ABI Blog Exchange

AP
General Electric Co.’s decision to drastically slim down its GE Capital finance unit poses the first real-world test of whether a “systemically important financial institution” can ever jettison that label. The designation as a so-called “SIFI” brings with it tougher oversight by the Federal Reserve. GE Capital entered that orbit in 2013, when regulators made their first wave of designations following the 2010 Dodd-Frank law. “This is an opportunity to put the theory of Dodd-Frank to the test. Can Dodd-Frank SIFI status go as a two way street?” said Aaron Klein, director of the Financial Regulatory Reform Initiative at the think tank Bipartisan Policy Center. GE, which wants to lose the SIFI label, said it had discussed its plans already with regulators, and will work with regulators and staff of the Financial Stability Oversight Council to “take the actions necessary to de-designate GE Capital.” FSOC is a panel of top U.S. financial regulators that oversees the designation process and ultimately will decide GE Capital’s fate.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
AP
General Electric Co.’s decision to drastically slim down its GE Capital finance unit poses the first real-world test of whether a “systemically important financial institution” can ever jettison that label. The designation as a so-called “SIFI” brings with it tougher oversight by the Federal Reserve. GE Capital entered that orbit in 2013, when regulators made their first wave of designations following the 2010 Dodd-Frank law. “This is an opportunity to put the theory of Dodd-Frank to the test. Can Dodd-Frank SIFI status go as a two way street?” said Aaron Klein, director of the Financial Regulatory Reform Initiative at the think tank Bipartisan Policy Center. GE, which wants to lose the SIFI label, said it had discussed its plans already with regulators, and will work with regulators and staff of the Financial Stability Oversight Council to “take the actions necessary to de-designate GE Capital.” FSOC is a panel of top U.S. financial regulators that oversees the designation process and ultimately will decide GE Capital’s fate.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
“…to be my student, you must develop a taste for victory.”  Pai Mei, Kill Bill The votes are in, Weil Bankruptcy Blog readers have decided. The ABI Commission to Study the Reform of Chapter 11’s proposed market rate on secured creditor cramdown in its Final Report and Recommendations has prevailed over all other competing proposals in our epic March Madness matchup.  As the law currently stands, cramdowns in chapter 11 cases are decided using the Supreme Court’s decision in Till v. SCS Credit Corporation, 541 U.S. 465 (2004) as precedent.  Till is a case in the chapter 13 context that decided the cramdown interest rate for a used pickup truck. A cramdown, by the way, is the involuntary imposition by a bankruptcy court of a plan of reorganization on a class of creditors following a vote to reject a proposed plan or reorganization by that class.
1 week 3 days ago
Wednesday in New York, American Airlines Group Inc. will ask a judge if it can distribute more than $230 million in stock it had set aside for claims disputes in its predecessor’s chapter 11 case. Lawyers for AMR Corp., the prior iteration of American, say the reserve fund to pay off the disputed claims would still contain more than $290 million in stock. The money would go to those who held the company’s equity before it merged with US Air ways Group Inc. In addition to the approximately $237 million coming from the main disputed claims reserve, the old equity holders will also get $73.1 million in stock from funds set aside to ensure unions get 23.6% of all claims, which was part of the bankruptcy agreement. American’s lawyers have said that without the approval of Judge Sean H. Lane, shareholders would be “unnecessarily deprived of their pro rata share of the excess reserve funds in the disputed claims reserve.” Thursday in Manhattan, a judge will decide whether to approve a deal that could free up $93 million for victims of the Bernard Madoff Ponzi scheme.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
Wednesday in New York, American Airlines Group Inc. will ask a judge if it can distribute more than $230 million in stock it had set aside for claims disputes in its predecessor’s chapter 11 case. Lawyers for AMR Corp., the prior iteration of American, say the reserve fund to pay off the disputed claims would still contain more than $290 million in stock. The money would go to those who held the company’s equity before it merged with US Air ways Group Inc. In addition to the approximately $237 million coming from the main disputed claims reserve, the old equity holders will also get $73.1 million in stock from funds set aside to ensure unions get 23.6% of all claims, which was part of the bankruptcy agreement. American’s lawyers have said that without the approval of Judge Sean H. Lane, shareholders would be “unnecessarily deprived of their pro rata share of the excess reserve funds in the disputed claims reserve.” Thursday in Manhattan, a judge will decide whether to approve a deal that could free up $93 million for victims of the Bernard Madoff Ponzi scheme.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
Wednesday in New York, American Airlines Group Inc. will ask a judge if it can distribute more than $230 million in stock it had set aside for claims disputes in its predecessor’s chapter 11 case. Lawyers for AMR Corp., the prior iteration of American, say the reserve fund to pay off the disputed claims would still contain more than $290 million in stock. The money would go to those who held the company’s equity before it merged with US Air ways Group Inc. In addition to the approximately $237 million coming from the main disputed claims reserve, the old equity holders will also get $73.1 million in stock from funds set aside to ensure unions get 23.6% of all claims, which was part of the bankruptcy agreement. American’s lawyers have said that without the approval of Judge Sean H. Lane, shareholders would be “unnecessarily deprived of their pro rata share of the excess reserve funds in the disputed claims reserve.” Thursday in Manhattan, a judge will decide whether to approve a deal that could free up $93 million for victims of the Bernard Madoff Ponzi scheme.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
Banking has less in common with industries like music and entertainment than it does with long-entrenched pharmaceutical, grocery store and airline businesses Â-- all of which can absorb the threat of new entrants by adapting to them.

