Municipal market mourns loss of Jim Spiotto, a leading voice in shaping bankruptcy canon
James E. Spiotto was remembered Friday as a consummate but humble voice in the municipal industry for his bankruptcy and restructuring expertise that influenced governments, investors and federal lawmakers as they rewrote municipal bankruptcy law in the 1980s.
Spiotto died suddenly of a heart attack on Thursday. He was 73.
“Jim was on a mission,” said Ann Acker, director at Chapman Strategic Advisors LLC, which the two launched after their retirement from Chapman and Cutler LLP. “He really cared so deeply about the municipal market and that the law be developed correctly. He was a brilliant man and a deep thinker and really understood the business side of what clients were facing and brought that to his legal reasoning.”
Spiotto, who lived in a north suburb, was born, raised and educated in Chicago. He was the son of a high-ranking Chicago police officer who served as the acting superintendent.
He graduated from St. Mary of the Lake Seminary in 1968 and received his law degree from the University of Chicago, where he met his future wife, Ann, in 1972. Chapman and Cutler LLP offered him a job, but he took a federal district court clerkship and then went on to join the firm in 1974 working on defaulted corporate bond issues.
There he stayed.
He gravitated toward municipal distress and became a partner in 1980 and was described as a "tour de force" in the bankruptcy practice, in addition to serving on the Chicago-based firm's Policy Committee, the firm said in a remembrance.
“Jim was a larger-than-life presence at Chapman for many years. He was a nationally known expert in his field, a lawyer’s lawyer, and an amazingly effective advocate for his clients," Tim Mohan, Chapman’s Chief Executive Partner, said in a remembrance. "His dedication to his work was unparalleled and his amazing efforts led to the national stature of our bankruptcy and workout group. He loved his family and the firm."
“Jim was instrumental in developing Chapter 9” and “was viewed by our bank and investment banking clients — as well as the entire public finance market — as ‘the Authority’ on both Chapter 9, and most recently, PROMESA,” Rick Cosgrove, a Chapman partner and close colleague, said in a remembrance. “Having had several opportunities to work alongside him on troubled muni deals, watching his brilliance and persistence first-hand was nothing short of amazing. His passing leaves a huge void.”
At Chapman, Spiotto's reputation grew as his client list did, spanning issuers, indenture trustees and bondholders in litigation, bankruptcy or workouts of more than 400 troubled debt financings in more than 35 states and in foreign countries on the municipal and corporate sides.
Spiotto was a co-author of "Municipalities in Distress?: How States and Investors Deal with Local Government Financial Emergencies." He was also a co-author of "The Law of State and Local Government Debt Financing" and authored chapters on municipal defaults and bankruptcy in "The Handbook of Municipal Bonds," among others. He represented a bank in the Jefferson County, Alabama, bankruptcy. On the corporate side he represented client interests in major workout or bankruptcy cases involving American Airlines, United Airlines, Lehman, MF Global, PG & E, and Conesco.
Spiotto served as a chairman of the National Association of Bond Lawyers' bankruptcy committee and authored numerous key municipal bankruptcy and distressed credit pieces. They all led to what's been recognized as his pivotal work in helping craft and win congressional support over a nine-year period for key municipal bankruptcy amendments President Ronald Reagan signed into law in 1988.
Spiotto’s career saw many other appearances on Capitol Hill. He provided testimony before Congressional committees on proposals to allow Puerto Rico to cancel its unsecured debts and possible amendments to the 2016 Puerto Rico Oversight, Management, and Economic Stability Act. He also spoke of the role of public employee pensions in contributing to Illinois' insolvency and the possibility of a state bankruptcy chapter in 2011.
Few in the municipal industry have not crossed Spiotto’s path at some point, including reporters who appreciated that he always returned a phone call.
"He was the dean of municipal bankruptcy. At the same time, he was always optimistic. Best of all, he loved to laugh and was always willing to share his great depth of knowledge with us. He will be truly missed," said John Hallacy, contributing editor at The Bond Buyer, adding that he was a frequent and cheerfully willing contributor to many Bond Buyer stories. “He always felt he was doing a service to the industry in these later years.”
