the fundamental business is in fair shape

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Slater & Gordon capital structure needs to be reset: insolvency report

Insolvency firm McGrathNicol has released its report on the financial state of troubled law firm Slater Gordon concluding that a restructure may be required subject to additional forward projections.
The report comes as original lenders to the company have offloaded their loans to distressed debt funds and investment banks, amid a growing perception that a "debt-for-equity" swap will be needed to recapitalise the operation
Titled "Group Forecast Review and Recapitalisation Discussion Paper", the report was drafted by the insolvency firm that was appointed by Slater & Gordon's two major lenders National Australia Bank and Westpac in January.
The report says that the fundamental business is in fair shape but the capital structure needs to be reset, according to sources.

In recent weeks lenders have been offloading their debt positions at discounts as low as 38¢ in the dollar.

The Australian Financial Review's Street Talk column revealed on Tuesday that Macquarie sold its $20 million exposure to Deutsche Bank at 45¢ in the dollar.
Macquarie [like Citigroup which has also jettisoned its debt] was one of the key lenders to Slater & Gordon on its disastrous purchase of UK group Quindell's professional services business in March 2015, of which $879 million of the value was written off within 12 months.  
The failed United Kingdom foray has left Slater & Gordon with $682 million of net debt, and a market capitalisation of $111 million at last close.
The trades come after Street Talk first reported on November 7 that Citi had offloaded its Slater's exposure at just 38¢ in the dollar.

It then emerged New York-based Anchorage Capital Group was one of the members of that syndicate and now holds a portion of the ambulance-chasing firm's debt stack.
The law firm's two largest lenders are National Australia Bank and Westpac and disclosures suggested that both lenders had made significant provisions against their exposures.
Macquarie was the other major lender in the syndicate, along with Barclays and Royal Bank of Scotland, according to reports at the time of the debt raising. Citi and Macquarie led the $890 million capital raising in April 2015 to finance the Quindell acquisition.