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During the first quarter of 2016, the Fifth Circuit handed down some important decisions relating to bankruptcy and debt.     These include cases about how attorneys get paid from PACA proceeds, standing to object, denial of discharge, dismissal for cause, enforcing a chapter 11 plan, preferences, more fallout from the Stanford Ponzi scheme and some cases of general interest. Click on the style of the case to go to the opinion.    Part One:  Bankruptcy DecisionsAttorney's Fees; PACA ClaimantsKingdom Fresh Produce Incorporated (Matter of Delta Produce, LP), No. 14-51079 (5th Cir. 3/11/16)This is a must-read opinion for anyone dealing with PACA claims in bankruptcy.   The first paragraph of the opinion explains the case better than I could try. 
This attorney’s fee dispute has its roots in the Perishable Agricultural Commodities Act (PACA), a Depression-era statute designed to protect sellers of perishable produce from delinquent purchasers. Two such purchasers filed for bankruptcy and the bankruptcy court appointed special counsel to collect and disburse funds to PACA-protected sellers that had claims against the purchasers-turned-debtors.
13 hours 43 min ago
Posted by Kathy Bazoian Phelps    Below is a summary of the activity reported for April 2016. The reported stories reflect: 3 guilty pleas or convictions in pending cases; over 26 years of newly imposed sentences for people involved in Ponzi schemes; at least 10 new Ponzi schemes worldwide; and an average age of approximately 50 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.    Alisa Adler, 55, was indicted on a wire charge relating to an alleged Ponzi scheme run through ASG Real Estate Services Group. The indictment alleged that Adler took about $740,000 from 3 investors, promising them returns through real estate transactions. The wire charge was added to other charges brought against Adler last year.    Aequitas Capital Management and its founder and CEO, Robert J. Jesenik, 56, executive vice president, Brian A. Oliver, 51, and chief operating officer, N. Scott Gillis, 62, were the subject of SEC charges that they were running a “Ponzi-like” scheme. The company agreed to the appointment of a receiver about one month after it had announced layoffs and hired a consulting firm to help it wind down the business. Aequitas stopped making payments on over $300 million in private notes that it sold to investors.

Read More from: The Ponzi Blog

1 day 13 hours ago
Coal giant Peabody Energy Corp. will make its second bankruptcy-court appearance next week, requesting full and final access to $800 million in bankruptcy financing. The company will appear before Judge Barry S. Schermer of the U.S. Bankruptcy Court in St. Louis on Thursday to request the permission. Judge Schermer granted preliminary access to the financing package arranged by Citigroup two weeks ago. At the time, the judge said he didn’t believe Peabody’s need for the financing was disputed. During the interim period, Peabody has had access to $200 million of a $500 million term loan, a $100 million letter-of-credit facility and a $200 million facility available to satisfy the company’s environmental obligations. Lenders of the financing package include Peabody’s existing secured lenders and the holders of Peabody’s unsecured bond debt–distressed investors Centerbridge Partners LP, Aurelius Capital Management LP, Elliott Management Corp. and Capital Research and Management. Peabody Energy Corp. is the largest U.S. coal company and became the latest to file for bankruptcy earlier this month. It joined peers Arch Coal Inc., Alpha Natural Resources, Inc., Patriot Coal Corp. and Walter Energy, Inc., all of whom have also sought chapter 11 protection.

Read More from: WSJ.com: Bankruptcy Beat

2 days 16 hours ago
The latest in a line of fraudulent transfer decisions in the Madoff case has added to the case-law regarding what level of knowledge is needed to plead actual fraud in securities Ponzi scheme cases. In dismissing most of the claims brought against certain investors by court-appointed trustee Irving Picard, Judge Stuart Bernstein of the United States Bankruptcy Court for the Southern District of New York found that the level of knowledge pled by the trustee did not satisfy the prevailing standard that has been established in the Madoff cases, as discussed below.  In this case, Picard asserted several counts of actual and constructive fraud against Legacy Capital Ltd. (“Legacy”), a single purpose vehicle used to invest in Bernard L. Madoff Securities LLC (“BLIMIS”), and Khronos LLC, a provider of accounting and other services to Legacy and certain other funds that invested in BLIMIS.  Taken together, Picard’s complaint sought to avoid and recover approximately $213 million in initial transfers made to Legacy and approximately $6.6 million in subsequent transfers made to Khronos. Standards
2 days 17 hours ago
The prosecution of former House Speaker Dennis Hastert illustrates why it makes sense to require bankers to share suspicions with the authorities.

Read More from: BankThink

2 days 17 hours ago
With consumers generally averse to risk, financial institutions have an opportunity to rethink what it means to make bets in line with their customers' well-being.

