The Role of Attorneys Following a Fraud Is Examined
by Robert D. Katz, Managing Director, Executive Sounding Board Associates Inc.
For the purposes of this article, consider the history and recent business practices of a company we’ll call JKL Shoes. JKL, a privately-held company, is a well-established, family-owned women’s footwear manufacturer. Consider these facts:
Owned and operated by the second generation, the company enjoyed for many years a strong record of success. In recent years, the business generated revenues of $75 million and had a reputation within the industry for superior technical expertise. Its clients were largely comprised of solid Fortune 1000 companies.
The company had a $10 million secured asset-based line of credit. This included $6 million for machinery and equipment purchases and about $3 million of secured real estate debt. With regard to collateral, accounts receivables were $10 million—of which $8 million were eligible. The advance rate was 80 percent. Total finished goods inventory was $7 million, of which $6 million were eligible. The advance rate was 50 percent. There were no personal guarantees.
Panelists for the 2005 Annual Spring Meeting Announced
Bringing a Prearranged Plan Together—Can We Agree to Agree?
On April 30, 2005, at the 2005 Annual Spring Meeting, the Financial Advisors and Young and New Members Committees will present four experts from bankruptcy and corporate restructuring firms located across the country to discuss prearranged plans of reorganization. In discussing prearranged plans, the panelists will address the varying constituencies and dynamics involved in negotiating a prearranged plan, the process of negotiating and implementing a prearranged plan, the roles of various players and advisors in the process, key factors for success, and recent case examples.
Read more about the panelists.
Things to Look for in Future Newsletters
I would like to thank everyone who contributed their time to this issue of the newsletter. My goal is to circulate a newsletter on a monthly basis. To that end, I intend to include the following in future newsletters:
Judicial Update
Each update will include summaries of reported decisions from across the country that could directly or indirectly impact financial advisors in the bankruptcy context.
Articles
The Financial Advisors’ Committee welcomes articles from its members. In order for an article to be included in the newsletter, the subject matter of the article must include information that members of the committee would find useful in their practice. Please forward any articles to Ian Fredericks.
Bankruptcy Act of 2005 Update
Assuming Congress passes the Bankruptcy Act of 2005 (S. 256/H.R. 685) and the President signs the bill into law, a summary of the amendments that impact chapter 11s will be circulated.