Ingram and Debitetto on Bankruptcy and Compliance Programs | Healthcare Compliance Association (HCCA)


There is no guarantee that a business won’t end up in Chapter 11 or buy another business going through it. When either happens, the consequences for the compliance team are serious.

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 does not change during bankruptcy, the environment in which she See more +

There is no guarantee that a business won’t end up in Chapter 11 or buy another business going through it. When either happens, the consequences for the compliance team are serious.

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 does not change during a bankruptcy, the environment in which it operates is radically transformed.

Chapter 11 is designed to help the business breathe, reorganize, redeploy assets, and hopefully keep running. But while for core employees it’s probably business as usual (with a fair amount of added stress) for management, it’s a hectic time. Also, who and where compliance reports can be quite different.

The debtor in possession appoints officers and directors to run the business, and these people may be different from those to which the compliance team reported. They are also working, as quickly as possible, to save the business and get it back on its feet. Compliance is not a priority.

Therefore, it is important for compliance to do two things quickly. First, make sure new management knows who the compliance team is and what they’re doing. Second, let them know that you are not there to hamper them, but to help avoid potential issues that will add further complexity to the reorganization efforts.

Tactically, it is necessary to ensure that management, when reviewing contracts, knows which ones are critical to the execution of compliance programs. Canceling the phone support contract, for example, can save money but shouldn’t be on the table.

Compliance should also be on the lookout for empty chairs. Chapter 11 is usually a high turnover time. Keep a watchful eye on departures of people with compliance responsibilities and be prepared to fill positions.

What if your business is healthy and acquires a Chapter 11 business? Expect insufficient time to do standard due diligence.

The good news is that the US Department of Justice generally understands that post-acquisition due diligence may be necessary, but don’t wait too long to do it. Then, if you have any issues, make sure they are resolved quickly.

In short, even if bankruptcy seems far away, it’s worth taking the time to listen to this podcast. Even seemingly healthy businesses can experience a sudden downturn or acquire another entity that is in Chapter 11. See less –


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