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Today, we follow up on our earlier post where we reviewed the United States Bankruptcy Court for the District of Delaware’s decision in Energy Future Holdings, focusing on the contractual interpretation issues implicated in a make-whole analysis. As promised, today’s post focuses on the automatic stay issues raised in the bankruptcy court’s decision. The bankruptcy court held that (i) if the automatic stay were lifted, the Trustee for the EFIH First Lien Notes could decelerate the EFIH First Lien Notes and the non-settling Noteholders would then be entitled to a make-whole and (ii) a genuine issue of material fact existed as to whether the Trustee could establish cause to lift the automatic stay retroactively to decelerate the Notes.  The Summary Judgment Opinion The Trustee’s Qualified Right to Rescind the Acceleration Was Barred by the Automatic Stay
3 hours 56 min ago
Bloomberg News
Nearly seven years since the collapse of Lehman Brothers, former chief Richard Fuld Jr. is still in the first stage of grief—denial. In a rare public appearance at a conference Thursday, Mr. Fuld reportedly argued that Lehman wasn’t a bankrupt company in September, 2008. He also said it had $28 billion in equity capital and $127 billion in unencumbered collateral. For most, the fact Lehman filed for Chapter 11 bankruptcy protection would be conclusive evidence it was, in fact, bankrupt. But Mr. Fuld said the firm was “mandated into bankruptcy,” a phrase he has used in the past. That flies in the face of the 2010 Lehman bankruptcy examiner’s report, which concluded there was sufficient evidence to find Lehman was insolvent by September 8, 2008—and perhaps earlier. Mr. Fuld also insisted all 27,000 Lehman employees were “risk managers” because each owned equity in the firm. The notion that holding equity qualifies one as a risk manager at least sheds some light on the failure of Lehman to manage its risk.

Read More from: WSJ.com: Bankruptcy Beat

9 hours 36 min ago
Baltimore attorney Jeff Scholnick will be a panelist for the business workshop on May 30, 2015 at The Emerging Technology Center. The workshop will begin at 9:00AM. Mr. Scholnick will be discussing unique legal issues that employers and businesses confront on a daily basis.  For entrepreneurs who are willing to open their own businesses, there are many risks. These risks are compounded by differences caused by language barriers. The objective of the Business Seminar is to assist Latino business owners and entrepreneurs in accessing information and resources to further develop and grow their businesses.  Businesses need to be aware of insurance issues, implications of employees’ conduct and behavior, the legal ramifications of contracts as well as other “red flags” that make owning a business such a challenge. The LPN is hosting this event as part of its educational workshop series.  With a focus on business development, the LPN endeavors to contribute to building a robust business community which supports a healthy and sustainable business climate that contributes to enhancing the overall quality of life for Baltimore City. For more information, click here.

Read More from: Scholnick Law

9 hours 57 min ago
The number of U.S. workers filing new claims for unemployment rose to 282,000 last week, according to a Labor Department report released today. Despite last week’s rise in initial claims, the number stayed below 300,000 – the mark generally associated with a firming jobs market – for the 12th week. Read more here.
11 hours 54 min ago
Richard Fuld Jr., the man at the helm of Lehman Brothers Holdings Inc. when it collapsed in 2008, said a “perfect storm” of events caused the financial crisis. Among the contributing factors Mr. Fuld listed Thursday were government officials who pushed for lower home-lending standards and homeowners who used their equity on their homes “as ATM accounts.” “It’s not just a one single thing, it’s all these things taken together,” he said. His comments came at the 2015 Marcum MicroCap Conference in midtown New York, where he was giving the keynote luncheon address–his first such appearance since Lehman filed for bankruptcy. The first minutes of his remarks were broadcast live on CNBC, complete with the clinking of the silverware in the background. Mr. Fuld has kept a low profile since leaving Lehman Brothers. Most of his public remarks since then have been before lawmakers in Washington. He joked Thursday that he didn’t count “my wonderful time with Congress” as a speaking engagement. He started his remarks with a brief discussion of Lehman’s culture and its compensation practices, which he said fostered a sense of teamwork. Then he discussed the fall of Lehman and took the audience on a whirlwind tour of the easy-money policies that led its demise. “Regardless of what you heard about Lehman’s risk management, we had 27,000 risk managers because they all had a piece of the firm,” he said.

Read More from: WSJ.com: Bankruptcy Beat

12 hours 21 min ago
A visit to an overnight shipping store in Napa Valley reveals that outdated payment-processing procedures remain de rigueur with some merchants Â-- despite the fraud risk.

Read More from: BankThink

12 hours 54 min ago
The Economist had an interesting article concluding that the evidence resulting from studies after the passage of BAPCPA indicate that the rules for Chapter 7 debtors might be too strict. The authors first looked at the effect on consumer bankruptcy filings (see chart). Although the change was designed to encourage people to file Chapter 13, paying at least some of their debts, the long term effect was slightly different. The reform had a big impact. At least at first, Chapter 13 filings rose relative to Chapter 7 ones. In a new paper, from Stefania Albanesi, of the New York Federal Reserve, and Jaromir Nosal, of Columbia University, finds that the reform led to a permanent drop in the bankruptcy rate. Will Dobbie of Princeton University and Jae Song, of the Social Security Administration, have made finding that suggests that this is not necessarily a good thing. More...The post The Economist: Bankruptcy and the Economy | A Fresh Start appeared first on Culhane Meadows PLLC - Chapter 11 Business Bankruptcy Attorneys.

