|
|
|
Bankruptcy Code Changes May Affect Receivership Practice By Mosier, Robert* On October 17th of this year most provisions of the “Bankruptcy Abuse Prevention and Consumer Protection Act of 2005” (the “Act”) took effect. The Act has been widely criticized as “purchased” legislation–legislation designed to satisfy the wishes of a specific and well-financed constituency–America’s financial institutions. At the California Bankruptcy Forum’s conference in Palm Springs the weekend of May 15, 2005 (soon after the Act was passed by both branches of Congress and signed into law by the President), the air was abuzz with speculation about the impact of the new legislation—reportedly drafted without input from the community of experienced bankruptcy judges or bankruptcy counsel. Dick Armey, former House majority leader, was the keynote speaker at the Bankruptcy Forum conference. When asked what he thought of the new bankruptcy legislation, he briskly replied, “I think the special interests bought that legislation.” This was a remarkably candid answer to a frank question. What does it all mean? The answer is…no one knows! In this issue of the Receivership News we focus on the question of how the Act may boost the use of state receiverships to reorganize the debt of troubled companies. Some practitioners theorize that the changes implemented by the Act hampering corporate reorganizations in bankruptcy may cause more troubled companies (and counsel) to consider debt restructure and turnaround in a state court receivership. Len Shulman and Bob Huttenhoff of Shulman, Hodges & Bastian, LLC in Orange County discuss the principal changes made by the Act to corporate Chapter 11 reorganizations. Kirk Rense contrasts bankruptcy and receivership reorganizations and speculates on whether the now decidedly less-friendly Bankruptcy Code may result in an up-tick in California receivership reorganization cases. We are pleased to provide these insights at a time when the entire insolvency arena is undergoing substantial change (like it or not!). By the time this is published the semi-annual meeting of the California Receivership Forum’s state board of directors will have taken place in Los Angeles. The Board, pictured in the accompanying photo, has decided to create a California Receivers Forum website for use both by members and by the general public looking for candidate receivers with particular expertise in distinct geographic areas. See the article on plans for the website elsewhere in this issue. We hope to post past (and future) issues of the Receivership News on the website, as a resource for CRF members and the legal community. *ROBERT P. MOSIER is a Southern California trustee and receiver and principal of Mosier & Company, Inc., a firm that has specialized in managing and turning around troubled companies for more than 25 years. |