Press Releases

Middle-Market Business Bankruptcies to Substantially Increase in 2007 According to Latest ABI Poll

Contact: John Hartgen
(703) 739-0800
[email protected]

MIDDLE-MARKET BUSINESS BANKRUPTCIES TO SUBSTANTIALLY INCREASE IN 2007, ACCORDING TO LATEST ABI POLL

January 12, 2007, Alexandria, Va. — A strong majority (71 percent) of respondents in a recent American Bankruptcy Institute online poll agreed that bankruptcies for middle-market businesses, such as private companies, family businesses and smaller listed companies, will substantially increase in 2007. Twenty-seven percent of respondents “agreed strongly” and another 44 percent “somewhat agreed” that middle-market business bankruptcies will substantially increase this year.

Twenty-one percent of respondents disagreed that middle-market business bankruptcies will substantially increase in 2007. Fifteen percent of respondents “disagreed somewhat,” while six percent “disagreed strongly” that business bankruptcies in the middle market will substantially increase in 2007. Seven percent did not know or had no opinion on the issue.

Business bankruptcies were down in 2006, owing to a strong economy, low interest rates and excess liquidity via hedge funds and other sources. The decline has led to much speculation on when the next restructuring “boom” will occur.

ABI members and members of the public were welcome to submit their response to the statement: “Business bankruptcies in the middle market will increase substantially in 2007.” The latest ABI Quick Poll was open for voting from Jan. 5 - Jan. 11.

ABI’s weekly 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://www.abiworld.net/quickpoll/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 more than 11,500 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.

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Northwestern Wins Third Annual Corporate Restructuring Competition

Contact: John Hartgen
(703) 739-0800
[email protected]

NORTHWESTERN WINS THIRD ANNUAL CORPORATE RESTRUCTURING COMPETITION

January 24, 2007, Alexandria, Va. — A team from Northwestern University's Kellogg School of Management won the Bettina M. Whyte Trophy at the Third Annual ABI Corporate Restructuring Competition, Jan. 19-21 in Chicago. The second-year MBA students also shared a $5,000 cash prize. Duke University Fuqua School of Business won the second place award of $3,000, with the University of California-Berkeley Haas School of Business receiving the $1,750 prize for third and Stanford University students receiving $1,250 for fourth place.

The competition, which is co-sponsored by ABI and Houlihan Lokey investment banking firm, provides 12 of the nation’s top MBA programs with a unique opportunity to learn by solving a real-world restructuring case problem. The students had a week to “solve” the problem and prepare comprehensive presentations showing their operational and financial plans, before panels of judges representing a mock board of directors and bondholders, with a final round before a mock first and second lienholders.

Past winners of the Corporate Restructuring Competition include the Stern Graduate School of Business of New York University and Stanford Graduate Business School. Other schools in this year’s competition in addition to the finalists and past years’ winners included the University of Chicago, Dartmouth University, University of Virginia, University of Pennsylvania, University of Michigan and Notre Dame University.

In addition to the case presentations, the competition featured a sponsored networking dinner keynoted by Prof. Douglas Baird (University of Chicago Law School). Nearly 150 Chicago-area restructuring professionals attended. An awards luncheon also followed the Final Round of the competition.

To find out more about the Corporate Restructuring Competition, please visit www.abiworld.org/crc.

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ABIs Popular New York City Bankruptcy Conference to Be Held May 7

Contact: John Hartgen
(703) 739-0800
[email protected]

ABI’s POPULAR NEW YORK CITY BANKRUPTCY CONFERENCE TO BE HELD MAY 7

February 1, 2007 Alexandria, Va. —The American Bankruptcy Institute's (ABI) ninth annual New York City Bankruptcy Conference is scheduled for May 7 at the Millennium Broadway Conference Center/Hudson Theatre in New York City. The day-long conference brings together a faculty of New York and New Jersey bankruptcy judges with practitioners from the top national insolvency firms to discuss timely issues related to bankruptcy. The workshops and plenary sessions and offer 6.5 hours of CLE credit, including 1.25 hours of ethics credit.

Lisa Donahue of AlixPartners LLC and Michael Luskin of Luskin, Stern & Eisler LLP are the program chairs for the conference. Bankruptcy Judge Robert E. Gerber (SDNY, New York) serves as the judicial chair.

“Nuts & Bolts: Bankruptcy Fundamentals for Young Practitioners,” a separate program on bankruptcy fundamentals for practitioners new to the bankruptcy arena, will be offered again this year. The program, chaired by Ira Herman of Thompson & Knight LLP (New York), will be held on May 4 at the U.S. Bankruptcy Court, located at the Alexander Hamilton U.S. Customs House in New York City.

