Rather than a standard presentation, an NACM Teleconference held on December 7th took the form of a question-and-answer session with Lowenstein Sandler PC Partner Bruce Nathan, Esq. Nathan took both extemporaneous questions and ones that had been submitted earlier that dealt with bankruptcy and other issues pertaining to creditors’ rights. Nathan likened the format to a creditor forum and mentioned that this was the first time NACM had organized a teleconference this way.
"You are part of history," Nathan said to the attendees.
Many of the questions asked focused on the sale of claims and the legal rights of creditors who choose to do so. "Sales of claims is really an area that has developed over the past 20 years," Nathan said. "In deciding when to sell your claim… the first thing you should do is check the docket of the case." Doing so allows a creditor to see a lot of information that could weigh heavily on their decision to sell, said Nathan.
In addition to looking up the case, Nathan advised claim sellers to always review the sales contract because they can often be designed to give the buyer an unfair advantage. "People buy claims in order to make money," Nathan warned, adding that, if possible, claim sellers should take sales contracts to an attorney before signing them. Sellers should even consider taking the offer of one buyer to another potential buyer and asking if they can offer a better price.
Also discussed were items that have changed under the Bankruptcy Abuse Prevention and Consumer Protection Act, which turned a year old in October. Under the new act, there have been changes in preferences, like who receives insider status and who doesn’t, utility rights in a bankruptcy case and the ordinary course of business defense, which has become easier to prove under the new law.
According to Nathan, pre-BAPCPA cases required that creditors prove both that the debt was incurred in the ordinary course of business of the debtor and creditor and that it was incurred according to ordinary business terms. The BAPCPA allows creditors to use the ordinary course of business defense if they can prove either of these things.
Attendees were from an array of different fields, including media, utilities and certain industries. The next NACM Teleconference, titled "Credit Card Processing," will be held on January 10th, 2007.
Source: Jacob Barron, NACM Staff Writer, and Bruce Nathan, Esq.