I don't know why I continue to be surprised by the statements about BAPCPA made by the now-infamous Prof. Zywicki, but like a moth to a flame, I keep reading them with utter amazement. Yesterday's hearing before the House Judiciary Committee on the impact of BAPCPA on retailer reorgnaizations (i.e., Circuit City) is a perfect example (a list of witnesses and their prepared remarks is available here).
On the one hand, you have Harvey Miller, arguably the top (at least one of the top) bankruptcy lawyers in the United States, testifying that "the balancing of interests that was enacted in 1978 has been upset through a series of amendments of the Bankruptcy Code, culminating in the enactment of [BAPCPA] that have clawed back Bankruptcy Code protections that had been enacted to assist and enable a debtor to rehabilitate and reorganize its business." His full prepared statement is well worth reading. This seems to be the majority view, approaching consensus.
Then on the other hand, you have Zywicki continuing on his "this bill is perfect" odyssey of cognitive dissonance. His remarks included these gems: “BAPCPA was designed to correct a system that had gotten out of whack,” and the new post-BAPCPA system in Zywicki's estimation is “well-calibrated.” I wonder if more than a handful of people in the reorganization industry share this view. I certainly have not heard this view expressed by anyone other than Zywicki.
It gets better (rather, worse). Zywicki takes a nice jab at debtor's counsel by posing a rhetorical question: “is it really worth burning through $40 million to $50 million in attorneys' fees for a company whose time has passed?” Another panelist challenged Zywicki's suggestion that counsel were prolonging cases just to increase fees. I wonder if Zywicki has read the latest empirical studies of professional fees in reorganization cases, which doesn't seem to support his attack on professional fees. I am beginning to wonder if Zywicki every reads empirical studies, and if he does, whether he internalizes any of the information in those studies. His public comments don't seem to suggest that he is influenced by the facts on the ground–certainly not in consumer cases (he started the means testing craze, remember), much less in business cases. Sigh.
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6 responses to “Cognitive Dissonance About BAPCPA”
More on Zywickidiocy is found here:
http://www.creditslips.org/creditslips/2009/03/cooking-the-bankruptcy-numbers.html
What a crock of (you know what!)
Now, I don’t know about 11s but as far as consumer bankruptcies are concerned, the faster we get theses suckers confirmed or in the case of a 7s discharged, the more money debtors counsel keeps (not spending on overhead in other words). There is also the other end of the spectrum. Sometimes 13 Trustees want to rush confirmation. It makes very little sense to me to rush confirmation to before the POC bar date. I mean we have to because they hold the balance owed on attorneys fees hostage until after confirmation. So because of the system we have to rush confirmation to happen before the POC bar date. What if a POC comes in the day before the Bar Date and makes the plan deficient post-confirmation? Here anyway, the trustee will object to our Attorneys fees for a Modifications done within 180 days of confirmation!
On BAPCPA being perfect, I believe prez Bush used a BS “singing statement” that said something like that. Just another example on how opinions can be purchased. I mean what the heck does he know about practicing bankruptcy under BAPCPA? I mean is he sitting in 341 meetings; actually working up individual means tests?
From what’s been written about Zywicki, is it fair to assume he is a paid shill for the financial services industry?
EastCoaster, whatever might be said about Todd, I don’t think he acts in bad faith. In my view, he exercises poor judgment and sloppy and myopic analysis, but he expreses his own opinions without compensation. I would be very surprised to learn anything different.
Jason,
As a professional in the reorganization industry, I can attest that I have yet to encounter anyone within it who has ever said anything good about BAPCPA. It is to law what ‘Gigli’ is to film for us in restructuring. Perhaps I’m biased because my firm works primarily on the debtor side, but in my opinion you will be hard pressed to find a financial advisor or attorney who truly believes that any of the more odious provisions (revised lease termination period, 20 day reclamation claims, etc) do anything but hurt the value of the enterprise.
Best,
Kyle
On the debtor side, BAPCPA is more like an Ed Wood film festival.
As far as Zywicki goes – I think he’s just a dope, not a shill.