Josh Feltman is a partner at Wachtell, Lipton, Rosen & Katz who has helped lead some of the most consequential restructurings of the last two decades – including Toys “R” Us, AMC, Expedia, and Express.
In this episode, Josh walks through his path from Harvard to Wachtell, the weekend he helped the U.S. Treasury nationalize Fannie Mae and Freddie Mac, and the lessons he’s learned steering multibillion-dollar deals at one of the most elite law firms in the world. He also shares insights on mentorship, the traits that distinguish standout associates, and the balance between family life and high-stakes work.
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Transcript
Victor M. Braca: You’ve led deal teams on multi-billion dollar restructuring deals with companies like AMC, Toys R Us, Expedia, and Express.
Josh Feltman: Just do me a favor, tell your father to wake up early and turn on the news early tomorrow morning. That night, we signed the papers to nationalize Fannie and Freddie. Then we worked on Lehman Brothers, the bankification of Goldman Sachs. Like, it was just utter chaos. And it’s just really cool to sort of be in meetings with Jamie Dimon when he’s talking about what the hell they’re going to do with $200 billion exposure to Lehman Brothers. Like that’s really cool. Gave Paulson the pen; handing him a piece of paper is the biggest thing in the world.
Victor M. Braca: What makes a standout associate?
Josh Feltman: Any associate who is not a good associate… a good associate is one who—
Victor M. Braca: What did it look like being a part of that deal during the decision to liquidate Toys R Us?
Josh Feltman: Yeah, it was terrible.
Victor M. Braca: What’d you tell your kids that night?
Josh Feltman: My kids were very young. “Dad killed your favorite toy store.”
Victor M. Braca: Wow, guys. Unbelievable episode today. I just sat down with Josh Feltman, a partner at Wachtell, Lipton, Rosen & Katz, one of the most elite Wall Street law firms. Josh is the chair of Wachtell’s restructuring and finance department, which essentially means that he’s the guy companies like Toys R Us, AMC, Expedia, and Express call when they’re in financial distress. And guys, I didn’t just pull those companies out of thin air. Those were all multi-billion dollar restructuring deals that Josh has worked on.
Let me just tell you a little bit about what we discussed. Josh took us into the room during the ’08 financial crisis when the government took over Fannie Mae and Freddie Mac. He literally handed Hank Paulson the pen to sign the legislation, which is totally a historic moment. He also broke down the restructuring of AMC and explained what it’s like to lead multi-billion dollar deals. He gave us the insider perspective on the liquidation of Toys R Us, which is insane because it’s something that we all remember having been just a couple years ago. And Josh shared his number one tip for aspiring lawyers, which I think you’re going to love and happens to apply to every field, not just law.
I’m Victor Braca, and Momentum is where I dive deep into the stories behind business success. And guys, before we start, YouTube and Spotify are telling me that 80% of you who watch Momentum are not subscribed. 80%. Do me a favor: wherever you’re watching this, click that subscribe or follow button. It shows me that you like what we’re doing and it would really, really mean the world to me. Please subscribe. And with that said, let’s get into this incredible conversation with Josh Feltman.
Josh Feltman, welcome to Momentum.
Josh Feltman: Thank you very much. Thank you for taking the time. I really appreciate it.
Victor M. Braca: I know you’re very busy. You’ve led deal teams on multi-billion dollar restructuring deals with companies like AMC, Expedia, Envision Healthcare, Express, and you lead the restructuring group at one of the most respected firms in the world. I want to start simple. When you meet somebody for the first time who’s not in finance, how do you explain to them what you do?
Josh Feltman: I mean, I generally say I’m a lawyer or I practice law. I’m an attorney. You know, obviously, law is typically associated with litigation or trials or CSI or whatever the case may be. And you know, it’s obviously exceedingly sexy to then say, “Yeah, no, I’m a bankruptcy lawyer.” But I think if somebody asked me really, “What is it that I do?” it’s I work with various stakeholders in distressed company situations to try and resolve the distress to the profit of my clients, hopefully.
Victor M. Braca: What does “distress” mean for a large multi-billion dollar company? What are some ways that they might reach distress?
Josh Feltman: Yeah, I mean, it’s interesting. There’s sort of two paradigms of distress. You could chop it into 50 different pieces, but I think there’s really two. One is you have a business model that is solid—or it’s a reasonable business model; maybe it’s not being executed on to perfection—but nonetheless, despite being a good business model, the company is overlevered. Expectations for the success of the business model were too great and also macro factors happen, like the debt gets too expensive because you have a massive rise in interest rates, say following COVID and inflation. So that’s just, “Oh, we need to resolve the debt stack. There’s too much debt. We need more equity, less debt,” but the business is a solid business.
And then the second form of distress—and there are many flavors or spectrums of this one—is, well, the business model’s broken. And that’s typically due to technological change or some broad macro trend—not macro, because that’s economic—but technological trends. You mentioned Express; perhaps it’s just a taste trend where the fundamental underlying business model needs reform, and as a result, there is a debt-related problem or liability-related problem.
I suppose I’d add to that there’s a third category that a lot of people who do what I do for a living have been dealing with for the last number of years, and anyone who’s alive and reading the business papers would be aware of this: mass torts. So you have companies that are basically good business models that are just overlevered and their capital structure needs reform. You have companies that are poor business models because of technological change or changes in trends and tastes. And then the third—historically, asbestos was the famous mass tort; recently there’s been a lot about opioids. People talk about Purdue Pharma, Talc, Johnson & Johnson. I make no judgment on whether or not any of these things are legitimate, but clearly in restructuring there’s businesses that had what appear to be quite good business models and do not appear to be overlevered in terms of borrowing money, but all of a sudden look like they’re in distress because they have 50,000 lawsuits against them. So that would be a third category.
Victor M. Braca: Got it. So the three categories of how a company might reach distress. I want to go back to the beginning for you. Before Harvard, before Wachtell, before these multi-billion dollar deals, I want to go back to your childhood. How did you grow up and what kind of values were instilled in you by your parents?
Josh Feltman: Yeah, I grew up in a very nice suburb of New York City, in New Jersey. Approximate to New York City—my grandparents lived in New York City—but you could be 18 miles from New York City and feel like you’re a million miles away, strangely. In terms of values, my mother mostly stayed at home, but over time, the older I and my sister got, she got progressively more into finding work outside the home. Early on she had a home business selling stationery and later became very successful in sales of academic programs to school systems. My father was a lawyer. And he worked… he’d leave, he was probably at the bagel store in Hillsdale, New Jersey, by 6:15 every day. In the office by 7:00, no doubt, every day. And didn’t come home until 6:00 or 7:00.
