Back in black: fixing failed companies is the new game in town for Argentina's money crowd. (Finance).

The unraveling of the Argentine economy has produced one of the largest private debt crises ever seen-and that means business.

Competition is stiff for huge commissions, known as success fees, of up to 1% for successful restructurings. U.S. investment banks like J.P. Morgan Chase and Morgan Stanley have snagged a half-dozen mandates each, including marquee firms like Telecom, with debt of US$3.3 billion, electricity transporter Transener and cement maker Loma Negra, which is relying on help from Argentina's former finance secretary, Daniel Marx, to renegotiate its $430 million debt load.

Export-oriented firms like energy giant Perez Companc, which has to renegotiate $2.3 billion in debt as a condition for its sale to Brazil's Petrobras, should fare better than most. The peso's 75% slide in value since January means Argentine goods sent abroad are extremely cheap for foreigner consumers, which bodes well for exporters--if they have enough cash to finance a burst of new activity.

"Every day that passes with such an exaggerated exchange rate represents a phenomenal opportunity for them," says Ubaldo Aguirre, a partner at Aguirre y Gonzalez, a Buenos Aires investment boutique handling eight restructurings.

A horrific debt overhang does not help matters. Even foreign-owned utilities and energy firms, usually liquid with cash or likely to benefit from a devaluation, are drowning in $50 billion in debt, mostly owed to bondholders across the globe. Sixty-five Argentine companies have defaulted since the beginning of the year. Argentina accounted for nearly 40% of corporate defaults worldwide in the first quarter of the year, itself a record period, according to Standard & Poor's.

About a third of Argentina's corporate debt was issued by utilities. They once were the country's safest debtors, but their rates in January were converted into pesos and frozen. Utilities, overwhelmingly foreign-owned, now say that can't cover operating costs. The government, willingly or not, might have to take over the same firms it privatized only a decade ago.

Although there is talk of a rate hike, there's no guarantee hard-up consumers will be able to pay. "Time is definitely a factor conspiring against reaching a sensible and rational agreement," says restructuring consultant Guillermo Jofre, former chief financial officer of Argentine telecom Impsat. "The slow pace of negotiations with the government means the best a major utility can hope for is a complex, contingent agreement that holds them over until all these variables are settled." Results. Jofre brings something undeniably attractive to overburdened corporations trying to restructure: He's done it. While most firms were busy seeking government protections like subsidies, tax benefits and favorable legislation, Jofre went to work renegotiating Impsat's $1 billion debt, making it the first and only company at press time to have completed a deal to restructure.

That's a switch. Rather than an orderly, predictable bankruptcy proceeding, bailing out debt-ridden firms in Argentina usually means rescuing chummy, insider shareholders at the expense of creditors. The financial pressure to pay investors first causes a cash crunch, often dooming otherwise solid companies to mass layoffs and eventual closure. "Put simply, protection for creditors barely exists in Argentina," says Santiago Carregal, a partner with Buenos Aires-based law firm Marval, O'Farrell & Mairal.

In the case of Impsat, priorities were reversed. Registered in the U.S. state of Delaware, Impsat was able to wipe out the stakes of some powerful shareholders overnight, among them Morgan Stanley, British Telecom and lead investor Grupo Pescarmona of Argentina, in favor of a deal with creditors to swap $700 million in debt: in exchange for majority control. "Impsat is definitely a leading case of how to get things done in spite of adverse conditions," says Agnirre.

In the process, 1,400 jobs at Impsat were saved, no small feat in a country where unemployment tops 24%--more than double the Latin American average--and shows no signs of dropping soon.

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