The panelists will explore the evolution of the law concerning fiduciaries’ duties when the company is insolvent, in the zone of insolvency or subject to “deepening insolvency.” Recent decisions from Delaware and other jurisdictions limiting remedies by creditors will be discussed, along with defenses such as the business-judgment rule, in pari delicto, and exculpation and release. The panel will put these issues into focus, citing numerous recent experiences and decisions they have faced, as well as recent cases in which breach or aiding and abetting breach of fiduciary duties has been litigated. The discussion will also address how key players can protect themselves when they volunteer to stand in harm’s way. The panelists will offer their insights into key coverage issues, the types of insurance available, practical considerations concerning the most important policy provisions, competition among various claimants and constituencies for insurance proceeds, and if and when insurance is an asset of the estate.

The panelists will discuss the increasingly familiar role of the newest “C-level” executive, the Chief Restructuring Officer. The topics will include the reasons for and the process of hiring a CRO from the perspective of the officer, the company and other stakeholders, compensation of the CRO and the importance of securing appropriate protections including coverage under a D&O policy. The panelists will explore the scope of the CRO’s authority and responsibilities, from day- to-day management, interaction with the board of directors, management, investors, lenders and other creditors to areas of potential personal liability such as wage claims, withholding taxes and environmental liabilities. Panelists will discuss how the CRO, often hired by the company at the insistence of its lender, handles both real and perceived conflicts of interest and confidentiality issues. Those issues often arise when either company is uncomfortable disclosing everything (because the CRO is seen as the eyes and ears of the lender) or the lender becomes adversarial because the CRO takes steps that are in the best interest of the company (but perhaps not the lender). The panelists will also discuss the decision to take a company into bankruptcy and the unique challenge a CRO may face in that arena, including retention, conflicts and compensation.

The panelists will discuss the “nuts and bolts” of chapter 9, including who can seek relief under chapter 9, which sections of the Code apply, plan formation and plan confirmation. The balance of the program will focus on recent developments in the law resulting from the recent significant increase in chapter 9 cases, as well as a discussion of the current financial strains on states and municipalities that should result in a further increase in filings.

In most of the larger public company cases, the reorganization plan is primarily centered on a major restructuring of the debtor’s capital structure. For example, in the case of Fairpoint, which entered chapter 11 with $2.7 billion of secured debt, the reorganization plan reduces the secured debt to $1.0 billion, converts the $1.7 billion of formerly secured debt into various classes of equity, and wipes out existing trade debt and equity. How did the parties arrive at this arrangement? To answer that question, the panel will select several recent cases for case studies and provide a presentation/role play on the methodology used by counsel and the various financial advisors to (1) develop an initial position or opinion as to what the post confirmation capital structure should look like, (2) develop and assemble support for that opinion, (3) negotiate the new capital structure with the other real parties in interest and (4) advocate their positions before the bankruptcy court.

Whether a given contract is “executory” and when it can be assumed, assigned or rejected, continues to generate debate, dispute and litigation. The panelists will examine the fundamentals of the § 365 analysis (such as when a contract is or is not “executory”) and the complexities of its application in various contexts such as rights of first refusal; intellectual property and restrictive covenants; defenses of nondebtor parties to assumption and assignment (including the nature of the contract (i.e., personal services) or the mechanics of the contract (i.e., whether a nondebtor party can tender its performance and attempt to render the contract nonexecutory); and whether a § 363 sale can sell free and clear of the non-debtor party’s rights under § 365.

Chapter 11 plans have been making a comeback of sorts recently. While a plan (as opposed to a § 363 sale) may be the presumed path of a chapter 11 case, an attempt to obtain confirmation of a plan provides more opportunities for creditors to influence the outcome of the case. Creditors are increasingly attacking plans on “structural grounds,” often even before votes are solicited. This panel will explore recent developments regarding a debtor’s ability to formulate and obtain confirmation of a chapter 11 plan, including case law on artificial impairment of claims (see Quigley Company), “gift plans” and the absolute priority rule, classification of claims and improper “gerrymandering,” and third-party releases, injunctions and exculpations.

