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Commercial Bankruptcy Filings Increase 26 Percent in Calendar Year 2016, Total Bankruptcy Filings Down 6 Percent

ABI Bankruptcy Brief
ABI Bankruptcy Brief

January 5, 2017

 
ABI Bankruptcy Brief
 
 
 
 
NEWS AND ANALYSIS

Commercial Bankruptcy Filings Increase 26 Percent in Calendar Year 2016, Total Bankruptcy Filings Down 6 Percent

Total commercial filings during calendar year 2016 (Jan. 1-Dec. 31) were 37,771, a 26 percent increase from the 29,920 filings for 2015, according to data provided by Epiq Systems, Inc. There were 5,438 commercial chapter 11s filings during calendar year 2016, a 2 percent increase over the 5,313 commercial chapter 11s filed the previous year. Total bankruptcy filings decreased slightly to 771,894 nationwide for calendar year 2016 (Jan. 1-Dec. 31), 6 percent less than the 819,431 total filings during 2015. The 733,897 total noncommercial filings during calendar year 2016 also represented a 7 percent drop from the noncommercial filing total of 789,332 during calendar year 2015. “While commercial filings increased last year, total filings fell for a seventh consecutive year and bankruptcies decreased to their lowest number recorded since 2006,” said ABI Executive Director Samuel J. Gerdano. “As the Fed raises rates in 2017 and the cost of borrowing increases, more debt-burdened consumers and businesses may seek the financial shelter of bankruptcy.” Click here to read the full press release.

Click here to access the statistical charts.

Report: Student Loan Servicing Problems Can Jeopardize Long-Term Financial Security for Older Borrowers

The Consumer Financial Protection Bureau (CFPB) today released a report that examines complaints from older student loan borrowers about servicing practices that can jeopardize their long-term financial security. In the last decade, the number of older student loan borrowers has quadrupled and the amount of debt per older borrower has roughly doubled, as many take out loans for children or grandchildren. According to the report, older borrowers struggling to make payments complain about obstacles to enrolling in income-driven payment plans and accessing their protections as cosigners. In 2015, nearly 40 percent of federal student loan borrowers age 65 and older were in default.
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Jon Corzine to Pay $5 Million for Role in Collapse of MF Global

The U.S. Commodity Futures Trading Commission said that former New Jersey Gov. Jon Corzine will pay $5 million to end a U.S. regulator’s lawsuit in the aftermath of the 2011 collapse of commodities brokerage MF Global Holdings Ltd., the Wall Street Journal reported. Corzine, who was chief executive of MF Global and had previously held the same role with Goldman Sachs Group Inc., is largely barred from trading client money in commodities and other assets regulated by the commission as he can’t register with the body. He could still trade some futures if the amount falls under certain thresholds. He is also prohibited from using insurance proceeds to pay the penalty. In a statement, Corzine said that he accepted responsibility for the company’s failure and is pleased to have reached a settlement. MF Global collapsed in 2011 after a series of big bets on European bonds during a volatile stretch for the markets alarmed investors and raised questions from regulators. The investment strategy was championed by Corzine, who rose through the ranks as a bond trader at Goldman. In MF Global’s final days, a $1.6 billion shortfall in customer funds emerged. It took more than two years for the trustee overseeing the liquidation of MF Global’s brokerage unit to collect and return the money to customers. The CFTC alleged that the company unlawfully used nearly $1 billion of customer funds to support its own operations.
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Analysis: Are U.S. Territories Now Junk? Puerto Rico Creates Ratings Rift

The U.S. effort to help pull Puerto Rico from a fiscal crisis has two major rating agencies at odds over another U.S. territory’s debt, Bloomberg News reported last Friday. Fitch Ratings cut Guam’s business-tax revenue bonds to junk last week, arguing that Puerto Rico’s rescue law, PROMESA, "fundamentally" alters the premise used to rate debt issued by territorial governments. Even though the act doesn’t apply to the Pacific island 9,300 miles (15,080 kilometers) from Puerto Rico, analysts say that it has set a precedent that could let other territories escape from obligations to bondholders. S&P Global Ratings disagrees. It holds an A rating on the securities, reflecting the island’s ability to pay investors. Unlike its Caribbean counterpart, Guam’s economic outlook is stable, according to S&P. The territory, home to American Air Force and Navy bases, stands to benefit from U.S. plans to expand its military operations on the island, which is the closest U.S. territory to potential hot spots in Asia.
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UPCOMING EVENTS
ABI Live Webinar: New Official Form 113 and the Conforming Amendments January 17, 2017 Online Webinar
ABI & NARCA Joint Webinar: Collections Gone Bankrupt January 24, 2017 Online Webinar
Rocky Mountain Bankruptcy Conference January 26-27, 2017 Denver, Colo.
ABI Live Webinar: Enforceability of Intercreditor Agreements February 2, 2017 Online Webinar
Alexander L. Paskay Bankruptcy Seminar February 2-4, 2017 Tampa, Fla.
Caribbean Insolvency Symposium February 9-11, 2017 Grand Cayman, Cayman Islands
VALCON March 1-3, 2017 Las Vegas, Nev.
Bankruptcy Battleground West March 21, 2017 Los Angeles, Calif.
Annual Spring Meeting April 20-23, 2017 Washington, D.C.
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BLOG EXCHANGE

New on ABI’s Bankruptcy Blog Exchange: As Long as There Are Megabanks, There Will Be Bailouts

Any method for unwinding too-big-to-fail institutions that tries to avoid bailouts is a fool's errand, according to a new blog post. A more effective path, the post suggests, may be reducing the size of TBTF banks or regulating them as utilities.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

 
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