Jon Henes, who left Kirkland & Ellis’ vaunted restructuring practice in 2021 to start a firm that advises distressed and bankrupt entities, is making his first partner-level lawyer addition since his company’s launch.
Whitney Fogelberg, a Kirkland restructuring partner, will join a team of 19 strategic communications professionals at C Street Advisory Group and launch the company’s Chicago office, Henes’ firm announced Monday.
The hire is an effort to build on what some of Henes’ clients said sets his shop apart: The insider knowledge he brings after having spent decades as a law firm lawyer representing distressed companies.
Other professional services required in restructuring situations have led to specialization. For instance, Weil Gotshal & Manges’ Harvey Miller is credited with building the first specialized Big Law bankruptcy practice, a model that’s spread throughout the industry.
“That’s what we’re doing in the strategy and communications area,” Henes said in an interview. “You need the specialization of restructuring knowledge.”
Since he began C Street in September 2021, Henes has drawn on contacts across the insular restructuring world to grab work on behalf of more than 30 companies last year, including major Chapter 11 cases such as WeWork Inc., Bed Bath & Beyond, and David’s Bridal.
The company helps leadership teams get their message out about journeys into or near Chapter 11 by drafting messages sent to employees, vendors, media, and other stakeholders rattled by whispers of “bankruptcy” or “restructuring.” It is near the top of a list of the busiest communications firms in the restructuring space, competing with Joele Frank, Wilkinson Brimmer Katcher and FTI Consulting Inc.
“To his credit, he’s identified a gap in the market,” Ryan Preston Dahl, co-chair of the business restructuring group at Ropes & Gray, said of Henes. The C Street founder combines his deep, nuanced understanding of restructuring with a team that provides additional layers of guidance, Dahl said, and “that’s easier said than done in a services business.”
Leaving the Mother Ship
Henes, who was a 20-year Kirkland partner, left the law firm’s restructuring practice after one of its busiest seasons. Kirkland advised on 23 of the 57 major Chapter 11 filings in 2020, setting a record for law firm market share in a single year.
The New Yorker had already expressed interests beyond practicing law. He was Kamala Harris’ national campaign finance chair during her bid for the 2020 presidential nomination.
When C Street officially launched in September 2021, it set its sights on a broad set of advisory services, including a push to make diversity, equity and inclusion programs “systemic” among corporate America, according to a press release.
Less than a year later, Henes decided the company was losing money on its DEI advisory service and would make a “hard and quick pivot” to focus on the restructuring communications advice. Four DEI-focused employees announced at the company’s launch have since left C Street.
“We had an amazing team of professionals in our DEI services group,” Henes said. “However, the business itself was not sustainable.”
Winning the Work
C Street won its first restructuring assignment in July 2022 on behalf of failed crypto lending platform Celsius Network, which filed a Chapter 11 case after blocking thousands of investors from accessing nearly $4.7 billion worth of crypto assets.
The Celsius case was handled by lawyers at Henes’ former firm. He’s worked on other cases alongside Kirkland, including BlockFi Inc., WeWork, and David’s Bridal. C Street’s referrals have also come from Ropes & Gray, Weil Gotshal & Manges, Milbank, and Latham & Watkins.
James Marcum, chief executive officer of David’s Bridal, said a C Street member was integrated into his senior leadership team throughout the company’s Chapter 11 process. They organized a daily call on the communications strategy, plotting out how to respond to various aspects of a frenzied process, like filing layoff notices with state regulatory bodies.
“Number one, everybody’s nervous,” Marcum said. “And number two, rumors propagate very, very quickly. So it’s very important how you manage those communications.”
David’s Bridal exited bankruptcy in July with a no-cash sale to asset manager Cion Investment Corp., keeping open 195 of its stores. Marcum said the company continues to work with C Street.
Doing the Job
Cole Gahagan, CEO of collegiate sports marketing company Learfield, said C Street employees sat in on twice-weekly calls with the company’s leadership team, outside lawyers and financial advisors. Learfield, which had more than $1 billion in debt, in September closed an out-of-court recapitalization transaction and equity investment.
“They were important to contributing to those decisions and plans because, again, this is an area Jon has significant expertise in,” Gahagan said of C Street. “It’s almost like as a business leader I was getting two consultants in one.”
C Street eschews hourly rates and bills clients on a monthly basis, Henes said. Unlike law firms or financial advisors, communications firms don’t list their bills in Chapter 11 cases. Henes declined to provide financial information for the company.
Fogelberg, the new C Street hire, said lawyers and communications professionals work together during restructurings. Lawyers might fact-check a press release, she said, but they don’t necessarily consider how the message impacts the company, its vendors or employees.
The C Street team has to consider “the bigger picture,” she said, and how to craft messaging that doesn’t conflict with the company’s strategy.
“I gravitated more and I always have toward the entrepreneurial problem-solving side of things,” Fogelberg said. “And that’s what really interests me about C Street.”