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Laura Davis Jones knows her way around the Delaware court system. Besides growing up in Wilmington and clerking for Judge Helen Balick in the U.S. Bankruptcy Court, Davis worked on the Continental Airlines Holdings bankruptcy in 1990 that put the venue on the insolvency map. So when Robert Gottlieb, the attorney for an 18-year old college student accused of killing her newborn son in a Delaware motel, was removed from the case for violating a gag order, his replacement in Delaware wasn’t just any local hot-shot litigator. It was Jones. Fortunately for Gottlieb, his brother Lawrence is a bankruptcy attorney at Kronish Lieb Weiner & Hellman in New York. He knew Jones from working on Delaware bankruptcies. It was emotionally difficult to work on the 1997 murder case, Jones, 40, recalls. And she found herself raising legal issues unprecedented in bankruptcy cases, such as constitutional questions regarding free speech and a client’s right to counsel of her choice. In the end, the judge ruled against Jones. But the girl’s defense team in the case was so impressed with Jones that the attorneys offered Jones a spot with them. Jones declined, choosing instead to return to her bankruptcy practice and resume her role in building one of the premier debtor’s practices in Wilmington for Pachulski, Stang, Ziehl, Young & Jones, a Los Angeles-based bankruptcy boutique firm where she’s now a name partner. Indeed, it seems as if every other bankruptcy filed in Wilmington nowadays finds itself with Jones as part of the legal team. In the last eight months, Jones has taken on the big asbestos cases of W.R. Grace & Co. and Federal-Mogul Corp., industrials such as Great Lakes Metals and Steel Heddle Group Inc., dicey situations such as American Tissue Inc. and Webvan Group Inc. and telecoms such as Covad Communications Inc. But Jones isn’t an overnight success. She spent 13 years at Wilmington-based Young Conaway Stargatt & Taylor, where she represented Continental Airlines and Marvel Entertainment Group in cases which helped define the Delaware city as a premier spot to file bankruptcies. And with Wilmington’s pre-eminence in Chapter 11, her own reputation has grown. “She’s tenacious. She’s determined. She’s competent. And she can be extremely effective,” says Jay Alix, the founder of Jay Alix & Associates, the Southfield, Mich.-based restructuring firm. “She has proven she’s a top professional in her field.” When she decided to leave her senior partnership at Young Conaway, she was recruited by 22 other law firms. Three national firms offered to make her a name partner right off the bat. James Sprayregen of Chicago law firm Kirkland & Ellis, who has worked with Jones on the TWA, W.R. Grace, and AmeriServe cases among others, isn’t surprised. “I have tremendous respect for Laura’s numerous abilities in helping in a number of cases with intelligence, judgment, hard work and creativity,” he says. After graduating from the University of Delaware, and Dickinson School of Law at Pennsylvania State University, she received a clerkship with Balick, a fellow Dickinson alum, in 1986. Jones developed an affinity for bankruptcy while working with Balick. Before that, her only exposure in the field was one bankruptcy course in law school. She joined Young Conaway in 1987 and ruffled feathers immediately at the firm when she told the partners that she wanted to forgo the rounds of the different law disciplines at the firm because she knew she wanted to practice bankruptcy law. Within months, she was assigned to be the co-counsel for Hatzel & Buehler, a Delaware-based electrical subcontractor with $150 million in debt. It was the biggest bankruptcy the Delaware court system had seen up to that time. “As a brand-new lawyer who was seriously over my head, I had to do a lot of serious work in that case. And I just fell in love with bankruptcy,” Jones says, talking in her Pachulski Stang office that’s still cluttered with unopened boxes. “The case had great clients and great issues. It was one of the few successful restructuring of an electrical subcontractor.” Then Continental Airlines happened. “Everyone has one case in their career where they probably learned the most on, and it made them real happy to be a bankruptcy lawyer. For me, that case is Continental,” she says. Even though it was a Houston-based company, Continental Airlines filed for Chapter 11 in Wilmington in December 1990, beginning Delaware’s ascent as the preferred venue for major bankruptcy filings in the United States. The state by the end of the 1990s would eclipse the U.S. Bankruptcy Court for the Southern District of New York in Manhattan as the nation’s pre-eminent venue for debtors. As part of the