#LongDate#

Final Week for Pre-Registration!
The 82nd Annual New York Education Conference is only three weeks away. Your $495 Member ($395 Spouse) registration includes 4 gala social events, over 15 hours of educational programming and materials (see details below) and daily Continental Breakfast & Hospitality. No additional ticket purchases required! Register by October 31, 2002 to be listed in the Official Roster! Click here to register.

SUA SPONTE
Judith Greenstone Miller
Raymond & Prokop, P.C.
jmiller@raypro.com

National Conference of Bankruptcy Judges a Great Success!
Preparation for New York Eastern Regional Conference Proceeds . . . .

It seems hard to believe that another month has gone by since I last wrote to you in my Sua Sponte for the Bankruptcy Section Newsletter. So much has and continues to transpire for the Bankruptcy Section of the Commercial Law League of America. The committees of the Bankruptcy Section have been formed and are beginning to plan and structure business activities for the year. It’s not too late to get involved and I hope that if you are interested in becoming an active member of the Bankruptcy Section you will contact me or another member of the Executive Council and express your interest.

• Read more...

CASE ANALYSIS
Richard E. Kruger
Jaffe, Raitt, Heuer & Weiss
One Woodward Avenue, Suite 2400
Detroit, MI 48226
Phone: 313.961.8380 Fax: 313.961.8358
Email: rkruger@jafferaitt.com

THIRD CIRCUIT HOLDS THAT CREDITORS’ COMMITTEE DOES NOT HAVE THE ABILITY TO BRING A PRE-PLAN CONFIRMATION FRAUDULENT TRANSFER ACTION

Synopsis: In the wake of the Supreme Court opinion of Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1 (2000), the Third Circuit in Official Committee of Unsecured Creditors of Cybergenics Corporation v. Chinery, 2002 WL 31102712, 2002 U.S. App. LEXIS 19731 (3d Cir. Sept. 20, 2002), held that a creditors’ committee does not have the ability to bring a fraudulent transfer action pursuant to bankruptcy code section 544(b). The bankruptcy court had entered an order authorizing the committee to bring the action in accordance with the prevailing view. Despite numerous cases to the contrary, the Third Circuit determined that the bankruptcy court did not have the ability to authorize the committee to bring the suit as the plain language of section 544(b) only allows a trustee (or debtor-in-possession) to maintain a fraudulent transfer action pre-confirmation.

• Read more...

Fraudulent Transfers. Noteholder sought to avoid fraudulent transfers in state court against participants in leveraged recapitalization of debtor. Examiner in bankruptcy determined fraudulent transfer claims to be “not promising,” and court confirmed plan in which all such claims were extinguished. Noteholder argued that plan could not extinguish his direct right of action under state law. Disagreeing with noteholder, court stated that debtor was empowered to pursue fraudulent transfers under § 544(b) but, after considering examiner’s report, chose to extinguish those claims. Because plan extinguished the claims, noteholder was barred from pursuing them. In re PWS Holding Corp., 303 F.3d 308 (3d. Cir. 2002).

• Read more...

MEET YOUR EXECUTIVE COUNCIL

Each month, the newsletter will be spotlighting members of the Executive Council and Bankruptcy Section Staff. Over the next few months we invite you to learn about the individuals who dedicate their time and expertise to the Bankruptcy Section.

Bill Brandt
Bankruptcy Section Executive Council Member
www.dsi.biz

Bill Brandt is President and CEO of Development Specialists, Inc., one of the nation’s oldest and most prominent restructing advisory firms. He recently has been working with representatives of China on approaches to the reorganization of some of that country’s state-owned industries. He was the principal author of the amendment to the bankruptcy code which permits the election of trustees in Chapter 11 cases, and also has been active in the last several Democratic National Conventions, serving in 1996 both as vice-chair and as a delegate from the state of Florida, and in 2000 as a member of the Democratic National Committee’s Platform Committee.

