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Bressler Comments on Bankruptcy Filings in Philadelphia and Delaware

On June 19, 2009 by Schnader in News

Barry Bressler, a partner in Schnader’s Philadelphia office, was quoted in a June 19-25 Philadelphia Business Journal article titled “Drop in Del. Bankruptcies, But Still Increasing in Phila.” The number of business bankruptcy filings in Delaware remained high in the first quarter, but were down slightly from the fourth quarter of 2008. Many companies from around the country incorporate in Delaware to take advantage of the business-friendly court structure. In Philadelphia’s bankruptcy court, which is dominated by Chapter 7 filings and smaller Chapter 11 filings, the numbers were up in the first quarter. Bankruptcy lawyers say the second quarter has also been busy.

The auto industry is among those most vulnerable to bankruptcy. Schnader represents two of the 15 members of the General Motors unsecured creditors committee, as well as one of the 11 members of Chrysler’s unsecured creditors committee. The Firm also represents the Ad Hoc Committees of Consumer Victims of Chrysler and General Motors, which consists of approximately 450 product liability tort claimants with approximately $2 billion in unresolved claims. Mr. Bressler said with Chrysler cutting ties with 800 dealers and GM doing the same with 1,000, it greatly reduces the distribution volume needed for supporting industries such as auto part manufacturing.  The article went on to note that this will create a strain within the marketplace. Further, if many of the existing new auto dealers convert to used car dealerships, they may also struggle, especially if the government offers incentives to purchase fuel-friendly cars, making older, used cars less attractive.