Letter from the President

The start of 2010 has been an interesting time for our industry. The level of intensity and the volume of actual bankruptcy filings appears to have declined for many, but equaling the past two years is not a goal the general economy would like to see achieved. I am writing this on the same day that Senator Evan Bayh of Indiana resigned from the Senate on the basis that our current system in Washington is not working due to extreme partisanship. Taken at face value, this level of frustration should be compared to what we focus on accomplishing as restructuring professionals.

As a broad generalization, what we have seen in the past year is a series of examples of a system that works. Our bankruptcy and insolvency practice is focused on rehabilitation and renewal in most respects. If one were to make a broad statement about the level of cooperation by lenders, the statement might be that many lenders have been patient and cooperative in trying to find solutions to difficult financial dilemmas. Does that happen in every case – of course not. But, broadly speaking, lenders have been practical.

Have the Courts been as practical, or, as some might argue, too pragmatic, in their approach to the cases before them. The January 25, 2010 decision in one of the Lehman Bros. adversary proceedings that the automatic stay and the concept of ipso facto clauses, would cross over to apply to non-debtors that were part of a group, and that the safe harbor provisions exempting swap agreements and derivatives from the automatic stay provisions would not apply to changes in priority as a consequence of bankruptcy, can certainly be said to be result oriented, and clearly debtor oriented. One may say the same thing about other decisions such as the District Court’s Philadelphia Newspapers ruling on limiting a secured creditor’s credit bid rights, while at the same time carefully noting that the interim ruling was not a determination of whether such a structure would meet the fair and equitable test for cramdown of a plan. The Tousa decision is arguably another example of an aggressive use of the Court’s fact finding authority in a fraudulent conveyance case that blazed some new territory where the Court found, without much discussion, that the concept of observable market value was a valid approach to value. All of these decisions are subject to appellate review and the continued development of the law in these important areas is definitely taking place.

In summary, our system keeps on working, the courts continue to make significant decisions, and parties find ways to solve their problems and disputes. That is how we are supposed to contribute – by helping the system work and finding solutions. Maybe our collective efforts as restructuring professionals could be a guide to those in Washington about how to work toward constructive resolution.

Author Bio:

Grant Stein is a partner in Alston & Bird’s Bankruptcy, Reorganization and Workouts Group. His diverse practice includes the representation of debtors, secured and unsecured creditors, creditors’ committees, and fiduciaries in complex and difficult out-of-court workouts, debt restructurings, bankruptcy cases, and financial transactions throughout the United States and internationally. He also regularly represents officers, directors, and other parties in bankruptcy litigation of all kinds. His restructuring experience includes manufacturing, real estate, wholesale, retail, distribution companies, health care, communications, technology and intellectual property issues.

Mr. Stein is a Fellow of the American College of Bankruptcy and is identified as a top practitioner in Chambers USA: America’s Leading Lawyers for Business, The Best Lawyers in America and Super Lawyers magazine. He serves as a director and president-elect of the Association of Insolvency and Restructuring Advisors (AIRA). He also is a director and president-elect for the Southeastern Bankruptcy Law Institute. He recently served as a Member of the executive committee of Emory University’s Board of Visitors. He has written numerous articles on bankruptcy and workout issues and regularly lectures around the country. Mr. Stein served as law clerk to The Honorable W. Homer Drake, the senior judge of the United States Bankruptcy Court for the Northern District of Georgia, following his graduation, with honors, from the University of Georgia School of Law in 1981. He received his B.B.A., with high honors, from Emory University in 1978.