Restructuring is flavour of the month right now, but even the experts know little more than the rest of us about the long-term implications of the credit crunch.

As John Houghton, the London-based global co-chair of insolvency at Latham & Watkins, puts it: "There are so many repercussions . . . in terms of consumer confidence and all the associated things like retail, homebuilding and so on. It's a big rock that's been dropped into the pool and the waves are spreading outwards. It could be very far-reaching, and no-one really knows how big the splash is going to be."

Houghton has spent 20 years advising companies and their lenders on how to cope when they run into financial difficulties, working out whether their problems can be solved with a restructuring or the injection of more cash or, failing that, dividing up any assets between creditors.

But the current crisis is different. There are now far more parties lending to companies than just high street banks. Hedge funds and investment banks increasingly buy and sell the debt of "distressed" businesses, hoping to buy low and sell high when things improve. That means there are a lot more parties taking an interest in how things work out for troubled outfits.

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"The restructuring market is no longer bilateral, with a bank and debtor putting in receivers," Houghton says. "The capital structures have become much more complex and the constituencies around the table are far more varied."

Another complicating factor is that this time many of the problems are with the financial instutitions themselves. Some of the biggest banks have been exposed to huge losses because of their investments in complex financial instruments tied to the US sub-prime mortgage market.

Latham & Watkins has been advising on the restructuring of a number of structured investment vehicles (SIVs), which use short-term borrowing to buy higher yielding, riskier assets.

"Through our involvement in the SIV restructurings we have got a full appreciation of just how profound the sub-prime crisis and the credit crunch really is," Houghton says. "We've seen how far-reaching it is and that makes it very difficult to predict when and if we are going to reach the bottom."

Houghton predicts restructuring in the financial markets will continue until the end of the year and that the knock-on effects in the real economy could last for up to two years after that.

Houghton has been fascinated with the subject since his postgraduate days at Queen Mary College, London, in the 1980s. Initially, he says, he chose a legal career because "my father made me write it down on my university admissions form", but he was inspired to pursue restructuring by one of his professors. "Suddenly this whole new world opened up and I realised there was more to law than conveyancing, probate and matrimonial cases," he says.

Now 46, Houghton shares a birthday with rocker Jon Bon Jovi. Another dubious claim to fame is that he lives with his wife and three children opposite Boris Johnson in Islington. A life-long Manchester United fan, he spends his spare time composing electronic music and "buying modern art for my wife to hate".

After graduating from university, he joined what was then Cameron Markby, now part of CMS Cameron McKenna. "They were doing all sorts of insolvency work for Lloyd's Bank at the time," he says. "It was a very small world in those days: Wilde Sapte was acting for NatWest, Clifford Chance acted for Midland Bank and Barclays was advised by Lovells."

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