ABI Blog Exchange

Desmond v Raymond C. Green, Inc. (In re Harborhouse of Gloucester, LLC), 523 B.R. 749 (1st Cir. BAP 2014) – A Chapter 7 trustee objected to the proof of claim filed by a downstream assignee of a lost mortgage note.  The … Continue reading →
1 week 5 days ago
On March 17, 2015, Quicksilver Resources Inc., a Texas based oil and natural gas producer and developer, and 13 of its affiliates, filed chapter 11 bankruptcy petitions in the United States Bankruptcy Court for the District of Delaware.  The petition lists assets of $1.2 billion and liabilities of $2.35 billion.  The case is docketed as case no. 15-10585. Vanessa Gomez Lagatta, Sr. VP, CFO and Treasurer of Quicksilver, filed a declaration in support of the petitions and first-day motions.  In her declaration, Ms. Lagatta states that as of December 31, 2014, the debtors had approximately 585,000 net acres of oil and gas properties with proven reserves of 1.1 Tcfe and over 2000 net producing wells.  She also notes that the debtors had, as of December 31, 2014, a consolidated net loss for the year of $103.1 million. The Lagatta Declaration reveals that the debtors have 1.098 billion in secured debt facilities as of the petition date.  The debtors also have three series of unsecured notes (the 2019, 2021 and Senior Subordinated notes), aggregating approximately $975 million in what the Legatta Declaration characterizes as “unsecured senior obligations.”
1 week 6 days ago
A workman repairs the store front of a closed RadioShack location after the sign was removed in Springfield, Va., on MArch 12.
Shawn Thew/European Pressphoto Agency
Hedge fund Standard General has unveiled the list of RadioShack stores it plans to keep open if it is the winning bidder at a bankruptcy auction. Is your RadioShack one of the keepers? The hedge fund is targeting 1,723 stores—either as standalone outlets or co-branded with Sprint—for survival, less than half of the 4,000 or so stores the chain had at the time of its bankruptcy  filing. (Check out this interactive map from WSJ of the stores getting shut down.) Exactly how many stores Standard General proposed to take over has been up in the air since RadioShack’s bankruptcy filing. The hedge fund is also bidding $20 million for RadioShack’s name.

Read More from: WSJ.com: Bankruptcy Beat

1 week 6 days ago
A workman repairs the store front of a closed RadioShack location after the sign was removed in Springfield, Va., on MArch 12.
Shawn Thew/European Pressphoto Agency
Hedge fund Standard General has unveiled the list of RadioShack stores it plans to keep open if it is the winning bidder at a bankruptcy auction. Is your RadioShack one of the keepers? The hedge fund is targeting 1,723 storeseither as standalone outlets or co-branded with Sprint—for survival, less than half of the 4,000 or so stores the chain had at the time of its bankruptcy filing. (Check out thisinteractive map from WSJof the stores getting shut down.) Exactly how many stores Standard General proposed to take over has been up in the air since RadioShacks bankruptcy filing. The hedge fund is also bidding $20 million for RadioShacks name.

Read More from: WSJ.com: Bankruptcy Beat

1 week 6 days ago
A new book by the American Enterprise Institute's Peter Wallison reveals how a government push to lower credit standards brought about the housing crisis Â-- and why a new effort to expand homeownership could inadvertently set the stage for a fresh disaster.

Read More from: BankThink

1 week 6 days ago
A study from the State University of New York at Buffalo’s School of Management has found that the JOBS Act seems to be having its intended effect – creating jobs, by helping more startups go public. Read more here.
1 week 6 days ago
Undersecured creditors may breathe a little easier.  In a recent decision, the United States Bankruptcy Court for the Northern District of Illinois denied the debtors’ request to use an undersecured creditor’s cash collateral, in the form of postpetition rents, to pay estate professional fees, holding that the undersecured creditor was not adequately protected even though the value of its collateral was stable and possibly increasing.  In re Chardon, LLC, Case No. 13-81372 (Bankr. N.D. Ill. Jan. 13, 2015)Background
1 week 6 days ago
Authored by Jon Sacks and Heather S. Nasonand Jon Sacks and Heather S. Nason of Rogers TowersCommercial Mortgage-Backed Securities (CMBS) loans are on the rise and many familiar with the market are concerned with the relaxed underwriting standards.  Interestingly, looser underwriting standards and increased loan volume are not the only issues.  Lenders are also encountering statutory and legislative developments that may limit recourse remedies in these loans and  the combination of these factors has potential for serious consequences. Increasing Numbers and Sliding Credit Quality The volume of CMBS loans is increasing and this trend is expected to continue.  CRE Finance Council’s 2015 Market Outlook Survey suggests the number of CMBS loans will increase in 2015 due to loan maturities and economic optimism.  There is also concern that higher volume means lower underwriting standards.  Lenders of CMBS loans are facing increased pressure to provide more favorable terms to borrowers due to the influx of capital in the market.  Private equity firms and hedge funds are aggressively pursuing borrowers and, according to Moody’s, issued more than 40 CMBS loan origination programs, 2014 alone.  In today’s market, borrowers are again obtaining interest only loan with reduced debt service coverage requirement. The “Limit” of Limited Liability

