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June 2008 Volunteer Feature: City Bar Justice Center honors Weil, Gotshal, & Manges for their commitment to the Bankruptcy Pro Bono Panel

The Law Firm of Weil, Gotshal & Manges, LLP has proven to be a staunch supporter and contributor of services to the Bankruptcy Pro Bono Panel administered by the New York City Bar Association. Over the past year the firm has volunteered to take on several pro bono matters referred by the Panel. Most have involved debtors who are faced with undue hardship as they seek the discharge of student loans. Weil has contributed hundreds of hours of work, and a recent referral from the Bankruptcy Court to the Panel demonstrates the firm's commitment to provide pro bono assistance.

Earlier this year, the Bankruptcy Panel of the City Bar Justice Center received a request from a Bankruptcy Judge in the Southern District of New York for pro bono representation for a debtor seeking to discharge her student loans due to economic hardship. Ms. M, who supports and takes care of her elderly mother, had earned a Masters Degree in International Business Affairs. Subsequently, she obtained a good job and earned enough to support herself, her mother and to make her student loan payments. In 2002, Ms. M started to have problems with her vision and went to see a doctor. After an MRI was performed, she was diagnosed with Multiple Sclerosis (MS). Ms. M underwent treatment, but since the medication had a negative effect on her, she decided not to continue the treatment. She tried to hold off the illness with alternative medicine such as acupuncture. Because her illness continued to affect her vision, she had to work part-time and take a pay cut. The reduced salary prevented her from making her student loan and other debt payments. She then had to file a Chapter 7 Bankruptcy, and was able to receive a Discharge of her unsecured consumer debts. At the time, Ms. M did not seek to discharge her student loans because she thought she would be able to pay them. She felt a commitment to work as much as she could so she could continue to pay back the loans. As the years passed, her mother became more fragile and Ms. M's own health continued to deteriorate. She found herself behind on payments to her student loan lenders. In March 2008, Ms. M finally had to file a Pro Se Motion to reopen her 2002 Chapter 7 Bankruptcy to seek a discharge of her student loans based on undue economic hardship.

The Bankruptcy Judge referred Ms. M to the Bankruptcy Pro Bono Panel. At the request of the Panel Administrator, Michael Kessler, a partner at Weil, Gotshal, & Manges LLP met with Ms. M to review the facts of her case. At that time, he coincidentally learned that her employer had been served with an Income Execution by one of the judgment creditors and they were going to start to take out 15% of her after tax disposable income. After interviewing Ms. M, Mr. Kessler felt that she was in worse shape than she had admitted. He was able to persuade her to see a physician and receive a new diagnosis and treatment. The firm immediately filed a motion to reopen Ms. M's Chapter 7 case for the purpose of commencing an adversary proceeding to discharge her student loans under the undue hardship exception. In addition, they moved to enjoin the Creditor from garnishing her wages because the reopening of a Chapter 7 Bankruptcy by itself would not have reinstated the automatic stay afforded to debtors when first filing for Bankruptcy; the lenders would have continued their action to garnish Ms. M's wages while the dischargeability action was pending. After the case was reopened, Mr. Kessler and his team immediately filed a Complaint, an Application for a Temporary Restraining Order, and a Motion for Preliminary Injunction.

The Bankruptcy Court granted the TRO staying the lenders from garnishing Ms. M's wages or taking any other action to collect the student loan debts. Pending a decision, a hearing was scheduled on the Motion for Preliminary Injunction. Subsequently, the judgment creditors consented to the preliminary injunction of the garnishment of Ms. M's wages until a decision is issued on the dischargeability of her student loans. To date, Mr. Kessler and his associates have provided over 90 hours of pro bono time on this matter. They are committed to putting in whatever time is necessary to help Ms. M succeed in obtaining a discharge of these loans so she can have a fresh start.

After seeing Mr. Kessler, Ms. M called the City Bar and expressed her gratitude. Due to the extensive assistance of the Weil, Gotshal & Manges attorneys, she is being seen and treated by a specialist. Ms. M stated that "whatever the outcome in this case, Weil has done nothing short of outstanding professional work. They have gone above and beyond, have done the maximum and have been excellent."

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