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We continue our bankruptcy cram course today with Part 2 of the Lookback Period – Eight Weeks. Property Co-Owner Not Off the Hook in Refusing to Sign Mortgage Ben Farrow’s piece, [Un]signed, Sealed, Delivered: Is It Still Yours? focused on equitable subrogation and how a lender might apply it when a property co-owner refuses to execute a new mortgage when the other co-owner refinances an earlier mortgage that was signed by both parties.  Applying D.C. law, the court in In re Stevenson allowed the subsequent lender to step into the shoes of the original lender under the jurisdiction’s  five-prong test for equitable subrogation:  (1) The new lender paid off the prior mortgage so it could protect its “own interest” by having a first priority mortgage; (2) the new lender did not “act as a volunteer” because the mortgage was consideration for its loan; (3) the new lender was not liable for the prior mortgage; (4) the proceeds from the new loan paid off the entire prior mortgage; and (5) subrogation would “not work any injustice to the rights of others.”  Ninth and Third Circuits Continue to Whittle (Hack?) Away at Equitable Mootness
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My blogging has been light the past few months as we have been working on the eighth edition of what will now be LoPucki, Warren & Lawless, Secured Transactions: A Systems Approach. For you secured transactions teachers out there, we have returned a first set of page proofs and everything looks on track for publication later this year well in advance of the spring semester. To get back into the blogging swing of things, I go to where else . . . bankruptcy filing data. Back in January, I predicted that total 2015 bankruptcy filings for the U.S. would be "somewhere around 800,000." Revisiting that prediction, the numbers seem right on track to meet it. According to data from Epiq Systems, there have been just short of 495,000 bankruptcy filings through July 31. In recent years, the bankruptcy filings for the first seven months of the year have been 61.2% of the annual total. Extrapolating, that would put us at 808,000 filings for the year. That would be a decline of 11.2% for 2015, on the heels of a decline of 11.8% in the prior year.

Read More from: Credit Slips

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Some thoughts on the latest dustup over venue in big chapter 11 cases, on Dealb%k.

Read More from: Credit Slips

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Supporters of the bankrupt Apache Railway in rural Arizona face a Nov. 30 deadline to find $7.2 million to pay off investors who they say will pull the railroad’s steel tracks out of the ground and sell them for scrap. Apache Railway officials negotiated that new deadline with investors, led by Los Angeles investment firm Hackman Capital Partners, who maneuvered to take over the 55-mile railroad because of an unpaid loan. The new deadline gives railroad supporters time to figure out whether they’ve qualified for a U.S. Department of Agriculture loan, which would pay off the investors, railroad lawyer Rob Charles told Bankruptcy Beat. The railroad’s operations, if dismantled, may be worth more than $11 million, leading local residents to worry whether that the economic lifeline will be shut down. Built in 1917, the railroad connects Snowflake, a desert town with a population of 5,590, with a bigger rail line in Holbrook in Navajo County. The effort to save the railroad has support from elected leaders, ranging from the mayor of Snowflake to U.S. Rep. Ann Kirkpatrick (D., Ariz.), who asked U.S. Department of Agriculture Secretary Tom Vilsack about the loan’s status at a congressional hearing in July.

Read More from: WSJ.com: Bankruptcy Beat

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Enjoy your money without worry about your creditors taking it from you. That describes asset protection. A substantial industry run by expensive professionals will scatter your money between interlocking partnerships and off-shore corporations to keep it away from those who might sue you. And, of course, a bunch of your money lands in their pockets. All to keep your assets safe from unexpected, catastrophic lawsuits. For most of us, we don’t need to go there:  Uncle Sam lays out the first step in asset protection. Retirement plans safe from creditors Federal law puts pensions, 401(k) plans, and employee benefit plans beyond the reach of even a creditor with a judgment. Any plan qualified under ERISA has an anti alienation clause that forbids transfer of plan benefits, except to the beneficiary. It takes no special set up, no costly maintenance, just regular savings in an appropriate plan to put your retirement assets beyond the reach of a financial catastrophey. If you file bankruptcy, ERISA qualified accounts don’t even come into the bankruptcy estate. It takes a plan To get the protection of law for retirement savings, they have to be in a plan.
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In March 2014 the European Commission issued a Recommendation considering a new approach to business failure and insolvency, targeting efficient restructuring of viable enterprises in financial difficulty and a second chance for honest entrepreneurs. The objective of this Recommendation was: “to encourage Member States to put in place a framework that enables the efficient restructuring of viable enterprises in financial difficulty” and to “give honest entrepreneurs a second chance.” Noting that the differing legal regimes across Europe negatively affect the level of recoveries to creditors,  access to cross border funding, the ability to restructure pan-European corporates, entrepreneurship, employment and innovation, the Recommendation contained detailed provisions seeking to harmonise insolvencies and restructurings throughout the EU and set out minimum standards for how it suggested this could be achieved. Last week the UK Government  published the results of a consultation it held during February and March 2015 into how the Recommendation would affect the UK, if implemented.

