When a retailer files for bankruptcy, who has the advantage? The debtor, the creditors or the landlord? The common assumption, since the Bankruptcy Code amendments in 2005, is that landlords have too much leverage, which has forced many retailers to liquidate rather than reorganize.
But an award-winning paper by Brian Phillips 3L, written for Melissa Jacoby’s Business Bankruptcy Seminar, offers a different viewpoint.
The paper, “Loehmann’s Department Store: A case study questioning the liquidation narrative of 11 U.S.C. § 365(d)(4) following BAPCPA,” won third place in the American Bankruptcy Institute (ABI) 2014 Law Student Writing Competition. The award carries a prize of $750 and a free one-year membership to the ABI, and Phillips’ paper will be published in an ABI committee newsletter.
Phillips studied Loehmann’s bankruptcy filing and reorganization in 2010 and the company’s 2013 bankruptcy filing, which resulted in liquidation.
The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005 shortened the time that retail debtors have to assume or reject non-residential real property releases in bankruptcy. Many people believe that gives landlords the upper hand.
Phillips’ paper questions that belief. “Through my research, I discovered that the landlords were not as much in control as one would believe. Rather, it was much more about the leverage that secured creditors had,” he says. “I argued that there may not be the need for a one-size-fits-all provision for assumption and rejection of leases.”
In addition to learning about the history of the bankruptcy code, Phillips gained other essential insights into the field through his research for the paper. “Perhaps most important was reading through the court’s docket and getting some hands-on experience with agreements and filings of the parties, which we normally don’t have experience with as law students,” he says.
Hands-on experience is one of the benefits of UNC School of Law’s transition-to-practice courses, such as the Business Bankruptcy Seminar. The classes give upper-level students invaluable opportunities to apply their knowledge and skills to address real-world issues through projects with faculty and learning from practitioners.
“The class was tremendously valuable because it offered a lot of practical experience that is often lacking from law school classes,” Phillips says. “In addition, the class had a number of visiting speakers who gave a variety of perspectives and insights about bankruptcy practice. The class has also given me a very strong and practical background to speak intelligently about bankruptcy law and practice.”
His award-winning paper gives Phillips something else to discuss with bankruptcy lawyers.
"This paper is a tremendous asset for my career prospects. It showcases my writing and analysis of a problem in a field that is of interest to me. In addition, it gives me something to discuss with practicing lawyers in the field and in interviews. Publication is a way to distinguish myself in a competitive market when job prospects are harder to come by,” Phillips says.
The winners of the ABI student writing competition were announced in April at the institute’s annual meeting in Washington, D.C., and listed in the May issue of the ABI Journal.
-July 14, 2014