ABI Blog Exchange

Receiving Wide Coverage ... Swiss Search HSBC Offices: Geneva public prosecutors launched what appeared to be a surprise raid on HSBC's Swiss offices Wednesday morning as part of a criminal probe into the bank's alleged money-laundering misdeeds. Prosecutors issued a public statement saying the search came in response to "recent public revelations" about the Swiss unit, an apparent reference to the vast files provided by whistleblower Herve Falciani to several media outlets. Among other things, theÂ...

Read More from: BankThink

1 week 2 days ago
MBS investors suffered a serious legal blow a couple of months back when the Second Circuit held that the Trust Indenture Act of 1939 doesn't apply to MBS.  The Second Circuit's decision hinges on treating a "mortgage" as a "security." That's rather counterintuitive.  The Trust Indenture Act doesn't define "security," but refers to the Securities Act's definitions. The Securities Act defines "security" to include "any note" but the definition bears the caveat "unless the context otherwise requires." I'd think that the context would have pretty easily counseled for reading "note" not to include residential mortgages. What the Securities Act is trying to pick up are issuances of corporate notes.

Read More from: Credit Slips

1 week 2 days ago
The Fifth Circuit decided five bankruptcy cases over the past two months.  They include cases where the effort to recite the facts exceeded the importance of the decision, cases about the effect of summary judgments granted, denied and reversed and a footnote about Florida strip clubs.Isbell v. DM Records, Inc. (Matter of Isbell Records, Inc.), No. 13-40878 (5th Cir. 12/18/14).   In this opinion, we learn that the song "Whoomp (There It Is)" was based on a chant when women disrobed in Florida strip clubs in the 1990s.  (It's in a footnote so it must be true).    We also learn that for half of the song's existence, the parties have been litigating over who owns the composition rights.    The writers entered into a Recording Agreement with Isbell Records, Inc. d/b/a Bellmark Records which provided that 50% of the composition rights would go to Bellmark's publishing affiliate.   Bellmark filed bankruptcy and in 1997, its trustee sold all of its assets to DM Records.  DM exploited the copyright to Whoomp.   However, it turns out that the president of Bellmark, Albertis Isbell, had his own music publishing company, Alvert Music and he thought that it owned the rights rather than DM..    In 2002, Isbell filed suit against DM.    The District Court dismissed finding that Isbell had assigned his rights to someone else.
1 week 2 days ago
This post was originally published in the American Bar Association Young Lawyer Division Bankruptcy Committee Winter 2015 Newsletter. (c) 2015 by the American Bar Association. The Second Circuit Court of Appeals recently determined that JPMorgan released its security interest on a $1.5 billion term loan by virtue of the mistaken filing of a UCC-3 termination statement.  After concluding that both the borrowers and lenders had reviewed drafts, including review by their counsel, the Second Circuit concluded that erroneous termination statement was filed with actual authority.  Official Committee of Unsecured Creditors v. JPMorgan Chase Bank, N.A. (In re Motors Liquidation Co.), Appeal  No. 13-2187 (2d Cir. Jan. 21, 2013)(Second Circuit Decision).  A copy of the decision can be found here.
1 week 2 days ago
In a recent ruling, the Ninth Circuit held that a seller was liable under the law of fraudulent conveyance to the bankruptcy trustee for the portion of the purchase price funded by a company controlled by the buyer, which was actually a Ponzi scheme, that later filed bankruptcy. Mano-Y&M Ltd. v. Field (In re Mortgage Store, Inc.), 773 F.3d 990 (9th Cir 2014). This holding was reached notwithstanding the fact that there was no allegation that the seller had no knowledge of the source of funds or that the funding company was a Ponzi scheme. The Court’s stated rationale was as follows: By placing the risk on initial transferees rather than creditors, Congress ensured that creditors “need not monitor debtors so closely,” the idea being that “savings in monitoring costs make businesses more productive.” [Bonded Financial Services, Inc. v. European American Bank, 838 F.2d 890, 892 (7th Cir. 1988)] (citing Douglas G. Baird & Thomas H. Jackson, Fraudulent Conveyance Law and Its Proper Domain, 38 Vand. L. Rev. 829 (1985); Robert Charles Clark, The Duties of the Corporate Debtor to Its Creditors, 90 Harv. L. Rev. 505, 554-60 (1977)); see also Tese-Miller v. Brune (In re Red Dot Scenic, Inc.), 293 B.R. 116, 121 (S.D.N.Y. 2003) (noting that strict liability for initial transferees “lowers the cost of credit”). Id. at 997.

