ABI Blog Exchange

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

22 hours 4 min 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

22 hours 29 min 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

22 hours 29 min 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

22 hours 54 min 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

23 hours 9 sec 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

23 hours 54 min ago
“The pros are getting into pot,” according to a recent Associated Press article, which reported that Founders Fund, the venture capital firm run by Silicon Valley stars like Peter Thiel, co-founder of Paypal, is investing in Privateer Holdings, a marijuana company that owns several pot-related brands. For more details click here.
23 hours 55 min ago
Anyone who has ever litigated a valuation issue knows that valuation is more art than science. Experts often arrive at widely divergent valuations. Yet, these valuations are of the same company, for the same time period, based on the same data, and often invoke the same model. How then can the valuations be so different and, more importantly, which expert is right? Valuations of course can vary for a number of reasons, including different assumptions and inputs, and sometimes because of the methodology itself. But as one of my very astute students in Corporate Finance recently pointed out, valuations also likely differ because of the legal position (he actually used the term "self-interest") of the party employing the expert and offering the particular valuation into evidence. I actually am a strong proponent of judicial valuation, despite the potential gamesmanship and uncertainty inherent in valuation testimony. I think the process subjects the valuation to greater scrutiny, better protects under-represented parties, and encourages consensual resolutions. The ABI Commission endorsed the continued use of judicial valuation, as well as the ability of judges to appoint valuation experts to perform an independent assessment of the valuation (see here).

Read More from: Credit Slips

1 day 1 hour ago
This April 1972 file photo shows rock singer Sylvester “Sly” Stone of the music group Sly and The Family Stone.
Associated Press
A Los Angeles jury awarded Sly Stone $5 million this week in a royalty dispute that precipitated the 2013 bankruptcy filing of businesses owned by the funk legend’s estranged manager. Mr. Stone, whose real name is Sylvester Stewart, filed a breach of contract suit in 2010 against record producer Jerry Goldstein, attorney Glenn Stone, Even Street Productions Ltd. and others, claiming they withheld royalties due to him. Sly Stone teamed up with the defendants in the late 1980s either to reinvigorate his career or to help him recoup royalties from his earlier work, depending on which side is telling the story. A 16-day trial in Los Angeles Superior Court concluded Friday, and a jury on Tuesday a jury said Even Street underpaid Sly Stone $2.5 million in profits due under his employment agreement. The jury also found Mr. Goldstein liable for $2.45 million in damages and found Glenn Stone liable for $50,000.

Read More from: WSJ.com: Bankruptcy Beat

1 day 16 hours ago
This April 1972 file photo shows rock singer Sylvester “Sly” Stone of the music group Sly and The Family Stone.
Associated Press
A Los Angeles jury awarded Sly Stone $5 million this week in a royalty dispute that precipitated the 2013 bankruptcy filing of businesses owned by the funk legend’s estranged manager. Mr. Stone, whose real name is Sylvester Stewart, filed a breach of contract suit in 2010 against record producer Jerry Goldstein, attorney Glenn Stone, Even Street Productions Ltd. and others, claiming they withheld royalties due to him. Sly Stone teamed up with the defendants in the late 1980s either to reinvigorate his career or to help him recoup royalties from his earlier work, depending on which side is telling the story. A 16-day trial in Los Angeles Superior Court concluded Friday, and a jury on Tuesday a jury said Even Street underpaid Sly Stone $2.5 million in profits due under his employment agreement. The jury also found Mr. Goldstein liable for $2.45 million in damages and found Glenn Stone liable for $50,000.

