ABI Blog Exchange

Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  The bankruptcy laws that allow companies flexibility in selecting a venue shouldn’t be changed. The vast majority of bankruptcy filings actually are filed either where the company has its principal place of business or where its principal assets are located. It’s only in larger cases that companies tend to file where the company is incorporated. There are good reasons for this. The goals of chapter 11 are to reorganize businesses and maximize the return to stakeholders while providing due process to interested parties. In determining where to file, large companies seek to minimize uncertainty. That can best be accomplished by filing in jurisdictions that have well-established precedent on key issues, such as first-day motions. In mega cases, that has been the Southern District of New York and Delaware. Thus, it shouldn’t be a surprise that many of the larger cases are filed there. It should be noted that often times it’s not just the company that wishes to file in these venues but the key lenders also, as they also desire predictability.

Read More from: WSJ.com: Bankruptcy Beat

2 hours 24 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed? The debate over venue shopping has been ongoing for years. The central concern—as viewed by Lynn LoPucki in “Courting Failure, How Competition for Big Cases Is Corrupting the Bankruptcy Courts”—is unbridled competition for cases by both Delaware and the Southern District of New York. Professor LoPucki substantiates the impact of this competition based on historic growth in either court’s market share and argues there is an attendant cost reflected in case outcomes, post-emergence. It is far from clear, however, that this concentration has impaired results. The volume of cases in these two jurisdictions may simply be self-reinforcing. Over time, caseloads in these courts have served to justify additional judges. This, in turn, affords both courts more cases, experience and corresponding efficiencies. Furthermore, either court is favored by dint of location central to the Northeast corridor, a region encompassing the preponderance of bankruptcy professionals, as well as dominant lenders.

Read More from: WSJ.com: Bankruptcy Beat

2 hours 51 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  Most bankruptcy cases should be heard in forums consistent with current law that are the most convenient and cost-effective for both the parties-in-interest and those most likely to play ongoing roles in chapter 11 case administration. Particularly in large enterprise chapter 11 cases, the location of the debtor’s principal place of business or principal assets may—or may not—be such a forum.

Read More from: WSJ.com: Bankruptcy Beat

3 hours 17 min ago
Lawmakers reluctant to offer community banks regulatory relief should consider the empirical evidence of how Dodd-Frank has hurt small lenders Â-- and listen to the federal and state bank regulators calling for changes.

Read More from: BankThink

3 hours 31 min ago
Judge Robert Gerber will be stepping down at the end of this year, ending a storied judicial career highlighted by his oversight of the 2009 chapter 11 case of General Motors Corporation (“Old GM”). In one of the most frenetic bankruptcy cases of all time, Judge Gerber signed an order (the “Sale Order”) approved the sale of substantially all of the assets of Old GM to a new entity, General Motors LLC (“New GM”), “free and clear” of claims against Old GM (other than a narrow range of expressly assumed liabilities), and with an express injunction to prevent Old GM creditors from proceeding against New GM. Now, he will be spending a substantial portion of his remaining time on the bench seeking to resolve the legal quandaries raised by the Sale Order, following the revelations last year that ignition switch defects in cars manufactured prior to 2009, which allegedly caused numerous deaths and injuries, were known by employees of Old GM but were not properly reported (or perhaps were deliberately covered up).

Read More from: Bankruptcy Law Insights

3 hours 36 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  The venue statute effectively allows those filing the case to choose which district’s bankruptcy court will hear the case. That ability to choose leads many firms whose business is located elsewhere to file for bankruptcy in Delaware’s bankruptcy court or in the Southern District of New York. Is this a bad thing? In two dimensions, it is. Since the choice of where to file is typically made by the debtor’s senior management and its professional advisers, these two have reason to file in a court whose decisions favor their interests—more discretion for managers and more protection from liability for directors. Sometimes a tilt toward their interests makes sense; sometimes not.