Peter C. Califano
Bankruptcy Section Executive Council Member and
Legislative Committee Co-Chair
www.cwclaw.com

Peter C. Califano is a partner of Cooper, White & Cooper LLP located in San Francisco, California and focuses his practice on bankruptcy, commercial litigation and mediation. He is the Chair of CWC's Bankruptcy and Creditors' Rights Practice Group and is involved in a broad range of activities on behalf of creditors, specializing in equipment leasing and real estate foreclosure matters. Peter received his Juris Doctorate degree from Santa Clara University School of Law with honors and a B.A., magna cum laude, from the State University of New York at Buffalo. He has been a frequent lecturer and author on various bankruptcy issues and is also a certified mediator and a member of the Panel of Mediators for the United States Bankruptcy Court for the Northern District of California's Dispute Resolution Program since 1997.

Alan R. Gordon
Bankruptcy Section Executive Council Member

Alan R. Gordon is a partner and chairs the Bankruptcy Group at the Philadelphia law firm of Pelino & Lentz. Mr. Gordon represents secured and unsecured creditors, debtors, creditors’ committees and trustees in bankruptcies, reorganizations and workout arrangements. He has also represented clients in major acquisitions (including the acquisition of companies in Chapter 11 proceedings) and securities transactions. He is a member in a wide variety of professional organizations, as well as a prolific lecturer and author. As Chairman of the CLLA’s Chapter 11 Working Group, Mr. Gordon authored position papers and testified before the National Bankruptcy Review Commission. Mr. Gordon received his B.S. degree from Pennsylvania State University and his law degree, with honors, from Villanova Law School. His work on the Asset Sales Committee (ABI) has been acknowledged in the Congressional Record.

Cathy S. Pike
Bankruptcy Section Executive Council Member

Cathy S. Pike is a shareholder of Weber & Rose, P.S.C. where she specializes in bankruptcy and commercial litigation. She is a graduate of Brandeis Law School and taught Bankruptcy as an adjunct professor at the University of Louisville. She currently serves as Chair-Elect of the Brandeis Law School Executive Council. Cathy has served as a panel trustee in the United States Bankruptcy Court for the Western District of Kentucky for ten years. She has lectured on bankruptcy issues for numerous groups, including the Kentucky Bar Association, the University of Louisville, Kentucky Society of CPAs and National Association of Credit Management.

SUA SPONTE

National Conference of Bankruptcy Judges a Great Success!
Preparation for New York Eastern Regional Conference Proceeds . . . .

It seems hard to believe that another month has gone by since I last wrote to you in my Sua Sponte for the Bankruptcy Section Newsletter. So much has and continues to transpire for the Bankruptcy Section of the Commercial Law League of America. The committees of the Bankruptcy Section have been formed and are beginning to plan and structure business activities for the year. It’s not too late to get involved and I hope that if you are interested in becoming an active member of the Bankruptcy Section you will contact me or another member of the Executive Council and express your interest.

This year the League’s committee structure is being reorganized and restructured. Instead of having multiple section committees meeting and planning separately, the League is considering the formation of various national committees on which, among others, representatives of each of the Sections of the CLLA, would participate. These national committees range from marketing, membership, education, government affairs, professional responsibility and meetings. The formation of the national committees represents another opportunity for you to get involved in League and Section activities. If you are interested in serving in any of these national committees, please email me to express your interest.

