Even the smallest chapter 11 reorganizations are complex, with many process handoffs, transactions and communication touchpoints. For cases with substantial or volatile creditor populations, the selection of a claims agent capable of helping a debtor company emerge from chapter 11 successfully can be critical.
Claims agent services vary from basic administrative work, such as noticing and validating proofs of claims, to other projects including building online claims forms and creditor portals, and highly complex financial balloting and solicitation work. The ultimate goal of a good claims agent should be to streamline the bar date process and reduce administrative overhead for the debtor company. The best claims agents have developed reputations for serving as invaluable assets to debtors’ restructuring teams by developing solutions to process challenges. In selecting a claims agent, it is important not to overlook the basic services provided. Below are the general key factors to consider when choosing a claims agent.
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by Robert J. Keach
Bernstein Shur; Portland, Maine
The relatively recent decisions of the Third and Fifth Circuits in Philadelphia Newspapers [1] and Pacific Lumber, [2] with respect to the rights of creditors to credit-bid in a sale of assets under a reorganization plan, uprooted the expectations of secured lenders who had come to expect that in the case of a proposed plan effecting a sale of assets free and clear of liens, they would have the ability to credit-bid. In light of the holdings in these two cases, creditors faced the possibility that a debtor can confirm a cramdown plan proposing a sale of assets free and clear of liens by merely providing the impaired creditor with the “indubitable equivalent” of its claim, but denying an opportunity to credit-bid. The extent to which other circuits would adopt the Philadelphia Newspapers holding remained to be seen. Now, at least one circuit—the Seventh Circuit in River Road [3]—has rejected the so-called “plain meaning” construction of § 1129(b)(2)(A) articulated by the majority in Philadelphia Newspapers, instead embracing the Philadelphia Newspapers dissent. This article examines these recent case law developments in the world of credit bidding in plan sales, particularly the Philadelphia Newspapers and River Road cases, and these cases’ differing statutory interpretations.
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On July 6, 2011, the FDIC issued a final rule implementing certain orderly liquidation authority provisions of the Dodd-Frank Act. Under Dodd-Frank, the FDIC may serve as receiver for a financial company if the failure of the company and its liquidation under the Bankruptcy Code or other insolvency procedures would pose a significant risk to the financial stability of the US.
The final rule is intended to provide greater clarity on the FDIC's powers as receiver and how the claims process under the FDIC's orderly liquidation authority will work. It follows a January 2011 interim final rule covering the payment of similarly situated creditors and the honoring of personal services contracts and a March 2011 proposed rule covering living wills, clawback of executive compensation, priority of claims and other related matters. The final rule largely coincides with the interim final rule and the proposed rule but contains several key differences.
Read the full final rule.
ABI is pleased to announce that it will again be hosting the Complex Financial Restructuring Program at Fordham University School of Law in New York City on October 5, 2011. Now in its eighth year with a unique format, the Complex Financial Restructuring Program promotes an understanding of the role of investment bankers and financial advisors in insolvency and restructuring. A case study will be presented to dramatize the various perspectives of parties in interest as they examine strategic alternatives and seek the highest value for a troubled company. Leaders in the industry will play the role of the major constituents as they work through the case study in this day-long program. This year’s featured speaker for the annual Schnelling Lecture will be Paula R. Reynolds, the former CRO of AIG. All registrants will receive the case study in advanced and a free copy of the ABI publication, “Pre-bankruptcy Planning for the Commercial Reorganization: A Brief Guide for the CEO, CFO/COO, General Counsel and Tax Advisor, Second Edition.” Written by ABI members, this publication is also available for purchase in the bookstore. Click here to view CLE/CPE information.
Register for the 8th Annual Complex Financial Restructuring Program.
