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In the new Harvard sponsored article, Financial Distress, Stock Returns, and the 1978 Bankruptcy Reform Act, forthcoming in The Review of Financial Studies, David Schoenherr, Dirk Hackbarth and Rainer Haselmann examine how bargaining power in distress affects the pricing of corporate securities.Summary:Harvard LogoThe authors study the effect of weakening creditor rights on distress risk premia via a bankruptcy reform that shifts bargaining power in financial distress toward shareholders. They find that the reform reduces risk factor loadings and returns of distressed stocks. The effect is stronger for firms with lower firm-level shareholder bargaining power. An increase in credit spreads of riskier relative to safer firms, in particular for firms with lower firm-level shareholder bargaining power, confirms a shift in bargaining power from bondholders to shareholders. Out-of-sample tests reveal that a reversal of the reform's effects leads to a reversal of factor loadings and returns.The post Harvard Article: Effect of Allocation of Bargaining Power and the 1978 Bankruptcy Reform Act appeared first on Culhane Meadows PLLC - Chapter 11 Business Bankruptcy Attorneys.

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

4 hours 29 min ago
In a six to three majority decision, the Supreme Court limited the impact of Stern v. Marshall, 564 U.S. 2 (2011) by holding in Wellness International Network, Ltd. v. Sharif, 575 U.S.___(2015) ( decided on May 26, 2015), that private litigants may consent to have their claims adjudicated by a Bankruptcy Court. Since the release of Stern in 2011, the Courts at all levels of the federal system have struggled with the question of what authority as Article I courts do the Bankruptcy Courts have to decide questions vested in the federal District and Appeals Courts under Article III of the United States Constitution. Wellness does not alter that debate which rages on within the walls of the Supreme Court, but the decision reaches a practical result grounded in the necessity of the needs of every day litigants and lawyers by holding that private parties may consent to have their disputes resolved by a Bankruptcy Judge.

Read More from: Creditors' Sidebar

20 hours 46 min ago
Yesterday, the Supreme Court issued its decision in the much-anticipated Wellness International Network, Ltd. v. Sharif.  And yesterday, we gave you the highlights of the decision.   Today, as promised, we bring you our more complete analysis on Wellness and its implications for bankruptcy matters moving forward.  Background 
21 hours 45 min ago
Although bankruptcy cases can be complex, many of the procedures and cases are routine. Before filing a bankruptcy case, you or your attorney should analyze your eligibility for different forms of debt relief available under the Bankruptcy Code and which form of relief is most beneficial to you. Be sure you understand the relief you can obtain and its limitations. To file a bankruptcy case, documents called a Petition, Schedules, and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court. You will have to pay a filing fee to the bankruptcy court. Once your case is filed, you will have to attend a first meeting of creditors where you will be questioned under oath by a court official called a “trustee”. At this meeting you may also be questioned by your creditors. If you choose to file a Chapter 7 case, you may be asked to reaffirm a debt. You may want help deciding whether to do so. A creditor is not permitted to coerce you into reaffirming debts. If you choose to file a Chapter 13 case in which you repay your creditors what you can afford over a 3 to 5 year period, your attorney will help you in preparing your Chapter 13 plan and with the confirmation hearing on your plan which will be before a Federal Bankruptcy Judge.
22 hours 31 min ago
50 Cent arrives at the Billboard Music Awards at the MGM Grand Garden Arena on May 17 in Las Vegas.
Eric Jamison/Invision/Associated Press
50 Cent is trying to use his boxing promotion company to dodge a sex-tape lawsuit. The rapper placed SMS Promotions LLC in bankruptcy Tuesday in U.S. Bankruptcy Court in Hartford, Conn., to dodge a suit filed by Rick Ross’s ex, according to the New York Daily News. Lastonia Leviston, rapper Rick Ross’s ex-girlfriend, sued 50 Cent in 2010, claiming he violated her privacy by posting a sex tape featuring her and Ross online. Ten minutes before the trial was set to start Tuesday, Ms. Leviston’s lawyers got an email notifying them of the bankruptcy filing. The filing puts the brakes on lawsuits against SMS. 50 Cent’s lawyers say that because the rapper owns the company, he should be protected from lawsuits, as well. Ms. Leviston’s lawyer said the filing was an “egregious case of sandbagging” and will seek to proceed with trial in state court.

