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On Monday in the Samson Resources Corporation Chapter 11 bankruptcy case, Delaware’s Judge Sontchi adopted Judge Walrath’s recentBaker Botts opinion in Delaware’s Boomerang Tube Chapter 11 case regarding fee-defense costs after Baker Botts. As we discussed last week, Judge Walrath’s opinion interpreted the U.S. Supreme Court’s Baker Botts, L.L.P. v. ASARCO opinion, a case that we’ve been covering since last June. Specifically, she held that neither § 328(a) of the Bankruptcy Code, nor a retention agreement provides a sufficient Baker Botts workaround. As a recap, the Supreme Court held in Baker Botts that professionals employed under § 327(a) may not be reimbursed for fees that they incur in defending their bankruptcy fee applications. Judge Sontchi’s Letter to Counsel

Read More from: Plan Proponent

8 hours 51 min ago
The Federal Court of Australia has approved a settlement, effectively resolving one of the most complex corporate insolvencies in Australian history. On 18 December 2015 the Federal Court of Australia approved a settlement relating to inter-company loans and disputed assets between the liquidators of Lehman Brothers Australia Ltd (LBA) and American parent company Lehman Brothers Holdings Inc. The expected dividend of 80 cents in the dollar is likely to provide significant relief to the 72 major investors in financial products, many of whom had sustained losses in the 10’s of millions, including institutional investors, private wealth individuals, councils across Australia and significant charitable organisations and churches which had surplus funds invested in a range of financial products, including the collateralised debt obligations or CDOs that they acquired through LBA. This outstanding result will see a number of investors, many of whom are not-for-profits and community based organisations receive much needed funds for their operations. This settlement is an important step for investors who have been involved in this seven year-long process, which began when they purchased a number of complex financial instruments from LBA, prior to the collapse of its US parent on September 15 2008.

Read More from: eSQUIRE Global Crossings

9 hours 24 min ago
A couple of years back, I resolved to try to get in better shape. Being in my mid-50s, I had made this resolution several times during my life. What I have learned is that making the resolution is easy. It is keeping the resolution that is the hard part. Trying to keep on track, I stopped at the local YMCA on my way home from work tonight to get in some time on the elliptical machine. What struck me while there is that it is only the second week in February and the crowds that were there the first of the year have already started to thin out. Many people who had resolved to get in better shape for the new year had packed the YMCA and other health facilities in early January but most have them had apparently already given up. I hope that some of them will get a “second wind” and follow through on the resolutions that they made.

Read More from: Bonds & Botes, P.C.

9 hours 29 min ago
Alpha Natural Resources Inc. lenders have offered a $500 credit bid, or the exchanging of debt for assets in the company, to help get it out of 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 http://on.wsj.com/DJBankruptcyNews, scroll to the bottom and click “try for free.”) MF Global’s liquidation, which began on Halloween in 2011, is finally ending, DBR reports via WSJ. DealBook looks at companies in the oil patch facing a vast reckoning over too much debt.

Read More from: WSJ.com: Bankruptcy Beat

10 hours 39 min ago
ASARCO, LLC v. Celanese Chemical Corp., 792 F.3d 1203 (9th Cir. 2015) – ASARCO, as a successor to the owner of a Superfund site, sued CNA as the successor to a lessee that operated a sulfur dioxide plant on the site, … Continue reading →
12 hours 18 min ago
Sen. Bernie Sanders' victory in New Hampshire will undoubtedly boost his campaign, but his plan to cap interest rates for credit card and other consumer loans at 15% won't help anyone in the short term and could potentially wreak havoc on low-income people in the long term. Here's how.

