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Retail banks must reinvent the way they charge consumers for their services at a time when institutions are struggling for profitability.

Read More from: BankThink

2 weeks 2 days ago
Practitioners generally identify “excusable neglect” as the standard that bankruptcy courts apply in determining whether to allow a creditor’s untimely proof of claim.  A creditor who lets the bar date pass finds itself in the undesirable position of having to persuade the bankruptcy court that its neglect to file a timely proof of claim was excusable.  A recent decision from the United States Bankruptcy Court for the District of Kansas features a bit of role reversal and serves as a friendly reminder that the bankruptcy court can apply the very same standard in deciding whether to entertain a debtor’s late-filed objection to a claim.       Background
2 weeks 2 days ago
Action Item.  This Regional Mediation Hubs proposal would mitigate many concerns of far-away defendants, improve efficiency of preference processes, and increase the number of cases actually mediated.  Accordingly, it should be adopted and implemented as soon as possible. #bankruptcy   #mediation   #bankruptcymediation

Read More from: Mediatbankry

2 weeks 2 days ago
To answer this question, let’s first talk about what I mean by the word “co-signer.”  Legally speaking, there is very rarely a difference between the person who signs a loan document first and who signs second.  In everyday conversation we all usually refer to the second person as the co-signer.  However, in the eyes of the law, it does not matter who signs first or second.  Both signers are responsible for the loan.  If the creditor cannot collect the money from one signer, then it has the right to collect from the other signer. Cosigner is Responsible for Your Loans So, suppose you bought a car and the finance company had your spouse or parent co-sign with you on the loan.  Both of you are responsible for paying that loan.  If you file a Chapter 7 or Chapter 13 bankruptcy and choose to stop paying for that vehicle, then the loan company will look to the co-signer to keep making the payments.  As long as your co-signer keeps making the payments, they should not be effected by your case.

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

2 weeks 2 days ago
Reuters
What Is a Living Will? A living will is a document from a financial firm that describes how it would go through bankruptcy without causing a broader economic panic or needing a bailout from taxpayers. The largest U.S. banks have filed several versions of them since the 2010 Dodd-Frank law, which ​required living wills from financial firms ​that were judged to pose a potential risk to the broader economy. The documents are also known as resolution plans. “Resolution” is regulatory parlance for dealing with a failing financial firm.  Living wills are separate from other regulatory requirements, such as annual “stress tests” that measure whether could banks survive a severe recession. Why Are Living Wills Important? Dodd-Frank says all banks with more than $50 billion in assets must file living wills, as well as any financial firm designated as a “systemically important financial institution.”  Other banks also have to file them under other regulatory requirements.   Regulators have also structured the process so that different groups of banks file living wills and receive feedback at different times. The Fed and the FDIC on Wednesday announced their judgment on the most recent living wills filed by the eight U.S. banks considered most important to the financial system.   Who Has to File Living Wills?

Read More from: WSJ.com: Bankruptcy Beat

2 weeks 2 days ago
Regulators gave Citigroup Inc. a passing grade on its plan detailing how it would go through a potential bankruptcy, but the “living will” plans from the other big U.S. banks received harsher assessments in evaluations released Wednesday. Here’s a breakdown of how the Federal Reserve and Federal Deposit Insurance Corp. evaluated each of the big banks. Bank of America: “Not credible” Both the Fed and the FDIC told Bank of America Corp. that its living will doesn’t meet the requirements of the 2010 Dodd-Frank law, which requires that firms have credible plans to go through bankruptcy at no cost to taxpayers. They said the Bank needed to improve liquidity models and develop a better playbook outlining how it is prepared for various stages of the bankruptcy process. Regulators also said the bank needed to give more details about how it would wind down its trading operations. For more on Bank of America, click here. Bank of New York Mellon“Not credible”

Read More from: WSJ.com: Bankruptcy Beat

2 weeks 2 days ago
The decision blocking the Financial Stability Oversight Council's designation of MetLife was presaged in factual and legal arguments made by trade associations and others for more than five years.