Read More from: Florida Banking Law Blog

1 week 6 days ago
The smaller banks in the FDIC's deposit insurance fund are subsidizing the activities of the largest banks. A two-tiered approach would go a long way toward addressing moral hazard and the too big to fail problem.

Read More from: BankThink

1 week 6 days ago
In its opinion in Gray v. Warfield (In re Gray), 523 B.R. 170 (9th Cir. BAP 2014), the Ninth Circuit BAP held that the U.S. Supreme Court’s decision in Law v. Siegel, 134 S. Ct. 1188 (2014) precludes a bankruptcy court from denying a debtor’s amendment of his claim of exemption on equitable grounds. Prior to filing bankruptcy, the Grays prepaid three months of rent on their residence, but did not list the prepaid rent as an asset in their schedules.  At the 341 meeting the trustee questioned their payment of $2707 to their landlord, at which time the debtors disclosed they had prepaid several months rent, including rent for the first two months after their bankruptcy filing.  Following the 341 meeting, the debtors amended their schedules to disclose the prepaid rent and also to assert an exemption in it, an exemption allowed by applicable state law.  The trustee filed an objection to the amended exemption, contending the debtors’ failure to list the asset initially constituted equitable grounds for denying the exemption, arguing the debtors acted in bad faith in failing to disclose the asset in the first place.  The bankruptcy court sustained the objection, and the debtors appealed. 

Read More from: Creditors' Rights

1 week 6 days ago
This photo taken on Oct. 17, 2012, shows the exterior of the former Revel Casino Hotel in Atlantic City N.J. ACR Energy Partners had told Revel’s owners it would cut off service to the building at 5 p.m. Thursday, Feb. 5, 2015, over unpaid bills. But the company and the casino agreed Thursday morning to keep the power and water flowing until a hearing Feb. 11. (AP Photo/Wayne Parry)
Wayne Parry/Associated Press
Atlantic City’s Revel Casino Hotel on Monday asked a bankruptcy judge for more breathing room in a bid move forward with a sale after the judge said she couldn’t sign off on a heavily discounted $82 million deal to Glenn Straub, a Florida-based developer. 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 http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”)

Read More from: WSJ.com: Bankruptcy Beat

1 week 6 days ago
This photo taken on Oct. 17, 2012, shows the exterior of the former Revel Casino Hotel in Atlantic City N.J. ACR Energy Partners had told Revel’s owners it would cut off service to the building at 5 p.m. Thursday, Feb. 5, 2015, over unpaid bills. But the company and the casino agreed Thursday morning to keep the power and water flowing until a hearing Feb. 11. (AP Photo/Wayne Parry)
Wayne Parry/Associated Press
Atlantic City’s Revel Casino Hotel on Monday asked a bankruptcy judge for more breathing room in a bid move forward with a sale after the judge said she couldn’t sign off on a heavily discounted $82 million deal to Glenn Straub, a Florida-based developer. 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 http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”)

Read More from: WSJ.com: Bankruptcy Beat

1 week 6 days ago
This is the next post in Plan Proponent’s series on the confirmation-related recommendations in the ABI Commission Report (and, in particular, its Exiting the Case piece). Continuing with Part C.1 (“Creditor’s Rights to Reorganization Value and Redemption Option Value”) from our last post, this post will introduce “Redemption Option Value.” The issue driving the Commission’s ultimate recommendations regarding “redemption option value” is the issue of how best to balance the rights of secured creditors, the rights of other stakeholders, and the debtor’s reorganization needs. Part C.1 is footnote-heavy, with citations to multiple written statements from those who weighed-in on this topic at various ABI Commission Field Hearings. In other words, it’s not an issue that the Commission took lightly.

