Judges expect 'tsunami' of bankruptcies

BANKRUPTCY SEMINAR: District Court of Guam Chief Judge Frances Tydingco-Gatewood, attorney Joyce Tang and U.S. Bankruptcy Judge Dan Collins speaks with The Guam Daily Post reporter Nick Delgado via Zoom about an upcoming Bankruptcy Seminar Series. Screenshot from Zoom

Community members should not wait until the last minute if they are going through financial hardships during this pandemic, a federal bankruptcy judge said.

"The time to walk to a bankruptcy lawyer is not when you are down to your last dollar. It's when you are starting to feel financial pressure," said U.S. Bankruptcy Judge Dan Collins from the District of Arizona. "There are some assets that cannot be taken from you and you need to know which ones ... you want to try to preserve as best you can."

Collins is the moderator for the upcoming bankruptcy seminar that is open to attorneys as well as business and banking community members on Guam and in the Northern Marianas.

"The pandemic has cost many people their jobs, has forced many businesses to close, and a lot of individuals are facing financial distress. I think the point that is important (is) to provide information not just to lawyers but the business community and individuals who have questions about, 'What should I do?' " said attorney Joyce Tang. "I think this seminar is designed not only for lawyers, but for individual homeowners and businesses both small and large who have loans and are facing financial distress as a result of the pandemic."

Tang said participants can ask questions about how to go about overcoming their financial struggles, especially those caused by the pandemic.

"The goal is to give people in the community some idea of how to approach their problems, and who they reach out to and plan accordingly," she said.

The panelists include Clarke Schaumann, regional country manager at ANZ Guam Inc.; Siska Hutapea, president and chief appraiser of Cornerstone Valuation Inc.; and Andrew Helman of Murray, Plum & Murray, a business reorganization and insolvency practice group in Portland, Maine.

"You need to plan, you need to strategize, you need to see what your options are, and I think that is mostly what we are trying to do is to educate both creditors, potential debtors, businesspeople, consumers, lawyers about some of the tools that are out there and understand how they can work for you," Collins said. 

Federal pandemic programs have kept the tsunami from rushing in but it's just a matter of time, he said.

"Across the country, consumer filings are significantly down year over year, and you say, 'How could that be?' Number one, they are getting bigger unemployment checks for most of this pandemic. Number two, they got Paycheck Protection Program loans for their business. Number three, banks are kind of reluctant to foreclose on people at this time because (of the) election coming up and they don't want to, in part, be targets by the politicians on the campaign trail."

'The tsunami that everyone is talking about'

However, Collins, along with attorneys and courts across the nation, including Guam, are preparing for a spike in bankruptcy cases.

"I think what is going to happen is once these moratoriums and foreclosures phase have been removed, I think you are talking about the tsunami that everyone is talking about in bankruptcy court," he said.

"I don't think there is any doubt about the fact that there is going to be filings. I read an article the other day that indicated something like a hundred-something thousand businesses across the United States have completely shut down, shuttered. People have debt and they guarantee on these businesses. They are going to have to find a method, some way and somehow to rid themselves of that and get started again, and bankruptcy is often the approach.

"I try to clean the decks (to) be completely caught up at all times because ... it only takes one huge case to completely take over a judge's docket. So that's really all you can do as a judge," he said.

Chief Judge Frances Tydingco-Gatewood, of the District Court of Guam, said she's taken steps to be prepared even with her already busy calendar as a district judge and bankruptcy judge at the same time.

"Not only am I concerned about this potential tsunami of bankruptcy cases that may come into my court, but I've also got four speedy trial, criminal cases on my docket right now," said Tydingco-Gatewood.

The seminar is scheduled for Friday, Oct. 30.

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