Goldman Sachs has poached Lachlan Edwards, head of European restructuring at Rothschild and one of the stars of the distressed debt sector, in a sign that financial firms are positioning themselves to profit from the casualties of the next downturn.
The appointment underscores Goldman’s commitment to expanding its restructuring business. It follows last month’s hiring of James Sprayregen, the leading US restructuring lawyer whose cases have included United Airlines and TWA.
Mr Edwards, an Australian national, was Rothschild’s head of restructuring in the UK and co-head for Europe. He will join Goldman as a co-head of European restructuring, a role within the financing unit of the advisory practice.
His experience includes the restructuring of Vivendi Universal, the French media and telecoms group, and Ahold, the Dutch retailer – two Goldman clients – as well as KarstadtQuelle, the German retailer.
Rothschild and Goldman both declined to comment.
Goldman has recently acted as an adviser for, and possible principal investor in, the restructuring of Eurotunnel.
Advising on bankruptcies and restructuring has traditionally been dominated by independent boutiques and accounting firms.
Large investment banks have generally steered clear of the business, put off by the potential conflicts of interest and by laws in the US barring banks that had underwritten securities for a company in the previous two years from advising that company in bankruptcy.
The US law was changed last year to allow investment banks to work as advisers if approved by a bankruptcy court judge.
Some banks are still reluctant to jump into the restructuring business, given that the bankruptcy process could bring them into conflict with corporate and institutional clients.
However, other firms also seem to be preparing for a rise in company defaults and bankruptcies.
Ernst & Young, the accountancy group, has expanded its restructuring side, as has PwC.
Alan Bloom, head of E&Y’s UK corporate restructuring practice, said he expected such activity could pick up at the end of this year or early in 2007.
Meanwhile, on the trading side, Lehman Brothers recently relocated its head of Asian distressed debt to run its high-yield and distressed debt operations in London, while expanding its European restructuring team.