Young Conaway team serving as debtor’s counsel — along with Morris Nichols Arsht & Tunnell — Jones was involved in the case until April 1993. “I did a lot of cases in between there, but that was probably the case that started my national reputation. I had tons of courtroom exposure,” Jones says. “In that case, we probably saw almost any issue one could see in a bankruptcy case. There were so many moving parts. “There were not enough hours in the day. It was very front and center. There was a lot of pressure, a lot of stress and I feed off of that,” she continues. “I got to learn so much so quickly.” During the Continental case, debtor attorneys were quite aggressive when it came to dealing with the aircraft leases, Jones explains. “We took the position that they were not true leases,” she says. “Therefore, we weren’t going to pay for any of the aircraft during the bankruptcy.” It was a novel position at the time. Jones’ argument was that certain leases Continental held were really financings. Her stance was instrumental in a clarification of the U.S. Bankruptcy Code �1110, which broadens the definition of leases to include the type of financings that Continental was involved with. “Since then, as a debtor’s lawyer, I’ve been pushing the envelope on a regular basis,” Jones says. Continental not only opened the door to major Chapter 11 filings in Delaware, but it proved a lucrative case for Young Conaway, which then got the lion’s share of co-counsel bankruptcy work in the state. The firms’ caseload stoked criticism at the time that there was an improper relationship between Balick, her former clerk, and her former clerk’s new law firm. “Delaware law firms weren’t placing cases in Delaware,” Jones said. “They were being placed by the major bondholders in the case who would be represented by huge New York law firms, and placed by debtors represented by huge New York law firms,” Jones says. Criticizing Balick for the flood of Chapter 11 filings or the repeated choice of Young Conaway as local counsel “shows ignorance of the process,” she says. Nor has Jones sailed through every bankruptcy she’s worked. Take her stint as local counsel for Marvel’s bankruptcy in 1996. It was a brutal case, defined by fights between high-profile investors such as Ronald Perelman and Carl Icahn and numerous lawsuits. After two years and four reorganization plans, it finally ended when ToyBiz Inc. proposed a $238 million reorganization plan in which every debt and equity class received some sort of compensation on their claims. As local counsel — Weil Gotshal & Manges served as the lead — it was hard for Davis to please everybody. It got to a point where Icahn went from being the head of the bondholders’ committee to becoming Jones’ client as Marvel’s chairman of the board. “We obviously had our strong differences of opinion,” said Edward S. Weisfelner, Icahn’s bankruptcy attorney and a partner in Berlack Israels & Liberman in New York. “But Laura, to her credit, acted with a high degree of professionalism.” As if working and going up against the legendary Icahn wasn’t enough, Jones had to also fend off Marvel’s banking group. “As the debtor’s counsel, we found ourselves having to take positions with the banks that were not constructive,” Jones recalls. In the end, everybody got something with the secured creditors leading the way with $232 million in cash, 7.9 million shares of convertible preferred stock and 13.1 million shares of common stock in the newly reorganized parent company. Despite plenty of case flow and many high-profile experiences at Young Conaway, Jones yearned for a new opportunity. “Young Conaway is a great firm,” she says, “but along with having a general practice, there is a limit to the amount of support that you can have to run national bankruptcy cases. I believe I did everything I could do within the confines of a Wilmington-based general practice firm. And it wasn’t enough for me.” Enter Pachulski Stang. Once Jones decided on their offer, Young Conaway did not produce a counteroffer. Jim Patton, chairman of Young Conaway, declined to comment. “We just agreed to part,” Jones says. “Pachulski Stang had the ability and resources to let me do what I wanted to do. There’s not a large case that I wanted to take that we had to turn down.” Norman L. Pernick, a partner with Saul, Ewing, Remick & Saul in Delaware, says Jones has recruited other attorneys for the Wilmington office of Pachulski Stang but says he’s not disturbed it. “We are fortunate enough that there are a lot of people in Delaware who are good at doing debtor’s case,” said Pernick, who represented a member of the creditors’ committee in the Harnischfeger Industries case when Jones was debtor’s counsel, as well as represented Fruit of