American Bankruptcy Institute Update

February 17, 2005

In This Issue

Highlights

Legislation Update

Senate Judiciary Committee Approves Bankruptcy Bill

The Senate Judiciary Committee today approved a bipartisan bill to overhaul bankruptcy laws after Democrats agreed to hold a large number of contentious amendments—including abortion-related language opposed by House GOP leaders—for the Senate floor, CongressDaily reported. The bill passed on a 12–5 vote after Sen. Orrin Hatch (R–Utah) struck deals with Democrats on several less controversial amendments to expedite the markup. Democratic Sens. Joseph Biden of Delaware, Dianne Feinstein of California and Herb Kohl of Wisconsin voted with Republicans in favor of the bill, but Biden and Feinstein said they also would support many Democratic floor amendments. Hatch, who chaired the meeting in the absence of Senate Judiciary Chairman Arlen Specter (R–Pa.), had warned that Majority Leader Bill Frist (R–Tenn.) might bypass the committee and move the bill directly to the floor if the panel failed to complete its work on the bill today. Frist has said he hopes to move the bill to the floor after next week’s Presidents’ Day recess. Only minor amendments were agreed to during the session. Senate Minority Whip Richard Durbin (D–Ill.) offered an amendment aimed at protecting employees and retirees who lose their earnings and retirement savings when a corporation files for bankruptcy, but it failed 9–7.

House Passes Class-action Legislation

With a 279–149 vote, the House this afternoon cleared class-action legislation for President Bush, following quickly on the heels of the Senate’s 72–26 approval last Thursday, CongressDaily reported. The legislation would move multi-state class-action lawsuits—which have in excess of $5 million in claims—from state courts to federal courts, where more stringent rules would apply.

Law Professors Express Concern over Bankruptcy Reform Bill

Ninety bankruptcy law professors sent a letter yesterday to the Senate Judiciary Committee expressing their belief that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (S. 256) is deeply flawed. Read the letter online at ABI World.

Judiciary Chairman Specter Has Cancer

Senate Judiciary Chairman Arlen Specter (R–Pa.) announced Wednesday that he has Hodgkin’s disease but expects to continue to work in the Senate while being treated, the Associated Press reported. Hodgkin’s disease is a type of cancer involving the lymph nodes. Specter’s doctor said he has an “excellent chance of being completely cured.” Specter has been absent all week and missed today’s Judiciary Committee meeting, at which senators approved the bankruptcy reform measure. He plans to continue to perform all of his duties, including chairing the Judiciary Committee.

Amtrak Must Change or Fold

If Amtrak isn’t dramatically overhauled, the Bush administration is prepared to shut it down, saving only the commuter-rail segments, Transportation Secretary Norman Mineta said yesterday, Knight Ridder reported. In its 2006 budget, the administration has proposed cutting Amtrak’s annual subsidy ($1.2 billion this year), which Mineta said currently keeps the cross-country passenger-rail system alive. The Bush proposal would force Congress and Amtrak to institute sweeping change that would limit Amtrak to owning and operating trains, and have states or local governments own the rails, stations and physical property. Mineta said under the Bush proposal, states along a given line would pay for rail upkeep or else the stations along that line would be closed down and trains would no longer stop at them. Amtrak supporters voiced confidence that Congress will keep providing the money the system needs even if the Bush administration won’t. Federal subsidies have increased from $520 million in 2001 to $1.2 billion in each of the last two years.

New York Firm’s Practice Group Bolts for Rival

Partners in the bankruptcy practice group at New York’s Clifford Chance have left to join the bankruptcy group at Kaye Scholer. ABI members who are part of the move, as reported today by New York Lawyer, are Margot Schonholtz, Mark Liscio and Madlyn Primoff. The departures leave London-based Clifford Chance without a U.S. bankruptcy practice. Kaye Scholer has more than 20 ABI members in its national bankruptcy practice group.

Credit Counseling in Crisis

The pending bankruptcy reform bill mandates credit counseling as a condition for eligibility in chapter 7. But there is a severe financial crisis in the counseling industry itself, which threatens the millions of Americans now in counseling programs, according to an alert issued today by National Legal Debt Centers Inc. Many providers are either going out of business or are being closed by government regulators such as the IRS. Recent disclosure of deceptive fee practices and consumer scams by agencies who have abused their non-profit status threaten to limit options for those in need, just as those needs are increasing.

ABI Mediation Guide Now Available

ABI’s latest publication, the ABI Guide to Bankruptcy Mediation: A Guide for Attorneys and Clients Concerning the Use of Mediation to Resolve Disputes Arising in Bankruptcy Cases, is now available in the ABI online bookstore to ABI members at the reduced rate of $7. The publication was written by ADR Committee Co-chairs Erwin I. Katz (Erwin I. Katz Ltd., Chicago), Lisa Hill Fenning (Dewey Ballantine LLP, Los Angeles) and Jacob Aaron Esher (JAMS, Boston, Riley & Esher LLP, Cambridge, Mass.). The Guide explains why, when and how mediation can be used in bankruptcy cases. It can be used as a comprehensive and accessible client handout. For attorneys, it also provides “how to” guidance with respect to the most common kinds of mediation issues that arise in bankruptcy cases. Suggested procedures adapted to the particular requirements of bankruptcy cases, as well as convenient checklists and cross-references to other bankruptcy-related mediation resources, are also included. Order your copy today!

LoPucki to Respond to Critics At ABI’s New York Conference

The Seventh Annual New York City Bankruptcy Conference—to be held May 9 at the Millennium Broadway in New York—will bring together a faculty of bankruptcy judges from the Southern and Eastern Districts of New York and practitioners from the top national insolvency firms. The format is designed to appeal to both experienced and new practitioners. One of this year’s highlights is Prof. Lynn LoPucki, who will respond to critics of his controversial new book, Courting Failure: How Competition for Big Cases is Corrupting the Bankruptcy Courts.

The popular stand-alone primer course, “Bankruptcy Fundamentals: Nuts and Bolts for New and Young Practitioners,” will be offered again this year on May 6 at the Alexander Hamilton Custom House. At this special program an outstanding faculty of judges, academics and practitioners will explain the fundamentals of bankruptcy. Register online today at www.abiworld.org/nyc05.

Business Reorganization e-Newsletter Now Online

The latest edition of the Business Reorganization Committee’s e-newsletter is now online at ABI World. Read articles about what constitutes an eligible contract for purposes of §11.1 of the CCAA and post-confirmation avoidance actions.

Latest Job Postings at ABI Career Center

Check out the ABI Career Center. The Center is a one-stop site for job seekers and employers in the insolvency community. Career Center resources are available free to both employers and job seekers. New positions are featured daily. The latest listings include: