Chapter 11: Miscellaneous

Web posted and Copyright © 1/12/98, American Bankruptcy Institute.

The following abstract summarizes the text of submissions made to the National Bankruptcy Review Commission. The abstract is organized by NBRC working group and topic.

The Final Report of the NBRC can be viewed on-line. To obtain a copy of any document shown below, contact the Center for Legislative Archives, Room 205, National Archives Building, Washington, D.C. 20408. The telephone number is 202/501-5350. Mr. R. Michael McReynolds, Deputy Director, will be able to assist with specific inquiries. (The NBRC documents will be housed at this location until June, 1999. Thereafter, the records will be transferred to the Center's archives in College Park, MD.)
 

ID Name Group Other Code
Sec
Cross
Ref
Problem Referenced Proposed Solutions
NBRC-0019 Morten S. Beyer President; Morten Beyer and Associates; "Reforming the Bankruptcy Act," V.2 No. 7 MBA Aviation Oracle (Nov. 1995)(citing Michael K. Lowry, "Air Watch Report").



Subject bankrupt air carriers to more stringent fitness standards prior to discharge.
NBRC-0019 Morten S. Beyer President; Morten Beyer and Associates; "Reforming the Bankruptcy Act," V.2 No. 7 MBA Aviation Oracle (Nov. 1995).


A failed management should leave in disgrace and not be rewarded. Rank and file employees lose their jobs and creditors don't get paid. Pan Am's senior officers walked away with some $16M while few others received anything. Ban golden parachutes.
NBRC-0223 Frank R. Kennedy Professor, Michigan Law School; former Executive Director, Commission on the Bankruptcy Laws of the United States (1973) Cover letter discussing various areas of concern

Author provides a list of 30 "Topics for Consideration by Commission on Bankruptcy Laws." The recommended topic relating to Chapter 11 miscellaneous issues was: Administration of insolvent insurance companies, stock brokerage firms, and savings and loan companies under the Bankruptcy Code. None.
NBRC-0277 Jay M. Goffman Attorney


By permitting companies to restructure without the high costs attendant to chapter 11, prepackaged chapter 11 cases ("prepacks") can save jobs and maximize the return to creditors and shareholders. Use of prepacks over the last five years has been limited by uncertainty. Code should be amended to codify the laws and rules surrounding prepacks so that the use of prepacks might become more widely understood and used.
NBRC-0303 Commercial Law League of America Commercial Law League of America (CLLA)


The Commerical Law League of America believes that the following issue should be considered by the NBRC: What rules should govern the courts' jurisdiction over the administrative affairs of a reorganized debtor Under what circumstances should plan modification be permitted The CLLA believes that these issues should receive moderate priority (no additional details are provided).
NBRC-0303 Commercial Law League of America Commercial Law League of America (CLLA)


The Commerical Law League of America believes that the following issue should be considered by the NBRC: Should industry specific legislation which has been added to the Bankruptcy Code since 1978 be repealed in order to reestablish the historic evenhandedness of commercial law statutes Also, should "straight liquidations" (i.e. chapter 11's filed with initial intent to liquidate) be allowed under chapter 11 Should the Bankruptcy Code be amended to increase meaningful participation by the unsecured creditor body Should there be a good faith requirement for filing of chapter 11 cases The CLLA believes that the issue of industry specific legislation should receive top priority. The CLLA has consistently opposed industry specific legislation and believes that the NBRC should reexamine the Code with an eye towards reestablishing the balance.
NBRC-0320 Robert M. Zinman, on behalf of the Bankruptcy Institute American Bankruptcy Institute ("ABI") Numerous position papers, memoranda and research material 1110
None. Most if not all industry specific legislation, such as § 1110 and the farmout legislation, should be repealed except to the extent that it clarifies non-discriminatory treatment (no additional explanation is provided).
NBRC-0399 Jean E. C. Laborde Chapter 11 debtor


