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From Shriner v. Friedman Law Offices Opinion By: Donald L. Swanson Here’s something you don’t see every day: an appellate opinion on mediation confidentiality.  It allows a mediator to testify about what happened in the mediation. The opinion is a week old — dated April 12, 2016 — and is published here.  The case is Shriner v. Friedman Law Offices, 23 Neb. App. 869, ___ N.W.2d ___ (2016).  It involves a mediation settlement of a personal injury claim.  The plaintiff then sues her lawyer for malpractice in wrongfully advising and pressuring her to accept the settlement. In the malpractice case, Defendant takes the mediator’s deposition about what happened in the mediation. Both Plaintiff and Defendant then file motions for summary judgment in the malpractice case.  Defendant offers the mediator’s deposition testimony as evidence.  Plaintiff opposes such evidence as privileged under Nebraska’s Uniform Mediation Act (Neb. Rev. Stat. § 25-2930 et seq). The court then grants Defendant’s motion for summary judgment and overrules Plaintiff’s.  The court references the mediator’s testimony in its written opinion but does not directly address Plaintiff’s objection to such evidence.  Plaintiff appeals.

Read More from: Mediatbankry

1 week 4 days ago
The following post comes to us from Professor Rasmussen at USC: Nortel Bankruptcy Sets a Dangerous Precedent For the Future of Lending Lenders are no fools. They care deeply about the promises they receive in return for the money they hand over to the borrower.  And if a 2015 ruling in the long-running Nortel Networks bankruptcy case is allowed to stand, it could lead to more restrictive lending to borrowers in the future. For decades, our commercial law has allowed enterprises to divvy up promises as they see fit. Companies often conduct business through multiple, related entities. This allows lenders to extend credit knowing they’ll receive repayment for their loans from particularly asset-rich subsidiaries, that are not on the hook for all of the debts of the business. This adroit use of the corporate structure allows borrowers to get funds at a lower cost and, in the extreme, can mean securing a loan or not — which can be the difference in a business being able to operate. Until recently, a lender taking a promise from a subsidiary of a business could rest assured that its only other competition to the subsidiary’s assets would be the other creditors. A recent case, however, threatens to overturn this accepted wisdom and bring uncertainty to financing of large enterprises.

Read More from: Credit Slips

1 week 4 days ago
On April 13, 2016, Hydrocarb Energy Corporation and certain of its affiliates (collectively, “Hydrocarb” or the “Debtors”) filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. According to Hydrocarb’s Cash Collateral Motion (the “Motion”), Hydrocarb’s operations are focused on the acquisition, development, and production of oil and gas  properties in the United States and onshore in Namibia, Africa.  The Debtors own a 93% working interest in four fields in the shallow waters of Galveston Bay, Texas and a 90% working interest in a concession located in Namibia. See Motion at 5-6. Hydrocarb’s liabilities total approximately $6.2 million including (i) $4.5 pursuant to a 2014 Credit Agreement with Shadow Tree Capital Management LLC as agent; and (ii) $1.7 million under a Secured Convertible Promissory Note to Typenex Co-Insurance Investment LLC. See Motion at 12. The Debtors’ bankruptcy cases are being jointly administered in lead case captioned In re Hydrocarb Energy Corp., et al., Case No. 16-31922. A copy of the Motion can be accessed here: Download Hydrocarb Cash Collateral Motion. For further information, please contact a Thompson & Knight Bankruptcy and Restructuring Attorney. 
1 week 4 days ago
Postpetition interest is a thorny area of bankruptcy law.  The myriad rules, coupled with the inconsistent way in which they are often applied, provide fodder for litigation and opportunity for confusion.  In re Beltway One Development Group, LLC, a recent decision of the Bankruptcy Appellate Panel of the Ninth Circuit, demonstrates the need for increased clarity regarding the rate of interest that oversecured creditors are entitled to receive after a bankruptcy filing.  Background Prior to bankruptcy, Beltway One Development Group, LLC – an owner and operator of a master-planned business park in Las Vegas – had approximately $9.9 million outstanding on a loan that was secured by the business park.  After defaulting on several covenants, Beltway One failed to repay the loan on its maturity date.  Beltway One tried unsuccessfully to negotiate new terms with Wells Fargo, the successor to the original secured lender.  After Wells Fargo began the process of foreclosing on the business park, Beltway One filed a chapter 11 case to stop the foreclosure process.
1 week 4 days ago
Bankruptcy is all about the debtor’s assets, specifically how many and who gets them. The reason that many bankruptcy cases are contentious is that the parties often disagree about the amount of assets available for distribution to creditors, as well as how the assets should be divvied up. Read More › Tags: Chapter 13, Eastern District of Michigan