Read More from: BankThink

2 days 17 hours ago
Core Media Group, the company responsible for the hit show American Idol, has filed for Chapter 11 bankruptcy protection citing deterioration in its financial performance. This comes on the heels of the show concluding its 15th and final season. Core is also responsible for So You Think You Can Dance. Some may find it hard to believe that a company responsible for two shows with such a strong television presence could be struggling financially, but profits have decreased for some time. Loss of Earnings and Sponsors According to USA Today, earnings for Idol fell $15 million in 2014 and total earnings for Idol and other shows produced by Core decreased by $35.6 million in the first half of 2015. Also, Idol’s airtime decreased to 42 hours from 56.5 hours. Peter Hurwitz, the president of Core Media Group, stated that this decrease caused Core to spread their costs over fewer production hours. Idol also lost large sponsors and had a sharp decrease in merchandise sales.

Read More from: Bonds & Botes, P.C.

2 days 18 hours ago
[wsj-responsive-image P="//art.wsj.net/api/photos/36737655/smartcrop?height=499&width=749" J="//art.wsj.net/api/photos/36737655/smartcrop?height=639&width=959" M="//art.wsj.net/api/photos/36737655/smartcrop?height=853&width=1280" credit="Bloomberg News" placement="Inline" suppressEnlarge="false" ] Annual rate increases at some of the country’s biggest law firms are going under the microscope in one chapter 11 case. The official keeping an eye on the professional fee meter in the Caesars Entertainment Operating Co. bankruptcy says the recent hourly rate increases at various law firms working on the case—some of which brought top rates close to the $1,500-per-hour mark—deserve a deeper dive. Nancy Rapoport, a law professor and independent member of the committee monitoring professionals’ fees, says the four-figure rates themselves aren’t necessarily the issue. Rather, “the controlling issue here is whether the clients of those firms are paying those rates,” she wrote, requesting evidence that a firm’s bankruptcy and non-bankruptcy clients alike each pay those rates—i.e., that there is no bankruptcy premium. Specifically:

Read More from: WSJ.com: Bankruptcy Beat

2 days 18 hours ago
Western District of Texas Bankruptcy Judge Tony Davis has written a very helpful opinion on valuing a truck in a chapter 13 case.   The ten page opinion is packed with extensive footnotes as well as practical guidelines.   In the end, the valuation issue depended on burden of proof and the relatively weak evidence offered by the debtor prevailed.    In re Solis, No. 15-11181 (Bankr. W.D. Tex. 4/15/16).    The opinion can be found here . The Issue Joseph Solis wanted to keep his 2008 Ford Explorer XLT as part of his chapter 13 plan. Ally had filed a proof of claim for $12,771.32 with a claimed value of $9,925.00.   While the claim contained all of the proper contractual and lien documents, it did not include evidence of value.   The Debtor objected to the claim asserting that the truck was only worth $6,371.25.    The Debtor's objection included a printout from the NADA guide.  Because the vehicle was purchased more than 910 days before bankruptcy, the Debtor could cram down the secured claim.   In this small chapter 13 case, the $3,200 difference in value was enough to make the plan fail.   The EvidenceAt the hearing, the Debtor introduced a printout from Edmonds.com as well as photos of the truck.
2 days 18 hours ago
While it is true that more consumers complain to the Consumer Financial Protection Bureau about their mortgages, the data still reinforces the idea that overdraft fees are more high-cost credit than protection.

Read More from: BankThink

2 days 20 hours ago
Receiving Wide Coverage… The American Bankers Association has pressed the idea of taking Congress to court over its decision last year to cut yearly dividend payments from the Federal Reserve to its member banks. The measure is part of a broad highway spending bill that "violates several legal principles" like breach of contract and taking of property without just compensation, ABA president Rob Nichols noted in a letter he wrote to Congress Thursday. Banks are required...

Read More from: BankThink

2 days 20 hours ago
[wsj-responsive-image P="//si.wsj.net/public/resources/images/BN-NT906_ENERGY_P_20160428163322.jpg" J="//si.wsj.net/public/resources/images/BN-NT906_ENERGY_J_20160428163322.jpg" M="//si.wsj.net/public/resources/images/BN-NT906_ENERGY_M_20160428163322.jpg" caption="Charles Walker is silhouetted against an overcast sky Tuesday, Feb. 7, 2012, attaching wires to one of two replacement transformers on a power pole in Nacogdoches, Texas." credit="Daily Sentinel/Associated Press" placement="Inline" suppressEnlarge="false" ] Energy Future Holdings Corp. said investors won’t go through with a planned buyout of its Oncor business because of conditions put up by a Texas state agency. (But some investors are scrambling to try to save it.) 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.”)

