Press Releases

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.

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.

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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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.

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

BANKRUPTCY COURTS HAVE THE INHERENT POWER TO RECHARACTERIZE DEBT AS EQUITY, ACCORDING TO LATEST ABI POLL

February 26, 2007, Alexandria, Va. — A wide majority of respondents (62 percent) in a recent American Bankruptcy Institute online poll said that bankruptcy courts have the inherent power to recharacterize debt as equity. Forty-two percent of respondents “agreed strongly” and another 20 percent “somewhat agreed” that bankruptcy courts have the inherent power to recharacterize debt as equity.

Fourteen percent disagreed that bankruptcy courts had the inherent power to recharacterize debt as equity. Seven percent “disagreed strongly” and another seven percent “somewhat disagreed” that the bankruptcy courts had the inherent authority to recharacterize debt as equity. Twenty percent did not know or had no opinion on the issue.

ABI members and the public were welcome to submit their response to the statement: “Bankruptcy courts have the inherent power to recharacterize debt as equity.” The ABI Quick Poll was open for voting from Feb. 16-22.

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.

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

SIXTEEN BANKRUPTCY JUDGES FEATURED AT ABI’S 2007 CENTRAL STATES BANKRUPTCY WORKSHOP

February 28, 2007, Alexandria, Va. —The American Bankruptcy Institute’s (ABI) 14th Annual Central States Bankruptcy Workshop, featuring 16 bankruptcy judges from the Sixth and Seventh Circuits, will take place June 14-17 at Michigan’s Grand Traverse Resort and Spa. More than 400 professionals are expected to attend this year’s workshop. Attendees have the opportunity to earn up to 10 hours of CLE and CPE credits, including 1.25 hours of ethics. Sheryl L. Toby of Dykema PLLC (Detroit, Mich.) is the program chair, while JudgePhillip J. Shefferly (E.D. Mich.) is the judicial chair.

The newest addition to this year’s Workshop are a series of unique “Judicial Debates,” moderated bytheprogram’s Advisory Board Chair Claire Ann Resop of Brennan, Steil & Basting (Madison, Wis.) will feature the following propositions:

• Bankruptcy Judges Daniel S. Opperman (E.D. Mich.) and Phillip J. Shefferly (E.D. Mich.) will debate whether “A 503(b)(9) Claimant Is Entitled to Receive Full Payment on Its Claim Prior to the Effective Date of a Plan.”
• “BAPCPA’s Credit Counseling Requirement Should Be Eliminated” will be debated by Bankruptcy Judges Jeffrey R. Hughes (W.D. Mich.) and Steven W. Rhodes (E.D. Mich.).
• Bankruptcy Judges Bruce W. Black (N.D. Ill.) and John E. Hoffman, Jr. (S.D. Ohio) will debate “It Is Appropriate for the Court to Enter a First-day Order Defining the Scope of a Creditors’ Committee’s Disclosure Obligation.”
• “A Chapter 13 Debtor Can Surrender a Vehicle to a ‘910 Creditor’ in Full Satisfaction of Its Claim” will be debated by Bankruptcy Judges Susan V. Kelley (E.D. Wis.) and Mary Ann Whipple (N.D. Ohio).

The second set of “Judicial Debates” will take place on June 16 and include:

• Bankruptcy JudgesBruce W. Black (N.D. Ill.) and Daniel S. Opperman (E.D. Mich.) debating “The New 45-day Reclamation Period Established by §546(c) Is Merely a Cap on Rights Provided by Nonbankruptcy Law, Rather Than a New Substantive Right.”
• “Means Test Determines the Proper Deductions for Income under the Totality of Circumstances Test under §707” will be debated by Bankruptcy Judges Pamela Pepper (E.D. Wis.) and Eugene R. Wedoff (N.D. Ill.).
• Bankruptcy Judges Pamela S. Hollis (N.D. Ill.) and Jeffrey R. Hughes (W.D. Mich.) will debate “During the First 30 Days of a Bankruptcy Case, the Court May Require a Utility to Accept Adequate Assurance in a Form and Amount Not Agreed to by the Utility.”
• Debating “It Is Inappropriate for an Attorney to Advise a Debtor to Incur Debt for the Purpose of Increasing the Value of the Debtor’s Exemptions” will be Bankruptcy Judges J. Philip Klingeberger (N.D. Ind.) and Eugene R. Wedoff (N.D. Ill.).

Panel topics for ABI’s Central States Bankruptcy Workshop include:

“Reaffirmation: The Ground Rules Have Changed” will feature panelists Elizabeth M. Abood of Charles J. Schneider PC (Livonia, Mich.), James J. Burns, Jr. of Burns & Wincek, Ltd. (Chicago), Stuart A. Gold of Gold Lange & Majoros PC (Southfield, Mich.) and Bankruptcy Judge Mary Ann Whipple (N.D. Ohio).

