Love for Life

CRIMES AND CORRUPTION OF THE NEW WORLD ORDER NEWS
Friday, June 29, 2007

America, your president is about to launch World War III

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Time to delay the imminent collapse of the US banking system?
by The Canadian
June 28, 2007

The facts:

1. Iranian Revolutionary Guard (IRG) have been spotted by the British on at least three occasions crossing the southern Iran/Iraq border nearest Basra and deploying spec. troops. On the Iranian side are the bulk of Iran's Province of Khuzestan's oil fields. These oil fields would be prime targets in the event of a U.S.-led invasion. The IRG specialist troops have the task of attacking communications, command, control, and intelligence facilities, and causing general chaos in the event of war.

[When the Roman Empire was collapsing, the Emperor decided to avert the Mobs' attention by holding a year's worth of fantastic games and slaughters in the Coliseum. Meanwhile the Barbarians were on the border.]

2. Iran has rationed fuel to its population causing riots and discontent which have been widely reported in world media.

3. Hugo Chavez of Venezuela has dramatically escalated his socialist policies, and actually nationalized all of the Orinoco production facilities, where large US oil and gas companies have literally billions invested in infrastructure.

4. Hamas has taken over the Gaza strip.

5. Hez b'Allah have begun aggressively reasserting itself in Lebanon.

6. Syria has significantly bolstered its troops and moved these troops closer to the Golan Heights much as they did prior to war in '73 (Yom Kippur).

7. Turkey has massed more than 50,000 troops on the northern Iraq border against the Kurdistan Workers' Party (PKK). Note, however, that NW Iran borders SE Turkey.

8. The Arab Gulf States have openly declared they are preparing/prepared for a U.S./Iran conflict this Summer.

9. Significant U.S. politicians are openly advocating war with Iran. These war advocates are Republicans, however, no voice of dissent is being heard from the Democrats.

10. Anti-Iranian propaganda is in full-swing of late.

11. The largest naval armada assembled off the coast of Iran since the 2003 Iraq war commenced is assembled and waiting. A 4th US Carrier fleet will secure the Suez.

12. The US Strategic Petroleum Reserve is full.

13. Next round of U.N. sanctions are on the way.

14. Politicians on all sides of this conflict have a vested political interest in war as a means of political survival. They are all hard-liners.

15. Moscow has released nuclear fuel to Iran for the Bushehr reactor.

16. Israel has recently and successfully launched its Ofeq-7 (http://www.israeli-weapons.com/weapons/space/ofeq/OFEQ.html) spy imaging satellite which gives it a great view of Iran (amongst others).

Conclusion: War is close.

Understanding that Iran is oil rich, but refinery poor, it is still quite an unusual event for them to ration petrol. They knew that it would cause public discontent and would be covered widely in world media. Despite the embarrassing news of riots, Iran knows that rationing petrol is a strategic preparation for war.

A military cannot function without petrol. And Venezuela's Chavez knows he cannot supply Iran, but he can help starve the U.S. of oil (but not for long ...)

Comments:

The Canadian
You've "connected the dots" so vividly the dots just disappear under the direct line, and the direct line ends in an arrowhead. The rhetoric from the White House has reached its logical (but insane) conclusion, bringing America to the verge of yet another concurrent war over lies.

And this war will probably be World War III.

And it's almost certainly too late to avert it.

And the top story in the news tonight will be that Paris Hilton farted.

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Helen & Harry
Paris. Makes sense to me. When the Roman Empire was collapsing, the Emperor decided to avert the Mobs' attention by holding a year's worth of fantastic games and slaughters in the Coliseum. Meanwhile the Barbarians were on the border.

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The Canadian

Thursday, June 28, 2007
Lake Shore Asset Management Accounts Frozen by U.S.

The US banking system faces imminent collapse.
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(Update4)

By Matthew Leising

June 28 (Bloomberg) -- Lake Shore Asset Management Ltd., a hedge fund firm run by a former chairman of the Chicago Mercantile Exchange, had its assets frozen by a federal court after regulators said it overstated its holdings.