Read More from: WSJ.com: Bankruptcy Beat

22 hours 44 min ago
In the case of In re Nortel Networks, Inc. et al., Case No. 09-10138 (KG) (Del. Bankr. Ct. May 21, 2015), Judge Gross considered a motion filed by the “Ad Hoc Committee of Canadian Employees Terminated Pre-Petition” seeking leave to file proofs of claim after the expiration of the Bar Date applicable to Nortel’s U.S. Debtors. Background The Canadian Employees are a self-styled “Ad Hoc Committee” of approximately 1705 former employees of the Canadian Debtors.  They were not employees of any of the U.S. Nortel debtors.  Prior to the Petition Date, each of the Canadian Debtors terminated the employment of the Canadian Employees who received a termination letter from the Canadian Debtors which, as is relevant here, proposed a severance payment in return for releases benefiting the Nortel Entities. The Canadian employees were exempt from the Canadian claims process, but not the U.S. Debtors claims process.  The applicable bar date against the U.S. Debtors was in 2009, however it was not until 2012 that they believed they may have a claim against the U.S. Debtors when their law firm advised that they should file a claim against the same. Analysis
1 day 48 min ago
Women in banking are making big strides Â-- but there's still a long way to go before achieving gender parity at the executive level. Here's how up-and-comers can carve out a path to the top.

Read More from: BankThink

1 day 55 min ago
Wynn at Law, LLC Continues to Grow — Opens Fourth Bankruptcy Law Office in Southeastern Wisconsin Lake Geneva, WI – May 27, 2015 – Wynn at Law, LLC, a Lake Geneva based law firm practicing bankruptcy, real estate law, and estate planning, is proud to announce a new law office location in Muskego, Wisconsin. The new law office location in Muskego follows the announcement of Wynn at Law, LLC’s new Delavan and Salem, Wisconsin offices. This marks four Southeastern Wisconsin bankruptcy office locations for Wynn at Law, LLC – Lake Geneva, Wisconsin; Salem, Wisconsin; Delavan, Wisconsin; and Muskego, Wisconsin. “Wynn at Law has been able to expand our Southeastern Wisconsin bankruptcy law firm presence due to the success rate of our firm,” stated Attorney Shannon Wynn. “We are excited to establish a bankruptcy law office location in Muskego. We have many clients in the Muskego, New Berlin, Big Bend, and Mukwonago areas. Our clients’ time is valuable. We can better serve those area clients with a bankruptcy office closer to their homes and places of employment.”

Read More from: Wynn at Law, LLC

1 day 1 hour ago
Healthcare is an ongoing wellspring of controversy in the media, and medical bills remain one of the greatest sources of debt for Americans across the United States.  According to a December 2014 report released by the Consumer Financial Protection Bureau, a staggering 43 million Americans are burdened with medical debt, accounting for more than half of all collection tradelines on consumer credit reports: just over 52%.  With so many Americans financially debilitated with so much medical debt, more and more people are turning to bankruptcy for relief.  But how does bankruptcy help eliminate medical debt?  Our bankruptcy lawyers explain how Chapter 7 or Chapter 13 could help you get your medical bills under control for a clean financial slate. Understanding Dischargeable Debt vs. Non-Dischargeable Debt

Read More from: Young, Klein & Associates

1 day 2 hours ago
The explosive growth of largely unregulated online lenders has given them new opportunities to prey on unsuspecting borrowers.

Read More from: BankThink

1 day 2 hours ago
Recovering Your Vehicle More and more clients are filing chapter 13 bankruptcy to recover their vehicle which was impounded by the city of Chicago. This is the very common case where someone with Chicago parking tickets winds up on the boot list and eventually their vehicle gets impounded. They also receive a notice from the+ Read More The post Bankruptcy Is The Answer To Recovering An Impounded Car: But Be Patient appeared first on David M. Siegel.
1 day 3 hours ago
Joshua Roberts/Reuters
The U.S. Supreme Court on Tuesday said bankruptcy judges have the power to make final judgments in certain legal disputes—a decision that bolsters the power of U.S. Bankruptcy Court system. 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.”) Highland Capital Management is suing Credit Suisse Group AG for more than $500 million, the hedge fund firm’s latest salvo in efforts to recoup some losses from the Swiss bank’s ill-fated loan program to developers of luxury properties in the U.S. Read the DBR article in WSJ.

Read More from: WSJ.com: Bankruptcy Beat

1 day 3 hours ago
Receiving Wide Coverage ... Cracking the Tax Code: The taxman is the latest victim of identity theft. The Internal Revenue Service said hackers stole tax-return information for about 100,000 U.S. households, including Social Security numbers. The thieves used the IRS's own online services to penetrate its databases, cracking the code of multistep authentication processes. Interestingly, the IRS commissioner, John Koskinen, said the incident was "not a hack or data breach. These are imposters pretending to be...

