October ABI Journal Article Examines How Asian Companies Use the Bankruptcy Code to Collect Assets
Alexandria, Va. — An article in the October edition of the ABI Journal examines the growing trend of Asian companies using Bankruptcy Code provisions to expand their U.S. asset portfolios. “Bankrupt companies hold particular appeal for foreign investors who are eager to benefit from the advantages and safeguards that the Bankruptcy Code affords acquirers and purchasers,” Edward E. Neiger, Joseph L. Steinfeld, Jr. and Dina Gielchinsky of ASK LLP (New York and St. Paul, Minn.) write in their article “Made in the U.S., Acquired by Asia: How Asian Companies Use the Code to Collect Assets.” The authors point out that Asian companies, particularly those based in China and Hong Kong, have been collecting U.S. assets for several years, similar to how the Japanese acquired U.S. assets in the 1980s. “The bankruptcies of Jennifer Convertibles Inc. and The Connaught Group Limited display prime examples of Asian companies utilizing the Bankruptcy Code to acquire U.S. assets,” the authors write.
One safeguard identified by the authors that is appealing to Asian companies looking to acquire bankrupt U.S. companies is that §363(f) allows for the sale of assets “free and clear of any interest in such property of an entity other than the estate,” provided that the debtor can satisfy one of certain specified conditions. “These include, among other things, a showing that applicable nonbankruptcy law permits the sale free and clear, that the sale price exceeds the amount of all liens encumbering the property, or that the interest being sold is in bona fide dispute,” according to Neiger, Steinfeld and Gielchinsky. A reorganization plan may also provide for the sale or transfer of the debtor’s assets free and clear of any other interests, provided that the secured creditors receive the “indubitable equivalent” of the value of their liens against the sold assets.
While Asian companies may face some objections when acquiring U.S. companies in bankruptcy, particularly if the U.S. company operates in the defense or technology sectors, Neiger, Steinfeld and Gielchinsky find that the purchases of bankrupt U.S. companies in retail sectors have proven profitable for both U.S. and Asian economies. “Aided by the Bankruptcy Code’s promotion of asset sales and its protections for acquirers and purchasers, Asian businesses are expected to increase their portfolios of distressed U.S. companies,” the authors write.
To obtain a copy of “Made in the U.S., Acquired by Asia: How Asian Companies Use the Code to Collect Assets,” published in the October edition of the ABI Journal, please contact John Hartgen at 703-894-5935 or via email at [email protected].
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.
New ABI Publication Examines Bankruptcys Effects on Manufacturing Supply Chains
Alexandria, Va. — ABI’s latest publication, Interrupted! Understanding Bankruptcy's Effects on Manufacturing Supply Chains, explores the issues that arise when suppliers are unable to make deliveries of promised parts due to financial problems. The manual, authored by John T. Gregg and Patrick E. Mears of Barnes & Thornburg LLP (Grand Rapids, Mich.), Deborah L. Thorne of Barnes & Thornburg LLP (Chicago), Aubrey E. Kauffman of Fasken Martineau DuMoulin LLP (Toronto) Renate Müller and Michael Thierhoff of Thierhoff Müller & Partner (Leipzig, Germany), and Alfonso Castro of Cleary Gottlieb Steen & Hamilton LLP (New York), expands ABI's Auto Supplier Insolvencies & Bankruptcies manual (ABI, 2006) with more in-depth coverage of supply chain issues in general, which have moved far beyond the scope of financially troubled auto suppliers. This comprehensive manual unravels the knotty intersection of the Uniform Commercial Code and the Bankruptcy Code, and includes special sections on cross-border matters in Canada, Germany and Mexico.
Also included in the book is a detailed discussion of relevant case law such as Delphi Corp. and Plastech Engineered Products, as well as sample agreements that outline common protections against supply chain disruptions. To pre-order Interrupted! Understanding Bankruptcy's Effects on Manufacturing Supply Chains from the ABI Bookstore, please click here: http://bookstore.abi.org/interrupted-understanding-bankruptcys-effects-manufacturing-supply-chains.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional conference information, visit http://www.abiworld.org/conferences.html.
