Helen Balick's Bailiwick Is A Backwater No More

In bankruptcy court circles, it has become the subject of an amused debate. Which judges are more overworked--the ones in federal bankruptcy court in New York City or the ones in Wilmington, Del.? The colossal bankruptcies of Macy's, LTV, and defunct Pan Am are all in New York. But the Delaware court is handling Continental, TWA, and Columbia Gas Transmission, to name a few. There's just one difference: In New York, there are five judges to split the caseload. In Wilmington, there's just one, U.S. Bankruptcy Court Judge Helen S. Balick. Her singular, albeit overworked, position makes her one of the most powerful judges in the country.

Balick's court was once a relative backwater. But the bill has come due for many overleveraged companies of the high-flying '80s and others caught in the '90s downturn. In overseeing the reorganization efforts of both Continental Airlines Inc. and Trans World Airlines Inc., Balick presides over the fate of one-fifth of the entire U.S. airline industry. And Columbia Gas Transmission Corp., with $6 billion in assets, is among the biggest bankruptcies ever. In all, the lone Delaware bankruptcy judge presides over 3,700 bankruptcies--nine of them megacases, involving corporations with more than $1 billion in assets. "Believe me, I'd be much happier if each judge up there had more than I have," she says. "I didn't ask for this."

SUMMER HAVOC. But bankrupt companies certainly ask for her. Balick has a reputation as a "debtor's judge," whose liberal interpretations of bankruptcy law generally favor the bankrupt company over its creditors. That's why companies incorporated in Delaware often choose to file there instead of wherever they are headquartered. Balick's philosophy is to aim for the speediest possible reorganization.

Yet at times, her efforts on behalf of debtors have been rebuffed. In 1991, she stunned the airline industry with a controversial ruling that blocked certain lessors from recovering planes even if Continental quit making payments. Her ruling was overturned by a higher court.

These days, TWA and Continental are clamoring for much of her attention. Both cases are unusual in one respect: Normally, the protective refuge of Chapter 11 restores some measure of calm for distressed companies. But constant airfare wars have created a highly unpredictable environment. Just when TWA built a niche attracting penny-pinching business travelers, American Airlines set a new pricing structure that exploded the strategy. Continental had to abandon a reorganization plan submitted in February after a half-price fare war last summer wreaked havoc with its plan.

Now, Continental appears ready to fly. Balick should rule by January on its reorganization plan, which includes a $450 million infusion from Air Canada and an investor group. Ailing Air Canada is hardly a strong rescuer. But most observers feel Balick will side with Continental and approve the match.

Drama is high in TWA's case, too. Balick recently granted approval for an emergency $100 million loan. And she has also given preliminary approval to a plan that would let employees and creditors take control of the airline from owner Carl C. Icahn. Still, as TWA's troubles scare travelers away, many observers wonder whether Balick will see this airline through reorganization.

Lawyers say Balick rules with a wry wit and unusual dispatch. She calls herself "the last of a dying breed"--those who were admitted to law school without ever attending college. She earned her degree from the Dickinson School of Law in 1966. Not that she was unprepared before that: Balick spent her late teen years as a legal secretary and remains a whiz at legal shorthand, which helps her render decisions from the bench. Her collection of animal-shaped paperweights in her chambers reveals a childlike side. But she is not above playing the stern elder ("I'll never see 55 again" is all she'll reveal), chiding bickering lawyers with: "Now, children...."

However heavy her caseload, Balick and her husband, Bernard, a state judge, manage to safeguard one day a week for themselves. Every Saturday, they pack Brindle, their boxer-pit bull, in the car and set off to explore some new spot in nearby states. "I would love to have a two-week vacation and not come back," she laughs. Given the number and complexity of the cases on her docket, she may have to wait until December, 1999, when her commission expires.