Kristin Mugford is the Melvin Tukman Senior Lecturer of Business Administration in the Finance Unit at the Harvard Business School. She currently teaches "Creating Value through Corporate Restructuring," a popular elective course that analyzes how economic stress and restructuring creates challenges and opportunities for businesses and their stakeholders. She has also taught Venture Capital and Private Equity, the FIELD Global Immersion, and currently is the faculty chair for field-based learning and co-curricular programs in the MBA program. She has received the Robert F. Greenhill Award, the HBS Student Association Faculty Teaching Award, the Charles M. Williams Award for teaching excellence, and the Apgar Award for Innovation in Teaching.
In 2013 Kristin retired from her position as Managing Director of Bain Capital, one of the world's leading private investment firms. Bain Capital and its affiliated advisors make private equity, public equity, fixed income and credit, venture capital, and absolute return investments across multiple geographies and industries.
Kristin joined Bain Capital's private equity business in 1994 and at the age of 32, became the first female Managing Director in the firm's history. Kristin helped start Bain Capital Credit (founded as Sankaty Advisors), and prior to her retirement was responsible for the oversight of their high yield investments and a senior member of Bain Capital Credit's management team and investment committee. Bain Capital Credit is one of the leading corporate and distressed debt managers, managing over $40 billion in twelve offices around the world.
Kristin began her career at the Walt Disney Company, where she worked in corporate strategic planning and the consumer products division. She graduated from Harvard Business School as a Baker Scholar and holds an AB with honors from Harvard College.
In 2016, a trial began to determine the future of Sabine Oil & Gas Corporation’s $3 billion chapter 11 reorganization plan. The plan called for first- and second-lien-secured creditors to receive new claims representing approximately 98% of the reorganized company’s enterprise value, leaving unsecured creditors, owed $1.4 billion, to recover less than two cents on the dollar. The plan had the support of the secured creditors, but unsecured creditors were strongly opposed. At the heart of the unsecured creditors’ objections to the plan was a dramatically different view on valuation. How much were Sabine's oil and gas reserves worth today? How much were they worth at the time Sabine filed for chapter 11? And, based on these valuations, what was a fair recovery for Sabine's creditors?
Gilson, Stuart C., Kristin Mugford, and Sarah L. Abbott. "Sabine Oil & Gas Corporation." Harvard Business School Case 218-004, April 2018. (Revised April 2019.)
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In 2019, ESL Investments’ $5.2 billion offer to purchase Sears Holdings out of Chapter 11 bankruptcy, was accepted, despite opposition from the company's unsecured creditors and other parties. ESL, which was led by Eddie Lampert, had acquired a stake in Sears following its 2005 merger with Kmart. Lampert was chairman and CEO. During Lampert’s ownership, Sears and Kmart shrunk their store base from 5,670 to 687 stores, and over 200,000 employees lost their jobs. Some attributed Sears’ woes to a challenging operating environment, others argued that Lampert's actions over the last decade benefitted himself and other shareholders at the expense of other Sears stakeholders. Was a sale of the company to ESL the best outcome?
Mugford, Kristin, and Mike Harmon. "Quiksilver Inc. and Oaktree Capital Management." Harvard Business School Spreadsheet Supplement 219-733, March 2019.
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Sports lifestyle company Quiksilver filed for bankruptcy in September 2015. Oaktree is considering an additional investment in the company to facilitate the restructuring.
Students must consider whether Oaktree should invest given the risks of the turnaround required at Quiksilver. Additionally, students need to craft a restructuring proposal that will be attractive to investors and will succeed in gaining support from the company and other creditors.
Comparison of the U.S. Government response, using the $700 billion TARP fund, to downturns in the banking and auto industries during the global financial crisis.
In June 2015, Ukraine found itself struggling with a volatile and devalued currency, dramatically diminished foreign reserves, and a projected financing shortfall of $40 billion. Ukraine’s new government sought to return the nation to stability following political uprisings in early 2014 and an ongoing military conflict with Russia including Russia’s recent annexation of Crimea. The International Monetary Fund (IMF)has agreed to provide funding to Ukraine, provided the country implement additional financial and economic reforms and restructure some of its $71 billion of sovereign debt. Newly appointed Minister of Finance, Natalie Jaresko, has proposed a 40% “haircut” to Ukraine’s $18 billion of Eurobonds, but creditors insist that any haircut is unnecessary. Can Ukraine get to a deal that will appease creditors and give it access to the IMF funding it so desperately needs?
Mugford, Kristin, Seema Amble, and Tian Feng. "Restructuring Ukraine." Harvard Business School Case 217-049, April 2017. (Revised February 2020.)
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Caesars Entertainment was a large casino operator in the United States that had been purchased in a 2008 leveraged buyout by Apollo and TPG. In January 2015, Caesars Entertainment Operating Company (CEOC), its largest subsidiary, filed for Chapter 11. This set up a battle between the company and a set of large, distressed investors. At issue was not only how to restructure the business and reduce Caesars' debt, but also multiple lawsuits alleging that the company had damaged creditors in their quest to preserve equity value. Of particular focus were a series of transactions that took place during 2013 and 2014 to sell assets from one subsidiary to another and to eliminate a valuable parent guarantee that had been granted to CEOC creditors. This case provides a good example of a variety of "defensive maneuvers" employed by companies and their private equity sponsors to protect a troubled investment.
Gilson, Stuart C., and Kristin Mugford. "Bankruptcy in the City of Detroit." Harvard Business School Spreadsheet Supplement 216-703, December 2015.
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The June 2013 bankruptcy of Detroit, Michigan, was, at the time, the largest municipal bankruptcy in American history. Detroit had struggled for years with a weakening tax base, high unemployment, a heavy debt load, and increasing retiree costs. These financial strains led to cuts in basic public services, declines in population, and significant urban blight. The State of Michigan appointed an emergency manager, Kevyn Orr, to lead the city though the restructuring process. In March 2014, Orr and his team put forth a restructuring plan to the city's creditors that provided for needed reinvestment in city services, but low recoveries for unsecured creditors. The city's plan also proposed that the Detroit Art Collection be transferred to a trust funded by philanthropists, with the proceeds accruing solely to retirees rather than to all creditors. Orr and his team must now find consensus on a plan that meets the needs of Detroit and is acceptable to its creditors.
Bain Capital had purchased Outback Steakhouse in 2007 and despite the myriad initiatives to improve operations, the financial collapse in 2008 threatened the company's ability to meet its loan covenants. Outback's performance steadily declined throughout the year. How should Bain Capital manage the company's debt while improving Outback's performance?
