Gordian Group President Peter Kaufman – Revlon Avoids Bankruptcy | New York Post

Revlon Confirms It Has Reached a Deal to Avoid Bankruptcy November 12, 2020 By Josh Kosman Revlon said Thursday it has closed a debt-exchange with creditors including billionaire Carl Icahn that will save the company from bankruptcy. Confirming an exclusive Wednesday report by The Post, the cosmetics giant controlled by Ron Perelman said early Thursday that it … Read more

Conference: Gordian Group President Peter Kaufman to Participate in M&A Advisor Virtual Summit October 29, 2020

M&A Advisor Virtual Summit Series 2020 Peter Kaufman, Gordian Group President, will participate in the M&A Advisor’s 2020 Distressed Investing Series Session 3: Interactive Panel Discussion: Prognosis for Distressed Health Care Companies Thursday, October 29, 3:30 – 4:45 pm ET About the Event ​This interactive session will provide in-depth analysis on best practices for struggling … Read more

Conference: Gordian Group Participates in Opal Financial Virtual Family Office Investment Symposium August 5-6, 2020

Opal Financial Family Office Investment Symposium 2020 David Beach, Gordian Group Family Office and High Network Worth Practice Advisor participated in Opal Group’s Family Office Investment Symposium 2020. The topic of discussion for this panel: Examining the Equity and Fixed Income Markets since the Outbreak of the COVID-19 Pandemic. Moderator: David Pappalardo, Senior Vice President, … Read more

Restructuring Scenario, The Novel Carrot

Creating advantageous restructuring tactics for debtors. Learn about Gordian Group’s novel “carrot” recapitalization strategy for shareholders & management.

Gordian Group President Peter Kaufman – Rural and Inner City Hospitals are Not Getting Funds They Need | Yahoo! Finance

Hospital Bailouts: Have They Gotten into the Right Hands?

Today on Yahoo! Finance:  Peter Kaufman, Gordian Group President joins Yahoo Finance’s On The Move panel to weigh in on the latest healthcare and hospital bailouts as well as Hertz’s failed attempt to raise $500M in equity in bankruptcy due to the COVID-19 pandemic.

Below is a timestamped breakdown of the interview and a full transcript.

00:00 | $15B in stimulus funding was distributed to US Hospitals. Did the funding reach the right hospitals and has the industry benefited from this influx of funds? If not, what recourse is there for the Government?

03:00 | Is healthcare reform a possibility if Joe Biden becomes President and the Democrats win back the Senate in the 2020 election?

04:15 | Hertz’s $500M Share Offering. Why did they abandon the sale?

Full Transcript 

Julie Hyman (00:05):

Stimulus money goes to various industries. Airlines, of course, among them. Hospitals are also on the list and there have been some reports that some of those hospital chains that maybe didn’t necessarily need the money are funneling some of it to their top executives. What does this say about the hospital industry, but also what about the hospitals that are closer to insolvency or are having real issues? We’re joined now by Peter Kaufman. He is Gordian group president. He looks at those issues of restructuring and bankruptcy. So as it applies to the hospitals, Peter what do you think, I mean, did the hospitals that really need the money get enough or was that money funneled to others that maybe even misused the funds?

Peter Kaufman (00:46):

Julie, Adam, good to see you again. This is as usual when the government is trying to dole out money, a bit of a mess. There were very few guidelines for how money gets doled out, mostly based on historical revenues. And I think some portion of Medicare reimbursement and you know, of the 60 largest hospital chains that received $15 billion in total, more than half have either laid off employees, furloughed employees, or demanding, reduced salaries from employees. And the CEOs are as usual pocketing a lot of money, they’re making some face saving, give ups of about two weeks worth of salary to give to everybody else. And these large hospitals are not just hospitals, they’re private equity firms, they’re venture capitalists. They’re hugely in the money management business. And I’m sure that they’re taking various forms of hits during the last three months because of COVID. But by no means, did all of them need all this money.  And conversely, I think there are a lot of mostly rural hospitals, inner city, hospitals that are not getting the funds they need, but all of this is to be expected when you know, the government’s inefficient. There were no great guidelines for how to dole out the money.

Adam Shapiro  (02:10):

Hey, it’s Adam, and it’s good to see you. So I’m curious though, and that New York Times article, which highlights this, I’m looking at one part of it where it talks about, I think it was Tenet Healthcare, got $345 million from taxpayers. Their CEO, and by the way, they had laid off 11,000 workers. Their CEO donated for six months, money from his pay package, which is $24 million a year. And what he donated is about $375,000. So we get the point of those kinds of numbers, but what recourse is there? The government’s not going to go claw back that money. Is it?

