ABI Blog Exchange

Section 365(c)(1) of the Bankruptcy Code limits a debtor’s ability to assume or assign a contract where “applicable law” excuses a non-debtor counterparty from accepting performance from a third party.  Circuits currently are split on whether this section prohibits a debtor from assuming an intellectual property license without the consent of the licensor.  Courts on one side of the issue apply the “actual test,” which permits a debtor to assume a license as long as the debtor does not intend to assign it.  On the other side, courts apply the “hypothetical test,” which prohibits a debtor from assuming a license regardless of the debtor’s intent to assign it.  In a decision that discusses in detail what type of “applicable law” is relevant in the 365(c)(1) analysis, the United States Bankruptcy Court for the District of Delaware issued a reminder in In re Trump Entertainment Resorts, Inc. that the hypothetical test is alive and well in the Third Circuit.  Trademark License Agreement
4 days 17 hours ago
Save Your Home & Pay Your Mortgage.. Through Chapter 13 Bankruptcy It is understandable that you will have tremendous fear when you fall behind on your mortgage and you start to receive threatening letters. You may not even know that bankruptcy is an option to save your home and stop a foreclosure case. You probably+ Read More The post Bankruptcy Is Just One Option To Save Your Home appeared first on David M. Siegel.
4 days 17 hours ago
Banks will only be able to compete with nimble digital startups if they invest in a diverse portfolio of fintech initiatives and avoid foisting traditional, buttoned-down cultures onto fledgling partners.

Read More from: BankThink

4 days 18 hours ago
Sale signs are displayed as customers browse inside a RadioShack Corp. store that is closing in New York.
Bloomberg News
RadioShack Corp .’s fate hangs in the balance Monday when a bankruptcy auction kicks off, pitting companies that want to liquidate the electronic retailer’s remaining assets against a hedge fund that has pledged to keep about half the chain’s stores open.. 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.”) A group of investment vehicles owned by a Bahraini bank are seeking U.S. bankruptcy protection to shield more than $200 million from Saudi Arabia’s Ahmad Hamad Algosaibi & Bros., DBR reports in WSJ.

Read More from: WSJ.com: Bankruptcy Beat

4 days 18 hours ago
Sale signs are displayed as customers browse inside a RadioShack Corp. store that is closing in New York.
Bloomberg News
RadioShack Corp .’s fate hangs in the balance Monday when a bankruptcy auction kicks off, pitting companies that want to liquidate the electronic retailer’s remaining assets against a hedge fund that has pledged to keep about half the chain’s stores open.. 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.”) A group of investment vehicles owned by a Bahraini bank are seeking U.S. bankruptcy protection to shield more than $200 million from Saudi Arabia’s Ahmad Hamad Algosaibi & Bros., DBR reports in WSJ.

Read More from: WSJ.com: Bankruptcy Beat

4 days 18 hours ago
Wall Street Journal Zions Bancorp is a comparatively small and simple fish in the "too big to fail" pond, but it's among the banks that's struggled most with the Federal Reserve's stress tests. The paper implies that Zions' predicament may be indicative of the problems with the $50-billion asset threshold used to determine which institutions are systemically important. The Salt Lake City lender focuses on "meat and potatoes banking," like lending and taking deposits, whereas most...

