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Increasingly, big corporations anticipate bankruptcies so that they emerge from Chapter 11 with relative ease. But there are exceptions, and the South Carolina waste hauler Safety Kleen Corp., which had last year’s fifth-largest Chapter 11 filing, was one. The company sprang its troubles onto its creditors, and tensions have run high from day one. At the center of the storm is David Kurtz, a bankruptcy partner at the Chicago office of New York’s Skadden, Arps, Slate, Meagher & Flom. When it filed for bankruptcy protection last June, Safety Kleen was a $4.4 billion company with $3.5 billion in debt, a cash crunch, and accounting fraud that it had yet to fully assess. It had removed its chief executive officer, chief operating officer, and chief financial officer. The previous March, when it retained Kurtz, Safety Kleen’s board could not even give Kurtz a clear picture of the company’s financial state, because it didn’t have reliable accounting records. “I was dropped onto the battlefield without knowing what was going on,” Kurtz recalls. In the midst of this confusion — and before he’d had a chance to sit down with Safety Kleen’s new CEO — Kurtz was paged in an airport and asked to join a conference call with irate creditors. In a slugfest like that, it helps to have a pro like Kurtz, 46, who is known as a cerebral, low-key strategist. “He is a very calm guy, especially in court,” says Luc Despin, a partner at New York’s Milbank, Tweed, Hadley & McCloy, one of the firms representing Safety Kleen’s creditors. Adds Allan Kornberg of New York’s Paul, Weiss, Rifkind, Wharton & Garrison, who is facing Kurtz in the Chapter 11 filing of ICG Communications Inc., the largest telecommunications bankruptcy filed in 2000: “There is not a lot of posturing [by Kurtz]. Bankruptcies can be very contentious and very often in the [bankruptcy] bar there are big egos … . Not David.” That approach paid off in 2000, the busiest year for restructurings in recent memory: Kurtz had a hand in four of the 15 largest Chapter 11 filings last year, including that of Owens Corning, the year’s largest bankruptcy. Kurtz started his career in September 1979 at Nachman Munitz & Sweig, then one of Chicago’s premier bankruptcy firms. Just eight days before, a revised bankruptcy code had gone into effect — one that made it more attractive for businesses to restructure. Then, in 1980, the economy went into a tailspin. “It was the perfect moment in bankruptcy history to start a career,” Kurtz says. In 1989, Kurtz moved to the Chicago office of Jones, Day, Reavis & Pogue, where his career went into orbit. In 1991 he was tapped by the firm to help corporate raider Carl Icahn restructure Trans World Airlines Inc. One of the largest Chapter 11 filings ever, the TWA bankruptcy was a pitched battle — three different employee unions took an active role, and they argued that Icahn had run the business into the ground. “[Icahn] had no hesitation about picking up the phone at 1 a.m., because he wanted to bounce a few ideas off me,” Kurtz recalls. “Being as young as I was, and being in a large case for the first time in a lead role, it was exciting.” The TWA bankruptcy gave Kurtz instant credibility. When John “Jack” Butler, the Chicago co-chair of Skadden’s bankruptcy section, lured Kurtz to the firm in 1999, it was considered a major coup. As recently as 10 years ago, Skadden was not among the nation’s top bankruptcy firms. But these days, thanks in part to Kurtz’s contributions, the firm is close on the heels of New York’s Weil, Gotshal & Manges, the gold standard of the bankruptcy bar. In late December two Chicago institutions, with 40,000 employees between them, joined Kurtz’s client list — Outboard Marine Corp., which filed for Chapter 11 protection on December 22, and Montgomery Ward, which filed under Chapter 11 on December 28. Kurtz, who says his sole hobby is spending time with his family, promptly delayed a New Year’s trip he was scheduled to take with his wife and two children. With 2001 shaping up as a banner year for business failures, it probably won’t be the last time that the Kurtzes reshuffle their schedules.

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