Forward Thinking: Inventing New Ways to Deploy Existing Technology

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1 Forward Thinking: Inventing New Ways to Deploy Existing Technology Author: Bennett Silverberg, Esq. Vice President and Senior Consultant Epiq Bankruptcy Solutions, LLC Despite incredible advances in software and other options for professionals in the legal and financial industries, too often these options are positioned in the market for very narrow purposes. The professional is then confronted with the situation not envisioned by the software developers or their very competent salesforce the so-called edge cases. Unable to obtain the desired response from the software vendor ( our software can handle that ) the instinctual reaction is to do abandon seeking a modern approach to complete the task at hand and turn to the way we ve always done it. The fact of the matter is that there will never be a software product that out of the box can meet the evolving needs of financial and legal professionals. Software applications are designed to satisfy the majority of market that is, the market which does not include us, the readers of this column. Think of it as just one additional challenge in our professional lives. Continuously, we need to adapt ourselves to technology to some extent unless we develop it ourselves. The real challenge is not to give up on existing technology by reverting to the old way when technology seems to fail us. As an attorney for one of the largest lawfirms, I gained a reputation for consistently seeking a technological solution for the logistical challenges facing my team members. Fortunately, my firm invested heavily in deploying technology to its attorneys and staff. I was a technology watchdog of sorts, sounding an alarm whenever it appeared technology whether it was software or hardware based provided a more efficient and accurate solution to the problem at hand. Sometimes the problem presented was a legal challenge. Other times, it was a logistical challenge. Tracking the Flow of Materials Among Parties-in-Interest Information sharing situations posed the most frequent challenge. A virtual data room (such as one offered by various vendors) presents itself as an obvious tool to use when a debtor wants to share due diligence with multiple parties in a methodical manner. Not too novel a concept, but we all know such a tool is underutilized. The days of rooms filled with metal accordions and manila folders are not quite behind us yet. Many vendors lecture on the clear strategic and logistical benefits of adopting virtual deal rooms but primarily in the M&A context. It is more than just the convenience factor of virtual deal rooms which led me to encourage my colleagues to use them. Too often, the casual sharing of documents

2 with a committee s professionals, ad hoc or official, or a single prospective purchaser of the debtor s assets or litigant is followed by the necessity to share the same set of documents with other committees, prospective purchasers, or litigants. I know, it is so easy to simply maintain a set of those documents given to the initial recipient and make repeated copies for the other requesters or to cross your fingers and hope the documents will not need to be shared with another party. The problem (or crisis) arises when the documents are provided by financial advisors, crisis manager, counsel, and the company and no one party is really keeping track of the information flow. If every document flows through the virtual deal room, retracing steps and ensuring an accurate duplicate production is painless the alternative, well, requires a bit of forensic work to reassemble all the previously produced materials. Employing a virtual deal room in this situation requires a commitment to organization, but think of the consequences of the duplicate set is not inaccurate or delayed. Information Sharing By Official Committees The amended bankruptcy code under BAPCPA presents some unique challenges which scream for technological solutions. The information sharing requirements of official committees with their constituents are now statutory and bolstered by various bankruptcy courts opinions. Arguably, no official committee should have needed the Bankruptcy Code to be amended to encourage the free flow of relevant case information to its constituents. Nevertheless, the professionals of official committees spend considerable time mulling over the newly imposed requirements of BAPCPA. The BAPCPA requirements would suggest that committee members should be aggregating all the materials they receive from the debtor and its advisors with the expectation that they will need to be shared with the committee s constituents - even if creditors are not lining up to receive this information. If the official committee is ill prepared to address these information sharing requirements, the request of a single meddlesome creditor can put the committee into crisis mode. All of a sudden, s are being searched and advisors desks are being tossed for materials received from the debtor. The creditor, if a troublemaker, has the ability to hold up the bankruptcy case and call the committee s compliance with the bankruptcy code into question if the documents and other information is not shared promptly. The best way to avoid being caught short-footed is to have the data prepared to be shared with a virtual data room. Moreover, this method of organization can help ensure that confidential data is treated as confidential data. As the documents are loaded into the virtual data room, it should also be identified as highly confidential (i.e., a document that should never be shared beyond the professionals or steering committee) so that it does not inadvertently find its way into the hands of general creditors not bound by a confidentiality agreement.

