NORTH AMERICA 2016 PROFESSIONAL FEES REPORT

NORTH AMERICA 2016 PROFESSIONAL FEES REPORT

Joshua Friedman Legal Analyst 212.574.7867 Joshua.Friedman@

Rong Ren Analyst 646.412.5318 Rong.Ren@

Jack M. Tracy II Head of Legal Analysis, Americas 646.378.3177 Jack.Tracy@

Tim Hynes Head of Research 212.574.7878 Timothy.Hynes@

ABOUT THIS REPORT

Debtwire's annual Professional Fees Report tracks and ranks advisors by the total amount of fees those firms earned in connection with their in-court representations in 2016.*

This report complements Debtwire's Restructuring Advisory Mandate Report, which tracks and ranks advisors by the total number of in-court and out-of-court hires, by providing a snapshot of the 2016 restructuring advisory market through the analysis of public fee data for professionals involved in US bankruptcy cases.

We reviewed and analyzed the professional fee applications and court orders approving those fees filed in bankruptcy cases that commenced in 2016. As a result, this report captures fee data for the following types of representations: Companies and boards of directors; Official committees (unsecured creditors and equity); and Trustees (Chapter 7 and Chapter 11).

As for types of advisors, this report tracks the fees paid to: Counsel (lead counsel and local/special counsel); Financial Advisors/Investment Bankers; Restructuring Advisors; and Claims Agents.

Notably, while the companion Restructuring Advisory Mandate Report includes significant data regarding representations of lenders and bondholders, this report does not include fee data for the professionals of parties that are not estate fiduciaries, as there is no requirement for those advisors to disclose or seek approval of their fee arrangements (and even when filed are still not subject to the same level of disclosure or review).

* NOTE: We have attempted to capture fees approved by the bankruptcy court on a final basis. However, due to the fluid nature of the fee application process, we have used interim fee orders and fee applications where final orders were not yet available.

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INTRODUCTION

2016 was a very busy year in the restructuring space. There was a seemingly never-ending stream of oil & gas bankruptcies; alternative energy saw its biggest collapse in years (SunEdison); and the US coal sector was battered, seeing two stalwarts--Arch Coal and Peabody Energy--seek Chapter 11 protection. The year also birthed the current retail restructuring boom occupying most of 2017.

With 2016 now in the rearview mirror, we took the opportunity to provide some global takeaways from a year's worth of fee data. In that vein, we analyzed data from 2016, based on: the total amount of fees each disclosing professional earned; the type of party represented (ie, the company, UCC, equity committee, etc.); and the sector in which the representation occurred.

This report ranks the most lucrative restructuring practices for 2016 based on: (1) Lead Counsel; (2) Local/Special Counsel; (3) Financial Advisors; (4) Investment Bankers; (5) Restructuring Advisors; and (6) Claims Agents.

We provide further analysis of average hourly rates and the relationship of company to UCC fees, in addition to performing a deep dive on fee data for each bankruptcy case, showing how expensive each case one was to run--both on a monthly basis and broken down by type of advisor.

We also shine a spotlight on the energy, retail, and metals & mining sectors, ranking firms based on sectorspecific fees and providing an overview of company-specific costs within each sector.

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2016 Professional Fees

COMMENTARY

There were more than 200 bankruptcies in 2016 that Debtwire tracked for this fees report, which includes more than 1,100 in-court representations by law firms, financial and operational advisers, investment bankers and claims agents.

During the course of 2016, bankrupt estates cut checks for more than USD 1.25bn of fees and expenses to restructuring professionals, including more than USD 700m for legal counsel (ie, over 55%), close to USD 400m for investment bankers/financial advisors (ie, over 30%), approximately USD 150m for restructuring advisors (ie, 12%) and USD 2.6m for claims agents.

The most significant difference between the data we analyzed

for advisor fees versus mandates is that counsel have a decreased

20.1%

role in the cost structure, with FAs, I-Bankers, and RAs seeing the

benefit of higher fees (compared to the amount of representations).

33.9%

FAs and I-bankers comprised 25% of total 2016 mandates (both in-

9.5%

and out-of-court), but earned 30% of total fees for 2016 (in-court).

Restructuring advisors saw an even bigger jump. They earned close to 12% of total fees for 2016, while comprising approximately 5% of total mandates.

10.4% 11.8%

14.3%

Energy Alternative Energy Retail

Metals & Mining Transportation & Automotive Others

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