ABI Blog Exchange

Right now, financial institutions are not required to know the identity of the living, breathing person behind accounts owned by legal entities. The beneficial ownership rules proposed by Fincen would help expose money launderers, tax evaders and criminals.

Read More from: BankThink

1 week 5 days ago
According to at least one entrepreneur, the offers made on ABC’s reality TV show Shark Tank are often based on lowball company valuations. Says Vonjour CEO Daniel Tawfik, “It’s not uncommon for the sharks to demand a 50 to 75 percent stake in a company for less than a $100,000 investment. Those equity stakes are not commonplace.” Read more here.
1 week 5 days ago
Starting out in business for yourself?  Congratulations. Small business, and businesses that were once small, form the tapestry of our economy. I’ve run my own small business for 36 years and my favorite clients in my business are other small business people. But, in the euphoria and exhaustion of starting up, don’t put off doing the dull basics of bigger businesses. Those basics are basic for a reason. Form habits and routines from the very beginning that will serve your business well as it grows. Four utterly non-sexy imperatives form the foundation of a small business. Document the deal Whether you are partnering up with another entrepreneur or engaging someone to create stuff for your business, put your deal in writing. In the best of all possible worlds, you get a lawyer’ s help.  A lawyer can see if the agreement is complete, that it covers all the important issues, and is without ambiguity. More on whether your contract is legal But even if you are doing it yourself, the act of writing down what the two of you agree on improves the odds that there is a true meeting-of-the-minds and that you really do share the assumptions about how the business deal goes forward. Make it legal Find out about the laws that cover what you’re doing.
1 week 5 days ago
Amalgamated Bank’s LongView Funds has written to several Delaware representatives, including the state governor, urging immediate legislative action to clarify that the “American rule,” in which each side in litigation bears its own costs, is applicable for stock corporations notwithstanding the decision in the ATP Tour case last year, which we previously discussed here.  
1 week 5 days ago
Mary Barra, CEO of General Motors, speaks during a discussion on “Valuing What Matters” at the Clinton Global Initiative in New York in September 2014.
European Pressphoto Agency
A federal judge expressed concerns Tuesday over whether General Motors Co. should be allowed to keep a bankruptcy shield blocking legal claims by some customers seeking damages over a defective ignition switch. 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.”) Enterprise software provider Allen Systems Group Inc. filed for Chapter 11 bankruptcy protection Wednesday to implement a balance sheet restructuring agreed to by most of its top-ranking lender, DBR (sub. req.) reports.

Read More from: WSJ.com: Bankruptcy Beat

1 week 5 days ago
Mary Barra, CEO of General Motors, speaks during a discussion on “Valuing What Matters” at the Clinton Global Initiative in New York in September 2014.
European Pressphoto Agency
A federal judge expressed concerns Tuesday over whether General Motors Co. should be allowed to keep a bankruptcy shield blocking legal claims by some customers seeking damages over a defective ignition switch. 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.”) Enterprise software provider Allen Systems Group Inc. filed for Chapter 11 bankruptcy protection Wednesday to implement a balance sheet restructuring agreed to by most of its top-ranking lender, DBR (sub. req.) reports.

Read More from: WSJ.com: Bankruptcy Beat

1 week 5 days ago
Mary Barra, CEO of General Motors, speaks during a discussion on “Valuing What Matters” at the Clinton Global Initiative in New York in September 2014.
European Pressphoto Agency
A federal judge expressed concerns Tuesday over whether General Motors Co. should be allowed to keep a bankruptcy shield blocking legal claims by some customers seeking damages over a defective ignition switch. 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.”) Enterprise software provider Allen Systems Group Inc. filed for Chapter 11 bankruptcy protection Wednesday to implement a balance sheet restructuring agreed to by most of its top-ranking lender, DBR (sub. req.) reports.

Read More from: WSJ.com: Bankruptcy Beat

1 week 5 days ago
Encouraging the financial industry to explore faster payments is all well and good. Effectively directing it to do so, however, is beyond the Fed's authority.

Read More from: BankThink

1 week 5 days ago
On February 18, 2015, Allen Systems Group, Inc., ASG Federal Inc. and Viasoft International, LLC all filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code.  The cases are docketed at 15-10332, and have been assigned to The Honorable Kevin J. Carey. As prepackaged cases, the Debtors have, simultaneously with their petitions, filed a disclosure statement and plan.  According to the Declaration of John C. DiDonato (the “DiDonato Declaration”), filed in support of the petitions and other first day pleadings, the chapter 11 plan is supported by the Debtors’ principal creditor constituencies, reflected by a plan support agreement.
1 week 6 days ago
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 6 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 6 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 6 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 6 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 6 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 6 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 6 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 6 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 6 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 6 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 6 days ago

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