ABI Blog Exchange

People watch the vice presidential debate in 2008 between then-Democratic vice presidential candidate, Joe Biden, and Republican vice presidential candidate, Sarah Palin, in Hawk ‘n’ Dove in Washington on Oct. 2, 2008.
Associated Press
The bankruptcy case for landmark Washington, D.C., watering hole Hawk ‘n’ Dove ended abruptly on Wednesday with a settlement between the bar’s owners and a group led by D.C. restaurateur Xavier Cervera. The judge overseeing the bankruptcy has dismissed the case at the owners’ request. Details about the settlement between Mr. Cervera, who sold Hawk ‘n’ Dove and eight other restaurants in 2012, and the investors who bought them weren’t disclosed, so it is unclear who won the battle. Hawk ‘n’ Dove and eight other restaurants filed for bankruptcy nearly a year ago—March 28, 2014—as their owners were facing a deadline to make a payment Xavier Cervera and his partners. As part of the 2012 sale, Mr. Cervera and the other sellers agreed to take $4.5 million upfront and another roughly $9.7 million in smaller payments made over time, according to documents filed in U.S. Bankruptcy Court in Washington. If the new owners missed a payment, the sellers could take the restaurants back. Putting the restaurants into bankruptcy protection prevented that takeover and forced the groups to negotiate.

Read More from: WSJ.com: Bankruptcy Beat

10 hours 41 min ago
People watch the vice presidential debate in 2008 between then-Democratic vice presidential candidate, Joe Biden, and Republican vice presidential candidate, Sarah Palin, in Hawk ‘n’ Dove in Washington on Oct. 2, 2008.
Associated Press
The bankruptcy case for landmark Washington, D.C., watering hole Hawk ‘n’ Dove ended abruptly on Wednesday with a settlement between the bar’s owners and a group led by D.C. restaurateur Xavier Cervera. The judge overseeing the bankruptcy has dismissed the case at the owners’ request. Details about the settlement between Mr. Cervera, who sold Hawk ‘n’ Dove and eight other restaurants in 2012, and the investors who bought them weren’t disclosed, so it is unclear who won the battle. Hawk ‘n’ Dove and eight other restaurants filed for bankruptcy nearly a year ago—March 28, 2014—as their owners were facing a deadline to make a payment Xavier Cervera and his partners. As part of the 2012 sale, Mr. Cervera and the other sellers agreed to take $4.5 million upfront and another roughly $9.7 million in smaller payments made over time, according to documents filed in U.S. Bankruptcy Court in Washington. If the new owners missed a payment, the sellers could take the restaurants back. Putting the restaurants into bankruptcy protection prevented that takeover and forced the groups to negotiate.

Read More from: WSJ.com: Bankruptcy Beat

10 hours 41 min ago
Fireworks erupt over Metlife Stadium ahead of Super Bowl XLVIII between the Seattle Seahawks and the Denver Broncos on Feb. 2, 2014. in East Rutherford, N.J.
Getty Images
Lehman Brothers and the New York Giants have settled their long-running dispute over a soured interest-rate swap tied to the financing of the football team’s stadium. Lehman sued Giants Stadium LLC in 2013, claiming it was owed $100 million under the swap. Giants Stadium LLC was set up by the team’s owners, the Mara and Tisch families, to fund the construction of MetLife Stadium. To finance the stadium, the Giants unit issued $650 million in bonds, the bulk of which were underwritten by Lehman. The Giants entered an interest-rate swap agreement with the bank. Lehman offered a lower interest rate to the Giants to beat out Goldman Sachs Group Inc. for the business. But in September 2008, Lehman collapsed, causing it to default on the deal and apparently creating a loss for the Giants.

Read More from: WSJ.com: Bankruptcy Beat

12 hours 2 min ago
Fireworks erupt over Metlife Stadium ahead of Super Bowl XLVIII between the Seattle Seahawks and the Denver Broncos on Feb. 2, 2014. in East Rutherford, N.J.
Getty Images
Lehman Brothers and the New York Giants have settled their long-running dispute over a soured interest-rate swap tied to the financing of the football team’s stadium. Lehman sued Giants Stadium LLC in 2013, claiming it was owed $100 million under the swap. Giants Stadium LLC was set up by the team’s owners, the Mara and Tisch families, to fund the construction of MetLife Stadium. To finance the stadium, the Giants unit issued $650 million in bonds, the bulk of which were underwritten by Lehman. The Giants entered an interest-rate swap agreement with the bank. Lehman offered a lower interest rate to the Giants to beat out Goldman Sachs Group Inc. for the business. But in September 2008, Lehman collapsed, causing it to default on the deal and apparently creating a loss for the Giants.

