The Business Advisor - Summer 2018

Karen A. Giannelli

(973) 596-4505


Message from the Department Chair:

Dear Colleagues and Friends,

Welcome to the Summer 2018 edition of The Business Advisor. Introduced below by FR&CR Department Director Natasha Songonuga, this edition features one guest article written by two guest authors about the new and revised ASTM standards for environmental liability valuation, recognition, and disclosure, which will greatly impact bankruptcies that involve environmental issues. In addition, Brett S. Theisen, an Associate in the FR&CR Department, authored a very timely article on marijuana bankruptcies, originally published on, where it was one of the most widely read articles for the week it appeared. And one of our Gibbons FR&CR Department Directors, Howard A. Cohen, summarizes the strategies employed and lessons learned in connection with a recent award-winning client representation. I hope you find each of these articles informative.

I’d like to use the remainder of this welcome message to invite you to join me at the upcoming ABI “Bankruptcy 2018 Views from the Bench,” which will be held on September 21 at the Georgetown University Law Center in Washington, DC. As a member of the 2018 Advisory Board, I know that this 29th annual Views from the Bench will address cutting-edge issues, provide substantive educational programming, and feature leading attorneys, jurists, and other professionals from all over the country.

Two great debates will form the centerpiece of the program:

  • Judge Dennis Dow will debate with Judge Marvin Isgur in “Resolved: The interest rate for plan confirmation in Chapter 11 should be governed by Till v. SCS Credit Corp.
  • Craig Goldblatt of WilmerHale will debate with Michael Bernstein of Arnold & Porter in “Resolved: A trademark licensee retains the right to use a debtor’s trademark post-rejection under Mission.”

Breakout panels will address other groundbreaking issues and hot topics, including claims and claims trading, ethics, confirmation issues, and third party releases, the last of which I will facilitate. The day will end with a cocktail reception.

Views from the Bench provides an excellent opportunity to connect with leading professionals, learn from jurists around the country, and network. To learn more about the conference, including information about registration and cost, please visit or or #ABIViews. I hope to see you there!

Karen A. Giannelli, Esq.
Chair, FR&CR Department

Introduction to Our Guest Article:
By: Natasha Songonuga

This edition of The Business Advisor features a guest article by Jeff Andrilenas, Executive Vice President and Environmental Lead at The TBLS Group, a transaction-focused environmental valuation advisory firm in New York and New Jersey, and Jerome Devillers, CPA and Partner at Mazars USA, a global accounting firm.

Mr. Andrilenas’ and Mr. Devillers’ article is entitled “The Game-Changing Impacts of Revised and New ASTM Standards for Environmental Liability Valuation, Recognition and Disclosure.” Gibbons and TBLS collaborated and presented a game-changer panel on the New ASTM Standards and the potential bankruptcy impact in April 2018, to members of the Commerce and Industry Association of New Jersey.

In the article, the authors discuss the 2017 revisions made to the ASTM International Standards, which are designed to help businesses assess and manage environmental risks and estimate costs and liabilities for environmental matters. The revised standards were developed to reflect certain current best practices in that they now require, among other things, that reporting entities measure estimated environmental liabilities using a fair valuation standard.

Industry-wide adoption of the ASTM’s fair market valuation standards, and, in particular, revised standard E2137 (which addresses estimation of environmental liabilities), bodes well for financial market participants, including lenders and investors, as it requires more accurate reporting and valuation standards over the prior “Expected Value Methodology,” which should provide a clear understanding of the financial health and risks of businesses with potential environmental liabilities. However, as these revised standards become the industry norms, one should expect an increase not only in valuation disputes but also an increase in the volume of regulatory and investor/lender/creditor litigations, including litigation relating to the use of such revised standards and inadequate valuation of environmental liabilities.

In the bankruptcy context, such increased litigation may likely surface in breach of fiduciary duty claims and investor fraud actions against officers and directors involving allegations assert that a bankrupt entity failed to provide adequate disclosure of its environmental risks or failed to accurately estimate environmental liabilities and provide sufficient reserves pre-bankruptcy in compliance with the fair market valuation under the revised ASTM standards. Increased litigation may also result from the use of a debtor’s pre-bankruptcy fair market value estimate. You may see such estimate used as a shield by the debtor in its negotiation with governmental entities, such as the EPA, as the maximum potential liability of the debtor’s contingent environmental liabilities, or as a sword by creditors where the pre-bankruptcy valuation showed the debtor to be insolvent, triggering a duty to creditors by management upon such discovery, which may lead to additional fraudulent transfer claims and/or breach of fiduciary duty claims.

Bankruptcy practitioners, whether representing debtors with environmental liabilities or creditors in such bankruptcies, should familiarize themselves with the ASTM standards and the potential risks to (i) management, accountants, and appraisers in a future bankruptcy case if the revised fair market valuation standards are not followed pre-bankruptcy; and (ii) the debtor, if pre-bankruptcy valuation is used against the debtor to set liability in a subsequent bankruptcy estimation proceeding.

