The rule-making process for implementing the Moro decision (COLA case) is beginning to unfold. COLA. The PERS staff has been studying ways to implement the second piece of the COLA restoration project – making retirees whole again after the court unraveled the mess made by 2013’s ineptness. I’m happy to report that staff posted their proposed rule making for this part in today’s PERS Board packet for Friday’s Board meeting. 60,000). This will tremendously simplify their work at a small benefit to retirees and a nominal cost to employers. It is going to be a long time before most employees are away from the old rules, and this solves the fairness problem. Alternatives might have been an income weighting, an FTE weighting, and all kinds of other grubby calculations. This route simplifies life for all concerned, although it is almost surely going to agitate someone in the media, somehow. Speaking of the media, what ever became of a discussion of the “other” part of the Grand Bargain? You know, the part where the legislature exchanged about a half a billion dollars of PERS benefits for about a half a billion dollars of small business tax cuts.
Saturday was the final day of the National Conference of Bankruptcy Judges. The panels focused on ethics issues of the future, the role of empirical research and international insolvency. The first topic up on the ethics panel was reasonable investigation. The hypothetical involved a lawyer who was unwittingly asked to facilitate money laundering and purchase of estate assets with hidden assets. Recent cases to be aware of include In re Soare, 493 B.R. 158 (Bankr. D. Nev. In re Goodman, No. 12-1643 (9th Cir. We learned that ABA opinion 465 says that there is not a per se prohibition on attorneys offering groupons. The Ethics 20/20 Commission is working on guidelines that would allow foreign lawyers to appear in U.S. However, a U.S. lawyer must reserve the absolute right to advice on American law. Hunter v. Virginia State Bar, 744 S.E.2d 611 (Va. State Bar advertising requirements. Hunter published a blog titled “This Week in Richmond Criminal Defense,” which was accessible from his firm’s website. The overwhelming majority of posts were about cases in which he obtained favorable results for his clients.
The blog did not contain any disclaimers. The Virginia Supreme Court found that Hunter’s blog constituted commercial speech subject to regulation by the Bar. The Court found that the Bar could require Hunter to place disclaimers on his posts about his own cases to the effect that the results in the given case did not guarantee the same results for other people. However, it found that the First Amendment allowed Hunter to discuss public details of his cases without the client’s permission. A dissent would have found that the First Amendment prevented the Bar from regulating the blog. Muniz v. United Parcel Service, 2011 U.S. Dist. LEXIS 11219 (N.D. ’s lawyer’s postings to a listserv. The Court quashed the subpoena. The case illustrates the danger of revealing work product by posting on a listserv. The panel on empirical research features three academics: Dean J. Richard Leonard of Campbell University School of Law, Prof. Theodore Eisenberg of Cornell Law School and Prof. Melissa Jacoby of UNC School of Law.
Until recently, Dean Leonard was a bankruptcy judge. He said that when he took the bench, he asked what he should read and was referred to Warren and Westbook’s empirical book, As We Forgive Our Debtors. He pointed out that empirical studies published by just one law review, the American Bankruptcy Law Review, were cited in 32 opinions ranging from trial courts to the Supreme Court. Prof. Eisenberg said that empirical research can be used to disprove the conventional wisdom about bankruptcy. He referred to the view that the American bankruptcy system is too pro-debtor and noted that the concept of a Debtor-in-Possession is shocking to other countries. He pointed to empirical studies showing that U.S. 20% more to unsecured creditors than those in other countries. Of twelve studies looking at payouts to unsecured creditors in different countries, the top five payouts were in American bankruptcies. His conclusion was that the combination of the absolute priority and the Debtor-in-Possession led management to propose a higher dividend to unsecured creditors than plans in other countries.
