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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

5 hours 4 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.
5 hours 49 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.
8 hours 20 min 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

13 hours 34 min 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

13 hours 41 min 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.
15 hours 25 min 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

15 hours 36 min 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

15 hours 38 min 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.

15 hours 59 min 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.
16 hours 4 min 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

16 hours 4 min 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

16 hours 7 min 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

16 hours 47 min 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

22 hours 19 min 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 2 hours ago
Upcoming Committee Formation Meeting:   Friday, February 12, 2016, 10:00 a.m. Case Name:  SFX Entertainment, Inc., et al. Case Number:  16-10238 (MFW) Location:  The DoubleTree Hotel, 700 King St., Wilmington, DE 19801 Notice of Formation Meeting for Official Committee of Unsecured Creditors can be found here. Additional information and documents are available from Kurtzman Carson Consultants LLC. Contact Norman L. Pernick, Nicholas J. Brannick, or David W. Giattino for more information.
1 day 8 hours ago
Zuma Press
Companies seeking the fresh start of bankruptcy aren’t the only ones that have to contend with the transparency that is at the heart of chapter 11. It also applies to the lawyers and other professionals who work on the cases. To report on rising legal fees at the nation’s top law firms, The Wall Street Journal reviewed dozens of bankruptcy filings disclosing the ranges of firms’ hourly billing rates as well as the individual rates of partners in a variety of practices. “Bankruptcy court is one of the few places where this stuff becomes public,” said legal consultant Ward Bower of Altman Weil. The filings, made in some of the largest chapter 11 cases filed last year, show that some law firms have increased their maximum partner rates to approach $1,500 per hour. Many senior partners routinely billed between $1,200 and $1,400 an hour last year. The filings, made in some of the largest chapter 11 cases filed last year, show that many senior partners billed between $1,200 and $1,300 per hour, with some approaching $1,400. Some firms have recently increased their maximum partner rates to approach $1,500 per hour, while a few star lawyers can command close to $2,000 per hour.

Read More from: WSJ.com: Bankruptcy Beat

1 day 9 hours ago
Problems Getting Paid In The Past Over the past 20 years, I have been searching for the reason or reasons why bankruptcy judges make it so difficult for bankruptcy attorneys to get paid in Chapter 13 consumer bankruptcy cases. This goes all the way back to the early 1990’s when some judges would simply not+ Read More The post Some Judges Making It Difficult For Bankruptcy Attorneys To Get Their Fees Ordered appeared first on David M. Siegel.
1 day 10 hours ago
Last June we covered the U.S. Supreme Court’s decision in Baker Botts LLP v. ASARCO, which held that the estate may not compensate professionals under section 330(a)(1) of the Bankruptcy Code for fees incurred in defending fee applications.  At the time, we suggested as a potential work-around that estate professionals could seek contractual language in their engagement letters and retention orders providing that the estate would compensate the professionals for any fees associated with defending fee applications.  A recent ruling by Judge Walrath of the United States Bankruptcy Court for the District of Delaware in In re Boomerang Tube, Inc., however, calls into question that proposed solution.  Background:
1 day 11 hours ago
In re Boomerang Tube, Inc.,Case No. 15-11247 (MFW), 2016 WL 385933 (Bankr. D. Del. Jan. 29, 2016) In this case, the Delaware Bankruptcy Court addressed a question remaining in the wake of the Supreme Court’s ASARCO opinion:  Although fees incurred by debtors’ attorneys in defending challenges to their fees are generally not permitted under section 330 of the Bankruptcy Code, may such fees be approved if they are provided in the attorneys’ retention application under section 328(a)?  See Baker Botts LLP v. ASARCO LLC, 135 S.Ct. 2158 (2015).  In a succinct Opinion, Judge Mary F. Walrath ruled that they may not.  After ASARCO, Her Honor held no “contract exception” remains for fee defense provisions under section 328 even if such provisions would have previously been permitted under Third Circuit precedent. Read More › Tags: Employment, Retention & Compensation

Read More from: Delaware Bankruptcy Insider

1 day 13 hours ago

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