Chicago-based Lake Shore purported to manage $1 billion for investors and traded in U.S. commodities futures contracts, according to the Commodity Futures Trading Commission. A review later showed the fund had about $466 million. Lake Shore barred regulators from inspecting its accounts on June 14, a violation of the Commodity Exchange Act, according to the CFTC's complaint.

``The message here is we're not going to sit by and wait to connect all the dots before we go in and freeze'' accounts, said Geoffrey Aronow, the former head of enforcement at the CFTC and now a partner at Heller Ehrman LLP in Washington. ``Whether it's conscious or not, everyone is more attuned to concerns to what's going on with hedge funds.''

Hedge funds Amaranth Advisors LLC and MotherRock LP, as well as the Bank of Montreal, have faced significant losses in commodities markets within the past year. Amaranth lost $6.6 billion in the largest-ever hedge fund collapse after some natural-gas trades turned against it.

Laurence Rosenberg is listed as Lake Shore's director, according to records from the National Futures Association, a self-regulating group for the U.S. futures industry. He is a previous chairman of the Chicago Mercantile Exchange, the largest U.S. futures exchange. Lake Shore had been profitable 13 years in a row, the CFTC said.

The CFTC froze $228 million in investor money at Lake Shore, according to agency spokeswoman Ianthe Zabel.

Critical Tool

``The commission's ability to inspect books and records is a critical regulatory tool that allows us access to a registrant's daily operations,'' Gregory Mocek, the CFTC's head of enforcement, said in a statement.

Lake Shore is a so-called commodity pool operator, a type of investment group which seeks to aggregate money to trade futures and options on commodities and other financial instruments. There were 1,898 CPOs in 2004 that held $594 billion in net assets, according to the CFTC.

Inconsistent Statements

The CFTC complaint alleges that Rosenberg and others at the fund gave inconsistent statements to regulators regarding the fund's activity and that it has refused to make documents available to the agency.

On June 14, the National Futures Association was allowed by Rosenberg to review Lake Shore's protected Web site, where it discovered the fund had $466 million in managed accounts, ``dramatically less than Rosenberg's estimate that LAM had approximately $1 billion under management,'' the CFTC said, referring to the fund by its initials.

A hearing on the matter is scheduled for July 11, the CFTC said.

Rosenberg did not return a call for comment. Drew Mauck, a spokesman for the company, declined to comment.

Rosenberg served as a Chicago Mercantile Exchange director from 1970 to 1993 and held chairman or vice chairman positions there between 1974 and 1988, according to filings with the U.S. Securities and Exchange Commission. He also was a legislative liaison for the Chicago exchange in 1989 and 1990 and a senior policy adviser in 1991.

Lake Shore's parent company, the Lake Shore Group of Companies, has clients in more than 40 countries and offices in Chicago, Bermuda, Hong Kong and London, according to press releases issued by the company this year.

`Particularly Aggressive'

Aronow said it was routine for the National Futures Association to conduct financial and general reviews of its members. The move by the CFTC to freeze Lake Shore's accounts was a serious remedy when there were no allegations of wrongdoing by the fund in the CFTC's complaint, said Aronow, who had read the CFTC complaint.

``What's particularly aggressive about this is getting an asset freeze right away because things aren't adding up,'' he said. ``They don't appear to have any direct evidence of anything improper. They just weren't getting answers.''

Judge Blanche Manning of the U.S. District Court for the Northern District of Illinois granted the CFTC's request to freeze Lake Shore's assets and to prevent it from destroying documents related to the inquiry, according to a court filing dated yesterday.

Violations

Manning ruled that Lake Shore ``has engaged, is engaging in, and is about to engage in violations'' of the Commodities Exchange Act and granted the restraining order on the fund ``to preserve the status quo and to protect public customers from loss and damage.''