He also talked about the importance of studying fees. He said, “From the day you graduate, (fees) will control your life.” He said that big fees made news while small ones did not. In this regard, he said that newspapers were just doing their jobs. However, he said that the headlines did not reflect reality. In smaller cases, the fees awarded average 17.6-21.6% of the assets of the debtor. 100 million, the fees averaged 1-2% of assets. He contended that fees charged by other professionals, such as investment bankers, charged more in fees. While I did not catch his conclusion, mine would be that you can’t assume that judges in Delaware and New York always march in lockstep. Prof. Jacoby expressed the concern that empirical studies were too reactive. She said that there were numerous studies framed in response to concerns that debtors were getting too much relief in bankruptcy.
She said that this approach was a limiting factor on the questions that academics ask and that academics should be more proactive in asking questions that others were not raising. Two random points that she made were that academics need more theory in empirical research and that empirical research meant observation and that academics should take the time to observe bankruptcy courts at work. Prof. Eisenberg got on a soapbox about parties making unsubstantiated claims about the legal system. You shouldn’t be able to stand in front of an audience and make nonsensical claims (with statistics). The Chamber of Commerce does it every day. He went on to say that we study areas that we care about, such as economic statistics. You couldn’t say that the inflation rate is 20% (and get away with it). However, you could say that plaintiffs are recovering multimillion dollar verdicts because of crazy juries.
The learned professors also made two seemingly contradictory statements. On the one hand, they stated that there is a lot of shoddy empirical research out there and that empirical studies should not be blindly accepted. The international insolvency panel largely focused on three cases: In re Lehman Brothers Holdings, Inc., No. 08-13555 (Bankr. In re Nortel Networks, Inc., No. 09-10138 (Bankr. Ad Hoc Group of Vitro Noteholders v. Vitro, SAB de CV (In re Vitro, SAB de CV), 701 F.3d 1031 (5th Cir. The panelists were Judge James Peck from the Southern District of New York, Marc Adams of Wilkie Farr, Andrew Leblanc from Milbank Tweed and Bruce Leonard from the Ontario office of Cassels Brock. In some cases, my notes do not indicate who said what so I will have to attribute comments generically to the panel. According to Mr. Abrams, chapter 15 is “the exclusive portal through which foreign representatives can seek assistance of the U.S.
” Chapter 15 allows an American court to recognize and enforce orders and decrees from foreign courts. It is not a reorganization chapter like chapter 11, but merely allows American courts to assist foreign courts with regard to assets of foreign entities in the United States. Under Chapter 15, a foreign representative may seek recognition of a proceeding in another country as either a foreign main proceeding (Main Proceeding) or a foreign non-main proceeding (Non-Main Proceeding). A Main Proceeding is one that is filed in the company’s center of main interest (COMI). A Non-Main Proceeding is one filed anywhere else that the company has non-transitory economic activity. A proceeding filed somewhere that is neither a COMI or has non-transitory economic activity is not entitled to recognition. Unlike the U.S. venue laws, the COMI determination pays little attention to the company’s domicile or state of incorporation. Instead, it is more of a nerve center test.
While this may seem clear, Judge Peck commented that “what is written down is not necessarily clear until the circuit court tells you it is clear.” In the recent case of Morning Mist Holdings Ltd. Krys (In re Fairfield Sentry Ltd.), 714 F.3d 127 (2d Cir. The importance of being a Main Proceeding vs. The panelists stated that Lehman Brothers and Nortel Networks shared many similarities. In the Nortel case, the business operated in 140 countries through a series of five business lines as opposed to operating through subsidiaries. It filed proceedings in the United States, Canada and the U.K. The U.S. claimed priority based on the location of the assets, Canada claimed priority based on the company’s headquarters and the U.K. The United States and Canadian proceedings recognized each other as contemplated by UNCITRAL. The U.S. also recognized the U.K. Non-Main Proceeding. However, the Canadian and U.K. 7 billion. However, four years later, the funds continue to sit in escrow because the parties could not agree upon a formula for allocating the sales proceeds.
