Nonprofits can successfully reorganize in bankruptcy notwithstanding unclear laws
10/11/2016

Scott K Brown​PHOENIX – Nonprofit bankruptcy laws have room for improvement, writes Scott K. Brown, a partner at Lewis Roca Rothgerber Christie LLP, in “Confirming a Plan of Reorganization for a Nonprofit Debtor” in the 2016 edition of the Norton Annual Survey of Bankruptcy Law.

Brown and co-author Evan C. Hollander note that “the term ‘nonprofit’ is not defined in the Bankruptcy Code and appears only in connection with the definition of ‘debt relief agency,’ in various references to nonprofit budget and counseling agencies, and in connection with an exception to discharge for certain educational loans.”

The article points out many nonprofits that have successfully reorganized in bankruptcy and the strategies for doing so; it also points out a few failures and what went wrong. Among other things, the authors assert that legal practitioners and the courts would benefit from instruction from Congress as to whether they are to consider the hypothetical liquidation of the nonprofit debtor at its “highest and best” liquidation value or at the value that would result from the sale of the assets to one or more hypothetical nonprofit purchasers.

Published by Thomson Reuters, the Norton Annual Survey is described as cutting-edge commentary on substantive and procedural issues in bankruptcy law practice and the constitutionality of the Bankruptcy Court, including the latest developments in the changing and often complex body of bankruptcy case law and in international law.

Brown represents commercial, agricultural and private lenders, healthcare companies and other businesses in a broad array of transactions and litigation. His experience includes both in-house and outside counsel roles in loan origination and documentation, regulatory compliance, litigation in state and federal court, receiverships and bankruptcies. He also represents clients regarding regulatory, lending and litigation issues related to consumer finance.

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