ABI Blog Exchange

This April 1972 file photo shows rock singer Sylvester “Sly” Stone of the music group Sly and The Family Stone.
Associated Press
A Los Angeles jury awarded Sly Stone $5 million this week in a royalty dispute that precipitated the 2013 bankruptcy filing of businesses owned by the funk legend’s estranged manager. Mr. Stone, whose real name is Sylvester Stewart, filed a breach of contract suit in 2010 against record producer Jerry Goldstein, attorney Glenn Stone, Even Street Productions Ltd. and others, claiming they withheld royalties due to him. Sly Stone teamed up with the defendants in the late 1980s either to reinvigorate his career or to help him recoup royalties from his earlier work, depending on which side is telling the story. A 16-day trial in Los Angeles Superior Court concluded Friday, and a jury on Tuesday a jury said Even Street underpaid Sly Stone $2.5 million in profits due under his employment agreement. The jury also found Mr. Goldstein liable for $2.45 million in damages and found Glenn Stone liable for $50,000.

Read More from: WSJ.com: Bankruptcy Beat

16 hours 39 min ago
This April 1972 file photo shows rock singer Sylvester “Sly” Stone of the music group Sly and The Family Stone.
Associated Press
A Los Angeles jury awarded Sly Stone $5 million this week in a royalty dispute that precipitated the 2013 bankruptcy filing of businesses owned by the funk legend’s estranged manager. Mr. Stone, whose real name is Sylvester Stewart, filed a breach of contract suit in 2010 against record producer Jerry Goldstein, attorney Glenn Stone, Even Street Productions Ltd. and others, claiming they withheld royalties due to him. Sly Stone teamed up with the defendants in the late 1980s either to reinvigorate his career or to help him recoup royalties from his earlier work, depending on which side is telling the story. A 16-day trial in Los Angeles Superior Court concluded Friday, and a jury on Tuesday a jury said Even Street underpaid Sly Stone $2.5 million in profits due under his employment agreement. The jury also found Mr. Goldstein liable for $2.45 million in damages and found Glenn Stone liable for $50,000.

Read More from: WSJ.com: Bankruptcy Beat

16 hours 39 min ago
In a Breaking News Alert  at CommercialBankruptcyInvestor.com, Chapter11Dockets.com discusses the Delaware Bankruptcy Court’s decision to allow Caesars bankruptcy cases to proceed in Chicago, Illinois. Read more about this fast breaking news here!  
18 hours 33 min ago
As a part of our continuing coverage of the 2012-2014 Final Report and Recommendations of the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11, we’ve reported on a number of the Commission’s proposed revisions and reforms to the Bankruptcy Code, many of which (i.e., systemically important financial institutions, cross-border cases, DIP financing, etc.) primarily impact the traditional big players in large-scale or so-called “mega” chapter 11 cases that dominate the media headlines: companies with complex corporate structures and hundreds of millions of dollars on their balance sheets. The “one percenters” of chapter 11, if you will. But what about the little guy? What about the family owned businesses, the mom and pop stores, and the startup companies that form the “backbone” of the American economy?
18 hours 41 min ago
Here at Shenwick & Associates, many of our more challenging personal bankruptcy cases involves past due tax debts. We've previously written about the complex rules involving the dischargeability of taxes hereand here.This month we want to discuss the concept of "tolling." There are several types of events that serve to stop the clock on various time periods that determine when an income tax becomes dischargeable:
  • A prior bankruptcy case. The filing of a bankruptcy case will toll both the rule that a tax must be more than three years past its due date to be dischargeable in bankruptcy (the "3 year rule") and the rule that a tax must have been assessed for more than 240 days to be dischargeable in bankruptcy (the "240 day rule")
  • An request for a due process hearing or an appeal of a collection action taken against a debtor. The same rules apply.
  • An offer in compromise.

Read More from: Shenwick & Associates

20 hours 23 min ago
The federal courts have instated a $25 fee for transferring corporate bankruptcy claims. The decision was met with little fanfare Â-- but it could pave the way to a financial transactions tax.

