© 2013 The Texas Lawbook.
By Brooks Igo
Staff Writer for The Texas Lawbook
When forecasting the next few years for bankruptcy attorneys, Perkins Coie bankruptcy and restructuring partner John Penn repeats an ancient Chinese curse, “May you live in interesting times.”
Penn, who at the beginning of the month became the fourth partner and eighth attorney to join the firm’s Dallas office since March, expects bankruptcy attorneys will play a key role in the next few years with billions of dollars of debt coming due.
“The wall of commercial mortgage backed securities (CMBS) loan maturities is just around the corner as the 10 year loans from 2004 and 2005 will begin to mature next year,” he said. “Billions of dollars of debt will have to be dealt with and a great many borrowers will undoubtedly find their way into Chapter 11. For me, Perkins is the best place to be to pick up the pieces as those loans crash into that wall.”
He also believes the historically low interest rates of the past few years have hidden a great number of problems within companies.
“When interest rates begin to rise and put more pressure on cash flows, those problems will come roaring to the forefront when borrowers can no longer service their debt,” he said.
In addition to the wall of CMBS debt, Penn said he and his clients are continuing to explore how many different types of financial transactions were removed from the bankruptcy process by the 2005 revisions to the Bankruptcy Code. Another issue they are dealing with is trying to find new approaches to minimize the amount of time a company spends in Chapter 11 by “pre-packaging” their cases.
The Baylor Law School graduate said cargo airline Kitty Hawk, Inc.’s bankruptcy was one of the largest and most interesting cases he has worked on. The Grapevine-based airline filed for Chapter 11 in May 2000 and successfully emerged in August 2002.
“Kitty Hawk’s Chapter 11 was extremely challenging in that we had to keep overcoming incredible obstacles to reorganize the company,” Penn said. “Those included shutting down a large subsidiary and grounding a fleet of large aircraft on the eve of bankruptcy, surviving the complete grounding of all aviation in September 2001 and its loss of a major postal contract.”
Penn, who joined Perkins Coie from Haynes and Boone, said he will continue to serve as a member of the Board of the American College of Bankruptcy Foundation, which promotes the ends of justice through educational and charitable activities with missions focused in the areas of bankruptcy and insolvency, and on the Executive Board of his local Boy Scout Council. Until the first of the year, he was also the Scoutmaster of his son’s Troop.
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