ABI Blog Exchange

Posted by Kathy Bazoian Phelps    Below is a summary of the activity reported for March 2015. The reported stories reflect: 4 guilty pleas or convictions in pending cases; over 54 years of newly imposed sentences for people involved in Ponzi schemes; a possible new massive Ponzi scheme involving $16 billion; and an average age of approximately 48 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.    Bryan W. Anderson, 40, pleaded guilty to running a Ponzi scheme that lured in 18 investors who invested $8.4 million. It is believed that 12 investors ended up losing about $3.1 million. Anderson promised the investors that their investments were 100% risk-free and had a guaranteed rate of return of 5% to 20%. He solicited them to invest in stock options and to invest in his company, 360 Properties.    Charles A. Bennett, 56, is in plea talks relating to an alleged $5 million Ponzi scheme that Bennett confessed to in a note written before a failed suicide attempt.

Read More from: The Ponzi Blog

6 hours 46 min ago
With the RadioShack Corporation bankruptcy action affecting the rights of many commercial landlords, it is important to determine ways that landlords can protect themselves during the course of the bankruptcy action. First, requiring a third-party guarantor is one way in which a landlord may obtain better creditor protection when entering into a lease. The automatic stay does not prevent a landlord from taking action against a guarantor to a corporate debtor-tenants’ lease, provided the lease guarantor is not in bankruptcy. Landlords can also seek protection through letters of credit. Using a properly drafted letter of credit allows a landlord to draw on the proceeds of the letter of credit from a third party (the lender) should the tenant default under the lease.  Letters of credit are generally not considered property of the tenant’s bankruptcy estate.  Some of the drawbacks to letters of credit include their complexity, both during lease preparations, as well as execution after default.
7 hours 54 min ago
Judge Christopher Sontchi issued a notable opinion last week in the bankruptcy case of Energy Future Holdings Corp., et al. (“EFH”), Case No. 14-10979 (D. Del.), ruling that the repayment in full of certain senior secured notes did not trigger an obligation by the debtors to pay a make-whole premium. One important aspect of this decision is that Judge Sontchi closely followed the reasoning of Judge Robert Drain last year in a similar decision involving a make-whole premium in MPM Silicones, LLC, et al. (“Momentive”), Case No. 14-22503 (S.D.N.Y.), thus extending the rationale of that decision, as well as earlier Southern District of New York cases such as In re Solutia, Inc., and In re Calpine Corp., into Delaware for the first time. (Kelley Drye & Warren LLP represents certain creditors in the EFH cases, but has had no role in these proceedings.)

Read More from: Bankruptcy Law Insights

8 hours 52 min ago
The Editorial Staff at CommercialBankruptcyLitigation.com provides a quick overview of the ramifications of a lender declaring a default on a commercial loan. Read more in this 90 second lesson here!
9 hours 23 sec ago
In an article written at CommercialBankruptcyInvestor.com, Jon Petersen provides an introduction on how to analyze a distressed company. Read more about this interesting topic here!
9 hours 2 min ago
Morris James LLP has formed a Data Privacy and Information Governance Group. The Data Privacy and Information Governance Group is an interdisciplinary team of corporate and fiduciary duty attorneys, attorneys well-versed in electronic data storage and discovery, attorneys with bankruptcy and insurance-related backgrounds, and non-attorney IT staff knowledgeable about trends in data security and technology. Together, the group advises boards of directors and officers in assessing and managing risk and defending claims for alleged breach of fiduciary duty arising from data breaches. “Our new group combines extensive knowledge and experience in various aspects of law with current data privacy issues which businesses and corporate officers and directors face today,” said David H. Williams, Managing Partner. The group will offer the following services:
  • Counseling companies’ directors and officers, or special committees, on complying with fiduciary duties and making informed decisions to prevent and/or respond to data breaches;
  • Advising clients on document retention and litigation readiness with an eye toward reducing potential costs of eDiscovery;
  • Helping businesses evaluate and understand their obligations to protect personally identifiable information (PII) and their reporting obligations if the business suffers a data breach; and
11 hours 22 sec ago
The sweeping reforms passed in 2010 didn't bring community banks to the brink of extinction. Rather, their numbers have dwindled because of the impact of economies of scale and dormant de novo banking activity.

Read More from: BankThink

12 hours 46 min ago
Anyone investing equity in an enterprise, whether creating a start-up or purchasing an established company, is a natural optimist.  The hope is that the business will continue to perform well and yield its owners substantial profits year-after-year (and then maybe a hefty return upon exit).  But, as those of us in restructuring know, not every company enjoys positive returns all the time.  Businesses go through down cycles for different reasons – whether it be the overall economic climate (think 2008), issues specific to a particular industry (think dropping oil prices), a great idea that needs more time to blossom into a profitable company, or the classic case of being overleveraged (i.e. too much debt).  As an owner of a business, it is important to recognize distress as soon as possible to create optionality, minimize the downside risk, and sometimes even take advantage of distressed opportunities to increase return.  
13 hours 31 min ago
In a case of first impression, the Ninth Circuit held that the unsecured portion of a secured debt, for which the debtor’s liability has been discharged in a prior chapter 7 proceeding, is still a debt for determining the debtor’s eligibility to be a debtor under chapter 12 of the Bankruptcy Code.  Davis v. U.S. Bank (In re Carolyn Davis), 2015 WL 662001 (9th Cir.

Read More from: Creditors' Rights

14 hours 46 min ago
A growing lack of transparency between some businesses and their banking service providers threatens our ability to effectively manage money laundering and terrorist financing risk.