the Loom while she represented the bondholder’s group. “She’s a pleasure to work with,” he says, “and against.” Interestingly enough, Jones’ best work doesn’t come in the courtroom. She’s known among her colleagues as being more an administrator than litigator and for having a knack for negotiating deals outside of the courtroom. “With every case I’ve worked on, she’s been very cooperative,” says Josef Athanas, a Latham & Watkins partner in Chicago who is working on the American Tissue for the company’s senior lenders. “She’ll fight if she has to, but she would rather make a deal.” Adds Cathy Hershcopf, of New York’s Kronish Lieb Weiner & Hellman, who is representing unsecured creditors in the Sweet Factory Group Inc. bankruptcy: “I’ve not had an adversarial relationship with her in any case, and she really goes out of her way to work with the committee rather than against the committee.” Jones explains that her original goal for 2000 was to open the Delaware office, and start a serious presence on the East Coast. The plan: do a lot of significant co-counsel work, and land a lead counsel case or two. “We’ve far exceeded that,” Jones says. “I think we are on people’s short list for cases in the $100 million to $500 million range to hire as lead counsel.” This year, she says, there has been a steady increase in the lead counsel mandates Pachulski Stang is getting via referrals. The firm’s case flow comes from a couple of places. In some instances, a company is represented by a big law firm that can’t represent it in a bankruptcy because of a conflict, such as it representing equity holders. “They will say ‘Take our client, go fix them, and give my client back when you’re done,’ ” Jones says. Because Pachulski Stang is one of the few remaining bankruptcy boutiques, larger firms have no problem in handing over clients for a reorganization. “One thing our firm offers is a way for people to get the bankruptcy expertise, but know that we are not trying to take their client,” she explains. “We do not want a company as a major client for our tax department 10 years from now. That’s not what we’re looking for, so it makes law firms we work with comfortable.” In 2001, Jones’ East Coast strategy has obviously involved expansion into New York. “We just have a lot of clients that have cases where the banks are in New York,” she says. The person she and Richard Pachulski recruited to start a New York office was Robert Feinstein, a veteran bankruptcy attorney with Kronish Lieb. At the time, Feinstein recalls, he never had any intention of leaving his firm, but, like Jones, was intrigued by the “firm’s reputation as a premier bankruptcy firm.” Feinstein plans to slowly grow the practice with expectation of luring in about a half-dozen attorneys into the fold. What’s next for Jones? She seems to have her hands full with the bankruptcies of Southfield, Mich.-based Federal-Mogul and Columbia, Md.-based W.R. Grace. Both filed for Chapter 11 due to the enormous amount of asbestos litigation, of which settling those claims is no easy task. But every bankruptcy has its wrinkles. Online grocer Webvan, for example, gave Jones the change to oversee what’s arguably largest dot-com auction of the year. In the case of Hauppauge, N.Y.-based American Tissue, the company has essentially been fighting for its survival on a weekly basis, having used about $8 million in debtor-in-possession funds. So where does Jones get inspired to keep such an ambitious case schedule and run a bankruptcy practice on a daily basis? “I just keep in constant contact with people in the office at all levels and truly believe in open communication,” she says, grinning. “Voice mail has been a wonderful invention for me.” What also inspires her is her late father, Harry, who died of Lou Gehrig’s disease in October at age 80. The disease, technically known as amyotrophic lateral sclerosis, is incurable. To honor his memory, she has set up a Harry F. Davis ALS fund for stem cell research and she says the local bankruptcy community has been big contributors to the cause. “He told me to make decisions,” she says. “Don’t apologize for them and act like a leader.” That said, a judgeship would seem to be in Jones’ horizon. Her name was bandied about by other attorneys when a vacancy opened up on the bankruptcy bench in Delaware in 1995. But she turned her boosters down, saying she may consider a judgeship one day, but it’s too soon. “I’ve always really enjoyed the debtor’s practice. I really put my energy there,” she says. “You can validate this with anyone: I work extremely hard and I have put an awful lot of time and energy into building my practice.” Copyright (c)2001 TDD, LLC. All rights reserved.

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