Read More from: Insolvency Insights

1 week 2 days ago
“And it’s too late, baby now, it’s too late, Though we really did try to make it.” - Carole King, It’s Too Late  Today’s blog is about a recent non-precedential decision from the Third Circuit, In re Winstar Communications, Inc. The decision is short and simple, and it stands as an important reminder of two important concepts for attorneys to remember:
  1. The bankruptcy court, and by extension, the district where a bankruptcy is heard, retains exclusive jurisdiction over any matters arising out of a bankruptcy proceeding, even years after the fact.
  2. Never take a statute of limitations for granted.
Facts IDT Corporation and Winstar Holdings, LLC, purchasers of assets in a Delaware bankruptcy sale and plaintiffs in the original action, asserted that the defendants, Blackstone Advisory Partners L.P., Impala Partners LLC, and Citigroup, Inc., defrauded them in connection with the sale of assets in Winstar Communications’ bankruptcy case. The underlying action included claims on account of fraud, negligent misrepresentation, and civil conspiracy. The action was filed in New York Supreme Court in May 2007, five years after the sale.
1 week 2 days ago
Big banks have only grown larger and more complex since the financial crisis, and there is reason to doubt the efficacy of measures aimed at preventing the risk of another taxpayer bailout.

Read More from: BankThink

1 week 3 days ago
Major Events It takes a lot for some people to take action. It takes a major event sometimes before someone will pick up the phone and seek help. Sometimes it’s in the form of a lawsuit served by a Sheriff to the front door. Other times, it’s a notice from the Secretary of State that+ Read More The post Filing Your Chapter 13 Bankruptcy Case Is Just The Start appeared first on David M. Siegel.
1 week 3 days ago
In its recent opinion in Aviva Life and Annuity Company v. White (In re: Millennium Multiple Employer Welfare Benefit Plan), 772 F.3d 634 (10th Cir. 2014), the Tenth Circuit clarified a litigant’s rights to continue to pursue claims against a party seeking the typical protections afforded when interpleading funds into the court’s registry. Aviva Life and Annuity Company had issued certain insurance policies having significant cash to the Debtor, with the Debtor holding the policies for the collective benefit of all participants in the Millennium Multiple Employer Welfare Benefit Plan.  Prior to the Debtor’s bankruptcy filing, Jerald and Claudia White and Diogenes Holdings, Inc. (the “Whites”) were among a number of claimants who had brought suit against Aviva and the Debtor alleging Aviva and the Debtor had fraudulently induced them to enter into various Participation Agreements.  More specifically, the Whites’ suit alleged causes of action for fraud, negligent misrepresentation, civil conspiracy and violations of Tennessee statutes, accounting malpractice, breach of fiduciary duty, unjust enrichment and constructive and resulting trust. 

Read More from: Creditors' Rights

1 week 3 days ago
The Governor of Kentucky has declared a state of emergency in the state due to the 12 or more inches of snow we have received. Unfortunately, that does not prevent creditors from continuing to harass folks through phone calls and mail, and often even email. If you are in your own state of emergency due to a financial situation, please feel free to call our office today to schedule a free, no obligation appointment to discuss your situation. We are open for business and look forward to helping ! Our toll free number is 270-651-9353 or local call at 270-651-7777. We are Board Certified in Consumer Bankruptcy law by the American Board of Certification and have been helping folks in all types of weather and situations for over 25 years ! There is no one in South Central Kentucky more skilled and ready and available to assist you. Our fees are very competitive and we can work with you on payment plans
1 week 3 days ago
On February 17, 2015, Saladworks, LLC filed a chapter 11 bankruptcy case in Delaware.  The case has been docketed as case no. 15-10327 and has been assigned to The Honorable Laurie Selber Silverstein. The petition lists assets and liabilities between $10 million and $50 million.  According to the Declaration of Paul Steck (the “Steck Declaration”), President and member of Saladworks’ board of directors, filed in support of the petition and various first-day motions, Saladworks is the nation’s first and largest fresh-salad franchise concept.  The debtor is currently a party to 149 franchise agreements.  The debtor is also a party to 141 franchise agreements where the franchisee has not yet opened the franchise. The debtor’s equity owners are J Scar Holdings, Inc. (70%) and JVSW LLC (30%).  According to the Steck Declaration, the debtor has no secured bank debt, and no other known properly secured debt obligations.  The debtor lists approximately $8.02 million in unsecured debt obligations including some $870,000 in trade obligations.
1 week 3 days ago
As a result of the SEC decision to withdraw its no-action letter decision granting Whole Foods the ability to exclude a proxy access shareholder proposal on January 16, the company has decided to delay its annual meeting. According to the company’s announcement in an 8-K filed on Friday, the company had planned to file a definitive proxy statement on January 22 for an annual meeting scheduled to be held on March 10. The company views the postponement of the meeting as necessary to allow its board adequate time to review and evaluate the company’s alternatives, and meet applicable deadlines.
1 week 3 days ago
The confirmation hearing for attorney general nominee Loretta Lynch suggested a shift in legislators' attitudes toward banks. Rather than the usual focus on banks' alleged misdeeds, lawmakers cast them as victims of government overreach in Operation Choke Point.

