ABI Blog Exchange

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

4 hours 18 min 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

4 hours 27 min 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
5 hours 4 min 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

5 hours 20 min 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

5 hours 21 min 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

6 hours 30 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

6 hours 55 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

6 hours 55 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

7 hours 21 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

7 hours 26 min 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

8 hours 21 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.
8 hours 21 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

9 hours 56 min 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 42 min 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 42 min 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 2 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 2 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 4 hours ago

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