Restructure This! Podcast Ep. 5
The Pre- and Post-Pandemic Economy with Gaurav Malhotra
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Listen to the original podcast released February 23, 2022 here:
https://www.sheppard.com/multimedia-378
The restructuring industry has been greatly impacted by the uncertainty that the global pandemic has brought. What does this mean for the future of restructuring? Which sectors will have been most severely impacted? We speak with Gaurav Malhotra of Ernst & Young LLP, who is a member of the EY Global Restructuring team and US Restructuring Leader.
Guest:
With more than 20 years of experience leading financial and operational restructuring assignments, Gaurav has advised leadership of enterprises ranging from Fortune 100 companies to middle market corporations. Gaurav has strategized turnaround plans in sectors including, among others, commercial airlines, and Tier 1 automotive suppliers, as well large scale local government restructurings, including the City of Detroit and Puerto Rico.
Transcript:
Justin Bernbrock:
On this installment of Restructure This, we welcome Gaurav Malhotra, of Ernst & Young. Gaurav is a member of EY's global restructuring leadership team, and he is the leader of EY's restructuring practice in the United States. Gaurav has more than 20 years of experience leading financial and operational restructuring assignments, ranging from Fortune 100 companies to middle market corporations as well. Today, Gaurav will tell us a little bit about his rise in the restructuring and corporate finance community, some of the lessons he and his team have learned over the last couple of years and where he sees the restructuring market headed in the next 12 to 24 months. As always, stay tuned after the interview for a quick rundown of current restructuring news and notable stories.
Justin Bernbrock:
Welcome back to another episode of Restructure This. Gaurav Malhotra joins us today, from Ernst & Young. Gaurav, thank you very much. It's good to see you. And I'll note for everyone listening that this is the first time we've recorded an episode live in person, perhaps a sign that things are returning to some sense of normalcy. So welcome. We're glad to have you here and really looking forward to the chat.
Gaurav Malhotra:
Thank you for having me here.
Justin Bernbrock:
So why don't we start out by just hearing your background, where you came from and then how you got to the position you're in now.
Gaurav Malhotra:
Great, thanks Justin. Well, I think the simple answer, like most people in the restructuring business, is I fell right into it. Really after the dot-com bust versus seeking it out. And I think similar to a lot of professionals, that once we work on a couple of restructuring situations, we get the bug to continue to help our clients through thorny situations. And alongside having a great team of mentors and other partners, that's the journey that I've been on. Stepping back, I came to the US for my graduate studies nearly 20 plus years ago as a first generation immigrant. No extended family here then, or friends. And in fact, I'd never visited the US before in my entire life. The real adjustment for me after having grown up in a warm weather climate situation for my entire life, is getting used to our glorious Midwest winter.
Gaurav Malhotra:
In terms of my restructuring experience, I grew up in the firm really doing a mix of debtor and credit side deals. And really, thanks to a number of mentors and partners, I got to work on some really interesting Chapter 11 cases. Whether they were airlines, rental car companies, global tier one automotive suppliers, construction companies, we really got to see just a variety of sectors. And then in the last decade or so, sort of got introduced to a different sector, really helping public sector agencies like school districts, transit agencies, states, cities, such as Detroit, deal with their financial and operational challenges. So it's been a wonderful journey. Here over the last couple of years, we've got some really interesting Chapter 11 cases like Alpha Media with your team, Nordic Aviation, Briggs & Stratton, and then have been leading the efforts on the Puerto Rico restructuring as well.
Justin Bernbrock:
And for how long has EY had a formal restructuring practice? And if you could, just spend some time talking generally about the firm's investment in the practice, how it came to be. I very much enjoyed the experience with the team on Alpha Media and thought it was tremendous. It was my first time working with EY and you all. And before then, I didn't know that I really came across the team that much. So I think it would be helpful to just get a background and understanding generally of the group and the practice where you came from, where you're headed.
