AIRA committees and individual members have worked on a number of significant legislative issues that affect the bankruptcy practice field. Over the years they have proposed Bankruptcy Code amendments, testified on Treasury Regulations and submitted recommended changes on bankruptcy and tax issues. AIRA proposed changes to fresh start reporting for tax purposes to reduce some of the tax loss resulting from repeal of the stock-for-debt exception, and suggested improvements to operating reports required by the U.S. trustees, among others. Presented below is a summary of some of these activities.
The AIRA has submitted a comment letter in response to the FASB's Exposure Document, on the liquidation basis of accounting. AIRA's Comment Letter
The United States Trustee in November 2014 released its draft proposal for revised fee guidelines for attorney compensation in larger chapter 11 cases. A committee appointed by AIRA's Board reviewed these guidelines and submitted a comment letter to the USTP. Read letter
In September 2015, the GAO issued a significant report dealing with guidelines for attorneys' fees and venue selection for large Chapter 11 cases. Read letter
CONGRESSIONAL TAX BILLS—The Association has made recommendations on several occasions regarding debt discharge provisions under Section 108 and preserving net operating losses under Section 382.
SOP 90-7 (ASC 852)—The AIRA developed a written response, after obtaining input from members, to a proposed Statement of Position (SOP) issued by the AICPA Task Force on Financial Reporting by Entities in Reorganization Under the Bankruptcy Code. The final statement (SOP 90-7) was issued in November, 1990. Two members of AIRA’s Board were appointed to serve on the Task Force.
U.S. TRUSTEE PROGRAM—The AIRA made the following recommendations to Congress with regard to improvements needed in the U.S. trustee program:
COMMENT LETTER TO FASB ON SOP 90-7—AIRA’s letter was among six comment letters received on the proposed FASB Staff Position (FSP) SOP 90-7-a, An Amendment of AICPA Statement of Position 90-7. An FASB internal document stated:
The Association of Insolvency and Restructuring Advisors (AIRA) requested that the Board add financial reporting in bankruptcy to its agenda and to consider the supporting materials submitted to the FASB in April 2006. Other respondents were concerned about a lack of guidance surrounding FASB Statement No. 141(revised 2007), Business Combinations.
AIRA ON KERPS
AIRA was quoted by Judge Lifland in a decision regarding the use of KERPs in In re Dana Corporation. Judge Lifland noted:
Senator Edward Kennedy proposed the amendment to section 503 of the Bankruptcy Code as a last-minute addition to the bill, expressing his concern over the “glaring abuses of the bankruptcy system by the executives of giant companies like Enron Corp. and WorldCom Inc. . . . Other members of Congress were concerned that Senator Kennedy’s amendment would preclude responsible companies that needed to retain key employees from being able to reorganize successfully . . . In a letter to Senator Arlen Specter, Chairman, Committee of the Judiciary, the Association of Insolvency and Restructuring Advisors also expressed its concern that the bill could cause considerable harm to companies in bankruptcy and suggested that, “there must be a better approach than handcuffing the judiciary and stakeholders in bankruptcy cases by essentially precluding all KERPs.” [Emphasis added].
AIRA RESPONDS TO AICPA EXPOSURE DRAFT ON VALUATION
The Association of Insolvency and Restructuring Advisors (“AIRA”) is pleased to comment on the AICPA 10/16/06 Exposure Draft, Proposed Statement of Standards for Valuation Services, Valuation of a Business, Business Ownership Interest, Security, or Intangible Asset (the “Statement”). We are broadly supportive of the AICPA’s project to establish standards for its members who provide valuation services. We note that the Statement reflects the AICPA’s sensitivity to prior comments provided to it by the AIRA regarding an exemption for court or administrative proceedings. We support the changes made by the AICPA to establish this exemption from the reporting provisions of the Statement.
There are numerous instances where valuation procedures are utilized in the insolvency process. In our review of the Statement we identified additional areas where we believe it would be helpful for the Statement to be more explicit in that regard. These are noted below:
LETTER TO CONGRESS ON CHAPTER 11 AND THE AUTO INDUSTRY—December 8, 2008
In the fall of 2008 Congress was involved in months of debate and conflict over possible solutions to the staggering problems of the U.S. auto industry. The Association’s Board of Directors drafted and sent a letter to members of Congress summarizing key ways in which the Chapter 11 process could offer relief and rehabilitation to the severely distressed. automotive industry:. Click here to read the entire text of the letter.