Read More from: eSQUIRE Global Crossings

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Wall Street Journal The paper has a story on Fannie Mae's revamped HomeReady program, designed to give help to low-income families in qualifying for low downpayment mortgages. Details of the program were outlined in American Banker on Tuesday. Wells Fargo expects to implement the program, said executive Brad Blackwell. Wells believes the program will help minority groups, although it may take some time to start working. ...

Read More from: BankThink

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For some people, filing for bankruptcy comes only when the money is gone and they’ve got no ability to repay their debts. But for one entrepreneur and his wife, filing  their Chapter 11 bankruptcy petition was a way to keep things going and ensure that everyone got paid. Craig Walker and his wife, Susan, filed for Chapter 11 bankruptcy in Colorado, estimating their assets at between $100 million and $500 million and liabilities at between $10 million and $50 million. The Walkers are officers, directors, shareholders or members of several companies, including Integrated Cable Systems Inc. of Longmont and Walker Component Group of Denver, which supplies cables and components used by Vestas Wind Systems’ wind turbines, as well as ranches, two malls, and the banks of Custer Bancorp and First Southwest Bank Corp. By all accounts, things are in fantastic shape. This doesn’t sound as if the couple needs to file for bankruptcy, does it? With plenty of money at their disposal and business interests that keep them financially fit, the last thing you’d expect would be a trip to the bankruptcy court.
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Retailer USA Discounters Ltd., which has been accused of misleading U.S. service members, filed for chapter 11 bankruptcy protection to wind down, Daily Bankruptcy Review reports via The Wall Street Journal. (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.”) As DBR reports via WSJ, Relativity Media LLC won permission to continue on a fast sale timeline for its movie and TV business. Puerto Rico’s sewer and water authority, Prasa, is delaying a $750 million bond sale until at least next week, WSJ reports. According to Bloomberg, American Apparel Inc. is looking for advisers to help it come up with a bankruptcy restructuring plan.

Read More from: WSJ.com: Bankruptcy Beat

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BB Syndication Services, Inc. v. First American Title Ins. Co., 785 F.3d 825 (7th Cir. 2015) – A construction lender sued a title insurance company seeking defense and indemnification in connection with claims in a developer’s bankruptcy.  The district court found … Continue reading →
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If you want your bank to be one of the best to work for, you can pick up a lot of pointers from those in our third annual ranking.

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Whether it's in your branches, through your customer service lines, in your communities, or through mainstream or social media, it's your employees Â-- many of them millennials Â-- who can make or break your reputation with customers and prospects.

Read More from: BankThink

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The Weil Bankruptcy Blog has been busy writing about all the hottest bankruptcy issues, while at the same time giving you some longer weekends with our Bankruptcy Beach Reading light reading.  In the spirit of the back to school season (which has started for many students around the country even if the New York region still adheres to the post-Labor Day model), for the rest of this week we will be stepping back and giving you the CliffsNotes/Spark Notes/Masterplots (choose your generation) version of our entries over the last eight weeks.  Given the state of the stock market, don’t you think now is the time to start cramming?  Will We Ever Get to Test Whether a Bitcoin Exchange Is an Eligible Debtor?
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Authored by Samantha Alves Orender of Rogers TowersSecurities claims subject to arbitration proceedings are subject to the same statute of limitations as any other judicial action. In holding that section 95.011, Florida Statutes, applies to arbitration proceedings, the Florida Supreme Court effectively cut the time investors have to file a claim by up to two-thirds. Using statutory interpretation, the Florida Supreme Court in Raymond James Fin. Servs., Inc. v. Phillips, 126 So. 3d 186 (Fla. 2013), concluded that the Florida Legislature intended to subject arbitration proceedings to Florida’s general statute of limitations set forth in chapter 95 of the Florida Statutes. The Court determined the applicability of section 95.011 to “civil actions” should be broadly defined to encompass all civil proceedings, which includes arbitration