Read More from: WSJ.com: Bankruptcy Beat

12 hours 2 min ago
The March 2015 edition of the ABI Journal includes an article written by Douglas N. Candeub. The article analyzes the outcome in In re East West Resort Development V. LP, a recent Delaware Bankruptcy Court decision, where the claimant seeking to recover from the debtors’ available liability insurance was, surprisingly, held obligated to pay for the covered litigation expenses that the debtors incurred in litigating against that claimant. Doug examines the background to the opinion, and highlights the acute level of attentiveness that may be required of creditors in a bankruptcy case that have claims covered by insurance, especially where the insurance policy should not be treated as an “executory contract” under the Bankruptcy Code. Click here to read “When a Non-Executory Insurance Policy Is Assumed: A Case Study.”
12 hours 7 min ago
The CEO of Vanguard has issued letters regarding shareholder engagement to the independent chair or lead director of approximately 500 of Vanguard’s largest holdings. The letter is published on Vanguard’s website, and discusses the importance of effective engagement for both shareholders and boards, with the “best boards” working to seek feedback and perspectives independent of management, and engagement functioning as a dialogue with both parties listening to and informing each other.  
12 hours 38 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  The venue provision of the bankruptcy code shouldn’t be changed and, in fact, works exceedingly well. The recent report from the ABI Commission studying the reform of chapter 11, which came up with several proposed substantive improvements to the bankruptcy code, specifically didn’t propose changes to the issue of venue.  In my view that was the correct approach. There is already a specific section, 28 U.S.C. §1412, which provides that venues in bankruptcy cases may be transferred in the interest of justice or for the convenience of the parties. That provision has been successfully used in large and small cases over many years to transfer venue where appropriate, including recently when Caesars was transferred from the District of Delaware to the Northern District of Illinois. Any party may move to transfer venue, even if all the other parties don’t want the change. The one moving party could be right, but it’s not a democracy. Rather, it’s up to the bankruptcy court to decide.

Read More from: WSJ.com: Bankruptcy Beat

13 hours 6 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  The venue provision of the bankruptcy code shouldn’t be changed and, in fact, works exceedingly well. The recent report from the ABI Commission studying the reform of chapter 11, which came up with several proposed substantive improvements to the bankruptcy code, specifically didn’t propose changes to the issue of venue.  In my view that was the correct approach. There is already a specific section, 28 U.S.C. §1412, which provides that venues in bankruptcy cases may be transferred in the interest of justice or for the convenience of the parties. That provision has been successfully used in large and small cases over many years to transfer venue where appropriate, including recently when Caesars was transferred from the District of Delaware to the Northern District of Illinois. Any party may move to transfer venue, even if all the other parties don’t want the change. The one moving party could be right, but it’s not a democracy. Rather, it’s up to the bankruptcy court to decide.

Read More from: WSJ.com: Bankruptcy Beat

13 hours 6 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  The bankruptcy venue requirements strike a fair balance between deference to a debtor’s chosen venue and the interests of other stakeholders. In our experience, a prudent venue choice by a debtor can enhance the progress and outcome of a chapter 11 case and thereby benefit all stakeholders. Further limiting a debtor’s venue choices is not necessary or advisable. The current venue rules permit a debtor to file for bankruptcy in the district where the debtor is domiciled, resides, has a principal place of business, or has principal assets, generally within 180 days immediately preceding the filing date. A “piggy-back” filing may also be made in the district where there is another bankruptcy case pending with respect to an affiliate of the debtor.

Read More from: WSJ.com: Bankruptcy Beat

13 hours 39 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  The bankruptcy venue requirements strike a fair balance between deference to a debtor’s chosen venue and the interests of other stakeholders. In our experience, a prudent venue choice by a debtor can enhance the progress and outcome of a chapter 11 case and thereby benefit all stakeholders. Further limiting a debtor’s venue choices is not necessary or advisable. The current venue rules permit a debtor to file for bankruptcy in the district where the debtor is domiciled, resides, has a principal place of business, or has principal assets, generally within 180 days immediately preceding the filing date. A “piggy-back” filing may also be made in the district where there is another bankruptcy case pending with respect to an affiliate of the debtor.