The National Conference of Bankruptcy Judges (“NCBJ”) held in Chicago, Illinois from October 2, 2002 through October 5, 2002 was a great success. Over 2000 bankruptcy professionals, ranging from practitioners, judges, trustees, workout consultants and academicians, attended the NCBJ. Again, this year the CLLA was an active participant and sponsor at the NCBJ. League festivities commenced on Thursday, October 2, 2002 with its Annual Breakfast. This year’s Breakfast featured Bill Brandt, the President and Chief Executive Officer of Developmental Specialists, Inc. (“DSI”), one of the nation’s most prominent restructuring advisory firms for the last thirty years, as the keynote speaker. Bill spoke to the audience about the political ramifications behind the bankruptcy legislation. In addition to providing tremendous insight about the political process, Bill encouraged each of us, as part of the unique bundle of rights attendant to citizenship in the United States of America, to get involved in the legislative process - regardless of what one’s particular views were. I would like to take this opportunity to again express the thanks and appreciation of the CLLA and the Section for Bill’s eloquent remarks and his continued support of the Section.

The Breakfast also featured the presentation of the Lawrence P. King Award for Excellence in Bankruptcy. This award is given annually by the League for distinction in the field of bankruptcy to recognize that lawyer, judge, teacher or legislator that exemplifies the best in scholarship, advocacy, judicial, administrative or legislative activities in the field of bankruptcy. This year the award was given to Elizabeth Warren, the Leo Gottlieb Professor of Law at Harvard Law School. Professor Warren’s work in bankruptcy and commercial law has reached beyond the traditional confines of the business-oriented subject, empirically redefining the field.
Professor Warren was nominated to receive this award by numerous colleagues. Dean Nancy Rapoport of the Houston School of Law, when nominating Professor Warren, said: “[Her] research about debtors has made a real difference in how we view consumer bankruptcy policy and how legal academics should do useful research.” According to Dean Robert C. Clark of the Harvard School of Law:

Through her life’s work Professor Warren has deeply influenced how we think about the relationship of bankruptcy to such key issues as consumer spending habits and incentives, the protection of creditors’ and debtors’ rights, even divorce and child welfare. In this, Professor Warren altogether exemplifies the qualities of achievement sought in the recipient of the Lawrence P. King Award: “a lasting contribution to the improvement of commerce and to the fair and ethical treatment of debtors, creditors and the public at large.”

Moreover, the award had particular special and sentimental meaning to Professor Warren as she had served as a Senior Advisor to the National Bankruptcy Review Commission with the late Professor King, who had become a mentor and friend to her. We will again recognize Professor Warren at the Brunch held in conjunction with the Eastern Regional Meeting in New York on Sunday, November 17, 2002. We hope that you will join us at that time to share in honoring Elizabeth Warren as the 2002 Recipient of the Lawrence P. King Award for Excellence in Bankruptcy. Finally, special thanks to the Nominating Committee that included Jay Welford, Fred Luper and Henry Swergold.

The League’s 17th Annual Educational Program held at the NCBJ was a great success! Over 1,000 people attended the program that focused on hot and emerging areas in bankruptcy. This year’s program was planned by Judge Frank Koger (Bankr. W.D. Mo.) and moderated by Harry W. Greenfield. The program featured Chief Judge Gregg W. Zive (Bankr. D.Nev.), William H. Schorling (Klett, Rooney, Lieber & Schorling, Philadelphi, PA), Judge Randolph Baxter (Bankr. N.D.Ohio), Honorable Marjorie O. Rendell (3rd Circuit Court of Appeals) and Professor G. Ray Warner (University of Missouri, Kansas City School of Law and Of Counsel, Greenberg Traurig, P.C., Chicago, IL). The outstanding talent of the speakers and the substance of the topics of this year’s program served to enlighten and enrich the knowledge and expertise of all who attended the program. Many thanks to Judge Koger, Harry Greenfield, each of the speakers and Professor Jack F. Williams (Georgia State University School of Law, Atlanta, GA and Consultant, BDO Seidman, LLP, New York, NY) for the preparation of wonderful written materials for the program. Special thanks are also extended to this year’s corporate sponsors: BBK, Ltd., Ernst & Young Corporate Finance, LLC and McDonald Investments.