Panel discussions at the conference include:

The “Confidentiality in Bankruptcy” session will be moderated by Scott L. Hazan of Otterbourg, Steindler, Houston & Rosen, PC (New York) and include panelists David I. Pauker of Goldin Associates, LLC (New York), Bankruptcy Judge Elizabeth S. Stong (EDNY, Brooklyn) and Andrew M. Troop of Weil, Gotshal & Manges LLP (Boston).

Marc Abrams of Willkie Farr & Gallagher LLP (New York) will moderate the “Intersection between Bankruptcy and Securities Law” session, with panelists Alistaire Bambach of the U.S. Securities and Exchange Commission (New York), Bankruptcy Judge Stuart M. Bernstein (SDNY, New York), Daniel Kramer of Paul, Weiss, Rifkind, Wharton & Garrison LLP (New York) and Jeffrey S. Sabin of Schulte Roth & Zabel LLP (New York).

Moderator Jonathan L. Flaxer of Golenbock, Eiseman, Assor, Bell & Peskoe LLP (New York) will be joined by panelists Bankruptcy Judge Raymond T. Lyons (DNJ, Trenton), Sanford P. Rosen of Sanford P. Rosen, PC (New York) and Joseph Samet of Baker & McKenzie LLP (New York) for “Getting Even: Who Sues Whom?”

“Intercreditor Issues in Restructurings of First-Lien/Second-Lien Debt” will be moderated by My Chi To of Debevoise & Plimpton LLP (New York) with panelists William Q. Derrough of Jefferies & Company (New York), Bankruptcy Judge Robert D. Drain (SDNY, New York), Matthew A. Feldman of Willkie Farr & Gallagher LLP (New York) and Peter S. Kaufman of Gordian Group, LLC (New York).

“Developments in DIP Lending and Restructuring Finance” will feature moderator Thomas M. Canning of JPMorgan Chase (New York) with panelists Kenneth Buckfire of Miller Buckfire & Co., LLC (New York) , Marc Kieselstein of Kirkland & Ellis LLP (Chicago) and Bankruptcy Judge James M. Peck (SDNY, New York).

The plenary session “Hedge Funds Have Changed the Chapter 11 Process. Is That Good or Bad?” will be moderated by Peter V. Pantaleo of Simpson Thacher & Bartlett LLP (New York). Panelists for the session include Jeffrey H. Aronson of Centerbridge Partners, L.P (New York), Richard M. Cieri of Kirkland & Ellis LLP (New York), Stephen F. Cooper, CPA, of Kroll Zolfo Cooper, LLC (New York) and Mary Ellen Egbert of JPMorgan Chase Bank (New York).

“Chapter 15s under BAPCPA” will include moderator Lindsee P. Granfield of Cleary, Gottlieb, Steen & Hamilton LLP (New York) and panelists Bankruptcy Judge Arthur J. Gonzalez (SDNY, New York), Kurt A. Mayr of Bingham McCutchen LLP (New York), James E. Millstein of Lazard Freres & Co. LLC (New York) and Karen E. Wagner of Davis Polk & Wardwell (New York).

Matthew Cantor of Kirkland & Ellis LLP (New York) will moderate the “Holding Co./Operating Company Ethical Issues in Large Chapter 11s” session along with panelists Bankruptcy Judge Robert E. Gerber (SDNY, New York), Todd R. Snyder of Rothschild, Inc. (New York) and Albert Togut of Togut, Segal & Segal, LLP (New York).

Panelists for “Buying Low, Selling High, and Getting Out of Dodge” include Bankruptcy Judge Stan Bernstein (EDNY, Central Islip), Saul E. Burian of Houlihan Lokey Howard & Zukin (New York), Marc Lasry of Avenue Capital Group (New York) and Randall R. Lay of Buccino & Associates, Inc. (New York), with Ira L. Herman of Thompson & Knight LLP (New York) moderating the session.

“Management Compensation: Executive Compensation and Reconciling Best Practices with Section 503” will be moderated by Corinne Ball of Jones Day (New York), with a panel featuring Bankruptcy Judge Carl L. Bucki (WDNY, East Amherst), Philip C. Dublin of Akin Gump Strauss Hauer & Feld LLP (New York), Jeffrey W. Levitan of Proskauer Rose LLP (New York) and Margot Beth Schonholtz of Kaye Scholer LLP (New York).

Alec P. Ostrow of Stevens & Lee, PC (New York) will moderate the “Recent Developments in Bankruptcy Jurisdiction” session with panelists James L. Garrity, Jr. of Shearman & Sterling LLP (New York), Bankruptcy Judge Martin Glenn (SDNY, New York) and Robin E. Keller of Stroock & Stroock & Lavan LLP (New York).