Read More from: BankThink

1 week 3 days ago
A judge gave permission for lawyers in charge of long-dead manufacturer Yarway Corp. to pay hundreds of millions of dollars to individuals who said the company exposed them to asbestos. Read the Daily Bankruptcy Review article here. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) A judge on Thursday said Doral Financial Corp. could auction off its insurance arm with a $10.75 million bid by Anglo-Puerto Rican Insurance Corp. serving as the lead offer, DBR reports via The Wall Street Journal. Noble Group Ltd. is rejecting accusations by short seller Muddy Waters of bad accounting practices, WSJ reports.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
A judge gave permission for lawyers in charge of long-dead manufacturer Yarway Corp. to pay hundreds of millions of dollars to individuals who said the company exposed them to asbestos. Read the Daily Bankruptcy Review article here. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) A judge on Thursday said Doral Financial Corp. could auction off its insurance arm with a $10.75 million bid by Anglo-Puerto Rican Insurance Corp. serving as the lead offer, DBR reports via The Wall Street Journal. Noble Group Ltd. is rejecting accusations by short seller Muddy Waters of bad accounting practices, WSJ reports.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
A judge gave permission for lawyers in charge of long-dead manufacturer Yarway Corp. to pay hundreds of millions of dollars to individuals who said the company exposed them to asbestos. Read the Daily Bankruptcy Review article here. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) A judge on Thursday said Doral Financial Corp. could auction off its insurance arm with a $10.75 million bid by Anglo-Puerto Rican Insurance Corp. serving as the lead offer, DBR reports via The Wall Street Journal. Noble Group Ltd. is rejecting accusations by short seller Muddy Waters of bad accounting practices, WSJ reports.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
Receiving Wide Coverage ... A Farewell to Banking: For General Electric, the banking business has lost its allure. The company plans to sell or spin off the bulk of its finance unit, GE Capital, over the next two years, returning to a focus on its industrial manufacturing business. Although the $500 billion-asset GE Capital brought in roughly half its parent company's earnings, it also came with a slew of regulations and risks that apparently weren't worth...

Read More from: BankThink

1 week 3 days ago
My school bookstore asked me to identify my fall book choices the other day, which reminded me that I had intended to comment on the new book I've been using for my Bankruptcy class. The new 7th edition of the classic Warren & Westbrook Law of Debtors and Creditors now features Katie Porter and John Pottow as co-authors (note the Credit Slips sweep of the author page). This is not the type of frustrating and all-too-common new edition incorporating a few nits here and there and swapping out two cases to change the pagination on your syllabus. The previous editions, which I've used for 15 years, were very good; this latest edition is really great.

Read More from: Credit Slips

1 week 3 days ago
Bloomberg recently reported on Robinhood, a relatively new startup focused on no-fee online trading. As reported here, Robinhood is run by a couple of Stanford physics graduates and received $3 million in seed money in September 2013, following up with an additional $13 million in 2014. Read more here.
1 week 3 days ago
JPMorgan chief Jamie Dimon tried to defend his bank's size and scope by suggesting that community banks are just as vulnerable in a crisis. But he succeeded only in proving that Wall Street firms will make the same mistakes all over again unless the government takes steps to disincentivize their risky behavior.