The 82d Eastern Regional Meeting will be held in New York from Thursday, November 14, 2002 through Sunday, November 17, 2002. In addition to providing wonderful networking opportunities, the conference will be “chock full of . . . mucho educational programs,” ranging from advanced Chapter 11 issues, basic bankruptcy for the beginning practitioner and hot and emerging cases decided during the last year. The schedule for this year’s conference has been somewhat restructured to maximize your ability to attend more functions and events. The Executive Council of the Section will be meeting on Thursday, November 14, 2002 from 4:00 to 6:00 p.m. Friday, November 15, 2002 and Saturday, November 16, 2002 will be filled with educational programs each morning. A dessert reception will be held on Thursday, November 14, 2002. The opening cocktail reception will be held on Friday evening, November 15, 2002. The annual cocktail party will again take place on Saturday, November 16, 2002 prior to the Theatre Party. Committee meetings will be interspersed within the schedule so make certain to check your conference brochures for the specific times. The conference will conclude on Sunday, November 17, 2002 with the annual brunch at 11:30 a.m., following the meeting of the Section’s Executive Council. It’s not too late to register for the conference. If you haven’t yet registered, please consider joining us in New York. If you have registered, click here and we’ll look forward to seeing you there - it’s certain to provide a lot of fun and opportunities to meet and greet old friends and make new acquaintances.

Judith Greenstone Miller
Raymond & Prokop, P.C.
26300 Northwestern Highway
4th Floor - P.O. Box 5058
Southfield, MI 48086-5058
Phone: 248-357-3010
Fax: 248-357-2720
jmiller@raypro.com
www.raypro.com

back to top ^

CASE ANALYSIS

THIRD CIRCUIT HOLDS THAT CREDITORS’ COMMITTEE DOES NOT HAVE THE ABILITY TO BRING A PRE-PLAN CONFIRMATION FRAUDULENT TRANSFER ACTION

Synopsis: In the wake of the Supreme Court opinion of Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1 (2000), the Third Circuit in Official Committee of Unsecured Creditors of Cybergenics Corporation v. Chinery, 2002 WL 31102712, 2002 U.S. App. LEXIS 19731 (3rdCir. Sept. 20, 2002), held that a creditors’ committee does not have the ability to bring a fraudulent transfer action pursuant to bankruptcy code section 544(b). The bankruptcy court had entered an order authorizing the committee to bring the action in accordance with the prevailing view. Despite numerous cases to the contrary, the Third Circuit determined that the bankruptcy court did not have the ability to authorize the committee to bring the suit as the plain language of section 544(b) only allows a trustee (or debtor-in-possession) to maintain a fraudulent transfer action pre-confirmation.

Facts: Cybergenics commenced a voluntary chapter 11 case in August 1996. A creditors committee was formed and retained counsel. The assets of the debtor were sold pursuant to a section 363 sale after which the debtor sought dismissal of the case. Based on the committee’s objection to the proposed dismissal, the Court did not dismiss the case. Subsequently, the committee identified several pre-bankruptcy transactions that it believed were fraudulent. The committee requested that the debtor bring suit to reverse those transactions. In June 1997 the debtor informed the committee and the court that it would not pursue the avoidance of those transactions. Thereafter, in September 1997, the committee sought bankruptcy court approval to pursue fraudulent transfer claims on behalf of the estate. Relying on numerous opinions allowing the committee to bring derivative actions on behalf of the estate under certain circumstances, the bankruptcy court granted the committee the authorization to bring suit because the committee showed that (i) it had colorable fraudulent transfer claims, (ii) the debtor refused to bring suit, and (iii) the debtor’s refusal was unjustified given its duty to maximize estate assets. After receiving bankruptcy court approval to do so, the committee brought a suit to reverse and recover alleged fraudulent transfers on behalf of the estate. Importantly, there was not a confirmed plan in place at the time.