I don’t want to say my parents didn’t overtly teach me values, but I think the values I was brought up with were just based on sort of constancy and hard work. I was allowed to watch television or do whatever, but not until my homework was done.
Victor M. Braca: It sounds like your parents led by example.
Josh Feltman: That’s right. I grew up Jewish. I went to temple. I had a bar mitzvah. I went to Hebrew school. We observed all the major holidays, but we didn’t even really observe Shabbat. Again, there was not… I was chastised appropriately when I acted out. But there wasn’t… it wasn’t the mode of ethical teaching to sit down and read parables and certainly not to philosophize, but to do the right thing. My father served on various charitable boards, my mother was very involved in UJA and the local YMHA, etc. So yeah, I think that’s right: leading, teaching by example.
Victor M. Braca: Did your father, innately maybe by example, teach you the value of hard work?
Josh Feltman: Oh, sure. Yes. Like I said, I never saw him in the morning. I don’t say that as though I was abandoned; I just mean he was not in the house when I woke up for school. He was in the office already. And you know, he worked for small firms. He didn’t work at Wachtell Lipton. He had his own practice with his name on the door for a large part of my childhood—or I guess the great bulk of my childhood. Eventually, he joined a somewhat bigger firm as sort of the world changed and developed. But you know, he was not home when I got home either, but he’d come home for dinner. And you know, of course, the great battle between my parents—highly, highly traumatic—you know, “You’re late for dinner.” “Sorry, I was at work. I had a phone call.” That kind of thing. But yeah, we had a family dinner every night. But for him, if he was home by 6:00 or 6:30 for family dinner, that was a 12-hour day, right?
Victor M. Braca: And it sounds like a lot of the practices that you take on today sound like they were borrowed or taken from your father in the sense that you put in long hours. I think it’s very admirable. It shows the ability to devote yourself to a career path that is extremely demanding, but at the same time live a very fulfilling life at home.
Josh Feltman: I think that’s right. You know, I feel fulfilled. Well, I hope my wife and children feel that way.
Victor M. Braca: I want to go into your high school and college days. Did you have a clear sense of where you wanted to go? Your father was a lawyer, but you didn’t really have the typical law path right from the onset. So, tell me a little bit about that.
Josh Feltman: I had not a the foggiest clue or notion what I wanted to do or really where I wanted to go when I was in high school other than, perhaps somewhat admirably and perhaps incredibly dorky and sort of cringey, I was bright. I was successful in school and I really just wanted to do the best I could where I was so that I could get to the best college I could get into. And then I worked hard in college to maybe get to whatever the next best thing was, but none of it was very directed.
I ended up going to Harvard for college. I’d say I worked hard in high school, but it’s probably more accurate to say I worked exactly as hard as I needed to to get straight A’s. My high school was sort of an excellent public high school, but it wasn’t… it was reading, writing, and arithmetic. It wasn’t an expansive intellectual curriculum. There weren’t that many AP classes. So I did what I had to do basically to get to Harvard, but that was the only goal. And it wasn’t like, “Oh, go to college so that you can then X.” Certainly not early on.
Victor M. Braca: Once you’re in college, was there an original plan to pursue law school or any sort of graduate school?
Josh Feltman: I mean, if you had asked me when I was a freshman in college, “Will you go to law school?” I probably would have said yes, but I did not. So, first my—as you know—my father was a lawyer. His father was a lawyer. So, it goes back generations of Feltman men in New Jersey becoming lawyers. I didn’t have that as my goal. It’s more like I didn’t know what else to do and that would be a place where I would end up.
I really wasn’t… I was ambitious and, perhaps partially due to sort of arrogance or whatever, I really wanted to be successful, but I really wanted to be successful where I was—get good grades and leadership positions—but I wasn’t oriented toward money and I wasn’t oriented toward any particular career. I wasn’t really looking ahead. I had a good time in college. I think I was very present in college. I had a lot of good friends. I was in a fraternity. I enjoyed myself immensely and I worked super hard. And I never thought about what I was going to do until I had to leave. I mean, truly, it was like, “Okay, well, now I’m a senior. I have to apply for jobs or something—law school or jobs or whatever.” And it was only at that point that I made any type of decision. And I pursued various paths to figure out what the best option would be. But there was no singular goal or focus or anything. Truly, truly none.
Victor M. Braca: It sounds like you pursue success as part of a love for the game, right? Like it’s not necessarily a motivation of money or status, but whatever you’re doing, you want to be the best.
Josh Feltman: Yeah. I wasn’t seeking particular mentors or particular internships. I mean, I honestly think life was—this sounds preposterous, I’m old, but I’m not that old—but I think life was simpler then. It’s a classic line. It sounds insane, right? I get it. But it was simpler in the following sense. I look at young people like you guys or my own children and I see the kids—and I don’t mean it pejoratively, but they’re so young coming into Wachtell.
And you know, the summer after my sophomore year in college, I went to Washington, DC, and I interned and I played a lot of softball and drank a lot of beer. And the summer after my junior year in college, I sat around Harvard. I had a couple of odd jobs, but I was working on my senior thesis and writing some articles for the magazine. I wasn’t interning at Goldman Sachs or, for that matter, Wachtell Lipton or anywhere else. And I did not have any concern in my mind at the time that I would not be employable when I graduated college because I hadn’t sort of relentlessly pursued that next step until I got there.
I think that was a luxury. I feel in retrospect incredibly grateful for that and I pity, truly—I don’t pity, but I do feel bad for—and I think it’s a shame that everything now is accelerated. There’s such a perception of the zero-sum game economy that if you don’t get the sophomore year internship at some financial institution, then you won’t get the junior year internship, then you won’t get hired out of college. It does feel that way.
But I even see it at Wachtell; we don’t really interview anybody who doesn’t go to a really good law school. Or if you don’t go to a top law school and you’re sufficiently ambitious and you’re doing really well and you write us a letter, we’ll interview you. But we don’t go visit anywhere intentionally other than like Yale. There’s all these genius kids. They’re smarter than me or they have better resumes than I did. But it advances a lot of stress and thought and intentionality that I did not have back then. And I don’t say that humbly. I really say it was the good old days. Goldman Sachs wouldn’t look at a junior in college for an internship. They wouldn’t even look at it.
