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Capital Markets

Can accountants act for bondholders?

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Nobody doubts that European debt restructuring has been transformed in the last three years. Consensual restructurings have started to replace formal, court-based insolvency proceedings. And US bondholders, with their more aggressive style, have shaken up the traditional, bank-led European approach.

That in turn has re-shaped the market for advisory services to creditors. In Europe, the big four accountants' established relationships are with senior creditors – usually the local clearing banks or the US investment banks. With their well-staffed, multi-country teams equipped for big due diligence projects, the accountants are a natural choice for senior lenders, who will need large teams to look through a debtor's books and report on potential problems in a restructuring.

Blurring lines But now, the accountants reckon they can take instructions from other lenders. PwC's Business Recovery Services (BRS) team has led the charge. At the beginning of 2003, a PwC team led by BRS partner Kevin Ellis acted as financial adviser to the bondholders of Song Networks in the restructuring of its $550 million high yield notes.

That could mean direct competition for the niche investment banks who have traditionally advised the bondholders in European debt restructurings – the likes of Close Brothers, Lazard, or the European end of specialist US outfits such as Houlihan Lokey Howard & Zukin or Greenhill.

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