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| vol 20, num 4 | December 2021 |
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| Facilitating a Consensual Plan: The Role of the Subchapter V Trustee |
| 11 U.S.C. § 1183(b)(7) tells us that “[t]he trustee shall ... facilitate the development of a consensual plan of reorganization.” The Small Business Reorganization Act of 2019 (Public Law 116-54) established for the first time in chapter 11 a mandatory, but nonpossessory trustee — the “subchapter V trustee” — to keep an eye on small business reorganizations under the new subchapter V of chapter 11 of the Bankruptcy Code. The subchapter V trustee’s duties, while enumerated with some specificity in § 1183(b)(1)-(6), include a vaguely defined final directive to “facilitate” a consensual plan of reorganization. |
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| The Future of Bankruptcy Venue Reform |
| On June 28, 2021, a bipartisan bill was presented in the U.S. House of Representatives to amend 28 U.S.C. § 1408, the bankruptcy venue statute. The Bankruptcy Venue Reform Act of 2021, H.R. 4193, begins by finding that the “wide range of permissible bankruptcy venue options” currently in the Bankruptcy Code “has led to an increase in companies filing for bankruptcy outside of their home States,” meaning “the district in which the principal place of business or principal assets of the company is located.” Currently, a corporate debtor may file bankruptcy (1) in the entity’s state of incorporation, (2) where the entity’s
principal place of business or principal assets are located, or (3) any district in which an affiliate of the entity has already filed a pending bankruptcy. |
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| Avoid Falling into the “Check-the-Box” Trap When Working On or Planning For a Reorganization |
| There are so many involved details and items turnaround professionals have to deal with when they are brought in to help reorganize a company. It is very tempting to fall into a false sense of security when you can just check off the “got it” box without delving into a detailed analysis of complicated issues. Insurance is one of those deeply involved areas where professionals should not take the easy way out.
Many business and turnaround professionals accept a Certificate of Insurance as evidence that commercial insurance is in place. As a matter of fact, the standard Certificate of Insurance is commonly called “evidence of insurance.”
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