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

13 hours 19 min ago
Just because you list a student loan debt on your bankruptcy case doesn’t mean it’s wiped out once the case is over. You need to take additional action – but before that, you need to do your homework. Once upon a time, student loans were dischargeable in bankruptcy court. As the years went by, more limits were placed on people who wanted to wipe out those debts. Congress gradually increased the required age of the past due federal loans to be discharged automatically, and then in 2005 put the final nail in the coffin by sweeping up private student loans as well. In 1996, the Bankruptcy Code prevented the discharge of all “educational . . . loans made, insured or guaranteed by a governmental unit or nonprofit institution.” And so anyone with a student loan that had no connection with the government or a nonprofit institution was, conceivably, home free. Enter James Corletta, who filed for bankruptcy in 1997 (under his former name of James Pappas) with the hope of, among other things, wiping out a student loan issued by Texas Higher Education Coordinating Board that he’d cosigned for a friend of his.
13 hours 32 min ago
Four years ago, in Stern v. Marshall, the Supreme Court stunned many observers by re-visiting separation of powers issues regarding the jurisdiction of the United States bankruptcy courts that most legal scholars had viewed as long settled. Stern significantly reduced the authority of bankruptcy courts, and bankruptcy judges and practitioners both have since been grappling with the ramifications of that decision. It quickly became clear, notwithstanding the Court’s characterization of its holding in Stern as “narrow,” that the Court would need to address and clarify two key questions regarding the power of judges and courts created under Article I, rather than Article III, of the Constitution: the scope of what constitutes a “public right” in the context of bankruptcy that can be decided by an Article I judge, and whether the right to have a dispute determined by an Article III judge may be waived by consent

Read More from: Bankruptcy Law Insights

14 hours 5 min ago
The continuing saga of the impact of the U.S. Supreme Court’s Stern v. Marshall decision took a major turn Tuesday when the Court issued its ruling in the Wellness International Network, Limited v. Sharif case (follow link for copy of opinion). Before considering the decision and its significance, let’s first take a look at some past hits — bankruptcy court authority-style. The Big Picture: The Stern v. Marshall Decision. In its 2011 summer blockbuster Stern v. Marshall, decided by a 5-4 vote, the U.S. Supreme Court held that even though Congress designated certain state law counterclaims as “core” proceedings, Article III of the U.S. Constitution prohibits bankruptcy courts from finally adjudicating those claims.  Like a good cliffhanger, Stern v. Marshall left a number of questions unanswered, including the following:
  1. Can a bankruptcy court enter a final judgment on “Stern claims” with the parties’ consent?; and
14 hours 16 min ago
Authored by Timothy D. Hedrick and Mark S. Mitchelland Timothy D. Hedrick and Mark S. Mitchell of Rogers TowersQuestions sometimes arise from creditors regarding the effect of a debtor sending to a bank or other creditor a check for less than the creditor’s claim that purports to be in “full satisfaction” of the creditor’s claim against the debtor. This potentially dangerous issue is governed by § 673.3111, Florida Statues, in Florida’s version of Article III of the Uniform Commercial Code. Under § 673.3111, several requirements must be met before such a payment may satisfy a creditor’s claim. Specifically, a debtor tendering less than full payment in “full satisfaction” will have the burden to show:
  • The check/instrument was tendered in “good faith”;
  • The check/instrument was tendered “as full satisfaction of the claim”;
  • The amount of the claim was liquidated or subject to bona fide dispute;
  • The creditor obtained payment on the instrument (e.g., the check was cashed); and

Read More from: Florida Banking Law Blog

14 hours 31 min ago
Burdensome requirements prevent consumer reporting agencies from providing people with educational materials in a timely manner. The Facilitating Access to Credit Act would remove these arbitrary barriers.

Read More from: BankThink

14 hours 54 min ago
Caesars Palace Hotel & Casino is pictured on the Las Vegas Strip in January 2015.
Isaac Brekken for The Wall Street Journal
A judge on Wednesday said Caesars Entertainment Operating Co. could keep control of its bankruptcy case without the threat of rival restructuring proposals until November, a win for the casino giant over several groups of creditors. 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.”) The liquidators of a pair of failed Cayman Islands-based hedge funds run by a former Harvard quarterback are suing Barclays PLC to claw back some $80 million they say was illegally funneled to the bank to cover margin calls, DBR reports in WSJ.

Read More from: WSJ.com: Bankruptcy Beat

15 hours 26 min ago
Receiving Wide Coverage ... Chinese Connections: U.S. officials' investigation of potential violation of antibribery laws is reaching to some of the highest levels of the Chinese government. Two agencies, the Securities and Exchange Commission and the Justice Department, have subpoenaed JPMorgan Chase for information about Wang Qishan, one of seven members of the Chinese politburo that rules the country, the Wall Street Journal and Financial Times reported, citing a copy of the April 29 subpoena and...

Read More from: BankThink

15 hours 49 min ago
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.

16 hours 28 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

1 day 8 hours 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 
1 day 9 hours 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.
1 day 10 hours 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

1 day 10 hours ago
This newspaper has published a number of articles to help investors understand how to purchase pre-IPO shares and the potential risks and rewards of doing so. Read more here.
1 day 11 hours ago

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