After three failed mediations, a trial has been scheduled for 2014 with at least four competing formulas for distribution. Mr. Abrams commented that the Model Law was not well equipped to deal with the situation where there were three competing COMIs. It is hard to design a law that gets to good results. People have to get to good results. The panel’s consensus was that because the Nortel assets were sold prior to obtaining an agreement for distribution of the proceeds that the parties lacked sufficient incentives to cooperate once the money was in the lockbox. Vitro was a large Mexican glassmaker with U.S. It obtained approval of a concurso in Mexico and sought recognition in the United States. In Mexico, all creditors vote together in a single class, including insiders and intercompany claims. Furthermore, approval of a concurso constitutes a novation which releases all guarantors. Finally, because a focus of the Mexican law is preserving jobs, a concurso must have the approval of equity.
The panel was critical of this opinion, asking whether it meant that the United States would be exporting its laws to other countries. Recognition was intended to be a presumption to facilitate the reorganization goals of other jurisdictions. Vitro seems to have changed that model. The panel put blinders on when applying a plain meaning approach. Abrams also said that he thought Judge Hale had the right approach in examining whether the result was manifestly contrary to the public policy of the United States, even though he did not agree with the Judge’s conclusion. The panel noted that the Fourth Circuit has opined that Courts should avoid reaching the section 1506 issue to avoid retaliation. I defer to a court that is at least civilized. He gave the example of a case decided by a local court in India that he had deferred to. In the Fairfield Sentry case, the Second Circuit was asked to address the “manifestly contrary” issue in the context of a foreign proceeding in which the records had been sealed.
It held that open records were not a matter of such importance to US policy as to negate recognition. It is not time to trigger an Amber Alert for Chapter 15 and international cooperation yet. This is a very good conference. However, when I attend, I am usually pulling down long days and am mainlining coffee to stay awake. I can’t help but notice that some very smart people are not very dynamic speakers. If you are speaking at a conference as prestigious as the National Conference of Bankruptcy Judges, is it not too much to ask that you look up from your notes and speak loudly enough to be heard. If you sound bored with your own presentation, you are probably putting your audience to sleep. I would also like to put in a word for more diversity in program formats. Four people on a one hour panel who don’t interact with each other is nothing more than a series of short monologues. While brevity is much to be desired, fifteen minutes or less is not enough time to tell me something I don’t already know. When it comes to putting together a panel, quality of content is to be desired over quantity of talking heads. If you are going to put multiple people up there, make them interact with each other and preferably disagree on some things. In the words of Robin Williams, “If you are going to go into the jungle, clash.” The student loan debate was a good example of how to keep things lively.
The following is a letter from The Children’s Campaign. It was forwarded to us (indirectly) by our Public Defender: Mr. Martinez. The history of The Children’s Campaign extends back to the time, longer than three decades ago, when children were detained regularly in county jails and lock-ups in Florida. The problems were numerous and often horrific and the State moved in a better child focused direction. While cost is an important consideration, the treatment of children in a civilized society must extend beyond such narrowly focused factors. For instance, the bill as written does not address consistency of treatment of children across the state. Are we to accept that children will be treated less well in one county than those in another? We do not agree that detention policy is only about holding a child securely until his or her appearance in front of the judge who decides whether to continue to detain or to release until the adjudicatory phase. Detention of children in Florida for example now extends an average of eleven days.
It is an opportunity to infuse other helpful and supportive services as was proven in the Girls Advocacy Project. The innovative GAP service assisted detained girls cope with their many difficulties and prepared them for a better life path. Further, we are horrified by the prospect that the county jail staff will not train by mandate in how to best treat and counsel children. Worse, the bill allows children to suffer the consequences of being shocked with powerful electronic devices and prodded with batons when non-coercive techniques would be best if employed by knowledgeable staff educated in child responsive strategies. Recent legal decisions as far up as the United States Supreme Court have validated a child’s brain is not yet fully developed and sentencing of children must be different than that afforded to an adult. Yet, this bill if allowed to become law will subject children to an environment specifically architected and operated for adults and by adults with no background in child management.