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Michelle Harner
Baltimore, Maryland
Recent Activity
Adam--Great post; thanks for keeping the valuation conversation going. Two quick thoughts: On the special master approach, I think the Commission's "estate neutral" recommendation could facilitate that appointment; we would just need the clarification that the court would not consider other valuations if the matter went to trial. I also am intrigued by the concept underlying the baseball salary arbitration approach. If we could institute a default process against which parties could more effectively (and reasonably) negotiate, that might add real value.
One additional thought here for everyone to consider. When I use the term "valuation litigation," I am using that term broadly to capture the various valuation disputes we have in chapter 11--adequate protection, priming, sales, plans, claims resolution, etc. Often that litigation never reaches trial, so the possibility of judicial valuation may be even more relevant than what the courts actually do. I raise this because of Amos's fair point about whether one expert solves (or even mitigates) the problem, and of course you have a cost factor when you add a third. That being said I was intrigued by Adam Levitin's post on valuation yesterday and his "baseball salary arbitration" approach. I wonder if that might discipline the process some and help the parties achieve consensus quicker.
Toggle Commented Jan 30, 2015 on The Art of Valuation at Credit Slips
Amos and Robert—Thank you for your comments. Amos, with respect to your comment and question: I actually was involved in valuation litigation frequently during my ten years of practice at Jones Day. Some of those battles were quite interesting. I think many lawyers and judges understand DCF, CAPM, WACC, etc., and where the play is in valuation contests. As such, I agree with your statement that “both sides know where each of their experts is probably right and probably wrong.” Along those lines, a court-appointed valuation expert typically is in addition to—not in lieu of—the parties’ respective experts. A court-appointed valuation expert can assist the court in working through each valuation and help identify the most appropriate valuation at that point in time. Also, I do not think it is the only or perhaps the best way to tighten the valuation process in bankruptcy, but it is one way and certainly alternative options should be explored.
Toggle Commented Jan 30, 2015 on The Art of Valuation at Credit Slips
I just finished discussing the “random walk” theory in my Corporate Finance class, so I thought I would close out my stint on Credit Slips with some “random thoughts” on reform. First, two expressions of sincere gratitude: I want to... Continue reading
Posted Jan 30, 2015 at Credit Slips
Anyone who has ever litigated a valuation issue knows that valuation is more art than science. Experts often arrive at widely divergent valuations. Yet, these valuations are of the same company, for the same time period, based on the same... Continue reading
Posted Jan 29, 2015 at Credit Slips
People (and institutions) like rules that give them a competitive edge. You need only to look at the recent headlines and the media coverage of “Deflate Gate” to understand this basic concept. Reportedly, Tom Brady, Peyton Manning, and other quarterbacks... Continue reading
Posted Jan 28, 2015 at Credit Slips
Can a company really melt? Putting aside a business with a perishable product or inventory, does management really wake up one morning and say, “Wow, if we do not sell this company in 30 days or less, we will lose... Continue reading
Posted Jan 27, 2015 at Credit Slips
It may surprise some, but approximately 90% of all chapter 11 debtors have less than $10 million in assets or liabilities, less than $10 million in annual revenues, and 50 or fewer employees (see data on small and medium-sized enterprises... Continue reading
Posted Jan 26, 2015 at Credit Slips
The general counsel of a financially distressed company calls you. She of course clearly states that her company does not need to file a chapter 11 case, but she is curious to understand how a chapter 11 case might work... Continue reading
Posted Jan 23, 2015 at Credit Slips
In his State of the Union speech on Tuesday, President Obama talked a lot about job creation. I am all for growing the economy and creating more U.S. jobs, but I also am for saving jobs and keeping people employed... Continue reading
Posted Jan 22, 2015 at Credit Slips
In the past two months, four retailers have filed bankruptcy cases. RadioShack is rumored to be preparing a chapter 11 filing, and other retailers certainly appear to be struggling (see Stephen Lubben’s post here). But if you were counseling any... Continue reading