The defendants initially sought dismissal of the suit claiming that the fraudulent transfer claim was sold along with the rest of the debtor’s assets in the 363 sale. In a prior opinion in the same litigation, 226 F.3d 237 (2000), the Third Circuit disagreed, holding that under state law a fraudulent transfer act belonged to the creditors and not the debtor. Subsequently, the defendants sought dismissal of the case claiming that section 544(b) only allows a trustee, or in this case the debtor-in-possession, to bring actions identified in that section. Therefore, the committee did not have the ability to pursue the cause of action.

Discussion: The Third Circuit expressly acknowledged that the prevailing view was to allow the committee to bring the suit as it had followed the correct procedures in obtaining bankruptcy court authority prior to bringing the derivative action. However, the court had to determine if the prevailing view survived given the recent Hartford Underwriters holding.

In Hartford Underwriters, the Supreme Court was asked to determine whether a creditor had the ability to seek a remedy available pursuant to section 506(c). Section 506(c) provides that “the trustee may” recover certain expenses relating to the disposition or preservation of property securing a secured claim. The Supreme Court focused on the phrase “the trustee may” and unanimously held that the relief available in section 506(c) was clearly only available to a trustee despite the fact that section 506(c) did not contain an express exclusion. The Supreme Court indicated that Congress is presumed to have meant what it clearly set forth in each statute and that the natural reading of section 506(c) leads to the result that Congress intended to empower only the trustee to recover under section 506(c). Importantly, the Supreme Court added a footnote to its decision that acknowledged that many courts grant committees the right to avoid fraudulent transfers in certain circumstances, but specifically indicated that it was not addressing the impact its holding would have on that practice.

Despite the footnote in Hartford Underwriters, the Cybergenics court determined that the analysis and holding of Hartford Underwriters would govern the analysis of its case. Specifically, the court first set out the holding and analysis of Hartford Underwriters. The court then began its own analysis of section 544(b) as the Supreme Court did, by examining the plain language of the statute. In short, section 544(b) indicates that “the trustee may” avoid certain fraudulent transfers. Given that the same exact phrase “the trustee may” qualifies the powers granted in both sections 506(c) and 544(b), the Third Circuit found that the need for uniformity requires that the phrase be given the same meaning in every context. Therefore, it determined that, in accordance with Hartford Underwriters, the most natural reading of section 544(b) restricts the ability to pursue a fraudulent transfer action to a trustee and only a trustee.

Notwithstanding its finding, the court indicated that the presumption that Congress meant a statute to mean what it naturally states may be overcome by reference to other statutory references and public policy concerns. Therefore, it examined each argument the committee proffered to determine whether there was sufficient evidence to rebut the presumption. The court duly noted that the burden of persuasion was an extremely heavy one.

At the committee’s urging, the court specifically reviewed sections 1109(b) and 1103(c) to assess whether those provisions or any other code provision could be read to grant the committee the authority to bring an avoidance action. The court acknowledged that sections 1109(b) and 1103(c) grant the committee broad rights to be heard and to perform any service that is in the best interest of its constituents. However, the court found that the impact of those general sections must be limited to prevent a general power to overcome a specific exclusion. Given that the plain language of section 544(b) specifically authorized only the trustee to act, the court found that the more general language of sections 1109(b) and 1103(c) did not grant the committee the authority to bring an avoidance action.

Finally, the committee urged the court to allow it to proceed as a policy matter. One of the main goals of a chapter 11 case is to preserve and marshal assets. The chapter 11 debtor was a party in the first instance to the transaction, which should be avoided. It isn’t surprising that a debtor-in-possession would not be inclined to bring an avoidance action. Leaving the decision to bring the avoidance action in the hands of the debtor-in-possession, who is unlikely to act, does not further one of the goals of the bankruptcy process and creates a conflict of interest between the debtor-in-possession and the creditors. Allowing the committee to act when the debtor-in-possession does not, the committee argued, would resolve the conflict and advance the goal of fair and equal distribution. While acknowledging that the committee raised sound policy considerations, the court declined to let them sway its interpretation of the plain meaning of 544(b), leaving the deliberations of policy considerations for Congress.

