Dealing with the debt - letters to the editor

GOOD JOB ON YOUR ARTICLE "SECOND Acts" (June). I've been managing midsize Chapter II companies on behalf of debtors for 30 years. From my perspective, the biggest reason that a high percentage of confirmed plans ultimately fail or require second chapter proceedings is that the highly paid experts hired by various parties at interest usually insist on a consensual plan that will not alienate any of the parties or other experts. These experts are usually afraid their fees will be challenged by disgruntled parties at interest. Consequently, debtors, via their representatives, too often do not hammer out a tough plan that will ensure a debtor's long-term survival.

The debtor often does not perceive the critical importance of the ultimate viability of the plan. Consequently, everyone involved usually takes advantage of the debtor and passes it around like a Christmas turkey, with each party pulling off a piece for itself until all that ultimately comes to rest is a bare-bones carcass with no staying power.

There are too many consensual confirmation arrangements struck in these proceedings and not enough tough negotiating on behalf of the debtor. More often than not the plan as proposed is unrealistic. Bankruptcy judges should be pressed to question weak plans and make hard confirmation decisions (for example, "cram downs") in the face of irate creditors. The various creditor classes are generally better off accepting less with a plan that is ultimately sustainable.

Len Levin

Safety Harbor, Florida

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