Read More from: BankThink

22 hours 49 min ago
Federal bankruptcy law can benefit debtors and creditors alike. Provisions such as the automatic stay and absolute priority ensure a streamlined proceeding, preserving the debtor’s scarce resources for business rehabilitation and creditor repayment.  The alternative, multiple state court debt enforcement actions, would waste the debtor’s time and money on litigation (as valuable as bankruptcy lawyers may be).  But federal bankruptcy law also has provisions that benefit particular parties while disadvantaging others.  Section 502(b)(6), for example, caps landlords’ rejection damage claims, helping the debtor but harming landlord creditors. In In re Murray, a judgment creditor creatively sought to use section 363(h) to its advantage, and to the detriment of a third-party interest holder in the debtor’s property.  The bankruptcy court for the Southern District of New York (Judge Gerber) held that the use of an involuntary chapter 7 bankruptcy filing as an enforcement tool in a two party dispute was improper and dismissed the filing for cause under section 707(a) of the Bankruptcy Code.
23 hours 34 min ago
It’s amazing to me that people are worried about getting credit before they even completed a bankruptcy case. This is due in fact based upon Americans desire and obsession for credit. After all, credit is what more than likely got the person into financial problems to begin with. Now there are other causes of bankruptcy+ Read More The post How Soon Will I Get Credit After Filing Bankruptcy? appeared first on David M. Siegel.
1 day 2 hours ago
Overhauling the S&L crisis-era method for intervening in struggling banks, which did not live up to expectations during the 2008 meltdown, should be a higher priority.

Read More from: BankThink

1 day 7 hours ago
The Supreme Court’s decision last term in Baker Botts v. Asarco, in which the Court ruled that professionals that are paid from a debtor’s bankruptcy estate cannot be compensated for time spent defending their fee applications, continues to rankle bankruptcy practitioners.  Moreover, a recent decision in a Delaware bankruptcy case shows that the impact of Asarco will not be easily circumvented. Attorneys and other advisors retained by a debtor, a trustee or an official creditors’ committee are known as “estate professionals,” because their retention in each case must be approved by the bankruptcy court, and their fees and expenses are paid out of the debtor’s bankruptcy estate and are subject to review and approval pursuant to Section 330 of the Bankruptcy Code.  Section 330(a)(1) of the Bankruptcy Code states, “After notice to the parties in interest and . . . a hearing . . . the court may award to . . . a professional person . . . reasonable compensation for actual, necessary services . . . .”

Read More from: Bankruptcy Law Insights

1 day 7 hours ago
Chair White covered a wide array of topics recently at a securities regulation conference, though the press immediately focused on her comments about the possibility of new rules for disclosing board diversity. Her comments on that and other governance issues follow.
1 day 9 hours ago
Individuals may want to think twice before seeking relief under chapter 11 following a recent decision from the Ninth Circuit Court of Appeals. In Zachary v. California Bank & Trust, the Ninth Circuit affirmed a bankruptcy court’s order denying confirmation of a plan of reorganization in which individual debtors proposed to retain their pre-petition and post-petition property but to pay a dissenting unsecured creditor just .26% of the creditor’s claim. The Ninth Circuit held that the absolute priority rule still applies to individual chapter 11 debtors, and that individual chapter 11 debtors may not confirm a plan under which they retain prepetition property if they do not pay dissenting creditors in full.

Read More from: eSQUIRE Global Crossings

1 day 9 hours ago
Argentina faces a complicated task in settling with its remaining holdouts, but there has been recent progress. The country has agreed to settlement terms with a large group of Italian bondholders and, most recently, several US hedge funds. The remaining barrier to complete resolution is the same as the old barrier: Elliott's NML Capital and assorted other holdouts. Bloomberg has two good explanations of the remaining issues here (by Katia Porzecanski and Chiara Vasarri) and here (by Matt Levine). The short version is that NML cleverly bought a subset of Argentine bonds that accrue pre-judgment interest (on principal) at extraordinarily high rates. Because of this, the settlement terms offered by Argentina are less favorable to them than to other holdouts.

Read More from: Credit Slips

1 day 9 hours ago
I have previously discussed the basics of a Chapter 9 bankruptcy as well as two Chapter 9 bankruptcies that occurred in Alabama.  In this post, I’ll examine a current event that involves a discussion of Chapter 9- Puerto Rico’s current debt crisis. Puerto Rico Financial Crisis The United States territory of Puerto Rico is in the midst of a financial crisis. The governor of Puerto Rico has repeatedly asserted that the island cannot pay back all its debts.  Puerto Rico currently has about a $72 billion debt load.  Besides its large debt, Puerto Rico faces other economic hurdles, including a 45% poverty rate and a decreasing tax base as a large number of citizens flee to the United States.  In January of this year, Puerto Rico defaulted on a second bond payment.  This debt crisis has the potential to inflict much harm on Puerto Rico as well as the U.S. economy.

