Lawyer sees rise in bankruptcy cases

Natalie D. Ramsey has handled bankruptcies through two recessions, so far. As chair of the Bankruptcy and Corporate Restructuring Practice of Montgomery, McCracken, Walker & Rhoads L.L.P. of Philadelphia, she also has had a close-up view of the bankruptcy practice as it has changed in recent years.

Her work is composed of corporate reorganization, restructurings, commercial transactions and other aspects of bankruptcy practice.

Question: How did bankruptcy early in your career compare with what you're seeing now?

Answer: It's night and day really. I mean, back then . . . going into probably the early- to mid-'90s, it was not uncommon for members of the group to work routinely at least until midnight, 1, 2, 3 o'clock in the morning and come back in the next day.

I can remember lots of holiday weekends being, you know, being in the office and dragging others in.

Then things sort of leveled off, it was still very busy but it was more normal.

The last maybe two or three years, bankruptcy has been very slow.

And a lot of people, commentators, have said that's the result of [the bankruptcy reform law]. Partly it was that the economy was good and partly I think it's an effect that I'm still seeing in the bankruptcy world, which is that so many individuals and companies became familiar with bankruptcy. Many of them started realizing that they could do what was happening in a bankruptcy proceeding outside of bankruptcy without the administrative costs and the time delays.

Q: Are you saying that it's a more sort of calculated, less panicked approach . . .?

A: I think that's right, and I think before, in the '80s, we would try to work things out outside of bankruptcy, but a lot of creditors were not sophisticated enough. . .. It was hard to find a sophisticated solution in the marketplace, to get people to a point where they were willing to come far enough on both sides to reach a deal [outside of a formal filing].

The cut-your-losses kind of philosophy was not as predominant. And we've represented some that believed that if you put the company into a bankruptcy proceeding and you liquidated them in an orderly fashion and you got fair value, that you would maximize your recovery. And sometimes that happens. But sometimes also between the time delay and the administrative costs and changes in the marketplace, by the time you got there . . .

Q: There wasn't a whole lot left?

A: There wasn't. It wasn't to your advantage, you would have been better off taking a much sharper haircut earlier and going forward.

Q: Isn't that what the big banks are doing in New York effectively right now . . .?

A: You're absolutely right. That's exactly what you see in the subprime market.

I do believe that we're going to see more bankruptcies. I think the retail industry is being hit very hard. But I think bankruptcy work is changing. We're doing an awful lot more workouts and out-of-court restructuring and debt restructuring outside of the insolvency or outside of a bankruptcy context.

Q: Why do you need a lawyer for that?

A: You know, I guess it depends on what your experience is. Let's take a retailer as an example. The retailer needs to go to 10 landlords and renegotiate lease terms. And the retailer needs to talk with seven suppliers who they've gotten behind on. If you've got groups like that, it is very helpful to hire someone who knows what the relief would be in a bankruptcy proceeding and who can formulate the proposals around that and a lot of times structure an out-of-court resolution.

Q: What drew you to this kind of work?

A: I was an accounting major. I love finances, I love business. I think I would have liked to have been a business person. And so all of that I liked. It was serendipitous in that at the time that I graduated from law school, the particular area that I started working in happened to be a growth area and very hot. I also liked bankruptcy because I think that it is one of the few disciplines left in the law where there is an opportunity for enormous creativity.

Q: Creativity in the sense that there's a big business component?

A: That's right, you get to work with the business people on business solutions, and that's just tremendously interesting.

Q: What is your staffing for bankruptcy now?

A: We have eight people who are the core bankruptcy group, and we probably have another five or six who I would say have a significant depth in bankruptcy whom we can call on.

Q: Are you in any way disappointed that your practice group isn't as large as it was?

A: Hard question. It's a little bit easier to coordinate and work with a smaller group of people. And to know what everyone's doing and how we can best staff things. I also have to say that it's hard on your life obviously when you are working at a pace of 10 hours a day, seven days a week. That's a hard schedule to maintain over a period of years and do anything else.

I personally spent a lot of my time working on banks. We did just about everything; I mean every kind of work I can think of. We had committees, we had secured creditors, we had unsecured creditors, we had a very small number of debtors.

Q: Is that currently the case?

A: Primarily on the creditors' side. That's most of what we've done, with the exception of health care, where we tend to represent the facility. But we haven't done so in bankruptcy. They've all been out of bankruptcy.

Q: Do you think [a wave of bankruptcies] still may hit?

A: Well, I think we all anticipated it. Last October or November I remember sending out an e-mail telling everyone that they should plan, if they made their holiday plans, to be on call . . . that if bankruptcy hit the way that we were expecting, that they should all expect to have to come back. And that didn't happen.

So, it hasn't obviously hit at the times that . . . the market was expecting.

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Age, Birthplace: 48, Greenville, Tenn.

Occupation: Corporate bankruptcy lawyer

Education: University of Delaware, Newark, 1981; Villanova University School of Law, 1984

Resides: Media, Pa.

Personal: Married, husband Richard, sons, 8 and 6, stepson, 19.

Sage Advice: "I do believe we're going to see more bankruptcies."

Secret ambition: "I love finances, I love business. I think I would have liked to have been a business person."EndText