ABI Commission to Study the Reform of Chapter 11
III. Background on the Commission and the Study Project 13
Not all commentators agree that significant reform to chapter 11 is necessary. Some suggest that any changes could have unintended consequences or negatively impact credit markets. Others simply suggest that the system continues to work well enough.47
These issues are at the heart of the Commission’s study. As explained below, the Commission’s process was designed to explore the new environment in which financially distressed companies operate and to determine what aspects of the current system are — and are not — working as well as possible.
c. the commission’s study
The Commission has undertaken a methodical study of chapter 11 of the Bankruptcy Code. Over 250 corporate insolvency professionals (including the Commissioners, committee members, and hearing witnesses) participated in this study. The Commission has strived to include all perspectives, ideologies, and geographic and industry segments.
Notably, the Commission’s process resembles that of the 1970 Commission on Bankruptcy Laws and, more recently, the 1994 NBRC in several respects. For example, the Commission used an advisory committee structure, described below, similar to the eight-topic committee structure invoked by the NBRC.48 Similar to the NBRC, the Commissioners retained authority for addressing and deciding each issue.49 Moreover, each of the field hearings hosted by the Commission and described below was open to the public, and the transcripts (and, in many cases, video recordings) are posted on the Commission’s website at www.commission.abi.org (the “Commission website”). In addition, similar to the process followed by the NBRC, the Commissioners appeared at restructuring events throughout the country to discuss and publicize the Commission’s work and to solicit feedback from affected constituents.50
The Commission has met on a regular basis since January 2012. During these meetings, the Commission has, among other things, discussed issues perceived as potential problems in chapter 11, reviewed recent developments in the case law and practice norms, and developed an effective process for identifying, researching, and analyzing chapter 11 as a whole. As explained below, the Commission used its advisory committees and numerous public field hearings to amass the information and research it required to critically analyze chapter 11 and consider any reform measures.
The Advisory Committees. To launch its study, the Commission identified 13 broad study topics to facilitate a detailed analysis of the various components of chapter 11. These study topics are: (1) administrative claims and other pressures on liquidity; (2) avoiding powers (e.g., preferences and fraudulent conveyances); (3) bankruptcy-remote and bankruptcy-proof entities; (4) distributional issues under plans; (5) executory contracts and unexpired leases; (6) financial contracts, derivatives,
47 See, e.g., Stuart C. Gilson, Coming Through a Crisis: How Chapter 11 and the Debt Restructuring Industry Are Helping to Revive the U.S. Economy, 24 J. Applied Corp. Fin. 23 (2012). 48 See NBRC Report, supra note 37, at 60–61. 49 See id. at 61. 50 See id. at 63.