ABI Blog Exchange

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). Continuing with Part C.1 (“Creditor’s Rights to Reorganization Value and Redemption Option Value”) from our last post, this post will introduce “Redemption Option Value.” The issue driving the Commission’s ultimate recommendations regarding “redemption option value” is the issue of how best to balance the rights of secured creditors, the rights of other stakeholders, and the debtor’s reorganization needs. Part C.1 is footnote-heavy, with citations to multiple written statements from those who weighed-in on this topic at various ABI Commission Field Hearings. In other words, it’s not an issue that the Commission took lightly.

Read More from: Plan Proponent

1 week 4 days ago
Wall Street Journal Citigroup is among at least a dozen companies that have given in to activist shareholders' demands to nominate directors, a strategy known as proxy access. Calpers, one of the largest activist shareholders, describes the trend as a "sea change," while the New York City Comptroller said it's only a matter of time before most companies allow for proxy access. New York Times ...

Read More from: BankThink

1 week 4 days ago
Two press releases announced that the New York City Comptroller has agreed to withdraw proxy access shareholder proposals at Staples and Abercrombie & Fitch.  Agreements have also been reached with Big Lots and Whiting Petroleum.
1 week 4 days ago
Knowing when to cut your losses and walk a deal is a difficult skill to master.  In the construction loan context it is particularly difficult because a half completed building lacks the intended value anticipated on the loan.  On the other hand, cutting off disbursements causes a whole other set of risks including mechanic and materialman’s liens (“M&M Liens”) which often prime the lender’s mortgage lien.  While different types of insurance may help, the 7th Circuit recently held that priming M&M Liens incurred after the lender had cut off funding following borrower’s default were caused by the lender and therefore excluded from the title insurance coverage.  The result was essentially a total loss to the lender of ~$61MM. Credit: LucasFilm, Ltd. / Imigur The Project The project was a commercial construction project in Kansas City, MO.  Basically what happened was that BB Syndication Services (the “Lender”) lent money on a construction loan to build the commercial development to its borrower.  The total line of credit was ~$86MM. In the project, First American Title (the “Title Company”), acted as disbursing agent and insured against encumbrances on the property.  The idea being that prior to making a disbursement, the Title Company would check for liens, and barring liens would disburse the next construction draw.  The title insurance policy contained a exclusion to coverage which excluded any liens that are “created ,suffered, assumed or agreed to” by the Lender.

Read More from: Tough Times for Lenders

1 week 5 days ago
Landlords may be able to recover attorneys’ fees incurred when a debtor-tenant seeks to assume the lease, or assume and assign the lease to a third party.  To recover attorney’s fees, however, the landlord must meet several criteria.  First, the lease must expressly state that the landlord is entitled to recover attorneys’ fees as additional rent or in connection with the collection of rent. Next, the landlord must have prevailed in the proceedings in which it seeks to recover attorneys’ fees.  “Prevailing” in a bankruptcy proceeding may include filing an objection to a motion of the debtor-tenant and receiving a favorable decision (i.e., objecting to the cure amount proposed by the tenant). The matter in which the landlord seeks attorneys’ fees must be in pursuit or enforcement of the landlord’s rights under the lease, not matters where the landlord challenges the debtor-tenant’s rights under the Bankruptcy Code. Finally, the attorneys’ fees must be reasonable.  To determine whether the fees are reasonable, courts will consider factors such as the amount in dispute relative to the fees requested, the debtor-tenant’s good faith efforts to resolve the dispute and compliance with the Bankruptcy Code.
1 week 5 days ago
I'm testifying before the House Financial Services Committee on Wednesday at a hearing entitled "Preserving Consumer Choice and Financial Independence." I'm the only non-industry witness (no surprise there). For those interested, my testimony is linked here.  Here's the highlight:   Community banks face a serious structural impediment to being able to compete in the consumer finance marketplace because they lack the size necessary to leverage economies of scale. The CFPB has repeatedly acted to ease regulatory burdens on community banks in an attempt to offset this structural disadvantage. While community banks continue to face serious problems with their business model, their profits were up nearly 28% in the last quarter of 2014 over the preceding year, which strongly indicates that they are not being subjected to stifling regulatory burdens.