And then over the years—I really think what kicked that off was right after I left college, you had the first internet boom and law firms and consultancies and banks realized there was this big competition for talent because you were competing with Silicon Valley. And it seemed to set off this huge race. For myself, I don’t know if this is advice to the young people because you have to live in the world that you live in, but certainly the world I lived in when I was 18 to 22 felt a lot less pressured. It was 1991 to 1995; we were in a recession. It was impossible to have sex without getting AIDS was the thought. You would not do better than your parents in terms of money was the thought.
Victor M. Braca: Why was that the sentiment at the time?
Josh Feltman: This is—remember you had the roaring ’80s and then there was a massive real estate and market crash at the end of the ’80s. This is how Clinton beat Bush. Remember the first George Bush was a one-term president because his tenure coincided—you could say there’s a lot of reasons, but the main reason without question was there was a recession and there was this sense that we were losing. Everybody was worried about tariffs and competition. Back then, we were going to get taken over by the Japanese. The Japanese had bought Rockefeller Center. We couldn’t make a good car in this country. I mean, this was the sentiment, right? And it was actually a very depressing time to be in college.
It has one positive effect: you could sit and enjoy yourself in college and say, “The world later is going to be terrible. I may as well enjoy myself now, and there’s nothing I need to do now to prepare for that terrible world because there’s no jobs anyway.” That’s exaggerated, but that was… We were listening to Nirvana and Pearl Jam and then Kurt Cobain killed himself. It just was a very different zeitgeist.
Victor M. Braca: Right. So interesting. You went to one of the top schools in the country, you graduated with honors, and you mentioned that you worked in DC for your summer after college. What did you do in between undergraduate and law school?
Josh Feltman: Yeah. As I mentioned before, I got to senior year and I truly did not know what I was going to do with my life. I knew I didn’t want to go right away. I sort of felt like I wanted some independence. My parents paid for college, but I had been in this student-and-child mode. And as I was graduating college, I felt some urgency to sort of evolve into an adult mode. And if I was going right to law school, I was going to remain in that childhood mode and also in an academic mode.
I worked quite hard during college and I wanted to sort of change it up out of an academic mode. Although, ironically, my first step was graduate school. But the reason it was graduate school was not because I was particularly ambitious for graduate school. I didn’t know what to do. I applied for consulting jobs and I applied for fellowships. And I figured I could be an adult and independent of my parents if somebody else paid for me to go to school. And that is in fact what happened. So I won one of the Harvard fellowships called the Knox Fellowship.
I spent a year at Cambridge University, which was good intellectually, and I actually got a one-year master’s degree. But I had never been out of the country before I was 22. I had never been to Europe. I had never been to London. I had never been to Paris. So going to Cambridge for that year was great because I told my parents, “You should come visit, but I’m not going to come home this whole year because I’m going to use every minute I can to go sort of see the world.” Like a very classic coming-of-age story.
The Berlin Wall had only recently fallen. This is in 1995. I was based in England, but I went to Prague and Budapest and Eastern Europe as well as Paris and Madrid and all—all in one year.
Victor M. Braca: Wow.
Josh Feltman: I mean, don’t get me wrong, I didn’t spend weeks and weeks there. I was a tourist. There was this thing called the Eurail pass. I spent $700 on a Eurail pass. I could take any train anywhere in Europe. I was with various friends who were doing other things in Europe. We did a Thanksgiving in Berlin, but it was a few weeks late. We said we had a “late Thanksgiving,” right? And then we took trains into Eastern Europe around Christmas time, which is really fun but it was cold as hell. And then in the summer I went to like southern Italy and Spain where it was like eight million degrees. I really should have flipped that. The point is I spent a year where I was still pursuing an academic path—I did manage to finagle a degree but I didn’t work super, super hard. I was sort of exploring the world and growing up and migrating into adulthood.
Victor M. Braca: Guys, there’s a very good chance you found out about Momentum through Kosher Media. These guys are the premier advertisers throughout Jewish communities all over the world. Momentum currently has however many thousands of listeners per episode. David and the Kosher Media team have been helping me expand my reach for over a year now. They have dozens of Instagram accounts, tens of thousands of contacts for email and text blast. Whatever it is you’re trying to advertise, call Kosher Media. It’s an amazing experience working with them and I promise you will not regret it. Guys, koshermedia.com. Tell David I sent you. And let’s get back to the episode.
Josh Feltman: When I came back, I took a job in Washington, DC. I was working for Price Waterhouse. They have a consulting division that does government-related consulting. And by that point I sort of knew I’d end up in law school and I intentionally didn’t do like a McKinsey management consulting gig. I wanted to do something that was law and government adjacent. So what I was working on were regulatory issues. Like when I was at Price Waterhouse, I worked on potentially privatizing the Pennsylvania Liquor Control Board because Pennsylvania has state liquor stores.
I would tell you that I worked at Price Waterhouse. I did not work at what is now known as PwC. They announced a merger with Coopers & Lybrand while I was there. They told me that I was now no longer going to work in downtown DC where I was very happy—because it’s cool when you’re young to work in a city. They said, “You’re going to have to go work in the suburbs.” And I said, “That is definitely not happening.” And I quit.
I joined another consulting firm that was very government and law adjacent called NERA—National Economic Research Associates. So between PWC and NERA, I was in DC for three years. So the answer to your question: between college and law school was four years for me. One year was in Europe and then three years in Washington where I was working as an economist, really, but in a law-adjacent field further to eventually going to law school. I might have gone to law school earlier if I didn’t feel compelled to quit Price Waterhouse. I might have stayed at that job for two years, not three, but I was not willing to accept a transfer to suburban Virginia.
Victor M. Braca: Did you look at those consulting jobs as a stepping stone to law school?
Josh Feltman: It turned out that they did indeed help me in law school and my later career. But it wasn’t super directed that way. It was really more what I said before: I sort of felt the need to be an adult, make a little money. My first salary at Price Waterhouse was $34,000. I felt like a millionaire. My rent was 400 bucks a month. It was great. It was glorious. I could afford all the beer and ramen I wanted. I didn’t have a car. That’s why I didn’t want to move to suburban Virginia. I am not buying a car, I am not moving to the suburbs. I’m going to live in downtown DC or in the immediate Virginia suburbs.