Gaurav Malhotra:
Sure. And back in the 80s, EY really had a dominant restructuring practice in the US. This was again, 70s and 80s, with the likes of folks like Art Newman who then went on to lead Blackstone's restructuring practice. In fact, Steve Zelin, who was there, was a former EY restructuring partner. And globally, the firm has a strong, strong bench and brand in the restructuring business. EY in the US had gotten out of the business for a while in the 2004 timeframe, but reconstituted the business in the 2010 time frame. And for some of the folks, that is sort of a common experience in terms of how they continue to see the EY brand continue to emerge here over the last few years. Globally today, Justin, we have roughly 1,000 plus core restructuring practitioners, a very strong presence in the UK, the rest of EMEA, a very strong and emerging business in AsiaPac. We've always had a very strong presence in Canada.
Gaurav Malhotra:
And now in the Americas broadly, we've got a couple of hundred core restructuring practitioners. And thanks really to all of our clients, referral sources and really the character of the team, in the US, we've seen 25% plus growth over the last five years. And it's really been a phenomenal journey. In terms of the profile of the practice, today, about 90% of the business is company side work. We are continuing to diversify in terms of creditor aside as well. And while the core of the business continues to be restructuring mandates, over the last couple of years, we've really seen a tremendous improvement in our work around operational turnarounds, and strategic transformation. So that's where the growth is coming in terms of a broad suite of services to help our turnaround clients, overall.
Justin Bernbrock:
Would you say that EY is unique in the context of the Big Four, for example, in its emphasis or its investment in the restructuring practice and how has that benefited some of the growth that you're mentioning?
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Gaurav Malhotra:
Yeah. I think there's a handful of items that are making us distinctive, especially in the Big Four, and sometimes even our broader competitor set. But the biggest thing that we have going for us is our internal client network is starting to work for the benefit of the restructuring and turnaround business. We've got 5,000 plus partners. And as the broader partnership starts to see the benefit of having a practice that can help through all the cycles, that is a real advantage for not only our team, but the broader firm in general. And at the same time, we've got our executive leadership team that sort of sees the impact that the restructuring and turnaround capabilities bring to the benefit of our clients. It creates a lot of investment capital for us.
Gaurav Malhotra:
Two is, I would say the scale and breadth of our complimentary services. So you get into a situation, whether it's a bankruptcy tax issue, whether it's a forensics issue, whether it is an issue with a particular sector, we've got the breadth and depth of the services of the firm that are really coming to bear to assist our clients.
Gaurav Malhotra:
Thirdly, again, none of this is possible without a great team that we've been fortunate to work alongside. We've got a mix of really good partners that have spent a significant amount of time within EY in the restructuring business. And I've grown up here. And then secondly, we've got a great mix of partners that have joined us from the outside. So whether it be from the likes of prior experience at Alix, A&M, FTI, McKinsey, BCG, I mean you know all these names. So we've got a good mix of partners that have got a solid reputation within the firm and that we've added on with great partners from the outside. So it's really a combination of all of these factors. But mostly at the end of the day, Justin, it's clients having faith in the brand of the firm and the brand of the partners to really help them through a thorny situation.
Justin Bernbrock:
It's a great point. And it's one that we've been, I would say, working to improve internally here at Sheppard Mullin, and that is helping our partners understand the value proposition of a thriving restructuring practice and the ability to help in a situation that otherwise might not turn out and it could. I think Alpha Media is a great example of that. And thinking back to the last 18 months or so, of course, we saw significant restructuring activity in 2020, after the onset of the pandemic. But then we saw restructuring activity fall off a cliff, and you've got restructuring lawyers starting podcasts, which I think we can determine whether that's a good idea or not. But what was EY's experience in 2020, 2021? How did the world look, from your seat?
Gaurav Malhotra:
Well, in the early spring/summer of 2020, it was really all hands on deck 24/7. It was a tremendous amount of uncertainty. And I remembered when I looked at the roster of the calls we had from our team, and they were 500 plus calls that within just a handful of weeks, that we had with our clients. And we did not have those to the point that you made earlier about the leverage and the power of the network of the firm. They weren't just a chat about restructuring. It was a chat really about what we were seeing in the market, how we were benefiting our other partners within the firm in terms of helping their clients that have been clients of the firm and them personally for decades. And there was a lot of uncertainty then.