Panelists for the “Supply Agreements and Other Hot Contract Issues: Adequate Assurance Demand, Does ‘Cure’ Mean ‘Cure and More’?” session include Donald S. MacKenzie Jr. of Conway MacKenzie & Dunleavy (Birmingham, Mich.), Bankruptcy Judge Marci B. McIvor (E.D. Mich.), Patrick Mears of Barnes & Thornburg LLP (Grand Rapids, Mich.) and Norman Newman of Much Shelist Freed Denenberg Ament & Rubenstein, PC (Chicago).

“Ouch! Administrative Insolvency and Disgorgement of Fees – Case Strategies” will include Richard S. Lauter of Levenfeld Pearlstein, LLC (Chicago), Judith Greenstone Miller of Jaffe Raitt Heuer & Weiss, PC (Southfield, Mich.), Bankruptcy Judge Steven W. Rhodes (E.D. Mich.) and Gary A. Wencel of Moglia Advisors (Schaumburg, Ill.).

Bankruptcy Judge John E. Hoffman, Jr. (S.D. Ohio), Alan D. Lasko of Alan D. Lasko & Associates PC (Chicago), Barry P. Lefkowitz of Virchow, Krause and Co. LLP (Southfield, Mich.), Ralph E. McDowell of Bodman LLP (Detroit) will be the featured panel for the “Cash-Flow Statements, Budgets, Financial Reporting: Watch Out for the Catches” session.

The “Avoid Professional Liability in Commercial Cases: Aiding and Abetting Client Wrongdoing and Other Liability Risks” session will include Jeffrey A. Hokanson ofIce Miller LLP (Indianapolis), Bankruptcy Judge Pamela S. Hollis (N.D. Ill.), C. Daniel Motsinger of Krieg Devault LLP (Indianapolis) and Nancy D. Terrill of Grant Thornton LLP (Cleveland).

“Secured Creditor Rights in Consumer Cases” includes Joseph A. Baldi of Joseph A. Baldi & Associates, PC (Chicago), Bankruptcy Judge James D. Gregg (W.D. Mich.), Richardo I. Kilpatrick of Kilpatrick & Associates PC (Auburn Hills, Mich.) and Richard D. Nelson of Cohen, Todd, Kite & Stanford, LLC (Cincinnati).

Panelists on the “Filing a Consumer Case: Pesky Prerequisites” session include John E. Gierum of Gierum & Mantas (Park Ridge, Ill.), Frederick M. Luper of Luper, Neidenthal & Logan, LPA (Columbus), Brian J. Small of Thav Gross Steinway & Bennett PC (Bingham Farms, Mich.) and Bankruptcy Judge John H. Squires (E.D. Mich.).

Chapter 13 Trustee Thomas J. King (Oshkosh, Wis.), Bankruptcy Judge Pamela Pepper (E.D. Wis.), Steven L. Rayman of Rayman & Stone (Kalamazoo, Mich.) and David S. Yen of the Legal Assistance Foundation of Chicago will be featured for the “Disposable Income and the Means Test: What Do They Mean?” session.

Panelists for “Pension and Legacy: New Laws and Old Obligations” include Mark Berkoff of DLA Piper US LLP (Chicago), Gary W. Burns of Walker Nell Consultants (Philadelphia), Bankruptcy Judge J. Philip Klingeberger (N.D. Ind.) and Shawn M. Riley of McDonald Hopkins Co., LPA (Cleveland).

The “Alternatives to Chapter 11: Receiverships, Operating 7s, Mortgage Trusts and More” session will feature John C. DiDonato of Huron Consulting Group (New York),Gregory J. Jordan of Dykema Gossett PLLC (Chicago), Timothy F. Nixon of Godfrey & Kahn SC (Green Bay, Wis.) and Bankruptcy Judge Phillip J. Shefferly (E.D. Mich.).

“Breakfast with a Judge” will feature a roundtable discussion with Bankruptcy Judges James D. Gregg (W.D. Mich.), John E. Hoffman, Jr. (S.D. Ohio), Jeffrey R. Hughes (W.D. Mich.), Philip Klingeberger (N.D. Ind.), Marci McIvor (E.D. Mich.), Daniel S. Opperman (E.D. Mich.), Steven W. Rhodes (E.D. Mich.), Phillip J. Shefferly (E.D. Mich.), John H. Squires (N.D. Ill.) and Eugene R. Wedoff (N.D. Ill.).

For more information about the Central States Bankruptcy Workshop, call ABI at (703) 739-0800 or visit www.abiworld.org/CS07.  

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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 11,000 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.