Finance and Banking Committee Meeting Minutes

2004 Winter Leadership Conference

The committee teamed with Investment Banking and presented “Chapeau, Sombrero or Fedora: A Lively Discussion About What Hats Investment Bankers, CRO/CRAs and Turnaround Consultants Are and Should Be Wearing.” How do you determine whether you have the right professional for the job? This panel addressed the distinction between financial advisory professionals hired, or recommended by, financial institutions and the roles they play at various points throughout a chapter 11 proceeding. Particular attention was paid to the inherent conflicts that arise among these professionals as the lines among their service offerings begin to blur. Peter Kaufman of Gordian Group LLC served as moderator, and the panelists included James Decker from Houlihan Lokey, Michael Epstein from TRG.

2002 Winter Leadership Conference

The committee had two presentations: "Bankruptcy Remote Lending: Will It Survive the Wall Street Shakeout?" On this panel were two experts—Robert Duffy from FTI Consulting and Krista Miniutti from Simpson Thacher. Mr. Duffy spoke about the effect that cases such as Enron and WorldCom have had on Wall Street's appetite for off-balance sheet financing and the proposed accounting rule changes that are likely to become effective governing the structure and reporting requirements of off-balance sheet financing. Ms. Miniutti discussed the legal structure of off-balance sheet financing and what changes might be in store given the publicity surrounding Enron and Worldcom. The panel's discussion engendered a lively discussion among the almost 50 committee attendees concerning the examiners report in Enron and the implications of the changes as they might affect DIP financing.

The committee also heard a report from Susan Armstrong, Sr. Counsel to PNC Bank, who spoke on the effects of the Third Circuit's decision in Cybergenesis.  While Ms. Armstrong noted that the Third Circuit's opinion had been vacated, she noted that the decision at the district court level was still viable and issues raised by Cybergenesis remain concerns for lenders, particularly in the context of DIP Financing. Ms. Armstrong discussed the factual and legal circumstances surrounding the decision and traps that the unwary lender or counsel to lender could fall into as a consequence of the issues raised by that decision.

2001 Winter Leadership Conference

The Finance & Banking Committee hosted a panel on Tranche B Financing, an important and growing area of asset-based lending. Two lenders described the product and market: Michael Pizette of Back Bay Capital Funding and Larry Klaff of Gordon Brothers Funding. These two market leaders cover much of the market. They described the criteria for eligibility for Tranche B financing, various structures and projected the development of Tranche B financing in the future, particularly as a supplement to senior secured debtor-in-possession financing and as an alternative to expensive mezzanine financing.

In addition, the committee reported on its continued work on the formulation of DIP Financing Guidelines by its DIP Subcommittee.

2000 Winter Leadership Conference

At this year's ABI Winter Leadership Conference, the Finance and Banking Committee and the Asset Sales Committee held a joint meeting at which over 60 people attended. The committee hosted two distinguished panels, which discussed the special problems of liquidating assets using the internet.

On the first panel, Cory Lipoff of Hilco Trading, David Marchick of Bid4Assets.com and William Burke of Liquidation.com spoke about the unique practical challenges and benefits of selling assets on line. The panel observed from experience that on-line liquidation companies were well-equipped to efficiently and effectively handle a variety of transactions, such as claims trading, financial instruments commercial real estate transactions, and equipment sales, but that they have not yet been able to solve the number of problems that arise in the on-line sale of retail goods to consumers. For instance they described how the logistics and costs of fulfillment and other process management issues simply do not permit them to generated value much in excess of what a traditional retail liquidation company might give as "rip" value.

For the second panel. Tracy Sandler of Osler, Hoskin & Harcourt, and Deborah Grieve of Blaney McMurty addressed recent court decisions that have considered liquidation sale of customer information and databases. They discussed the controversies surrounding the sale of internet company customer lists, privacy information, and related computer data. Using the Toysmart.com case as a case study, they illustrated how privacy concerns surrounding these types of assets complicate and potentially frustrate their sale. Finally, they discussed issues arising from existing regulations and competing legislation that has been proposed by Congress to address the privacy issues that arise with respect to the sale of these types of assets.

I terms of New Committee business, the Finance and Banking Committee announced that it will be collaborating with Wilmington Trust to develop content material for "webinar" programs to be broadcast live over internet to ABI member institutions. The Committee is looking for those who wish to participate and general material for programs. If you are interested, you may contact Peter Antoszyk (617) 856-8513 or Steven Golick (416) 862-6704.

The Asset Sales Committee announced that it would like to present a program on the ethical issues raised by bankruptcy sales, including issues presented when the debtor's advisors on sale procedures have close ties to creditor constituencies. Volunteers/speakers for this program should contact Richard Tilton at tiltonr@gtlaw.com.

1998 Winter Leadership Conference

Tom Sommerfield (Business Credit Group, BankBoston NA; Boston), Warren Feder (Gordon Brothers Capital LLC; New York) and David Weinstein (Congress Financial Corp.; New York) gave a presentation on the current availability of credit, particularly in the take-out and asset-based lending sectors of the industry. It was reported that events in the Asian economies and U.S. stock market had little effect on the availability of credit, or the pricing thereof, for these sectors of the lending industry. Both marketing and sales of these types of loans remain strong, although recent trends indicate an upturn in the market for the acquisition of distressed loans. A report from various committee liaisons was deferred to the committee's meeting at the upcoming Annual Spring Meeting.