Read More from: WSJ.com: Bankruptcy Beat

13 hours 39 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  The passion and politics of the venue reform debate, while fueled by legitimate and sincere motivations and differences of opinion, all too often obfuscate underlying factual predicates and real-world venue disputes. The remarkable intensity of divergent voices makes it difficult to sort out whether reform of the venue statute is necessary at all, or what the imperative is to limit companies from their exercise of reasonable business judgment. If reform has merit, it’s even more challenging to conclude what potential reform might best serve the diverse interests in chapter 11 cases. Under current law, the primary venue options are the debtor’s domicile (i.e., place of incorporation), principal place of business, location of principal assets and place of an affiliate’s filing (which permits bankruptcy cases of multiple affiliated debtors to be prosecuted in the same courthouse in a jointly administered, cost-efficient manner).

Read More from: WSJ.com: Bankruptcy Beat

14 hours 7 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  The passion and politics of the venue reform debate, while fueled by legitimate and sincere motivations and differences of opinion, all too often obfuscate underlying factual predicates and real-world venue disputes. The remarkable intensity of divergent voices makes it difficult to sort out whether reform of the venue statute is necessary at all, or what the imperative is to limit companies from their exercise of reasonable business judgment. If reform has merit, it’s even more challenging to conclude what potential reform might best serve the diverse interests in chapter 11 cases. Under current law, the primary venue options are the debtor’s domicile (i.e., place of incorporation), principal place of business, location of principal assets and place of an affiliate’s filing (which permits bankruptcy cases of multiple affiliated debtors to be prosecuted in the same courthouse in a jointly administered, cost-efficient manner).

Read More from: WSJ.com: Bankruptcy Beat

14 hours 7 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  The venue determination aspect of bankruptcy law has been a subject of debate for many in our industry. The bankruptcy venue statute permits a bankruptcy case (except a case under chapter 15) to be filed in any federal district court containing the debtor’s “domicile, residence, principal place of business or principal assets in the United States.” Consistent with longstanding rules and practice that have governed venue for litigation in federal courts, a corporation’s domicile is generally held to be its state of incorporation. Those laws appear to be straightforward and non-controversial. This debate stems from what I consider to be the myth of forum shopping. Special interest groups have proposed measures that fundamentally shift the venue choices available to a company seeking the protection of a chapter 11. The proposals generally would require that a chapter 11 proceeding be filed only in the state where the parent company holds its assets or principal place of business. This is in direct conflict with the rights that companies currently have that allow a filing to occur in their state of incorporation.

Read More from: WSJ.com: Bankruptcy Beat

14 hours 32 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  The venue determination aspect of bankruptcy law has been a subject of debate for many in our industry. The bankruptcy venue statute permits a bankruptcy case (except a case under chapter 15) to be filed in any federal district court containing the debtor’s “domicile, residence, principal place of business or principal assets in the United States.” Consistent with longstanding rules and practice that have governed venue for litigation in federal courts, a corporation’s domicile is generally held to be its state of incorporation. Those laws appear to be straightforward and non-controversial. This debate stems from what I consider to be the myth of forum shopping. Special interest groups have proposed measures that fundamentally shift the venue choices available to a company seeking the protection of a chapter 11. The proposals generally would require that a chapter 11 proceeding be filed only in the state where the parent company holds its assets or principal place of business. This is in direct conflict with the rights that companies currently have that allow a filing to occur in their state of incorporation.

Read More from: WSJ.com: Bankruptcy Beat

14 hours 32 min ago
A recent CFPB enforcement action shows that lenders must not only avoid misleading statements, but anything in connection with their advertising that may have the likelihood of significantly confusing consumers.

