Representation – Star-Tron Technology Corporation
Bankruptcy – Western District of Pennsylvania
Situation: Star-Tron Technology Corporation, a night vision equipment manufacturer in Pittsburgh, Pennsylvania, was failing. A buyer had been found by the shareholders.
Action: Star-Tron sought the assistance of Robert S. Bernstein of Bernstein and Bernstein, P.C. of Pittsburgh. It was determined the best course of action was to file a Chapter 11 Petition, which was done on January 23, 1995. On March 17, forty-six days later, the Bankruptcy Judge confirmed the Plan for Reorganization filed by the Debtor. This case was the first in Pittsburgh to utilize changes in the law created by the Bankruptcy Reform Act of 1994 which allows companies with debts of less than $2,000,000 to avail themselves of accelerated procedures to reorganize in less time and with less expense.
The case took less time and cost less in professional fees than similar size cases prior to the amendments. Without these provisions, the case would have taken at least two months longer and may have cost another $3,000 to $10,000.00 or more in professional fees. The Bankruptcy Code provisions, known as the Small Business Amendments, allow the Court, on request of the Debtor, to order that no creditors’ committee be appointed. This can be beneficial in a case such as Star-Tron since a Creditors’ Committee generally operates through an attorney and other professionals paid for by the Debtor. With such professionals looking out for the interests of creditors, additional negotiations and hearings occur. While these additional activities may not materially change the outcome of the case, they will add to the time and the expense of the case. For each meeting, hearing or discussion between committee professionals and debtor’s professionals, the debtor bears the cost.
The other helpful change in the law concerned the approval of the Disclosure Statement that must accompany the Plan when submitted to creditors for a vote. Prior to November 1994, and in cases with debt over $2,000,000, the Court was required to give creditors and others at least 25 days notice of the hearing. Under the 1994 changes, The firm was able to ask the Judge to conditionally approve the Disclosure Statement without a hearing, and hold the final hearing at the same time as the confirmation of the Plan. This cut at least 25 days and one hearing out of the process.