Although its holding affirmed dismissal of the committee’s avoidance action, the court did not leave the committee without options. It indicated that the committee may seek the appointment of a chapter 11 trustee pursuant to section 1104 or dismissal of the case pursuant to section 1112 to allow the pursuit of an avoidance action in state court. Most importantly, in footnote 11, the court identified one scenario in which a committee would have the authority to bring an avoidance action in the bankruptcy court. Pursuant to section 1123(b)(3)(B), a plan of reorganization may provide for the retention of avoidance actions for the estate’s benefit. The plan may also specifically designate a representative to enforce the avoidance actions so retained. Therefore, the committee could still pursue its avoidance action provided that the action is properly retained in a confirmed plan, that the committee is designated as the estate’s representative to bring the action and that the action is brought timely.

Comment: The Third Circuit’s opinion is clearly the minority view. Nevertheless, the Third Circuit’s opinion will quickly become popular with counsel representing defendants of not only section 544(b) avoidance actions, but also those under other avoidance provisions of the Code, including preferences, by virtue of the continued express use of “trustee” in those sections. Most importantly, the application of Cybergenics is limited to those situations where the committee seeks to pursue actions before the confirmation of a plan. Therefore, committees that identify avoidance and preference actions can avoid the impact of Cybergenics by ensuring that the actions are specifically reserved and that the committee is identified as the estate representative to bring those actions in a plan.

Richard E. Kruger
Jaffe, Raitt, Heuer & Weiss
One Woodward Avenue, Suite 2400
Detroit, MI 48226
Phone: 313.961.8380 Fax: 313.961.8358
Email: rkruger@jafferaitt.com

back to top ^

CASE LAW UPDATE

Fraudulent Transfers. Noteholder sought to avoid fraudulent transfers in state court against participants in leveraged recapitalization of debtor. Examiner in bankruptcy determined fraudulent transfer claims to be “not promising,” and court confirmed plan in which all such claims were extinguished. Noteholder argued that plan could not extinguish his direct right of action under state law. Disagreeing with noteholder, court stated that debtor was empowered to pursue fraudulent transfers under § 544(b) but, after considering examiner’s report, chose to extinguish those claims. Because plan extinguished the claims, noteholder was barred from pursuing them. In re PWS Holding Corp., 303 F.3d 308 (3d. Cir. 2002).

Discovery Sanctions. Where party fails to produce documents, court has broad discretion in fashioning sanction, including delaying start of trial at breaching party’s expense, declaring mistrial, or proceeding with adverse inference instruction. Sanctions, including adverse inference instruction, may be imposed on showing of ordinary negligence; finding of bad faith or gross negligence is not required. Residential Funding Corp. v. DeGeorge Capital Corp., 2002 U.S. App. LEXIS 20422 (2d Cir. Sept. 26, 2002).

Nondischargeability. Despite language of Rule 4007(b) of the Federal Rules of Bankruptcy Procedure that complaints to determine dischargeability of certain debts may be brought “at any time,” affirmative defense of laches may be asserted; defendant much show extraordinary circumstances and set forth compelling reason why action should be barred. Beaty v. Selinger (In re Beaty), 2002 U.S. App. LEXIS 20421 (9th Cir. Sept. 26, 2002) aff’g Beaty v. Selinger (In re Beaty), 268 B.R. 839 (9th Cir. B.A.P. 2001).

Preliminary Injunction. District court properly denied motion for preliminary injunction because, under the holding of Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999), district courts have no authority to grant unsecured creditor’s request to enjoin a party from disposing of assets pending adjudication of claim for money damages. If granted, injunction would permit creditor with no right in debtor’s assets to interfere with debtor’s use of its own property. Dateline Exps., Inc. v. Basic Constr., Inc., 2002 U.S. App. LEXIS 20351 (9th Cir. Sept. 25, 2002).

