ABI Blog Exchange

Kicking the can down the road doesn’t seem to work for many distressed companies. The percentage of repeat defaulters since the Great Recession is running at more than double the historical average. That suggests that lax credit markets allowed troubled companies to paper over their problems without fixing them, according to a report Thursday by Moody’s Investors Service.

Read More from: WSJ.com: Bankruptcy Beat

1 day 9 hours ago
Kicking the can down the road doesn’t seem to work for many distressed companies. The percentage of repeat defaulters since the Great Recession is running at more than double the historical average. That suggests that lax credit markets allowed troubled companies to paper over their problems without fixing them, according to a report Thursday by Moody’s Investors Service.

Read More from: WSJ.com: Bankruptcy Beat

1 day 9 hours ago
Much is being made of American Airlines' "bold" decision to avoid hedging its fuel costs. I fully believe that corporations engage in way too much hedging, mostly to the benefit of big financial institutions. But let's be clear, a just out of bankruptcy counterparty is not going to be doing a lot of swaps deals anyway.

Read More from: Credit Slips

1 day 9 hours ago
Emanuel Grillo has joined the bankruptcy and workouts group at Baker Botts. Mr. Grillo, who will be a partner at the firm, has represented creditors, debtors and trustees in restructurings. He has worked on such bankruptcy cases as Lehman Brothers Holdings Inc., Delphi Corp. and Silicon Graphics Inc. Most recently, Mr. Grillo was a partner with Goodwin Procter. He is a member of the American Bankruptcy Institute and the Turnaround Management Association. Marc S. Kirschner has joined Goldin Associates as senior managing director and member of the management committee. He has been an adviser and trustee in bankruptcy matters and has worked with companies like Tribune Co., Yellowstone Mountain Club and Refco. Mr. Kirschner is a fellow of the American College of Bankruptcy.

Read More from: WSJ.com: Bankruptcy Beat

1 day 10 hours ago
Emanuel Grillo has joined the bankruptcy and workouts group at Baker Botts. Mr. Grillo, who will be a partner at the firm, has represented creditors, debtors and trustees in restructurings. He has worked on such bankruptcy cases as Lehman Brothers Holdings Inc., Delphi Corp. and Silicon Graphics Inc. Most recently, Mr. Grillo was a partner with Goodwin Procter. He is a member of the American Bankruptcy Institute and the Turnaround Management Association. Marc S. Kirschner has joined Goldin Associates as senior managing director and member of the management committee. He has been an adviser and trustee in bankruptcy matters and has worked with companies like Tribune Co., Yellowstone Mountain Club and Refco. Mr. Kirschner is a fellow of the American College of Bankruptcy.

Read More from: WSJ.com: Bankruptcy Beat

1 day 10 hours ago
What you did last year may come back to bite your family  when you file bankruptcy. Even if not fatal, the bite can  leave scars. I sat waiting for my turn at a bankruptcy hearing last week and watched a series of other cases that left blood in the water. The trustee’s feeding frenzy in at least three cases centered on payments or transfers the debtor  made to family before they filed their bankruptcy case. In some cases, the debtor was repaying money lent by family.  In others, it appeared the debtor had simply made a gift to family. In the worst case, it looked like the debtor had transferred a car to keep it out of the bankruptcy. All of those transfers spelled trouble. In each case I watched, the Chapter 7 trustee continued the hearing for the production of documents, the amendment of schedules, or further questioning. In several, she wanted the debtor to agree to give her a longer period to challenge their very right to a bankruptcy discharge. None of this bodes well for the debtor. Here’s why. The long arm of the law Bankruptcy law gives the trustee legal rights to recover, for the benefit of creditors, property or money the debtor has transferred.  Collectively, those are the avoiding powers.
1 day 10 hours ago
Adding to the apparent deluge of issues surrounding the Eleventh’s Circuit decision in Crawford v. LVNV Funding, LLC, the Bankruptcy Court for the Northern District of Indiana has sanctioned two creditors for not being able to do math.  More accurately, the Sekema court awarded sanctions of $1000 for no-showing a show-cause hearing to explain why filing a time-barred claim did not violate Rule 9011.  The underlying debts were subject to Indiana’s six-year statute of limitations.  The debtors successfully objected to the claim on that basis, and the Court issued a Show Cause Order on its own initiative (“By filing that claim, it appears that [creditors] violated Rule 9011(b)(2) of the Federal Rules of Bankruptcy Procedure because the claim was not warranted by existing law or a non-frivolous argument for its extension and a reasonable pre-filing inquiry would have revealed that lack of merit.  See In re Excello Press, Inc., 967 F.2d 1109, 1112-13 (7th Cir. 1992) (Rule 11 requires the filer to investigate any obvious affirmative defenses)”).  The creditors failed to appear and the Sekema court took the matter under submission.

Read More from: Creditors' Sidebar

1 day 11 hours ago
Regina StangoKelbon Michael DeBaecke Jonathan Cooper The following is a summary of a paper prepared for the American Bar Association and later submitted to the Pennsylvania Bar Institute. The full article can be found at the link below. In recent years, companies in financial distress have found “independent” directors to be useful to achieve protections for their board members. An independent director is a director – usually with no prior affiliation to the company – who has no personal interest or relationship that would render him or her incapable of acting solely in the best interests of the business. These individuals, typically selected on the basis of their business acumen and/or restructuring experience, bring not only expertise, but a desirable level of impartiality and objectivity to the corporate management scheme. The appointment of an independent director can benefit a company in a number of ways, particularly when the business is struggling. From a practical standpoint, independent directors may be used for investigative purposes or to negotiate transactions involving insiders. The role of the independent director can mirror that of a bankruptcy examiner, a chief restructuring officer, or both, depending on the circumstances and strategic purposes.

