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Credit Q&A - Bruce Nathan

Bankruptcy & Restructuring Department, Lowenstein Sandler LLP

Bruce Nathan, Partner with Lowenstein Sandler, has more than 40 years of experience in the fields of bankruptcy and insolvency and is a recognized leader in trade creditor rights nationwide. Recently, Bruce shared some insights on his career.

How did you decide to focus on bankruptcy law?

When I was in law school at the University of Pennsylvania, my roommate encouraged me to apply to the Wharton School for an MBA. I wasn’t sure that I wanted to continue with more school. I was worried about the additional financial strain on my family, but my mother pushed me to apply (and ultimately I was accepted) and said that she’d help pay for my additional education. It was the best decision I could have made. Having an MBA has made me a more effective bankruptcy and restructuring lawyer. It has helped me in analyzing the operational and financial issues facing distressed companies. After four years pursuing a J.D. and MBA, I was at a crossroads; I wasn’t sure what I wanted to do. I loved business school and I didn’t know if I wanted to practice law or work in finance. In my fourth year of school, I took a class called Bankruptcy and Creditors’ Rights, with an incredible professor, and it was at that point that I knew I wanted to become a bankruptcy and creditors’ rights practitioner. I found that I had a passion for this legal area, which was reinforced by the secured transactions and bankruptcy thesis courses I also took. The timing was perfect, because the Bankruptcy Code was passed in 1978 and then became effective in 1979. As my mom had predicted, I got in on the ground floor as part of the first generation of bankruptcy lawyers that created the foundation for our bankruptcy practice and for the credit-oriented law that credit professionals deal with on a daily basis.

What are your primary responsibilities at the firm?

I have been a partner at Lowenstein Sandler for nearly 20 years and served on their Executive Board for more than 10 years. I represent larger and middle-market companies’ credit departments and deal with bankruptcy, financing-related risk mitigation, collection, antitrust, and various regulatory and other credit-related legal issues, all with the goal of maximizing recovery on our clients’ secured or unsecured claims and minimizing risk of nonpayment from financially distressed customers. A large part of my practice also includes representing creditors’ committees focusing on industries such as food, book publishing, paper, chemicals, floor covering, metals, and manufacturing.

Can you describe your typical work day? I hear you keep interesting hours.

I’ll describe this in two ways–pre-pandemic and pandemic. Pre-pandemic, unless I was traveling for a speaking or other networking event, I’d start working from home at about 6:30 a.m. I don’t like to go into the office with a stack of emails waiting for me, so I’d answer emails from the night before first thing, after I woke up. I would take the train at around 9 a.m. to New York City, and the conductor wouldn’t even ask for my ticket; they’d see me set up with my papers spread out, say good morning, and let me work on my commute! I’d arrive at the office and work for clients from about 9:30 a.m. until 6 p.m. I would then do all speaking- and writing-related work from 6 p.m. to 9 p.m. and frequently later. My assistant, who’s been with me since 1989, worked with me from 9 to 5; then I worked with a night secretary who was there usually until 9 p.m. (and frequently later), who assisted in preparing my PowerPoints and other presentation materials, articles for various publications, and other marketing materials.

Then I’d take the train home around 9 p.m. and frequently later, catch a nap during the ride and somehow not miss my stop (the nice conductors would sometimes wake me up), and then take a break at home with my family. Typically, I’d wake up at 3 a.m. and start working again! Some clients would see my emails coming in at all hours and ask if I was a vampire, and why I wasn’t sleeping! The truth is that I do catch a quick nap here and there at night.

During the pandemic, I’ve been working from home, so I miss my commute. The ride into the office would always set me up for the day, and the ride home would be my way to come down from office stress, so I miss that immensely. My days are hectic, so relaxing on the train was essential for me so that I wouldn’t come home to my family in a craze. So, I had to figure out a new way to conclude my workday from home. I start my day at about 6 a.m., and usually work until about 7 p.m. I “commute” from my home office down the stairs to join my wife and we have dinner at 7 p.m. We then spend an hour or so together, until I fall asleep, and I then wake up around 2 a.m. and work until 5 a.m., the vampire routine again! I’ll catch another couple hours of sleep, and then wake up at 7 a.m. and start all over again. It’s very frenetic, but I love what I’m doing. Also, I do catch-up work and writing and speaking materials on the weekends!