Read More from: WSJ.com: Bankruptcy Beat

1 day 16 hours ago
In a Breaking News Alert  at CommercialBankruptcyInvestor.com, Chapter11Dockets.com discusses the Delaware Bankruptcy Court’s decision to allow Caesars bankruptcy cases to proceed in Chicago, Illinois. Read more about this fast breaking news here!  
1 day 18 hours ago
As a part of our continuing coverage of the 2012-2014 Final Report and Recommendations of the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11, we’ve reported on a number of the Commission’s proposed revisions and reforms to the Bankruptcy Code, many of which (i.e., systemically important financial institutions, cross-border cases, DIP financing, etc.) primarily impact the traditional big players in large-scale or so-called “mega” chapter 11 cases that dominate the media headlines: companies with complex corporate structures and hundreds of millions of dollars on their balance sheets. The “one percenters” of chapter 11, if you will. But what about the little guy? What about the family owned businesses, the mom and pop stores, and the startup companies that form the “backbone” of the American economy?
1 day 18 hours ago
Here at Shenwick & Associates, many of our more challenging personal bankruptcy cases involves past due tax debts. We've previously written about the complex rules involving the dischargeability of taxes hereand here.This month we want to discuss the concept of "tolling." There are several types of events that serve to stop the clock on various time periods that determine when an income tax becomes dischargeable:
  • A prior bankruptcy case. The filing of a bankruptcy case will toll both the rule that a tax must be more than three years past its due date to be dischargeable in bankruptcy (the "3 year rule") and the rule that a tax must have been assessed for more than 240 days to be dischargeable in bankruptcy (the "240 day rule")
  • An request for a due process hearing or an appeal of a collection action taken against a debtor. The same rules apply.
  • An offer in compromise.

Read More from: Shenwick & Associates

1 day 20 hours ago
The federal courts have instated a $25 fee for transferring corporate bankruptcy claims. The decision was met with little fanfare Â-- but it could pave the way to a financial transactions tax.

Read More from: BankThink

1 day 20 hours ago
Susan Wachter and I have a new (short!) paper up on SSRN. It's called Second-Liens and the Leverage Option, and is about the curious absence of negative pledge clauses in US home mortgages, which enabled enormous amounts of second-lien leverage (much more than anyone realized) during the housing bubble. We have a very simple, narrowly tailored legislative fix that should make additional mortgage leverage via junior liens a bargained-for matter between the borrower and the senior lienholder(s), rather than an absolute right of the borrower.  Abstract is below the break: The finance literature has long recognized the existence of embedded put options within mortgage contracts, such as a prepayment option and a walk-away default option.  This Article identifies a previously unrecognized option embedded in residential mortgages:  a mortgagor’s unilateral option to increase total leverage on the collateral property through junior liens irrespective of existing mortgagees’ wishes.  We term this the “leverage option.”  We show how the leverage option was created as an unintended consequence of a federal law enacted to deal with seller financing arrangements that prevailed during the inflationary economy of the 1970s.  The leverage option was of little importance until the housing bubble in the 2000s, as homeowners massively increased their leverage using second-lien mortgages. 

Read More from: Credit Slips

1 day 21 hours ago
If you have decided to file for bankruptcy, there’s a lot of things going around in your mind. You’re stressed. You’re scared. You really don’t know what’s going to happen to your favorite possessions or your home. In fact, you might even be experiencing tension in your family related to all this turmoil. All you […]
1 day 21 hours ago
A judge approved a settlement between the trustee in charge of Jeffrey Soffer’s failed Fontainebleau Las Vegas casino project and the company’s former directors and officers that will put millions in creditors’ pockets. 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.”) A judge Monday denied a request by GT Advanced Technologies Inc. shareholders to have a voice in the former Apple Inc. supplier’s bankruptcy, though he left open the possibility for the group to come back with a new proposal, DBR reports in The Wall Street Journal. Japan’s Skymark Airlines Inc. filed for bankruptcy after running low on cash, Bloomberg reports.

Read More from: WSJ.com: Bankruptcy Beat

1 day 22 hours ago
A judge approved a settlement between the trustee in charge of Jeffrey Soffer’s failed Fontainebleau Las Vegas casino project and the company’s former directors and officers that will put millions in creditors’ pockets. 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.”) A judge Monday denied a request by GT Advanced Technologies Inc. shareholders to have a voice in the former Apple Inc. supplier’s bankruptcy, though he left open the possibility for the group to come back with a new proposal, DBR reports in The Wall Street Journal. Japan’s Skymark Airlines Inc. filed for bankruptcy after running low on cash, Bloomberg reports.

Read More from: WSJ.com: Bankruptcy Beat

1 day 22 hours ago
Successful filing of Chapter 11 and Appointment of Chapter 11 Trustee to facilitate sales of assets The post In re Overland Energy, Inc.; Acorn Energy, Inc.; Tega Operating Co. appeared first on Culhane Meadows PLLC - Chapter 11 Business Bankruptcy Attorneys.

Read More from: Richard G. Grant, P.C.

1 day 22 hours ago

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