Read More from: WSJ.com: Bankruptcy Beat

2 days 22 hours ago
What happens when the counterparties on both sides of a contract are debtors in separate bankruptcy cases and their estates have contrary views about whether to reject or assume a contract?  This was exactly the issue faced by the Bankruptcy Court for the Eastern District of Missouri in In re Noranda Aluminum, Inc.  There, the Bankruptcy Court heard debtor Noranda Bauxite Ltd.’s motion to reject a sales agreement under which it was required to provide bauxite, a raw material used to make aluminum, to the counterparty (the “Bauxite Agreement”).  The counterparty to the Bauxite Agreement was Sherwin Alumina Co., LLC, a debtor with its own chapter 11 case before the Bankruptcy Court for the Southern District of Texas.  Sherwin, in its own bankruptcy case, had moved to assume the Bauxite Agreement, and it objected to Noranda’s rejection motion in Noranda’s bankruptcy case, arguing that rejection could force it out of business and cause its 575 employees to lose their jobs.  What was the Missouri Bankruptcy Court to do?   Appropriate Standard for Rejection
3 days 10 hours ago
State Prosecutors Accuse Student Loan Giant Of Wrongdoing According to the Huffpost Business Navient Corp., the nation’s largest student loan company, violated state laws that ban unfair or abusive practices by paying call center workers based on how quickly they could get struggling borrowers off the phone, a group of more than two dozen state attorneys general alleged.  For more This practice smacks of the same problems that permeated the mortgage lending practices.  Lenders are rewarded for doing nothing that will really help the borrowers.  I am not asking you to ignore the horrible abuses that a few borrowers suffered on the student loan system.  Borrowing hundreds of thousands of dollars to obtain a degree that will never provide for the necessary funds to pay their student loans.  Money is not free.  Loans should not be entered into without understanding the long range consequences on the family budget. Having said that lenders (schools) need to be responsible for their actions.  They give loans to individuals that they know will not be able to repay the debt, unless they hit the lottery.  The schools raise tuition so as to make more loans, which makes it impossible for those students who do not have to take out student loans to get an education.
3 days 12 hours ago
A ninth-grader challenges Bank of America's CEO; the San Francisco Fed has a lot of interest in fintech; FinCEN's Jennifer Shasky Calvery is leaving, possibly for a banking job; Wells Fargo's Secil Watson talks up a new biometrics option; and Sallie Krawcheck appreciates Carla Harris' career advice. Plus, Kelly Ripa and the 49ers.

Read More from: BankThink

3 days 13 hours ago
[wsj-responsive-sandbox id = "0" ] The company behind Los Angeles’s iconic Roscoe’s House of Chicken and Waffles restaurants has promised to come up with a plan by Oct. 1 that explains its path out of bankruptcy. The pledge, filed in court documents Wednesday, came from restaurant officials who put four Roscoe’s locations into bankruptcy on March 25 while they appeal a $3.2 million award to a former employee who said he was a target of racial discrimination and sexual harassment. The restaurant locations—three in Los Angeles, one in Pasadena—employ nearly 400 people. A successful appeal could lower the amount that the restaurant operator owes to ex-Roscoe’s worker Daniel Beasley, a black man who sued in 2013 saying he worked later shifts and got fewer schedule requests than his Hispanic coworkers. Mr. Beasley’s lawyer said one of his managers, a Hispanic woman, commented that black workers were lazier. Aside from challenging Mr. Beasley’s award, restaurant officials said that finances will improve in July once it starts getting $30,000 monthly payments for selling its trademark and intellectual property.

Read More from: WSJ.com: Bankruptcy Beat

3 days 15 hours ago
Success rates vary wildly for innovation labs, but some basic principles increase a bankÂ's chances of the incubation process leading to viable product expansion.

Read More from: BankThink

3 days 17 hours ago
Income Whether you are eligible to file under a particular chapter of the bankruptcy code is dependent upon a number of factors. One of the most critical factors is whether or not you qualify based on income. Income is calculated based upon all sources for one part of the bankruptcy petition, yet not necessarily included+ Read More The post Proof Of Income Is Critical To Filing Bankruptcy appeared first on David M. Siegel.
3 days 18 hours ago
Last week, my law partner Mary and I had the opportunity to attend the Montgomery Chamber of Commerce’s Women’s Roundtable which featured Martha Hawkins as the guest speaker.  If you are from the Montgomery area, you are probably familiar with Martha’s Place.  Ms. Hawkins owns Martha’s Place which is a restaurant featuring homemade Southern cuisine.  The story about how Ms. Hawkins made her restaurant a success is truly remarkable.  Ms. Hawkins spoke about her secret to her success at the luncheon.  Her faith in God and a strong belief in her ability was the key to making the restaurant happen.  She did not have a mentor, a business plan or any money!   She said surrounding herself with encouraging friends was a must. Mary’s Perseverance and Faith

Read More from: Bonds & Botes, P.C.

3 days 18 hours ago
Authored by Adam B. BrandonFlorida’s Third District Court of Appeal (DCA), sitting en banc, recently withdrew an unpopular decision applying the statute of limitations defense to mortgage foreclosures. As previously discussed on this blog, the Third DCA’s prior opinion in Deutsche Bank Trust Co. Am. v. Beauvais took the unique position that the dismissal of a foreclosure action without prejudice had no effect on the running of the five-year statute of limitations. This meant that a subsequent foreclosure action based on a new default could be time-barred if not commenced within five years of the original acceleration if the lender took no affirmative action to decelerate the loan following the original dismissal.

Read More from: Florida Banking Law Blog

3 days 19 hours ago

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