ProfNet Wire: Business & Technology: Bankruptcy Reform Bill

ROUND-UP: BANKRUPTCY REFORM BILL

Following are experts who can discuss the bankruptcy reform bill currently working its way through Congress. If the bill passes into law, fewer people will be allowed to file under Chapter 7 and more will be forced to file under Chapter 13. Lawmakers who favor the legislation argue that it would prevent consumers from abusing the bankruptcy laws. But consumer advocates argue that the bill is a gift to creditors, which may receive $1 billion or more from repayment plans due to the expected increase in Chapter 13 filings:

**1. BRADFORD G. STROH, founder and co-CEO of FREEDOM FINANCIAL NETWORK, LLC, is available to comment on the potential impact of Senate Bill 256, the Federal Bankruptcy Reform bill, now awaiting President Bush's signature: “If and when the bill becomes law, it will change the landscape for consumers who face decisions about bankruptcy -– an estimated 1.5 million Americans each year. Because the legislation would effectively strip consumers of an existing option, they should be aware that other options exist to help them manage/eliminate debt, especially debt incurred through divorce, medical problems or other catastrophic events."

**2. RANDY STRAM, vice president of critical illness at METLIFE: "Congress’s bankruptcy decision stands to significantly impact individuals fighting serious illness. According to a recent Harvard study, over half of all bankruptcy filings in 2001 were due to out-of-pocket costs associated with medical conditions, and 76 percent of individuals had health insurance when they first became ill. Health insurance only covers so much, and with critical illnesses on the rise, individuals can be optimistic about survival, but must be realistic that it often comes with an expensive price tag." Stram can discuss how the market is responding to the growing need for a financial safety net from serious illness by offering innovative new products, particularly if Congress removes the option for filing Chapter 11.

**3. IRA HERMAN, partner at BRYAN CAVE LLP: "While this bill has a tremendous and clear impact on individuals and creditors in personal bankruptcy cases, it also greatly affects businesses in corporate bankruptcy cases, including cross-border restructuring. Both small and large businesses need to know the implications and changes associated with the bill as they compete in today’s marketplace." Herman is an expert in corporate restructuring and bankruptcy matters, and has represented both creditors and debtors in numerous complex corporate bankruptcy cases. He is available to discuss the implications and changes associated with the bill.

**4. PAUL M. YENERALL, attorney at ECKERT SEAMANS CHERIN & MELLOTT, LLC: "The new bankruptcy bill contains significant protections for retirement and pension accounts in bankruptcy: all pension accounts will be exempt up to $1 million; debtors' employers will be permitted to continue to make salary deductions to repay loans against the plan accounts; debtors can continue to repay loans to protect their pensions in preference to paying other creditors; and the loans will be non-dischargeable. Debtors need no longer fear triggering early termination or distributions from plans and can safeguard their retirement funds. Employers need to change their treatment of these loans when an employee files bankruptcy."

**5. DARRYL LADDIN, chair of bankruptcy practice at ARNALL GOLDEN GREGORY LLP: "Although the bankruptcy bill has been most publicized as a bill affecting consumer debtors, what has been ignored is the significant impact the bill will have on the way in which business bankruptcies are handled. As with the consumer side, the bill is largely creditor-friendly. It limits some of the flexibility that a business debtor had under current law in certain key areas, thus shifting the balance of power in business bankruptcy cases somewhat."

**6. SHAWN RILEY, attorney at MCDONALD HOPKINS, specializes in business restructuring: "Changes to business parts of the Bankruptcy Code represent significant shifts with no apparent consideration of the pro and cons. It's likely to produce unexpected/unintended consequences. For example, while limiting executive bonus/retention plans has superficial appeal, it creates risk that attempted reorganizations for smaller businesses will fail because of flight of key employees. Paying millions to retain WorldCom/Enron execs during bankruptcy should be examined. But preventing a middle market auto parts maker from offering key employees meaningful incentives to remain during reorganization is short-sighted."