3 Due Process Considerations Addressed Through Technology Other BAPCPA requirements are more due process focused. We should, therefore, take these due process focused provisions seriously. Failure to comply with these requirements may derail our client s reorganization efforts at inopportune times. The practice of debtors not taking steps to ensure that critical notices to creditors are not sent to lockbox addresses derived from accounts payable files with stale addresses is not acceptable under the Bankruptcy Code. Various databases are available to scrub company provided mailing lists of potentially stale addresses. Online skip tracing services can be used to locate the most elusive of creditors en masse. Contracts, invoices, and purchase orders loaded into a virtual data room or other database can be reviewed using optical character recognition (OCR) technology to, among other things, proper noticing addresses for the respective vendors. Once loaded into the database, an additional benefit is that the contracts and other documents can also be scrubbed for termination and assignability provisions. All of these efforts will yield result quicker and more accurately than using the yellow pages or generic search engines on the internet to locate individual creditors. The level of effort to correct or guarantee the accuracy of the mailing lists should match the severity of any delay the debtor might incur if the creditor should come into the bankruptcy court weeks after and claim infringement of its due process rights. Facilitating Service of Documents Through Electronic Means The method a debtor provides notice of motions or objections to partiesin-interest in large chapter 11 cases is also drifting towards electronic means. Electronic noticing provides distinct advantages to a debtor. In addition to be significantly less expensive than mail notice, it can also ensures prompt delivery of notice (versus the delay of providing notice by mail), depending on the method of electronic delivery of the pleading, the debtor can determine whether the recipient actually reviewed the pleading. This information can be used by the debtor to identify the parties truly interested in the progress of a case. In addition, monitoring when pleadings are reviewed can used by a debtor to determine when to reach out to a party to discuss the relief requested in a pleading further. With these tools, a debtor can be more proactive in averting an objection its request for relief. Otherwise, a debtor might be in the dark until an objection is filed to a pleading. Facilitating Communications to Taxing Authorities Taxing authorities have also squawked about debtors impacting their right to collect taxes or sell property free and clear of their liens without proper notice. Taxing authorities have historically made it difficult to determine their proper noticing address. Debtors could gamble and send notices to the tax collector or the tax assessor, hoping they reached the correct official. Debtors were at quite the disadvantage if the taxing authority claimed it never received the notice, motion, or objection from the debtor. The

4 public interest protected by the taxing authority often gave way to the needs of the debtor to reorganize. In an effort to minimize these complicated situations, BAPCPA instructs the thousands of taxing authorities throughout the country to band together and form a database of suitable noticing addresses. Maintaining this database is sure to be a technological feat for the taxing authorities. Even more challenging is for the debtor to cross reference the taxing authorities in its case to the national database. The only practical way to ensure adequate notice is to cross reference the taxing authority database to the list of taxing authorities impacted in a debtor s bankruptcy case a suitable situation to deploy software to compare the two lists. Communicating With the Public At-Large Communicating with the public at large is also a task best left to technological means. Creating a website to communicate with creditors, employees, and vendors with a message crafted by a professional public relations firm can prove a useful buffer between the creditor body and the debtor s overworked professionals. The professionals, on the verge of filing a disclosure statement or confirming a plan, cannot afford to address the influx of calls from the creditor body usually triggered following the service of a disclosure statement and confirmation hearing notices. The key to heading off those creditor calls is to ensure that the website s content is kept timely and comprehensive enough to answer general creditor inquiries. The website s address, additionally, must be well publicized on the debtor s corporate website and general notices disseminated by counsel and locatable on popular internet search engines. If a creditor cannot find the answer on a website, it is likely the creditor will call somebody seeking an answer. The creditor, in most circumstances, should be directed towards calling a call center. It is critical that the operators at the call center have access to claimant data and the capability to funnel inquiries and track responses from the debtor s advisors. Good software and coordination is necessary for a call center solution to truly offload calls from the debtor s other professionals. Otherwise, the call center will be no more useful than a voic box and still require expensive professionals to respond to creditor calls or provide the needed information to the call center operators or involvement from the debtor s personnel. Thinking Forward I have suggested a mere handful of technological solutions to address common logistical and legal issues arising during the course of a typical reorganization case. The technologies involved virtual deal rooms, internet websites, databases, and call centers are extremely mature technologies. For the most part, we are well positioned to deploy these technologies today and without great expense. There is no reinvent the wheel to address these common challenges. The technology is here today ready, willing, and able to make our professional lives easier and more productive.

5 If new technology is deployed in the marketplace, however, I will revisit the suggestions I made here and possibly suggest ways to incorporate such new technologies into our business practice. As is our business, technology is consistently evolving. I would be surprised if I was not suggesting new technological solutions to more everybody problems in the near future.