On February 9, AABANY’s Student Outreach & Bankruptcy Committees hosted a virtual panel discussion on legal careers in bankruptcy and restructuring. The event, part of the Student Outreach Committee’s Students Meet Mentors Series, ran from 6:00 pm to 7:15 pm on Zoom. The panel was moderated by Student Outreach Committee Co-Chair Long Dang (Columbia Law School ‘22) and AABANY Student Leader Sharon Yang (Fordham Law School ‘23) and featured the following distinguished bankruptcy attorneys:
Panelists discussed their day-to-day lives as bankruptcy attorneys, recommended classes for interested law students (e.g., Secured Transactions, Basics of Bankruptcy), and shared their perspective on the bamboo ceiling in the industry. The discussion was followed by a participant Q&A, where audience members asked questions about the use of technology in bankruptcy law. The evening ended with a gift card raffle for attendees. Congratulations to Maggie Fang of the University of Pennsylvania Law School for winning the raffle!
AABANY thanks the Student Outreach & Bankruptcy Committees for organizing the event and all panelists, moderators, and students who attended. To learn more about the Student Outreach Committee, please visit https://www.aabany.org/page/121. To learn more about the Commercial Bankruptcy and Restructuring Committee, please visit https://www.aabany.org/page/353.
The Student Outreach and Bankruptcy Committees co-hosted a panel titled “What Do Bankruptcy Lawyers Do?” on February 11, 2021 as part of the SOC’s Students Meet Mentors series. William Lee, Associate at Alston & Bird, moderated the panel and speakers included William Hao, Counsel at Alston & Bird; Jessica Liou, Partner at Weil; Charlie Liu, Associate at Morgan Lewis; and Geoffrey Williams, Associate at Alston & Bird. The panel provided law student attendees an opportunity to learn about the bankruptcy and restructuring practice area and what being a bankruptcy attorney entails.
William Lee began the event by asking panelists to give an introduction of what bankruptcy and restructuring is. Panelists described bankruptcy as a tool companies are given to reorganize themselves and remove liability pre-bankruptcy. Restructuring encompasses a wide spectrum of processes available to companies, such as filing for court protection, financial restructuring, and operational restructuring. William Hao summarized chapters 7, 11, and 13, the three most common processes used by bankruptcy lawyers.
Next, panelists were asked to describe their experiences working as a bankruptcy and/or restructuring lawyer. Jessica Liou stated that bankruptcy and restructuring is flexible and described it as a hybrid between litigation and transactional work. Some lawyers work in the bankruptcy-litigation niche, while others take the transactional route. When asked what type of student would fit the mold of a bankruptcy lawyer, panelists answered that it would be someone who is interested in a variety of things. Not only can a bankruptcy case be quick-paced, but a bankruptcy lawyer also gets to work with different groups in the firm, such as the tax group, executive compensation group, or litigation group. No two bankruptcy cases are the same, so a bankruptcy lawyer must be willing to do and understand many different things. Jessica Liou also shared how it is extremely rewarding to be a restructuring lawyer as she helps save jobs and helps companies get a second chance.
The panel concluded with tips and recommendations to students who may be interested in getting involved in the bankruptcy and restructuring practice area. Panelists suggested that students should look for opportunities to get exposure to bankruptcy. These include trying an internship or bankruptcy judicial clerkship, taking a bankruptcy course, talking to bankruptcy lawyers, or participating in the Duberstein Moot Court competition.
Thank you to the Student Outreach Committee and the Commercial Bankruptcy and Restructuring Committee for organizing this informative panel. And thank you to William Lee for moderating and to William Hao, Jessica Liou, Charlie Liu, and Geoffrey Williams for volunteering their time and sharing their experiences. To learn more about the Commercial Bankruptcy and Restructuring Committee, go to https://www.aabany.org/page/353. To learn more about the Student Outreach Committee, go to https://www.aabany.org/page/121.
On September 26, 2020, as part of AABANY’s 11th Annual Fall Conference, the AABANY Commercial Bankruptcy and Restructuring Committee hosted a panel discussion entitled “COVID-19 and Global Financial Distress: Where do We Go From Here?” The panel included:
Courina Yulisa, Bankruptcy and Restructuring Associate at Dorsey & Whitney LLP (Moderator)
William Hao, Counsel in Alston & Bird’s Financial Restructuring & Reorganization Group
Vijar Kohli, Co-founder of Golden Door Asset Management
Vincent Roldan, Partner at Mandelbaum Salsburg’s Bankruptcy and Creditors Rights, and Banking and Financial Services groups
The panelists observed a general increase in commercial bankruptcy filings accompanied by a decrease in individual Chapter 11 filings compared to last year. As the opening panelist, William Hao remarked that the phenomenon was partly due to court closures during the pandemic, which made it harder to complete filings. New York City in particular, as Vijar Kohli and Vincent Roldan explained, has been suffering from a significant reduction in traffic, negatively affecting traffic-dependent industries such as hotels and has led to a domino effect on retailers, landlords and suppliers. The absence of employees entering and leaving office buildings signaled the slow reopening of businesses. The panelists also discussed the increased accessibility of Subchapter 5 under the CARES Act to small businesses in addition to larger corporations to speed up the recovery process. And while there has been heightened pressure on landlords since the pandemic began, Vijar suggested that tenants pay attention to details such as rent payment deadlines in existing contracts and openly negotiate with landlords to lessen the COVID-imposed financial impact.
