Press

As part of the Weil Bankruptcy Blog’s series on the recently released ABI Commission Report, we previously discussed the ABI Commissions’ recommendations on management and oversight of cases in chapter 11. In this entry we turn to the often debated topic of professional fees and the costs of complex chapter 11 cases.
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In this post, we discuss some of the more interesting findings and recommendations relating to the first topic tackled in the report, the less-exciting, but nevertheless important, topic of management and oversight of chapter 11 cases.
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America's bankruptcy system has been one of the U.S. economy's competitive strengths: A failing business should get a shot at a fresh start. Too often, however, bankrupt companies get trapped in court for years, paying a fortune in fees while competitors flourish at their expense, according to an editorial in yesterday’s Chicago Tribune. In a report unveiled this month, the American Bankruptcy Institute's Commission to Study the Reform of Chapter 11 recommends an overhaul of the law.
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Lenders are concerned their investments in broken companies would lose protections under proposed changes to US bankruptcy rules. A 400-page report nearly three years in the making, released on Monday by the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11, laid out hundreds of recommended changes to law, some of which give companies more leeway to impose restructuring plans over creditors’ objections.
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An American Bankruptcy Institute commission report on reforming the bankruptcy code says that the current Chapter 11 process is out of date, too expensive and needs an overhaul. The study, released by ABI on Monday, Dec. 8, said that the bankruptcy code needs reforms since the financial markets, credit and derivative products and corporate structures are significantly different from those in 1978, when Congress enacted the Bankruptcy Code.
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Commercial lenders have been wielding progressively more power over how distressed companies reorganize, but experts say the industry could lose its upper hand if lawmakers follow an influential bankruptcy panel’s calls to cut back secured creditor rights. The lending sector is sure to mobilize after an American Bankruptcy Institute commission laid out 400 pages of recommendations on modernizing Chapter 11, some of which would strip away key protections that secured creditors currently enjoy.
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The American Bankruptcy Institute has proposed reducing some protections for secured lenders as part of its recommendations for reforming the U.S. bankruptcy system. In a 400-page report that includes hundreds of recommended changes to bankruptcy law, the ABI’s Commission to Study the Reform of Chapter 11 said companies should be given more leeway to impose restructuring plans over creditors’ objections.
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Top restructuring professionals say U.S. corporate bankruptcy law is broken and are pushing lawmakers for changes that would give struggling companies a better shot at survival. In a report released Monday, industry professionals called on federal lawmakers to pass reforms they say would make the Chapter 11 process cheaper and more efficient, potentially saving jobs and stabilizing the economy. The 370-page report from the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11 describes how federal lawmakers could restore protections that have eroded since the last major overhaul of corporate reorganization law in 1978.
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A bankruptcy research group unveiled hundreds of ideas for a “substantial modernization” of Chapter 11 of the U.S. Bankruptcy Code. The American Bankruptcy Institute’s proposals to Congress, released today, followed more than two years’ research into ways to fix distressed companies, the group said in a fact sheet. They include making it easier to obtain financing during bankruptcy and creating an alternative path for small and medium-sized businesses to reorganize.
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The American Bankruptcy Institute released its anticipated report on Monday on how Chapter 11 laws should be reformed and updated. I was part of an earlier advisory committee that struggled with the special treatment of derivatives and related securities trades in Chapter 11 cases. The so-called safe harbor provisions excuse derivatives from much of the normal operation of the bankruptcy code. Normally, a debtor has some time to decide which contracts it wants to keep and which it no longer needs. But with derivatives, the choice moves to the non-bankruptcy parties, which get to decide whether they will allow the debtor to keep the contract or whether they will terminate the deal instead.
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