Some of Lake Shore's funds have trading accounts with the London offices of Man Financial Inc., Lehman Brothers Holdings Inc. and Fimat, a unit of Societe Generale SA, according to the complaint.

Lake Shore started a new Web site this month to ``provide high quality, transparent client communications,'' according to a June 12 press release. That's one day after the National Futures Association started its review of the firm's Web site, according to today's complaint.

To contact the reporter on this story: Matthew Leising in New York at mleising @ bloomberg.net .
Last Updated: June 28, 2007 17:12 EDT

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Thursday, June 14, 2007
Baron Guy de Rothschild, patriarch of banking empire, dies at 98

Last update - 14:30 14/06/2007

By The Associated Press

PARIS - Baron Guy de Rothschild, patriarch of the French banking empire,
has died, his family announced Thursday. He was 98.

Rothschild, who saw the family's bank taken over first during the Nazi occupation and then by a Socialist government 40 years later, died Tuesday in Paris, his family said in an announcement in Le Figaro daily. The cause of death was not given.

Guy de Rothschild was born May 21, 1909, in Paris' upscale 8th district, or arrondissement, into the House of Rothschild, whose complex family tree included financiers of European royalty and some of France's most prominent names.

During the Nazi occupation, the collaborationist French government stripped his family of its French nationality - and its assets - because they were Jewish, according to Le Figaro. Rothschild fled to the United States and later to London, where he joined Gen. Charles de Gaulle's resistance force.

After the war, Rothschild rebuilt his family's financial empire, and went on to chair de Rothschild Freres bank from 1967 until 1979.

In 1981, the bank switched to government hands under a series of nationalizations under Socialist President Francois Mitterrand.

Rothschild left France and briefly moved to New York, after writing an editorial in Le Monde accusing the Socialists of falling victim to French anti-Semitism.

Later his son David followed his father's example and began reconstructing the family banking network which in 1987 became Rothschild & Cie Bank.

Guy de Rothschild founded and presided over the United Jewish Welfare Fund, France's primary Jewish philanthropic agency from 1950 to 1982.

He and his second wife, Marie-Helene, were stars of France's elite social scene until she died in 1990.

He is survived by sons David and Edouard among other relatives. A funeral service was planned in Paris' main synagogue on June 21.

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Friday, March 9, 2007
The Man Who May Become the Richest Rothschild

LANDON THOMAS Jr.

Happy or unhappy, each family generation often resembles another, and that is especially true when it comes to the Rothschilds.

More than 200 years after Mayer Amschel Rothschild founded the family dynasty that offered discreet counsel and investment wisdom to kings, queens, emperors and industrial titans, his 35-year-old direct descendant, Nathaniel, has emerged as a kingmaker in his own right and an investor who some say may become the richest Rothschild of them all.

In five short years, the man in line to be the fifth Baron Rothschild is close to becoming a billionaire through a web of private equity investments in Ukraine, Eastern Europe and most significant, his partnership stake in Atticus Capital, the fast-growing $14 billion hedge fund.

The ascent of Mr. Rothschild is a vivid illustration of how the still glittering, if somewhat faded, prestige and wealth of Europe’s most storied banking family has been reinvigorated from bold bets in this era’s new-money investment vehicles.

Like his forebears, he prefers that his influence remain unseen.

Mr. Rothschild is a principal adviser to Oleg Deripaska, one of the richest oligarchs in Russia and the owner of the aluminum giant Rusal, which recently merged with two other companies to create the world’s largest aluminum company. Mr. Rothschild received no public credit despite having played a crucial role in getting the deal done.

And like a true Rothschild he has a taste for the good life: as an avid skier, his principal residence is in Klosters, Switzerland, and he uses his Gulfstream jet to shuttle among his other homes in Paris, Moscow, London, New York and Greece.

But he is also a man of contradictions: he dates supermodels and actresses, sits on an advisory board of the Brookings Institution, a research organization in Washington, and serves his guests the best wines from the Rothschild vineyards, which he himself will not drink.