While a conventional bankruptcy filing is frequently a viable option for a company seeking to reform its capital structure and operations, it is certainly not the only alternative. Recent years have seen a significant rise in prepackaged bankruptcy filings. A Practitioner's Guide to Pre-packaged Bankruptcy: A Primer serves as a guide to prepackaged bankruptcy and assists practitioners in the evaluation of restructuring alternatives, comparing the advantages and disadvantages of prepacks to the advantages and disadvantages of out-of-court restructurings or conventional filings. The book delves into the foundation for prepacks established in the Bankruptcy Code and in local bankruptcy rules and guidelines, as well as the historical basis for prepacks. It also summarizes the prepack process and contrasts this process with the process for conventional filing. Finally, the primer examines several significant prepacks and identifies a number of recent ones.
Did you know that all of ABI's publications are written by experts in the field and are widely used by the bankruptcy bar and bench? You can own these same publications by visiting the online ABI Bookstore. The ABI Bookstore carries over 40 publications, offers several bundled packages for your convenience and includes free ground shipping!
Click here to order your copy today and have it sent directly to your home or office!
The Business Reorganization Committee is actively soliciting articles and ideas for improvement of the newsletter. If you are interested in writing an article or have any ideas or suggestions for improvement, please contact Brad Sandler, your committee Newsletter Editor. Guidelines for newsletter articles can be found by clicking here. For topic ideas please browse some of your membership benefits - the Bankruptcy Blog Exchange, ABI Daily Headlines and ABI Bankruptcy Brief, Volo and the Asset Sales Database. ABI login required.
Click here to view previous committee newsletters.
Summer is a busy time of year for conferences at ABI with several regional and one-day events. This year's summer conferences have provided the committee with a plethora of educational materials covering topics such as the court approval process, discretionary jurisdiction, witness interviews and and current ethics issues. Panelists for sessions included bankruptcy judges, trustees and attorneys from across the country. Click here to view a list of upcoming conferences.
This year's 18th Annual Central States Bankruptcy Workshop was held in June in Traverse City, Mich., and contained two sessions of interest to the committee. The first, titled, "Can You Fight (or Restructure) City Hall? Restructuring Municipal Debt," used the state of Michigan's laws and regulations as an example to discuss topics such as state school reform, public employee rights, the limited role of the bankruptcy court in a chapter 9, the appointment of a bankruptcy judge, and also provided a frequently asked question sheet regarding Public Act 4 of 2011. Panelists included Michael G. Boudreau of O'Keef & Associates in Bloomfield Hills, Mich., Charles M. Moore of Conway MacKenzie, Inc. in Birmingham, Mich., the Hon. Phillip J. Shefferly of the U.S. Bankruptcy Court for the Eastern District of Michigan in Detroit and J. Robert Stoll of Mayer Brown LLP in Chicago. Click here to view "Can You Fight (or Restructure) City Hall? Restructuring Municipal Debt" educational materials.
Speakers for the session "How To Get Retained and Paid: Ethics Issues in Business Cases" focused their presentations on financial application analysis, lessons learned from In re Project Orange Associates, LLC, ethical issues relating to committee solicitation and tips for managing the risks in business cases. Panelists included Carla O. Andres of Godfrey & Kahn SC in Green Bay, Wis., Sean D. Malloy of McDonald Hopkins LLC in Cleveland, Judith Greenstone Miller of Jaffe, Raitte, Heuer & Weiss, P.C. in Southfield, Mich., Thomas A. Morrow of AlixPartners LLP in Southfield, Mich. and the Hon. Thomas J. Tucker of the U.S. Bankruptcy Court for the Eastern District of Michigan in Detroit. Click here for materials related to the session "How To Get Retained and Paid: Ethics Issues in Business Cases."
This July the ABI held its 18th Annual Northeast Bankruptcy Conference in Newport, RI. There were several sessions during the event that you will find relevant reads, such as "What Does the Market Say, and Does it Matter? Valuation Issues Inside and Outside of a Plan," "Claims Allowance and Voting" and "Directors' and Officers' Fiduciary Duties and Insurance." This year's event also featured several bankruptcy judges as panel members and session moderators, and a bankruptcy court trial practice symposium. Click here to view materials from the Northeast Bankruptcy Conference.
