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Barry Caplan Featured in the Portland Business Journal

April 15, 2011
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Caplan's roots aid bankruptcy career
Portland Business Journal by Andy Giegerich
Friday, April 15, 2011

Business runs deep in attorney Barry Caplan's blood.

First, there's the bankruptcy specialist's pedigree. His father and uncle owned the Caplan's sporting goods store in downtown Portland.

"I grew up in a business family where we talked about business around the dinner table," Caplan said.

There's also his experience. Caplan has practiced law since the mid-1960s, when he was a deputy district attorney. In 1968, he moved to Portland-based Sussman Shank LLP, where he's remained since.

"I was the fourth person here, and we were business lawyers first," said Caplan.

While accumulating a wealth of institutional knowledge along the way, he's also earned raves as a bankruptcy and creditors' rights expert who's weathered industry trends and who remains, at a very spry 70, an in-demand counselor.

He's also a keen economic observer who's learned to gauge his clients' fortunes by analyzing whatever bankruptcy data is available.

Lately, he favors simple Chapter 11 filings, which he's tracked over the last five years. In 2006, there were 19 Chapter 11 filings. The number crept up to 24 in 2007, then exploded to 64 in 2008 — year one of the recession from which Oregon and the nation continues to recover — before stabilizing at 59 in 2009.

There were 65 Chapter 11 filings last year.

"My feeling is, we've reached the bottom, but we can't crawl back quickly and it may take a while" for matters to stabilize, Caplan said.

These are not normal times, he added. In 2006 or 2007 a case might arise where a big business fell on hard times, but one could still find new financing or buyers, or conduct an orderly liquidation with a return.

"Recently, not all business failures have ended up in Chapter 11 bankruptcy," Caplan said. "Using receivers in state and federal courts has become a more frequent remedy for secured lenders and failing businesses."

Among other skills, Caplan excels at advising clients on bankruptcy reorganization. He's worked for debtors, creditors, creditor committees and asset purchasers.

On the debtor side, he's handled cases involving Hanna Car Wash, Larry's Sports Center, Rubenstein Furniture and Trinity Carpet Brokers Inc.

Caplan also represented Oregon Arena Corp. as local counsel for the Rose Garden Arena owner's 2004 Chapter 11 case.

Caplan encourages clients to be prudent before taking drastic bankruptcy steps.

"For every formal case, we have three or four other cases where we're working things out before filing anything," Caplan said. "If a business is starting to have problems of any sort, they need to get to the right place where they can get help they need. Because problems can be solved more cheaply and easier" than automatically seeking bankruptcy protection, he said.

He also implores companies to change with the times even if they're operating smoothly.

"You need to start by knowing your own business and analyzing it," he said.

Often companies that appear strong during a good economy aren't run as efficiently as they should be, he said. When the economy sours and they lose revenue, they realize belatedly that their margins were weak.

"When the tide goes out, you find out who's swimming without their swimsuit on."

Caplan brings a great deal to the legal table, according to Aaron Besen, a Sussman Shank colleague. Caplan's an "outstanding lawyer," Besen said.

"People don't often think of bankruptcy lawyers as business lawyers, but working with Barry taught me that most bankruptcy deals really are business issues," said Besen, who specializes in health care cases. "It's often better to solve those problems outside of bankruptcy court in a non-judicial format. It's usually cheaper and quicker and much more practical for the clients."

Pay-off for Emporium creditors
Barry Caplan further served as co-counsel for the creditors committee that handled the 2003 Chapter 11 case of North Bend-based Troutman's Emporium. Working with New York-based lead counselors and Troutman's representatives, Caplan helped craft a plan that paid creditors more than 60 cents on the dollar.

"That was somewhat unexpected, but between running going-out-of-business sales and transferring designation rights on leases of closed stores, the recovery on available assets was very significant," Caplan said. "By paying off the lender quickly in the case and getting help from financial consultants and forensic accountants, we were able to achieve a higher-than-expected return to the creditors."

In recent years, Caplan has helped creditors of Sunwest Management Inc. the senior care and housing provider that collapsed in 2008.

He also began representing noted turnaround expert Ed Hostmann when Hostmann became the receiver in North Pacific Group Inc.'s liquidation case. The case landed in U.S. District Court. Caplan said Hostmann "satisfied the very substantial secured lender debt." When the case is completed, the receiver hopes to distribute a to-be-determined dividend to North Pacific's unsecured creditors.

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