President's Letter

Alan D. Holtz, CIRA

Dear AIRA Members:

As we celebrate the paper anniversary of the 2005 bankruptcy amendments on October 17, let’s reflect on the last 12 months and the resulting changes we’ve seen in bankruptcy practice. While it’s still too soon to draw conclusions about the full impact of the amendments, a few common practices seem to be emerging.

Debtors are uniformly seeking judicial modification of section 366 regarding adequate assurance for utilities, and a two week deposit is frequently the solution.

It has become somewhat more difficult to fill seats on creditors’ committees, and members initially appointed to sit are resigning more frequently, as their claim status is elevated to administrative or reclamation.
Predictions about the demise of critical vendor motions appear to have been premature. Even with the new degree of elevated claim status for trade vendors, debtors continue to believe that many of their suppliers require payment of prepetition claims to minimize business disruption (or worse).
Creditors’ committees are setting up websites to facilitate the sharing of information with their constituents. These sights generally contain only public information, and committees are receiving protective orders regarding their approach to these arrangements.
The jury is still out on the impact of the seven month hard deadline for lease rejections decisions, because most chapter 11 filers post amendment have not yet reached this deadline, and no major retailers have filed during the past year. Similarly, the 18 month deadline for exclusivity has not been reached by any debtors that filed since last October, and the impact of this change won’t become apparent until at least mid 2007.
Given the strict conditions that must be met in order to implement a key employee retention bonus program, debtors have been implementing bonus programs for their key personnel that are linked to measures of financial performance rather than the passage of time (i.e., incentive programs rather than retention programs).

Of course, those who attended AIRA’s Advanced Plan of Reorganization conference in New York on September 14 or in Los Angeles on September 28 already learned about the impact of the 2005 amendments and about many other recent and important developments in bankruptcy and restructuring. Your next opportunity to learn, network and have fun courtesy of AIRA is at the National Conference of Bankruptcy Judges in San Francisco on November 1-4. I hope to see many of you there.

Warm regards,

Alan

Author bio:

Alan Holtz is a Managing Director with AlixPartners based in New York. He has spent close to 20 years as a corporate restructuring and reorganization specialist and has managed all aspects of the financial restructuring process. Alan has provided services to companies, management teams and boards of directors, as well as to financial institutions and creditors’ committees, across a wide variety of industries. A frequent speaker on the subject of bankruptcy and reorganization, Alan holds a bachelor’s degree in economics from the Wharton School of Business at the University of Pennsylvania and is a CPA and a CIRA, for which he received the 1992 CIRA silver medal from AIRA.