Key Issues Regarding the Retention and Use
of Financial Experts in Bankruptcy Cases
Written By David P. Bart

Financial experts provide invaluable services to the court and to parties in interest in bankruptcy matters and in the defense or prosecution of litigation. As business experts, they can provide evidence and opinions that assist the court in reaching an understanding of key issues in the case. The range of topics that can be addressed by qualified financial accounting and business testimony is significant. A representative list extends beyond tax and accounting and includes corporate finance, cash flow management, forensic accounting, business valuation, loan compliance, business viability, management and operations, lost profits, damages and many other subjects. The types of professionals available to analyze the topics is also quite varied and includes accountants, business consultants, turnaround experts, fraud examiners, tax professionals and other specialized types of training. Determining the relevance and role of the financial professional required in each case is a question of the fundamental questions affecting each bankruptcy case and the overall litigation strategy.
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To Claim Or Not To Claim Cutting in Line: How Shareholders and Bondholders Are Being Paid Ahead of Trade Creditors in Chapter 11—Thanks to the Securities and Exchange Commission and The Sarbanes-Oxley Act
Written By Scott Blakeley, Esq.

Headlines of corporate fraud within public companies, from Enron to Adelphia to WorldCom, prompted the U.S Congress to overwhelmingly pass federal legislation providing for accounting reform and requiring more accurate financial disclosure and reporting from public companies. This new federal legislation penetrates the area of corporate governance, which traditionally had been left to the states. The Sarbanes-Oxley Act of 2002 (SOA) was signed into law in July 2002 to combat the wave of accounting and financial reporting scandals and corporate bankruptcies.

SOA focuses on the conduct of corporate officers and public accounting firms and adequate disclosure in public company financial statements. SOA provides that the Securities and Exchange Commission (SEC) enforces the legislation and has earmarked $766 million for SEC enforcement. A provision of SOA allows for the SEC to direct money collected from a fine and civil penalties of the company to a restitution fund for shareholders, not vendors. Prior to SOA, the SEC could only repay defrauded shareholders through money collected through disgorgement actions, as fines and civil penalties went to the U.S. Treasury.
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Don’t Forget to Use the Committee Listserves

Stay tuned for comprehensive committee listserve instructions. ABI is in the process of putting together graphically enhanced individual committee listserve instructions. The UTC committee listserve provides a vehicle for unsecured creditor professionals to compare recovery ideas, inquire into recovery techniques employed by other professionals and brainstorm with each other about relevant issues.

-DBW