Read More from: Bankruptcy Law Watch

1 day 11 hours ago
“With Great Risk Comes Great Reward” – T. Jefferson In order to succeed as a business person in this country individuals have to be willing to take a risk.  They put their heart, soles and wallets on the line.  However, not every business can succeed.  Even among those businesses that do succeed, there are often major hiccups in the owners personal finances along the way.  When a business owner files for personal bankruptcy they face special headaches that non-business owners don’t face. Pay Stubs When an employee of a company files personal bankruptcy, the trustee requests pay stubs, bank statements, tax returns and other financial documents.  These documents are usually pretty straight forward with the information the trustee is seeking right there for all to see.  However, business owners don’t typically receive pay stubs.  Even if a business owner chooses to receive a regular paycheck, the stubs are not telling the whole story.  They may also receive bonuses, profit sharing or simply draws that may not appear on the owners pay checks.  The owner’s income is often a complicated target that is hard to find and even more difficult to explain to a trustee who may never have run a business of their own. Valuation
1 day 12 hours ago
It’s a new year, and The Examiners are back and are talking about the always-contentious issue of bankruptcy fees. Massive bankruptcy cases, like those of Lehman Brothers and Energy Future Holdings—and now, the already-complicated Caesars Entertainment Corp.—tend to feature armies of professionals to deal with the complexities of the case, albeit at a high cost.

Read More from: WSJ.com: Bankruptcy Beat

1 day 12 hours ago
It’s a new year, and The Examiners are back and are talking about the always-contentious issue of bankruptcy fees. Massive bankruptcy cases, like those of Lehman Brothers and Energy Future Holdings—and now, the already-complicated Caesars Entertainment Corp.—tend to feature armies of professionals to deal with the complexities of the case, albeit at a high cost.

Read More from: WSJ.com: Bankruptcy Beat

1 day 12 hours ago
If financial firms are serious about incorporating gender and ethnic diversity into their leadership teams, they need to encourage women to apply for promotions and implement more flexible work schedules.

Read More from: BankThink

1 day 12 hours ago
Authored by J. Ellsworth Summers, Jr. and Scott St. Amand and J. Ellsworth Summers, Jr. and Scott St. Amand of Rogers TowersOn Monday, December 8, 2014, the American Bankruptcy Institute’s Chapter 11 Reform Commission, which is tasked with recommending reforms to the nearly 40-year-old bankruptcy regime, released a report which found that the current Chapter 11 system has fallen behind the times.  The Commission’s report urges Congress to provide troubled businesses with a better chance at rebuilding through Chapter 11. The report is three years in the making, and is in direct response to practitioners’ and lawmakers’ observations that the Chapter 11 system has not kept pace with changing financial trends and modern finance, which leaves struggling businesses with diminished opportunities to reorganize.  Of the nearly two hundred and forty recommendations, many seek to streamline the Chapter 11 process, making the reorganization process cheaper, fairer and more effective.

Read More from: Florida Banking Law Blog

1 day 13 hours ago
This Dec. 27, 2013, photo shows the exterior of Caesars Atlantic City in Atlantic City N.J.
Associated Press
A federal bankruptcy judge dispensed harsh words for Caesars Entertainment Corp. and its private-equity owners Wednesday, marking the second time this month a federal judge has called into question financial maneuvers the owners made before putting the casino company’s largest unit into bankruptcy. The Wall Street Journal has 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 our homepage, scroll to the bottom and click “try for free.”)

Read More from: WSJ.com: Bankruptcy Beat

1 day 14 hours ago
This Dec. 27, 2013, photo shows the exterior of Caesars Atlantic City in Atlantic City N.J.
Associated Press
A federal bankruptcy judge dispensed harsh words for Caesars Entertainment Corp. and its private-equity owners Wednesday, marking the second time this month a federal judge has called into question financial maneuvers the owners made before putting the casino company’s largest unit into bankruptcy. The Wall Street Journal has 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 our homepage, scroll to the bottom and click “try for free.”)

Read More from: WSJ.com: Bankruptcy Beat

1 day 14 hours ago
The Basel Committee's revisions to banks' risk disclosure requirements should help investors glean more meaningful information, thereby allowing them to impose market discipline on less creditworthy institutions.

Read More from: BankThink

1 day 14 hours ago
As most debtors know first-hand, debt collection agencies can be incredibly persistent.  Avoid making repayments for too long, and you could even find yourself facing a creditor lawsuit.  What should you do if you’ve been sued over an unpaid debt? In this post, our New Jersey bankruptcy attorneys weigh some of the legal options. Step 1: Seek Legal Representation You may have a strong affirmative defense against the allegations without even knowing it, or there could be an issue with the allegations themselves.  For example:
  • Are you absolutely positive that the debt is in the correct amount?  Even prominent and well-respected financial institutions make errors, with one eight-year-long study by the Federal Trade Commission uncovering 40 million mistakes on credit reports across the country.
  • Does the person or entity actually have standing?  Standing is a legal term that describes a plaintiff’s legal right to bring a lawsuit.  In order to demonstrate standing, the burden of proof falls on the collector to prove ownership of the debt.  Even if the plaintiff has the legal right to sue, in some cases the defendant is a victim of identity theft and is not actually liable for the debt.

Read More from: Young, Klein & Associates

1 day 14 hours ago
Receiving Wide Coverage ... A Patient Fed: When analyzing the Federal Reserve's statements about its timeline for raising short-term interest rates, it helps to have practiced close reading in college. The Fed said Wednesday it plans to be "patient" in adjusting monetary policy, which "means the central bank isn't likely to raise rates at its next two policy meetings," the Wall Street Journal reports. In other words, a rate hike wouldn't come until June at the...

Read More from: BankThink

1 day 15 hours ago

Pages