The Financial Advisors Committee would like to thank Adam Paul, Ron Kubick, Peter S. Kaufman and Steven L. Victor for their time associated with their presentation at the ABI Spring Meeting. Also, thank you to all who attended.
Summary of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
by Brendan Linehan Shannon and Ian S. Fredericks, Young Conaway Stargatt & Taylor LLP, Wilmington, Del.
On April 20, 2005, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act (hereinafter, the “BAPCPA” or the “Act”). The Act has an effective date of October 17, 2005 and, with some exceptions, its provisions will apply only to cases filed after the effective date.
The BAPCPA has received an enormous amount of both positive and negative media coverage over the past year. That attention, however, has focused almost exclusively on the Act’s provisions affecting consumer bankruptcy. In fact, the BAPCPA contains many provisions directly affecting corporate restructurings under chapter 11—provisions that create new opportunities and obligations for debtors, and potential traps for unwary practitioners.
The Act’s business bankruptcy provisions promise to make it more difficult for distressed companies to successfully reorganize. From limiting timeframes for plan exclusivity and lease assumption, to drastically curtailing a debtor’s ability to structure and implement an employee retention plan, the Act appears to curtail a debtor’s flexibility in formulating a reorganization plan.
This summary briefly addresses some of the key provisions affecting chapter 11 debtors and their professionals. For convenience, what follows immediately as Section I is a short summary describing the most significant changes to the Bankruptcy Code and their practical effects. Section II contains a section-by-section summary of the more important business bankruptcy changes.
Things to Look For in Future Newsletters
June Newsletter
Tentatively, submissions for the next newsletter should be forwarded to Ian Fredericks by May 31, 2005, and the next newsletter will be circulated on or about June 6, 2005.
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 all ABI 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 or other submissions to Ian Fredericks.