What would you say has been your greatest accomplishment in your field?

I am one of the few lawyers whose practice corresponds with the legal issues facing credit professionals, such as bankruptcy, collection, finance, antitrust, and various regulatory issues. My greatest accomplishment has been my development as a trade creditor expert with over 40 years’ experience dealing with the legal issues facing credit professionals. I have been honored to have been invited to speak and write articles for various credit organizations, such as the National Association of Credit Management (NACM), Credit Research Foundation, and multiple credit groups in various industries, including groups sponsored by ABC-Amega, Riemer, and other credit organizations, and after more than 30 years, I have become a trusted legal advisor to the trade. I am honored to consider the trade as part of my family and have shared my celebrations, such as my daughter’s wedding and my becoming a grandfather, during my speeches and other networking events. Credit professionals have reached out and congratulated me and asked how the wedding went or how the baby is doing, and that is very special to me. If I ever slow down practicing law, I intend to continue speaking at various credit group meetings. This challenges me to continue learning and providing valuable legal education for the credit industry.

Another career highlight was through my work with NACM. I was involved in drafting legislation and working toward Congress’ passage of the 2005 amendments to the Bankruptcy Code that got trade creditors’ section 503b9 administrative priority status and preference reform, which made it easier to prove the ordinary course of business defense to preference claims.

I also chaired the Avoiding Powers Committee that worked with the ABI Commission to Study Chapter 11, focusing on issues related to preference claims. I was instrumental in arranging for the Commission to hold one of its hearings at an NACM Credit Congress and worked with the trade creditor witnesses who testified before the Commission about the operation of and their suggested changes to the preference statute. The Commissioners regarded this hearing as one of their more insightful hearings. The Commission accepted some of the Committee’s suggested changes to the preference statute, which were incorporated in the recently enacted Small Business Reorganization Act of 2019.

I have had great success for my clients over the years, including significant recoveries for my trade creditor clients in cases where I led the engagement representing Creditors’ Committees and large savings in defending preference actions against clients, and in counseling on risk mitigation options.

Where do you see the field of bankruptcy law in the future?

Bankruptcy has been on a roller coaster the past few years. In 2020, with the onset of the pandemic and the initial shutdown of the U.S. economy, Chapter 11 filings were at the highest level since 2008. But then toward the end of 2020 and into 2021, and continuing into 2022, Chapter 11 filings have plummeted because of all the cash in the economy from the massive stimulus packages enacted by the federal government and the low interest rate easy money policy implemented by the Federal Reserve. We’re now at a tipping point. With inflation spiraling from commodity price rises and labor shortages, the risk of interest rate increases and other contraction efforts by the Federal Reserve increases the probability of an increase in Chapter 11 filings sometime in the second half of 2022 and continuing into 2023. The risk of a Fed overreaction and the resulting increased recession risk could be an additional cause for an increase in Chapter 11 filings. However, if inflation moderates during 2022 and there is a limit to the increase in interest rates, Chapter 11 filings might continue at their current depressed levels. The bottom line is there will always be Chapter 11 and other bankruptcy filings. There will always be troubled customers. The key is to identify them early enough to mitigate the risk of nonpayment and secure payment of claims to minimize losses.

What advice would you give someone thinking of entering the field?

First thing is, love thy work. I love bankruptcy, I love creditors’ rights. I have a great passion for all aspects of representing unsecured trade and other creditors and all the legal issues they face. When I started practicing law, I spent a lot of time keeping abreast of bankruptcy and other credit law developments relevant to my practice. Young folks starting out should also have a passion for bankruptcy, and need to keep abreast of developments.