Total Bankruptcy Filings Down 14 Percent Through Three Quarters of 2012 Commercial Filings Down 22 Percent
Alexandria, Va.— Total bankruptcy filings totaled 921,219 nationwide during the first nine months of 2012 (Jan. 1-September 30), a 14 percent decrease from the 1,073,021 total filings during the same period a year ago, according to data provided by Epiq Systems, Inc. The 876,469 total noncommercial filings through three quarters of 2012 represented a 14 percent drop from the noncommercial filing total of 1,015,408 through the first three quarters of 2011. Total commercial filings during the first nine months of the year were 44,750, representing a 22 percent decrease from the 57,613 filings during the same period in 2011. Chapter 11 filings also fell during the first nine months of 2012 as the 5,889 filings represented an 11 percent decrease from the 6,627 chapter 11 filings during the first nine months of 2011.
“We remain on pace for the lowest total bankruptcies since before the financial crisis in 2008,” said ABI Executive Director Samuel J. Gerdano. “Sustained low interest rates and weak consumer spending will continue to slow bankruptcies through the end of 2012.”
The 87,492 total bankruptcy filings for the month of September represented a 21 percent decrease compared to the 110,410 filings in September 2011. The 83,471 total noncommercial filings for September represented a 20 percent drop from the September 2011 noncommercial filing total of 104,638. Total commercial filings for September 2012 were 4,021, representing a 30 percent decrease from the 5,772 filings during the same period in 2011. Chapter 11 filings registered a 25 percent drop as the 693 chapter 11 filings in September 2011 fell to 523 in September 2012.
The average nationwide per capita bankruptcy-filing rate for the first nine calendar months of 2012 (Jan. 1-September 30) decreased to 3.97 (total filings per 1,000 per population) from the 4.04 rate for the first eight months of the year, and the average total filings per day in September 2012 was 2,916, a 21 percent decrease from the 3,680 total daily filings in September 2011. States with the highest per capita filing rate (total filings per 1,000 population) through the first nine months of 2012 were:
1. Tennessee (6.98)
2. Nevada (6.84)
3. Georgia (6.51)
4. Utah (5.99)
5. Alabama (5.92)
ABI has partnered with Epiq Systems, Inc. in order to provide the most current bankruptcy filing data for analysts, researchers and members of the news media. Epiq Systems is a leading provider of managed technology for the global legal profession.
For further information about the statistics or additional requests, please contact ABI Public Affairs Manager John Hartgen at 703-894-5935 or [email protected].
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.
Epiq Systems is a leading provider of managed technology for the global legal profession. Epiq Systems offers innovative technology solutions for electronic discovery, document review, legal notification, claims administration and controlled disbursement of funds. Epiq System’s clients include leading law firms, corporate legal departments, bankruptcy trustees, government agencies, mortgage processors, financial institutions, and other professional advisors who require innovative technology, responsive service and deep subject-matter expertise. For more information on Epiq Systems, Inc., please visit http://www.epiqsystems.com.
Closely Divided ABI Quick Poll Finds That Bankruptcy Courts Should Have Unfettered Discretion in Adjusting Fee Applications
Alexandria, Va.— Half of the respondents in a closely divided ABI Quick Poll believe that bankruptcy courts should have unfettered discretion in adjusting fee applications, even when no party-in-interest has raised objections. Twenty-nine percent of respondents “agreed strongly” while 21 percent “somewhat agreed.”
The question is based on a new guideline proposed by the U.S. Trustee Program for reviewing applications for attorney compensation in larger chapter 11 cases. The question of allowing bankruptcy courts to have unfettered discretion in adjusting fee applications was also raised as a part of ABI's "Jaunty Judicial Debates" at the 8th Annual Mid-Atlantic Bankruptcy Workshop on August 4, 2012. During the debate, Bankruptcy Judges Kevin J. Carey (D. Del.) and Michael Kaplan (W.D.N.Y.) debated the pros and cons of the issue.
