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Bankruptcy Courts Adjust How They’ll Tend to Battered Companies

Bankruptcy Courts Adjust How They’ll Tend to Battered Companies

(Bloomberg) -- The busiest bankruptcy courts in the U.S. are changing the ways they do business in light of the spreading coronavirus.

The U.S. Bankruptcy Court for the District of Delaware, where many of the biggest insolvent companies seek court protection, this week said it will conduct upcoming hearings via telephone or video chat unless the presiding judge orders otherwise. In the Southern District of New York in Manhattan, the court is barring people who have recently visited coronavirus hotspots from attending hearings in-person.

It’s a change of pace for the bankruptcy world, whose high-priced lawyers are accustomed to frequent travel and hallway negotiations. While remote court appearances are common, judges often require permission to appear by phone ahead of time and court dial-in systems sometimes experience glitches.

U.S. Bankruptcy Judge Dennis Montali, who is presiding over the massive PG&E Corp. bankruptcy, said this week all hearings in his courtroom will be conducted by telephone until at least April 17.

Judges sometimes tell deadlocked parties in heated cases to hash out deals in person. Notably, a hallway bidding war determined financing in the high-profile Sears Holdings Inc. bankruptcy, and in the ongoing Sanchez Energy Corp. case, Judge Marvin Isgur last week ordered stakeholders to meet within a one-mile radius of the courthouse for negotiations.

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