Gaurav Malhotra:
And like you, Justin, we work in an uncertain world and an environment in restructuring for a living. But the key was how to break it down into smaller pieces, all the situations we were facing and really help our clients. So if I think back to the early days of 2020, it really started off as, we've got a supply chain disruption because of China. That's where a lot of calls emanated, but how quickly they pivoted into we've got a huge demand issue really here in the Americas itself. And I remember having calls with automotive suppliers, travel and leisure companies, private equity firms, and there was just a tremendous amount of uncertainty. And that's the word that comes up repeatedly again—that there wasn't a perfect script. But the key, what I did realize, was how quickly the Fed reacted. And it's up for debate whether the reaction has been too much, but how quickly the Fed did react did, in my view, help at least prevent an extraordinary disaster that could have happened.
Gaurav Malhotra:
And what has been interesting as we think about the latter half of 2020 and 2021, which is we saw the pendulum shift and the earlier conversations were, we are potentially out of liquidity, what should we do? Then the conversation quickly pivoted into, we've got sufficient liquidity now, how should we think about changing our operating model, in terms of how we operate post pandemic? Then the conversation shifted to, we've got plenty of liquidity, we've got plenty of access to capital markets, we need to buy new companies today to get ready for growth in the future.
And the pace at which that pendulum shifted, I have never seen in the last 20 plus years of doing this, in terms of a shift in sentiment. So yeah, that's what we really saw in the 2020, early 2021 timeframe.
Gaurav Malhotra:
If I double click on 2021 itself, a lot of the activity and the deals we've been working on really emanated through the disruptions caused by the pandemic. And I can think about four main themes. The first one is really about the work that happened in the travel related sector. You recently saw the filing of Nordic Aviation, one of the world's largest aircraft lessors, and again, faced significant disruptions. And we helped the company file for Chapter 11 and to effectuate a restructuring of nearly $8 billion in liabilities. We've been involved in a similar situation in an article setting, helping a large travel and entertainment company that was really impacted by the pandemic, but then was able to take on billions of dollars of debt in order to at least get through the liquidity disruption that was caused.
Gaurav Malhotra:
The second main theme, from a sectoral standpoint, is companies in the entertainment sector. And again, Alpha Media was a classic case of this in terms of how overall ad revenue just completely evaporated for a short period of time. We saw the same thing in one of our Canadian filings at Cirque du Soleil, in terms of where we had to go through a bankruptcy filing and then brought the company out in late 2020. Another interesting theme has been just the overall disruption and transactions. So this is where you've got a failed integration, or you've got a disruption in a divestiture. And we saw this in the case of, for instance, Briggs & Stratton, which was a household name in the lawn mower industry, where they make small engines for lawn mowers. But really, a disruption in the overall divestiture caused an overall restructuring that was necessitated. And we were able to take that company through a filing and effectuate a sale, really saving 4,000 jobs.
Gaurav Malhotra:
The last one was really what the pandemic showed is where companies were still having disruption because of an over leveraged capital structure. So whether that was a company like Shiloh, that we took through a Chapter 11 where it had a high leverage . . . where we were able to take these companies through a filing and really figure out what the long term restructuring strategy was. But the pandemic really put pressure on an over-leveraged capital structure from the get go. Those are some of the themes that we saw, which caused an uptick in demand of our services in 2020 and 2021.
Justin Bernbrock:
You made a brilliant point that I hadn't focused on as much at the outset, which is the reaction speed of the Fed and of the central government to curb or mitigate some problems that companies were facing. And I hadn't thought about any relationship that may have come from the '08, '09 crisis and perhaps the Fed's slowness in responding at that point or its picking and choosing at that point. I don't know if you've given any thought or consideration to whether there were lessons learned from the '08, '09 crisis that set up the Fed and central governments to pounce on the COVID-19 created crisis that actually may have staved off greater economic calamity. I don't know if you have any thoughts on that.