I did view those years as sort of a time to get good experiences, but they were really… it was not like, “I need to do this as a stepping stone.” It was much more, “I don’t want to go back to New York yet.” I wanted a little bit of distance from that, grow up a little bit, find myself a little bit, pay my own rent, and then eventually get to law school. So, it was much less career-directed than it was personal-development-directed. And I think I was sufficiently self-aware that I wanted to be independent and an adult. And that was step one to later having a real career.
Victor M. Braca: Take me into Harvard Law. The recruiting landscape in undergraduate sounded very different from how it is today. But when we talk about recruiting for law in your 2L year, did that look about the same as it does today?
Josh Feltman: I think the answer is more or less yes. There are moments in time though. If you happened to enter law school in 2007 and then you were applying for your second-year summer job in 2008 in the middle of the financial crisis, your prospects were a lot different than if you were applying in 2015 when things were really booming.
By way of timeline, I entered law school in 1999. In 1999, only idiots were going to law school because all intelligent people were going to Silicon Valley. This is the absolute height of the first internet boom. I had a ton of friends there who really killed it. I did not. I had no foresight. But the direct answer to your question is yes, the landscape was quite similar, but where you are in the economic cycle massively affects the drama and anxiety of going through that recruiting process.
The month I started law school, there was a front-page article in the New York Times that first-year law salaries had risen to $125,000 a year. It was a lot at the time. And ask yourself why was that? The answer was everybody who was intelligent was going to San Francisco to try and strike it rich. From where were they going to San Francisco? From New York. And what were they doing in New York before they went out to found Pets.com? Well, they used to work at Goldman and McKinsey and Morgan Stanley. So now Goldman and McKinsey and Morgan Stanley needed bankers and consultants, and the business school track people were all in California. So they started hiring all the law school people, which then led to a shortage of first-year lawyers, which led to rising salaries.
So it turned out to be sort of a boom time when my class of law students were applying for jobs. A lot less stressful than if you were applying for a law job in the summer of 2008 or 2009. So I think the setup of legal recruiting was similar, but you’re on the wave and the sine curve of the global economy. I was there at an outstanding time to get a second-year job and a horrible time to have a job after that because we all applied into this boom and then there was a massive bust.
The stock market fell, and then while I was in law school, 9/11 happened and that tanked all economic activity. From the point of view of the law student, everybody who had taken a job in San Francisco and worked there in the summer of 2000 or 2001—I don’t think it’s an exaggeration to say 60 or 70% of them did not have jobs when they graduated law school. Your basic law school path is you take a job after law school at the firm that you worked for after your second year. That’s how I ended up at Wachtell. Dozens of people in my Harvard law school class did not have jobs. And then they were scampering to find jobs in New York. There was a number of San Francisco law firms that went bankrupt. Like, nobody wanted to work at Wachtell Lipton in 2001; they wanted to work at Brobeck, Phleger & Harrison. Look that one up—it was bankrupt within two years after I graduated law school. So it was a different time.
Victor M. Braca: Let’s talk about Wachtell. How do you guys refer to the firm?
Josh Feltman: Wachtell, Wachtell Lipton, or WLRK. Locally, it’s Wachtell. It’s known in the market as Wachtell.
Victor M. Braca: It’s interesting. Wachtell carries a very prestigious name in the law and broader finance community. Matt Levine famously said he left Wachtell for Goldman for better hours. I want to ask you broadly: how did you end up at Wachtell Lipton?
Josh Feltman: It wasn’t the “hot thing,” right? It wasn’t like it was today. It was still decently competitive to get a job here, but honestly less competitive than it was at other eras just cuz everybody wanted to go to San Francisco. Look, by that point I wanted to be in New York. I really have always loved New York. I considered my college and Washington and law school years to have been a known hiatus from the New York area. I definitely knew that as sort of a young professional establishing my career, I wanted to be here.
It’s funny because by the time I graduated, I looked like a genius. Anybody would have killed themselves to be at Wachtell because they all got fired from Brobeck. But at the time when I was applying, I never caught the dot-com bug. I’m not a futurist. I was the last person on earth to have a Blackberry. So I really wasn’t interested in all that. I wanted to be at the epicenter of the commercial world, i.e., New York, and I just wanted to go to the best, most challenging place that I could find. Wachtell was known to pay a little bit more and that was attractive, too, but what it was really about was I wanted to work on the biggest, most important deals—the thing on the front page of the Wall Street Journal.
And I will say—and this is true—my experience at Price Waterhouse… I enjoyed my work there, but I was victimized by the fact that it was a multi-thousand-person company with five million offices all around the world. There was bureaucracy. I did have a very good sense that a small firm—one office, intimate relations among the attorneys—would be something that I would prefer to being part of a large organization with global scope. None of that appealed to me at all. So between Wachtell’s reputation for doing the most important and interesting work, and the notion that it was… look, at that time Wachtell had fewer than 200 lawyers.
Victor M. Braca: How many associates did they hire every year?
Josh Feltman: I think in my summer class we probably had like 18 2Ls. These days I think it’s more like 25 or maybe even 30. When I joined the firm maybe we were 160 or 170 lawyers; we’re now about 270. So that’s a very significant increase in relative size. So yeah, we probably have 30 summer associates now but we’re still minuscule compared to any of our peers.
Victor M. Braca: Marc Rowan, founder of Apollo, said that when he joined Drexel Burnham in ’85, he felt like all the money was made, all the deals had already been done. Did you sort of feel like that joining Wachtell? And is that what drove you ultimately to restructuring as opposed to M&A?
Josh Feltman: No and yes. I was aware that we were in a recession. I was aware that a lot of people I knew had lost their jobs. But I didn’t feel like I had missed anything. I think I had a sense that we were—it was just part of the business cycle. So I definitely did not feel like all the opportunities were gone. But yes, where we were in the cycle affected the entire course of my career.
The summer that I worked at Wachtell, which was summer of 2001, the market between the time when we did recruiting and when we all got to our summer jobs had imploded. When I got to Wachtell for the summer there was like no M&A going on at all because the equity markets had complete—I mean, the equity markets were off 50% or whatever it was. Everybody was sort of battening down the hatches. The humorous anecdote was they brought in one deal for a dot-com that had to sell itself in the face of what was going on. It was selling itself to Yahoo and my ex-girlfriend was the general counsel—because back in the day in the dot-com boom very young people had very big jobs, right? I happened to have been dating this woman who had gone to law school right out of college and she was two or three years older than me. So she was more far more advanced in her career, was a general counsel, and hired Wachtell. I was a summer associate, so naturally I had to recuse myself from that deal.