Read More from: BankThink

1 day 3 hours ago
      A bankruptcy court in Virginia ruled against the US Trustee on a motion to dismiss under §707(b)(3)(B), finding that social security income cannot be considered under the totality of the circumstances standard.  In re Moriarty, No. 13-51437, 2015 WL 2393358 (Bankr. W.D. Va. May 18, 2015).   The US Trustee filed a motion to dismiss the case under §707(b)(3)(B) alleging that the debtor could afford to pay her debts.  In response, Ms. Moriarty converted her case to chapter 13, proposing to pay the mortgage outside the plan, and only pay the attorneys fees and administrative fees with a zero dividend to unsecured creditors.  The chapter 13 trustee objected to this plan, alleging that the case should be reconverted to chapter 7.  The Debtor did so, and responded to the renewed motion to dismiss by the US Trustee.     Debtor received income from employment of $3,226,.68 gross/month, from survivor's benefit from the Department of Labor of $2,070, and $1,591 in social security benefits.  The sole issue was whether social security benefits should be considered in determinng whether to dismiss a case as abusive under §707(b)(3)(B).     §101(10A)(B) excludes social security income from the definition of current monthly income for purposes of the means test.  Thus receipt of social security income can never give rise to a presumption of abuse under the means test.

Read More from: Tampa Bankruptcy

1 day 4 hours ago
ISS is evaluating equity plan ballot proposals under a new “scorecard” approach this season, which we previously discussed here. Through May 12, ISS has supported 85.9% of equity plan proposals covered under its S&P 500 and Russell 3000 models, higher than in past years. In 2014, of the 808 companies in those indexes that were reviewed, a little over 80% received favorable recommendations for their plans.   
1 day 5 hours ago
In re Mississippi Valley Livestock, Inc., 745 F.3d 299 (7th Cir. 2014) – A debtor sold cattle for the account of a cattle producer and then remitted the proceeds to the producer.  A chapter 7 trustee sought to recover the payments as … Continue reading →
1 day 6 hours ago
Resolving an issue left open by two prior decisions, the Supreme Court ruled that the right to entry of a final judgment by an Article III court, like the right to trial by jury, is a personal right which can be waived or consented away (subject to supervision by an Article III Court).    The decision left Chief Justice Roberts, whose broad language in Stern v. Marshall spawned a plethora law review articles, in the minority, while Justice Sotomayor wrote for the six justices in the majority.   Wellness International Network, Ltd. v. Sharif, No. 13-935 (5/26/15).     The Stern ProblemArticle III of the Constitution states that the judicial power is vested in courts created under that Article, which is to say, judges appointed by the President, confirmed by the Senate and enjoying life tenure.    Over the years, Congress created many other judges, such as U.S. Magistrate Judges, Administrative Law Judges and Bankruptcy Judges, to help with the workload of the federal courts.   These judges were not appointed by the President or confirmed by the Senate and did not enjoy life tenure.    While they were under the supervision of Article III Judges, some of these legislatively created judges enjoyed great levels of independence.   In Stern v. Marshall, 564 U.S. ___, 131 S.Ct. 2594 (2011), the Court said that Congress did not have unlimited power to create adjuncts to assist the Article III judges.
1 day 18 hours ago
This morning, the Supreme Court issued its decision in the much-anticipated Wellness International Network, Ltd. v. Sharif.  And finally, the various opinions of the Court have offered some meaningful guidance on some of the key issues raised in the wake of Stern v. Marshall.  Although the majority opinion did not directly address the first question before the Court – that of whether actions implicating state law property matters under the ambit of section 541 of the Bankruptcy Code are “Stern-type” claims or ordinary “core” claims – it did resolve the current circuit split regarding whether bankruptcy courts’ constitutional deficiencies pursuant to Stern can be cured with the parties’ consent. (Short answer: yes).  A more complete analysis will follow tomorrow, but given the breaking news, we wanted to bring the decision to your attention ASAP.  For complete coverage of Stern, Arkison, Wellness, and their progeny, please visit the Stern Files, available here. So What Do I Need to Know?
1 day 20 hours ago
In a much-anticipated decision, the Supreme Court established the parameters of consent to jurisdiction under Stern v. Marshall in Wellness Int’l Network, Ltd. v. Sharif, No. 13-935 Decided May 26, 2015. Syllabus Respondent Richard Sharif tried to discharge a debt he owed petition­ers, Wellness International Network, Ltd., and its owners (collective­ly Wellness), in his Chapter 7 bankruptcy. Wellness sought, inter alia, a declaratory judgment from the Bankruptcy Court, contendingthat a trust Sharif claimed to administer was in fact Sharif’s alter-ego, and that its assets were his personal property and part of his bankruptcy estate. The Bankruptcy Court eventually entered a de­fault judgment against Sharif. While Sharif’s appeal was pending inDistrict Court, but before briefing concluded, this Court held that Ar­ticle III forbids bankruptcy courts to enter a final judgment on claims that seek only to “augment” the bankruptcy estate and would other­wise “exis[t] without regard to any bankruptcy proceeding.” Stern v. Marshall, 564 U. S. ___, ___. After briefing closed, Sharif soughtpermission to file a supplemental brief raising a Stern objection. The District Court denied the motion, finding it untimely, and affirmed the Bankruptcy Court’s judgment.

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

2 days 33 min ago

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