Read More from: BankThink

4 days 19 hours ago
Security deposits are considered property of the bankruptcy estate, and as such, are generally required to be returned to the debtor.  Even so,  landlords are permitted in certain instances to setoff their rejection damage claim against the security deposit.  This benefits a landlord for two reasons.  First, instead of returning the deposit to the debtor-tenant, a landlord can setoff its claim against the deposit, and thus reduce the amount of the deposit that must be returned.  Second,  the landlord’s rejection damage claim is a general unsecured claim, meaning it gets paid after all other types of claims under the Bankruptcy Code.  However,  the landlord’s rejection claim can be setoff against the security deposit “dollar for dollar,” which in essence raises the status of the rejection claim to secured status, up to the amount of the security deposit. Landlords should not setoff any claims they have against the debtor-tenant’s deposit without first receiving an order from the bankruptcy court granting the landlord relief from the automatic stay.  If the parties reach an agreement as to the amount of the claim to be applied to the deposit, the debtor-tenant may consent to relief from the automatic stay.
4 days 19 hours ago
As companies that received proxy access shareholder proposals for this proxy season are determining their the best course of action, which we recently discussed here, others are waiting and watching to see how the developments may impact future proposals.  One open question is whether the conflicting proposal provision under Rule 14a-8(i)(9), that Whole Foods originally relied on to put forth its own management proposal instead of the shareholder proponent’s version, could be available again as a basis to exclude proxy access shareholder proposals, and under what terms.
4 days 20 hours ago
President Obama signed an executive action on Tuesday that would make it easier for Oregon bankruptcy filers to discharge certain kinds of student loans. As any would be Oregon bankruptcy filer knows, student loan debt is extremely difficult to eliminate now. The most common path to discharge now requires a showing of undue hardship which is now so stringently defined that an Oregon bankruptcy attorney could go through her entire career without finding a case that would meet the required criteria. It appears that the undue burden standard may now be broadened such that more debtors would potentially be able to eliminate their student loans. It is, however, far from certain how many Oregon debtors will be affected and what the new standard for discharge will be. We know that the executive branch has directed the Secretary of Education, by July 15, 2015, to “issue information highlighting factors the courts have used in their determination of undue hardship, to assist parties who must determine whether to contest an undue hardship discharge in bankruptcy of a federal student loan.” The president has also suggested relief might be forthcoming as well concerning private student loans.

Read More from: Oregon Bankruptcy Lawyer

5 days 8 hours ago
It was not too long ago that a lender would consider an oil & gas company as a fairly safe credit.  However, the times are changing.   It is no secret that the current lower gas prices are due to upstream excess production, either domestically (in the US) or in the mid-east.  This has led to much discussion about the financial future of many upstream exploration and production (“E&P”) companies in the near term as well as to the down-stream companies later in time. As a corollary to that, most folks outside of Texas are likely not aware that a significant portion of the oil patch is serviced by smaller vendors whom you would likely not know by name.  These are the early warning companies that are expected to fail prior to the larger E&P companies. Despite financing vehicles and hedging (learned from the last downturn, I am told), some of the E&P companies are already filing bankruptcy or seemingly moving in that direction.
  • Recently, Quicksilver Resources, Inc. and affiliates filed chapter 11 in Delaware (case no. 15-10585).   Quicksilver was (and remains) a E&P company based in Fort Worth, Texas.  It lists over $1BB in liabilities as well as over $1BB in assets.  Click here for the press release.

Read More from: Tough Times for Lenders

5 days 10 hours ago
On March 24, 2015, the U.S. Supreme Court will hear oral arguments in two cases involving whether a chapter 7 debtor may strip off a second (or any junior) mortgage that is not secured by the home’s actual market value. In Bank of America, N.A. v. Toledo-Cardona, No. 14-163, the market value of the chapter 7 debtor’s home was $77,689.00.  The first mortgage owed to Quicken Loans had a balance of $135,703.00, and the second mortgage owed to Countrywide Bank had a balance of $32,000.00. In Bank of America, N.A. v. Caulkett, 13-1421, the market value of the chapter 7 debtor’s home was $98,000.00, the Countrywide Financial first mortgage balance was $183,264.00, and the Countrywide Financial second mortgage balance was $47,855.00. Thus, in each of the two cases, the homes were worth less than the balances owed on the homes’ first mortgages.  This meant that the second mortgages were completely unsecured by any value.  The chapter 7 debtors argued that under bankruptcy code section 506(a), the second mortgages should be declared avoided and stripped from the homes. In each case, the Eleventh Circuit U.S. Court of Appeals approved the strip-off of the second mortgages, and the banks have appealed to the U.S. Supreme Court.