But that was almost the only thing in the office. It was not a hot time for M&A. What was hot? Enron and WorldCom and a ton of the dot-coms. There were tons of interesting bankruptcies and distress situations around the companies that had built the infrastructure for the internet. So there was famously this company called Global Crossing and then there was Enron and WorldCom and just bankruptcy and restructuring was a very happening, cutting-edge spot. Wachtell, not obviously, but for those who don’t know, is famous primarily for M&A, but also had an excellent bankruptcy practice.
Leonard Rosen—Wachtell, Lipton, Rosen & Katz—Leonard was still alive at the time. He had retired but was still around. And we had a sort of an outstanding bankruptcy group that was working on a lot of really interesting things. And the summer I was here, I got more interesting work to do and had more mentoring-type experiences on real-world matters working on restructuring matters than I did in M&A. In addition, as lawyers go, I’m pretty good at finance. I have a master’s degree in economics. The issues that come up in restructuring appeal to me intellectually and I found what I was doing to be really interesting and fun. I didn’t come here with that intention, but to me it was, “Okay, this is where we are in the cycle, these people seem great, this is really interesting.” That’s sort of how I stumbled into my career.
Victor M. Braca: You know, when I started Momentum, I did it because I love talking to business people. I wanted to inspire people with real stories—stories of how people built something from nothing. But what I didn’t expect, not in a million years, is how much those episodes would mean to the families of my guests. I’ve had people reach out to me and tell me, “Victor, I watched my dad’s episode three times. Thank you for capturing a piece of him forever.”
And that’s what led me to start Life Vault Films, guys. It’s a way to professionally capture your parents’ or grandparents’ full life story—from where they were born to how they built their life, their family, their values, their business, all of it on film forever. It’s not a tribute, it’s not a slideshow; it’s them telling their story in their own voice so that your grandchildren and great-grandchildren can know them, too. Imagine you felt like you knew your great-great-grandmother. Wouldn’t it be amazing to see her smile and hear her voice? That’s what Life Vault Films gives you. Click the link in the description to learn more. Because stories fade unless we capture them. Let’s get back to the episode.
I’ve heard you tell a funny story about having to bail on a wedding because you were in DC with Hank Paulson. Can you tell that story?
Josh Feltman: Yeah. This is in 2008. I met the woman who is happily now still my wife. I had met her in 2007. We were seriously dating and the wedding in question was—she was going to be the maid of honor in her childhood best friend’s wedding. The wedding was in New York City and her family was very close with the bride’s family. It was one of these things where you’re sort of introduced to your girlfriend’s family in a more robust way. So it was a non-trivial moment in our relationship.
About a week before—and it was in New York, right? And we lived in New York. It should not have been hard to accomplish attending a wedding on a Saturday night. But as it transpired, I think it was the Sunday night before I had to go to DC. What had happened was Congress had passed this legislation which was colloquially known as “Hank Paulson’s bazooka.” Basically, they passed a piece of legislation that said, “Hank, you can do whatever the heck you need to do to save Fannie Mae and Freddie Mac.” We were getting into extremely novel territory in terms of government powers, and Paulson called Wachtell and said, “We’d like you to be the Treasury Department’s counsel to deal with Fannie and Freddie.”
So I was staffed on this SWAT team that went down to DC and we took out conference rooms in the hotel right next to the Treasury Department. I was there all week and I was talking to my girlfriend—now wife—”Oh don’t worry, I’ll be at the wedding on Saturday.” I couldn’t tell her what I was doing. We were completely sworn to secrecy. Wachtell couldn’t get paid, we couldn’t get indemnities… it was all completely pro bono and it had to be completely secret. We flew down on separate planes; we didn’t want 12 Wachtell Lipton lawyers on the same shuttle because we didn’t want to be noticed. And the markets were extremely on edge—remember Bear Stearns had gone down earlier in the year, Lehman was considered to be on edge.
Every day I would tell my girlfriend, “This is crazy. I wish I could tell you more about it. I’ll see you Saturday.” On Friday night I missed the rehearsal dinner. Friday afternoon it was like, “I can’t make it back for the rehearsal dinner. Will you be there tomorrow?” “I’ll be there tomorrow.”
And then of course the next day—this nationalization of Fannie and Freddie was announced on a Sunday morning. This was the Saturday morning and at a certain point I just realized I wasn’t going to make it. And I called my wife and I said, “Listen, I know I haven’t really been able to tell you what I’m doing. I know it’s really meaningful for both of us that I’m at this wedding, but I can’t make it.”
There’s just total silence on the other end of the line. After a couple of seconds I said, “Are you there?”
And she said, “I’m here. I can’t talk. I’m going to hang up right now because if I talk I’m going to cry and ruin my makeup.” And she’d been getting her makeup done for like three hours.
I said, “Just do me a favor. Tell your father to wake up early and turn on the news early tomorrow morning and send him my apologies.”
And that night we signed the papers to nationalize Fannie and Freddie. I gave Paulson the pen. I don’t want to exaggerate my personal role in the nationalization, but in terms of dramatic film-worthy moments, I gave Paulson the pen. I handed him the piece of paper. And then the next morning I was in the background at a press conference where this was announced and it was the biggest thing in the world. My relationship happily survived; my father-in-law was suitably impressed. It’s now a bit of a running joke with my wife and her still best friend who has forgiven me.
Victor M. Braca: You’ve been at Wachtell for 23 years. Tell me about making partner. I’ve heard the quote that your career starts when you make partner. Which camp would you say you fit into when you made partner—scaling back or doubling down?
Josh Feltman: I would have been more energized by it. But I did feel it more as a continuation. It’s exceedingly nice to be promoted, but I felt continuity as opposed to a massive quantum leap. I did make partner shortly after the financial crisis. During the financial crisis I can’t even tell you how hard I worked. From Fannie Mae/Freddie Mac, then we worked on Lehman Brothers, Wells Fargo, Wachovia, the bankification of Goldman Sachs… it was just utter chaos for months and months. I had been working as hard as one could possibly work. If I tried to do it now, I would drop dead.