Read More from: Michigan Bankruptcy Blog

1 week 4 days ago
[wsj-responsive-image P="//si.wsj.net/public/resources/images/BN-NP848_colleg_P_20160419111258.jpg" J="//si.wsj.net/public/resources/images/BN-NP848_colleg_J_20160419111258.jpg" M="//si.wsj.net/public/resources/images/BN-NP848_colleg_M_20160419111258.jpg" caption="In this May 10, 2014, file photo, a graduate of Northwest Florida State College wears her cap during commencement in Niceville, Fla." credit="Associated Press/Northwest Florida Daily/Nick Tomecek" placement="Inline" suppressEnlarge="false" ] Colleges have returned $276,434.80 in tuition payments that were made for students whose parents later filed for bankruptcy protection, a Wall Street Journal analysis of more than two dozen lawsuits filed since 2014 has found. Villanova University, Ithaca College and the New York Institute of Technology are just some of the schools that have been sued by bankruptcy trustees. The trustees, who are in charge of recovering money for the debts of the bankrupt parents, argue that financially struggling parents should have paid their own bills instead of college tuition for a child. The Wall Street Journal analysis found that most schools have opted to settle the cases and return the tuition rather than battle expensively in court, though two schools are pushing forward in lawsuits that could lead judges to clarify whether the controversial lawsuits are fair. Four federal lawmakers are backing a bill to ban them. Among the latest settlements:

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
Six years ago, in an otherwise unremarkable opinion, a court in Texas undermined one of the fundamental concepts embedded in the statute of frauds and deprived unsecured creditors of millions of dollars in value that would otherwise have been available to them. Nobody noticed—until now. Why does a six-year-old Texas bankruptcy case matter now? Oil and gas companies are failing at an unprecedented rate. The creditor who can get at the oil and gas company’s real property interests holds the keys to the debtor’s estate. If the real property interests are subject to a properly recorded mortgage, unsecured creditors are, in most instances, out of luck. Any contract for the transfer of an interest in real property, such as oil and gas interests, is subject to the statute of frauds. The statute of frauds requires a contract for the sale or transfer of real property to contain “sufficient” information to identify the property being conveyed with “reasonable certainty.”  In most states, that means a granular description—think metes and bounds. In Texas, in the wake of a 2010 ruling in the bankruptcy of Cornerstone E&P Co., a blanket lien on “all real property interests now owned or hereafter acquired” is deemed sufficiently descriptive to satisfy the statute of frauds.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
Looking for the secret alternative which will solve your debt problems without bankruptcy? Why not? Ads for debt settlement companies and do-it-yourself books always promise to reveal the tricks to make your bills vanish for pennies, without resort to bankruptcy. Isn’t it interesting that these “secrets” are known only by people who want to sell you something?  A book, a debt settlement plan, a seminar? I’m tempted to ask clients who ask about the secret alternatives: do you also believe in the tooth fairy, Santa Claus, and leprechauns with pots of gold? Unkind, I know. But in the information age, it ought to be obvious: There are no painless, quick fixes. Settle your debts for pennies Yes, it is theoretically possible to get a settlement of each of your debts that gives the same result as bankruptcy. But it is seldom a realistic option because
  • It requires cash to pay each settlement
  • It requires 100% of your creditors to agree to terms
  • It takes time and effort to negotiate deals
  • Not all creditors are prepared to deal
  • It’s dependent on no negative financial changes in the future
And in the meantime, your credit report gets trashed.  Often, the unpaid creditor sues.
1 week 4 days ago
Community banks are at a crossroads as they face a threat from alternative lenders and the need to stay true to the traditional bank model. What they should do?

Read More from: BankThink

1 week 4 days ago
Receiving Wide Coverage ... Wells Fargo Becomes Primary Dealer: The Federal Reserve Bank of New York has added Wells Fargo Securities as a primary dealer for the U.S. government bond market. As a primary dealer, Wells Fargo will trade directly with the New York Fed and underwrite U.S. government debt sales. It's a rare move: There are only 23 primary dealers and the last time the Fed added a primary dealer was in February 2014 when...