“He was a good friend and a great teacher and one of the most creative minds in the world of municipal financial stress,” said Richard Ravitch, a former New York lieutenant governor who played a pivotal role in New York City’s recovery from its near financial collapse in the 1970s.
Spiotto left the courtroom in 2013 as he hit the firm’s mandatory partner retirement age but was far from ready to take it easy in retirement, his friends and colleagues said. He co-launched the Chapman Strategic Advisors to serve as a consultant parlaying his experience and insights in a way he hoped would benefit the market through education and advocacy.
He offered insights frequently during the course of Detroit's Chapter 9 and Puerto Rico's bankruptcy under the Puerto Rico Oversight Management and Economic Stability Act of 2016. He was especially concerned over court rulings that he believed ran afoul of long-established bankruptcy law.
In an interview at the time of his retirement, Spiotto said: “The height of practicing law is being of service to clients so my intention now is to be of service to the market. I will miss being in court but I'm still a lawyer and hopefully I can be of greater service and make a contribution in providing these services."
Spiotto also was engaged in another endeavor with his longtime friend Richard Ciccarone, president of Merritt Research Services, as joint publisher of MuniNetGuide.com where Spiotto continued to share his sharp opinions and recommendations on bankruptcy, governmental fiscal distress, and other topics influencing and affecting the market.
Spiotto’s last commentary: “Just Wipe Out Public Debt! — Not a Solution for Puerto Rico or Anyone Else” was published on Feb. 22.
Spiotto was a learned type, Ciccarone said. “He liked to quote from the classics and also liked a joke,” said Ciccarone, who admired his friend’s writing acumen. “He would write these long industry pieces that really created the foundation for some of the law and bring along in boxes to pass out, really heavy boxes, and he would offer them up as 'an anecdote for insomnia.’
“He wasn’t just a close friend to me, but he also was to the industry. I think Jim’s work will be remembered in the industry for a long time to come,” Ciccarone said. “Jim was a gentleman and always tried to be positive on even the most distressed situation and he was really a collaborative person who tried to find solutions rather than breeding discontent.”
Before he fell suddenly ill Thursday, he had attended a Chicago Municipal Analysts Society event on high-speed rail, taking notes throughout the discussion. “He loved these kinds of presentations and was always the only one besides reporters you would see taking notes,” Ciccarone said.
Spiotto’s specialty was restructuring and bankruptcy, but only as a last resort. He favored and promoted the need to act early to avoid deep fiscal distress and was one of the authors of the Chicago Civic Federation’s proposal to enact a quasi-governmental agency that could intervene early for municipalities to avoid defaults. He advocated for not just restructuring but recovery for troubled government borrowers and believed that all stakeholders must share in the pain for success.
The National Federation of Municipal Analysts honored Spiotto in 2014 with an award for his contributions as a thought leader within the municipal bond industry. Spiotto remained a frequent presenter at conferences hosted by the National Bond Lawyers Association and various municipal analysts groups and conferences.
Spiotto's long list of civic roles include his membership on the Chicago Civic Federation board. He was a past president of the Society of Municipal Analysts, a member of the Board of Directors of the Retirement Security Initiative, a member of the Board of Advisors of the Center for Municipal Finance Harris School of Public Policy, University of Chicago, and a member of the Board of Visitors for the College of Urban Planning and Policy, University of Illinois at Chicago.
Spiotto is survived by his wife, Ann, his four children Joan, Kathryn, Mary Catherine, and Michael, and many grandchildren. Information about services can be found here.
Remembrances poured in from across the market Friday all stressing Spiotto’s devotion, influence and contributions to the industry.
“For nearly two decades, Jim Spiotto was an indefatigable presence at the Civic Federation. He was more than a dedicated Board and Executive Committee member; Jim was a longtime friend who shaped many of the Federation’s policy approaches and the organization’s strong sense of optimism for the future of our state and local governments,” said Chicago Civic Federation president Laurence Msall.
Jim volunteered thousands of hours as the co-chair of the federation’s Pension Committee, where he helped strengthen members’ and staff’s understanding of the pension and financial crises facing our region. “Both at the Federation and in his corporate work, Jim always eagerly offered his expertise and world-class legal acumen to all who sought his guidance,” Msall said. “Jim’s unwavering enthusiasm for life and for his work has forever changed the Civic Federation and all who knew him.”
“The market has lost a great defender of investor rights and someone who truly understood the true public and private partnership between state and local governments and the investors who help fund the critical infrastructure and essential services necessary to serve their citizens,” said Build America Mutual general counsel Jeffrey Fried. “His Book ‘Municipalities in Distress’ was the original roadmap used by analysts, advisors, lawyers and legislators in navigating the unchartered seas of municipal bankruptcy and is still considered today as one of the great resources of information in an increasingly changing marketplace of distressed municipal credits. I have never met an attorney who loved what he did more than Jim.”
Frank Shafroth, former Director of Legislative Affairs and Intergovernmental Relations for the Municipal Securities Rulemaking Board who is the Director for the Center of State and Local Leadership and Assistant Professor at George Mason University, worked with Spiotto on bankruptcy law.
“Jim was a towering force in municipal finance with whom I had the exceptional good fortune to spend eleven years securing enactment of municipal bankruptcy. His insight, creativity, and patience were exceptional,” Shafroth said.
“It fell to me to actually see and experience his foresight: I was in Detroit the morning it filed...and in Central Falls the morning it filed,” Shafroth recalled. “In Detroit, no traffic light or street light was out: and every 9-1-1 call received a response. Jim’s essential lesson was the importance of creating a statute strongly opposed on many sides, painstakingly, and calmly. That unending depth of knowledge and patience made all the difference. The nation is richer for the commitment he brought to municipal finance.”
Fitch Ratings Managing Director Amy Laskey said: “Jim’s passing is a great loss for the public finance industry. He was an icon; a trusted expert not just on municipal bankruptcy, where he was ‘the man’ but on anything where municipal government met the law. His immense knowledge was dispensed freely and generously, and with warmth, humor and an obvious love for the subject.”
“James was a gentleman and a scholar. He was so knowledgeable about legal issues around bankruptcy, restructuring and distress and always willing to share his time and expertise. This is such a big loss for our industry,” said Robin Prunty, Head of Analytics and Research, US Public Finance, S&P Global Ratings.
Tom Kozlik, Head of Municipal Strategy and Credit at Hilltop Securities, said: "This is devastating news for Jim’s family, friends, colleagues, and my heart is empty. I have dozens upon dozens of memories of Jim. His devotion was tireless and his kindness unequaled.”
Kozlick continued, "I remember having countless conversations with him. Most were a result of me reaching out for his expertise. He never disappointed. He spoke at my class several times. He served as a resource to my students for years after his appearances.
"The industry mourns the loss of one of its giants, as I mourn the loss of a friend and a teacher,” Kozlik said.
“That is a great loss to all of us in this business,” Puerto Rico bankruptcy attorney and commentator John Mudd said.
Puerto Rico Oversight Board lead bankruptcy attorney Martin Bienenstock said, “Jim was a champion of creditors' rights, and made deals to save enterprises such as Republic Steel Technology. He will be missed.” Bienenstock is a partner at Proskauer Rose.
Arent Fox Partner David Dubrow said, “It is shocking to hear of the passing of James Spiotto. He was a giant in the municipal industry. His loss is not only a tremendous loss for his family but also a tremendous loss for the municipal market.”
Susheel Kirpalani, chairperson of Quinn Emanuel’s Bankruptcy and Restructuring Group, said, “Every bankruptcy lawyer who travels in muni-land owes a debt of gratitude to Jim for his generosity and patience in teaching all that he learned. He will be missed.” Kirpalani represented the Ad Hoc Group of COFINA Seniors and now represents the Lawful Constitutional Debt Coalition in the Puerto Rico bankruptcy.
— Robert Slavin and Chip Barnett contributed to this report.
Update: The original story has been rewritten to include interviews with friends and colleagues, link to information about services, and include the cause of death.