Weil Gotshal Looks Back at 2011

Last year was to bring a flat economy and continued real-estate distress, according to a survey of more than 100 restructuring professionals. Was 2011 all they imagined?

Pretty much, according to Weil, Gotshal & Manges LLP. The prestigious bankruptcy law firm sponsored last year’s survey (which Bankruptcy Beat wrote about here) and is looking back to see how its 125 respondents fared.

“It was a mix,” Adam Strochak, a Weil Gotshal partner, said in an interview Monday. “What we took away from it was, more than anything else, volatility.”

After all, last year was to be the year that if the economy didn’t get better, it didn’t get worse. But a wave of events conspired to send the world’s stock markets on a wild roller-coaster ride, from the March earthquake and tsunami in Japan and the revolutions that wracked the Arab world to the worries over the U.S. debt ceiling and continued uncertainty in the euro zone.

The result was a year that bore out some survey respondents’ predictions to be “fairly spot on,” Strochak said, while other guesses “could not have been more wrong.”

Among those spot-on predictions included the number of giant Chapter 11 filings and which industries would experience distress.

The one that couldn’t have been more wrong, according to Strochak, was the prediction that interest rates would go up.

“For three years now, just about everyone in our industry has been saying that interest rates are going to go up, and for three years, everyone has been flat-out wrong,” he said.

More than 70% of respondents agreed commercial real estate would experience financial distress in 2011. While that didn’t bear out in the number of big Chapter 11 filings, Strochak said it was true in the many real estate businesses trying to solve their problems out of court (pushing out loan maturities or handing over their deeds to their lenders, for example).

Now, the firm is gearing up for its 2012 survey, which Strochak said it expects to launch in about a week. What’s the survey master seeing in his crystal ball?

“I think we’ll see distress in the energy sector, particularly in coal-fired power generation,” he said, pointing to the low prices and high supply of natural gas.

As for everything else, Strochak said he doesn’t “see a clear picture” at a time when so much uncertainty remains. What will his peers predict in the new survey? Stay tuned!