We are pleased to have The TBLS Group and Mazars USA as guest authors this quarter.


The Game-Changing Impacts of Revised and New ASTM Standards for Environmental Liability Valuation, Recognition, and Disclosure
By: Jeff Andrilenas, Environmental Lead of the TBLS Group, LLC in collaboration with Jerome Devillers, CPA and Partner at Mazars USA

After conducting a major initiative to provide more consistent and comprehensive guidance to environmental professionals relating to the estimation and management of environmental matters, ASTM International has revised two technical standards on the Disclosure of Environmental Liabilities (E2173-16) and Estimating Monetary Costs and Liabilities for Environmental Matters (E2137-17) and has added a new standard for Recognition and Derecognition of Environmental Liabilities (E3123-17). The changes are designed to mesh ASTM’s guidance with existing Generally Accepted Accounting Principles (GAAP) and other accounting requirements companies consider when making decisions relating to the evaluation, recognition, and reporting of environmental liabilities. Clients and their advisors, including environmental, engineering, accounting, and auditing professionals, as well as legal counsel, should familiarize themselves with the requirements of these new standards, because, like GAAP, these standards inevitably will become the commonly accepted ways of estimating and managing environmental obligations.

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Options for Failing Marijuana Cos. and Their Creditors
By: Brett S. Theisen
Law360, June 15, 2018

In 2012, Colorado and Washington became the first states to legalize the sale and use of recreational marijuana. Additional states have followed with both recreational and expanded medical use laws, and the “legal” cannabis industry has seen tremendous growth. Colorado’s marijuana tax revenues increased over 57 percent from fiscal year 2015-16 to fiscal year 2016-17; other states have experienced similar revenue surges. A recent study found that nationwide legalization would create at least $132 billion in tax revenue and more than a million new jobs across the United States in the next decade.

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Chieftain Sand: Strategies Employed and Lessons Learned in Connection with Gibbons Award-Winning Representation
By: Howard A. Cohen

Global M&A Network named Gibbons the winner of its prestigious Turnaround Atlas Award, Special Situation M&A Deal ($25 to $50 million) category, at the organization’s 10th annual gala. The firm was recognized for its representation of Chieftain Sand and Proppant, LLC in connection with its chapter 11 proceeding and the sale of the company to Mammoth Energy Services, Inc.


Karen A. Giannelli and Mark Conlan have joined the National Association of Federal Equity Receivers (NAFER) Judicial Outreach Committee, which is an outreach to federal district court judges and magistrates to provide education in evaluating and supervising the appointment of federal equity receivers in their cases.

Karen A. Giannelli has joined the Bankruptcy & Restructuring Affinity Group of the National Association of Women Lawyers (NAWL).

Howard A. Cohen authored an article for the American Bankruptcy Institute (ABI) Asset Sales Committee newsletter, entitled “Key Provisions in Bankruptcy Asset-Purchase Agreements.”

Karen A. Giannelli was selected as a member of the Rutgers Law School 2019 Reunion Committee.

Natasha Songonuga was selected as a member of the International Women’s Insolvency & Restructuring Confederation (IWIRC) Delaware Network Social Committee.

On May 28, 2018, David N. Crapo was appointed the patient care ombudsman (“PCO”) in the jointly administered bankruptcy cases of EBH Topco, LLC and its affiliates (collectively, “Elements Behavioral Health”). Elements Behavioral Health provides substance abuse disorder and mental health treatment (including detoxification) on a residential basis at thirteen facilities in eight states. Outpatient treatment (intensive and standard) is provided at additional locations in the same eight states. As PCO, Mr. Crapo will monitor the quality of patient care and safety at the treatment centers, including facility inspections and interviews of patients and staff. This is Mr. Crapo’s second appointment as a PCO for a behavioral and mental health facility. He recently completed such an appointment at the Girard Medical Center and Goldman Clinic in the North Philadelphia Health System bankruptcy in Philadelphia.

Mr. Crapo also participated in a panel entitled “Fallout of Healthcare Consolidations: Who Will Be the Winners and Losers?” at the American Bankruptcy Institute Mid-Atlantic Workshop on August 2-4, 2018 in Hershey, Pennsylvania.


Gibbons Selected as One of New York’s Best Workplaces for Second Consecutive Year (July 17, 2018) 

American Lawyer Ranks Gibbons 46th Nationwide in Pro Bono Survey (July 11, 2018)

Gibbons Earns Nationwide Great Workplace Certification for Third Consecutive Year (June 21, 2018)

Gibbons Featured in the 2018 Chambers Associate Guide (June 20, 2018)

 Gibbons is headquartered at One Gateway Center, Newark, NJ 07102; (973) 596-4500

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