Read More from: BankThink

14 hours 46 min ago
Receiving Wide Coverage ... When Nob Met Dread: Two federal officials assigned to investigate Silk Road, the digital marketplace for drugs that only accepted payment via Bitcoin, have been charged with illegally using the defunct black-market service to enrich themselves. An agent with the Drug Enforcement Administration and a Secret Service agent have resigned and been charged with money laundering and wire fraud. The DEA agent, named Carl Mark Force IV, has also been charged with...

Read More from: BankThink

15 hours 30 min ago
Altegrity Inc., which gained notoriety for vetting former National Security Agency contractor Edward Snowden, said its restructuring plan would pay general unsecured creditors just over two cents on the dollar for their claims. 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.”) The Wall Street Journal reports on the Securities and Exchange Commission’s charges against Lynn Tilton and her Patriarch Partners firm for fraud. According to WSJ, the Puerto Rico Electric Power Authority got an extended deadline for some loans.

Read More from: WSJ.com: Bankruptcy Beat

15 hours 31 min ago
Altegrity Inc., which gained notoriety for vetting former National Security Agency contractor Edward Snowden, said its restructuring plan would pay general unsecured creditors just over two cents on the dollar for their claims. 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.”) The Wall Street Journal reports on the Securities and Exchange Commission’s charges against Lynn Tilton and her Patriarch Partners firm for fraud. According to WSJ, the Puerto Rico Electric Power Authority got an extended deadline for some loans.

Read More from: WSJ.com: Bankruptcy Beat

15 hours 31 min ago
T. Rowe Price’s proxy voting policies explains that its Proxy Committee develops the firm’s positions on major proxy voting issues.  The Proxy Committee comprises portfolio managers, investment analysts, operations managers and internal legal counsel, and relies upon its own research, independent research provided by ISS and Glass Lewis, and information presented by companies’ management and shareholder groups, in establishing policies.
15 hours 46 min ago
Authored by Adam B. Brandon of Rogers TowersThe Truth in Lending Act (“TILA”) requires lenders to make certain disclosures to borrowers before the parties close on a residential mortgage.  TILA also affords borrowers the right to rescind a mortgage for any reason for three day after the transaction.  Furthermore, if a lender fails to make the disclosures that TILA requires, then the borrower may rescind the transaction within three years or until the sale of the secured property, whichever comes first. On January 23, 2015, the U.S. Supreme Court issued a significant opinion that clarifies how a borrower may exercise the right to rescind.  Previously, many federal courts required a borrower seeking rescission to file a declaratory judgment action.  If the borrower failed to file suit within three years, the borrower lost the right to rescind forever.  However, in Jesinoski v. Countrywide Home Loans, the Supreme Court ruled that the plain text of TILA only requires a borrower to provide timely written notice of rescission to the lender.

Read More from: Florida Banking Law Blog

15 hours 59 min ago
Per www.reuters.com:WASHINGTON, MARCH 30 | BY LAWRENCE HURLEY(Reuters) - The U.S. Supreme Court on Monday left intact a ruling that prevents plaintiffs from suing banks that they say aided and abetted convicted fraudster Bernie Madoff.The high court declined to hear two separate appeals filed by investors in foreign investment vehicles that lost money when Madoff's the Ponzi scheme collapsed in 2008. They had sued Madoff's bankers, JPMorganChase & Co and Bank of New York Mellon Corp, and others.For more, see: http://www.reuters.com/article/2015/03/30/usa-court-securities-idUSL2N0W...

Read More from: The COMI

1 day 6 hours ago
In general, you can file a chapter 7 bankruptcy case once every eight years. For example, if you filed on January 1, 2008, then you would not be eligible to file another chapter 7 bankruptcy case until January 2, 2016. If you filed the case in between those two dates, the chapter 7 trustee or+ Read More The post Can I File Chapter 7 Bankruptcy Again? appeared first on David M. Siegel.
1 day 8 hours ago
Every parent has thought about it, but few want to discuss it.  What happens to your children if you and your spouse both pass away before your children grow up.  Who will care for them?  Who will cover the costs of raising them? How will they go to college?  Who will control their inheritance?  These are very tough questions, but they must be answered. A proper estate plan can account for this worst case scenario.  A guardian can be named to care for your children and a back up guardian can be chosen in case the first choice is unable or unwilling to serve.  A revocable trust can be set up that dictates the terms under which money shall be disbursed, first to the guardian and later to your children.  The Trustee should be someone that you trust to work with your children’s guardian, but also protect your children’s financial future.  Life insurance can be purchased and the alternative named beneficiary can be your revocable trust. Terms of the trust can also include information about college attendance, military service, or other career paths.
1 day 10 hours ago
Bloomberg reported recently on a gem and mineral show held at the Tucson Convention Center. While diamonds, gold, and select other precious metals have, since antiquity, been a recognized store of value, there appears to be an expanding universe of gems and minerals that people are looking toward as an investment. Read more here.
1 day 10 hours ago
No matter how deep your hole of debt, you want to keep bankruptcy as a last resort. If there’s a way out of debt that doesn’t involve a trip to a bankruptcy lawyer, that’s what you want to do. After all, bankruptcy costs money and takes time. You have to give up all sorts of financial information, and it doesn’t cover all types of debt. Most important, bankruptcy is a tool you can’t use all the time. Better to save your best option for last. Most of my job as a bankruptcy lawyer is to help my clients understand that I’m the last stop on the train, not the first. Consultations usually involve laying out all the options and then looking at which one is the best. If filing for bankruptcy is the right way to go, I can usually help. But here are some of the other choices you should look at first. Debt Consolidation Debt consolidation involves taking out a new loan to pay off the other ones. If you qualify for new financing at a better rate than the existing debts, it may make sense. Unfortunately, most of the people who meet with me are already past due on their debts and so don’t qualify for a new loan. Still, it’s worth it for you to try as a way to get out of debt.
1 day 10 hours ago

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