The business of covering bankruptcy court: Knowing sources

By Josh Mills

Get familiar with the concepts of and potential sources bankruptcy coverage, because you’re likely to see a lot more of it in coming months, a panel of experts on bankruptcy told dozens of SABEW members in a conference call Wednesday.

"We haven’t yet seen the second wave of insolvencies” stemming from the real estate-mortgage-credit issues of the last year, said Henry F. Owsley, (right) a founding partner of the Gordian Group in New York City, which specializes in restructuring financially distressed businesses. Calling his practice a leading indicator of bankruptcy activity, he said “our business picked up significantly in the first quarter of this year.”

Owsley added, “With the inflation in crude oil, natural gas and other commodities and the inability to pass price increases onto consumers, this will lead to more financial distress for companies, and more down the road.”

That view was seconded by Vikas Bajaj, a business reporter at The New York Times. "It should be a fascinating couple of years,” he said. “I’m skeptical that we’re getting back to normal quickly.”

Bajaj and Owsley were joined by Samuel J. Gerdano, executive director of the American Bankruptcy Institute, and Sandra Block, a personal finance reporter at USA Today, in a SABEW tele-training session on “Boning Up on Bankruptcy,” moderated by professor Chris Roush of the University of North Carolina at Chapel Hill.

More than six dozen SABEW members participated in the call.

Bankruptcy can be a complex process, and good reporting requires good sources. "I spend a lot of time talking to lawyers, and many of them are very helpful in explaining things and also in identifying trends,” said Block.

She also said she was pleasantly surprised that lawyers were willing to direct her to clients who were filing for bankruptcy protection. “Debt has become such a pervasive part of our society that people are willing to talk to it,” she said.

Bajaj noted that not just lawyers, “but clerks and paralegals at the bankruptcy courts can be very helpful, also.”

The panelists suggested the journalists pay particular attention to how less affluent consumers and businesses with fewer resources are faring.

"The most vulnerable, those who need the most help, may not have the resources to open the courthouse door," Gerdano said.

And Block said she had seen many Latinos and immigrants “run into a lot of language problems -- a double-barreled problem, not that many attorneys, and not that many with the language skills.”

Audio of the call will be posted on the SABEW web site on Thursday.

Posted June 25, 2008