He professes to have a penchant for privacy and would not be interviewed for this article, yet he allowed his lushly renovated town house in Greenwich Village to be featured in Men’s Vogue magazine. Despite his reputation as the most gregarious of men and the increasingly public nature of his life and career, he comes across as a pinched, reticent man in the few public photographs of him — as if he was shying away from his renown.

The burden of being a Rothschild can be a heavy one. In 1996, one of Mr. Rothschild’s cousins, Amschel, having been asked to fill a leadership position in the family bank in London, hanged himself in a hotel bathroom at the age of 41.

Four years later Raphael de Rothschild, also a cousin, died on a sidewalk in Manhattan at the age of 23 from a heroin overdose.

In the early 1990s, some thought that Mr. Rothschild might also buckle under the weight of the family name. He appeared to be an aimless society playboy with a taste for the slack, unchallenged lifestyle so often embraced by the sons and daughters of Europe’s rich families.

“This is the story of Prince Hal turning into Henry IV,” said Charles G. Phillips, who supervised Mr. Rothschild during his time at the investment firm Gleacher & Company. “He is one of the few sons of great men who has enhanced the family stature and created his own wealth.”

The family legacy was daunting at first for Mr. Rothschild, whose ancestor Nathan Mayer Rothschild helped finance Britain’s victory at Waterloo and whose father, Jacob, split from the family bank in 1980 to begin his own successful career as an investor.

So much so that until he started work as a 25-year-old investment analyst at Gleacher in 1995, Mr. Rothschild avoided it altogether.

He was the life of parties in New York, Paris and London, and in 1995 he eloped to the Dominican Republic with Annabelle Neilson, a free-spirited London socialite with a reputation for dancing on dinner tables in her high heels.

In 1995, when Mr. Rothschild showed up for work at Gleacher, he was still trying to find his way. He was a recent graduate of Oxford, where he had been a member of the exclusive Bullingdon Club, a notorious drinking society known for its rite of wrecking the restaurant furnishings after raucous dinner parties.

With his shabby dress, limited financial experience and energetic social life, he did not make much of a first impression, according to Eric Gleacher, chairman and founder of the bank who is a close friend of Jacob Rothschild, known as Lord Rothschild.

“He was kind of floundering,” Mr. Gleacher said. “I figured he had some big boots to fill.”

While he undertook the drudgery of trainee investment banking work, Mr. Rothschild kept his eyes open for an opportunity more in tune with his growing ambition. In the spring of 1995 he found just that when he left the Gleacher offices in Midtown Manhattan to smoke a quick cigarette a few floors above.

Puffing away in an anteroom, he ran into Timothy R. Barakett, then a 29-year-old investor who was doing the rounds trying to raise funds for Atticus, his new hedge fund. Learning that Mr. Barakett was starting up a fund, he asked for a job. Mr. Barakett turned him down.

But the two men stayed in touch, and in the fall of 1996, Mr. Barakett took Mr. Rothschild on as a minority partner in the nascent fund, then $90 million in assets, and gave him the title of director of business development with a mandate to tap his considerable connections and family connections for new capital.

Mr. Rothschild took to the new opportunity with renewed vigor. He stopped drinking, reached a divorce agreement and devoted his energies to promoting the investment talents of Mr. Barakett.

The fund’s extraordinary performance — since inception it is has grown on average 30 percent a year — made Mr. Rothschild’s job an easy one. Still, some early investors like Peter Munk, the founder and chairman of Barrick Gold, were skeptical at first.

In 2001, he agreed to meet with Mr. Rothschild at the request of Mr. Rothschild’s father, a longtime friend.

“He did not carry the halo of being the future of the family,” Mr. Munk recalled of their brief meeting in the lobby of Claridge’s, the hotel in London. “I wanted to get rid of the boy.”

When Mr. Rothschild said he was a partner in a hedge fund, Mr. Munk had his doubts, assuming that the fund was just a family hedge fund.

