Kenneth N. Klee

Los Angeles

Practice: bankruptcy

Specialty: reorganization

Klee somehow manages to juggle a demanding practice, tackling highly complex - and often high-profile - bankruptcy cases, while teaching students the intricacies of this challenging area of the law.

"I balance it and do the best I can," Klee said. "I have colleagues who help cover for me when I need it."

On the front burner these days has been his role as lead bankruptcy counsel for Jefferson County, Ala., which is a potential debtor in what would be the largest Chapter 9 filing in history.

"The commissioners rejected the creditors most recent offer, so there is a standstill between the governor and the receiver," Klee said.

Now the county will focus on trying to negotiate a deal with the creditors out of court, he said.

For municipalities considering a Chapter 9 proceeding, he said there is much to digest. "It's expensive, time consuming and unpredictable. It's a last resort, but can act as a useful framework."

For instance, the parties can figure out what can happen in a proceeding, and that can influence what can happen at the table out of court, he said.

"It's cheaper and faster when you don't have a judge looking over your shoulder."

But, he added, "There comes a time when out-of-court negotiations have to stop. If somebody is running out of money, they have no choice but to file."

"Some municipalities have no access to credit markets whatsoever, and Chapter 9 can be a way to get them back to gain access to credit markets and move forward."

Earlier this year, Klee was among those who submitted briefs that ended up on the winning side of a U.S. Supreme Court ruling that put an end to claims by the estate of deceased Playboy playmate Anna Nicole Smith in the battle over her dead husband's fortune. Stern v. Marshall, 10-179. 131 S. Ct. 2594 (2011).

The court affirmed the 9th U.S. Circuit Court of Appeals, holding that a bankruptcy court lacked constitutional authority to rule on a counterclaim that would have awarded Smith's estate $88 million.

"This is the most significant bankruptcy opinion to come out of the Supreme Court in 29 years," Klee said. "It altered the balance of power on what a bankruptcy judge can do. It was a very significant decision."

But the impact of the decision remains to be seen, he said.

"It's beginning to have a ripple effect on bankruptcy litigation across the country."

- PAT BRODERICK