Peter Kaufman (02:44):

No, there’s, there’s really very little recourse. I mean, some firms are being shamed into returning PPM PPP money, but it’s a much smaller amount and I don’t think anybody should expect for a wire to be coming from the hospitals, you know, back to the government.

Rick Newman (03:00):

Hey Peter, Rick Newman here, I’ll, I’ll follow up on that. So in the democratic primaries, before Joe Biden clinched the nomination, there was a lot of discussion about healthcare reform and should the government have a more active role. I think it’s fair to expect that it’s going to be something Biden is talking about in the fall and if Biden wins and he gets a democratic Senate, Democrats will possibly have the votes to do some reforms here. So, would you like to take a swag at how, if the government did have the power to do it, what would be sensible to do?

Peter Kaufman (03:32):

Well, I can only focus on solvency, insolvency, restructuring issues here, but I think a great first step would be to have some sanity about how material amounts of taxpayer money is doled out to the healthcare industry. And I think that what we’re seeing here is it just was to throw it up against the wall, see what sticks, and I’m not sure it’s really done any good and the receivers of all that money are still laying off people or furloughing them et cetera. So I think that’d be a good place to start, but I  couldn’t begin to opine about how the US healthcare system should be reformed.

Julie Hyman (04:15):

Peter, before I let you go, while we have, got to ask you about a different company in bankruptcy and that’s Hertz.  Yesterday abandoning that share sale, right? Because it was under scrutiny. But what do you make of the Hertz situation and this phenomenon of speculators piling into these companies that are in or near bankruptcy?

Peter Kaufman (04:38):

Well, I thought it was a really creative attempt by Hertz to end run the usual process of if you need cash, you go get use of the cash collateral of your lenders, or get your lenders or other lenders to loan you money called DIP financing in Chapter 11. Instead, here they tried to raise $500 million in equity. And even the offering material said there’s a very high likelihood you’re going to lose all of this money because shareholders in bankruptcies almost uniformly get wiped out unless Gordian Group’s advising the company. And I give them high credit for creativity, but the SEC stepped in and this thing went away. But it was different. It was interesting. The speculation in Hertz stock is quite interesting to me because there is no plan of reorganization that’s been promulgated or certainly publicly stated. And so, no one has any idea as an investing public what, if anything, the shareholders are going to get on the other side of Hertz.

Julie Hyman (05:44):

Peter, thank you. Peter Kaufman Gordian group president. Thanks for joining us.

VIDEO Interview: Covid-19 Shutdown: How should family offices react to newly distressed investments?

In light of the current Covid-19 shutdown and economic ramifications across the globe, many family offices and private investors may now find themselves in uncharted waters.  Peter S. Kaufman, President of Gordian Group sits down with David Beach of Crestmont Investments to discuss how private equity investors should approach the current environment and how they can address (and not avoid) issues of new distress in their portfolio companies.

Below is a timestamped breakdown of the interview and a full transcript.

Gordian Group President Peter S. Kaufman and Crestmont Investments’ David Beach

00:19 | What should family offices being doing and thinking now in light of COVID-19 over the last two months? Consumer demand has plummeted and the credit bubble has burst. Without a vacine it’s difficult to know what’s going to happen in the coming months.

RELATED: Corporate Debt Bubble Has Burst Amid Coronavirus (Fox Business)

01:18 | But, there are new dynamics between lenders and borrowers that can advantage shareholders. The key is having a strategy to make lenders do what the board wants them to do.

03:34 | Aside from hiring Gordian Group, what should Family Offices do if a profitable investment has become distressed? Are there any quick fixes?

Full Transcript

David Beach (00:01)

Hi, this is David Beach with Crestmont investments. And I’m here today with Peter Kaufman of Gordian Group. Talking about what to do now with the current COVID shutdown and its impact on family office investments. Peter, in your view, what in the world has just happened over the last two months?

Peter S. Kaufman (00:20)

It’s been fascinating as an investment banker who only deals with advising boards that have capital structure challenges. The world has caved in, especially if you’re a consumer facing business directly or even indirectly. The government is trying to prop up businesses and workers, but what the government can’t do is create demand. And right now there’s just no demand. My crystal ball is no better than anybody else’s I think until, and unless there’s a vaccine, I think demand is going to continue to be tamped down. The credit bubble has burst as part of this. For 10 years plus or minus a whole lot of money was available to companies that in other cycles would be undeserving of it. And they’ve been able to refinance their capital stack and kick the can down the road. And that game is, is over.

And right now you have a really interesting dynamic between lenders and companies, private owned companies, private equity sponsors, family office backed, public companies. And the tension is as simple as this.