Conversely, 46 percent of Quick Poll respondents (31 percent “strongly” and 15 percent “somewhat”) believe that judges should not have unfettered discretion in adjusting fee applications.
ABI’s Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://news.abi.org/quick-polls/archive to access the results of previous ABI Quick Polls.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes over 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.
Bankruptcy Professionals Encouraged to Attend and Submit Testimony for ABIs Chapter 11 Reform Commission Fall Hearings
Alexandria, Va. —Bankruptcy practitioners and scholars are invited to attend and participate in the fall public hearings for the American Bankruptcy Institute's (ABI) Commission to Study the Reform of Chapter 11. The hearings are scheduled to take place at major insolvency conferences, where interested members of the restructuring community can appear and provide testimony to the Commission or to one or more of its advisory committees. Hearings will be held at the National Conference of Bankruptcy Judges annual meeting in San Diego on October 26, the Turnaround Management Association annual convention in Boston on November 3 and the Commercial Finance Association annual meeting in Phoenix on November 15. Other public hearing dates will be announced. Those interested in testifying at any of the fall hearings should contact ABI Executive Director Sam Gerdano at [email protected].
The purpose of ABI’s Commission to Study the Reform of Chapter 11 will be to propose fixes to the Bankruptcy Code that will better balance the goals of effectuating the effective reorganization of business debtors—with the attendant preservation and expansion of jobs—and the maximization and realization of asset values for all creditors and stakeholders. The work of the Commission is expected to take two years.
For more information on the Commission, including a list of commissioners, advisory committee members and minutes of previous meetings, please click here: http://commission.abi.org/.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional conference information, visit http://www.abiworld.org/conferences.html.
ABI Launches Fifth Annual Writing Competition for Law Students Participants Receive One-Year ABI Membership
Alexandria, Va.- Law school students are encouraged to submit a paper now through March 1, 2013, for ABI’s Fifth Annual Bankruptcy Law Student Writing Competition. ABI will extend a complimentary one-year membership to all students who participate in this year's competition. Eligible submissions should focus on current issues regarding bankruptcy jurisdiction, bankruptcy litigation, or evidence issues in bankruptcy cases or proceedings.
The first-place winner, sponsored by Invotex Group, Inc., will receive a cash prize of $2,000 and publication of his or her paper in the prestigious ABI Journal. The second-place winner, sponsored by Jenner & Block LLP, will receive a cash prize of $1,250 and publication of his or her paper in an ABI committee newsletter. The third-place winner, sponsored by Thompson & Knight LLP, will receive a cash prize of $750 plus publication of his or her paper in an ABI committee newsletter.
Past winners include Elliot Ross of Fordham Law School (2012), Saul Ehrenpreis of the University of Maryland School of Law (2011), Jason Lynch of Fordham Law School (2010) and Cullen Drescher of the William & Mary School of Law in ABI’s Inaugural Writing Competition (2009). For competition participation and submission guidelines, please visit http://papers.abi.org.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/events.
Twenty-First Annual Duberstein Bankruptcy Moot Court Competition to be Held March 9-11 in New York
Alexandria, Va. — The American Bankruptcy Institute (ABI) and St. John’s University School of Law will co-sponsor the 21st Annual Hon. Conrad B. Duberstein Bankruptcy Moot Court Competition, March 9-11, 2013, in New York. The competition promotes and recognizes the finest oral and written advocacy on a significant problem in bankruptcy practice. The event, the nation’s only moot court competition devoted entirely to bankruptcy, is named to honor the memory of Chief Judge Conrad B. Duberstein, a St. John’s University alumnus and a former member of ABI’s Board of Directors. The competition’s preliminary and octo-final rounds will be held on March 9-10, and quarter-final, semi-final and final rounds will be held on March 11. The preliminary and octo-final rounds will be held at St. John’s University School of Law, while the quarter-final, semi-final and final rounds will be held at the Conrad B. Duberstein U.S. Bankruptcy Courthouse in Brooklyn, N.Y.
