The Eagle Scout

In the early 1980s, Ted Berkowitz and a handful of fellow law firm associates would regularly meet over lunch, or at one of their offices, to talk about bankruptcy issues. Federal bankruptcy law had undergone a comprehensive overhaul in 1978, says Berkowitz, now of Farrell Fritz in Uniondale, “so for us, there was very little learning curve with respect to that law. The cases were only five years old. Every time there was a decision in the Southern District of New York, law was being made.”

In the group, the associate who stood out was Deryck Palmer. “I knew even then there was something different about him,” Berkowitz says. “Deryck really had a passion, even in 1984, for the substantive issues that arose out of the bankruptcy code.

“There was a saying that winning a partnership at Weil was like winning a pie-eating contest, and the prize was another slice of pie,” Berkowitz adds. “That didn’t scare Deryck. He had a plan. And if you flash forward 20 years, he lived out that plan. He became one of the top bankruptcy lawyers in the world. He flies all over the world advising multinational corporations. He advises INSOL [the International Association of Restructuring, Insolvency & Bankruptcy Professionals]. He advised the government of China on revising their restructuring scheme. So in some ways he passed me by but he’s never forgotten me or treated me any different even though I’m at an 85-person law firm and he’s at a firm with 85 bankruptcy lawyers alone.”

That’s the Deryck Palmer described by peers and friends. Fiercely driven, intellectually engaged, extremely successful, and … nice? Yes. Nice.

“He is one of the nicest people I know,” says Michael A. O’Connor, Palmer’s longtime neighbor.

“He’s an unbelievably generous person,” says Cadwalader, Wickersham & Taft colleague Andrew Troop. “An unbelievably understanding person.”

“Deryck is just giving, giving, giving,” says Cindy Dougherty, dean of students at Southwestern Oklahoma State University, and former president of a major health and social services nonprofit that Palmer helped through a complete financial restructure and Chapter 11.

If it sounds like they’re talking about a boy scout, they are. “Deryck,” says his friend Jack Jackson of Proskauer Rose, “is literally a Boy Scout. An Eagle Scout,” he adds, referring to the highest ranking in the scouts, attained by only an elite 5 percent.

Jackson adds with a laugh, “I was not a Boy Scout, either literally or figuratively, so stories of camping don’t quite mean the same thing to me that they do to him. But they clearly left an indelible mark on him. Deryck lost his father at an early age, and so those experiences really helped him.”

Palmer himself wouldn’t dispute this. “Scouting changed my life. I had a wonderful Scoutmaster who told every kid they could be everything they wanted to be. An Eagle Scout is required to earn 21 merit badges, which represents quite a skill set. And coming from the inner city …”

“His family wasn’t poor,” says co-worker Troop. “But let’s put it this way: He didn’t grow up in Westchester.”

Palmer, born in Manhattan, lived in Jamaica with his grandmother until he was 7. After returning to New York, his family soon moved to Bedford-Stuyvesant, where, somewhat prophetically, he attended Our Lady of Good Counsel Elementary School. He continued in Catholic schools until graduation (and remains a devout member of the church), then studied political science at Syracuse University. His fascination with law was ignited by a course on American government. “I saw in that class the profound effect that the law had on our society,” Palmer remembers. “But if I had to trace the origins [of my interest in the law], they go further back to when I was a young child. You may laugh, but I watched Perry Mason and I was very impressed. Raymond Burr did an excellent job of capturing the impact lawyers can have.”

Drawn in part by its emphasis on public policy, he chose to attend the University of Michigan Law School. While students, both Palmer and Jackson worked as summer associates at Weil Gotshal, with one of the great bankruptcy lawyers: Harvey Miller. Jackson believes the challenge of trying to keep up with Miller had something to do with Palmer’s attraction to the field.

“I liked that bankruptcy was a combination of corporate law and litigation,” Palmer says. “That ability to do both in the same department was fascinating.” At the end of his summer associate position, two partners in Weil’s bankruptcy program invited him to join the firm. After graduation, he did. He remained for 26 years.

Palmer likes to compare the lawyers at Weil to the Roman legions. “It was an invincible place,” he says. “We won case after case. We worked very hard and took tremendous pride in our papers and presentations.”

His first big opportunity came when he was a third-year associate and Wayne Transportation of Richmond, Ind., went through an out-of-court workout. “They built those yellow school buses,” Palmer explains, “and because of busing and desegregation requirements, they were ramping up bus production.” Palmer says Wayne bought its rigs from International Harvester and manufactured the cab portion of the bus, which sat on top of the rig.

Palmer negotiated with several national unions over a six-week period. Through the negotiations, he was able to obtain sufficient concessions that the company was able to restructure out of court, avoiding a bankruptcy filing.  “Their cost structure was above market due to the use of unionized labor provided by several national unions. Our job was to try to help the company return to profitability by reducing its operation costs. The results in Wayne gave me a lot of confidence to go on and do other deals shortly thereafter.

