Barclays RX & Advisory Group

Lots of confusion on the board so as someone currently working in Leveraged Finance, I'll clear it up for you:

Barclays RX (or any bulge bracket RX group for that matter) focuses on DIP financing or any sort of debt issuance for companies in stress. The advisory portion is almost always done by a specialized RX shop such as Lazard/HLHZ/Blackstone.

Basically it works like this: company is in distress and bondholders are threatening to take control over the company. Company hires bankruptcy lawyers and RX bankers (usually Lazard or Blackstone/PJT for debtor side) to advise them on what to do next. RX bankers and lawyers suggest a chapter 11 to buy some time and then formulate a turnaround strategy, but as with any plan, the plan requires financing in order to execute it. The RX bankers call up the big banks' restructuring groups (ex. DB, JPM, or Barclays usually) and say hey we have this turnaround plan but we need $300mm of financing (ex. DIP revolving credit facility) to execute upon it - given the amount and circumstances, what terms can you offer us? The bulge bracket RX groups discuss with their syndicate groups (and this actually gets interesting because the terms are heavily reliant on the circumstance, situation, quality of plan, strategy of creditors yada yada, very diff from a plain vanilla leveraged loan / HY Bond refinancing). Each of the bulge bracket groups submit the terms they're willing to offer for the loan and the company (with the advice of the RX banker/lawyer) will select a bank to offer the lead-left mandate. Even if the other banks don't win the lead-left mandate, a handful of them are usually brought along as joint bookrunners for the syndication so they still get fees. The bank executes the DIP facility, and earns $$$.

6 months later, the turnaround strategy is successful and the company is ready to refinance their DIP facility into a regular credit facility (revolver + term loan). Unsurprisingly, the one who was lead left on the DIP facility gets first dibs and priority to lead the refinancing (and earns $$$ again). The lead-left bulge bracket bank develops a great relationship with the CEO and has priority in offering the full suite of products of the investment bank going forward.

As you can see the role of the BB RX team is the financing side. The advisory side (which is usually what people are referring to when they speak of RX) is done by the RX-specialized shops. With that said, the BB RX teams who are offering the financing still need to have a very good understanding of the situation and the bankruptcy code (just like the real RX bankers) in order to dictate what terms to offer for the financing. The only difference is that they're getting paid for the financing, not their "strategic advice" - the ones getting paid for the "strategic advice" are the RX shops.

Of course it varies from situation by situation but that's generally how it works. Hope this clears up some misunderstandings on this board.