Read More from: WSJ.com: Bankruptcy Beat

3 hours 40 min ago
More is more, right? Not according to the Bankruptcy Court for the Northern District of Florida. The court recently ruled that when a creditor tries to capture the maximum amount of collateral in its security interest, this could have the opposite effect and result in an entirely unsecured claim. As most creditors know, the treatment of a claim in bankruptcy is governed not only by the Bankruptcy Code, but also by state law. The extent to which a creditor has a claim secured by a valid, enforceable security interest in the borrower’s assets often is governed by the applicable state’s Uniform Commercial Code (“UCC”).  Generally, in order for a security interest to attach to collateral under the UCC, three requirements must be met: (1) value must have been given; (2) the debtor must have rights in the collateral; and (3) depending upon the type of collateral, there must be an authenticated security agreement that provides a description of the collateral. As seen in In re Hintze, the sufficiency of such collateral description can be critical in defining the nature and extent of a secured creditor’s claim in bankruptcy. Facts
4 hours 25 min ago
Why pay for Turbo Tax or its competitors when, odds are, you can get it for free? Unless you like burning money. Seventy percent of American taxpayers qualify for free tax software. If your income was $60,000 last year or less, you can use commercial tax filing software for free through the IRS FreeFile program. Software is free, filing the return is free, and direct deposit of your refund is free. Did I mention it was free? Filing state tax returns Some twenty states participate in the FreeFile, too.  Find your state from this map. California, where I live, hasn’t joined FreeFile, but has its own, free on line tax filing service. Need tax help? If you have trouble doing your taxes on your own, there’s free help with your return, too. Trained volunteers help those with low incomes, disabilities or limited English through VITA, Volunteers Income Tax Assistance.  Find a VITA site near you.
4 hours 43 min ago
A RadioShack sign is viewed at a location in the Eastern Market neighborhood of Washington, D.C., in February 2015.
Melanie Cohen
GameStop  is picking up about 163 RadioShack Corp. locations, boosting its Spring Mobile collection of AT&T Inc. cellphone sales outlets by about 50%. 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.”) A federal judge has finalized an order for ex-billionaire and Texas entrepreneur Sam Wyly to pay a $198.1 million in fines, after regulators accused him of profiting for more than a decade from hidden stock trades. Read the DBR article in WSJ.

Read More from: WSJ.com: Bankruptcy Beat

4 hours 58 min ago
Geographic ties bind Federal Home Loan Banks and their members to local communities. The Federal Housing Finance Agency's recent proposal to change the FHLB membership requirements could put this connection at risk. The Federal Home Loan Bank system is a national network of local cooperatives. Each of the 12 Federal Home Loan Banks is as committed to its local region as the members it serves. The system aims to foster responsible lending and meet the needsÂ...

Read More from: BankThink

5 hours 31 min ago
Wall Street Journal The Dodd-Frank restriction on the Federal Reserve's authority to be a lender of last resort poses a threat to financial stability, Glenn Hubbard, former chair of the Council of Economic Advisers under President George W. Bush, and Hal Scott, a Harvard Law School professor, write in an op-ed for the Wall Street Journal. Restrictions on federal guarantees for bank deposits and money market funds also contribute to the threat. The Fed's lender-of-last-resort authority...

Read More from: BankThink

6 hours 36 min ago
Like many others, I have been struggling to figure out whether the new lunar year is a Sheep or a Goat. I found the answer last week in the archives of the League of Nations Committee for the Study of International Loan Contracts, which spent four years from 1935 to 1939 trying to figure out why sovereign debt was so screwed up, and what to do about it. During these four years, committee notables and their experts managed to foresee just about every 21st century sovereign debt controversy, from pari passu and feckless trustees to the epic and tiresome battle between contractual and statutory sovereign bankruptcy. The 1937 meeting minutes below also show a solid grasp of Odious Debt and sovereign lemons. Some governments might walk away from their debts just because, others have good economic or moral reasons not to pay, but the creditors cannot tell the two apart.

Read More from: Credit Slips

1 day 11 hours ago
Posted by Kathy Bazoian Phelps    Below is a summary of the activity reported for February 2015. The reported stories reflect: 2 guilty pleas or convictions in pending cases; over 64 years of newly imposed sentences for people involved in Ponzi schemes; at least 5 newly discovered schemes involving more $138 million; and an average age of approximately 47 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.    Kenneth Brewington, 50, was charged with running an alleged $2.5 million Ponzi scheme through a financial services marketing company called Compass Financial Solutions. The indictment alleges that Brewington and other co-conspirators falsely represented to investors that they held millions of Euros in overseas bank accounts and that investor funds would be used to obtain the release of the funds.    John A. Geringer, 48, of GLR Advisors and GLR Capital Management was barred by the SEC from the securities industry. The SEC charged Geringer with running a $60 million Ponzi scheme which GLR advertised as “SEC approved” and represented that it had returns of 17% to 25% during every year of its operation.

Read More from: The Ponzi Blog

1 day 18 hours ago
Think about bankruptcy. Nobody reads a bankruptcy blog for fun. You are here to find something out. You want to know if it is reasonable for you to think about bankruptcy. Does it make you nervous to think about bankruptcy? Perhaps it arouses feelings of shame. Are you too embarrassed to seek bankruptcy advice? If your answers are “yes,” you are perfectly normal. People with debt problems usually don’t seek help until things reach crisis proportions. There’s got to be something in human DNA that makes us put things off. Minor tooth pain is often ignored instead of seeing a dentist. Minor discomfort in your private parts down below will be ignored instead of seeing a butt doctor. Think hard. Think about freedom from debt worries. Think about bankruptcy. Human DNA also gives us a incredibly strong survival instinct. We may suffer hurt that is constant or unbearable. But we don’t just sit there waiting to die. We look for help. We expect help. We cry for help.