Read More from: BankThink

21 hours 17 min ago
Susan Wachter and I have a new (short!) paper up on SSRN. It's called Second-Liens and the Leverage Option, and is about the curious absence of negative pledge clauses in US home mortgages, which enabled enormous amounts of second-lien leverage (much more than anyone realized) during the housing bubble. We have a very simple, narrowly tailored legislative fix that should make additional mortgage leverage via junior liens a bargained-for matter between the borrower and the senior lienholder(s), rather than an absolute right of the borrower.  Abstract is below the break: The finance literature has long recognized the existence of embedded put options within mortgage contracts, such as a prepayment option and a walk-away default option.  This Article identifies a previously unrecognized option embedded in residential mortgages:  a mortgagor’s unilateral option to increase total leverage on the collateral property through junior liens irrespective of existing mortgagees’ wishes.  We term this the “leverage option.”  We show how the leverage option was created as an unintended consequence of a federal law enacted to deal with seller financing arrangements that prevailed during the inflationary economy of the 1970s.  The leverage option was of little importance until the housing bubble in the 2000s, as homeowners massively increased their leverage using second-lien mortgages. 

Read More from: Credit Slips

21 hours 30 min ago
A judge approved a settlement between the trustee in charge of Jeffrey Soffer’s failed Fontainebleau Las Vegas casino project and the company’s former directors and officers that will put millions in creditors’ pockets. 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 our homepage, scroll to the bottom and click “try for free.”) A judge Monday denied a request by GT Advanced Technologies Inc. shareholders to have a voice in the former Apple Inc. supplier’s bankruptcy, though he left open the possibility for the group to come back with a new proposal, DBR reports in The Wall Street Journal. Japan’s Skymark Airlines Inc. filed for bankruptcy after running low on cash, Bloomberg reports.

Read More from: WSJ.com: Bankruptcy Beat

22 hours 54 min ago
A judge approved a settlement between the trustee in charge of Jeffrey Soffer’s failed Fontainebleau Las Vegas casino project and the company’s former directors and officers that will put millions in creditors’ pockets. 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 our homepage, scroll to the bottom and click “try for free.”) A judge Monday denied a request by GT Advanced Technologies Inc. shareholders to have a voice in the former Apple Inc. supplier’s bankruptcy, though he left open the possibility for the group to come back with a new proposal, DBR reports in The Wall Street Journal. Japan’s Skymark Airlines Inc. filed for bankruptcy after running low on cash, Bloomberg reports.

Read More from: WSJ.com: Bankruptcy Beat

22 hours 54 min ago
Successful filing of Chapter 11 and Appointment of Chapter 11 Trustee to facilitate sales of assets The post In re Overland Energy, Inc.; Acorn Energy, Inc.; Tega Operating Co. appeared first on Culhane Meadows PLLC - Chapter 11 Business Bankruptcy Attorneys.

Read More from: Richard G. Grant, P.C.

22 hours 55 min ago
Successful sale of assets pursuant to Bankruptcy Code Section 363 and of resolution of ownership/control dispute The post In re Triton EP, LLC/Peak Flow Operating & Drilling, LP appeared first on Culhane Meadows PLLC - Chapter 11 Business Bankruptcy Attorneys.

Read More from: Richard G. Grant, P.C.

23 hours 21 sec ago
Critics of online alternative lenders argue that their underwriting models are unproven and that a financial crisis could bring the whole industry crashing down. But while Lending Club and other startups may be relatively new to the scene, they're no greenhorns.

Read More from: BankThink

23 hours 17 min ago
Successful acquisition of original Bob’s Steak & Chop House utilizing leveraging of bid by purchase of primary secured note at discount (outbidding Omni Hotel group while paying less out of pocket) The post In re Silveroak Holdings, Ltd. (Bob’s Steak & Chop House) appeared first on Culhane Meadows PLLC - Chapter 11 Business Bankruptcy Attorneys.

Read More from: Richard G. Grant, P.C.

23 hours 30 min ago
Receiving Wide Coverage ... Gold Rush: Three armed robbers stole historic gold nuggets from Wells Fargo's corporate museum in San Francisco on Tuesday. The masked suspects crashed their sports-utility vehicle into the entrance of the museum and broke into the display case while holding a security guard at gunpoint, according to reports. At an estimated value of $10,000, the nuggets are hardly a staggering haul, but the New York Times notes they have sentimental value: "the...

