ABI Blog Exchange

The U.S. Bankruptcy Court for the Northern District of Illinois recently held in Krol v. Key Bank National Association (In re MCK Millennium Centre Parking, LLC) that the safe harbor of section 546(e) of the Bankruptcy Code applies to a debtor’s payments made in respect of mortgages pooled and held by a REMIC trust.  The case appears to be the first to interpret the phrase “in connection with a securities contract” to include payments of this type.  Background In 2008, MCK Millennium Centre Retail, LLC, a subsidiary and insider of debtor MCK Millennium Centre Parking, LLC, obtained a loan from Key Bank National Association.  Key Bank sold the promissory note to a trust qualified as a real estate mortgage conduit (“REMIC”).  The promissory note was pooled with other mortgages, and certificates representing beneficial ownership interests in the trust were issued to investors.  The certificates entitled the holders to payments from principal and interest on the pool of mortgages, in the manner provided for in the pooling and servicing agreement (“PSA”) among Key Bank, Wells Fargo, as trustee, and other financial institutions.
1 week 3 days ago
In the months, even years, before selling a business, there are certain steps that a business owner can take to maximize sale price.  These can range from financial housekeeping (i.e. consider whether audited financial statements should be paid for) to operational improvements (i.e. are all customers actually profitable?  Should more money go into R&D).  Read more here.
1 week 3 days ago
In the first of what is promised to be a series, the PCAOB issued a communication to audit committees to highlight key areas of recurring concern in PCAOB inspections of large audit firms and emerging risks to audits. This Audit Committee Dialogue includes questions that the PCAOB encourages audit committees to ask their auditors. 
1 week 3 days ago
Cathedral of St. Paul
Jim Mone/Associated Press
A bankruptcy judge last week gave the parishes of the Roman Catholic Archdiocese of St. Paul and Minneapolis a greater voice as creditors in the archdiocese’s bankruptcy case, a development that is “troubling” to victims of alleged clergy sexual abuse and their advocates, who say the judge’s ruling effectively gives the archdiocese a place on both sides of the bargaining table. Judge Robert Kressel of the U.S. Bankruptcy Court in St. Paul, Minn., signed off on an order that gives the archdiocese’s 187 parishes increased representation in their bid to reach a settlement with alleged victims through a separate, parish-only creditors’ committee, one with equal standing to the current creditors’ committee made up of alleged victims. Though parishes have banded together in past diocesan bankruptcies to facilitate negotiations with abuse victims, never before have they been allowed to form their own creditors’ committee, lawyers familiar with the bankruptcies say. By forming a committee, any legal fees the parishes generate will paid by the archdiocese, sparing the parishes a significant expense.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
Cathedral of St. Paul
Jim Mone/Associated Press
A bankruptcy judge last week gave the parishes of the Roman Catholic Archdiocese of St. Paul and Minneapolis a greater voice as creditors in the archdiocese’s bankruptcy case, a development that is “troubling” to victims of alleged clergy sexual abuse and their advocates, who say the judge’s ruling effectively gives the archdiocese a place on both sides of the bargaining table. Judge Robert Kressel of the U.S. Bankruptcy Court in St. Paul, Minn., signed off on an order that gives the archdiocese’s 187 parishes increased representation in their bid to reach a settlement with alleged victims through a separate, parish-only creditors’ committee, one with equal standing to the current creditors’ committee made up of alleged victims. Though parishes have banded together in past diocesan bankruptcies to facilitate negotiations with abuse victims, never before have they been allowed to form their own creditors’ committee, lawyers familiar with the bankruptcies say. By forming a committee, any legal fees the parishes generate will paid by the archdiocese, sparing the parishes a significant expense.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
Vendors that specialize in Bank Secrecy Act compliance can help ease community banks' regulatory burden while strengthening their controls.

Read More from: BankThink

1 week 4 days ago
Corinthian Colleges filed for bankruptcy and shut down all its campuses, and its former students just won a formal committee role in the case. This photo taken July 8, 2014, shows a person walking past an Everest Institute sign in a office building in Silver Spring, Md.
JOSE LUIS MAGANA/ASSOCIATED PRESS
The interests of former students of defunct Corinthian Colleges Inc. who could potentially have billions of dollars in claims against the for-profit educator are getting an official voice in company’s bankruptcy case, a win for students seeking a greater sway in the case’s outcome. 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

1 week 4 days ago
Corinthian Colleges filed for bankruptcy and shut down all its campuses, and its former students just won a formal committee role in the case. This photo taken July 8, 2014, shows a person walking past an Everest Institute sign in a office building in Silver Spring, Md.
JOSE LUIS MAGANA/ASSOCIATED PRESS
The interests of former students of defunct Corinthian Colleges Inc. who could potentially have billions of dollars in claims against the for-profit educator are getting an official voice in company’s bankruptcy case, a win for students seeking a greater sway in the case’s outcome. 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

1 week 4 days ago
Wall Street Journal Loyalty trumps lucrativeness, at least for the time being, in the world of credit cards. Issuers like American Express, JPMorgan Chase and Commerce Bancshares in Kansas City are all picking up the pace in securing co-branded partnerships with merchants. The reason? Some merchants' customer bases are deemed more loyal, even if they generate less fee income, and a partnership with a merchant is a considered a more efficient way to grow a customer...