Disinterestedness. Court approved retention of debtor’s counsel despite possibility that counsel received avoidable preference on condition that, if payments were found preferential, counsel would return payments and waive any claim against estate. Court of Appeals held that where there is a facially plausible claim of substantial preference, court may not avoid clear mandate of statute by mere expedient of approving retention of counsel conditional on later determination on preference issue. In re Pillowtex, Inc., 2002 U.S. App. LEXIS 19952 (3d Cir. Sept. 23, 2002).

Arbitration. Language in confirmed plan expressly providing that bankruptcy court retain jurisdiction to adjudicate pending adversary proceedings superseded contractual language requiring arbitration of disputes and, in any event, complaining party waived right to arbitration through actions evidencing intent to participate in adversary proceeding. Ernst & Young, LLP v. Baker O’Neal Holdings, Inc., 2002 U.S. App. LEXIS 19949 (7th Cir. Sept. 23, 2002).

Lien Avoidance under § 522. Creditor held judicial lien on property debtors sold after their bankruptcy case was closed. Debtors moved to reopen bankruptcy case, which was granted, and sought to avoid the lien to the extent it impaired their exemption, which was properly claimed in bankruptcy case. Creditor argued debtors could not avoid lien because they no longer owned the property. Held, debtors could avoid lien so long as they owned property in question at time lien attached. Culver, LLC v. Kai-Ming Chiu (In re Kai-Ming Chiu), 2002 U.S. App. LEXIS 19181 (9th Cir. Sept. 18, 2002).

Catherine E. Vance, Esq.
Columbus, Ohio
614-336-3861
Email: vance76@earthlink.net

back to top ^

Washington Hot News

October 25, 2002

On Friday, October 25, 2002 a small charter plane carrying Sen. Paul Wellstone (D-MN), his wife, daughter and five others crashed in Minnesota. There were no survivors. Sen. Wellstone was up for re-election this year (ending his second term) and was consistently one of the chief opponents of the Bankruptcy Reform Bill (HR 333) in the Senate. The CLLA extends its condolences to the Wellstone family, Senator Wellstone’s colleagues and the people of Minnesota.

October 24, 2002

Here comes the lame-duck.

Congress reconvening November 12th will be for the 14th "lame-duck session," the continuation of a Congressional session after the next Congress has been elected, since the 1933 ratification of the 20th Amendment, establishing January 3rd as the starting date for each Congressional session. Lame-duck sessions used to occur infrequently. However, this session marks the fourth time in the last eight years. (Without such an omnibus, the government will continue to be funded by "continuing resolutions." Since 1980, there have been six years beside this one when Congress did not complete a single spending bill before the start of the fiscal year. There have been 102 CRs over that period to keep the government running. Only in 1977, 1989 and 1997 was the work wrapped up when the new fiscal year began October 1.) Members will use the first part of the special session to conduct leadership elections, make committee appointments and pass the fifth in a series of CRs. Leadership races will be held Nov. 13-14.

Lame-duck sessions are known for rapid consideration, and passage, of legislation. Often in the form of "omnibus" bills, in this case which would fund all aspects of the government in one measure, but is also likely to have a number of add-ons that might be hard to eliminate. House Appropriations Committee Chairman Young (R-FL.) is already pushing for the House to complete all of its appropriations work, 11 bills, in an omnibus. It is reported a draft of such bill has already been presented to Speaker of the House Hastert.

On possibly a related note, despite repeated disappointment on bankruptcy reform legislation (H.R. 333), supporters of the 6-year old bill still harbor hope that after the November 5th elections, Speaker Hastert (R-IL) will step up to the faction within the Republican party opposing the Schumer Abortion Amendment compromise. Otherwise, the bill's supporters fear that it will not be readdressed next year (quoting Sen. Leahy (D-VT) and Daschle (D-SD). It is believed that former independent counsel Kenneth Starr is supporting a draft opinion prepared for conservatives to attempt to ease their concerns that Schumer's abortion language could impede abortion protesters' legitimate rights to picket health clinics performing abortions.