**7. DR. PAUL VIOLLIS, president of RISK CONTROL STRATEGIES: "The new bankruptcy bill will undoubtedly increase the number of wage garnishments and the frequency in which HR executives and security directors must manage potentially volatile situations. There are two things an HR executive or security director should never want to get in between: an employee’s money or their family. Since a wage garnishment is often the result of a marital collapse, corporations are left to deal with a double whammy when delivering the devastating news." Viollis can discuss how HR executives can reduce the likelihood of violence.

**8. GREG JORDAN, partner at DYKEMA GOSSETT ROOKS PITTS, is a bankruptcy attorney: "Because many small businesses have their personal assets tied up in their businesses, the new bankruptcy legislation will have a disastrous impact on entrepreneurs and small businesses. Under the current Bankruptcy Code, a small-business owner has to start from scratch. Under the new law, that owner probably won't even have the chance to get to the starting line. As a result, the economy will suffer. The bill will not necessarily be a bonanza for creditors either."

**9. JOHN PENN, partner at HAYNES AND BOONE, LLP, says debtors are going to face an uphill battle once this bill becomes effective: “It’s going to make it far more difficult to debtors to discharge their debt. The pendulum has taken a huge swing the other way, and there is going to be a great need to educate the entire system, including debtors, lawyers and creditors, about these changes.” Penn has over 20 years of experience in representing parties in business bankruptcy cases. He is also president-elect of the American Bankruptcy Institute.

**10. CRAIG DEAN, principal at AEG PARTNERS: “Despite the spotlight on the consumer impact of the bankruptcy legislation, the bill will also influence the way corporate bankruptcies play out. The theme stays the same, however, in that the changes for companies also shift in favor of the creditors. While the new rules are designed to accelerate resolution, courts will have limited ability to permit debtors extra time to address issues and reach negotiated solutions in complex cases. Key managers will also have less incentive to remain to help the company through its difficulties.” AEG Partners is a strategic advisory firm to distressed middle-market companies.

**11. HOWARD EHRENBERG, partner at SULMEYER KUPETZ, member of the Chapter 7 Bankruptcy Panel of Trustees and a California state court receiver, says most consumers file for bankruptcy because of unforeseen occurrences like medical bills, loss of job, divorce or death: "Banks and credit card companies support the legislation that categorizes these hardship cases with consumers who abuse bankruptcy law. Essentially, these people will be forced to use Chapter 13 and make a repayment plan instead of being able to completely discharge their debts. The number of actual abusers is very small, and the current bankruptcy code already has provisions in place to deal with these cases."

**12. RHETT CAMPBELL, head of the corporate reorganization and creditors' rights practice at THOMPSON & KNIGHT: "What we see now is the operation of the golden rule: he who has the gold makes the rules. The creditors' side has always had more money and the creditors have a better lobby. What you see is creditors able to pass a law that favors their side of the calculus. It's not to say it's wrong or bad, it just is what it is. Many of these changes, while they favor creditors, are overdue." Rhett specializes in energy reorganization and bankruptcy, corporate reorganization, and creditors' rights, and is available to provide an analysis of the legal aspects of the Federal Bankruptcy Bill.

**13. SCOTT SANDAGE, associate professor of history at CARNEGIE MELLON UNIVERSITY: "The fierce debate over the bankruptcy bill that recently was passed by the U.S. Senate reflects a dispute over the nature of success and failure that has been going on in America practically since its founding. Bankruptcy has caused political firestorms throughout American history because it inflames conflicting opinions about success and failure. Most arguments on both sides of today's debate appeared almost verbatim in the press and politics of 150 or 200 years ago." Sandage is the author of "Born Losers: A History of Failure in America."

**14. JAMES E. DATRI, partner at MANATT, PHELPS & PHILLIPS in Washington, D.C., and former executive director of the Democratic Caucus, United States House of Representatives, wrote an article for the American Banker on this topic: "The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 will bring fairness to a broken system, and deserves strong, bipartisan support in the Congress. It is ironic that opponents of the current bankruptcy reform legislation claim the bill is an attack on families and consumers, when it is the current system that makes no distinction between the millionaire and the struggling family, makes no distinction between luxury items and rent, and treats child support and alimony as second-class obligations."