Read More from: BankThink

1 week 4 days ago
[wsj-responsive-image P="//si.wsj.net/public/resources/images/BN-NP771_sanber_P_20160419075723.jpg" J="//si.wsj.net/public/resources/images/BN-NP771_sanber_J_20160419075723.jpg" M="//si.wsj.net/public/resources/images/BN-NP771_sanber_M_20160419075723.jpg" caption="A sign with the 'i' missing from the word civic is seen in San Bernardino, Calif., in this Jan. 23, 2015, file photo. " credit="Lucy Nicholson/Reuters" placement="Inline" suppressEnlarge="false" ] San Bernardino, Calif.’s bankruptcy plan would shield individual police officer from claims of brutality and excessive force, and alleged victims aren’t happy about 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.”) DBR has more in in WSJ about Eastern Mountain Sports operator Vestis Retail Group LLC’s bankruptcy filing.

Read More from: WSJ.com: Bankruptcy Beat

1 week 5 days ago
Chicago — Photo by Grant Swanson By: Donald L. Swanson If the City of Chicago were to file bankruptcy, the Bankruptcy Court in Chicago would find itself in a bit of a pickle. It’s not a between-a-rock-and-a-hard-place type of pickle. It’s more of a between-a-rock-and-an-I-don’t-want-to-go-there pickle. First of all, let’s note that prospects for a City of Chicago bankruptcy filing are now dramatically increased. Here’s why: –Chicago’s attempt to solve, by negotiated settlements, potential shortfalls in public employee pension funding have failed because the Illinois Supreme Court recently ruled that such settlements are prohibited by the pension clause in the State of Illinois Constitution. –Detroit successfully resolved this issue in bankruptcy, when the Bankruptcy Judge ruled that provisions of the Bankruptcy Code override a similar pension clause in the Michigan State Constitution. Second, let’s note that Detroit’s successful bankruptcy reorganization is attributed in large part to a proactive mediation process created by the Bankruptcy Judge in that case. Third, let’s note that the Bankruptcy Court in Chicago recently took anti-mediation steps by, (1) deleting its local mediation rules, and (2) then ruling that it lacks authority to create a proactive mediation process. Pickle Jar So the pickle, if Chicago were to file bankruptcy, is this: the Bankruptcy Court in Chicago will need to either,

Read More from: Mediatbankry

1 week 5 days ago
As referenced in a prior post, on April 7th, Pacific Sunwear of California, Inc. (aka PacSun, aka Pacific Sunwear) filed for chapter 11 protection in the United States Bankruptcy Court for the District of Delaware. On April 8th, the Court entered an Interim Utilities Order (click here), which among other things sets forth deadlines for utility providers to object to the proposed adequate assurance procedures or the amount of adequate assurance.  The exhibits to the Interim Utilities Order (click here), set forth a proposed final order which establishes the proposed amount of adequate assurance of payment to each utility provider of the Debtors under Section 366 of the Bankruptcy Code.  The adequate assurance amount proposed by the Debtors represents the average amount owed to such utility provider over a two-week period.
1 week 5 days ago
Summary In yet another straight-forward 15 page decision signed April 18, 2016, Judge Walrath of the Delaware Bankruptcy Court granted a defendant’s motion to dismiss a preference complaint, but granted the plaintiff leave to amend. Judge Walrath’s opinion is available here (the “Opinion”).  Numerous posts on this blog discuss other opinions issued by the Delaware Bankruptcy Court dealing with preference payments, as can be seen here. PREFERENCE OPINION POSTS Background My colleague, Carl Neff, published a blog post when THQ first started filing preference actions.  You can read it here: THQ Inc. Preference Actions Filed
1 week 5 days ago
It appears that the House legislation has bogged down.  Two or three issues keep coming up, none of which make a whole lot of sense: First, "bailouts."  I'm not sure if people making this argument actually believe it or are just using a convenient, politically toxic buzzword. But the claim that extending chapter 9 to include some or all of Puerto Rico constitutes a "bailout" can't really be taken seriously. A bailout involves (a) the use of taxpayer money to (b) help investors avoid realizing risks they voluntarily agreed to take. Neither is applicable here. Instead, this is the basic insolvency process doing its thing. Namely, losses will be allocated pro rata if bankruptcy applies.  But no taxpayer money is involved, and in no case are investors being saved from their own poor investment choices. Second, expanding chapter 9 does not raise takings or other scary "retroactivity" problems. If it did, then Congress could never have enacted chapter 9 in the first place. After all, there was no chapter 9 until there was a chapter 9.