However, despite the threats of "3 strikes and your’re out" (the bill has been in the 105th, 106th and 107th Congresses), some still feel with all the political mileage they get out of the bill it would return and, still others feel, it wouldn't be a bad thing if Republicans control both the House and Senate.

David Goch
Washington Legislative Counsel, CLLA
Webster, Chamberlain & Bean
150 North Michigan Avenue, Suite 600
Chicago, IL 60601
dgoch@wc-b.com

back to top ^

NY Education Conference Details

The following is a sampling of the educational programs provided. For a full listing, please click here

November 15, 2002 Educational Programs

Advanced Issues in Chapter 11 (8:00 a.m. – 10:00 a.m.) Judge Gropper will discuss recent developments with respect to financing orders, with particular attention to guidelines or rules of court that have been adopted in various jurisdictions throughout the nation. In addition, he will analyze select cases and trends with respect to the jurisdiction of the Bankruptcy Courts and issues relation to abstention, venue, appeals, and the allocation of jurisdiction between the District and Bankruptcy Courts. Professor Markell will examine recent appellate and trial level cases discussing the rules relating to plan confirmation. In particular, Professor Markell will look at recent cases involving feasibility, classification and treatment of bondholders, and the manner in which courts have tried to apply the Supreme Court’s 1999 decision in the 203 North LaSalle case. Mr. Samet will examine the treatment of intellectual property in bankruptcy, including under § 365(n) of the Code, from both a legal and practical perspective.

Ethical Issues in Representing Organizations and Entities (10:00 a.m. - 12:00 noon): When you are representing an entity, to whom do you owe allegiance? The complexities presented by multiple layers of authority invite ethical problems. Your understanding of the proper methods for initiating and managing such client relationships is crucial to your success. In this program, Anthony Davis will provide you with knowledge of the ethics rules and case law, along with a proven structure upon which to pattern your client relationships. Upon completion of this course, you will be able to identify your client (which may be more difficult than you think!); draft or respond to engagement letters for outside counsel, or employment terms for in-house counsel; deal with the potentials for disaster surrounding whistle blowers; safeguard against problems with non-management employees’ rights in subsequent disputes; and asses your right to be present when opposing counsel wants to interview employees or former employees. Every aspect of this program is solidly based upon existing ethics rules and case law, but speaker Anthony E. Davis of Moye, Giles, O’Keefe, Vermeire & Gorrell reaches far deeper to give you the systems you need to insure that your practice is safe from the many potential nightmares that lurk in representing organizations and entities.

Saturday, November 16, 2002

Bankruptcy Basics (9 a.m. - 12:00 noon): Who are the major players in bankruptcy? What are their rights, duties and responsibilities? This program, designed for both the attorney who is new to bankruptcy practice and the seasoned non-bankruptcy professional, will unravel the complexities of the Bankruptcy Code, teaching you how to maximize your client’s interest, while avoiding the many traps that can lead to trouble for parties in interest and their counsel. Professor Douglas J. Whaley, the James W. Shocknessy Professor of Law at The Ohio State University, Columbus, Ohio, will provide an engaging overview of the basics of Bankruptcy law.

Survey of Bankruptcy Law (9:00 a.m. – 10:00 a.m.): Following up on his extremely successful “Annual Survey of Business Bankruptcy” program this past spring, Professor Markell will briefly review major business bankruptcy cases of the past year. Topics will include recent cases on critical vendor motions, issues regarding plan solicitation and confirmation, and a special section of cases on an emerging topic – what effect does a prior bankruptcy have when the debtor files again? This efficient summary is designed to provide you with the tools you need to keep up to date on the latest cases, and to let you know how they can affect your day-to-day practice.

back to top ^

©2002, Commercial Law League of America