Read More from: Credit Slips

1 week 5 days ago
The biggest threat to one’s nest egg or the assets that they wish to leave their loved ones isn’t necessarily a recession or tumbling stock market, but rather the debilitating march of time that might see them facing the kind of chronic illness or disability that will necessitate long-term, often round-the clock care. Read more here.
1 week 5 days ago
A derivative suit filed in the United States District Court for the Western District of Washington alleges that Nordstrom violated securities laws in not fully disclosing aircraft-related costs in its proxy statements and that the board breached its fiduciary duties in approving the related party transactions without analyzing the actual expenses.
1 week 5 days ago
NORTH OF THE BORDER UPDATE This article has been contributed to the blog by Ziyi Shi.  Ziyi Shi is an associate cross-appointed to the Corporate Group and Insolvency and Restructuring Group of Osler, Hoskin & Harcourt LLP. Under Québec law, the sale of litigious rights gives rise to a right of redemption in favour of the debtor of the claim that is being sold. The application of this right of redemption, idiosyncratic to civilist legal systems, can lead to unexpected results when insolvency rules are also in play. Such was the case in Investissements Novacap inc. v. Vidéotron, s.e.n.c., 2015 QCCS 138, a long-awaited Québec judgment involving some of the province’s biggest telecommunications companies.  Background Litigation
1 week 5 days ago
The press has been writing articles about people abusing the Social Security Disability system, claiming that these people are filing for disability when they can work and are otherwise being lazy. I wish the press would instead write an article about Gaetana Welsh, whose claim has been denied over and over again.   Gaetana Welsh is 58 years old.  She’s worked all of her life as a waitress, stopping only to raise her children.  She suffers from severe ulcerative colitis, among other disabling conditions and spends her day running back and forth to the restroom.  She is too proud to consider the alternative- soiling herself and her clothing.  She has to go for Remicade shots every month for her condition.  The side effects are severe migraines and terrible fatigue.   Ms. Welsh basically spends her day in the restroom.  A diary entry for any day mostly reads “Spent the last hour in the bathroom, again.”  The few days after the Remicade shots are worse.  Much worse. Her condition is so bad that, at her Father’s funeral, she had to run from the service to go to the bathroom- TWICE.  The entire service was held up until Ms. Welsh returned from the bathroom thirty minutes later, each time.  Can you imagine the embarrassment she felt when she walked back into the funeral service and all of the mourners and family members glared at her, knowing exactly where had been?  Can you imagine the humiliation she felt when she returned?  It is hard to live life in Gaetana’s shoes.  

Read More from: Scholnick Law

1 week 5 days ago
Two activist groups want regulators to investigate whether OneWest Bank used philanthropic contributions to win the support of community organizations. But this could set a precedent that would discourage banks from making much-needed donations.

Read More from: BankThink

1 week 5 days ago
Let’s say you bought something on credit but the vendor’s bill never showed up in your mailbox. You thought you hit the jackpot! But then, one day, the company woke up and now you find it’s time to pay the piper. How long can a creditor wait before attempting to collect on debt? “I am […]
1 week 5 days ago
One of the most successful startup banks in a generation is turning over its keys to a California bank. Institutional ownership and the prospect of slower growth may have prompted Square 1 to make the deal.