Read More from: Plan Proponent

1 week 6 days ago
Wall Street Journal Citigroup is among at least a dozen companies that have given in to activist shareholders' demands to nominate directors, a strategy known as proxy access. Calpers, one of the largest activist shareholders, describes the trend as a "sea change," while the New York City Comptroller said it's only a matter of time before most companies allow for proxy access. New York Times ...

Read More from: BankThink

1 week 6 days ago
Two press releases announced that the New York City Comptroller has agreed to withdraw proxy access shareholder proposals at Staples and Abercrombie & Fitch.  Agreements have also been reached with Big Lots and Whiting Petroleum.
1 week 6 days ago
Knowing when to cut your losses and walk a deal is a difficult skill to master.  In the construction loan context it is particularly difficult because a half completed building lacks the intended value anticipated on the loan.  On the other hand, cutting off disbursements causes a whole other set of risks including mechanic and materialman’s liens (“M&M Liens”) which often prime the lender’s mortgage lien.  While different types of insurance may help, the 7th Circuit recently held that priming M&M Liens incurred after the lender had cut off funding following borrower’s default were caused by the lender and therefore excluded from the title insurance coverage.  The result was essentially a total loss to the lender of ~$61MM. Credit: LucasFilm, Ltd. / Imigur The Project The project was a commercial construction project in Kansas City, MO.  Basically what happened was that BB Syndication Services (the “Lender”) lent money on a construction loan to build the commercial development to its borrower.  The total line of credit was ~$86MM. In the project, First American Title (the “Title Company”), acted as disbursing agent and insured against encumbrances on the property.  The idea being that prior to making a disbursement, the Title Company would check for liens, and barring liens would disburse the next construction draw.  The title insurance policy contained a exclusion to coverage which excluded any liens that are “created ,suffered, assumed or agreed to” by the Lender.

Read More from: Tough Times for Lenders

1 week 6 days ago
Landlords may be able to recover attorneys’ fees incurred when a debtor-tenant seeks to assume the lease, or assume and assign the lease to a third party.  To recover attorney’s fees, however, the landlord must meet several criteria.  First, the lease must expressly state that the landlord is entitled to recover attorneys’ fees as additional rent or in connection with the collection of rent. Next, the landlord must have prevailed in the proceedings in which it seeks to recover attorneys’ fees.  “Prevailing” in a bankruptcy proceeding may include filing an objection to a motion of the debtor-tenant and receiving a favorable decision (i.e., objecting to the cure amount proposed by the tenant). The matter in which the landlord seeks attorneys’ fees must be in pursuit or enforcement of the landlord’s rights under the lease, not matters where the landlord challenges the debtor-tenant’s rights under the Bankruptcy Code. Finally, the attorneys’ fees must be reasonable.  To determine whether the fees are reasonable, courts will consider factors such as the amount in dispute relative to the fees requested, the debtor-tenant’s good faith efforts to resolve the dispute and compliance with the Bankruptcy Code.
2 weeks 2 hours ago
I'm testifying before the House Financial Services Committee on Wednesday at a hearing entitled "Preserving Consumer Choice and Financial Independence." I'm the only non-industry witness (no surprise there). For those interested, my testimony is linked here.  Here's the highlight:   Community banks face a serious structural impediment to being able to compete in the consumer finance marketplace because they lack the size necessary to leverage economies of scale. The CFPB has repeatedly acted to ease regulatory burdens on community banks in an attempt to offset this structural disadvantage. While community banks continue to face serious problems with their business model, their profits were up nearly 28% in the last quarter of 2014 over the preceding year, which strongly indicates that they are not being subjected to stifling regulatory burdens.

Read More from: Credit Slips

2 weeks 4 hours ago
The biggest threat to one’s nest egg or the assets that they wish to leave their loved ones isn’t necessarily a recession or tumbling stock market, but rather the debilitating march of time that might see them facing the kind of chronic illness or disability that will necessitate long-term, often round-the clock care. Read more here.
2 weeks 7 hours ago
A derivative suit filed in the United States District Court for the Western District of Washington alleges that Nordstrom violated securities laws in not fully disclosing aircraft-related costs in its proxy statements and that the board breached its fiduciary duties in approving the related party transactions without analyzing the actual expenses.
2 weeks 7 hours ago

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