Read More from: BankThink

2 weeks 2 days ago
    Albert Einstein said compound interest is the 8th wonder of the world.
Those who understand it, earns it.  He who doesn’t, pays it.
In other word, it’s a double edged sword. Terrific if you’re earning it.  Debilitating if you’re paying it. And compound interest is a fundamental building block of personal financial literacy. Understand compound interest, and you’re motivated to contribute to your IRA faithfully.  The interest your account earns this year itself earns interest next year. Borrow money at compound interest and the interest bearing balance can grow to be larger than the original loan. Compound interest is at the heart of many of the student loan horror stories.  Student borrows $10,000, uses some deferments,  and, after paying for years, owes $18,000. How does that work? Deferred student loan payments compound The interest portion of a deferred payment is added to the loan balance, and that unpaid interest accrues more interest. Student loan servicer Navient explains it this way.
2 weeks 2 days ago
Breaking News This Morning ... Judgment Day: Regulators have rejected the living wills of JPMorgan, Wells Fargo, Bank of America, BNY Mellon and State Street Bank. The Federal Reserve and Federal Deposit Insurance Corp. said they don't meet the standard outlined by Dodd Frank – that banks come up with a credible plan of action that would spare taxpayers from having to bail them out should they start to fail. The firms have until Oct. 1...

Read More from: BankThink

2 weeks 2 days ago
Congress begins considering legislation Wednesday that addresses Puerto Rico’s debt crisis. Here’s a look at seven frequently asked questions: How did Puerto Rico end up with so much debt? The island’s economy has been in recession since 2006, and Puerto Rico’s government borrowed aggressively to balance its budget. It has around $70 billion in debt, up from $24 billion in 2000. To skirt debt-sustainability requirements, it devised new bond issues with competing security pledges. Today, many creditors lament the island’s deep political dysfunction that they say has failed to properly collect taxes or rein in a bloated public sector. But these problems are not new and some investors were willing to tolerate them for years because they believed that the island’s economic problems would eventually turn around. Also, unlike other municipal bonds, Puerto Rican debt is exempt from local, state and federal taxes, which made them an attractive investment during an era of low yields. Is there a humanitarian crisis on the island? The island’s public services are, for the most part, still functioning. Creditors say that concerns about a humanitarian crisis are being exaggerated by local officials and the Obama administration to scare Congress into providing debt relief that isn’t necessary.

Read More from: WSJ.com: Bankruptcy Beat

2 weeks 2 days ago
[wsj-responsive-image P="http://si.wsj.net/public/resources/images/BN-NI794_CLIMFI_P_201603311728..." J="http://si.wsj.net/public/resources/images/BN-NI794_CLIMFI_J_201603311728..." M="http://si.wsj.net/public/resources/images/BN-NI794_CLIMFI_M_201603311728..." caption="A crane mines coal in a strip mine of Peabody, which filed for bankruptcy Wednesday."  credit="Jim Richardson/Corbis" placement="Inline" suppressEnlarge="false" ] Peabody Energy filed for chapter 11 bankruptcy protection weeks after warning it might do so, The Wall Street Journal reports. Peregrine Midstream Partners filed a restructuring plan that would cut more than $249 million in debt from the natural gas storage company. WSJ has the Daily Bankruptcy Review article here.

Read More from: WSJ.com: Bankruptcy Beat

2 weeks 2 days ago
The statistics show that over 10,000 English limited companies operate in Germany. The company is registered in the Companies Register in the UK, but has a branch active in Germany, which is registered in German Company registries. On 10 December 2015 the Court of Justice of the European Union (ECJ) decided on the question whether the liability of the director of English registered Kornhaas Montage und Dienstleistung Ltd (‘KMD’), which was subjected to German insolvency proceedings, should be determined by English law or by German law. Under Article 4 of Regulation 1346/2000 (The EC Insolvency Regulation), the law applicable to insolvency proceedings and their effects is the law of the member state within the territory of which such proceedings are opened. Rules relating to the “voidness, nullity, voidability or enforcement of legal acts detrimental to all the creditors” are governed by the law of the state in which proceedings are opened. German law imposes strict rules on the obligation of a managing director to file for insolvency no later than three weeks after the company has become insolvent, i.e. either the company has become unable to pay its debts or it was established that the company is over-indebted. Furthermore, pursuant to paragraph 64 of the GmbHG (German Act on companies with limited liability) managing directors are required to reimburse the company in respect of certain payments made after the company becomes insolvent.