Gaurav Malhotra:
I do. I think there was definitely a lesson learned in terms of speed. I think the difference here in terms of how it impacted this crisis with the pandemic, the day-to-day livelihood of consumers was another reason why the Fed had to move at a much faster pace. So I think it was a combination of lessons learned from the '08, '09 crash in terms of moving with speed. And then B, just the unique nature of this crisis, where the intervention had to touch the consumers from a day-to-day standpoint. Now, what we have seen though is the question, whether is it too much? And that's something that we are probably going to see play out and nobody has the perfect answer.
Gaurav Malhotra:
But when we see in terms of some of the companies that were actually at the doorstep of a restructuring, probably needed to restructure, but the restructuring was really staved off from the standpoint that there was new capital that was available. While for some companies in certain sectors it has provided time to really restructure the operations, in other situations, all it is, it's created more debt and some of these zombie companies that continue to operate today. And so I do believe that the Fed did the right thing in terms of reacting quickly. And I think what we are going to see now is certain sectors will continue to see disruption play out where just because of the introduction of liquidity has not solved for a broken business model.
Justin Bernbrock:
So shifting years a bit, I know you were heavily involved in the Puerto Rico case and recently saw, of course, the court confirmed the plan there. Can you talk a bit about your role, your experience, key takeaways? It was a fascinating process. I think any municipal insolvency process is fascinating. I was involved in Detroit. It had more difficult issues than any Chapter 11 case in which I've been involved. But if you wouldn't mind telling us a bit about Puerto Rico, I think that'd be interesting.
Gaurav Malhotra:
Sure. Yes. And I have some lessons learned from the time that we spent as the restructuring advisor for the City of Detroit, and then now as an advisor for the oversight board in Puerto Rico. But it's been really a team effort starting with, of course, the oversight board and the government of Puerto Rico, and really the Congress passing a law that effectuated at least a framework for Puerto Rico to be able to restructure its obligations. But it's been really a team effort with professionals working for the board, the government, and really all the creditors, because it was four years of hard work with, at the end of the day, the focus was how do we improve the lives of three million US citizens living on the island while restructuring the weight of $125 billion in legacy obligations that to the point that you just made for any state and municipality, Justin, the difference from a Chapter 11 is these obligations just don't come around overnight or over a course of two or three years. They really have basically been coming together over a period of decades.
Gaurav Malhotra:
But yes, we are thankful that the judge has confirmed the plan of adjustment and the total debt has been reduced quite significantly, in some cases by more than 50%. More importantly, in terms of an impact, the plan does bring to the forefront the much needed infrastructure needed for the residents and that benefits the residents of Puerto Rico. We've created some stability for government employees and retirees, which are nearly 350,000 in count with a variety of provisions in terms of restructuring and the treatment of the pensions and the collective bargaining agreements. And more importantly, looking forward, creating some operating and financial flexibility so that Puerto Rico doesn't find itself in a similar situation down the road.
Gaurav Malhotra:
And this was some really creative structuring, thanks to all the lawyers, the bankers and the financial advisors and the board to really think about a contingent value instrument going forward, which was really not done previously in a public sector restructuring. Everybody involved has really done this with collective efforts, I would say. And I don't, similar to what as I saw the Chapter 9 situation of Detroit and now Puerto Rico, I don't think we are just going to see a significant uptick in public sector restructuring activity. More so, because again, there's been an influx of new cash as well with some of the stimulus programs, but I do feel that a lot of our public sector entities are dealing with the significant weight of legacy liabilities, such as pension and retiree healthcare. And those will continue to have to get resolved in the future.
Justin Bernbrock:
Certainly the City of Chicago is in a challenging position in that regard. So the question that I think every restructuring professional wants a crystal ball answer to is, what's next? Where are we headed? What's '22 going to look like, and do you have views on what might be drivers of a restructuring cycle or market correction? Give us some good news on this because a lot of folks who would like to be busier than they are.