I started as a partner on January 1st, 2010. Now you’re in a recession, but restructuring was really hopping. So I was still quite busy, but I don’t think I could ever work harder than I worked in the fall of 2008. I felt a responsibility—I did not feel like, “Oh I made it and now I can sit back.” I felt like I got to earn this every day. And to some extent I still feel that. Having the partner title also just opens up some possibilities for new experiences.
Victor M. Braca: Wachtell is known for its singular New York office, small team, lock-step model, and its huge presence in M&A. You mentioned at Stern that you guys advise on 60% of the top 25 global M&A deals every year. What does it look like to be in restructuring at a firm that’s so widely known for M&A?
Josh Feltman: Our M&A practice really is premier. I don’t know… I do my thing. We have a bunch of corporate clients that don’t themselves file bankruptcy typically if you’re a Fortune 100 company, but they have needs in the financing area. They have needs in the bankruptcy area because one of their suppliers is going bankrupt. I like to think that I contribute to the franchise indirectly by being an additional touchpoint. Wachtell is not going to do patent filings or small real estate purchases, but our big clients do have problems that touch on idiosyncratic financing and restructuring issues.
Another example would be our most famous recent matter on the M&A front: compelling Elon Musk to close the Twitter deal. One might question whether that was good for society, but as a matter of corporate law and enforcement of contracts, it was an incredibly important case. And one of the ways that Musk was trying to get out of buying Twitter was through his financing commitments. And with another one of my financing partners, we joined the Twitter litigation team. I wasn’t taking depositions, but I could help my partners understand the nuances of bank commitment letters and how Morgan Stanley would think about this. So we do contribute in our way. And then my other contribution to the firm is I have my own practice and my own clients. I am certainly not in the wheelhouse of the firm’s core competency. We are not diversifying our practice—we’re never going to be like people who file patents. But there is a room and a necessary function for people who do what I do.
Victor M. Braca: Hedaya Capital Group is a trusted business advisor helping entrepreneurs unlock the growth potential of their businesses with tailored accounts receivable factoring and working capital solutions. They’re a family-owned, approachable team who listen and provide solutions while sharing their business experience and knowledge to help protect clients’ interests. They work from a core of old-world values where ethics and integrity have meaning and new-world thinking where speed and flexibility ensure success. Visit hedayacapital.com. Back to the episode.
Josh, you’ve mentioned how your early mentor at Wachtell, Hal Novikoff, shaped the way you look at deals. I want to ask you about mentorship in general.
Josh Feltman: This firm being one office and small and intimate is largely devoid of bureaucratic structures. We don’t have a ton of formal training. We’re sort of perpetually short-staffed and so learning by doing is the way here. You cannot be successful here if you don’t have the confidence to just step into things that you’ve never seen before and to ask questions. You have to have the confidence in yourself that you’ll figure it out, but the humility to know that you don’t know what the hell you’re doing.
And so the day-to-day mentoring that goes with being in the trenches together is exceedingly important here. The relationship I had with Hal and a couple other senior guys… it was just, “Okay, you don’t know how to do this and you’re not going to be the one to negotiate this, but you’re going to spend the next three hours sitting in front of my desk and you’re going to listen to me take these phone calls. You’re going to listen to me yell at these bankers or smooth-talk this other lawyer, and then when I hang up, we’re going to talk about it.”
Law is to a great degree an apprenticeship model. It is more of a vocation. That mentorship is just critical to your development. Nobody can train you how to have judgment in a formal way, but you can learn how to have judgment by watching the fellows who are senior to you. “Why’d you give up on that point?” “Well, Josh, that point’s not really important. We need this point.”
The deals you’re working on are complicated and you’re a smart guy and you feel like you should win on everything. If you insist on that you’re going to fail because everybody’s got to win for there to be a deal. Mentorship is literally learning how to have the judgment of being a lawyer. It was critical to me to watch people who I consider some of the most brilliant people do what they do.
I try to follow the same path. It’s one of the reasons why we have a five-day-in-the-week office policy. The reason for that is because you have no ability to learn your craft or judgment if you aren’t present. If you work for me and a banker calls, I literally shout at my associates, “Dave, get in here! Banker’s on the phone!” I am never going to dial you in on your cell phone so you can join from home. We believe in highly present mentorship here.
It’s fun to watch them develop. We just made a new partner in my group last two weeks ago. It’s very lovely to see this guy who came in as a very raw talent emerge into a lawyer who I can take with me to a meeting and tell him to handle things without me because I can just be the gray-haired guy. It’s totally rewarding. But the business model also depends on it—it makes my life easier. I like to go home and be with my wife and children. If something needs to be done between 7:00 and 9:30, I can give it to my mentees and then pop back online after my kids go to bed. So, it’s a win-win-win.
Victor M. Braca: Wachtell is famously one of the top legal advisers to creditors. I heard a story—industry lore—about Leonard Rosen. He was advising a debtor on a deal and he got physically sick because of the sheer volume of work. And so since then, Wachtell only represents creditors. Is that true?
Josh Feltman: It may be literally true. It’s probably gestaltingly true. Although I wouldn’t say that Leonard or anybody else here worked any less hard for only representing creditors. I think the story is they did have this huge case where they were representing the debtors. The problem in bankruptcy, if you represent the debtor, is you need a lot of resources because you have primary responsibility for a huge administrative task in addition to the deal task. The administrative task is coping with court and all the various constituents: employees, suppliers… it’s an enormous task and those who do it well—Kirkland & Ellis, Latham, Paul Weiss—need to be able to bring serious resources. More associates per partner. We just don’t have that here.
We didn’t then. When I joined the firm we were 160 or 170 lawyers. To do a debtor-side bankruptcy you probably had to take 50 or 110 lawyers. It’s just not functional. So, I think the story led to the nature of the development of our practice: we’re going to be on the creditor side of this thing. We really can’t take a large company into bankruptcy.
Victor M. Braca: I remember when you spoke at Stern you mentioned that people occasionally leave law for private equity or a hedge fund. It reminded me of what Irwin Dweck said. He said: “One of the biggest mistakes I see young people make is looking ahead. When you’re a second-year at a law firm and you’re trying to act like a partner, you fail to realize that the greatest career capital you can build is what’s right in front of you. If you’re not great at what you’re doing as a second-year lawyer, you’re going to miss everything.” Josh, what makes a standout associate?
