Bankruptcy Lawyers Predict Upcoming ‘Debt Wall’

  • United States
  • 08/12/2010
  • Debra Cassens Weiss - American Bar Association

Top bankruptcy lawyers are in a pessimistic mood about the economy, which could be a positive for their business.

Speaking at a roundtable discussion last month, the experts warned of trillions of dollars in debt coming due, according to the Wall Street Journal blog Bankruptcy Beat. Businesses that can’t refinance when debt matures will end up in default, they said.

Kirkland & Ellis partner Jonathan Henes thinks the United States is still in recession and more problems are ahead, the blog reports.

“Now we are looking at real unemployment of 20 percent, and we are looking at major problems, but a lot of the debt that was going to come due got pushed out, because we got to this stabilization period,” he said. “So are we going to hit another debt wall? Of course we are. When does that happen? Who knows?”

Other lawyers said they don’t think the next wave of defaults will be as bad as 2009. “That was a once-in-a-career event for everybody around this table,” said Richard Levin, a partner at Cravath, Swaine & Moore.

The transcript of the event, sponsored by the Daily Bankruptcy Review, was published last week.