Read More from: Bonds & Botes, P.C.

1 day 9 hours ago
It’s tax time and the mails are full of IRS form 1099. If you managed a short sale of your property; suffered a foreclosure; filed bankruptcy; or settled your debt for less than you owed, you probably got a 1099. Receipt of the form does not mean  that you must include the reported sum as income. Please repeat:
mere receipt of the form does not mean you are necessarily paying taxes on that money.
When real property changes hands or when a debt is forgiven,  the creditor involved is required to report the transaction to the IRS and to you, the potentially affected taxpayer. Form 1099 is an informational form.  It is sent out routinely and without much thought on the creditor’s part. It does require thought on your part if you want to avoid paying more tax. Claim the exceptions to the rule The Internal Revenue Code starts with the proposition that debts that are forgiven increase your net worth and therefore constitute taxable income. But there are exceptions.  The three most important exceptions for my clients:
  1. Bankruptcy
  2. Insolvency
  3. Qualified mortgage indebtedness
Fit in one of these exceptions and the cancelled debt does not get added to your taxable income.
1 day 9 hours ago
The Federal Home Loan Bank System was designed to provide liquidity to community lenders and traditional insurers, not to unregulated lenders that circumvent the membership rules.

Read More from: BankThink

1 day 9 hours ago
Receiving Wide Coverage ... Banks' Stock Slump: Investors have turned on the world's biggest banks so far this year. The KBW Nasdaq Bank Index slipped more than 3% on Monday and has fallen roughly 20% since the start of the year. And many of the largest banks' stock dropped more than 4% Monday. The health of banking behemoths has become a trigger for worry – since a slump in bank stocks can signal turbulence in the...

Read More from: BankThink

1 day 9 hours ago
Billing rates at big corporate law firms have reached a new mark: $1,500 per hour, despite low inflation and weak demand. The Wall Street Journal has the Daily Bankruptcy Review article here, but don’t forget to check out a supplementary piece on bankruptcy providing a window into billing practices.
Reuters/Beawiharta
(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.”) New York supermarket chain Fairway Group Holdings Corp. says it may breach its loan agreement, DBR reports via WSJ.

Read More from: WSJ.com: Bankruptcy Beat

1 day 10 hours ago
By Donald L. Swanson Mediation should be standard procedure in Chapter 11 plan confirmation processes. Many of us have been arguing this point for years!  Caesars Entertainment now agrees and is placing its bet accordingly. Caesars Entertainment files for Chapter 11 relief in the Northern District of Illinois on January 15, 2015 (Case No.15-01145).  On February 3, 2016, Caesars files its Motion to appoint a mediator in the case (Doc. 3195)—see reports in Reuters, Wall Street Journal, and Las Vegas Review. The Motion requests a mediator “to mediate issues related to a chapter 11 plan of reorganization.”  In support, Caesars Entertainment says: “a neutral, third-party mediator can assist the Debtors and their key constituents in working through plan issues,” and “any mediation should process in parallel” with plan confirmation proceedings. The Motion claims that mediation “has been the successful path in other large chapter 11 cases.”  The Motion cites the following four examples of a successful mediation path to plan confirmation.

Read More from: Mediatbankry

1 day 16 hours ago
In the recent decision of Village Green I, GP v. Fed. Nat’l Mortgage Ass’n (In re Village Green I, GP), 2016 WL 325163 (6th Cir. Jan. 27, 2016), the U.S. Court of Appeals for the Sixth Circuit held that the contrived nature of the impairment will cause the plan to fail Section 1129(a)(3)’s good faith requirement. The debtor’s proposed plan at issue crammed down secured debt by paying it over ten years, and impaired unsecured claims by paying them over sixty days.  After the district court vacated and remanded twice, the case was appealed to the Sixth Circuit, which affirmed the ruling of the district court. On the issue of impairment, the Sixth Circuit found that:
[T]he plan undisputedly would alter the minor claimants’ rights, because these claimants are legally entitled to payment immediately rather than in two installments over 60 days.  That this impairment seems contrived to create a class to vote in favor of the plan is immaterial.  Section 1124(1) by its terms asks only whether a plan would alter a claimant’s interests, not whether the debtor had bad motives in seeking to alter them.
1 day 20 hours ago

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