Cleanup Time on the Bankruptcy Detail : Finances: William Rifkin heads a Salomon Bros. team trying to sort out the mess.
In 16 years at Salomon Bros., William D. Rifkin has had a front-row seat to some of the best-known corporate takeovers and massive bankruptcies of the past decade. But being called in to help straighten out Orange County’s multibillion-dollar financial mess was another matter.
“I am used to looking at the balance and income sheets of a corporation. The finances of a municipality are completely different,” Rifkin said in a recent telephone interview. “You have one source of revenue over which you have little control . . . taxes. It’s hard to know what flexibility you have.”
Unfamiliar with municipal finance or not, Rifkin, 41, is the self-described coordinator of a 30-member team from the New York investment banking firm hired to assess Orange County’s troubled portfolio and to help market its remaining securities. He is a managing director in Salomon’s mergers and acquisitions group.
Rifkin’s team of executives and technicians worked throughout last weekend evaluating the county’s deteriorating bond fund, which sparked the largest municipal bankruptcy in U.S. history.
Then Rifkin gave his initial verdict to the county Board of Supervisors and U.S. Bankruptcy Judge John E. Ryan: The 187 cities, school boards and special districts participating in the pool had lost $2.02 billion.
And on Thursday and Friday, Salomon Bros. was involved in selling off more than $1 billion of the estimated $5.4-billion portfolio to try to stabilize the county’s fund.
If Rifkin has no experience handling a Chapter 9 municipal bankruptcy, he notes that few others do, either, because a municipal filing is so rare. And Orange County’s is the largest by far.
But Rifkin is well-traveled on the bankruptcy and high-finance circuits. His credentials include the Federated Department Stores and Circle K Corp. bankruptcies as well as some of the biggest takeover battles of the 1980s.
“He’s very smart and he is very decent,” said Bruce Bennett, Orange County’s bankruptcy lawyer, “and I have a great deal of confidence in his advice.”
Bennett said he gained his respect for Rifkin from working with him on the bankruptcy of Federated, which operates retail chains like Bloomingdale’s, Jordan Marsh and Burdines. Federated filed for bankruptcy in the late 1980s, a victim of the debt-financed merger and acquisitions craze.
Once the takeover target of R. H. Macy & Co., Federated emerged from bankruptcy and turned the tables, purchasing a $449-million bankruptcy claim that gave it the leverage to arrange for a takeover of Macy later this month.
Rifkin was also involved in the bankruptcy of Circle K Corp., the nation’s second-largest convenience store chain, which is to be acquired by CK Acquisitions, an investment group whose holdings include Saks Fifth Avenue.
Rifkin’s role as an adviser to takeover artists Kohlberg Kravis Roberts & Co. in its takeover of Beatrice Cos. was described in the 1992 book, “Merchants of Debt: KKR and the Mortgaging of American Business.”
The book tells of a climactic scene in May, 1988, when Beatrice Chief Executive Don Kelly claimed that someone had fiddled with Salomon’s analysis of the deal, triggering a confrontation with KKR partner Don Kravis.
“The room went deadly quiet for a moment. Then, quivering inside, Salomon’s Rifkin got up and began running through his formal presentation,” the book related. Kelly agreed to sell.
A native of Nebraska, Rifkin has been with Salomon Bros. since graduation from Harvard Business School in 1978. He is married, the father of two boys and lives in Brooklyn Heights, N.Y.
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