The author provides a copy of her testimony before the NBRC, of which she was only able to present a portion. She states that as a chapter 11 debtor, she has been the victim of "fraud and preceived corruption and the inherent injustices in the Fresno Bankruptcy Court which cost my family and I over $50,000,000.00." Specifically, she states that the chapter 11 trustee and his attorney have been involved with "conflict of interest and insider self-dealings by former corporations. Author requests that the NBRC "help to get an investigation, certified audit or an audit by the General Accounting Office..." with regards to her experiences with the bankruptcy system.
NBRC-0417 Lisa Hill Fenning Judge, U.S. Bankruptcy Court, Central District of California
1129(a) 362(d)(2) According to the author, Chapter 11 isn't working right, and the main problem isn't a broken statute; it's erroneous assumptions and, consequently, misguided implementation. Bankruptcy judges individually and collectively can solve many of the problems by changing the way they approach chapter 11 cases. We need to think about the true nature of the proceedings and the proper role of bankruptcy judges. In a series of three articles in the ABI Journal in July/August 1996, September 1996, and October 1996, the author advances "three simple, interrelated propositions that can serve as the basis for the rethinking process: 1) Chapter 11 is mediation, not litigation; 2) Judges must run chapter 11 cases, because nobody else can; and, 3) Chapter 11 success is defined in business, not litigation, terms.
NBRC-0456 David Baston Private citizen, Chairman of the Official Creditors Committee of Limited Partners and co-investor in a company which filed for reorganization under Chapter 11. Letter from Joseph Patchan to The Hon. Russ Feingold dated 10/29/96 and letter to The Hon. Russ Feingold from David Baston dated 12/3/96.

Author is co-investor in a company which filed for reorganization under Chapter 11 and Chairman of the Official Creditors Committee of Limited Partners which was appointed by the United States Trustee in that case. Author and other investors in the company are upset and feel not enough was done to protect their interests, especially that debtor was allowed to remain in possession instead of the appointment of a trustee to run the business. Something should be done to protect investors, "to show that someone in the "system" is on their side."
NBRC-0513 Richard S. Toder Attorney
1104(c)
Author is a mediator in the Southern District of New York Mediation Program and writes to advocate the use of court ordered mediation in bankruptcy cases. The Code should be modified to make the appointment of an examiner discretionary with the Court, based upon a finding that an examiner is appropriate under all the circumstances. Further, the Court should order mediation of the dispute based upon its own motion, or upon a motion by any party in interest, including the U.S. Trustee.
NBRC-0626 Richard G. Lugar U.S. Senator Letter dated 4/5/97 from Dr. and Mrs. George E. Nomikos to Senator Richard Lugar.

Constituents of Senator Lugar, Dr. and Mrs. George E. Nomikos, write of a contractor who was paid in advance for work on their house, never finished it, then filed bankruptcy when they sued and obtained a judgement. This was his pattern of practice. They claim there were inconsistencies in the contractor's bankruptcy filing, and they filed several objections, but were told that the court could not evaluate the merits of the case unless they filed an "Adversary Complaint" with a $120 filing fee, which they felt they would have needed an attorney to do. They are angry that the contractor could engage in this pattern of behavior in the first place, and that he could avoid his obligations while having enough money to repay his debts. The Senator's constituents write: "We look forward to your serious efforts in addressing this issue, both in terms of our specific situation, and in more general terms of the badly needed reform of the U.S. Bankruptcy Code."
NBRC-0690 Harvey R. Miller Attorney, Weil, Gotshal & Manges LLP
1126 (b)(1) and (2) 1145 (a)(1) "Sections 1126(b)(1) and 1145(a)(1) of the Bankruptcy Code now require compliance with applicable nonbankruptcy law, i.e., federal, state and local laws, to solicit acceptances of a prepackaged or prearranged plan of reorganization." "As a result, what now exists is a bifurcated, cumbersome and needlessly expensive system of disclosure regulation for securities issued under confirmed Chapter 11 plans." "It is recommended that the National Bankruptcy Review Commission consider amendments to the Bankruptcy Code which would create uniform disclosure standards in all bankruptcy cases." Specific amendments are also given.
NBRC-0691 Luc A. Despins & Dennis F. Dunne Attorneys, Kirkland & Ellis
1124
"[T]he deletion of section 1124(3) missed the mark and was not precisely tailored" to correct the problems caused by the New Valley case, and has caused its own problems. Expressly provide that section 502 (b)(2)'s disallowance of post-petition interest will ot apply in cases where equity retains an interest...under the plan on account of its pre-petition equity ownership."
NBRC-0701 Jack M. Zackin Bankruptcy Law Section, New Jersey State Bar Association Memorandum from NJSBA Bankruptcy Law Section, Comments regarding various Chapter 11 Proposals dated May 9, 1997.

Author is forwarding a Memorandum of comments by a special committee of the Bankruptcy Law Section of the New Jersey State Bar Association with respect to several proposals put forward by the Chapter 11 and Small Business Working Groups.
NBRC-0710 Franklin Feldman Attorney Exhibit A - a collection of letters from and to author concerning the enforcement of a Guarantee and legal representation of the company; and, Exhibit B - exchage of letters between author and Michael L. Cook concerning a request for legal fees and a threat of sanctions. 1125(b)
Author invested in company which had filed chapter 11 but which got a new president and CEO whom author thought could turn the company around. Author later became convinced that the CEO had acted in his own best interests, and not those of the company, when the company had to file chapter 11 two more times. Author petitioned for the appointment of a trustee or examiner and was denied, and has been actively involved in the legal procedings of the bankruptcy. Author writes with suggestions for changes in the bankruptcy code based on his experience. If the cramdown provisions of the Bankruptcy Code are to be implemented, a reasonable number of security holders, who it is claimed, voted for the Plan should be required to testify to confirm that they, in fact, received the Disclosure Statement prior to being solicited for their vote, as contemplated by Section 1125(b) of the Bankruptcy Code.
NBRC-0736 David J. Frankel Associate County Attorney
724(b)
At the Commission's discussion on the proposal to amend Code Section 724(b), author was concerned, as were members of the workgroup, with the repective priorities of "teachers" v. "brick-layers" v. "Chapter 7 legal fees". Author was struck by the "substantially equivalent weight" of the arguments on behalf of each group. "Perhaps...a fair resolution would be to allow each group to whare the same priority, with distribution to be made, if necessary, pro-rata."
NBRC-0951 Leslie Carbine, Chris Peterson and Melisa Hills Controller, Senior Credit and Collections Specialist, and Credit and Collections Specialist, respectively, BRIO Corporation


Authors write to inform the commission that they have written their senators and congressman to ask their support for the changes listed below. 1) reclamation should be extended from 10 daays to 60 days; 2) Unsecured creditors need to be better represented on the Creditor's Committee and be more involved in the Bankruptcy prodeedings; 3) Debtors should be curtailed from filing Chapter 11 preemptively against the creditors; 4) There should be a cap on the aggregate amount allocable to professional fees of no more than 10% of the debtor's assets, so that these fees no longer absorb the bulk of the assets to the detriment of the creditors; and, 5) Creditors who ship a Chapter 11 post-petition debtor should receive priority payment status.
NBRC-1009 Harold Smick Jr. Chairman of the Board of Smick Lumber; Member National Lumber and Building Materila Dealer's Association (NLBMDA) Government Affairs Committee; Chair, subcommittee on Bankruptcy


Written copy of testimony of B. Harold Smick Jr. on behalf of The National Lumber and Building Material Dealers Association (NLBMDA).
NBRC-1069 John E. Burke Vice President, Credit & Collections, Corporate Finance & Control, Nestle


Form letter from trade creditors - see prior entries in NBRC-1069.
NBRC-1069 Douglas R. Ernst Controller, Sales Division, Pillsbury


Form letter from trade creditors - see prior entries in NBRC-1069. See file.
NBRC-1069 Rita M. Childers Director, Credit Management, Ralston Purina Company


Form letter from trade creditors - see prior entries in NBRC-1069. See file.
NBRC-1147 Loretta E. Cline President/CEO, Kim Originals International

 xx This is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.
NBRC-1147 Debra Brassieur Corporate Credit Manager, GUND


This is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.
NBRC-1147 Sandra Lewis Eberting Associates


This is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.
NBRC-1147 Susan Holsapple CEO, Wood Apple, Inc.


This is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.
NBRC-1147 Nancy J.K. Abbott Credit Manager, North American Bear Co., Inc.


This is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.
NBRC-1147 Sheryl S. Mott Director of Credit Services, The AT-A-GLANCE Group


This undated letter is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.
NBRC-1147 Bonnie Housch Credit Manager, Wilton Armetale


This is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.
NBRC-1147 Susan Alexander Credit & Customer Services Manager, Stephen Lawrence


This is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.
NBRC-1147 Martin Weinberg Credit Manager, Geneva International Corporation


This is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.
NBRC-1147 Marcia Olson Credit Services Manager, Sullivan, Inc.


This is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.
NBRC-1147 Darlene Arno Credit Manager, Possible Dreams Ltd.


This is a form letter by business suppliers/creditors who complain about certain bankruptcy practices. See other letters in NBRC-1147 file.