As we have previously reported, in December 2014, the Commission of the American Bankruptcy Institute to Study the Reform of Chapter 11 published its report, which contained over 200 distinct proposed amendments to the Bankruptcy Code. Since that time, we have distributed several alerts outlining certain issues and concerns regarding the ABI Report and its potential impact on secured creditors’ rights and recoveries. On October 7, 2015, the Loan Syndications and Trading Association released its own response to the ABI Report, titled "The Trouble with Unneeded Bankruptcy Reform: The LSTA’s Response to the ABI Chapter 11 Commission Report." After a comprehensive review of the Commission’s proposals, the LSTA believes that the ABI Report’s overall approach to reforming the Bankruptcy Code is misguided and that, if the recommendations contained in the ABI Report were adopted, the changes would be overwhelmingly harmful to debtors, creditors and credit markets, increasing the cost of credit to both performing and distressed businesses alike. This Client Alert summarizes a few of the most significant points offered up by the LSTA against the Commission’s proposed reforms.
This Client Alert was republished by Pratt's Journal of Bankruptcy Law in its February/March 2016 issue. Click here to read the republished article.