Judging the final round will again be the chief judges of the U.S. Bankruptcy Courts for the Eastern and Southern Districts of New York (Carla E. Craig and Cecilia G. Morris) along with Federal Appeals Court Judges Edith Hollan Jones (Fifth Circuit), Steven Colloton (Eighth Circuit), Diarmuid O’Scannlain (Ninth Circuit) and U.S. District Court Judge Laura Taylor Swain (S.D.N.Y.). Bankruptcy judges from across the nation will judge the quarter- and semifinal rounds.
Approximately 50 ABA-accredited law schools are expected to participate in this year’s competition. Awards will be presented to the winning team, as well as for best written brief and best oral advocate. The awards banquet will be held at the famous Pier Sixty, Chelsea Piers. The University of Texas Law School is the defending champion, while past winners include University of Houston Law School, University of Miami School of Law, Mississippi College School of Law, Brooklyn Law School, Baylor University School of Law, University of Connecticut Law School, Emory University School of Law, University of Idaho College of Law, William & Mary Law School, the University of Florida Law School, the University of Alabama School of Law, Stetson University College of Law and New York University School of Law.
The ABI Endowment Fund will present awards of $5,000 to the first-place team, $3,000 to the second-place team and $1,500 to the two third-place teams. Individual awards of Best Oral Advocate and Best Brief will receive $1,000 each.
State and local bankruptcy bar sections are encouraged to participate by sponsoring law school teams. ABI members, and especially academic members, are encouraged to help sponsor or coach a team. Hotel and travel accommodations are at the school’s expense. The Sheraton New York Hotel and Towers is the host hotel.
The registration deadline for teams is Nov. 19. Visit the competition website for more information: http://www.stjohns.edu/law/bankruptcy.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/events.
Client Matters Left Unfinished at a Firm When It Files for Bankruptcy Are the Property of the Defunct Firm According to Latest ABI Poll
Alexandria, Va.— A narrow majority of respondents (52 percent) in a recent ABI Quick Poll “agreed strongly” or “agreed somewhat” that client matters left unfinished at a firm when it files for bankruptcy are the property of the defunct firm.
The question is based on the chapter 11 proceeding of law firm Dewey & LeBoeuf LLP, as ongoing client matters are one of the firm’s primary assets for producing revenue during its bankruptcy case. Dewey listed accounts receivable of about $255 million for its operations at the time of its filing on May 28. Dewey’s bankruptcy advisers have said they plan to pursue nearly $60 million in “unfinished business” claims. The court last month also approved a $70 million “clawback” settlement from ex-partners, but claims on profits from unfinished legal work that former partners took to their new firms remain a point of contention in the case.
Conversely, 48 percent of respondents (37 percent “strongly” and 11 percent “somewhat”) believe that client matters left unfinished at a firm when it files for bankruptcy are not the property of the defunct firm.
ABI’s Quick Poll is posted on ABI’s home page, www.abiworld.org. ABI members and the public are invited to respond to a question on a timely bankruptcy or insolvency issue. Visit http://news.abi.org/quick-polls/archive to access the results of previous ABI Quick Polls.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes over 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.
August Bankruptcy Filings Increase Slightly over Last Month
Alexandria, Va.— Total bankruptcy filings in the United States for the month of August increased 7 percent compared to July, according to data provided by Epiq Systems, Inc. August bankruptcy filings totaled 104,336, up from the 97,104 filings registered in July 2012. The 99,417 total noncommercial filings for August represented a 7 percent increase from the July noncommercial filing total of 92,562. Total commercial filings for August 2012 were 4,919, representing an 8 percent increase from the 4,542 filings in July. Commercial chapter 11 filings also increased in August as the 648 filings represented an 8 percent increase over the 600 filings in July.
“Financially distressed consumers and businesses will continue to turn to bankruptcy for relief,” said ABI Executive Director Samuel J. Gerdano. “While the August totals rose slightly over last month, we remain on course for the lowest total new bankruptcies since before the financial crisis in 2008.”