Read More from: BankThink

1 week 3 days ago
Associated Press
General Motors Co. is in court Tuesday to try to preserve its bankruptcy shield against legal claims regarding low resale values and ignition-switch defects, The Wall Street Journal reports. Energy Future Holdings Corp. has asked court permission to start paying down some of its debt as it moves ahead in discussions with creditors to formulate a Chapter 11 exit plan. WSJ 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.”) Cayman Islands bank Caledonian Bank Ltd. Filed for bankruptcy after its U.S. assets were frozen, Bloomberg reports.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
Associated Press
General Motors Co. is in court Tuesday to try to preserve its bankruptcy shield against legal claims regarding low resale values and ignition-switch defects, The Wall Street Journal reports. Energy Future Holdings Corp. has asked court permission to start paying down some of its debt as it moves ahead in discussions with creditors to formulate a Chapter 11 exit plan. WSJ 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.”) Cayman Islands bank Caledonian Bank Ltd. Filed for bankruptcy after its U.S. assets were frozen, Bloomberg reports.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
Associated Press
General Motors Co. is in court Tuesday to try to preserve its bankruptcy shield against legal claims regarding low resale values and ignition-switch defects, The Wall Street Journal reports. Energy Future Holdings Corp. has asked court permission to start paying down some of its debt as it moves ahead in discussions with creditors to formulate a Chapter 11 exit plan. WSJ 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.”) Cayman Islands bank Caledonian Bank Ltd. Filed for bankruptcy after its U.S. assets were frozen, Bloomberg reports.

Read More from: WSJ.com: Bankruptcy Beat

1 week 3 days ago
Receiving Wide Coverage ... The Russian Hacker Mob: Russian-speaking gangs of hackers have stolen millions of dollars since 2013 from banks in the U.S., Eastern Europe and Russia and according to the Russian computer-security firm Kaspersky Lab, the Wall Street Journal reported. The Financial Times' report on the same study said the thieves' total haul may be closer to $1 billion. Most alarming is the lab's claim the cyberattack is still active. The Kaspersky Lab issued...

Read More from: BankThink

1 week 3 days ago
The Securities and Exchange Commission announced in October, 2014 that it brought a record of 755 enforcement actions, a 10 percent leap from 2013’s 686. With the use of a reward system for whistleblowers and technology-like data analytic tools, the SEC has been able to spot anomalies and streamline investigative efforts to enforce penalities against wrongdoers who harm investors and threaten financial markets. Patterned after former New York City Mayor Rudolph Giuliani’s “broken window” strategy, the SEC has focused on the smallest of violations to deter more serious crime. Read more here.
1 week 3 days ago
If the debtor-tenant seeks to terminate and surrender the lease, that is “reject it”, the landlord may be entitled to a “rejection damage” claim.  A landlord is not entitled to the full amount of unpaid obligations for the balance of the lease.  Instead, Section 502(b)(6) limits the recovery a landlord may receive for “rejection damages.” Under Section 502(b)(6) of the Bankruptcy Code, the landlord is entitled to rent due under the rejected lease for the greater of (i.) one year’s rent, or (ii.)  fifteen percent (15%) of the rent due under the lease, not to exceed three years’ rent.  Unlike the administrative rent claim, a rejection damage claim is a general non-priority unsecured claim paid only after all other claims. The landlord’s rejection damage claim is capped under Section 502(2)(b)(6), but the landlord is entitled to include all amounts that constitute “rent” under the lease.  Items that may include “rent” include utility fees, common area maintenance charges and taxes.
1 week 3 days ago
How is it that I never find the time to blog? My answer would be that I simply do not have the time. But of course I have the same hours in a day as my co-bloggers. I could argue that I have more demands on my time, but I know very well that we are all busy. Scarcity, a book by Sendhil Mullainathan and Eldar Shafir, has many lessons for busy people, including those of us who are busy thinking about the difficulties faced by people who have a scarcity of income or disposable income after debt.  The book looks at scarcity in varied contexts such as time, money, food, friendship. It argues that there is a common logic to situations of scarcity: a mindset that captures our attention and changes how we think. At an optimal level, scarcity can create positive focus. But the same capture of the mind can preoccupy us and make us vulnerable to poor thinking and impulse control. The authors find, for example, that being poor reduces a person's cognitive capacity more than going one full night without sleep.

Read More from: Credit Slips

1 week 4 days ago

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