Distressed Debt & Special Situations Investing

As pioneers of the development of a distressed debt market in Australia, Henry Davis York's experts are recognised for their deep understanding of the motivations and methodologies of distressed debt investors.

With extensive networks and experience in Asia, North America and Europe, they have been engaged by the global special situations groups from nearly all of the leading investment banks as well as the leading hedge funds and the distressed private equity funds, to source, facilitate and execute deals and to provide high-level strategic advice on a range of investment opportunities.

Cross-border knowledge

Our experts translate and effect the special situation and distressed investing techniques and expertise from the Northern Hemisphere into the complex Australian regulatory environment.

Henry Davis York has actively recruited specialists in Europe and North America who have experience in those distressed debt markets to advise offshore distressed investing clients on Australian opportunities.

Our experts are known for their ability to bring a strategic mindset to distressed situations and to structure transactions innovatively, and for their accessibility, efficiency and commitment to going the extra mile. The depth of our knowledge and experience of all levels sets us apart.

Distressed debt investing opportunities in Australia

Distressed debt and special situations funds, principally from Asia and the US, are involved in an increasingly broad range of Australian investment opportunities. Australia's strong regulatory regime makes it an ideal jurisdiction for these investors to deploy capital in a range of event driven situations.

Although the major banks have traditionally been reluctant sellers of distressed debt positions, there is an increasing interest post global financial crisis from these institutions to understand and potentially access the option of buy side debt capital to manage their non-performing exposures.

We have been engaged by the leading global special situations groups from the investment banks, hedge fund and private equity community on a wide range of instructions. We have the leading practice in this area in Australia and it sits within and can draw on the resources of Australia's pre-eminent restructuring and insolvency group and our expert teams in Mergers & Acquisitions and Private Equity provide a comprehensive and strategic approach to distressed situations.

Partnering with clients

Our focus is on partnering with our clients to facilitate sourcing deals and adviser networks, execute deals and provide cohesive strategic advice.

We strive to provide unparalleled service to our offshore distressed investing clients, and have the network to effectively engage in negotiations with key stakeholders in the Australian market.

Our expertise is particularly focused on acting for those parts of the capital structure where trading is likely to occur, namely in large syndicated or LBO deals, or in the mezzanine or second lien section of the capital structure of Australian corporates.

What the market says

"What is particularly exceptional with HDY is that it is not only the partners that are exceptionally skilled, knowledgeable and trustworthy, there are many layers of staff below partnership level that are equally impressive."
IFLR 1000, 2012

"Henry Davis York is definitely a top tier firm - the firm has one of the strongest insolvency practices in Sydney and maybe even Australia."
IFLR 1000, 2011

"Henry Davis York has taken a lead in hard economic times. It has been involved at a strategic level in many of Australia's major collapses and the practice is praised for having a deep network in the banking sector".
Asia Pacific Legal 500, 2010

"High standard of advice across partner and senior associate level ... Experts at what they do, whilst still remaining commercially focused".
Chambers Global, 2010

Henry Davis York's experts advise on all aspects of distressed investing and special situations investments in Australia including:

• distressed debt trading
• distressed mergers and acquisitions 
• foreign investor tax issues
• foreign Takeovers Act issues 
• merge arbitrage 
• loan to own strategies 
• advising committees of creditors in restructurings 
• rescue finance 
• receivership and other security enforcement issues.

We recognise that distressed situations affect all facets of companies and corporate groups and the Henry Davis York Distressed Debt team works with our colleagues in all practice groups to provide cohesive, expert advice across all aspects of a distressed situation.

Centro Properties Group

Henry Davis York advised several major international funds on their senior debt holding in Centro Properties Group acquired through the secondary market. Centro Properties Group is one of Australia's largest and most complex real estate investment trusts. The restructure has involved a number of major restructures of various headstock debt facilities and we have provided strategic advice to our clients on their senior debt exposures to the Centro Properties Group.