Josh Feltman: That’s a very interesting quote. I think that’s very wise. If you do very well with what you are doing at any law firm worth its salt, the reward will be more responsibility. You pour yourself into what you’re doing. You show that you care. That is how you will advance. You don’t advance by kicking things down the ladder.
To that I would add: we have a lot of very intelligent people who apply to this firm. My preference in terms of hiring is we also need people who have confidence. You can’t just be a complete bookworm. You got to be curious and you got to have the courage to ask questions. If I give you something to do and what I’m saying is foreign to you—which it ought to be—you need to have the confidence and the curiosity to ask questions. I tell my associates my door is always open. So the good associates are the ones who darken my door. They show up and say, “You gave me this to-do. I really don’t get it. Can we talk for 10 minutes?”
Any associate who takes an assignment from me and then spends six hours beating their head against the wall and then produces a mediocre product is not a good associate. A good associate is one who confesses, “Josh, I don’t know what the hell you’re talking about,” or, “I’ve never seen this before.” I need an associate who has the intelligence to be able to do what we do, but the confidence to confess their ignorance and ask for help. You can’t impress me by beating your head against the wall for eight hours. I need more productivity than that. I would really encourage anybody who’s listening: don’t be afraid to show your inexperience or ignorance. Go to your partners and say, “I could really use five minutes of your time.” I like a strong personality—the confidence to have enough faith in yourself that your confession of ignorance is not going to be viewed as a confession of incompetence. Those are two completely different things.
Victor M. Braca: I want to shift into some of the notable deals you’ve advised on. Liability management exercises have seen a lot of popularity in recent years. You were front and center for some of the most innovative restructuring ever: AMC, Toys R Us, Express. What is “liability management”? How does it differ from traditional Chapter 11 bankruptcy?
Josh Feltman: Toys R Us tragically was not a liability management exercise at the end; it was a liquidation. But what liability management is… there’s just a generic literal meaning that is so broad as to be meaningless. One way you manage your liability is by paying your bills. But what we mean in the restructuring space by liability management now is dealing with financial distress not through the mechanisms of the court in bankruptcy and not through “right-way” capital market transactions (where everybody gets paid what they’re owed). Liability management these days is finding a way to deal with your existing contractual obligations and transform them without the administrative expense, time, or constraints of the bankruptcy process.
Victor M. Braca: Take us into the Toys R Us deal for a second. What did it look like being a part of that deal during the decision to liquidate?
Josh Feltman: Yeah, it was terrible. The most “famous” moment of the Toys R Us bankruptcy… there’s an attorney at Kirkland & Ellis, Josh Sussberg. He begins his opening remarks at the first-day hearing by singing the Toys R Us jingle—which might not be familiar to everybody your age, but to anybody my age, everyone could sing that whole song by heart. There really genuinely was an air of sadness about this case.
The hope at the outset was to restructure it, and at the end of the day that was not possible. The liability management that went on with Toys R Us in the four or five years prior made the ultimate reorganization impossible, which is tragic. Being in the room… that was terribly sad. And it wasn’t just because I have nostalgia for buying Legos in Paramus. There were 30,000 employees.
At the end of the day, my clients took a lot of heat for somehow being responsible, which they were not. But it was convenient to blame the lenders who basically said, “We’re not going to lend anymore.” I don’t know how you could be faulted for not losing even more money than you already lost. At a certain point, it’s got to stop. But yeah, it was a total complete drag.
Victor M. Braca: What’d you tell your kids that night?
Josh Feltman: My kids were very young—probably like two, five, and eight. I didn’t say that I killed Toys R Us, but I did say it is dying. During the liquidation sale, I took them toward the tail end. I was saying, “Look how empty these shelves are. The store is going away, but we can get some discounts.” A lot of the elite stuff had been cleared out. They were not sufficiently attached to it at that age, but it was the first time I talked to them about what I do for a living. They don’t blame me.
Victor M. Braca: Out of all the deals you’ve done, what would you say has been your biggest accomplishment?
Josh Feltman: I worked on Fannie Mae and Freddie Mac. I worked on Bear Stearns. But I was young; I played my part, but I’m not going to sit here and take credit for rescuing Fannie Mae. Those were super exciting.
I think probably some of the deals I worked on and sort of accomplished the most in an abstract legal way didn’t necessarily have great outcomes. Relatively early on in my partnership, I ended up taking the reins on the restructuring of Education Management, a for-profit education company. It ended up being an early example of the type of liability management we’re seeing now. The reason for that was the company was unable to go bankrupt. If an educational institution went bankrupt, its students would not be eligible for federal loans.
Some of the creditors figured they could have hold-up value. The power of the bankruptcy code is that it can compel holdouts who are saying, “I’m not going to take my share of the pain,” to share the pain. But we were unable to restructure in court because they’d lose all their students. We were between a rock and a hard place. And along with my colleagues, I said, “We’re going to do this liability management transaction.” I remember the lawyers for the creditors saying, “Yeah, you can’t do that. It doesn’t really work.” And I got really animated. I said, “Stop saying that. This is the way forward. I will make it so.” And I literally said—this is almost embarrassing—”At the end of the day, they’re going to erect a statue of me in Pittsburgh.” It was a good Braveheart speech.
We went ahead with the deal. The holdouts sued in federal court and they didn’t get an injunction, but they got a ruling from the judge that he found a high probability that the holdouts were correct on the merits. It held us up and we appealed to the second circuit and we won. It was incredibly satisfying because these guys had bought this position for the purpose of holding us up. They thought they could terrorize Goldman Sachs into buying them out, and I just told everybody, “No, we’re going to do it this way. Screw those guys.” And we won. Not the world’s greatest story because eventually the company sort of had to liquidate anyway, but from a pure Josh Feltman value-add, fascinating legal problem… vindication save the day in the moment. It was terrific.
Victor M. Braca: I want to shift outside of business. There have got to be times where in the moment you have to make a choice between work or family. What do you do?
Josh Feltman: One of the choices I made—and I didn’t have to fight my wife on this—is we live in Manhattan. I can be in the office and be home in 17 minutes. Wachtell is on 6th Avenue; I can get home in 15 minutes. Now, would I have enjoyed living in a big house in the suburbs with a yard? Perhaps. But we love living in the city and the culture.