Read More from: eSQUIRE Global Crossings

2 weeks 2 days ago
Morgantown Excavators, Inc. v. The Huntington National Bank (In re Godfrey), 537 B.R. 271 (Bankr. N.D. W. Va. 2015) – Two chapter 7 debtors sued a lender claiming violations of the Uniform Commercial Code (UCC) in connection with the lender’s … Continue reading →
2 weeks 2 days ago
The Caesars examiner's report makes for interesting reading. Of particular interest for our readers might be its discussion of the role of the lawyers, namely those at Paul Weiss, who simultaneously represented the Caesars holding company, its operating subsidiary, and the holding company's private equity sponsor.  As the report notes, it is not unusual for a law firm to simultaneously represent at a parent and a sub or a sponsor and a portfolio company. But the examiner's report argues that things change in one of the entities is insolvent because then the real party interest in that firm are the creditors, not the shareholders, and that means there is a real conflict of interest between the insolvent (or potentially insolvent) sub and the holding company (and private equity sponsor).  Although the examiner's report ultimately concludes that there's probably not much basis for finding liability against Paul Weiss (which might not have even know of the insolvency), something jumped out at me:  the lurking conflict between Delaware corporate law and NY Rules of Professional Conduct.  

Read More from: Credit Slips

2 weeks 3 days ago
In a typical application of the veil piercing remedy, an equity holder is held liable for the debts of the corporate entity it owns and controls.  The tests courts use for determining when the remedy is available vary, but generally veil piercing may occur only where the equity holder has abused the corporate form, by using its control over an entity to commit a fraud or other injustice.  Accordingly, in the context of a corporate family, most people assume that veil-piercing may cause liabilities to travel up the corporate chain, with parents sometimes liable for actions they have caused their subsidiaries to take.  But when can a subsidiary business be liable for the actions of its owners?  And how can this even be fair since subsidiaries do not control parents? One court recently asked this question, and in so doing provided insights into how such a “reverse veil-piercing” claim might be possible under alter ego doctrine
2 weeks 3 days ago
One of the most contentious parts of bankruptcy is determining the value of the company filing for chapter 11. In fact, the valuation process was a major focus of the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11, and many of the commission’s proposals were based on the perception that bankruptcy valuations are systematically skewed toward undervaluing debtors. However, a closer look at the data reveals that the proposed changes are based on a somewhat questionable assumption and may therefore need to be reconsidered. Because all valuation approaches are market-based, valuation levels for chapter 11 reorganization plans confirmed during a particular time period necessarily reflect overall market levels. The commission posits that most chapter 11 plans are confirmed during periods when market valuation levels are low by historical standards, supporting its view that reorganizing debtors are systematically undervalued. Strikingly, 32 years of data measuring the inputs for the two most common valuation methods—discounted cash flows and market multiples—shows that just the opposite is true. Substantially more chapter 11 reorganization plans over that period were confirmed when markets were overvalued rather than undervalued by historical standards. Valuation Methods

Read More from: WSJ.com: Bankruptcy Beat

2 weeks 3 days ago
Before banks are truly integrated into the digital landscape, they must break down data silos and implement steps to make data more accurate and actionable.

Read More from: BankThink

2 weeks 3 days ago
The impending Consumer Financial Protection Bureau proposal will limit access to payday lending but it will not enable small-dollar lending alternatives for consumers.

Read More from: BankThink

2 weeks 3 days ago
Receiving Wide Coverage ... Devil's in the Details: Goldman Sachs has agreed to a $5.1 billion settlement to end the investigation into its role in the mortgage bubble and financial crisis. The FT says the deal failed to satisfy critics, citing one that called it Â"more of the same non-punishment, non-accountability ritualÂ" and said the bank should publicly disclose its profits and total investor losses from its misconduct. A look at the fine print of theÂ...

Read More from: BankThink

2 weeks 3 days ago
Many big name retailers have filed Chapter 11 bankruptcies over the last several months.  Among them are names like City Sports, Sports Authority, Quicksilver, and most recently Pacific Sunwear, also known as PacSun.   The news of these filings leaves many people scratching their heads and wondering where these retailers went wrong. Competition from Online Retailers One issue facing the sports retailers, City Sports and Sports Authority, is the increased completion from online retailers.  According to Matt Powell, a sports industry analyst with the NPD Group, the underlying sports business remains solid.  “Last year, we had the second best year in a decade in athletic footwear and athletic apparel remains robust…”  Additionally, in contrast with an online retailer, these stores have to rent space.  Sales volumes are often not enough to support rent payments that have not come down much, if at all, since the online shopping boom.

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

2 weeks 3 days ago

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