I-Med

We advised the mezzanine syndicate of 15 hedge funds and special situation institutional clients based in Hong Kong, Singapore, the UK and Sydney, on the restructuring of their $300 million exposures to medical imaging group, I-Med. Our lawyers advised on all aspects of this complex and multi-faceted transaction which included the implications under the Corporations Act of the value proposition of the I-Med group restructure, the syndicate's contractual rights and strategic legal advice in the restructuring negotiations with all stakeholders. Henry Davis York successfully negotiated an outcome which converted the mezzanine debt into a piece of the senior debt and equity in the recapitalised I-Med structure.

Colorado Group

Henry Davis York advised the majority of senior lenders to the Colorado Group on a dispute with another lender concerning inter-creditor rights. Our clients included local and foreign banks and hedge funds. We provided strategic advice to our clients on the proper construction of the contracts to resolve the dispute in favour of the senior lenders. This eliminated the need for protracted litigation, which could have derailed the anticipated restructure of the Colorado Group.

Reliance Rail

We act for creditors of Reliance Rail on their exposure to the Waratah Train PPP. The project has been at the forefront of public interest and due to its complex structure and political relevance, our clients have required strategic advice within the complex documentation matrix.

Babcock & Brown

Babcock & Brown was one of Australia's largest investment banks, with a market capitalisation in excess of $10 billion at its peak. It had a very complex structure, with thousands of entities and assets spanning Australia, Asia, the US and Europe. Henry Davis York advised the banking syndicate comprising a large number of Australian and foreign lenders on the restructure of debt facilities of approximately $3.2 billion. As the debt traded, the syndicate continued to evolve and now consists mainly of distressed and special situation funds. We continue to provide strategic and general advice on this restructuring, including on the sale of the assets and the winding down of the business.

Nexus

Henry Davis York acted for a steering committee of mezzanine noteholders comprising major international investment banks and hedge funds on their exposure to the troubled Nexus Energy. We provided strategic advice on the whole transaction including structuring an exchange offer to facilitate a restructure of the majority of the mezzanine debt in circumstances where Nexus Energy did not have the unanimous support of the mezzanine noteholders. The exchange offer, which was the first in the Australian market, facilitated the swapping of existing mezzanine notes for a new exposure on restructured terms and a equity upside exposure.

LOY YANG

We are advising a Special Situations Fund on a substantial holding of the subordinated debt in Loy Yang A.

Waco

Henry Davis York is advising the subordinated lenders of Waco, which include eight special situations funds based in Asia and the US, on restructuring the Waco debt.

LLA Restructuring

We advised Goldman Sachs on the capital raising and debt restructuring of Living & Leisure Australia, a stressed company which owns Australian ski fields and aquariums throughout the world.

Recapitalisation of Apex Mining NL

We advised Goldman Sachs, the majority holder of notes in Apex Mining NL, on the recapitalisation of the mining company. Apex funded the repurchase of the notes through a capital raising, in which the noteholders, including Goldman Sachs, were partial underwriters.

Australian Japan Cable

We advised senior lenders, the secondary debt holders, on negotiations with equity and the company on a restructuring of the debt facilities of this major undersea cable.

Freightlink

Henry Davis York is advising the committee of mezzanine debt on the sale/restructuring and inter-creditor issues relating to the Adelaide to Darwin rail link. The committee comprises a mixture of original and secondary note holders.

Lane Cove Tunnel

We advised the majority bondholders which included original and secondary holders on the high yield bonds issued by Lane Cove Tunnel. The bonds were contractually subordinated to the rights of MBIA which was the credit wrapper and 'Financial Controller' under the bonds.

Mining Expertise

We have had significant engagements on mining transactions for distressed investing and special situations funds, both individually and for ad hoc committees. Our clients include Sons of Gwalia, Henry Walker Eltin, Lafayette Mining, Southland, Tamaya Resources, Pasminco, Apex Minerals, Brandrill, Griffin Coal, Ravensthorpe and Sinom Investments.

Distressed Property Expertise

Henry Davis York has advised a range of funds on their participation in NPL portfolio sales, the takeover or investment in listed and unlisted distressed property funds and the establishment of new funds with a distressed property focus.

Non-public investments

We have advised on many non-public distressed investments in a diverse range of industries including agriculture, managed investment schemes, financial services, energy, infrastructure, entertainment and communications.