The following discussion examines a number of factors that have complicated the bankruptcy process. It also offers a look at how out-of-court restructurings might be a more viable course for distressed business owners to take.

Scott L. Baena, a senior partner of Bilzin Sumberg and chair of the firm’s Restructuring and Bankruptcy Group, has witnessed drastic changes in the practice of bankruptcy law over the last 40 years. “It has emerged”, he recently told a group students, from a “small arcane undesirable practice” to a sophisticated subset of the legal profession where specialists navigate a matrix of rules designed to give debtors and creditors a level playing field to resolve their financial disputes. Over time, Baena and the firm successfully counseled clients in such high-profile cases as Fontainebleau Las Vegas, Tousa, Cenvill Development and U.S. Gypsum. He also saw involvement in airline cases involving carriers including Air Florida, Atlas Air, Braniff, Eastern and Pan Am. Since the 1980s, Baena recalled, the bankruptcy process evolved into a system where the interests of economic stakeholders have been balanced “in the interests of rehabilitation and reorganization of a distressed business.” Yet, since the recession of 2008, Baena now argues, bankruptcy has become a very unpredictable play for real estate developers who failed to complete projects before the crash, for companies that failed to achieve new financings and for retailers who saw a significant erosion of their customer base. As debtors in these and other categories have sought bankruptcy court protection, successful trips to reorganization have become less certain. In short, Baena notes, there is no longer a “Playbook” to successfully navigate the process.