THE CHAPTER 11 SPECIALISTS

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Snapshot: Donlin, Recano & Company, Inc.

Monday, May 22, 2006 --- For bankruptcy services firm Donlin, Recano & Company. Inc., launching the first creditor information site regarding entertainment retailer Musicland Holdings Corp. is noteworthy but not unusual for a business that considers itself a pioneer in the Chapter 11 world.

In the wake of the new bankruptcy law passed in October, the firm decided that it needed to provide the service since the legislation strongly encouraged the dissemination of more information to the larger creditor population.

The change in the law mandated this, said Scott Stuart, the vice president for Donlin Recano. We saw a need in the industry and we seized the moment.

Though the firm mainly handles claims facing Chapter 11 debtors, Donlin Recano is more than ready to adapt to the changing times.

We are confident that our creditor information site is going to become standardized throughout the industry, said Stuart. Imitation is the sincerest form of flattery.

Founded in 1989 by two partners who were once part of bankrupt companies themselves, Donlin Recano prides itself on being a full service bankruptcy claims management firm.

While other claims firms in the bankruptcy world have dabbled in other areas within the field, Donlin Recano has been determined to remain true to its core business.

Filings are down a little bit so companies are trying to diversify, he says, noting that others are expanding to litigation. But we don t want to ever lose focus.

That kind of commitment has proven popular over the past 17 years, with Donlin Recano being tapped to handle debtor claims in some of the biggest bankruptcy cases in recent years.

Determined not to specialize in any one industry, the firm has done Chapter 11 work for a vast array of companies, including US Airways, Fruit of the Loom Inc., Loews Cineplex Entertainment Corp., and Krispy Kreme subsidiary, FreedomRings LLC.

But the group represents only a small chunk of the nearly 200 cases Donlin Recano has worked on since its inception.

Comprising 40 people, the firm is mainly a combination of bankruptcy analysts and former attorneys, some new to the field but most veterans of the industry.

Donlin Recano's senior management team is a seasoned group, with the majority of its members boasting over 25 years of experience in the bankruptcy field.

Experience really matters, says Stuart. Donlin Recano knows how to best tackle certain problems, having already experienced such snags before, says Stuart.

But we are not an older group we are still young and dynamic, he says.

One of the firms greatest strengths is its accessibility, according to Elizabeth Ellison, the director of marketing for the firm.

It's important to have people accessible in these cases because a lot of these matters are time-sensitive, she says.

While the bankruptcy attorneys and the restructuring professionals can often walk away with all of the glory after a successful Chapter 11, Stuart says it is important not to diminish the key role that claims agents play in these cases.

There is no room for error, says Stuart, emphasizing the host of problems that can occur if a claim is accidentally withdrawn. You can not afford to be less than perfect.

To avoid mistakes, Donlin Recano is constantly in the process of self-auditing as it strives to give the clients the quality service it promised, according to Stuart.

You can be the hot new guy on the block but what really matters is that you are not making mistakes and that you have been in the industry, he says.

As agents of the court, the claims firms work hand-in-hand with the law firms and the restructuring firms, striving hard to carve out a successful niche in the reputation-driven bankruptcy world.

Located in New York City, Donlin Recano dispatches people to do on-site work throughout the country but the bulk of its cases fall primarily in New York and Delaware.

The business is so technology-based that you don't have to be in a hundred different places, says Stuart.

Though bankruptcy filings may be relatively low right now, Stuart believes that a change in the economic cycle coupled with less liquidity in the market could tip the scale and force more companies to declare in the years to come.

There is so much money available, companies are using that to delay the inevitable, he says. They are worsening the situation by getting into deeper debt at a higher cost.

If businesses do file, Stuart predicts that more and more companies will opt for prepackaged bankruptcies, like yellow bus manufacturer BlueBird, whose case Donlin Recano helped work on.

After filing its prepackaged bankruptcy in January, the yellow bus manufacturer left bankruptcy protection a record 32 hours later, relieved of $115 million in debt.

[The trend] is partially in response to the new law, says Stuart. People don't want to linger too long in bankruptcy.

But no matter how long a business is parked in bankruptcy, Donlin Recano is ready to offer its services from start to finish and see that the debtor's claims are handled in a timely and efficient matter.

We are a close-knit group of people who take time to care about what they are doing, says Stuart. I take great pride in this business- it's a wonderful profession.

--By Anne Urda, anne.urda@portfoliomedia.com
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