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FLORIDA: An Introduction to Bankruptcy/Restructuring

Bankruptcy and Restructuring in Florida – South

Paul Steven Singerman
Jordi Guso
Ilyse Homer
Christopher Andrew Jarvinen
Brian Rich

The numbers speak for themselves. In 2020, the U.S. Bankruptcy Courts located in the Southern District of Florida were statistically tied as the sixth busiest bankruptcy court system in the United States. Accepting close to 15,000 new business and individual bankruptcy filings last year, the Southern District of Florida again placed in the top decile of all federal judicial districts which handle bankruptcy cases. And the numbers are equally impressive with respect to business bankruptcies. The Southern District of Florida, which is comprised of the U.S. Bankruptcy Courts located in Miami, Fort Lauderdale and West Palm Beach, ranked seventh overall in the number of new Chapter 11 business bankruptcy petitions filed in the United States in 2020. Although such numbers are less than the amount of bankruptcy filings in the U.S. Bankruptcy Courts located in Wilmington, Delaware (one of the common venues for court-supervised corporate restructurings) and Houston, Texas (a jurisdiction which has recently witnessed an increase in Chapter 11 cases), the number of business-related bankruptcy filings in South Florida is substantially greater than virtually all other federal judicial districts, including those covering a part or all of such major US cities as New York City, Chicago, Phoenix, Philadelphia, San Antonio, San Diego and San Francisco.

One of the uniquely positive features of the corporate restructuring landscape in South Florida is the ability to practice before a distinguished group of eight U.S. Bankruptcy Judges who provide a great level of accessibility to the U.S. Bankruptcy Court. The U.S. Bankruptcy Judges who sit in the Southern District of Florida were appointed between 1985 and 2020 and many were accomplished bankruptcy practitioners in private practice before they assumed judicial office. They include the former president of the National Conference of Bankruptcy Judges, a naval aviator for 18 years who was also with the Judge Advocate General’s Corps (JAG Corps), an individual who was appointed at the age of 33 to lead a large law firm’s new bankruptcy department and who also serves as an author of Collier On Bankruptcy (a highly respected bankruptcy law treatise), members of the American College of Bankruptcy (the most prestigious US-based society of bankruptcy professionals), a former trial attorney in the Attorney General’s Honors Program with the United States Department of Justice, a Florida Supreme Court Certified Circuit Civil Mediator and several past presidents of the Bankruptcy Bar Association of the Southern District of Florida. 

South Florida is also a welcoming and hospitable location for out-of-market attorneys, financial advisors, bankers and investors. Florida-based corporate restructuring professionals routinely work on large and complex matters involving a myriad of out-of-state commercial interests which are already represented by counsel or other advisors who do not have a professional presence in South Florida. Whether these matters are court-supervised bankruptcy cases or out-of-court restructurings, a defining feature of the corporate restructuring professionals in South Florida is their regular and extensive work with out-of-market professionals in bankruptcy cases and restructuring matters. In addition, the procedures for pro hac admission for lawyers not admitted to The Florida Bar are not cumbersome, and the U.S. Bankruptcy Judges in South Florida warmly welcome out-of-state practitioners. 

A third beneficial feature which distinguishes the corporate restructuring community in South Florida is the collaborative Bar of bankruptcy attorneys who practice in this area of the country. A part of the reason is historical. Many of the professionals who currently lead law firms in South Florida with the most prominent corporate restructuring practices had their start working with one another in a small number of national law firms with offices located in South Florida. These bankruptcy professionals possess decades of experience working across the table with one another in Chapter 11 bankruptcy cases as well as volunteering in a number of local bankruptcy-related professional organizations.

With the active support and participation of the U.S. Bankruptcy Judges, the bankruptcy Bars in South Florida and throughout Florida have also been at the forefront of developing professional associations and lawyer advisory groups designed to (i) increase restructuring competency among professionals, (ii) aid the U.S. Bankruptcy Court by acting as a liaison between the court and bankruptcy law practitioners throughout the district, (iii) provide extensive networking opportunities, and (iv) engage in meaningful pro bono initiatives. These organizations include the Bankruptcy Bar Association of the Southern District of Florida, the Lawyers Advisory Committee of the Southern District of Florida, and the Business Law Section of The Florida Bar. This tight-knit community of restructuring professionals in South Florida has a widespread reputation for minimizing counterproductive litigation tactics which can get in the way of efficient and effective approaches to assisting businesses through periods of financial distress.

Recently, the U.S. Bankruptcy Court in the Southern District of Florida adopted new Local Rules, effective as of December 1, 2020, which guide bankruptcy practice before the Court. A number of the Local Rules are particularly helpful for bankruptcy practitioners who represent the core parties in Chapter 11 cases, such as debtors, official committees of unsecured creditors, and trustees. For example, an order of the U.S. Bankruptcy Court is not necessary to authorize an examination pursuant to Rule 2004 of the U.S. Federal Rules of Bankruptcy Procedure (a rule which provides interested parties in a bankruptcy case with the ability to obtain broad prelitigation discovery), or to require production of documents or electronically-stored information (ESI). The Local Rules and the U.S. Bankruptcy Court are also very inviting of a one-step process in South Florida to confirm a proposed reorganization plan by providing an efficient process for the conditional approval of a disclosure statement which includes the ability to schedule a combined court hearing in which a debtor can simultaneously obtain final approval of the disclosure statement and confirmation of the plan of reorganization, and this commonly-used approach often reduces the confirmation process by up to 30-45 days. In addition, the Local Rules and the U.S. Bankruptcy Court are particularly supportive of procedures providing for the monthly payment of interim compensation for Chapter 11 professionals.

The U.S. Bankruptcy Judges and restructuring professionals who work in South Florida live in a dynamic state which is undergoing constant change and transformation. A half-century ago, Florida barely made the list of the top-10 most populous states in the US. However, as reflected by the most recent national decennial census taken during 2020, Florida added over 2.7 million residents during the past decade, which has catapulted the state over New York to become the third largest state by population in the US with 21.5 million residents. Only the states of California and Texas have larger populations. In addition, Florida’s $1.1 trillion gross domestic product is now the fourth largest state-level economy in the U.S. In the global context, the size of Florida’s economy is now larger than all but 16 countries in the world and is equivalent to an economy roughly the size of Mexico, Indonesia, or the Netherlands. The primary industries recently driving growth in Florida’s economy include tourism, agriculture, international trade, aerospace and aviation, life sciences, construction and real estate, and financial services. Due to the fact that Florida’s economy continues to undergo tremendous growth and reinvention, pursuing a court-supervised restructuring is one of the primary tools that financially-distressed companies use to maintain value for their various stakeholders, including employees, vendors, taxing authorities and owners.

Berger Singerman LLP possesses one of the largest business reorganization practice groups in the southeastern United States and the firm’s offices are located in close proximity to the three U.S. Bankruptcy Courts in the Southern District of Florida, as well as in the state capital of Tallahassee, and the lawyers in the firm’s Bankruptcy Reorganization Team routinely file, or represent other key, interested parties in, some of the most significant cases in the Southern District of Florida. And one of our team members is currently serving on the board of directors of the Bankruptcy Bar Association of the Southern District of Florida. Having been active for close to four decades in most of the largest and complex, business bankruptcy cases and out-of-court restructuring matters in the State of Florida, Berger Singerman team members are at the forefront of assisting clients in a wide range of industries to navigate the significant market-based changes which have occurred, and continue to take place, throughout the state.