“I’ve worked on over 90 cases in my career,” he adds, glancing at the mementos on his desk that remind him of past successes. “I’ve worked on retail cases: Pergament, Jamesway and W.T. Grant. Real estate cases like Trident, which was the old Chase Manhattan Trust. Railroad cases and restaurants. You’ve heard of ShowBiz Pizza? They did an out-of-court restructuring in 1986. I worked with A.K. Steel in its effort to acquire National Steel. I’ve done international restructurings.” He’s also worked airline cases, including Continental, TWA, Braniff and—the most contentious—Eastern, a case that stretched from 1989 to 1994.

“Part of [the difficulty],” Palmer explains, “was that the airline was one of the first to need relief on its wages, pension-benefit obligations, [and] it needed to renegotiate a number of its aircraft leases.

“But I must tell you, it was a great case to be a part of. There was a tremendous amount of new law that came out of that case. One of the new decisions was the Doctrine of Necessity. I think the court also addressed a number of questions relating to venue.”

“Everybody’s been short-changed in a bankruptcy,” says Guy Sansone of Alvarez & Marsal, a global professional services firm with a specialty in turnaround management. “Everybody’s going to make their individual claim for their share of the pie. You have to be tough and aggressive in this business. Deryck draws a firm line and won’t cross it. But he doesn’t need to get in someone’s face to be effective. Ninety-eight percent of the time he’s pretty calm, but when he needs to step up, he can. He can be very tough on people, but is also very good at recognizing what battles to fight and what not to fight.”

“He will bring a negotiation to the edge of the cliff,” says Bernard Katz, a partner at J.H. Cohn, an accounting firm in Edison, N.J. “I have seen him in negotiations for his clients where he was the only person not agreeing to a plaintiff reorganization while 15 other parties agreed. And his disagreement allowed his client to obtain triple the recovery that he otherwise would have received. He gambled that the deal would be held together while he was able to get a better position for his client.”

“If you go through the litany of Chapter 11 innovations of the past 25 years,” Berkowitz says, “you’ll find [Deryck] behind some of the top 10 innovations that lawyers have used to get their clients out of trouble on the bankruptcy side.”

Palmer tapped his interest in public policy to start Weil’s health care restructuring practice in 1995 and helped several hospitals—including Doctor’s Hospital in Washington, D.C., and St. Vincent’s in New York—remain solvent. He helped innovate the concept of lending against health care receivables. “It’s now at the point where it’s a widely accepted structure, whereas before it was not always believed that you could lend against receivables without having those loans be subject to attack,” he says.

Palmer’s devotion to the law extends to its abstract, intellectual form. He has co-authored several books, including History of Bankruptcy Law in the Second Circuit (1995) and Restructuring: The Search for Value in a Troubled Enterprise (1993), as well as an upcoming volume, The New Chinese Bankruptcy Law: The People’s Work in Progress, the first definitive Western work on the set of laws that went into effect on June 1, 2007.

Palmer didn’t just write about these Chinese laws; he helped write them. Professor Li Shuguang of the China University of Political Science and Law in Beijing, who was the primary drafter of China’s new bankruptcy code, used Palmer as one of the foreign experts with whom he’d consult on different provisions.

“We wrote a number of white papers for him and we looked at drafts and commented on them and gave suggestions,” says Palmer. “We talked about priorities, about confirmation procedures under U.S. bankruptcy law, financing, etc. We served as a sounding board.

“I went [to China] a lot,” he says. “It went on for a number of years, and was one of the most stimulating nonclient-related projects I ever did. To see the law develop in the fourth-largest economy in the world and have some role in it is something I’m very proud of having participated in.”

Last spring, Palmer, accompanied by a handful of Weil Gotshal peers, left the firm for Cadwalader, Wickersham & Taft. He declines to discuss the factors behind his departure but says Cadwalader presented him with an outstanding opportunity. The New York Law Journal, on March 13, 2007, reported that the move of four “restructuring stars” meant “a major realignment among elite bankruptcy practices.”

Palmer lectures at major law schools nationwide, and, as an adjunct professor, teaches advanced topics in bankruptcy and corporate reorganization at New York Law School. The professorial side of him occasionally seeps out in professional settings, too. According to Cindy Dougherty, “With our [nonprofit] board, he made sure they understood the ramifications of any action they were considering in non-legalese. To the point that he would quiz them afterward by saying, ‘Now, what if this happened? What if we go A? B? C?’ And they would have to tell him what that meant. And these were high-powered individuals.”

Palmer is also unafraid to take on high-powered organizations, including one beloved by him: The Boy Scouts of America. In February 2001, as a member of the Boy Scouts’ New York City board, he publicly opposed the Scouts’ national policy of banning homosexuals from the organization.

“I didn’t go looking for a fight on this,” Palmer explains. “But it is incumbent on people of good will to speak their mind on controversies. I felt a responsibility to ensure that other kids had the opportunity to be exposed to the ethical and moral principles of scouting. It can be a safety net.

“I mean, look at me,” he says. “I can’t not have a vested interest in protecting principles of equal access.” The issue, he says, is still not 100 percent resolved.

So is Palmer still a good Eagle Scout after all these years? Among the merit badges Scouts earn are: Citizenship in the Community—check. Citizenship in the Nation-check. Citizenship in the World—check. Palmer also earned a merit badge in Lifesaving. You could say he’s still doing it. “That’s the aspect of bankruptcy that I find most exhilarating,” he says. “We get up every day looking forward to saving another business.”