Read More from: Bankruptcy Law Network

6 days 3 hours ago
When people hear I am a bankruptcy attorney the first thing they say is “I hope I never need your services, no offense.”  I understand the sentiment.  Nobody wants to file bankruptcy.  There is something else, however,  just under the surface of this statement.  While GM, Chrysler, and American Airlines can all file bankruptcy and have it considered a “smart business move”, when individuals file for bankruptcy there is still a stigma in the eyes of some.  It shouldn’t be that way.  Without bankruptcy, America would be a very different place.  Many of the great American success stories have happened only after the filing of a bankruptcy.  Entrepreneurs take great risks to build their company, and like the rest of us, they do not always succeed.  Without the ability to get a fresh start, the following American businesses would  not exist today: Ford Motor Company:  Henry Ford was perhaps America’s greatest entrepreneur.  When he created the assembly line he revolutionized the world.  With that innovation Henry Ford lowered the cost of goods across American and allowed the American Economy to take off in a way that no country had ever seen before.  However, before the raging success of Ford Motor Company, Henry Ford filed bankruptcy not once, but twice.
6 days 5 hours ago
On March 10, 2015 the White House announced that President Obama would  sign a Presidential Memorandum directing the Department of Education and other federal agencies to work across the federal government to do more to help borrowers afford their monthly loan payments including: (1) a state-of-the-art complaint system to ensure quality service and accountability for the Department of Education, its contractors, and colleges, (2) a series of steps to help students responsibly repay their loans including help setting affordable monthly payments, and (3) new steps to analyze student debt trends and recommend legislative and regulatory changes.   In addition, the Administration is releasing state by state data that shows the outstanding federal student loan balance and total number of federal student loan borrowers who stand to benefit from these actions.   This move underscores his vision for an affordable, quality education for all Americans in a Student Aid Bill of Rights which he started five year ago. A Student Aid Bill of Rights
1 week 8 hours ago
This is the next post in Plan Proponent’s series on the confirmation-related recommendations in the ABI Commission Report (and, in particular, its Exiting the Case piece). We introduced the Commission’s “Redemption Option Value” (“ROV”) recommendation in our prior post. We’ll wrap-up the ROV discussion in this post by discussingthe ROV calculation itself. In preparing this post, I reviewed our prior post. Only then did I realize that we could not have introduced such an arguably radical recommendation in a more nondescript fashion. Such is the risk of these “book report”-style posts (i.e., “First the Commission said this, and then it recommended this, etc.”). So, let’s take a step back and let the ROV recommendation sink-in.

Read More from: Plan Proponent

1 week 11 hours ago
A recap of the informed opinions (and the discussions they generated) on BankThink this week, including the best way to instill ethical culture and what the U.S. can learn from foreign countries' efforts to reach the unbanked.

Read More from: BankThink

1 week 12 hours ago
This week on The Broke and the Beautiful, Italy’s Parma soccer team went bust, Tower Records lives on in a new documentary, and Caesars can tear up its contract with the Kansas City Chiefs.
The entrance gates of the Ennio Tardini stadium in Parma, Italy.
Elisabetta Baracchi/European Pressphoto Agency

Read More from: WSJ.com: Bankruptcy Beat

1 week 12 hours ago
This week on The Broke and the Beautiful, Italy’s Parma soccer team went bust, Tower Records lives on in a new documentary, and Caesars can tear up its contract with the Kansas City Chiefs.
The entrance gates of the Ennio Tardini stadium in Parma, Italy.
Elisabetta Baracchi/European Pressphoto Agency

Read More from: WSJ.com: Bankruptcy Beat

1 week 12 hours ago
On March 13, 2015, the United States District Court for the District of Delaware, in the case of Walnut Creek Mining Company v. Cascade Investment, LLC, Civ. No. 14-738-LPS (In re Optim Energy, LLC, Bankr. Case No. 14-10262-BLS), affirmed an order of the United States Bankruptcy Court for the District of Delaware which denied derivative standing to the debtor’s largest unsecured creditor, Walnut Creek Mining Company (“Walnut Creek”).  Walnut Creek had sought to file an adversary proceeding seeking to recharacterize or subordinate Cascade Investment, LLC’s (“Cascade”) secured debt.  Cascade had guaranteed the debtor’s debt to Wells Fargo.  When the debtor breached the agreement, Cascade paid Wells, and, by virtue of a reimbursement agreement with the debtor, became a secured creditor of the debtor.
1 week 13 hours ago
In an article at CommercialBankruptcyLitigation.com, Adam Stein-Sapir explores the impact a bankruptcy filing can have on a creditor’s efforts to resolve debts owed post-state court litigation, and how a bankruptcy filing can frustrate those efforts. Read more about this interesting article here!
1 week 14 hours ago

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