At ABI's 16th Annual Southeast Bankruptcy Workshop, held in July at Kiawah Island, S.C., there were several sessions of interest to the committee. The first, titled, "Court Approval vs. Ordinary Course: Issues Related to Obtaining Court Approval" provided attendees with an extensive breakdown of the court approval process in a chapter 11, complete with eligibility requirements and several case studies. The session was moderated by C.R. "Chip" Bowles, Jr. of Greenbaum Doll & McDonald PLLC in Louisville, Ky. Panelists included Beverly M. Burden, who is a chapter 13 trustee for the Eastern District of Kentucky in Lexington and the Hon. C. Ray Mullins of the U.S. Bankruptcy Court for the Northern District of Georgia in Atlanta. Click here to view "Court Approval vs. Ordinary Course: Issues Related to Obtaining Court Approval" educational materials.
The panelists for "Referees between Thieves? In Pari Delicto and Insurance Coverage Issues" discussed the deepening insolvency theory, discretionary jurisdiction, fiduciary duties and gave attendees a detailed summary of related cases. Jeffrey W. Kelley of Troutman Sanders LLP in Atlanta and Jerry M. Markowitz of Markowitz, Ringel, Trusty & Hartog of Miami moderated the session. Panelists included Kevin G. Hroblak of Whiteford, Taylor & Preston LLP in Baltimore, Soneet R. Kapila of Kapila & Company in Ft. Lauderdale, Florida and John C. "Kit" Weitnauer of Alston & Bird, LLP in Atlanta. Click here for "Referees between Thieves? In Pari Delicto and Insurance Coverage Issues" educational materials.
"Business Update 2011" covered topics such as the absolute priority rule and issues that arise under § 365. Speakers also provided attendees with the court opinion for a variety of cases; some examples include In re Bryant Manor, LLC and In re Tousa, Inc. The session was moderated by the Hon. Mary Grace Diehl of the U.S. Bankruptcy Court for the Northern District of Georgia in Atlanta. Panelists included the Hon. David W. Houston, III of the U.S. Bankruptcy Court for the Northern District of Mississippi in Alberdeen and Prof. Margaret Howard of Washington & Lee University School of Law in Lexington, Va. Click here for "Business Update 2011" educational materials.
ABI's 7th Annual Mid-Atlantic Bankruptcy Workshop, held in early August at The Hotel Hershey in Hershey, PA, hosted a variety of educational sessions including two of particular interest. The first, "Post Confirmation Issues," included topics such as jurisdiction, benefit plans and compliance issues. The panelists also included an appendix with a 401(k) plan summary sheet, a sample letter relating to the dispersal of benefits and an example of incorrect common practice, complete with tips on how to avoid such issues. James E. Van Horn of McGuireWoods LLP in Baltimore acted as the session's facilitator. Panelists included Alfred T. Giuliano of Giuliano Miller & Company, LLC in West Berlin, N.J., Warren J. Martin, Jr. of Poizio, Bromberg & Newman, PC in Morristown, N.J., Thomas A. Pitta of Lowenstein Sandler PC in Roseland, N.J., Linda Richenderfer of Klehr Harrison Hargey, Brazenburg LLP in Wilmington, Del. and David B. Stratton of Pepper Hamilton LLP in Wilmington, Del. Click here for "Post Confirmation Issues" educational materials.
Panelists for the session titled, "Examiners: Their Use, Misuse and Creative Applications," provided attendees with information on topics such as duties of the examiner, the differences between an examiner and a chapter 11 trustee, the appointment process, witness interviews and retention issues. The session was facilitated by Valerie P. Morrison of Wiley Rein LLP in McLean, Va. Panelists included Don A. Beskrone of Ashby & Geddes, PA in Wilmington, Del., the Hon. Jeffrey A. Deller of the U.S. Bankruptcy Court for the Western District of Pennsylvania in Pittsburgh, Ramona D. Elliott of the Executive Office for the U.S. Trustees in Washington D.C. and Mark Minuti of Saul Ewing LLP in Wilmington, Del. Click here for "Examiners: Their Use, Misuse and Creative Applications" educational materials.
Don't forget to check back to the Business Reorganization Committee page regularly for more conference educational materials, past newsletters and the latest announcements.