Read More from: BankThink

1 day 50 min ago
People (and institutions) like rules that give them a competitive edge. You need only to look at the recent headlines and the media coverage of “Deflate Gate” to understand this basic concept. Reportedly, Tom Brady, Peyton Manning, and other quarterbacks lobbied the NFL to allow each team to supply its own set of footballs for use by that team’s quarterback during games. Note—I am not suggesting ill motive on the part of either Brady or Manning (or the others).  Although I never played quarterback, I can understand a quarterback’s desire to select personally his own game-day equipment.  How does any of this relate to chapter 11 reform? To answer that question, ask yourself a different one: Do you like how chapter 11 currently resolves your client’s key issues in most instances? If you answered “yes,” you likely see no reason for reform. If you answered “no,” you likely would favor reform, but perhaps only those aspects of reform beneficial to your client. Therein lies the ever-present dilemma for policymakers:  implementing the best policy for the overall federal bankruptcy system in the midst of so much noise.

Read More from: Credit Slips

1 day 1 hour ago
The SEC has announced that it will host a roundtable on February 19 on ways to improve the proxy voting process. 
1 day 15 hours ago
“I am broke.” I’m sorry about that. But you can probably fix it. The Los Angeles bankruptcy law firm of Bayer Wishman Leotta  has built a 34 year reputation for getting clients out of debt. I know. Bankruptcy is the last thing you want to think about. I want to explain why a lawyer makes a career in the practice of bankruptcy law. If you can understand that, then I think you will understand why a bankruptcy case is a valuable consumer tool. And, that a bankruptcy case is nothing you should fear.
Why we practice bankruptcy law. We don’t do it for the money. You think a lawyer gets rich representing folks who are broke? Please, tell me how to do that. The fact is a lawyer does not make a mint doing bankruptcy work. I won’t deny that we make a comfortable living. But that comes from decades of putting in 12 to 14 hour work days. Often, six days a week. And, many years of difficult study and passing a bar exam.  (Roughly half of all bar takers fail to pass.)  But nobody we gets rich doing this. How can you, when your clients are broke? Lawyers that go into law to make money wind up doing divorces. Accidents. Corporate and entertainment law. They get jobs on Wall Street. The gold diggers are smart enough not to go into bankupcy law. And, that’s a good thing. Making a lot of money is the wrong reason to be a bankruptcy lawyer. Here’s why.

Read More from: Los Angeles Bankruptcy Blog

1 day 18 hours ago
In this installment of the Bankruptcy Blog’s series on the ABI Commission to Study the Reform of Chapter 11, we turn our attention to the recommendations and findings on the trustee’s avoiding powers (section V.C.), the standard for reviewing settlements and compromises (section V.G.), and the in pari delicto doctrine (section V.H.). Avoiding Powers The ABI Commission focused on two aspects of the trustee’s powers of avoidance under the Bankruptcy Code: the trustee’s ability to pursue preference claims under section 547 and to recover property involved in any avoided transfers (or the value of such property) under section 550. A preference is a transfer of property to or for the benefit of a creditor, made within 90 days of the filing of the bankruptcy petition by an insolvent debtor on account of a preexisting debt, which allows the transferee to receive more than it would have received in a chapter 7 liquidation. A preference defendant can rebut the showing of a prima facie preference by establishing certain defenses.
1 day 19 hours ago
In this installment of the Bankruptcy Blog’s series on the ABI Commission to Study the Reform of Chapter 11, we turn our attention to the recommendations and findings on the trustee’s avoiding powers (section V.C.), the standard for reviewing settlements and compromises (section V.G.), and the in pari delicto doctrine (section V.H.). Avoiding Powers The ABI Commission focused on two aspects of the trustee’s powers of avoidance under the Bankruptcy Code: the trustee’s ability to pursue preference claims under section 547 and to recover property involved in any avoided transfers (or the value of such property) under section 550. A preference is a transfer of property to or for the benefit of a creditor, made within 90 days of the filing of the bankruptcy petition by an insolvent debtor on account of a preexisting debt, which allows the transferee to receive more than it would have received in a chapter 7 liquidation. A preference defendant can rebut the showing of a prima facie preference by establishing certain defenses.
1 day 19 hours ago

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