A Judges’ Roundtable, moderated by Bankruptcy Judge Robert E. Gerber, will feature a panel of bankruptcy judges New York and New Jersey discussing current developments.

Sponsors for this year’s event include: AlixPartners LLP, Alvarez & Marsal, LLC, Baker & McKenzie LLP, Bridge Associates, LLC, BSI Corporate Restructuring, Buccino & Associates, Inc., CIT Group, Inc., Cleary, Gottlieb, Steen & Hamilton LLP, Davis Polk & Wardwell, Debevoise & Plimpton LLP, Donlin, Recano & Company, Inc., Foley & Lardner LLP, Goldin Associates, LLC, Golenbock, Eiseman, Assor, Bell & Peskoe LLP, Huron Consulting Group, Jones Day, JPMorgan Chase, Kirkland & Ellis LLP, Latham & Watkins, LLP, Luskin, Stern & Eisler LLP, Mayer, Brown, Rowe & Maw LLP, Otterbourg, Steindler, Houston & Rosen, PC, Sanford P. Rosen, PC, Simpson Thacher & Bartlett LLP, Skadden, Arps, Slate, Meagher & Flom LLP, Stevens & Lee, PC, Thompson & Knight LLP, Togut, Segal & Segal, LLP, Weil, Gotshal & Manges LLP and Willkie Farr & Gallagher LLP.

For more information about the New York City Bankruptcy Conference, call ABI at (703) 739-0800 or view conference details at http://www.abiworld.org/NY07

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Study Shows Fragmented Competitive Market for Corporate Bankruptcy Counsel

Contact: John Hartgen
(703) 739-0800
[email protected]

STUDY SHOWS FRAGMENTED, COMPETITIVE MARKET FOR CORPORATE BANKRUPTCY COUNSEL

February 2, 2007, Alexandria, Va. — A recent study of 275 large chapter 11 cases revealed that, contrary to the impression given a handful of newsworthy mega cases, the market for corporate bankruptcy counsel is highly competitive and includes professionals from a number of firms that vary in size. The results are summarized in an article by Prof. Stephen J. Lubben of Seton Hall University School of Law, and published in the Winter 2006 issue of theAmerican Bankruptcy Institute Law Review.

Lubben used Prof. Lynn LoPucki’s Bankruptcy Research Database to find large corporations with assets greater than $100 million that filed for bankruptcy between 2001 and the first half of 2005. The average debtor in the sample had assets of more than $2.5 billion and more than 6,500 employees prior to the filing. Lubben’s study uncovered a highly fragmented market of more than 100 unique law firms represented as counsel in the sample, ranging in size from 12 attorneys to over 1,000. No firm had more than 10.4 percent of the market as debtor counsel, although six firms (Weil, Gotshal & Magnes; Skadden Arps, et al.; Kirkland and Ellis; Pachulski Stang, et al; Jones Day; and Latham and Watkins) accounted for 39 percent of the total representations. No other firm had more than 3 percent representation. An increase in both the number of debtor employees and size of debtor assets correlated to the likelihood that the debtor would select one of the three leading firms (Weil, Skadden and Kirland), though Lubben found that case size and complexity are only partial explanations for the selection of these firms.

The article complements Lubben’s forthcoming study on professional fee practices in chapter 11 cases, to be released this fall. Lubben’s two-year study is funded by the ABI Endowment. Some scholars have argued that the selection of certain debtors’ counsel steers cases to jurisdictions like New York and Delaware, resulting in high costs to the detriment of the reorganization and bankruptcy system in general.

The ABI Law Review, published twice a year by Thomson West, is among the most respected scholarly publications in the bankruptcy community. Distributed to all ABI members as a benefit of membership, the ABI Law Review has the largest circulation of any bankruptcy law review.

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Termination of Multiple Pension Plans By a Bankrupt Company Should Be Analyzed on an Aggregate Basis According to Latest ABI Poll

Contact: John Hartgen
(703) 739-0800
[email protected]

TERMINATION OF MULTIPLE PENSION PLANS BY A BANKRUPT COMPANY SHOULD BE ANALYZED ON AN AGGREGATE BASIS, ACCORDING TO LATEST ABI POLL

February 5, 2007, Alexandria, Va. — Nearly half (49 percent) of respondents in a recent American Bankruptcy Institute online poll said that an employer looking to terminate more than one pension plan in a chapter 11 proceeding should have the plans analyzed on an aggregate rather than a plan-by-plan basis. Twenty-six percent of respondents “agreed strongly” and another 23 percent “somewhat agreed” that the termination of pension plans by a company in chapter 11 should be done on an aggregate rather than case-by-case basis.