**15. ADAM BRAUER, debtor advocate and the in-house counsel for DEBTSETTLEMENTUSA.COM: "Credit card issuers are beginning to raise monthly minimum payments on outstanding balances. I believe this will lead to more personal bankruptcy filings within a short time. In the short run, there will be an increase in credit card delinquencies as people who are used to making bare minimum payments will be unable to make the required higher amounts. Consumers will be in the same position as before while being required to make the larger monthly payments. In the long-term, this new provision will not shield people from the three major causes of not being able to continue to pay their debts: major illness, job loss or divorce. This new policy by the credit card issuers will not materially benefit consumers other than accelerate their decision-making process for filing bankruptcy, or joining a debt management or credit counseling program."

**16. GARY STERN, CEO of ASTA FUNDING INC., is a veteran in the debt buying industry: "As the bankruptcy bill comes to legislation, the $70 billion debt buying industry will be directly affected. It is estimated that 5 to 10 percent of people who now file under chapter 7 will be required to file under Chapter 13, which could result in better portfolios to purchase and stronger industry revenues. The bill can also have a positive effect on those owing debt, as most people who declare chapter 7 would prefer to pay off their debt. The bill will require debtors to meet with credit counselors to evaluate their situation and help those in debt develop a payment program so they can get back on the right track.”

**17. SUSAN STREIFEL, president and CEO of WOODSTONE CREDIT UNION, can discuss why bankruptcy reform is actually good for consumers: "No one has reported that an entire not-for-profit movement, including liberal democrats, went to Washington, D.C., to encourage their legislators that bankruptcy reform is good for consumers. Is it possible that this legislation isn’t just greed- driven for credit card companies?" Streifel can give examples of how bankruptcy abuse creates a burden for real people.

**18. BILL LENHART, national director of BDO SEIDMAN’s financial recovery services practice, can discuss the following topics regarding the bankruptcy bill: How are bankruptcy judges gaining more discretion over the makeup of creditor committees, and why will this change benefit smaller creditors? How will unsecured creditors, such as suppliers, have greater rights in reclaiming property from debtors? Why will lease extensions, that previously could go on for years, be limited to 210 days? How will the fees of board certified advisors be enhanced by this legislation? Why will this bill do nothing to slow the rush of businesses into 363 sales?

**19. CLARK WATSON is partner and chairman of the creditor rights and bankruptcy practice group at BALCH & BINGHAM, which represents financial institutions, equipment lessors, utilities, landlords, creditors' committees, landlords and distressed companies in a variety of insolvency and creditor proceedings, including reorganizations under chapters 9 and 11 of the Bankruptcy Code; liquidations under Chapter 7 of the Bankruptcy Code; defense of adversary proceedings, including preferences and fraudulent conveyances; debtor-in-possession financing; stay relief proceedings; purchase and sale of distressed companies; equipment lease defaults; workouts and loan restructurings; receiverships; foreclosures; actions to recover personal property; and commercial collections. Prior to joining Balch & Bingham LLP, Watson served as law clerk for the Honorable James H. Hancock, United States District Judge, Northern District of Alabama (1981-1982).

**20. WILLIAM GREENDYKE, partner at FULBRIGHT & JAWORSKI, served as chief judge of the United States Bankruptcy Court for the Southern District of Texas sitting in Houston. Greendyke was appointed to the bankruptcy bench in Houston by the Fifth Circuit on Sept. 1, 1987. At the age of 33, he was one of the youngest bankruptcy judges in the country. During his tenure as a judge, he presided over a number of complex and significant cases, including National Convenience Stores (Stop-N-Go), Appletree Markets, Ninfa's, Tri-Union Development, Drypers, Sterling Chemicals, Metals USA and Encompass Services.

**21. NANCY RAPOPORT, dean and professor of law at the UNIVERSITY OF HOUSTON Law Center, is an expert on bankruptcy ethics and law and popular culture. She has written and edited a number of articles and books on the Enron debacle. After receiving her B.A. from Rice University and her J.D. from Stanford Law School, Rapoport clerked for the Honorable Joseph T. Sneed on the United States Court of Appeals for the Ninth Circuit and then practiced law (primarily bankruptcy law) with Morrison & Foerster in San Francisco. She has been the dean at UH's Law Center since 2000.