Gaurav Malhotra:
It could be some good news and bad news. If we look at maybe our portfolios in the last two, three weeks and some of the correction that's happening in the marketplace and the question, is it a sign of good news to come from a restructuring standpoint? Not so much yet. Unfortunately, from a restructuring activity standpoint, I think the corrections that we are seeing right now in the equity markets over the last few weeks are really driven by high growth valuations that continue to contract. Time will tell whether it creates a substantial restructuring opportunity. I don't think so yet because these companies are really funded predominantly through equity investments versus debt. But we have seen some increase in technology and software restructuring activity more recently. What we do believe as we look forward is we will see an ongoing pace from an M&A environment that will continue.
Gaurav Malhotra:
But we do believe that this strong M&A activity is going to create potential for more restructuring activity in the near future. We'll see it's because of the profile of deals that are being done. But I do see, given the profile of deals that are being done combined with the debt that is being taken on with some of these deals that are being done, we will see more activity just in probably in the next 12 to 24 months. But it's probably not as immediate as what somebody would think that may be happening, just given what's happening in the equity markets today.
Justin Bernbrock:
Sure. And are there specific factors that you can think of or point to that could drive the next restructuring cycle?
Gaurav Malhotra:
Yeah. As I look back over the last three or four years I'll go back to the strong M&A activity. I mean, transactions are getting financed with more leverage than we have seen since 2007. That's what the profiles are today. 20% of the 2021 M&A financings were at seven times a higher leverage, and nearly 44% were at six times. Secondly, the debt issued by single-B-or-below borrowers is higher today than it has ever been before. So as we step back and we see, okay, companies have raised more debt today than before, the profile of debt in terms of the composition of non-investment grade debt being higher than it has ever been before. And then when we see rising interest rates, it is going to create more opportunities.
Gaurav Malhotra:
The second theme, I would think again, related to M&A, is given the low interest rates in the market, there has been an ongoing increased level of activity to put that capital to work, to take advantage of low interest rates. But what that means is, the original thesis in terms of the integration of those businesses is happening slowly today because the focus has been on just the acquisition strategy. So when we look at some of the transaction activity that has happened, all of the add-backs that have been actually put in terms of EBITDA levels, what we see is that there is going to be potential opportunities where the investment thesis or the integration thesis is not going to play out. And we are going to see potentially some restructuring activity happen, where the integration of businesses was not focused on, and it's going to create the potential for more restructuring business in the future.
Gaurav Malhotra:
So I would say working with companies, both from a corporate standpoint, sponsor-backed companies, this is not going to be just an imminent sort of factor that's going to increase the level of restructuring activity across the board. But we are going to see a general trend and a gradual increase of restructuring activity, probably towards the end of 2022, or early part of 2023.
Justin Bernbrock:
And as you may have heard, we've talked about interest rates. Of course, the Fed made some announcements recently to expect rising rates as early as March. How, if at all, in your mind, does that factor into the analysis in terms of the uptick in restructuring?
Gaurav Malhotra:
I would say it is definitely going to have an impact. It's going to have an impact definitely for those companies that are on the higher end, of course, of the leverage cycle. What we are seeing, though, is there is still some dry powder on the sidelines in terms of companies that are sitting on a pile of cash. So yes, while leverage levels are higher, interest rates are going to creep up and it's going to cost companies more. But it is not going to cause an immediate surge in restructuring activity because from a net leverage standpoint, there are a number of companies that still are OK versus not.
Gaurav Malhotra:
So what we are going to see is that the initial surge is probably going to be driven by more operational improvement, operational turnaround mandates. And why is that? Because sponsor backed companies or even non-sponsor backed companies are not going to be looking at Chapter 11 as the overall restructuring conduit. They're going to be turning to operational turnarounds using the cash on the balance sheet to help fund, let's say, the ongoing losses, while they buy time. Now, I would say in certain industries or certain sectors, that's not going to play out. But we see an uptick in more operational turnaround mandates coming through as the first step before a resurgence of an uptick in Chapter 11 activity.
Justin Bernbrock:
Do you think that there are specific industries or sectors to watch closely in this regard, or do you think it's more diffuse? What's your perspective in that regard?