Thirty-seven percent disagreed that termination of multiple pension plans should be considered on an aggregate basis, rather than case-by-case, for bankrupt companies. Twenty-nine percent “disagreed strongly” and another eight percent “somewhat disagreed” that the multiple pension plans should be analyzed on an aggregate basis for chapter 11 companies looking to terminate them during the reorganization process.

The poll question is based on a recent case (In re Kaiser Aluminum), in which the U.S. Court of Appeals for the Third Circuit unanimously held that when an employer in chapter 11 seeks to terminate more than one pension plan, the plans must be analyzed on an aggregate rather than a plan-by-plan basis.

ABI members and members of the public were welcome to submit their response to the statement: “When an employer in chapter 11 terminates more than one pension plan, the plans must be analyzed on an aggregate rather than a plan-by-plan basis. (In re Kaiser Aluminum).” The latest ABI Quick Poll was open for voting from Jan. 20 - Jan. 31.

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Newest ABI Publication Focuses on Pension Issues in Business Bankruptcy

Contact: John Hartgen
(703) 739-0800
[email protected]

NEWEST ABI PUBLICATION FOCUSES ON PENSION ISSUES IN BUSINESS BANKRUPTCY

February 7, 2007, Alexandria, Va. —The American Bankruptcy Institute (ABI) has released ABI’s Pension Manual: A Practical Guide to Pension Issues Arising in Business Bankruptcy Cases to help insolvency professionals navigate the challenging terrain of bankruptcy and pension law. This timely book incorporates provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 and the new Pension Protection Act of 2006 to help professionals understand the new rules regarding the treatment of pensions in corporate bankruptcy proceedings.

Authored by a team of experts, the Manual also looks at legacy issues related to he Employee Retirement Income Security Act of 1974 (ERISA) that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans.

The 354-page softbound manual is available for purchase at ABI’s Online Bookstore. Click here to order.
http://www.abiworld.org/source/orders/index.cfm?task=3&SKU=07_002

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ABI Releases Updated Analysis of European Union Insolvency Regulations

Contact: John Hartgen
(703) 739-0800
[email protected]

ABI RELEASES UPDATED ANALYSIS OF EURPEAN UNION INSOLVENCY REGULATIONS

February 7, 2007, Alexandria, Va. — The American Bankruptcy Institute (ABI) has released the European Union Regulation on Insolvency Proceedings: An Introductory Analysis, Second Edition, an updated version to reflect the recent modifications to the EU Insolvency Regulation. The book was written by Prof. Bob Wessels of Vrije University in Amsterdam, who wrote the first edition in 2003 after the European Union’s insolvency regulation was implemented in May 2002, replacing a number of bilateral insolvency treaties.

The updated version of European Union Regulation on Insolvency Proceedings is a primer that covers jurisdictional issues, “winding-up” procedures such as the appointment of a liquidator, recognition of judgments, creditors’ rights and other provisions. This book is an invaluable resource for professionals who find themselves increasingly involved in cross-border insolvency cases.

The 170-page softbound manual is available for purchase at ABI’s Online Bookstore. Click here to order.

http://www.abiworld.org/source/orders/index.cfm?task=3&SKU=07_001

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Employee Payment Obligations a Priority Expense for Chapter 11 Debtors Prior to Rejection of Collective Bargaining Agreement According to Latest ABI Poll

Contact: John Hartgen
(703) 739-0800
[email protected]

EMPLOYEE PAYMENT OBLIGATIONS A PRIORITY EXPENSE FOR CHAPTER 11 DEBTORS PRIOR TO REJECTION OF COLLECTIVE BARGAINING AGREEMENT, ACCORDING TO LATEST ABI POLL

February 12, 2007, Alexandria, Va. — An overwhelming majority (73 percent) of respondents in a recent American Bankruptcy Institute online poll said that employee payment obligations due between a chapter 11 filing and rejection of a collective bargaining agreement should be payable as a priority administrative expense. Fifty-six percent of respondents “agreed strongly” and another 17 percent “somewhat agreed” that payments to employees between the chapter 11 filing and termination of the collective bargaining agreement are payable as a priority administrative expense.

Nineteen percent disagreed that employee payments should be considered a priority administrative expense for chapter 11 debtors between the filing and termination of the collective bargaining agreement. Twelve percent “disagreed strongly” and another seven percent “somewhat disagreed” that the employee payments between filing and the termination of the collective bargaining agreement should be considered a priority administrative expense for chapter 11 debtors.

