Ingram and Debitetto on Bankruptcy and Compliance Programs | Health Care Compliance Association (HCCA) – JDSupra – JD Supra

Posted: November 5, 2021 at 10:00 pm

Theres no guarantee that any company wont end up in Chapter 11 or wont acquire another company going through it. When either happens, there are serious implications for the compliance team.

As Kasey Ingram, General Counsel & Chief Compliance Officer at ISK Americas and Rocco Debitetto, Partner at Hahn Loesser & Parks explain in this podcast, while the importance of compliance doesnt change during a bankruptcy, the environment in which it operates transforms Seemore+

As Kasey Ingram, General Counsel & Chief Compliance Officer at ISK Americas and Rocco Debitetto, Partner at Hahn Loesser & Parks explain in this podcast, while the importance of compliance doesnt change during a bankruptcy, the environment in which it operates transforms dramatically.

Chapter 11 is designed to help the company breathe, reorganize, redeploy its assets and hopefully continue to operate. But while for rank and file employees it is likely business as usual (with a good amount of stress added) for management its a frantic time. More, who and where compliance reports may be very different.

The debtor in possessions appoints officers and managers to run the company, and these individuals may be different than the people the compliance team had reported to. They also are focused on, as quickly as possible, saving the company and getting it back on its feet. Compliance is not a priority.

As a result, its important for compliance to do two things quickly. First, make sure the new management knows who the compliance team is and what it does. Second, let them know that you are not there to get in the way but to help avoid potential problems that will add greater complexity to the reorganization efforts.

On a tactical level theres a need to ensure that leadership, when reviewing contracts, knows which ones are essential to running the compliance programs. Canceling the helpline contract, for example, may save money but should not be on the table.

Compliance also needs to be on the lookout for empty chairs. Chapter 11 is typically a time when there is substantial turnover. Keep a vigilant eye out for departures by people who have compliance responsibilities, and be prepared to backfill the positions.

What happens if your company is healthy and acquiring a company out of Chapter 11? Expect insufficient time to do the standard due diligence.

The good news is that the US Department of Justice generally understands that post-acquisition due diligence may be necessary, but dont wait too long to do it. Then if you find issues, be sure they are addressed promptly.

In sum, even if bankruptcy seems far away, its worth taking the time to listen to this podcast. Even seemingly healthy companies can take a sudden downturn, or acquire another entity that is in Chapter 11. Seeless-

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Ingram and Debitetto on Bankruptcy and Compliance Programs | Health Care Compliance Association (HCCA) - JDSupra - JD Supra

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