Read More from: BankThink

1 week 5 days ago
 
Men stand outside a Banco de Madrid branch office in Madrid, on March 11.
Agence France-Presse/Getty Images
According to The Wall Street Journal, Spain’s Banco de Madrid SA filed for bankruptcy after its parent, Andorran lender Banca Privada d’Andorra, was accused of money laundering. A bankruptcy judge on Friday denied approval of an $82 million deal to sell the Revel Casino Hotel in Atlantic City, N.J., to Glenn Straub, a Florida-based developer, Daily Bankruptcy Review reports in WSJ. (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 5 days ago
 
Men stand outside a Banco de Madrid branch office in Madrid, on March 11.
Agence France-Presse/Getty Images
According to The Wall Street Journal, Spain’s Banco de Madrid SA filed for bankruptcy after its parent, Andorran lender Banca Privada d’Andorra, was accused of money laundering. A bankruptcy judge on Friday denied approval of an $82 million deal to sell the Revel Casino Hotel in Atlantic City, N.J., to Glenn Straub, a Florida-based developer, Daily Bankruptcy Review reports in WSJ. (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 5 days ago
Wall Street Journal Tap the brakes on those hopes for a rebound in bank stocks in the near future. The same old worries bank investors know so well are expected to continue this year, analysts and investors told the Wall Street Journal. Low interest rates will continue to compress profit margins. Excessive U.S. regulations continue to drive up costs. Legal bills will also remain elevated. These reasons are cited by analysts and money managers quoted inÂ...

Read More from: BankThink

1 week 5 days ago
On March 12, 2015, Judge Leonard P. Stark, of the United States District Court for the District of Delaware denied a defendant’s motion to withdraw the reference from the Bankruptcy Court. In the case of Richard W. Barry, as Chapter 11 Trustee v. Santander Bank, N.A., Civ. No. 14-677-LPS, Adv. Pro. No. 14-50020, (In re Liberty State Benefits of Delaware, Inc., Case. No. 11-12404), the Defendant had moved to withdraw the reference from the Bankruptcy Court to the District Court.  The Defendant argued that withdrawal was appropriate under either the mandatory or permissive tests of 28 U.S.C. §157(d).  The Complaint asserted violations of federal and state RICO acts, claims under the New Jersey Consumer Fraud Act, and common law claims for negligence, aiding and abetting breaches of fiduciary duty, and unjust enrichment. In making a determination of what causes of action were core and which were non-core, the Bankruptcy Court found that 4 of the causes of action were non-core, and only one action was core.  In the District Court, the Defendant argued that withdrawal of the reference was mandatory because it required “substantial and material consideration of federal non-bankruptcy law.”  The Defendant also argued that permissive withdrawal was appropriate for “cause shown.”
1 week 6 days ago
I am officially annoyed this afternoon. Trying to run my client’s household income numbers through the Means Test and seeing him fail due to the cumulative amount of both his household income and military disability. I am annoyed because if he were receiving plain old social security disability, he would pass the means test with flying colors and we would be filing a chapter 7 bankruptcy for him tomorrow afternoon in the Portland, Oregon Bankruptcy Court. Why count one and not the other? Shouldn’t the vets do better than the civilians? Of course I have known about this rule since it was enacted ten years ago, but it still annoys me.   The original post is titled The Bankruptcy Means Test and VA Disability , and it came from Portland Bankruptcy Attorney | Northwest Debt Relief .

Read More from: Oregon Bankruptcy Lawyer

1 week 6 days ago
Consumer Financial Protection Bureau (CFPB)  filed its lawsuit in August 2013, against debt-relief services company Morgan Drexen. The CFPB alleges, among other things, that  Morgan Drexen deceived consumers into paying unlawful up-front fees for debt relief services by disguising them as fees related to “sham” bankruptcy services. According to an article by Joanna M. Zdanys and Jessica Kaufman of the lawfirm Morrison & Foerster LLP “(t)he CFPB claimed that the defendant’s practices violated the Telemarketing Sales Rule (TSR), 16 C.F.R. § 310, and the Consumer Financial Protection Act (CFPA).  
1 week 6 days ago
The economic hardships of recent years combined with the burst of the “housing bubble” caused many Michigan families to get behind on their mortgage and/or property taxes.  Although things may be improving now for some families and individuals, many homeowners are still trying to dig out the financial mess.  This includes dealing with past due […] The post Property Tax Forfeiture and Foreclosure Timelines for Michigan – Time is Running Out! appeared first on Acclaim Legal Services, PLLC.

Read More from: Acclaim Legal Services

2 weeks 11 hours ago

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