Claudia Springer, a veteran in the field of restructuring and bankruptcy law and more recently business advisory in the restructuring space, has been leading Novo Advisors’ Philadelphia office and its new Mediation practice for just over three years. She also acts as Novo’s in-house counsel and frequently leads a small team in cases where Novo acts as receiver or assignee for the benefit of creditors or as a fiduciary (for example, a trustee of a liquidating trust). With over 40 years of experience, Claudia brings extensive expertise and a deep understanding of this field to the table. Her path from attorney to turnaround consultant highlights her adaptability, determination, and passion for the field. Read below for insights from our conversation with Claudia, where she shares her thoughts on current market trends and how her background as a practicing attorney has enabled her to successfully pivot from lawyer to restructuring strategist.

About Claudia Springer

Claudia’s legal career is marked by her tenure at the prestigious firms of Reed Smith LLP and prior to that Duane Morris, where she represented a diverse array of clients in high stakes restructuring and bankruptcy cases. Her clientele included debtors, major creditors, shareholders, boards of directors, creditors’ committees, landlords, buyers of assets, plan sponsors, bondholders, guarantors, and more. This extensive experience has equipped Claudia with a deep understanding of the intricate dynamics and challenges in the field of insolvency, spanning various industries from healthcare and pharmaceuticals to heavy manufacturing and retail. Notable cases like Allegheny Health and Education Foundation, National Steel, St. Vincent’s Catholic Medical Center, Erickson Senior Living, Vertellus Chemical Company, Boscovs Department Stores, the Philadelphia Orchestra, and Purdue Pharma highlight the array of industries that she is familiar with as well as her broad expertise and skill.

Q&A with Claudia Springer

Q: What inspired you to transition from a career in law to the field of turnaround consulting?

Claudia: I practiced law for over 40 years, and while I loved it and enjoyed success, I felt it was time to use my skills to transition into a different role for the remainder of my career. As a lawyer, I often provided business counsel and strategic advice. Clients retained me not only for my skills as a lawyer but also for my business insights and ability to map out solutions to thorny business issues. It seemed like the right time in my career and life to make a change to an area that called for a slightly different skill set but also made use of the knowledge I developed over my many years as an attorney. I went into this knowing I would have to work hard to prove I could successfully transition to the business side of restructuring, but I was prepared to make the time commitment to be successful.

Q: What are the most significant trends or themes you are currently observing in the bankruptcy and distressed market?

Claudia: We’re seeing significant decisions from both the Circuit Courts and the Supreme Court impacting bankruptcy cases. One prime example is the recent Supreme Court decision in the Purdue Pharma case, where the court overturned a Second Circuit decision and ruled against the confirmed bankruptcy plan, a plan that shielded the Sackler family from liability for their role in the opioid crisis. There’s also a trend of smaller businesses opting to go the route of state and federal receiverships or assignments for the benefit of creditors to avoid the steep costs associated with Chapter 11 cases. While the bankruptcy arena has been very busy over the past few years, the out-of-court and state court alternatives to chapter 11 have also seen a significant increase in activity.

Q: Can you describe the key strategies you employ to successfully turn around companies experiencing financial challenges?

Claudia: I work with others at Novo to review and challenge historical and current data provided to us by the company and study aspects of the industry in which that business is involved. Transparency with the company’s lenders is crucial. Lenders don’t like surprises; they want to know the worst-case scenarios upfront and they usually want a timeframe for exiting the credit. Planning for the worst while aiming for a favorable outcome is essential. You always need a Plan B. When using bankruptcy to stop litigation or stabilize the business, it is vital to have an endgame planned. For example, if you want to use Chapter 11 to sell assets, you must also consider what happens after the sale. While many difficult issues cannot be worked out in advance of a filing, a road map for solving them should be developed beforehand assuming time permits.

Q: Could you share a notable case study where your legal expertise played a critical role in a successful turnaround?

Claudia: Recently we were retained as the Court appointed receiver for a trucking business. While the Company had been very successful for several generations, covid and other issues severely impacted its cash flow and its lender wanted to exit the credit. No other lender was willing to lend the amount needed to keep the business alive and equity was unwilling or unable to invest more money in the company. Equity did agree to place the business in a receivership so that an orderly liquidation of assets could occur with the hope that most creditors would be paid. Ultimately, we successfully negotiated with a wide variety of creditors regarding their claims and obtained a great result from an auction of the assets. We managed to pay all unsecured claims in full, other than the unsecured portion of the Bank claim. We negotiated with creditors, including landlords and employees, much like one would in a chapter 11 case. While we engaged outside counsel, much of the negotiation was conducted by a Novo team of two which included me.

Q: How does your legal background enhance your effectiveness as a turnaround consultant, particularly in complex bankruptcy and restructuring scenarios?

Claudia: The legal and business aspects of restructuring are closely aligned. My legal background helps me provide business suggestions that consider the limitations that exist under current law. This dual perspective is beneficial for clients, as I can offer strategic advice considering both legal and business implications. I don’t try to be the lawyer for our clients, but my legal knowledge allows me to provide a comprehensive view on strategy and potential legal hurdles.

Q: Can you describe the most challenging case you've mediated and how you approached it?

Claudia: During my legal career I was involved in numerous mediations but most often as a representative to one side of the dispute. Recently, I was retained by a decedent’s estate mired in debt, for the purpose of negotiating and mediating disputes between numerous creditors of the estate. After three years, all of the disputes were settled, and creditors received much more than most would have received had they continued to litigate their claims. Most cases can be settled successfully if parties are willing to make the effort and are amenable to compromising their positions in light of the risks and costs of litigation. For the mediator, one critical aspect to being effective is preparation and the ability to listen. Being tenacious also helps.

Q: What do you predict for the future of restructuring consulting, and what advice would you give to companies potentially facing these challenges?

Claudia: One of the biggest hurdles we as restructuring professionals face is timing. Our clients often come to us when their situation is already grave and not easily reversible. Cash may be running out and the lender wants a quick exit. My advice is to address problems early and seek help sooner rather than later. While seeking help might seem expensive and is often viewed as an admission that the business is struggling, it is key to turning around a situation before it becomes irreversible. Time is not usually on your side, so acting early is crucial. Don’t wait to see the doctor when you know something is not right.

Q: What advice would you give to anyone who wants to pivot from law to the business side of the restructuring field?

Claudia: If you have legal expertise in restructuring and are seeking to use that to pivot into business consulting, you need to be willing to take a few steps back before moving forward. You should be willing to devote the time to learning a different aspect of the field, although you will likely find, as did I, that having the legal expertise and the years of working alongside turnaround consultants, is a great advantage and provides a solid springboard from which to be successful. I have found the transition to be extremely rewarding, especially when we are able to resuscitate businesses that were on a downward slope.

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Claudia’s knowledge and experience in restructuring and bankruptcy are valuable contributions to Novo Advisors and its clients. Contact Claudia today at cspringer@novo-advisors.com or catch her at the upcoming Commercial Receivers Association conference on August 21^st where she will be moderating the “Hot Topics” Panel.