Read More from: BankThink

1 week 4 days ago
Overview This case is an unusual example of an LMA “standard” debt trade leading to litigation in the UK Supreme Court and demonstrates that standardised terms are by no means immune to dispute, despite their frequent use. It is also an interesting example of the judiciary taking into account the practical implications in the specific commercial context of the debt trading market, in addition to a legal consideration of the LMA standard wording, when reaching its decision. The Supreme Court has held that the Loan Market Association standard terms and conditions for par trade transactions (the “LMA Terms“) do not allow a transferor to recover from the transferee part of a “Payment Premium” pertaining to the period prior to the date of transfer. The Court will not readily infer continuing rights and obligations in the context of the LMA loan market, where standardised documentation has been designed to facilitate the trading of debt, often many times over. Continue reading >>>
1 week 4 days ago
According to an article in the American Banker, by Rachel Witkowski ,  4/9/2015, The Consumer Financial Protection Bureau “CFPB” has filed a massive lawsuit against more than a dozen debt collectors, payment processors and related entities for failure to stop fraudulent collection tactics.  The case was filed in U.S. District Court for the Northern District of Georgia, on March 26, 2015. The article goes on to say that the “complaint accuses a handful of connected debt collectors based in Georgia and New York of harassing consumers about “phantom” debts.  But the potentially groundbreaking part of the case is that the CFPB also sued several payment processors, including worldwide processor Global Payments and its contracted parties, because the agency said they “should have known” about the alleged violations.”
1 week 4 days ago
How much stress can we expect to see for oil and gas producers and related companies as a result of the current low prices? And what special issues does this industry face when it’s time to restructure or file for bankruptcy? The U.S. shale oil boom fueled by hydraulic fracturing has been a double-edged sword. Due to the pace of domestic crude oil production, the U.S. has become the world’s largest producer of oil and natural gas liquids in 2014. At the same time, and partially as a result, oil and gasoline prices have plummeted. While this is good news for individual and business consumers who rely on the commodity, it has quickly become a nightmare for producers, oil field service companies and their lenders and investors. “Fracking” is a much more expensive means of extraction than traditional drilling methods—by some estimates and depending on particular circumstances, more than twice as expensive. High production costs, depressed prices, limited liquidity, high leverage and costly junk-bond debt (characteristics of many producers) are a recipe for financial distress, and the evidence is plain in recent headlines trumpeting the instability or demise of small and large producers alike. This trend will continue if oil and gas prices remain depressed.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
How much stress can we expect to see for oil and gas producers and related companies as a result of the current low prices? And what special issues does this industry face when it’s time to restructure or file for bankruptcy? The U.S. shale oil boom fueled by hydraulic fracturing has been a double-edged sword. Due to the pace of domestic crude oil production, the U.S. has become the world’s largest producer of oil and natural gas liquids in 2014. At the same time, and partially as a result, oil and gasoline prices have plummeted. While this is good news for individual and business consumers who rely on the commodity, it has quickly become a nightmare for producers, oil field service companies and their lenders and investors. “Fracking” is a much more expensive means of extraction than traditional drilling methods—by some estimates and depending on particular circumstances, more than twice as expensive. High production costs, depressed prices, limited liquidity, high leverage and costly junk-bond debt (characteristics of many producers) are a recipe for financial distress, and the evidence is plain in recent headlines trumpeting the instability or demise of small and large producers alike. This trend will continue if oil and gas prices remain depressed.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
How much stress can we expect to see for oil and gas producers and related companies as a result of the current low prices? And what special issues does this industry face when it’s time to restructure or file for bankruptcy? The sobering reality about the current price collapse in the global oil and gas markets is that it’s driven by fundamental changes in both supply-side and demand-side factors—and underlying market conditions suggest that prices are likely to stabilize well below the near-high watermark experienced in recent years. On the supply side, rising North American supplies created by the increased sophistication, adoption and use of U.S. light tight oil extraction technologies, commonly known as hydraulic fracturing or fracking, are transforming the roles and relative power of OPEC and non-OPEC producers. On the demand side, factors ranging from lower demand by emerging economies to the politics of climate change and related regulation to the impact of globalization and the commercial feasibility of alternative fuels are reducing the demand rate.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
How much stress can we expect to see for oil and gas producers and related companies as a result of the current low prices? And what special issues does this industry face when it’s time to restructure or file for bankruptcy? The sobering reality about the current price collapse in the global oil and gas markets is that it’s driven by fundamental changes in both supply-side and demand-side factors—and underlying market conditions suggest that prices are likely to stabilize well below the near-high watermark experienced in recent years. On the supply side, rising North American supplies created by the increased sophistication, adoption and use of U.S. light tight oil extraction technologies, commonly known as hydraulic fracturing or fracking, are transforming the roles and relative power of OPEC and non-OPEC producers. On the demand side, factors ranging from lower demand by emerging economies to the politics of climate change and related regulation to the impact of globalization and the commercial feasibility of alternative fuels are reducing the demand rate.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago

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