Do conflicts still come up? Yes. My wife’s father was a high-powered litigator at a New York law firm, so she sort of grew up with this. She sort of gets the drill. As we talked about earlier, she accepted my marriage proposal in 2009—a year after I abandoned her for her best friend’s wedding. So she completely knew what she was getting into. I am more than usually lucky in terms of the resources I have from familial help and an exceedingly understanding wife.
The other way I’ve organized my life is I usually leave the office in the dinner-time hour. I usually try not to have phone calls between 6:00 and 8:30 or 9:00. Doesn’t always work—not even close—but I like to go home and be with my family for a couple of hours. And I don’t drink coffee and I don’t sleep. After my kids go to bed…
Victor M. Braca: You’re not a coffee drinker?
Josh Feltman: This is tea for those of you about to call on me. My point is: my two organizational principles are I live in Manhattan and I block out a couple of hours. I’ll tell my associates: “You can send me something at 11 at night or midnight and I’m going to be up till 2 or 3 anyway.” Is that a personal sacrifice? I don’t experience it that way. It takes management to have a robust, satisfying career and also a meaningful, loving home life. I think by and large we’ve managed it.
Victor M. Braca: Josh, you’ve mentioned mentoring associates, you speak at conferences, and you teach. Why are these things so important to you?
Josh Feltman: The mentorship—you could be cynical and say it’s just part of the practice. But it’s satisfying in and of itself. One feels a moral obligation to repay the spirit of my mentors. Being in the dirt on the details of deals is fun, but stepping back and saying, “Well, what’s the through-line here?” is both intellectually engaging and professionally helpful. It’s the forest and trees thing. I work a lot in the individual trees; pruning them metaphorically. It’s highly satisfying to step back and see the forest.
I held a seminar a couple weeks ago for a bunch of clients where I invited a couple of professors who are friends of mine to speak on trends in bankruptcy. I think the clients got a lot out of it and it helped them position themselves. It was a lot of fun. We had a couple glasses of wine and some cocktail food and listened to two genius professors. That’s a really fun way of doing work.
Victor M. Braca: We have a signature closing question. The show is called Momentum. I want you to look back at your career from joining Wachtell to meeting with Hank Paulson. What would you define as your “Momentum Moment”?
Josh Feltman: It probably was the financial crisis. It’s just really cool to sort of be at the focal point of the world—in meetings with Jamie Dimon when he’s talking about what the hell they’re going to do with exposure to Lehman Brothers. But the other reason would be that from 2005 to 2007 a ton of lawyers left law to go to private equity firms or start hedge funds. The perception at the time was that law is a good career, but it’s not a way to get super rich. Starting a hedge fund was the way to get super rich.
I had clients who called me and said, “Hey, this guy’s starting this distressed debt hedge fund… they raise $2 billion, take 2%… they pay you like a million dollars.” I did not fall for the temptation. I know a lot of people who did and then got fired in 2008. There’s a “there but for the grace of God” aspect to this. That period in the mid-2000s dwarfed in terms of activity. I think that’s the answer because I made it through that “long dark night of the soul” where I did not give up on my career. I decided I was happy as a lawyer and then that was validated by the financial crisis—both in terms of, “Oh my god, I probably would have lost whatever job I had taken,” but also in terms of, “Wow, this is a super exciting, interesting, satisfying place to be.”
Victor M. Braca: The main takeaway I’ve gotten from you in the past almost two hours is that you’ve always been all in on your goals. Do you see any echo of those time periods in the market today? A lot of people are talking about AI.
Josh Feltman: One of the things my mentor Hal told me… he’s like, “Look, Josh, yes there’s a macroeconomic cycle. But there’s always going to be stupidity, there’s always going to be greed.” If AI is in fact transformative, it’s going to create incredible opportunities for bankruptcy lawyers because it’s going to obliterate entire industries that are overlevered or over-capitalized. The only constant is change. If you find yourself as a restructuring professional and the only constant is change, you’ll never be too bored.
I will never make a billion dollars because I founded an AI company. But I do feel I’ll always be satisfactorily employed—intellectually and in terms of having fun. Are we at a moment right now? I think we’re always on the cusp of a moment like that. It’s really been since the financial crisis that we had a real recession. I don’t want to be a forecaster, but it’s coming. My career will see one more great cycle in terms of magnitude. So I’m not worried about getting bored.
Victor M. Braca: Josh, it’s been 2 hours, so I really appreciate it. Thank you so much for taking the time.
Josh Feltman: Sure.
Victor M. Braca: Cheers, guys. Thanks so much for listening. At the end of every Momentum episode, I like to distill the conversation into three key takeaways.
First: master your craft, but have the confidence to confess your ignorance. Josh geared this toward young adults, but I think it’s applicable to everybody. If you don’t know the answer to something, don’t try to BS your way out of it. Confessing your ignorance is the honest thing to do and the most productive option.
Second: find a mentor and then find another one. Josh explained how pivotal it is to sit in on meetings, to listen in on calls, and overall get as much exposure as possible. School is great, but the real learning happens on the job. If you want to be the best, you have to learn from the best.
And third: do something that excites you. You don’t have to chase your number one passion, but if you want to be the leader of your industry, you have to love what you do. Josh is known as one of the best within the finance and restructuring world. He works every night from 11:00 until 2:00 in the morning. He doesn’t have to do that; he wants to. That’s the key to a successful, fulfilling life.
If you enjoyed this episode, I highly encourage you to check out my conversation with Eddie Rishty. Eddie is a partner at Debevoise & Plimpton. His resume is just as stacked as Josh’s. His clients include JP Morgan Asset Management, Carlyle, and two of the richest people in the world. Funnily enough, Eddie also has a great story from the ’08 financial crisis—he was in the room when Bear Stearns collapsed. I also gave Eddie two resumes: a scrappy hustler who went to Brooklyn Law School and a Harvard graduate. I asked him which one he would hire. To check that out, click the link in the description or search “Momentum Eddie Rishty.”
And with that said, please share with a friend and be sure to follow or click that subscribe button wherever you’re watching. Help support the Momentum mission. I look forward to seeing you in the future. See you next time.
Before we go, a reminder from our amazing sponsor, Advanced Solar Solutions. Federal solar incentives expire at the end of the year, December 31st. Don’t miss out on 0 down and even a new roof on them. Text a photo of your electric bill to 347-455-8430 today. Thank you for watching. See you next time.
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