Posted Jan 21, 2015 at Credit Slips
Robert: Hello, and thank you for this comment on the Report. I did pass on your original email. Your email and this comment provide a great deal of food for thought. I hope to touch on the sale provisions in a future post. I will try to address some of your points there, as well as through a subsequent response. Your comment represents the type of dialogue that the Commission hoped would flow from the Report. Indeed, the Commission views the Report as just the start of the conversation. Sincerely, Michelle Harner
Toggle Commented Jan 20, 2015 on Welcome Back to Michelle Harner at Credit Slips
For those of you who are not familiar with my scholarship, I am fairly conservative in my approach, and I strive to remain objective in my analysis and balanced in my proposals. I believe that most companies try to get... Continue reading
Posted Jan 20, 2015 at Credit Slips
Thank you for your comment. As in the business context, I believe that many amendments in the consumer context also have been driven by special interest groups. Congress has increasingly tightened the student loan discharge provisions of the Bankruptcy Code and, as you note, made it very difficult to discharge those loans. I think we need to reconsider the appropriate balance between the debtor's fresh start and creditors' repayment rights in several provisions of the Code, including in the student loan context. There is a difference between individuals who have, in good faith, tried to repay their loans and truly need the assistance of the Bankruptcy Code and those who are trying to manipulate the system. We should be able to fashion a remedy that distinguishes between the two and provides appropriate avenues of relief for the former
I thought I would wrap up my week of blogging with a little entertainment—the Trump Entertainment chapter 33 case. Yes, this is Trump Entertainment’s third trip through chapter 11 of the U.S. Bankruptcy Code, and its adventure rivals any episode... Continue reading
Posted Jun 19, 2010 at Credit Slips
As I previously mentioned, recent amendments to the U.S. Bankruptcy Code have been significant and driven in large part by special interest groups. Yet, Congress has ignored ambiguity in the Code that has persisted for years, causing confusion, uncertainty and... Continue reading
Posted Jun 18, 2010 at Credit Slips
Countless restructuring lawyers have told me that their corporate partners are hesitant to introduce them to their firm’s troubled business clients because the “B” word might “spook” the client. I also experienced board ostrich syndrome (i.e., denial that the company... Continue reading
Posted Jun 17, 2010 at Credit Slips
Thank you so much for the comment, Prof. Kuney. I actually really like your reference to section 105 and the developments forged by courts under that provision in the context of assessing chapter 11's utility. From my perspective, the equitable nature of bankruptcy courts and their ability to fashion equitable remedies where necessary and appropriate often are essential to a successful corporate reorganization. Now that we have lived and worked with chapter 11 for over thirty years and observed how courts invoke their equitable powers, it may be time to evaluate what truly furthers the goals of chapter 11 and, as you suggest, formalize those processes into the Code. My only hesitation here is that some proponents might also then seek to restrict the equitable powers and discretion of the bankruptcy courts further, which I think would be a mistake. Thanks again, Michelle.
Toggle Commented Jun 16, 2010 on The Utility of Chapter 11 at Credit Slips
For the past several years, we have watched various industries struggle, including the automotive, airline and entertainment industries. Although troubled companies within these industries have their own unique issues, they also share common experiences relating to the recent recession, competition... Continue reading
Posted Jun 16, 2010 at Credit Slips
As the financial reform bills make their way through committee conference, I thought I would take this opportunity to reflect on the activities of private equity firms and hedge funds in bankruptcy. (For those of you interested in the bills’... Continue reading
Posted Jun 15, 2010 at Credit Slips
First, I want to thank Bob Lawless and the other authors of Credit Slips for inviting me to guest blog this week. I am honored to share this space with you, and I look forward to a robust dialogue. Second,... Continue reading
Posted Jun 14, 2010 at Credit Slips
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Jun 12, 2010