Regarding corporate strategies to preserve and increase liquidity, Vijar noted that the most significant move has been to preserve cash by increasing sales or reducing expenses. Since the protracted business recovery has added more uncertainty to the long-term trajectory of their business profitability, the lack of capital is still unfortunately a difficult problem to resolve. Vincent described the recent changes in the restaurant industry, where establishments have been transitioning to providing delivery-only services to cut production costs. Despite these challenges, William mentioned that the Paycheck Protection Program (PPP) can be helpful in getting capital temporarily, and again stressed that strategic negotiations with landlords can be particularly instrumental in preserving capital.
The panelists foresaw a slow recovery timeline for small businesses and that real estate businesses, in particular, may take up to two to three years—also depending on the vaccine distribution timeline—to bounce back to a normal level of business operations. No major changes are likely in the next three months, since the next stimulus plans would not include much for businesses and thus it is up to businesses to ensure their own survival right now. Vincent stated that companies need to pay attention to signs of economic distress to plan their next moves and contact bankruptcy lawyers to know their rights. And unlike the 2008 financial crisis, Vijar explained that this year’s economic downturns have also been accompanied by high rates of unemployment and the replacement of local, small businesses with new technology companies.
Thank you to Courina, William, Vijar, and Vincent, for this insightful panel discussion. And thank you to the AABANY Commercial Bankruptcy and Restructuring Committee, co-chaired by William and Vincent, for organizing this event. To view a recording of the panel, click here or on the image above.
On May 28, the Asian American Bar Association of New York (AABANY) co-sponsored “COVID-19: Relief for Small Businesses Webinar Series Part 2” as part of a series dedicated to helping small businesses mitigate financial losses in light of COVID-19. The presentation discussed the various economic relief packages passed under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), including the Payroll Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL), as well as how Chapter 11 bankruptcy and the Small Business Reorganization Act can help small businesses ensure long-term financial stability. The webinar featured William Hao, Counsel at Alston & Bird with extensive experience in bankruptcy, litigation, and out-of-court restructuring and Treasurer of the AABANY Board. The presentation was moderated by William K. Lee, an associate at Alston & Bird LLP and AABANY member.
The presentation began by addressing the various relief packages currently available to small business owners, specifically those regarding eligibility requirements and application information. Small businesses need to submit their payroll processing records, tax filings, Form 1099-MISC, and other supporting documentation to be eligible to receive the PPP principal loan. The loan amount will be the lesser of either $10 million or 2.5 times the average monthly payroll based on 2019 annual statistics. The deadline for PPP loans is June 30, 2020 but will likely be extended for the next round of funding. As for EIDLs, eligible small businesses must have suffered economic injury in connection with COVID-19 and have an acceptable credit history that demonstrates an ability to pay back loans. Businesses may receive a principal loan amount of up to $2.5 million that can only be used to pay for expenses the businesses would have paid for even if the disaster had not occurred with an interest rate of 3.75%.
The presentation also discussed how filing for Chapter 11 bankruptcy could help small businesses reduce debt, restructure certain obligations, and come out of bankruptcy a more financially stable company. Filing for Chapter 11 bankruptcy allows owners to retain ownership of their businesses by restructuring their internal operations and finances, while incentivizing creditors to negotiate a more favorable reorganization plan. However, heavy legal expenses and other administrative requirements have traditionally blocked smaller businesses from being able to file for Chapter 11 bankruptcy. Under the Small Business Reorganization Act, many of the barriers that have deterred small businesses from filing Chapter 11 bankruptcy have been removed by allowing small businesses to qualify as Subchapter V debtors. By filing under Subchapter V, small businesses would not need to incur the significant legal expenses associated with forming a creditors’ committee, paying the appointed trustee, and filing for a disclosure statement. In addition, the Small Business Administration has raised the aggregate noncontingent, liquidated debt limit from $2,725,625 to $7,500,000, and has expedited the process for filing Chapter 11 bankruptcy.
The discussion also provided guidance on the process of filing for Chapter 11 bankruptcy. Small business owners should seek out a lawyer to help prepare and file a petition along with other potential filings such as an initial affidavit. An automatic Subchapter V trustee is appointed upon filing the petition and will formulate a plan to address outstanding debts.
Debtors should also prepare for court appearances such as Section 341 meetings, during which creditors can come and ask questions regarding company finances and status conferences between all parties to discuss progress toward developing a restructuring plan. These plans must contain a brief history of the business operations of the debtor; an analysis of how much money the company is worth if all of its assets were immediately liquidated; a valuation of future profitability if the company was allowed to continue operating; and any relevant forms. Plans must also outline how to manage and pay various classes of claims and interests including administrative expenses, priority claims, secured claims, general unsecured claims, and equity interests. Secured creditors can be paid over time and can be paid at a potentially lower interest rate whereas unsecured creditors must complete repayment within five years and all income not allocated for the maintenance of the company and basic personal living expenses of the debtor will be applied to make payments. If the plan is mutually agreed upon by all parties, the debtor will pay regular installments to creditors and any liability for debts is waived upon confirmation of the plan. If the plan is nonconsensual, the appointed trustee will make regular payments on behalf of the debtor, and liability is waived upon the completion of payments.
We thank William Hao and William Lee at Alston & Bird for helping to organize this webinar series and for their demonstrated commitment to helping small business owners affected by COVID-19. To learn more about AABANY’s Commercial Bankruptcy & Restructuring Committee, visit https://www.aabany.org/page/353. For any specific details, please refer to the video above.
If any attorneys would like to volunteer with AABANY to assist small business owners adversely affected by COVID-19, please contact [email protected].
