“That’s the good news for potential buyers of companies,” said Swanstrom, who is Co-Chair of Locke Lord’s Energy Practice Group. “The challenge for buyers, as always in these situations, is deciphering whether they are buying a ‘falling knife,’ or instead are buying quality companies or assets at attractive prices, with the opportunity to generate a significant upside.”
Adding to that challenge is the fact that downturns tend to result in more litigation risk, more employment-related claims and more counterparty credit-risk. Careful due diligence by buyers can help mitigate that risk, as can strong indemnities and – increasingly – rep and warranty insurance products, Swanstrom added.
A Q&A Series package on “Financial Distress in the Energy Sector” – pulled from the Boston event on Thursday -- includes the following features from Swanstrom, as well as from Karl Fryzel, Co-Chair of Locke Lord’s Tax Department, and Bankruptcy, Restructuring & Insolvency Partners Rick Kuebel and Jonathan Young.
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