Read More from: Los Angeles Bankruptcy Blog

1 day 22 hours ago
Oregon student loan debtors breathed a sigh of relief this week when the Department of Education announced that it was finally firing five debt collection agencies that had been giving inaccurate information to student borrowers. I say finally firing these agencies because the department had been under fire for years for its partnership with these agencies and its insistence on paying them roughly a billion a year to harass student loan borrowers. The Department of Education ultimately found that Pioneer Credit, one of their largest collection partners, and four others had been regularly doling out inaccurate information about the department’s loan forgiveness program.  Due to incentive-pay structures, the debt collectors had little incentive to rout student loan debtors into loan forgiveness programs and often misinformed debtors to keep them outside the loan forgiveness programs. The original post is titled Good News for Oregon Student Loan Debtors , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .

Read More from: Oregon Bankruptcy Lawyer

2 days 4 hours ago
The 8th Circuit Court of Appeals has ruled that retirement funds rolled over from an Individual Retirement Account to purchase an annuity are exempt from the bankruptcy estate.  In re Miller (No. 13-3682).  Prior to filing bankruptcy, Joseph Miller, rolled over $267,319 from his IRA account to purchase an annuity contract from Minnesota Life Insurance Company.  The annuity was to pay the debtor $40,497.95 for the next 8 years.  Although it is clear that funds held in IRA accounts are exempt, the trustee argued that the funds lost that protected status when the annuity was purchased because the annuity did not meet the tax qualification rules of Internal Revenue  Code Section 408. Section 522(b)(3)(C) of the Bankruptcy Code provides that funds which are exempt from federal taxation are thereby made exempt from the claims of creditors.  Such funds are not part of the “bankruptcy estate.”
2 days 5 hours ago
A recap of the informed opinions (and the discussions they generated) on BankThink this week, including Dodd-Frank's impact on small institutions, Fed chair Janet Yellen's handling of attacks on her staff and Bitcoin's public but pseudonymous ledger.

Read More from: BankThink

2 days 21 hours ago
Twenty-five years ago, the Supreme Court held that a Bankruptcy Court had the authority to order the IRS to allocate payments made "voluntarily" by a Debtor when necessary to effectuate a successful reorganization.    United States v. Energy Resources Co., 495 U.S. 545 (1990).   Left to its own devices, the IRS will generally allocate payments to the oldest taxes first, or, in the case of payroll taxes, to non-trust funds taxes first.   If the Debtor can require the IRS to allocate payments differently, it can greatly impact the overall amount the Debtor will be required to pay.   A recent decision out of Fort Worth illustrates how Energy Resources continues to provide a valuable tool for Debtors with tax obligations.    In re Fielding, 522 B.R. 888 (Bankr. N.D. Tex.
2 days 22 hours ago
Dear Clients, Colleagues, and Friends:Twenty-six years is a long time in one place. While there is sadness in parting, the partners of Seder & Chandler, LLP and I have mutually agreed to separate our practices. Effective March 1, 2015, I will leave the firm and join my wife, Marina R. Matuzek, at her law offices located at 5 Austin Street, Worcester, MA 01609. As for my practice, I will continue to offer my services to present and future clients and represent them in consumer bankruptcy, business bankruptcy, and bankruptcy litigation in Massachusetts courts. As I have often said in my  “elevator speech”, it does not matter whether you are a debtor or creditor, consumer or business, owner or claimant, plaintiff or defendant—if you plan to be involved or are already involved in a bankruptcy case or an adversary proceeding, I can assist you. I offer my experience and knowledge in business and consumer Chapter 7, Chapter 11, and Chapter 13 cases, on all sides of a bankruptcy case and on all sides of an adversary proceeding. My twenty-six years in bankruptcy practice have also provided me with experience and knowledge in commercial litigation, loan transactions, corporate matters, mortgage foreclosure, and secured party sales. If you have a problem or need representation in any of these areas, I will be willing to sit down with you and explore your options. Seder & Chandler, LLP and I plan to continue our amicable relationship.
2 days 22 hours ago
When filing bankruptcy, it is very, very important to tell your attorney about ANY and ALL possible or potential claims that you have or may have against anyone. If you don’t list these claims in your bankruptcy filing, then it is quite likely that you will be prevented from pursing them later. In a recent opinion in the Bankruptcy Court for the Western District of Kentucky, Judge Stosberg ruled that an individuals employment law claim could not be pursued by her as she did not list the potential claim in her previous bankruptcy filing, even thought she had not yet hired an attorney to pursue the claim at the time she filed bankruptcy. For the full case, click here. Always disclose all claims to your bankruptcy attorney !
3 days 30 min ago