Everyone’s shell shocked. The lenders don’t know what to do. What they’d like to do is to keep the borrowers on a short leash, you know, 60, 90, 120 day forbearance periods with more equity coming in below what we would call Mount Debt because these companies almost uniformly can no longer the amount of debt that they’ve taken on because the bottom has dropped out of revenues, and of course, profitability.

On the other hand, the companies whose crystal ball is no better than anybody elses wants a couple of years of free runway, where they don’t have to look over their shoulder about what happened last month, what’s gonna happen this month.

And they’d like, arguably two or three years of covenant, almost covenant free relief from the usual reporting requirements and the usual trip wires that lenders have to keep an eye on their borrowers.

That’s where the tension is. What we do for companies in this situation, because we’re the only firm in the restructuring space. The only investment bank that doesn’t represent financial creditors, banks, bond holders, et cetera, is we figure out strategies to make the lenders do what the board wants them to do.

These strategies are often not, but often bankruptcy centric, meaning, every one of these situations views the world through the prism of what can they do to me in a bankruptcy, what can I do to them in a bankruptcy? And when we go to the lenders would bespoke solutions, depending on what the particulars of any given situation are. We show them strategies that we’re prepared to carry out in chapter 11, that they’ll like a lot less then giving us two years runway. And that almost always ends up with an out of court solution that is amenable to the board of directors, trying to look out for shareholders.

David Beach (03:34)

If I’m a family office who has all of a sudden seen a profitable investment or a successful company now face bankruptcy, or, other insolvency or some other sort of distress, are there any quick fixes? What would you advise or what’s your thoughts to that family office?

Peter Kaufman (03:55)

Other than call me, there are no quick fixes. But, the shareholders and the board need to always remember that shareholders have two things going for them at any given time. Number one is option value, which is time and volatility and number two control into until they don’t. So even when things look dark, there are always, almost always strategic options available to companies and shareholders who have the will to deal with their creditors in a way that will turn out advantageously for the company and the shareholders.

David Beach (04:35)

Thank you very much. Any parting thoughts to equity holders right now besides call Gordian?

Peter Kaufman (04:44)

keep the faith, get great advice that’s unconflicted with your creditors, hope for a vaccine soon, but hope isn’t a plan you’ve got to make do with the cards on the table. And we usually find that a well-advised board looking out for shareholders is usually more nimble in times of uncertainty than are more vanilla lenders.

David Beach (05:05)

Great. Well, thank you so much, Peter. I’m sure we’ll be seeing a lot of activity in the weeks ahead.

Peter Kaufman (05:11)

Thank you, David.

Gordian Group President Peter Kaufman – Will More Companies File for Chapter 11 in the Near Future? | Yahoo! Finance

Today on Yahoo! Finance: The coronavirus hit retailers hard, causing businesses to file for bankruptcy across the world. Peter Kaufman, Gordian Group President joins Yahoo Finance’s On The Move panel to weigh in on the differences between chapter 7 and chapter 11 bankruptcy. Peter discusses the new dynamics between lenders and borrowers and how to advantage shareholders.

00:00 | What is the difference between Chapter 7 and Chapter 11? Is one just for liquidation and other for restructuring?

01:57 | How is this different, economically from the 2008 recession. And, how many more bankruptcies could we potentially see?

RELATED: Corporate Debt Bubble Has Burst Amid Coronavirus (Fox Business)

03:50 | Will small and middle market mainstreet companies benefit from bailouts? What’s the posture between lenders and borrowers today? What does each want and do they differ? 

05:33 | Why would a lender help a company restructure inside or outside chapter 11 without covenants and diluting equity? 

Full Transcript

Adam Shapiro (00:05):

We’re also keeping an eye on chapter 11 and chapter seven bankruptcy. We’re going to talk about the differences and where companies go after a restructuring with Peter Kaufman. He’s the Gordian group president, head of restructuring and distressed mergers and acquisitions. It’s good to see you again. How are you doing Peter? Great. Good morning. Nice to be here. So let me start with you on this cause we created a chart that shows lots of companies have declared or sought chapter 11 protection. That’s where they can reorganize. And a few have gone with chapter seven. They are liquidating, they’re done. Explain to us not only the differences, but there are companies like pier one, which originally filed for chapter 11, but then said in the process we’re done. We’re liquidating. Does that mean they shift to chapter seven?

