| In 2024, the issues of forum-selection and venue reform were again at the forefront of nationwide discussions about bankruptcy. Regardless of one’s views on the topics, forum considerations must be at the top of the pre-bankruptcy planning list for debtor’s counsel in a large chapter 11 filing. There are fewer available forums in health care cases, however, because of the often-limited geographic scope and localized practice of health care companies such as community hospitals, nursing facilities and physician groups. In these cases, some of the more common forums like Delaware, the Southern District of New York and the Southern District of Texas
simply might not be viable. Instead, it might be necessary or more appropriate to file in a forum that has a lesser volume of large chapter 11 cases. What then?
In 2023 and 2024, McDermott Will & Emery LLP partnered with Nyemaster Goode P.C. and collectively led Mercy Hospital (Iowa City, Iowa) and its affiliates (collectively, “Mercy”) through their complex chapter 11 cases in the Northern District of Iowa. Felicia Gerber Perlman, Daniel Simon and Emily Keil of McDermott, and Roy Leaf and Kristina Stanger of Nyemaster, teamed up as co-counsel and guided Mercy through a sale of substantially all of its assets to the State of Iowa’s University of Iowa and a successful confirmation of a proposed chapter 11 plan of liquidation. Here is our advice for how to maximize the partnership between local and national bankruptcy counsel, particularly in jurisdictions that do not have a large volume of corporate chapter 11 filings.
Tips for National Counsel Communication:
- Communication: The key to a successful partnership with local counsel is frequent and transparent communication. Because local counsel may be handling different workstreams than its national counterpart during a chapter 11 case, it is important to keep local counsel apprised of critical case and strategy updates to help ensure that everyone is on the same page and moving collectively toward a common goal. Though the expected availability of local counsel may be different than that of a national firm, it is still important to keep local counsel in the loop at all times.
- Teamwork: Given local counsel’s expertise regarding local rules, practices and procedures, their experience with other members of the local bar, and their prior local case experience, it is critical that a national firm work in tandem with local counsel throughout the pendency of a chapter 11 case. Not only can teamwork with local counsel ensure significant cost savings for the estate in legal fees and expenses, it can also facilitate compliance with necessary rules and procedures that might not be readily apparent to a national firm, and provide a helpful liaison between national counsel and other local practitioners and court personnel. Such joint efforts are typically encouraged by judges in jurisdictions with fewer complex chapter 11 filings from both a cost-savings and local-bar-involvement perspective.
- Delegation: It is easy for a national firm to fall into the trap of using local counsel only for administrative tasks, failing to utilize their unique skills and abilities. Avoid this mistake and trust your local counsel counterpart to handle substantive, meaningful workstreams. Given their expertise discussed above, local counsel is often the appropriate party to handle issues specific to governing state law, communications and negotiations with local vendors and practitioners, matters that impact the lives of local residents, and presentations to the court regarding the same.
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