Gaurav Malhotra:
Yeah. I think there are certain sectors where the disruption and transformation has gotten accelerated. So, for instance, you take retail, for example. The overall disruption, given the digital transformation of the models has gotten accelerated, but that's not new. What we are seeing right now in certain sectors, what's going to happen in energy where we are seeing current oil prices—it seems like that sector might be alright for a bit. What is going to be interesting is with some of the sectors that basically took a hit in 2020 and 2021, how quickly they bounce back, because a lot of those balance sheets are a lot more levered today than they were pre-pandemic.
Gaurav Malhotra:
So I'll give you a couple of examples. We are seeing more activity today in automotive than we did in the past. And while volume levels continue to be reasonable and reasonably high, in the supply base, there continues to be a disruption in terms of those companies that had invested heavily in terms of electrification versus some of the platforms where they are on legacy platforms, where volumes may be falling. So there's going to be an imbalance between the uptick in terms of volume coming through on the electrification, whereas the overall decline in volume in terms of legacy platforms and volumes. So we are seeing more activity in automotive. Plus, it's a heavy cap ex business that continues to produce more restructuring activity versus not.
Gaurav Malhotra:
The second place where we continue to see more activity is in the travel and leisure sector. So these were sectors that were heavily impacted by the pandemic. There was a lot of debt that was taken on. And where we have seen an overall recovery and resurgence, but it is not a consistent recovery across the board. In fact, we are seeing certain geographies where the recovery has been a lot more inconsistent than what we are seeing in America. So there are companies that are dealing with a global issue because of certain parts of the world where the recovery has been a lot slower, than let's say what it has been in the Americas.
Gaurav Malhotra:
We are also seeing within just the overall media and entertainment space, more opportunities that continue to come through because there is, again, like I said, an imbalance in terms of what is driving the recovery overall. So those are some of the sectors where we can continue to see activity. I would say overall companies that have continued to fund losses over the last 12 to 24 months, those companies that have had the opportunity to restructure their overall operating model, are going to come out of this in a much better environment. But those companies that have actually had to fund losses, but have not been able to make the pivot to a new operating model quickly enough, are going to continue to struggle and will be restructuring candidates for us in the future.
Justin Bernbrock:
It is encouraging to hear that the future could be a return to, call it a normal restructuring market. I do have this theory, it's probably not mine, but it's increasingly, we're seeing restructuring activity or at least heavy amounts of restructuring activity being caused by an externality in a lot of instances, very difficult to predict. The '08, '09 crisis, the '14, '15 oil and gas downturn, of course, the pandemic, COVID-19. And I wonder if first, whether you subscribe to this theory, that increasingly, as we go forward, we're going to see major events that lead to restructuring. And more specifically, whether you've given any thought to what might be in the offing in that regard.
Justin Bernbrock:
And I think a lot of folks would say, "Well, we could have never predicted the COVID-19 pandemic and the effect on economic activity." There's probably some folks out there, Bill Gates being one who would say, "No, we actually could have and did predict this." But what do you think might be out there that folks could think about, or maybe even—even if it's a break-glass-in-case-of-emergency plan to deal with something that might come down the pike in the future?
Gaurav Malhotra:
Yeah. It's interesting how different each of these external events are. They are completely different from each other and they're completely different in terms of the impact they've had. What is interesting is while I don't know what the next external force is going to be, that's going to cause the same amount of disruption, let's say as the financial crisis or the pandemic. What has been interesting is the pace at which the rebound has happened. And what has been interesting also is in terms of the massive amount of carnage that could and did happen both from a corporate standpoint and a personal stand. So when I look at '08, '09 and even '14, '15, and I even look at the dot-com sort of cycle, what the impact was and who the impact was felt by was different. So I think what we are seeing is that the impact is getting broader in terms of the external event, that it is not necessarily being isolated to just one particular sector.
Gaurav Malhotra:
I do believe that as we continue to become much more of an integrated, global machine, these next external impacts are going to be impacting the entire globe versus it being impacted by just a certain sector or a certain geography. Some of the things that we are seeing rightfully so, in terms of the change around the focus around ESG, which is a much top of mind topic for board members that we speak to today, and rightfully so. But some of these topics are also going to have an impact from a restructuring standpoint, right? And this is not going to be just the E component from an environmental standpoint, it's also going to be societal and social. So about what's happening to the workforce.