Peter Kaufman (00:51):

Well, I don’t want to get too in the weeds technically, but you can do chapter seven liquidation. You can have what’s called a chapter 11 liquidation. Neither of those are particularly optimal outcomes for certainly shareholders and likely creditors as well. But on the other hand, if a company is liquidating, it means they haven’t been able to attract enough capital to retool, restructure, and either sell themselves in chapter 11 or emerge. Simply put, chapter seven is the company is just gonna liquidate. It’s going to sell its lock stock barrels, inventory, and it goes out of business. And that’s it. Chapter 11 is a reorganization tool, unless it’s a liquidating 11 and a company can restructure its debts, it can sell itself. But that’s the hopeful chapter, filing is chapter 11. So a company has the chance to reorganize and emerge with a better capital structure, presumably, and a viable business plan and fresh capital to move forward and hopefully thrive.

Julie Hyman  (01:57):

Hey Peter, it’s Julie here. It’s good to see you. I know that everyone is saying this time is unprecedented, but you know, you’ve been doing this for a while. So given what we’ve seen in past cycles and given some of the big names that have already filed, like Hertz, like Neiman Marcus, like J Crew, how do these cycles tend to move? In other words, how many more bankruptcies could we potentially see?

Peter Kaufman (02:21):

Yeah, that’s a great question. These cycles are all different. This is a lot different than 2008 that was really financially driven. This is consumer driven. Anything that’s consumer facing or directly or even indirectly travel, leisure stuff, gyms, trade shows, airlines, trains, car rentals everyone is under huge pressure. And you know, I was listening to your prior guests who had a lot to say that I found of interest. But just because you open an economy doesn’t mean people are gonna show up. I don’t know who’s going to be showing up at restaurants, planes, trains, et cetera. I think it’s going to be careful and slow and I think that we have a lot to play out here. Two important dates to keep in mind. June 30th, end of the second quarter, August 15th, is when companies have to report either public or private companies need to report to their lenders if they breached any covenants. And I think you’re going to see an awful lot of chapter 11 filings over the next period of time. I don’t see this cycle being cured anytime soon. I think if as in when there’s an effective vaccine, that’s clearly going to be  a huge impact, but I think the bankruptcy courts I believe are going to end up being swamped over the next year or two as this thing ripples as these exontionist market conditions ripple through individual confidence.

Julie La Roche (03:50):

Hi Peter, it’s Julie La Roche. Thank you so much for joining us. I always find conversations with restructuring bankers to be pretty instructive, just given what’s going on in the broader business community and the economy. I have a question for you because I would wonder, what do you think the main street lending program might mean for restructuring in the middle market, the middle market restructuring? What kind of impact might we see there?

Peter Kaufman (04:16):

Well, you know main street and small businesses have never done well in this country even in bailout programs, they’re, they’re not doing well today. They haven’t in prior cycles. It’s rightly or wrongly, it’s the big companies, the big financial institutions that  have done well. The government can prop things up in a sense, the government cannot create demand. And I think that’s what’s missing now. I think it’s what’s going to be muted going forward for a good long while. And so I think that the middle market is going to be a lot more problematic than the bigger companies. But even today, you’re seeing the bigger companies go chapter 11 to try and reorganize. There’s a great tension today and it’s true with big companies, maybe truer with middle market companies between what the lenders want today. Lenders today, once the borrowers to be on a short leash and they want the owners to put in more equity beneath their debt compared to what companies want today, which is a long runway with no convenance, with the ability to not have to worry about what the results were last month, but give themselves a good two year plus runway because no one’s smart enough to have a good crystal ball about when this ends.

Adam Shapiro (05:33):

Peter, let me interrupt you with that because that’s a great point. Why would a lender help a company, restructure inside or outside of say chapter 11 without covenants or you know, diluting shareholder equity? It seems to me as a lender, no way.

Peter Kaufman (05:50):

Well, you know, you’d say that, but that’s why you’d hire me and Gordian Group because we never represent financial creditors so we can give unconflicted advice to a board seeking to benefit shareholders in these situations. And the reason that lenders will do as I’ve just indicated is not because they’re nice people, although they may be, but because we have strategies usually bankruptcy centric that they will like a whole lot less than giving a two year runway with minimal covenants. So bankruptcy, chapter 11, is a very important tool even, or almost especially outside of court, because everyone in a tough situation, like many of these companies find themselves in view the world, the prism of what can I do to the other side in chapter 11 and what can they do to me? And so having bankruptcy centric strategies that the lenders don’t like very much almost always means you can get something done conventionally outside of chapter 11 and it’s a long winded way of saying that while you might say, and it might look that way correctly from the outside, that gosh, why would a lender do that? Give two years of runway and not dilute the shareholders? And the answer is because the lenders have seen, at least in our deals, that that’s a much better outcome for them than some of the other strategies that we can present to them.

Adam Shapiro (07:15):

In other words, one company’s protection is another’s threat. Peter Kaufman, we appreciate your being here. Gordian Group President and Head of Restructuring and Distressed M&A  all the best to you.