American Bankruptcy Institute Update

October 18, 2005

In This Issue

Highlights

Outreach On New Law

ABI leaders have been interviewed by dozens of news organizations and national networks in the past few weeks. On Friday, John Penn, Nathalie Martin and Sam Gerdano were interviewed on-camera by more than 15 television stations and networks, including Fox, MSNBC and BBC, in a round-robin satellite tour at a D.C. television studio that is home to many of your favorite network programs. Several other stations requested tapes of the presentations for use on their news programs. A sampling of the programs is available here.

Legislation Update

New “Debt Relief Agency” Rules Held Inapplicable to Lawyers

In an opinion filed within an hour of the court’s opening for business on the first day of life under a new bankruptcy law, the Chief Judge of the Southern District of Georgia ruled that the amendments regulating the practices of “debt-relief agencies” are not applicable to attorneys licensed to practice before his court. Judge Lamar W. Davis found his authority on his own motion, under §105 and under new §526 (c ). After finding that the “new layer of regulation superimposed” upon existing state lawyer-conduct rules was a “burden which should not be borne by the Bar needlessly,” he held that “Congress intended to establish regulation of entities who interface with debtors in shadowy, gray areas not already covered by bankruptcy petition-preparer regulations …but did not intend to regulate attorneys.” The new provisions found in §526, §527 and §528 are extremely controversial among most members in the debtor Bar, although most commentary suggested that the rules did in fact apply to consumer debtor counsel. Read the full opinion. http://www.abiworld.org/pdfs/lwdOrder.pdf

Decision Time Near for '05 Legislation

Hurricane Katrina relief? Definitely alive. Social Security reform? Dead. Tax and spending cuts under reconciliation? The jury is still out, CongressDaily reported yesterday. Five weeks remain before Congress' latest adjournment target of Nov. 18, but senior lawmakers and aides in both chambers have acknowledged that the date will easily slip into December. That would seem to open up at least three more weeks for legislative activity in 2005, but the reality is that hurricane relief efforts -- along with reconciliation and the must-do appropriations bills -- have already jammed the remaining calendar.

Majority Leader Bill Frist's (R-Tenn.) tentative agenda for the year also includes pension overhaul, defense authorization, medical record technology modernization and terrorism insurance legislation. Given the tight calendar, several high-profile issues -- including asbestos reform and a contentious border security and immigration bill -- are now on the bubble in the Senate.     

Asbestos Bill Prospects Slipping

Since the asbestos litigation bill passed the Senate Judiciary Committee in May, its architects -- Judiciary Chairman Arlen Specter (R-Pa.) and ranking member Patrick Leady (D-Vt.) -- have been pressing Majority Leader Bill Frist (R-Tenn.) for a floor vote, CongressDaily reported yesterday. But the long-negotiated bill still has detractors on all sides of the issue, and observers say that it is unlikely that the Senate will take the bill up before the end of the year.    

A handful of Republicans on the Judiciary panel, including Sens. John Cornyn (R-Tex.), Jon Kyl (R-Az.), Jeff Sessions (R-Ala.) and Tom Coburn (R-Okla.), are lobbying for major changes before the bill heads to a floor vote.

Many outside groups, too, have concerns about the bill. Insurers oppose it, saying that it would require them to pay too much into the system without getting assurances that they will not face asbestos lawsuits if the trust fund runs out of money. Many labor groups complain that the payout to asbestos victims is insufficient.

PBGC OBJECTION TO UAL BANKRUPTCY PLAN POSES HURDLE

An objection to UAL Corp.'s reorganization by the government agency that insures corporate pensions could disrupt the airline's planned emergence from bankruptcy, Reuters reported yesterday. It all depends on how willing UAL is to resolve a dispute with the Pension Benefit Guaranty Corp. (PBGC), which last week said that the airline's disclosure statement detailing its financial model conflicts with a previously reached deal.

The PBGC said that the disclosure statement violates the settlement by restricting its ability to sell securities that the government would receive from United in exchange for taking over its four pension plans. In exchange for taking over UAL's pension, the PBGC will receive up to $1.5 billion in notes and convertible stock. The government is to get the securities upon United's exit from bankruptcy. The PBGC said the settlement places no restrictions on its ability to sell the securities. But UAL's proposed plan would restrict the transfer of the new equity securities for five years.
Thomas Salerno
, chairman of the financial reorganization practice group at Squire, Sanders & Dempsey, said that he expects United to make every effort to resolve the issue so that the disclosure statement wins court approval. A court hearing on the statement is scheduled for Thursday. Read more. Read the full story.

DETROIT BANKRUPTCY CONFERENCE PROVIDES INTENSIVE NEW-LAW EDUCATION

ABI’s Detroit Bankruptcy Conference, "Practice Under the New Bankruptcy Law," brings together the area’s top insolvency professionals for one day of intense learning. The event will be held Nov. 11, 2005, at the Novi Sheraton. Topics include:

  • U.S. Trustee Implementation: Entering, Getting Through and Exiting the Process
  • The Means Test: An In-depth Analysis
  • Chapter 13 Changes
  • What Debtors Get to Keep (and Not): Homestead Exemption; Household Goods; Privacy Issues
  • The New Super-creditor: Domestic Support Changes
  • The New World of Chapter 11: Small Business Rules, Strategies in Real Estate Cases, Lease Rules, Preference and Reclamation Issues and Ethics
  • Tax Changes

Register today! and earn up to 7 hours of CLE credit.

2005-06 ABI Membership Directory Print Edition Available for Purchase

The print edition of the 2005-06 ABI Annual Membership Directory is now available. This 1,000-page edition lists more than 11,000 insolvency professionals, and is a symbol of ABI’s sustained membership growth. The Directory is one of the many benefits of ABI membership and is available exclusively to members. An online version of the Directory is available at the ABI World Web site (www.abiworld.org), which is continually updated. All members will receive a complimentary CD-ROM version of the Directory with their November ABI Journal later this month. The $55 cost of the printed version includes shipping and handling. Visit http://www.abiworld.org/abistore/ to order.

ABI World Tutorial Highlights Daily News and Bankruptcy Court Updates

A new online tutorial shows you how to find daily news stories, information and bankruptcy opinions on ABI’s comprehensive Web site. The tutorial features a visual demonstration of how to locate these documents quickly and easily, and guides you through the navigation process. This is the fourth in a series of tutorials that will highlight the many resources and services available at ABI World.

What’s New at ABI World

New Opinions Posted Online

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: