The Small but Essential Handbook of Basic Bankruptcy Law--Lawyer's Edition
By Thomas W. Coffey, Scott J. Kelly, and Krista L. Kaleps
Casemaker Print Publishing
2005, 274 pages, $28.95
ISBN 0976656523

For both transactional as well as litigation lawyers, the world of bankruptcy can seem daunting. It is neither purely one nor the other, but rather a hybrid of the two fields of law, with rules and courts of its own. For many of us, the word "bankruptcy" elicits a negative feeling, but our understanding of the subject does not extend much further.

Luckily, The Small but Essential Handbook of Basic Bankruptcy Law comes to our rescue. The easy-to-read book gives the nonbankruptcy lawyer a basic working knowledge of the subject. It provides sufficient explanation to allow a nonbankruptcy lawyer to have an intelligent conversation with a client on the subject and realize when a bankruptcy specialist is necessary.

In addition to providing a great summary, the book includes definitions of terminology commonly used in the bankruptcy world. So, next time you find yourself at a cocktail party and someone mentions "DIP financing" or "cram down" you can join in the conversation instead of eating an additional chicken skewer.

The book also does a great job of relating the world of bankruptcy to other areas of law. For example, a business lawyer should know that when advising a client who is interested in purchasing assets from a distressed company in a "fire sale," it is better to enter into a transaction after the seller has filed bankruptcy in connection with a "363 sale" rather than a prebankruptcy transaction, which may be subject to an unwinding or reversal by the court. Such sales can later be characterized by the court as fraudulent or "preference" payments, whereas "buyers of assets in bankruptcy cases traditionally get very clean title."

In addition, lawyers who represent lenders should take careful note of the level of scrutiny the bankruptcy court puts on lending transactions. For example, if an otherwise secured loan is not properly perfected under the Uniform Commercial Code or recorded in the real estate records, a secured creditor can quickly be pushed to the back of the line with other unsecured creditors. Defects can include "failing to file a mortgage, financing statements, or mechanic liens notices; filing in the wrong office or not all required offices; filing improperly signed or drafted documents; or failing to file notarized documents where required, in some cases."

Other useful aspects of the book are its checklists and lists of important questions to ask when an individual is considering bankruptcy. For example, one should never borrow from a retirement account to pay debt because creditors cannot reach those funds in a bankruptcy. Another notable point is that educational loans are generally not dischargeable in bankruptcy. Yes, even bankruptcy will not make those law school loans go away!

One fact that all practitioners should realize is that while bankruptcy is always filed in the federal court system, many aspects of bankruptcy are state specific. For example, the homestead exemption afforded to Florida and Texas residents is significant compared to the rather low one available to residents of Ohio.

The book devotes an entire chapter to the Bankruptcy Reform Act of 2005, which is especially useful to those who may have practiced bankruptcy in the past but are in need of a quick update. The act, among other things, makes it more difficult to qualify for a discharge (cancellation) of debt and forces most middle-income parties to repay their debt under a Chapter 13 plan.

The author pulls no punches. For example, it refers to the 2005 Reform Act as "fundamentally flawed legislation" drafted by "lobbyists for the credit card issuers and bankers" and catered toward creditors.

The full text of selected bankruptcy statutes as well as the full text and summary of two Supreme Court bankruptcy cases are included as appendices. Appendix III has a comprehensive list of Web sites, which serves as an excellent reference. While a glossary of terms would be useful as an easy reference, the book does include an index and a detailed table of contents, which direct the reader easily through the book.

Overall, for $28.95, the book is a bargain. Given its short length of 98 pages (exclusive of appendices), it is a much cheaper and less time-consuming option than a comparable continuing legal education course on the subject.

By the way, if you do find yourself at a cocktail party in need of a conversation topic, an interesting tidbit pointed out in the book is that the word bankruptcy comes from the phrase "banca rotta," which means "broken bench" in Italian.