Committee Amendments May Impact Corporate Restructuring
The Senate Judiciary Committee last Thursday (Feb. 17) adopted two amendments by Sen. Kennedy to the Bankruptcy Reform bill that could have implications for corporate restructuring professionals. The actual language (see below) should be read carefully. The legislation (S. 256) is on an extraordinarily fast track, scheduled for debate beginning next week.
Should the managers of the bill successfully defeat other amendments on the floor, this “clean” bill could be taken up and passed quickly by the House in the identical form (as the House did with the recently-passed Class Action Reform bill, which was promptly signed into law by the President). Thus these provisions have a high probability of becoming law, unless changed on the Senate floor.
ABI members with comments should immediately direct them to the Senate Judiciary Committee.
Amendment No. 1
The purpose of the amendment is to provide for the appointment of a trustee in cases of suspected fraud. It appears to require the U.S. Trustee to move for the appointment of a trustee “if there are reasonable grounds to suspect…actual fraud, dishonesty or criminal conduct in the management of the debtor or the debtor’s public financial reporting.” Read the full amendment.
Amendment No. 2
The purpose of the amendment is to expand the authority of the bankruptcy courts to limit retention bonuses and severance pay to corporate insiders. It also appears to limit the ability to retain consultants hired after the date of the filing of the petition. Read the full amendment.
Upcoming In The March Issue Of The ABI Journal
The March issue of the ABI Journal features an article challenging the spread of “deepening insolvency” as a cause of action. Other topics include so-called silent second lien financings, DIP budgeting, third-party liability in pension plan terminations under the Bankruptcy Code, whether chapter 13 plans should be permitted to discharge student loans, mortgage options for former debtors, how to analyze an offer to buy unsecured claims, the enforceability of limits on security interests in intellectual property licenses, a user guide to a successful turnaround and when to appoint a chapter 11 examiner, among other articles. Watch for the March issue in your mail next week or read the current issue online.
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