Bankruptcy: Richard M. Hutson II

By Lisa Davis

Occasionally someone will stop Dick Hutson on the street, grab his hand and shake it — and maybe get a little emotional. Going through bankruptcy will do that to you. “They’ll say, ‘I want to thank you for the Chapter 13 program. It saved my marriage or my job,’ or ‘It really helped me through a bad time.’ To me, that’s the most satisfying part.”

Hutson is Chapter 13 trustee of the U.S. Bankruptcy Court in Durham and has supervised more than 100,000 personal-bankruptcy cases. He started the program in 1971, when lawyers tended to herd debtors into Chapter 7 — liquidation of assets. Filing Chapter 13 allows them to consolidate debts and pay them off over three to five years. Hutson championed the option and brought it to Durham. These days, the Durham Chapter 13 program gets about 2,900 new cases a year. Disbursements to creditors in 2004 totaled $62 million.

In his private practice, he handles corporate bankruptcies. Clients have included apartment developers and owners of textile mills and high-tech companies. Hutson “can take a complex situation and solve the problem in the most efficient and economical way for the client,” says Stephanie Powell, a partner at Hutson Hughes & Powell PA. “And he has the ability to bring people to the table.”

He recently liquidated E-Z Serve, a Durham-based chain of 475 convenience stores. He also helped reorganize Chapel Hill-based Convenience USA, now called Exprezit, with about 170 stores across the Southeast. Out-of-court restructuring, in fact, is what Hutson enjoys most. “You work with the accountants, the business people, and you are able to revitalize the business without the expense and time of a bankruptcy filing.”

Daniel Laycock is a principal in JEM Development, a Gastonia real-estate developer that hit a rough spot in the late ’90s. “I remember Dick emphasizing that it is going to take time because negotiations like this go slowly. We set a time period — three years — and took each day one at a time.” The company managed to avoid filing for bankruptcy and worked out of its financial hole. “We wouldn’t be enjoying the success we have now if it hadn’t been for Dick. There was little animosity involved with the creditors. He just did a great job.”

Hutson was born and raised on Long Island, the son of a waiter and a homemaker. He never had been to the South when in 1957 he left to start college at Carolina. “I drove all night from New York and arrived in Chapel Hill in the morning. I got out and asked somebody where the University of North Carolina was. He said, ‘Son, you are standing in it.’”

Four years later, Hutson had a degree in political science and history. Intending to join the FBI, he went to law school at Wake Forest University. But a year clerking for U.S. District Court Judge Edwin M. Stanley in Greensboro “changed my mind completely,” he says. Moving to Durham in 1965, he joined a small practice. He soon left to join another that, through various mergers and splits, he remains with today. It has been Hutson Hughes & Powell since 1994.

He took his first personal-bankruptcy case his first year in practice and in 1969 was appointed trustee of the Durham Hilton, which he helped restructure. He began building a bankruptcy practice when few North Carolina lawyers were doing so. But his timing was good. The ’70s brought a recession and revision of bankruptcy laws, which attracted more lawyers to the field. Hutson managed to stand out.

“He’s what’s called a lawyer’s lawyer,” Powell says. “He is a lawyer that other attorneys or other law firms call to represent them, and that is a very high compliment.”