Read More from: Credit Slips

1 week 5 days ago
[wsj-responsive-image P="https://si.wsj.net/public/resources/images/BN-HQ748_puerto_M_20150330135..." J="https://si.wsj.net/public/resources/images/BN-HQ748_puerto_M_20150330135..." M="https://si.wsj.net/public/resources/images/BN-HQ748_puerto_M_20150330135..." caption="Beachgoers soak up the sun in San Juan, Puerto Rico. " credit="KRISTI EATON/ASSOCIATED PRESS" placement="Inline" suppressEnlarge="false" ignorerespwidth="1280" ignorerespheight="853" ] Republican leaders ran into a familiar stumbling block last week when they tried to advance their bill to address Puerto Rico’s debt crisis: their own lawmakers. Republicans called off a committee vote on the Puerto Rico bill at the last minute, blaming the delay on Democrats and the Obama administration, who they said had requested more time to negotiate. [wsj-responsive-more-in tag="Puerto Rico" category="" ]

Read More from: WSJ.com: Bankruptcy Beat

1 week 5 days ago
NASA defines a black hole as a place in space where gravity is relentless and pulls so much that not even light can get out.  And, so it goes with Chicago as it attempts to get out of its pension black hole. The recent Illinois Supreme Court opinion in Jones v. Municipal Employees’ Annuity and Benefit Fund of Chicago, 2016 IL 119618 (Ill. 2016) (“Jones”) may have created a wormhole or way through Chicago’s pension black hole.  That way through is collective bargaining, as discussed below. Pensions are like black holes because while we can size the problems, we can’t see solutions – at least yet.  Market volatility impacts returns on investments and the parties involved have not found a level playing field to talk about what happens if adjustments are not made.  There are a myriad of answers but it is going to take persistence and patience and using cases like Jones as a paradigm to find solutions.  Pensions are not intractable, but they are complex, and like black holes there is a lot more information to be gathered in terms of finding solutions.[1] Background

Read More from: eSQUIRE Global Crossings

1 week 5 days ago
Are you stressed to meet the deadline to file your taxes today or relieved that you already filed your return?  If so, today may be a day of freebies for you.  Several companies are offering tax day freebies today which include:
  • Get one free cookie today from Great American Cookies
  • Get one free small sandwich with a purchase of a 32-ounce drink and a bag of chips from Schlotzky’s Deli today.
  • From 6:00 a.m. to Midnight today, Krystal’s is offering discounted hamburgers and cheeseburgers
  • Single cheeseburgers are half-price at Sonic
Do you owe taxes that you cannot pay this year? If so, remember to file your tax return anyway to avoid additional penalties.  If you are unable to pay your tax bill because you are struggling to pay other debts or have limited income, Bond & Botes offers a free consultation to discuss your financial options, including managing those tax liabilities.  One option of settling your debt may be an “Offer in Compromise”. Avoid making common errors on your tax return

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

1 week 5 days ago
The doctrine of equitable mootness provides that Chapter 11 reorganization plans will be deemed moot, and therefore not subject to appellate review, if a plan has been substantially consummated and granting appellate relief would impair the rights of innocent third parties relying on the confirmation order.  Since the development of the court-created mootness doctrine nearly a quarter century ago, courts have grappled with applying it in such a way as to strike an adequate balance between the need for finality, and the need to exercise the court’s jurisdiction and preserve the right to appellate review.  The standard interpretation in bankruptcy was that once the debtor took definitive steps to put the Chapter 11 plan in place (i.e., “substantial consummation”), and the objecting creditor neglected to gain a stay of the plan confirmation order pending appeal, then any appeal was presumed to be “equitably moot” and therefore subject to dismissal by the appellate court.
1 week 5 days ago
The idea of financial institutions resembling financial institutions has caught on with some industry observers for reasons other than reducing systemic risk.

Read More from: BankThink

1 week 5 days ago

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