“He was indignant,” Mr. Munk recalled. “ ‘My family did not put in one cent,’ he said.”

Mr. Munk would become an investor and a happy one at that. Now, Mr. Rothschild sits on Barrick’s advisory board and is an investor along with Mr. Munk in the TriGranit Development Corporation, a real estate company that invests in Hungary and Eastern Europe and which may go public this year, representing another big payoff.

“This kid is special,” he said. “It’s back to when they were ruling the world.”

With his mix of Old World politesse, a racy appreciation for fast times and the brute force of his accumulating wealth, Mr. Rothschild has become friend and adviser to many — including Russian billionaires, Indian steel magnates and a long list of people who have helped him out during his ascent.

“I will literally get a BlackBerry from him in Siberia asking me how I am doing,” said Glenn Dubin of Highbridge Capital, who was an early investor in Atticus.

To a large extent, the source of Mr. Rothschild’s renewed wealth and influence is tied to the explosive growth of Atticus, where over the last three years assets have surged to $14 billion from $2 billion. (Last year, the fund was up 50 percent before fees, an astonishing return given its considerable size.) In 2005, Mr. Rothschild was paid $80 million in compensation and made more than that last year, according to people with knowledge of his pay arrangement at Atticus.

Now co-chairman, he spends less time raising money for the fund, which is for the most part closed to new investors. But his influence in opening doors for Mr. Barakett, especially in Europe, has been considerable. His Oxford connections came in handy when he pried David Slager, also an Oxford alumnus, away from Goldman Sachs’s risk arbitrage desk in London. Mr. Slager is now Mr. Barakett’s top investing deputy and a vice chairman at the fund.

Mr. Barakett and Mr. Rothschild remain close and speak every day.

“He has had an incredible evolution, and he has done it on his own,” Mr. Barakett said. “It’s not about family connections. He has a knack for identifying talented people and interesting investments.”

By all accounts his relationship with his father is a complicated one. He sits on the board of RIT Capital Partners, Lord Rothschild’s investment trust, and he has never been shy about using the family name to open doors. Still, people who know him say that he is consumed by a furious ambition to live up to, if not surpass, the reputation and doings of his father.

“Being Jacob’s son was difficult for him,” Mr. Dubin said. “But he has matured and is comfortable with himself.”

But, while his rapidly won riches may give him pleasure, it will take more than a billion dollars to live up to the wider social and charitable responsibilities that fall upon a Rothschild baron.

“The family is accomplished in so many different ways,” said Jeffrey T. Leeds, a private equity investor who knows the Rothschilds well. “Nat knows that he would not be fulfilling his responsibilities if he were simply someone who amassed great wealth.”

Now his investments are done through his personal merchant bank called JNR, an entity that is controlled solely by him, in spite of the initials, which stand for Jacob and Nathaniel Rothschild.

It is through JNR, based in London and run by a small crew of investment bankers, that Mr. Rothschild has made his latest investments, prospecting for oil in Ukraine and buying a stake in Diligence, a corporate intelligence firm.

“There is a lot of power behind him, and like all the Rothschilds they use their power with discretion,” said Guy Wyser-Pratte, who has invested with Mr. Rothschild. “I expect him to uphold the family tradition.”

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Friday, December 8, 2006
Banks brace for slew of defaults
By Gillian Tett and Chris HughesWed Dec 6, 2:25 PM ET

When Goldman Sachs (NYSE:GS - news) poached Lachlan Edwards, one of Europe's financial restructuring gurus, from N.M. Rothschild, the British investment bank, the news set the banking world abuzz in London and beyond.

The big US group is famously adept at spotting where markets are moving. So the July hire suggested that some of the savviest banking brains were quietly preparing for a wave of corporate defaults in Europe - and the associated restructuring work, which can be intensely lucrative.

But five months on, Mr Edwards' move to Goldman is still provoking industry gossip. That is because Rothschild has so far failed to find a high-profile replacement. Senior restructuring officials are in such demand that they are ever harder to come by.

