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Calling James L. Patton, Jr. the father of the Delaware bankruptcy bar isn’t a stretch. He staked a claim for bankruptcy lawyers in general, and law firm Young Conaway Stargatt & Taylor in 1990 in particular, when United Merchant & Manufacturing Inc., a New York-based apparel and textile company, filed for Chapter 11 protection in Wilmington, Del. Delaware has been the dominant jurisdiction for bankruptcy filings in the U.S. ever since. “I would say he is the dean of the Delaware bar,” said Marc Abrams, a partner at Willkie Farr & Gallagher in New York and formerly of Young Conaway. “Jim has always been very good at marketing Delaware as good place for bankruptcy filings. He was one of the few people at the time who could actually hold himself out as a bankruptcy expert.” Young Conaway didn’t dissuade him, either, since it was among the first law firms in Delaware to recalibrate its bankruptcy practice to handle megacases. Among the debtors it now represents are Imperial Sugar Co., Golden Books Family Entertainment Inc. and U.S. Office Products, to name only a few. “There is an incredible amount of homegrown and imported competition, but they’ve managed to hold a fairly preeminent position in the bar down there,” Abrams said. Patton was the sole bankruptcy attorney at Young Conaway in 1987, cutting his teeth on cases such as the Phoenix Steel Corp. bankruptcy. But dozens of mega-Chapter 11 cases later, Patton is chairman of the firm, as well as one of five partners in its 17-person bankruptcy practice area — Young Conaway’s largest. Ironically, Patton is looking to expand Young Conaway’s reach beyond Delaware. Good thing, too. The choked docket of Delaware bankruptcy cases is leading many companies to file for Chapter 11 elsewhere. That Delaware’s bankruptcy caseload is so voluminous — it’s had to bring in guest judges from other states to help out — is a testament to how far its courts have come and how instrumental Patton has been. It all started when United Merchant, with $224 million in assets, filed for Chapter 11 protection in Delaware because it was concerned about how its bonds would be treated in the Southern District of New York, then the hot forum for bankruptcy filings. The New York courts had previously said that discounts given in connection with the sale of bonds would be treated as interest, which would have been bad news for United Merchant’s bondholders. The Delaware court handled the case efficiently and capably, heightening the court’s profile, but it was one month later, when Continental Airlines Holdings filed for Chapter 11 in Wilmington, that Delaware eclipsed New York as the preferred venue for debtors. Patton was an attorney in both cases. “Once United Merchants opened the door, Continental made Delaware famous, and the cases started coming,” said Patton, 45, who has handled more than a fair share of the steady flow of major Chapter 11 filings in Wilmington, including Crown Books Inc., Paging Network Inc., Smith Corona Corp. and Grand Union Corp. “There’s no doubt that [United Merchants and Continental] put the firm on the map,” Patton says. “But being highly visible was merely an opportunity to succeed or fail in a very public way. We could have crashed and burned as easily as we could have succeeded. Fortunately, so far, we’ve succeeded.” Interesting enough, Patton says he got into bankruptcy law by accident. “It wasn’t an affirmative decision at all,” he notes. He actually started out doing general litigation work, and even today, the generalist approach keeps him interested in bankruptcy assignments. “I find the complexity and variety of issues exciting,” he says. In fact, as a first-year associate, Patton replaced Abrams, then a third-year associate, as Young Conaway’s bankruptcy lawyer. Recalls Abrams: “Ironically, in 1985, I was induced to take a job at a bankruptcy boutique in Manhattan on the basis that Delaware was a relative backwater for bankruptcy, compared to what was being handled in the Southern District of New York.” Abrams handed over his caseload of “small, modest” bankruptcy matters to Patton. Aside from Phoenix Steel, which was based in Delaware, the caseload consisted mostly of the bankruptcies of local department stores, furniture stores and diners. But that changed. “By the early to mid-’90s, I saw myself taking the train down to Wilmington to try bankruptcy cases,” Abrams says. “If I hadn’t left [Young Conaway], I would probably be working for Jim.” Even with its crowded courtroom calendar, Delaware’s status as a favored venue is ensconced. Still, Patton says his biggest challenge is moving his firm beyond Delaware. “We’ve been given an incredible opportunity because of Delaware’s prominence,” says Patton, who is also chairman of the Delaware bar association’s bankruptcy law subcommittee. “With all of the exposure and great work we’ve been able to do and the experience we’ve gained, I want to help grow the firm’s reputation to the point that when a company thinks of hiring a bankruptcy lawyer, it thinks of looking for lawyers in New York, Los Angeles, Chicago and Delaware.” In that vein, Patton is working on an out-of-Delaware case as legal representative for future and unknown asbestos bodily injury claimants in the Babcock & Wilcox Co. Chapter 11 case in New Orleans. Patton says his biggest triumphs both deal with his work in the bankruptcies of former asbestos manufacturers. As debtor’s counsel to Fuller-Austin Insulation Co., a DynCorp subsidiary that was driven to bankruptcy because of asbestos personal injury claims, Patton put together a prepackaged bankruptcy that was completed in about a year after its September 1998 bankruptcy filing. “It was the first-ever pre-pack for an asbestos case, and it has never been done since,” he notes. Patton’s introduction to Chapter 11-related asbestos litigation was actually outside Wilmington. It was in 1992 in the Chapter 11 case of Celotex Corp. in Tampa, Fla. As the representative for future asbestos claimants, Patton managed to get the debtor’s exclusive right to write the plan of reorganization terminated, and he ended up crafting it. The case, filed in 1987, or five years before he was appointed, was wrapped up 18 months after he was hired. Undoubtedly, there will be more asbestos work for Patton down the line, either in Delaware or elsewhere. But he says he will most likely only serve as the future claims representative. “Scientists believe we will see asbestos victims all the way until 2040,” he said. “There is a huge bulge of claimants that have yet to surface.” Copyright (c)2001 TDD, LLC. All rights reserved.

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