Read More from: BankThink

1 week 4 days ago
Although bankruptcy cases can be complex, many of the procedures and cases are routine. Before filing a bankruptcy case, you or your attorney should analyze your eligibility for different forms of debt relief available under the Bankruptcy Code and which form of relief is most beneficial to you. Be sure you understand the relief you can obtain and its limitations. To file a bankruptcy case, documents called a Petition, Schedules, and Statement of Financial Affairs, as well as in some cases a Statement of Intention need to be prepared correctly and filed with the bankruptcy court. You will have to pay a filing fee to the bankruptcy court. Once your case is filed, you will have to attend a first meeting of creditors where you will be questioned under oath by a court official called a “trustee”. At this meeting you may also be questioned by your creditors. If you choose to file a Chapter 7 case, you may be asked to reaffirm a debt. You may want help deciding whether to do so. A creditor is not permitted to coerce you into reaffirming debts. If you choose to file a Chapter 13 case in which you repay your creditors what you can afford over a 3 to 5 year period, your attorney will help you in preparing your Chapter 13 plan and with the confirmation hearing on your plan which will be before a Federal Bankruptcy Judge.
1 week 4 days ago
Nothing says “closure” quite like a termination agreement reaffirmed by a bankruptcy court – right? Apparently not.  As demonstrated in In re Great Lakes Quick Lube Limited Partnership, under certain circumstances, a prepetition agreement for an early lease termination might provide unsecured creditors an opportunity to commence an action in the bankruptcy court seeking to avoid the lease termination as a preferential or fraudulent transfer. In February 2012, less than two months prior to filing a Chapter 11 petition, the debtor and its landlord entered into a lease termination agreement under which the debtor agreed to relinquish its leasehold interests in five retail stores. Nine months after the debtor filed for bankruptcy, the committee of unsecured creditors brought a complaint against the landlord claiming that the agreement should be avoided as a preferential or fraudulent transfer under the Bankruptcy Code, alleging that two of the five leases that were terminated held a combined value of $825,000.  At issue was whether the lease termination agreement was an avoidable preference or fraudulent transfer under either section 547(b) or section 548(a)(1)(B). Ruling
1 week 4 days ago
Should the bankruptcy code be amended to make it easier for borrowers to seek forgiveness of student loan debt through a bankruptcy filing? The explosive growth of student debt has become not only a mounting political issue, but its near-suffocating effect on millions of Americans also is causing considerable macroeconomic impacts. The statistics are daunting: Total student debt now exceeds $1.2 trillion, up from only $240 billion just 12 years ago. During this period, the number of borrowers has increased more than 65% to nearly 40 million, with average student loans increasing nearly 50%. And as graduate school ranks increased during the most recent financial downturn, average student debt for these former students is now approaching $100,000. There are many causes for these dramatic increases. Tuition is increasing at far greater than the rate of inflation, and enrollment at “for-profit” colleges, which are highly dependent on “risky” student loans, is exploding. It’s no wonder that the default rate on student loans is the highest of any debt category, approaching close to 20%.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
Should the bankruptcy code be amended to make it easier for borrowers to seek forgiveness of student loan debt through a bankruptcy filing? The explosive growth of student debt has become not only a mounting political issue, but its near-suffocating effect on millions of Americans also is causing considerable macroeconomic impacts. The statistics are daunting: Total student debt now exceeds $1.2 trillion, up from only $240 billion just 12 years ago. During this period, the number of borrowers has increased more than 65% to nearly 40 million, with average student loans increasing nearly 50%. And as graduate school ranks increased during the most recent financial downturn, average student debt for these former students is now approaching $100,000. There are many causes for these dramatic increases. Tuition is increasing at far greater than the rate of inflation, and enrollment at “for-profit” colleges, which are highly dependent on “risky” student loans, is exploding. It’s no wonder that the default rate on student loans is the highest of any debt category, approaching close to 20%.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
Should the bankruptcy code be amended to make it easier for borrowers to seek forgiveness of student loan debt through a bankruptcy filing? Currently, the bankruptcy code makes it very difficult to discharge (walk away from) student loan debt, often leaving new graduates in debt to the point at which it negatively impacts their decision to make major purchases such as real estate or cars, take jobs they want as opposed to jobs simply for a higher salary or any paycheck at all, or even marry or leave home. Although it appears that the current state of the student-loan market begs for reform, simply relaxing the barriers to student-loan forgiveness in bankruptcy may actually aggravate the issue and leave the underlying problem of rising higher education costs unresolved. This isn’t to say that the market itself is not reacting. Perhaps in recognition of the skyrocketing cost of higher education, recent reforms do provide payment alternatives including grace periods to delay or prevent defaults, reduced repayment terms during periods of unemployment, or repayment plans tied to a percentage of the recent graduate’s salary.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
Should the bankruptcy code be amended to make it easier for borrowers to seek forgiveness of student loan debt through a bankruptcy filing? Currently, the bankruptcy code makes it very difficult to discharge (walk away from) student loan debt, often leaving new graduates in debt to the point at which it negatively impacts their decision to make major purchases such as real estate or cars, take jobs they want as opposed to jobs simply for a higher salary or any paycheck at all, or even marry or leave home. Although it appears that the current state of the student-loan market begs for reform, simply relaxing the barriers to student-loan forgiveness in bankruptcy may actually aggravate the issue and leave the underlying problem of rising higher education costs unresolved. This isn’t to say that the market itself is not reacting. Perhaps in recognition of the skyrocketing cost of higher education, recent reforms do provide payment alternatives including grace periods to delay or prevent defaults, reduced repayment terms during periods of unemployment, or repayment plans tied to a percentage of the recent graduate’s salary.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
A new wave of artificial intelligence applications work by crunching financial data to answer customers' questions. This may give financial institutions a leg up over their nonbank competitors, since the latter group tends to lack vast reserves of people's financial information.

