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Experience Plus Preparation Equaled Smooth Handling of Bankruptcy Cases
Overflow crowds of spectators and news media representatives flocked to the same federal courthouse earlier this year for multiple hearings in a pair of auto industry bankruptcy cases filed within a month of each other. Thousands of interested parties sought on-line access to the tens of thousands of pages of court documents that the two cases generated. The court, girded by experience and preparation, never flinched.
“We have an experienced staff,” said Clerk of Court Vito Genna of the U.S. Bankruptcy Court for the Southern District of New York. “We’d been through this with Enron, WorldCom, Lehman Brothers, General Growth Properties, and other big cases.”
Two of the largest and most closely watched bankruptcy cases in American history, filed by Chrysler and General Motors (GM), landed in the Manhattan-based bankruptcy court on April 30 and June 1, respectively. But the court’s preparation had begun back in December 2008.
“We were part of a long conversation, held in monthly conference calls, about what would be needed if one or more auto industry cases materialized,” Genna said. “We and the bankruptcy court staffs in Detroit and Delaware were included in the calls because the likelihood was pretty high that such a case would be filed in one of our courts.”
The planning sessions were initiated by the Administrative Office’s Bankruptcy Court Administration Division, led by Glen Palman. “Glen and his staff helped us focus on whether our computer systems would be able to handle the crush, and why a separate server might be advisable,” said Chief Deputy Clerk Una O’Boyle. “How best to utilize our court’s website and an alternative site provided by the debtor to satisfy the anticipated demand from customers, employees, creditors, and suppliers for information were discussed, too.”
Security needs also were considered. “We had to deal with New York City police and the Federal Protective Service about security outside the courthouse, and then had to plan for extra help securing inside the courthouse and courtroom with additional Court Security Officers,” Genna said. “We also planned for greater use of videoconferencing and for multiple overflow courtrooms and conference rooms.”
U.S. Bankruptcy Judge Arthur J. Gonzalez, who presided over the Chrysler case, was pleased with the results. “In spite of the enormous burden placed upon the system, it worked well,” he said. “Issues that arose were handled well by the clerk’s office. This is attributable to the planning and efforts by the staffs in this court as well as the bankruptcy courts in Delaware and Detroit in conjunction with the AO’s staff in ensuring a seamless transition.”
U.S. Bankruptcy Judge Robert E. Gerber, who presided over the GM case, expressed great gratitude for Gonzalez, whom he called “a pathfinder.”
“I can’t tell you how many times I cited his Chrysler opinions,” Gerber said. He also praised his court’s staff. “Our clerk’s office, led by Vito and Una, did an outstanding job. We were operating in a goldfish bowl.”
A major concern in handling high-profile cases is working to limit the number of telephone inquiries, either to the clerk’s office or to the judge’s chambers. Providing enhanced on-line information is a vital tool in that effort.
“An important step is having the debtor hire a court-approved claims agent who will do all the noticing in the case,” O’Boyle said. “The claims agent has its own website, which helps take the pressure off the court’s website. In these cases, the debtors also had public relations firms that could handle public inquiries.”
Part of the informational enhancement made available for the Chrysler and GM cases included same-day, on-line digital audio recordings of key courtroom proceedings. The audio files were accessible through the Public Access to Court Electronic Records (PACER) system, as the bankruptcy court joined a pilot project that began in 2007.
One of the leaders of that pilot project has been U.S. Bankruptcy Judge J. Rich Leonard of the U.S. Bankruptcy Court for the Eastern District of North Carolina.
“Judge Leonard made two members of his court’s staff available to us for almost a week so we could offer the audio files,” Genna said. “They really provided invaluable help.”
In referring to all the planning that took place, Gonzalez noted that “there were unanticipated issues that arose that had to be addressed.” He added: “These issues were addressed effectively and efficiently.”
O’Boyle remembers one such issue. “We had 300 to 400 people jammed into our main courtroom for a key hearing in the GM case– so many people that there was an air conditioning overload. The heat in the courtroom made the sound system fail. Judge Gerber took the bench and started talking, but no one could hear him.” Another large courtroom quickly was made available, and the hearing proceeded.
Genna reported that more than half of his 65 staff members in Manhattan had their workload affected in some way by the two big cases, and that the clerk’s office had to adopt “a 24-hour operation,” with work shifts and telework assigned. “In sum, we did a lot of planning, last-minute decisions, and running around in the background to make things move quickly and smoothly,” he said. “I’m a bit grayer and I’ve got more wrinkles, but it was a great experience.”