GE Capital has been the number one debtor-in-possession financing shop in the US for the past five years. In view of the leveraged finance boom, that is a position Wall Street banks are viewing with envy. In March alone, GE Capital lost several key personnel to Morgan Stanley and Barclays Capital, which are both intent on expanding their leveraged finance capabilities.
In an internal memo at Morgan Stanley last month, Michael Hart, co-head of the acquisition and leveraged finance group, announced that the firm had hired two managing directors from GE Capital into its strategic finance group. One was Bruce Buchanan, who will become the new global head of restructuring finance and strategic lending origination.
Buchanan had led GE Capital’s national restructuring group, generating $4 billion of new commitments in debtor-in-possession, plan-of-reorganization and out-of-court restructuring loans and $40 million in up-front fees in 2005. By contrast, deal flow in Morgan Stanley’s whole strategic finance group amounts to $2 billion for insolvency-related deals, growth and acquisitions, recapitalizations, first-lien and second-lien transactions, and synthetic letters of credit.
First-hand experience
Morgan Stanley has had first-hand experience of GE Capital’s dominance in debtor-in-possession financing.