**22. STEPHEN LUBBEN, professor of law at SETON HALL UNIVERSITY, is the principal investigator under a $345,000 grant from the American Bankruptcy Institute that will fund an independent look at professional fees in Chapter 11 cases. His research interests focus on a variety of topics related to corporate financial distress. He has been interviewed and quoted in numerous media outlets, including the Dow Jones Newswire, New Jersey Law Journal and the Wall Street Journal.

**23. JESSE VOGTLE, partner at BALCH & BINGHAM LLP, specializes in creditor rights and bankruptcy and litigation practice groups, which are devoted exclusively to helping debtors and creditors negotiate the bankruptcy process nationwide. Vogtle has extensive experience providing companies and individuals advice regarding business bankruptcies, including municipal filings under Chapter 9, committee representation, involuntary bankruptcy proceedings, preference litigation, buying and selling assets, and general Chapter 11 proceedings.

**24. PAUL SINGERMAN, co-CEO of BERGER SINGERMAN, has a 20-year track record of successful representations in high-profile matters, such as AT&T Latin America; Atlas Air/Polar Air Cargo; Renaissance Cruise Lines and Roadhouse Grill reorganizations, in which Berger Singerman represented the debtors; and the Pan Am and Fine Air bankruptcies, in which Berger Singerman represented the Official Committee of Unsecured Creditors.

**25. JOHN GENOVESE, managing partner of GENOVESE JOBLOVE & BATTISTA, heads its reorganization and insolvency practice. He advised the national plaintiff law firm Milberg Weiss Bershad Hynes & Lerach of New York, which represented the lead plaintiffs from the Enron shareholder class-action case in the company’s bankruptcy proceedings. He was charged with protecting the interests of the shareholder class in the bankruptcy case. Practice areas include troubled loan workouts, bankruptcy, insurance insolvencies and expert testimony, emphasizing complex bankruptcy litigation in Bankruptcy and District Courts, and other complex commercial litigation.

**26. JOE BALDIGA, chair of MIRICK O'CONNELL LLP's bankruptcy and creditors' rights department, is available for comment on the Bankruptcy Reform bill. For over 17 years, Baldiga has represented creditors, creditors' committees, debtors, trustees and examiners in bankruptcy cases, and since 1998, he has also served as a panel trustee, appointed by the United States Trustee's Office, in over 600 consumer bankruptcy cases annually. Mirick O'Connell LLP is a full service, regional law firm with over 55 lawyers in offices in Worcester, Westborough and Boston, Mass.

**27. BONNIE GLANTZ FATELL, partner with national law firm BLANK ROME LLP, is an expert in the outcomes and issues surrounding corporate bankruptcy. As chair of the firm’s business restructuring and bankruptcy group, Fatell concentrates her practice on bankruptcy/reorganizations and related litigation, workouts and other banking and commercial matters, including loan restructuring, debtor-in-possession financing, intercreditor relationships, preference action defense work, and lender liability prevention and defense. Recently, Fatell was inducted as a fellow to the American College of Bankruptcy. She is a member of the Business Reorganization Committee of the American Bankruptcy Institute, former Chairman of the Eastern District of Pennsylvania Bankruptcy Conference, and was appointed by the United States District Court for the Eastern District of Pennsylvania to serve on the local Bankruptcy Rules Advisory Committee.

ROUND-UP: AGING OF THE AMERICAN WORKFORCE (continued)

We've added the following to items posted previously at http://profnet.prnewswire.com/organik/orbital/thewire/lst_leads.jsp?iLRTopicID =6973

**1. DWIGHT MOORE, Ph.D., industrial psychologist and president of MOORE & ASSOCIATES, which helps executives plan for their retirement: "Most executives have taken steps towards financial planning for retirement, but have not considered how to deal with their new identity and feelings after their transition from corporate life. These executives' primary concerns are losing their corporate identity, having others not take their transition seriously and changing their support group and friends networks, the perception of having no problems to solve and not knowing what to do with their free time."