Read More from: Florida Banking Law Blog

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Whenever any bankruptcy case is filed, the creditors are usually stopped from taking action to collect the debts that were owed at the time of the bankruptcy. This feature of bankruptcy is called the “automatic stay.” The automatic stay, if it applies, stops a foreclosure or repossession from going forward. However, no bankruptcy filing allows a debtor to keep property that is security for a loan without making payments on the loan. For example, debtors with home mortgages and car loans, cannot keep their homes and cars in Chapter 7 bankruptcy without making payments. As soon as the bankruptcy case is closed, the automatic stay terminates, and the creditor can proceed with foreclosure or repossession. Moreover, if the debtor is not current on payments, creditors may ask the court to terminate the automatic stay while the bankruptcy is still pending, and, in Chapter 7, creditors are usually able to terminate the automatic stay. In order to keep property that is security for a loan, a debtor often must enter into a “reaffirmation agreement” with the creditor who holds the lien on that property. Usually, a creditor will require that the debtor be current on the loan in order to “reaffirm” the debt.
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On Monday, bond investors may have said we-told-you-so, but they also tacitly gave investors reason not to worry too much. The WSJ noted that corporate-bond markets had been showing signs of weakness ahead of the plunge in major stock indexes in recent days—similar to the warnings signs the credit markets flashed ahead of the stock market drops of 2000 and 2008. But the response in credit markets, particularly in the junk-bond markets, on Monday diverged wildly from the response among credit investors in 2008. Junk-bond investors were largely calm Monday, and trading volume was relatively low, according to several traders. On Monday, junk-bond prices dipped to 94.4 cents from 95.3 cents Friday, a drop of less than 1%, according to Barclays data. Yet the Dow closed down 3.6%, at 15871.35, and the S&P 500 dropped 77.68 points, or 3.9%, to 1893.21. The closing prices of the stock markets, while down sharply, masked the extreme intraday swings in the indexes. That contrasted with the relatively quiet day of trading in the bond markets Monday.

Read More from: WSJ.com: Bankruptcy Beat

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Marketplace lenders and other alternative finance companiesshould be perceived not as a threat, but rather as a group of pioneers opening up opportunities for those banks that elect to buy, build or partner in this market.

Read More from: BankThink

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Here at Shenwick & Associates, many of our bankruptcy clients (especially younger ones) have outstanding student loans. Although the Bankruptcy Code doesn't contain an express prohibition against discharging student loans in bankruptcy, the bar to doing so is very high. Most (but not all, as we'll discuss below) appellate courts, follow the standard laid out in Brunner v. New York State Higher Education Services Corp. The debtor must show that: (1) he or she cannot maintain, based on current income and expenses, a minimal standard of living for the debtor and dependents if forced to pay off the student loan; (2) that additional circumstances exist indicating that this state of affairs is likely to persist for a significant portion of the repayment period of the student loan; and (3) that he or she has made good faith efforts to repay the loans. Unfortunately for debtors in New York, Connecticut and Vermont (whose federal courts are under the jurisdiction of the Second Circuit Court of Appeals), the Brunner test remains good law and will do so until either the Second Circuit or the Supreme Court overrules Brunner or Congress amends the Bankruptcy Code.

Read More from: Shenwick & Associates

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Many community banks seem to have forgotten that they are most valuable for their ability to identify customers' pain and put an end to it. But fierce competition from fintech startups like Lending Club and Kabbage offers a reminder that they cannot afford to disregard this reality.

Read More from: BankThink

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Receiving Wide Coverage ... Dodd-Frank's Good and Bad Sides: Monday's stock market meltdown offered up a case study in how Dodd-Frank has helped banks and how it's hurt banks. The market madness also cast serious doubt on the Fed's plans to raise interest rates next month. On the positive side for Dodd-Frank, banks have been forced to build up their defenses because of the law and they should be much better equipped to weather the storm of...

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