"Right now, there is a real war for talent in restructuring," says Antonio Alvarez III, head of Alvarez & Marsal, an advisory boutique. "The smart money is definitely gearing up [for restructuring work]."

There is good economic logic behind that. As 2006 draws to an end, the west is enjoying the benefit of a multi-year period in which interest rates have been at extraordinarily low levels. This has delivered a bonanza for many consumers, for example by cutting the cost of their mortgages.

However, it has likewise delivered easy credit conditions for businesses, allowing a host of risky companies that would have been shunned by themarkets in the past to raise finance - often at cheap rates. That in turn has fuelled record levels of private-equity activity: in Europe alone, buy-out groups have done $220bn (£112bn, EU166bn) of deals this year, according to Thomson Financial.

Thus far, there is little evidence that this mountain of cheap debt has created problems. On the contrary, corporate default rates have recently been very low because the world's financial system remains flooded with cash - meaning that troubled companies are still able to keep borrowing rather than face a collapse. Many bankers expect these benign conditions to last for some time yet.

Nonetheless, history suggests that rising debt levels will sooner or later trigger problems. While debt-ladenprivate-equity deals - just like huge retail mortgages - might make financial sense at present, the picture could quickly change. Companies would struggle to repay the debt if the cost of borrowing suddenly rose or their earnings declined. Significantly, central bankers in Europe are already raising rates, while some economists are forecasting an economic slowdown in the US - which would hurt.

Indeed, some private-equity deals are running into problems. Pole­star, a British commercial printer owned by Investcorp, the Bahrain-based buy-out group, is this week negotiating with financiers to restructure a £650m ($1.23bn, EU962m) pile of debt that has overwhelmed the company in recent months as the printing sector has slowed.

"Our research points to a [future] rising tide of defaults," says Close Brothers, the investment advisory group whose findings released this week show that ultra-low CCC-rated debt (which carries a high risk of default) accounts for 11 per cent of all European non-investment-grade bond issuance, compared with just 3 per cent three years ago.

"It's reasonable to expect some deal failures to occur," Hector Sants, head of wholesale business at the Financial Services Authority, the main UK regulator, recently warned. In a paper last month, the FSA suggested that the default of a large private-equity backed company seemed "inevitable" in Europe.

This is prompting the restructuring industry to ready itself for a busy period, on both sides of the Atlantic. History shows that when restructuring waves occur, they tend to do so very rapidly - often triggered by an unexpected economic downturn or political shock. Consequently, operators in the sector that wait until the shock hits before they act to expand their restructuring staff tend to be too late. In the next downturn, moreover, super-smart restructuring experts who can navigate the rising complexity of corporate finance will be doubly in demand.

Why so? The reason is that, behind the scenes, the bankruptcy game has changed in recent years, particularly in Europe. While the implications of this shift are not widely visible yet - precisely because the economic climate has been so benign - these shifts could deliver nasty shocks for companies and investors when the next downturn hits.

One of these changes concerns the nature of the investor base. Traditionally, companies raising finance have used a mixture of loans, bonds and equities - and these instruments have each been held by a different class of investor. Corporate bonds, for example, were typically held by pension funds and loans were held by banks, while hedge funds focused on equity.

Since loans are usually considered to be the most "senior" part of a capital structure - meaning they are first to be repaid in a default - loanholders often take chief responsibility for organising a restructuring when a company falls into default. Thus, in the past in Europe, banks presided over such a "work-out", often acting in a clubby, consensual manner - sometimes dubbed the "London approach".

For instance, when Olympia and York, developer of London's Canary Wharf complex, collapsed in 1992, it went into administration for 20 months and then fell for a while into the hands of its lenders. But in any similar situation today, advisers might instead tee up a potential sale and a debt refinancing. The role of the banks has reduced.

