Turnarounds & Workouts – Year In Review
Greg Charleston was interviewed by Turnarounds & Workouts.
Question: Overall, what did restructuring activity look like in 2016?
“Chapter 11 filings increased. However, Chapter 11 is costly and has become a very inefficient way to restructure a business and has deterred bankruptcy filings in many cases. Furthermore, the availability of cheap credit has allowed companies to refinance debt and opt for out-of-court restructuring approaches.”
Question: How significant is the prolonged environment of cheap credit?
“The low interest rates have been driven, in part, by the Fed maintaining a federal funds rate at near zero. It seems that the Fed has continued to find new excuses not to raise the federal funds rate. The fundamentals of having a federal funds rate of essentially zero for nine years are nonsensical. This bizarre time in American history will be studied and criticized by economists for years to come.”