American Bankruptcy Institute
16 III. Background on the Commission and the Study Project
works for these companies. Witnesses cited cost and procedural obstacles as common barriers.60 Third, the witnesses who testified on financial contracts and derivatives generally agreed that the safe harbor protections have been extended to contracts and situations beyond the original intent of the legislation.61 They did not necessarily agree, however, on appropriate limitations or revisions to the relevant sections of the Bankruptcy Code.62 Finally, witnesses — even those who were highly critical of certain aspects of chapter 11 — all perceived value in the U.S. approach to corporate bankruptcies, including the debtor in possession model.63
In addition, the Commission worked with the University of Illinois College of Law to organize and host an academic symposium on the role of secured credit in business bankruptcies in April 2014. Nineteen of the nation’s leading bankruptcy scholars contributed to the symposium.64 The symposium was open to the public, and both the scholarship presented and a video recording of the event are posted on the Commission website. Many of the scholarly papers from this symposium will also be published in a forthcoming issue in the 2015 volume of the Illinois Law Review.
d. the commission’s deliberations
Immediately following its February 2014 retreat, the Commission began its in-depth review of the advisory committees’ reports and recommendations, various issue-specific white papers prepared by the Commission’s Reporter with the assistance of the Commissioners and research fellows, the papers from the Illinois symposium, and testimony and papers submitted by hearing witnesses and restructuring professionals.65 The Commission then held five separate executive session retreats to deliberate, formulate, and vote on the content of this Report. Two of these retreats were held in
60 See Written Statement of the Honorable Dennis Dow: Field Hearing Before the ABI Comm’n to Study the Reform of Chapter 11 (Apr. 19, 2013) (noting that the complexity, time, and costs of the chapter 11 process impose obstacles that small business debtors often cannot overcome), available at Commission website, supra note 55; Written Statement of Professor Anne Lawton: NCBJ13 Field Hearing Before the ABI Comm’n to Study the Reform of Chapter 11 (Nov. 1, 2013) (“The Code’s small business debtor definition should be simplified.”), available at Commission website, supra note 55; Oral Testimony of Gerald Buccino: TMA Field Hearing Before the ABI Comm’n to Study the Reform of Chapter 11, at 7, 15 (Nov. 3, 2012) (TMA Transcript) (“A one-size-fits-all approach for the Code does not work because smaller businesses have special needs.”), available at Commission website, supra note 55; Oral Testimony of Jeff Wurst: NYIC Field Hearing Before the ABI Comm’n to Study the Reform of Chapter 11, at 28 (June 4, 2013) (NYIC Transcript) (stating smaller companies can no longer afford to seek protection under chapter 11), available at Commission website, supra note 55. 61 See Written Statement of Daniel Kamensky on behalf of Managed Funds Association: LSTA Field Hearing Before the ABI Comm’n to Study the Reform of Chapter 11 (Oct. 17, 2012) (asserting that the breadth of safe harbors has had unintended consequences and some courts have held that safe harbors extend to protect one-off private transactions that do not affect financial institutions),
available at Commission website, supra note 55; Oral Testimony of Jane Vris on behalf of the National Bankruptcy Conference: NYCBC Field Hearing Before the ABI Comm’n to Study the Reform of Chapter 11, at 9 (May 15, 2013) (NYCBC Transcript) (“The original purpose of the safe harbors was to preserve the clearing of payments and delivery within a fair closed system, the protections have now expanded beyond that.”), available at Commission website, supra note 55; Written Statement of Jane Vris on behalf of the National Bankruptcy Conference: NYCBC Field Hearing Before the ABI Comm’n to Study the Reform of Chapter 11 (May 15, 2013), available at Commission website, supra note 55. 62 See Oral Testimony of the Honorable James Peck: NYCBC Field Hearing Before the ABI Comm’n to Study the Reform of Chapter 11, at 31–32 (May 15, 2013) (NYCBC Transcript) (recommending that judges should have more discretion to determine whether contracts fit the criteria for protection under the safe harbors), available at Commission website, supra note 55. 63 See Written Statement of William Greendyke: UT Field Hearing Before the ABI Comm’n to Study the Reform of Chapter 11 (Nov. 22, 2013) (reporting that the membership of the Bankruptcy Law Section of the State Bar of Texas noted that the chapter 11 process still worked, but found it to be more expensive and “faster” than 10 years ago), available at Commission website, supra note 55. 64 The names and affiliations of the academics who presented at this symposium are listed at Appendix F. 65 Certain of the materials that the Commission reviewed and discussed during the three-year study and deliberative process are identified in the footnotes in this Report. These citations capture but a fraction of the materials collected and reviewed by the Commissioners during this process. It simply was not feasible to cite all relevant sources and materials. The absence of a citation to a particular court opinion, empirical study, law review article, or witness’s testimony does not mean that such material was not considered and analyzed by the Commissioners.