Banks are increasingly selling their existing loans to outside investors, such as hedge funds, while non-bank investors are joining lending syndicates. The trend is not yet particularly prevalent for investment-grade companies - those with strong credit ratings. Where risky European companies are concerned, however, non-banks can now account for up to 80 per cent of the loan finance in private-equity deals. This is a radical change for Europe, though a similar move has been under way in the US for some time.

This all means that when companies run into trouble, their fate increasingly depends on hedge funds rather than traditional banks. Some observers believe the shift is a thoroughly good thing. After all, hedge funds tend to be driven by rational, profit-centred motives - and so can act quickly to restructure a company if they believe they will make a profit on that deal. Banks, by contrast, are often hampered by internal bureaucracy.

In the old system, "no one had any economic incentive to do anything quickly", says Fred Eckert, founder of GSC Group, the US credit fund, who argues that American restructurings are becoming more efficient as hedge funds replace banks.

Hedge funds are so much more flexible than traditional banks that they are increasingly stepping in to provide loans for troubled companies even before they collapse. "We can be much more creative than a bank," says a top official at one of Europe's largest credit funds, which has restructured several German groups recently.

Indeed, the finance being provided by hedge funds to "stressed" companies (as opposed to "distressed" groups that have defaulted) partly explains why corporate default rates have recently been so low. "Right now, the companies which are stressed tend to be re­financed," says Andrew Wilkinson, a partner at Cadwaladar, Wickersham & Taft, a law firm. "Ten years ago they would have probably gone to commercial banks but now they are talking to hedge funds."

But there is a catch: organising a diverse group of hedge funds to agree on a restructuring can prove hard. Loans change hands fast - making it difficult to track down key players. Hedge funds' economic interests may also vary wildly. That is because, in a second big change in the European and US financial landscape, companies owned by private equity are raising finance in much more complicated ways than before. In place of simple bonds or shares, they are using"second-lien loans" or "payment-in-kind bonds", to name two of the fashionable instruments that are available.

As a result, a hedge fund that holds a second-lien loan and a piece of equity may have very different motives from one holding bond derivatives. That can make it difficult if not impossible to find a deal that keeps all creditors happy. Take Eurotunnel, the troubled cross-Channel operator: it has been near default for months while its creditors argue among themselves - in part because they hold numerous different pieces of Eurotunnel debt and thus have divergent interests.

Such deadlocks are rare, optimists in the restructuring industry insist. "Eurotunnel is at the extreme end of the spectrum. In most cases, the new [restructuring] system is much more effective than before," says Mr Alvarez, who has just helped Treofan, a German manufacturing company that was owned by private equity, to restructure itself - with money from hedge funds and Goldman Sachs.

However, pessimists argue that Eurotunnel is instead just a foretaste of the future. "Over recent years you have had an increase in complexity in capital structure," says Mark Fennessy of Hunton and Williams, another law firm. "The knock-on effect of that is that restructurings will become very complex and time-consuming."

Either way, both sides agree that this shift will create huge demand for restructuring advice in the future - and probably a shortage of suitably experienced lawyers, accountants and bankers. "Businesses in distress now find that their senior debt is being bought by distress investors such as hedge funds," says Andrew Wollaston, corporate restructuring partner at Ernst & Young. "This type of investor has differing agendas to par holders [the original owners of the debt], so companies will need to turn to specialist restructuring advisers to help them."

"There is now real competition for staff," echoes Mr Alvarez, who has doubled the size of his operation in the past 18 months and has recently been attempting to hire more expertise - only to see potential candidates poached by hedge funds.

This will be good news for the restructuring advisers at the boutiques, law firms and banks, whose fees and salaries are likely to increase. But the losers may turn out to be companies or those who invest in them. After all, the more in fees that is paid out for restructuring advice, the less value there is left in a troubled company.

"You have got so many hedge funds in the market that will be knocking on the doors of a finite number of quality restructuring professionals," says Mr Fennessy. "That means that fees and salaries are going up... At the end of the day, enterprise value [of troubled companies] is sure to diminish."

Additional reporting by Richard Beales

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