1991’s Distressed Distressed Market

Ah, the good old bad days.

Raising a distressed fund is all the rage now, and even firms with just a little experience are winning institutional backing for funds that will be deployed whenever the latest distressed cycle arrives. But dedicated pros in the turnaround space may remember a time—the recession of the early 1990s—when distressed investing was a tiny segment of the cottage buyout industry and though opportunities may have abounded, distressed investors could hardly get any backing whatsoever.

In these pages exactly 15 years ago, Buyouts ran a piece describing the eight funds—yes eight—seeking capital for turnaround funds. It’s safe to say that distressed fund-of-funds manager Scott Vollmer (profiled in this issue) would have had an easier time keeping track of players in the market in 1991.

At that time, the largest fund being raised was the Chilmark Partners Zell/Chilmark Fund, formed n 1990, which had raised $1 billion to date. Other funds in the market were Joseph, LittleJohn & Levy’s Corporate Restructuring Fund, which had raised $220 million, and Weiss, Peck & Greer’s Corporate Development Associates fund, which had amassed $100 million.

The other fundraisers were Red Oak Investment Corp., Transitions Capital, GrandWest & Associates, Gilbert Loomis Partners and Corporate Rebuilding Partners. But, as Buyouts reported, in spite of the abundance of distressed opportunities, most of the funds were forced to seek funding on a deal-by-deal basis.

In the capital-loaded market of today, distressed pros travel worldwide to find any broken down company or hairy situation they can. If only they could travel back in time.