alerts & publications

Directors’ and Officers’ Guide to Restructuring: The Rise of the RSA

O’Melveny partners Daniel Shamah and Matthew Kremer and counsel Jordan Weber have contributed to the publication of Navigating Today’s Environment | The Directors’ and Officers’ Guide to Restructuring (Second Edition), which examines key topics and challenges facing directors and officers during a restructuring in today’s environment.

The book is an update to the first edition that was published in 2010 and covers topics such as accelerating the Chapter 11 process, liquidity management, M&A transactions, strategic communications, workforce considerations, filings by multinationals and other relevant. It includes chapters from 90 contributing authors from leading firms in the fields of law, financial advisory, investment banking and executive staffing.

The authors’ chapter, “The Rise of the RSA: Driving Value To Streamline Negotiations In A Restructuring Process,” discusses how Restructuring Support Agreements (RSAs) are impacting the distressed debt market. They write:

“Throughout the past decade, the use of the restructuring support agreement (‘RSA’ or sometimes referred to as ‘plan support agreement’) has emerged as a staple of large financial restructurings in the United States and abroad. Historically, a debtor commencing a Chapter 11 case in a U.S. bankruptcy court would use the bankruptcy process to develop a business plan, eventually file a plan of reorganization, and then work to garner sufficient support to achieve confirmation. The high costs and uncertainty inherent in these often-lengthy bankruptcy cases drove parties to employ RSAs to expedite and provide clear direction to the restructuring. At its core, an RSA acts as a ‘lockup agreement,’ ensuring that the signing stakeholders — usually financial creditors, but sometimes shareholders or other stakeholders too — will support and not vote against a plan that is consistent with the terms of the agreed restructuring. In turn, the company agrees to prosecute the plan on the agreed-upon terms and timeline. When effectively used, an RSA can provide significant savings to a debtor’s estate and reduce the uncertainty for both debtors and creditors over the course of a restructuring.”

Navigating Today’s Environment | The Directors’ and Officers’ Guide to Restructuring (Second Edition) is available for download at www.navigatingtodaysenvironment.com.