As several U.S. automakers teeter on the brink of collapse, the prospect of bankruptcy reorganization has become a present-day reality for two of the largest automakers in the U.S. Reorganization would involve plant closures, brand elimination, layoffs, union concessions, reduced dealer networks, asset sales and creditor compromise. What is perhaps less obvious is the part that this codependence will play between the domestic automakers and their suppliers in Detroit’s potential road to recovery. Unless the courts grant “critical vendor” status to many parts suppliers, there are risks of widespread collapse in the supply chain. If the collapse occurs, production lines could be disrupted or shut down because of the automakers’ inability to obtain parts.
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by: Andrew L. Cole
Franklin & Prokopik, PC
Baltimore
The enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) brought sweeping changes to the Bankruptcy Code, but perhaps none more important to most unsecured trade creditors than a single word changed in 11 U.S.C. §547(c)(2). Prior to BAPCPA, proving that a payment was made in the ordinary course of business, and thus nonavoidable as a preference, required proof that the payment was not only made in the ordinary course of business between the particular debtor and creditor in question, but that the payment would also be in the ordinary course of business when measured against similarly-situated, but unrelated, debtors and creditors in a relevant industry.
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The 16th Annual Northeast Bankruptcy Conference will be held in conjunction with the 4th Annual Northeast Consumer Forum July 16-19 at the historic Mount Washington Resort in Bretton Woods, New Hampshire. This year's program offers more than 8 hours of CLE and features a roster of the best regional speakers. Outdoor enthusiasts and families can take advantage of an array of activities as well. One of the sessions will be of particular interest to the committee.
Panelists in the session "Effective Strategies for Trade Creditors" will discuss pre-bankruptcy supply agreements and the effect that Kmart has had on critical vendor motions. Joseph S.U. Bodoff of Bodoff & Associates, P.C. in Boston will moderate. Panelists will include Hon. Robert E. Gerber of the U.S. Bankruptcy Court (S.D.N.Y.) in New York, Lisa E. Herrington of Choate Hall & Stewart LLP in Boston and John P. McVeigh of Preti, Flaherty, Beliveau & Pachios, LLP in Portland, Maine. Please click the links below to view papers by Mr. Bodoff and Ms. Herrington.
Bound to Sell: Wrestling With Pre-Bankruptcy Supply Agreements
Critical Vendor Motions After Kmart