ROUND-UP: GLOBAL TEXTILE QUOTA SYSTEM (continued)

We've added the following to items posted previously at http://profnet.prnewswire.com/organik/orbital/thewire/lst_leads.jsp?iLRTopicID =6973

**1. DAN IKENSON, trade policy analyst at the CATO INSTITUTE: "The textile industry is simply not interested in competing. Foreign barriers -— real or imagined -- have been an excuse it has used with success to get the U.S. government to respond favorably to its special requests. Despite all the exceptions made on its behalf during the Bush administration and in previous years, the textile industry continues to lobby for special favors. Those efforts should be expected to continue until they no longer prove fruitful. The Bush administration should move decisively to cut the umbilical cord. The U.S. textile industry has the capacity to walk on its own two feet -— and even to thrive. Meanwhile, such an effort would allow the administration to focus its energies where it should -- by promoting international trade policies that benefit the broader U.S. economic interest."

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LEADS

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**2. BUSINESS: WEEE/RoHS -- WHAT BUSINESSES NEED TO KNOW TO EXPORT TO EUROPE. GEOFFREY BOCK, engineer at TUV RHEINLAND OF NORTH AMERICA: "This summer, the WEEE regulations in Europe go into effect, mandating almost all electronic items must be recycled. Next year, RoHS goes into effect, prohibiting certain pollutants from being used in electronic items. Companies that are not taking steps to comply with WEEE/RoHS now risk being shut out of Europe." Bock can provide updated information on WEEE/RoHS, what companies need to do to comply and what it means for exporters.

**3. INTERNET: COURT DOCUMENTS OPEN ONLINE WINDOW TO PERSONAL INFORMATION. PETER VOGEL, attorney at GARDERE WYNNE SEWELL: "As court records make their way onto the Internet, more and more personal information is also readily available to the public. From Social Security numbers to real estate holdings, public information that once took an arduous courthouse search to gather is now available at the click of a mouse. As a result, district clerks and government privacy experts are being asked to decide what, if any, personal information should be included in online court files. Some support posting exact court documents, but once your personal information appears in cyberspace, the genie is out of the bottle. There is no way to make it disappear."

**4. LABOR RELATIONS: UNIONS ARE BETTER OFF TRYING TO DIVIDE AND CONQUER. BILL ADAMS, Ph.D., president of ADAMS, NASH, HASKELL & SHERIDAN, can discuss the Wal-Mart labor relations issue and provide an employer’s perspective as well as expert insight on National Labor Relations Board complaints: “The union’s gone about this all wrong. The most recent complaint against Wal-Mart isn’t even an NLRB matter, but should be addressed to the U.S. Department of Labor, where the UFCW will have zero success in this administration. As for the larger issue of trying to unionize Wal-Mart, the union’s decision to organize nationally is a big mistake and will fail. Unions are better off trying to divide and conquer by regionalized organizing efforts, but no union has succeeded nationally, and UFCW, like many others, will wind up dead meat.” Adams is a great source to speak on NLRB complaints, appropriate employer strategies against union organization and how unions have been targeting employers like Wal-Mart as their ranks shrink.

**5. MANAGEMENT: CORPORATE CULTURE -- THE X FACTOR IN M&AS. PRISCILLA STANDIFER, director of people solutions at PROUDFOOT CONSULTING, a management consulting firm: "M&A activity is growing at a scorching pace this year. But will these mergers last? Despite the fact that acquisition is a popular strategy to meet Wall Street expectations for growth, 83 percent of all mergers fail to create shareholder value, according to a KPMG study. Why don't they last? What is often overlooked when trying to make M&As work? Corporate culture. It is the X Factor in M&As. In fact, merger deals have been estimated to be 26 percent more likely to be successful if the acquirers focus on cultural issues." Standifer has more than 15 years' experience in helping leading organizations keep new and existing employees motivated and productive as these companies undergo major change such as mergers and acquisitions.