SCG_distressed

Spectrum's national restructuring practice is devoted to advising corporate leaders in
times of financial distress. Most frequently, Spectrum is called upon by senior
management teams, institutional shareholders and boards of directors to devise and
execute creative strategies and transactions that
resolve complex, and sometimes seemingly
intractable, financial challenges. Spectrum
attempts to conduct its restructurings on an out-
of-court basis whenever possible, but has also
frequently worked with companies operating
under Chapter 11 of the Bankruptcy Code.

Spectrum’s managing partner, Mike Lederman,
leads Spectrum’s restructuring group. Mr.
Lederman was a creditors’ rights attorney with
Shearman & Sterling during the LBO insolvencies
of the ‘80’s and was involved in dozens of
restructurings. He was then recruited away to become one of two co-founders of the
Restructuring Group at Goldman, Sachs & Co. where he developed the concept of
distressed M & A as an investment banking discipline. He was also a founding partner of
the Gordian Group, a New York-based restructuring advisory firm, and was a founder of
the Turnaround Management Association. In the restructuring world, Mr. Lederman is
probably best known for masterminding what was the first (and today remains the only)
unsolicited takeover of a billion dollar public company out of Chapter 11. Allegheny
International was renamed Sunbeam-Oster upon its celebrated emergence from
Chapter 11. Mr. Lederman then brought Sunbeam-Oster public in a $250 million IPO.

Spectrum believes that corporate financial distress can be caused by many factors. We
have seen well-managed companies fall into financial trouble due to such diverse
reasons as:

the withdrawal of lender support from a particular industry or segment;
the consolidation of industry participants;
the downgrade of a debt rating;
industry consolidation plays that, with lender participation, result in untenable debt
levels;
lawsuits that create potential liabilities from the actions of former management
teams;
industry-wide economic downturns;
sudden and rapid changes in technology that result in the obsolescence of
product lines;
the loss of a key customer; and
the sudden loss of trade credit

Of course, we have also seen poor strategic decisions at the board level and inadequate
execution by management place a company in financial distress.

Unlike virtually every other investment bank and financial advisor participating in the
distressed company arena, Spectrum does not accept creditor-side assignments except
under extraordinary circumstances. Our decision to restrict Spectrum’s client base in this
manner stems from our commitment to maximizing value and recoveries, and from our
fundamental belief that value for all stakeholder constituencies is best maximized by the
troubled company itself executing its responsibilities on behalf of such stakeholders. The
more parochial, self-interested perspective of any given creditor class simply cannot be
expected to generate the value-maximizing solutions that most corporate distress
situations require.

Spectrum also believes that the results we are committed to obtaining require a results-
driven, relentless focus by highly experienced professional experts. We think we are at
our best in tough situations, and our commitment is to deliver that focus in every
assignment we undertake. To do so, we believe we must remain a small firm highly
concentrated on just a few assignments in which we deliver great value to our clients and
their stakeholder constituencies. When faced with a choice of maintaining our
commitment to this disciplined, client-focused approach and taking on new business
that might dilute our ability to deliver top-notch results, we have had to, and will continue
to, decline the new assignment.

As a result of these perspectives and our commitment to remaining small in order to
bring our best efforts to every assignment, Spectrum’s client base tends to consist of
middle-sized, privately held companies whose management teams hold a significant
equity stake. We also represent institutional private equity groups with troubled portfolio
companies, independent members or groups of a troubled company’s board of directors,
other equity groups, and acquirers of troubled companies. Our clients seek our
assistance because of the complexity of restructuring issues, our track record in dealing
with such issues and because most of our clients do not have the depth of our
experience with distressed companies and their creditors.


	Distressed




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