The 104,336 total bankruptcy filings in August represented a 14 percent decrease from the 120,905 filings registered in August 2011. The 4,919 commercial filings for August 2012 represented a 24 percent decrease from the 6,434 filings during the same period in 2011. The August commercial chapter 11 filing total of 648 represented a 9 percent decrease from August 2011’s total of 710. The 99,417 total noncommercial filings for August represented a 13 percent drop from the August 2011 noncommercial filing total of 114,471.
The average nationwide per capita bankruptcy-filing rate of 4.04 (total filings per 1,000 per population) for the first eight calendar months of 2012 (Jan. 1-Aug. 31) remained unchanged from the first seven months of the year. Average total filings per day in August 2012 were 3,366, a 14 percent decrease from the 3,900 total daily filings in August 2011. States with the highest per capita filing rate (total filings per 1,000 population) through the first eight months of 2012 were:
1. Tennessee (7.03)
2. Nevada (6.97)
3. Georgia (6.58)
4. Utah (6.07)
5. Alabama (5.69)
ABI has partnered with Epiq Systems, Inc. in order to provide the most current bankruptcy filing data for analysts, researchers and members of the news media. Epiq Systems is a leading provider of managed technology for the global legal profession.
For further information about the statistics or additional requests, please contact ABI Public Affairs Manager John Hartgen at 703-894-5935 or [email protected].
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.
Epiq Systems is a leading provider of managed technology for the global legal profession. Epiq Systems offers innovative technology solutions for electronic discovery, document review, legal notification, claims administration and controlled disbursement of funds. Epiq System’s clients include leading law firms, corporate legal departments, bankruptcy trustees, government agencies, mortgage processors, financial institutions, and other professional advisors who require innovative technology, responsive service and deep subject-matter expertise. For more information on Epiq Systems, Inc., please visit http://www.epiqsystems.com.
September ABI Journal Article Raises Points to Consider for the Coming Transformation of the U.S. Health Care System
Alexandria, Va. — As the government, private industry and American public adjust to the changes brought by the Patient Protection and Affordable Care Act (PPACA), an article in the September edition of the ABI Journal raises a number of points for restructuring professionals to consider during the transformation of the health care industry. “It is important for restructuring professionals to recognize the significance of a potential disruptive transformation of a $2.6 trillion industry within the next three to 10 years,” Dr. David Gruber and Paul Rundell of Alvarez and Marsal (New York and Chicago, respectively) write in their article, “Restructuring and PPACA: Points to Ponder on the Coming Transformation of Health Care.”
Dr. Gruber and Rundell contend that even healthy organizations will be challenged by the cultural shift from the previous volume-based, fee-for-service system to the value-based, shared-risk system under the new law. Some of the challenges identified by the authors include:
• There is the potential for rising costs, driven by increased insurance coverage. National health expenditures, inclusive of the impact of PPACA, have been forecast by the Centers for Medicare and Medicaid Services to reach $4.6 trillion in 2020, an increase of $2 trillion in 10 years.
• PPACA does not affect elderly and disabled Medicaid recipients, who represent 25 percent of enrollees and 69 percent of total costs.
• Employers currently offering health insurance to their employees may drop coverage for all their employees or only “sicker-than-average” employee populations.
• The transformation will be metropolitan area-specific, subject to local factors and occurring at different rates in different parts of the country.
• Financial penalties, pilot initiatives and managed care will not fundamentally transform health care delivery or contain costs.
The transformation to the shared-risk system under PPACA will require actuarial and risk-management expertise, according to the authors. “All stakeholders, including restructuring and bankruptcy firms, will require a fundamental understanding of the evolving (local) health care market,” Dr. Gruber and Rundell write. “Debt restructuring, asset redeployment, contracts, collective-bargaining agreements and related activities are dependent on future cash-flow expectations. Uncertainty potentially adds an additional risk premium.”
To obtain a copy of “Restructuring and PPACA: Points to Ponder on the Coming Transformation of Health Care,” published in the September edition of the ABI Journal, please contact John Hartgen at 703-894-5935 or via email at [email protected].
For more information on the intersection of the health care and restructuring industries, the ABI Health Care Insolvency Manual, Third Edition is available in the ABI Bookstore at bookstore.abi.org.
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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 13,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.