Claim allowance is the first step on the path to recovery. This panel will address the claims-allowance process, including the right way to file a proof of claim and the various burdens of proof in claims-objection litigation. The panel will also address the increasingly common use of ADR procedures with respect to claims and the need for and methodologies used by courts in estimating claims. Finally, the panelists will discuss a growing and important body of case law surrounding designation of votes under § 1126(e). (DBSD North America, Quigley Company and Adelphia)

The expansion of the Internet and the arrival of email have provided bankruptcy professionals with a number of very useful tools. At the same time, the Electronic Age has ushered in a host of new ethical issues. The panelists will examine the impact of technology on professional responsibility, discussing such issues as (1) confidentiality-related concerns that arise from professionals’ increasing transmission and storage of electronic information, including the inadvertent emailing of privileged information and spoilation issues; (2) the use of web pages and the Internet to develop business opportunities; and (3) the growing incivility in electronic communications in large chapter 11 cases and related adversary proceedings.

Article 9 of the Uniform Commercial Code is the part of the statute that most often collides with the Bankruptcy Code. However, security interests are created by other Articles of the UCC. This panel will address current developments relating to attachment, perfection and priority of security interests, as well as anticipated amendments to Article 9 that were recently approved by the National Conference of Commissioners on Uniform State Laws. It will also survey the “other parts” of the UCC that are most likely to be encountered by bankruptcy practitioners when investigating a secured creditor’s rights in various types of personal property.

Bernie Madoff, R. Allen Stanford, Shawn Merriman, Weizhan Tang, John Anthony Miller, Norman Hsu and Norman Petters—all are virtual household names for having followed the business model generally associated with Charles Ponzi. The pain felt by the duped investors may be only the beginning. Those who invested with the accused perpetrators of these frauds are also in the unfortunate position of learning another term of art—“clawback”—avoidance actions in which defrauded investors not only suffer the loss of what they invested with the Ponzi scheme perpetrators, but may also have to give back whatever limited distributions they did receive. The panel will include an in-depth discussion on the application of avoidance action provisions to the recovery of funds from investors. The discussion will include the application of both preference and fraudulent-transfer theories, focusing on recovery based on actual fraudulent intent, and the seemingly unassailable presumptions of insolvency of the debtor entity applied in actions based on constructive fraudulent transfers.

Valuation issues shift throughout a chapter 11. What is relevant for adequate protection in first-day hearings on cash collateral of DIP financing may have limited relevance in a motion for relief from stay, and no relevance at all at a confirmation hearing. Methods used at any of those times to value commercial real estate bear little resemblance to methods used to value the businesses operating in that real estate. What type of valuation is needed when a plan challenge brought by a secured creditor is even different from the valuation needed when a committee brings the challenge— and what happens if they are both challenging confirmation? This panel will be an interdisciplinary overview of valuation issues during an operating entity’s chapter 11 case. Topics will include going-concern valuations, when they are needed and the methods used to undertake them, including discounted cash flow, comparable company and precedent transactions. The panel will also discuss present valuation of payment streams required in contested chapter 11 plan confirmation proceedings, including the directives of Till, the application of those directives, how courts determine whether or not an efficient market exists and, if so, how to apply what that market is saying.

The recent depressed economic cycle saw an unprecedented increase in the number of organizations where creditors exchanged their debt claims for the equity of their borrowers and thereby took control. In the past, such situations, while infrequent, were considered value plays or strategic equity investments by organizations experienced in such control positions. This time around, the new owners are forced to assume such positions on a defensive basis: In their eyes, with marketplace values being so depressed, the only sensible option is to assume ownership. Such organizations include first-lien lenders, insurance companies, CLOs and the like. This panel will explore this dynamic and what it means for the prospects of the organization during this period of “Accidental Ownership.” What are the structural implications? What are the difficulties in consummating the restructuring? What does it mean for management and their personal and professional opportunities? What are the prospects for the business during this transition period? Are there benefits? What are the drawbacks, and how will this governance impact the investment strategy?