Oil price plunge spurs restructuring shift at Canada banks, law firms

By Euan Rocha and John Tilak
TORONTO, Jan 28 (Reuters) - The oil price crash of the past
year and a half is forcing Canadian investment banks and
corporate law firms that profited from mergers and acquisitions,
and financing deals during good times to focus instead on
restructuring and asset sale work.
The trend is reshaping the staffing makeup at these banks,
law and accounting firms, especially in the energy-dependent
Western Canadian province of Alberta, with bankruptcy expertise
in high demand even as the broader industry suffers.
Josef Krüger, a senior insolvency lawyer at Borden, Ladner,
Gervais in Calgary, said his firm has five times as many lawyers
working on insolvency files as it did two years ago.
"My concern had long been that we didn't have good files on
which to train young insolvency lawyers. Well, that's changed."
While some law firms are hiring these experts externally,
many are simply shifting colleagues from other practice areas.
"We're redeploying resources," said Howard Gorman a partner
with Norton Rose Fulbright in Calgary. "A banking associate who
would typically be doing loan originations, is now assisting on
restructurings."
A similar trend is evident in Houston, where banks and law
firms are also bulking up their restructuring teams.
"Restructuring is going to be a very prominent theme given
the challenges the energy sector is experiencing and our team is
very busy in that regard," said John Armstrong, head of Canadian
M&A at BMO Capital Markets.
In Canada, investment dealers owned by the country's
deep-pocketed banks are seen as best able to adapt. Industry
insiders say boutique firms have been getting crushed by the
dearth of M&A and financing activity, with many expected to shut
down.
Still, asset sales are keeping some firms busy as companies
look to boost liquidity. Some banks have even tapped engineers
to strengthen their acquisition and divestiture (A&D) practices,
which carry out the complex engineering and technical research
needed to value oil and gas deposits.
"One or two Canadian firms are expanding A&D teams, based on
the belief that we will see more A&D activity," said Bill Vlaad,
whose firm specializes in the recruitment of financial services
professionals.
While many production assets are on the block, divestiture
activity is likely to largely center around midstream assets
like pipelines, storage and processing facilities. These are
attractive for private equity players who can borrow against the
assets.
"The midstream space, particularly for private equity firms,
offer more certain cash flow," said Janan Paskaran, a partner at
business law firm Torys. by Jeffrey Hodgson and Bernadette Baum)