Read More from: BankThink

1 week 4 days ago
The roughly $7 million sale of the Fresh Produce retail chain, which sells vacation-inspired clothing to women, got approval from a bankruptcy judge. In a court order signed Tuesday, Judge Michael Romero approved the chain’s sale to an investor group that includes Fresh Produce’s existing owners, Thom and Mary Ellen Vernon. The deal is expected to keep more than half of Fresh Produce’s 27 stores open. The retailer targets both tourists and “non-tourist customers for whom a ‘vacation state of mind’ resonates,” Chief Financial Officer Jo Stone said in earlier documents filed in in U.S. Bankruptcy Court in Denver. The Boulder, Colo., chain filed for chapter 11 protection on April 4, blaming an “aggressive overexpansion” and high turnover in key positions. As the company began to struggle last year, it closed a store, laid off workers and cut employee pay by 10%. Fresh Produce employed 270 people at the time of its bankruptcy and made $37.9 million in sales during its most recent fiscal year.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
The roughly $7 million sale of the Fresh Produce retail chain, which sells vacation-inspired clothing to women, got approval from a bankruptcy judge. In a court order signed Tuesday, Judge Michael Romero approved the chain’s sale to an investor group that includes Fresh Produce’s existing owners, Thom and Mary Ellen Vernon. The deal is expected to keep more than half of Fresh Produce’s 27 stores open. The retailer targets both tourists and “non-tourist customers for whom a ‘vacation state of mind’ resonates,” Chief Financial Officer Jo Stone said in earlier documents filed in in U.S. Bankruptcy Court in Denver. The Boulder, Colo., chain filed for chapter 11 protection on April 4, blaming an “aggressive overexpansion” and high turnover in key positions. As the company began to struggle last year, it closed a store, laid off workers and cut employee pay by 10%. Fresh Produce employed 270 people at the time of its bankruptcy and made $37.9 million in sales during its most recent fiscal year.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
Should the bankruptcy code be amended to make it easier for borrowers to seek forgiveness of student loan debt through a bankruptcy filing? It’s not exactly “breaking news” that student loan debt has become an insurmountable issue for many recent graduates. The problem is now so widespread that we must reform the bankruptcy code to help alleviate the burden on individuals and the U.S. economic future. Borrowers rarely try to discharge student loan debt because of the bankruptcy code’s stringent requirements that apply to forgiveness of such obligations. Since 2005, all qualified educational loans, including private loans, are impracticality non-dischargeable. However, treating student loan debt this way impacts not just individuals, but the economy as a whole. The staggering rate of growth of educational debt will ultimately have rippling (and crippling) effects on other financial sectors.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago
Should the bankruptcy code be amended to make it easier for borrowers to seek forgiveness of student loan debt through a bankruptcy filing? It’s not exactly “breaking news” that student loan debt has become an insurmountable issue for many recent graduates. The problem is now so widespread that we must reform the bankruptcy code to help alleviate the burden on individuals and the U.S. economic future. Borrowers rarely try to discharge student loan debt because of the bankruptcy code’s stringent requirements that apply to forgiveness of such obligations. Since 2005, all qualified educational loans, including private loans, are impracticality non-dischargeable. However, treating student loan debt this way impacts not just individuals, but the economy as a whole. The staggering rate of growth of educational debt will ultimately have rippling (and crippling) effects on other financial sectors.

Read More from: WSJ.com: Bankruptcy Beat

1 week 4 days ago

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