Co-authored by Sara Coelho and Dana Hall
It is rare that the approval by the U.S. Supreme Court of changes to the Bankruptcy Rules (part of the normal rule approval process, after all) gets any media attention. With the April 26 Supreme Court approval of the most recent set of changes, however, the business community is abuzz – and all because of the amendment of Bankruptcy Rule 2019. When the Advisory Committee released a draft of the proposed amendment in late 2009, the business community took unusual interest in the rule-making process and participated during the comment period, as reported in The Wall Street Journal, Financial Times, and The New York Times.
The Rule 2019 amendments have garnered so much attention because once the amendments go into effect (which will occur automatically on December 1, 2011 if Congress does not vote to amend or reject the amendments), the expansion and clarification of Bankruptcy Rule 2019’s disclosure requirements may affect the trading of distressed debt and change how ad hoc committees of bondholders form in chapter 11 cases. When the changes to Bankruptcy Rule 2019 were first proposed, we issued a client alert explaining the scope and requirements of the amended rule, which we have reprinted here.
A second entry discussing the other proposed amendments and new Bankruptcy Rules will follow.