The Poll question is based roughly on the Peters v. Pikes Peak case in which the Colorado Springs Symphony Orchestra failed to pay its musicians between filing for chapter 11 and obtaining court approval to reject the collective bargaining agreement with the musicians. The Tenth Circuit Court of Appeals sided with the musicians as they sought an administrative priority for the wages payable under the collective bargaining agreement during the five-week post-petition, pre-rejection period.

ABI members and members of the public were welcome to submit their response to the statement: “The debtor’s obligation under a collective bargaining agreement for payments to employees due between the chapter 11 petition and the date the debtor rejects the agreement are payable as a priority administrative expense.(Peters v. Pikes Peak).” The latest ABI Quick Poll was open for voting from Feb. 1 - 8.

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ABI Releases Updated Bankruptcy and Insurance Manual

Contact: John Hartgen
(703) 739-0800
[email protected]

ABI RELEASES UPDATED BANKRUPTCY AND INSURANCE LAW MANUAL

February 8, 2007, Alexandria, Va. — The American Bankruptcy Institute (ABI) released the updated Bankruptcy and Insurance Law Manual, Second Edition, to cover the basics of insurance law for the bankruptcy professional, as well as bankruptcy principles for the insurance professional. Author of the first edition, published in 2004, Susan N.K. Gummow (Clausen Miller PC; Chicago) updated theManual to incorporate legal changes implemented by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, as well as a glossary of key bankruptcy and insurance law terms.

The updated Bankruptcy and Insurance Law Manual distinguishes 'claims' in an insurance sense from those under the Bankruptcy Code, and describes the duties of both the insurer and the insured under insurance law.

The 204-page softbound manual is available for purchase at ABI’s Online Bookstore. Click here to order. http://www.abiworld.org/source/orders/index.cfm?task=3&SKU=07_003

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Chapter 13 Study Finds that Two-Thirds of Debtors Did Not Complete Repayment Plans Little Paid to Unsecured Creditors

Contact: John Hartgen
(703) 739-0800
[email protected]

CHAPTER 13 STUDY FINDS THAT TWO-THIRDS OF DEBTORS DID NOT COMPLETE REPAYMENT PLANS; LITTLE PAID TO UNSECURED CREDITORS

February 26, 2007, Alexandria, Va. — A recent study funded by a grant from the American Bankruptcy Institute examining chapter 13 filings found that two-thirds of debtors did not complete a repayment plan or receive a discharge, and that of the one-third who did attain a discharge, 15 percent later returned to bankruptcy. The Chapter 13 Project also found that secured creditors received more than two-thirds of debtors’ payments and that unsecured creditors received less than a third, with the median unsecured creditor repayment standing at $0. The study’s findings are summarized in the March edition of the ABI Journal in an article written by the Chapter 13 Project’s lead researcher, Prof. Scott F. Norberg of Florida International University’s College of Law.

The Chapter 13 Project looked at 795 chapter 13 cases from 1994-2003 in seven federal judicial districts to determine if the chapter 13 process fulfilled two of its principal purposes: giving debtors a fresh start and providing for creditor repayment. While the study looked at cases filed prior to the implementation of the Bankruptcy Abuse Prevention and Consumer Protection act of 2005 (BAPCPA), Prof. Norberg notes that researchers expected that the findings will help provide a baseline for measuring the BAPCPA’s effect on chapter 13 case outcomes.

The study found that at least half of all the chapter 13 filers in the sample had filed one or more bankruptcy cases in addition to the sample case. The Project’s researchers anticipated that BAPCPA’s limitations on the automatic stay where the debtor has filed one or more cases in the year preceding the current filing would substantially reduce the numbers of chapter 13 filings and increase the percentage of completed cases.

The researchers also predicted that BAPCPA’s provisions will have the effect of further diminishing unsecured creditor collections in chapter 13, while increasing the costs of those collections. The diminished collections by unsecured creditors would likely be due to the provisions enhancing the repayment rights of secured creditors, such as the new restrictions on the automatic stay to allow some creditors to retake collateral when the debtor has equity in it (e.g., a car purchased within 910 days of filing).

Debtors examined in the case study were nearly evenly divided between men and women. Men comprised 36.9 percent of the petitioners, women 36.3 percent and joint petitioners 27.8 percent. The vast majority of the debtors had modest incomes; the average debtor’s gross income was $28,173 (adjusted to 2006 dollars). Additionally, almost all of the debtors were in extreme financial distress at the time of their filing.

To obtain a copy of the article summarizing the findings of the Chapter 13 Project, please contact John Hartgen at 703-739-0800 or via email at [email protected].

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