Debtwire – Profile of notable women in Restructuring featuring Kat Burke

These lawyers, advisors and consultants from around the world specialise in private equity, restructuring, mergers and acquisitions, hedge funds, anti-corruption, data privacy and more.

Read Kat’s contribution below and find the full article on Debtwire here: https://debtwire.ionanalytics.com/content/1003764096

This article was first published on Debtwire in March 2024.

Kat is Of Counsel in the Dispute Resolution & Insolvency team at Maples Group, Dublin

What are the biggest changes you’ve seen since you started in the industry?

Perhaps it’s been a shift in my perspective as I moved around different jurisdictions, but restructurings seem to be more global in nature and there are a lot more options for companies to use different tools for corporate rescue. I have seen over my career the trend of ‘where to restructure’ migrate over time due to the advantages of different jurisdictions, the cost of proceedings and advisors and the sophistication of the bar and bench. Restructurings will continue to be successful in each domestic jurisdiction, but for large cross-border restructurings, there is an ebb and flow that has moved over time.

When I started in 2008, most multinational companies that needed a financial restructuring opted for a strategic pre-packaged Chapter 11. It was a quick in and out of court process that allowed a company to de-lever. It is an expensive process, but it was what the company needed to get back on track. There were few processes that could compete with a Chapter 11 that offered the same ability to cut debt without losing control of the company.

As Chapter 11 grew more and more expensive and increasingly litigious, companies looked to other jurisdictions. English schemes have been quite popular over the last decade for foreign companies with English debt able to achieve the same goal at a fraction of the cost, but these too have now become expensive and very litigious.

The trend now seems to be to restructure in the Cayman Islands and Europe. Part of the move to the Cayman Islands has been because of the vast number of Chinese companies that have used Cayman Islands entities for raising debt in the US markets and stock exchange listings. When these companies become distressed the place where their registered office is located is the natural choice. Although Chinese companies could theoretically use the US Chapter 11 process to restructure, they are reluctant to engage with US courts and the Cayman Islands has English-style schemes of arrangement at a more attractive price point.

Following Brexit and the implementation of the EU Directive on Preventive Restructuring Framework, European jurisdictions have become more attractive, particularly Ireland, which is well-placed to provide a pan-European solution without the need for a parallel UK proceeding.

While Ireland has had a preventative restructuring regime for over 30 years, most EU countries have only implemented these regimes since 2020. However, recognition and the binding effect of EU procedures has been lost in the UK post-Brexit, except for Irish proceedings. Irish courts are the only EU courts eligible under the UK’s Insolvency Act to request special assistance from the English courts to bind English creditors.

Just this year, an Irish Court made a request to the English Court to bind English creditors to an Irish scheme obviating the need for a parallel procedure in the UK and successfully restructuring the company with one main proceeding. There have been an increasing number of complex cross-border Irish Examinership proceedings and schemes of arrangement both with and without parallel proceedings.

For example, the Maples Group’s restructuring team represented aircraft lessors in what was a pioneering Irish Examinership of a European airline and has also represented official creditors’ committees in parallel Irish proceedings to US Chapter 11s in Mallinkcrodt and Endo. I expect this trend to continue where more companies restructure in Ireland and Europe with or without parallel schemes.

And these trends are precisely why I joined this firm because this is where I see the future of European and global restructuring. The Maples Group in particular has the depth and breadth of restructuring experience in both Ireland and offshore.

What do you see as the most notable issue or trend right now in the industry, and what big issue or trend was when you started out?

The trend when I started in restructuring was ‘Too big to fail’. I started as a lawyer on the day Lehman Bothers filed for Chapter 11 bankruptcy. As I stepped into the Honorable James M. Peck’s chambers in the Southern District of New York to start my clerkship on Sept 15 2008, he told me he had just been assigned the Lehman Bros. case. What an amazing and interesting first case.

From there, lawmakers around the world were consumed by the idea of companies that were too big to fail and created Dodd Frank laws in the US and Markets in Financial Instruments Directive (MiFID) in the EU. The economy was swinging wildly after the Lehman fi ling, but eventually with government intervention, things settled.

The reality is that Lehman wasn’t too big to fail. It failed and the bankruptcy system dealt with it. It was a difficult case that took a few years to resolve, but it did resolve and there was a good recovery for creditors. A lot of time was spent developing Dodd Frank and MiFID, which seems to have pushed the market away from bank lending and into private credit.

And interestingly this private credit lending market is now the trend, which is leading to what people are calling ‘creditor on creditor violence’. This was not a term we used when I started, but it’s an interesting progression. Combining private credit with decades of covenant-light documentation has created an environment that pits creditors against creditors. There are so many more players in the market with different strategies and creditors now need to protect themselves from strategies like up-tiering and trap doors, that can lead to some creditors being left behind. I think we will see this peak and then the documents and creditors will adjust.

Women have made tremendous strides in our industry over the past 20 years. What would you like to see more of for women, professionally?

I would like to see more gender parity with our male colleagues across the legal sector globally. According to statistics, women make up approximately 28% (US) and 37% (UK)of the partnerships in law firms. This is the case notwithstanding that many incoming lawyer classes are at or close to gender parity and have been for quite some time.

And while there is certainly a lot of work to do across global law firms to address gender imbalance at partner level, I’m proud to work at a firm where currently 40% of the Irish partnership is made of up of women, and within a global organisation that is very focused on developing our female talent by promoting an inclusive culture that is designed to attract, retain and advance a gender balanced and diverse workforce throughout all levels of the firm.

While we have seen progress over the years with more women achieving partnership, board and C-suite roles, there is more to do and we, along with male allies, need to continue that push for substantive equality and gender parity.