Gaurav Malhotra:
So we are going to see the impact of things that are top of mind on boards today, right? What's happening with M&A, what's happening with ESG, that is going to have a trickle down impact from a restructuring standpoint. And I don't know the exact impact from an external influence today, Justin. What I can see is that every restructuring event now is going to have much more of a global impact versus it being isolated to a particular geography.
Justin Bernbrock:
I had not connected that. My theories so far have been environmental-related events. So last winter, the big Texas freeze. Texas got snow earlier in the week, I think. And there's just interesting changes from an atmospheric and weather phenomenon perspective that might impact industries. Although again, that tends to be limited from a geographic perspective and it'll be sector agnostic and of course, nearly impossible to predict. Well, this has certainly been fascinating for me. I can't let you go without asking what's becoming a hallmark question of the podcast. And assuming no limitations, a world without end, if you weren't a restructuring professional, what would you be?
Gaurav Malhotra:
It's a very interesting question. I think if I was not a restructuring professional, and some of the folks, our friends in the restructuring community know this, a small group of friends, but I think I would be a professional poker player.
Justin Bernbrock:
Really?
Gaurav Malhotra:
I love playing cards. I've enjoyed playing cards since I was in college. In fact, that's how me and my wife met, and I continued to play for a long time. But if I was not in this business, I think I would be a professional poker player.
Justin Bernbrock:
Is it a five card draw, any particular game? Just cards.
Gaurav Malhotra:
Just cards. Texas Hold'em is what I would veer towards.
Justin Bernbrock:
Very good. Very good. Well Gaurav, thank you very much. And we look forward to seeing the great things that you and the folks at EY get up to in the next many months and years. Thanks again.
Gaurav Malhotra:
Justin, I want to thank you for having me. And again, we have a great group of partners and a great team working alongside us. And we're just scratching the surface and we are very excited about the growth opportunity ahead for our platform.
Justin Bernbrock:
Great. All right. Take care.
Gaurav Malhotra:
Thank you.
Justin Bernbrock:
Bye-bye.
Bryan Uelk:
This is Bryan Uelk of Sheppard Mullin for Restructure This!, with your rundown of weekly restructuring news and notable stories. Exiled Chinese billionaire, Steve Bannon supporter and yacht enthusiast, Miles Guo, filed for Chapter 11 last week in the US Bankruptcy Court for the District of Connecticut. Mr. Guo's Chapter 11 filing comes just days after a New York State court ordered him to pay approximately $145 million to creditors after Mr. Guo sought and failed to avoid debt collection by moving his multi-million dollar yacht out of U.S. waters. In truth, I don't know whether Mr. Guo is a yacht enthusiast or not. In fact, I understand that he claims he doesn't even own the $30 million vessel in question, as he lists having between only $50,000 and $100,000 dollars of assets on the basis of his Chapter 11 petition. I suppose you can't blame him though, given that the yacht was the site of Steve Bannon's arrest on fraud charges in 2020.
Bryan Uelk:
In other news, two appeals of Mallinckrodt Chapter 11 plan were taken. As you may recall, the plan was confirmed earlier this month by Judge Dorsey in Delaware after the Mallinckrodt debtors had been in bankruptcy for over a year. The debtors had been battling the appellants throughout much of the pendency of their cases.
Bryan Uelk:
Finally, Powhatan Energy Fund LLC recently filed for Chapter 7, after many years of costly litigation with the Federal Energy Regulatory Commission. Powhatan, which was founded by Kevin and Rich Gates, has reportedly spent millions fighting FERC on claims that it was involved in manipulating markets through fraudulent trades in 2010. True or not, it's usually a shame to see a story end this way. Well, that's it for this week's restructuring news. This has been Bryan Uelk of Sheppard Mullin, for Restructure This!.
Contact Information:
Gaurav Malhotra’s bio: https://www.ey.com/en_us/people/gaurav-malhotra
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