Read More from: BankThink

15 hours 1 min ago
Admitting it was a "bad boy" handling mortgages in bankruptcy, Chase recently entered a settlement with the federal government to compensate more than 25,000 US homeowners. The settlement is subject to court approval. The United States Trustee Program, a unit of the Department of Justice whose attorneys at the bankruptcy court oversee the integrity of the system, announced on March 3 it had reached an agreement with Chase forcing it to pay homeowners $50 million in cash, mortgage loan credits and loan forgiveness for "robo-signing" and other improper practices before the bankruptcy court. Chase also agreed to change internal operations and submit to the oversight of an independent compliance reviewer. Chase admitted it submitted more than 50,000 mortgage "payment change notices" that were signed by persons who had no knowledge of the accuracy of the notices they signed:
  • More than 25,000 of the notices were signed by employees or former employees who had nothing to do with reviewing the accuracy of the notices.
  • The rest of the notices were signed by employees of third party vendors who also were not involved in verifying the accuracy.
Chase also admitted it failed to file the notices in a timely fashion, as well as failing to provide timely escrow statements to homeowners in bankruptcy.
15 hours 12 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  While the venue provisions for chapter 11 cases are fairly straightforward, much like a comet or solar eclipse, controversy surrounding the venue statute comes around every few years.  Due to a number of recent developments, it appears to again be the season for this debate. Briefly, the venue statue provides that a chapter 11 case may be filed in any district “in which the domicile, residence, principal place of business…or principal assets…have been located for the 180 days immediately preceding” the bankruptcy filing.  Criticism that these provisions led to a disproportionate percentage of chapter 11 filings in Delaware and New York brought calls for reform more than a decade ago. Legislation was introduced to eliminate state of incorporation as a basis for venue, with proponents claiming that creditors received smaller recoveries in these venues.  While many cast a more cynical eye on what were perceived as “parochial” arguments, in the end, these changes failed to be included in the wide-ranging Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Read More from: WSJ.com: Bankruptcy Beat

15 hours 20 min ago
Should bankruptcy laws that allow companies broad latitude in selecting a venue be reformed?  While the venue provisions for chapter 11 cases are fairly straightforward, much like a comet or solar eclipse, controversy surrounding the venue statute comes around every few years.  Due to a number of recent developments, it appears to again be the season for this debate. Briefly, the venue statue provides that a chapter 11 case may be filed in any district “in which the domicile, residence, principal place of business…or principal assets…have been located for the 180 days immediately preceding” the bankruptcy filing.  Criticism that these provisions led to a disproportionate percentage of chapter 11 filings in Delaware and New York brought calls for reform more than a decade ago. Legislation was introduced to eliminate state of incorporation as a basis for venue, with proponents claiming that creditors received smaller recoveries in these venues.  While many cast a more cynical eye on what were perceived as “parochial” arguments, in the end, these changes failed to be included in the wide-ranging Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Read More from: WSJ.com: Bankruptcy Beat

15 hours 20 min ago
A view of a Cache store at The Shops at Columbus Circle in Midtown Manhattan
Sara Randazzo
For bargain hunters, prom-dress shopping may be starting early this year. Cache, a women’s dress and formalwear retailer, is about to launch going-out-of-business sales at its more than 150 stores nationwide, the company told a bankruptcy judge this week. The latest in an increasingly long line of troubled women’s retailers to seek chapter 11 protection, Cache started its run through bankruptcy hoping to find a buyer willing to keep some stores alive. That aspiration ultimately failed, though a 25-hour auction did drive up the price of the company’s remaining assets. An attorney for Cache told a judge Tuesday that the marathon auction, which lasted all day Monday and through the night, is expected to bring in $18 million for creditors.

Read More from: WSJ.com: Bankruptcy Beat

15 hours 52 min ago
A view of a Cache store at The Shops at Columbus Circle in Midtown Manhattan
Sara Randazzo
For bargain hunters, prom-dress shopping may be starting early this year. Cache, a women’s dress and formalwear retailer, is about to launch going-out-of-business sales at its more than 150 stores nationwide, the company told a bankruptcy judge this week. The latest in an increasingly long line of troubled women’s retailers to seek chapter 11 protection, Cache started its run through bankruptcy hoping to find a buyer willing to keep some stores alive. That aspiration ultimately failed, though a 25-hour auction did drive up the price of the company’s remaining assets. An attorney for Cache told a judge Tuesday that the marathon auction, which lasted all day Monday and through the night, is expected to bring in $18 million for creditors.

Read More from: WSJ.com: Bankruptcy Beat

15 hours 52 min ago

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