Join Today and Benefit Daily from ABI's 35+ Years of Insolvency Expertise.
Join Today!
Help Center

Bankruptcy Headlines

California Loses Last-Ditch Effort to Force Exide to Deal with Toxic Legacy

California taxpayers were left responsible for a dangerously contaminated plant outside Los Angeles after a federal judge turned down an emergency bid by state environmental regulators to block Exide Technologies LLC from exiting bankruptcy, the WSJ Pro Bankruptcy reported. Yesterday’s court ruling rejected a last-ditch effort from California, which has been hammering Exide for years over a polluted battery-recycling facility in Vernon, near Los Angeles, that authorities view as a risk to the surrounding community. Once a cheap source of lead for Exide’s battery business, the plant left a toxic legacy for the largely working-class residents nearby. California taxpayers are now being stuck with the Vernon facility, which closed down in 2015. It remains an imminent danger to a densely populated residential area nearby, according to the state’s Department of Toxic Substances Control. State authorities have said it will cost $72 million to prevent contaminated dust in Vernon from blowing into residential areas, dwarfing the money Exide is leaving behind for cleanup, which amounts to $2.6 million from a court-approved bankruptcy plan plus $26 million in surety bonds and cash that Exide agreed years ago to set aside.

Pelosi Says Stimulus Deal May Wait Until After the Election, as Key Differences Remain Unresolved

House Speaker Nancy Pelosi (D-Calif.) was noncommittal yesterday about bringing a stimulus measure to the House floor for a vote before the Nov. 3, noting that even though a deal with the Trump administration appeared to be coming together, “it takes time” to transform it into legislation, the New York Times reported. At her weekly news conference, Pelosi said that she believed she and Steven Mnuchin, the Treasury secretary, were “just about there” in their negotiations to reach a compromise, although she said they had yet to agree on the two biggest sticking points. The White House is resisting Democrats’ push for $500 billion for state and local governments, while Democrats have balked at Republicans’ demands for liability protections for schools, hospitals and businesses open during the pandemic. Even if the pair were to reach agreement on those issues, Pelosi said there was no guarantee it could be passed before Election Day. “It’s not just a question of us agreeing in a room,” Ms. Pelosi said, noting that the process of writing any deal into legislative language and having the Congressional Budget Office go through it to determine an official cost could be lengthy. “It takes time.” But she continued to maintain public optimism that an agreement could be reached and signed into law. She brushed aside public warnings from Republican senators, who have said they are unlikely to support a bill anywhere near as costly as the emerging compromise, and have suggested that there aren’t even the minimal 13 Republican votes needed to join all Democrats to advance the legislation.

U.S. Consumer Watchdog Proposes Changing Rules on Accessing Borrower Financial Data

The U.S. Consumer Financial Protection Bureau (CFPB) said yesterday that it is seeking public comment on a proposal to modify rules governing the access and use of consumer financial data which is collected by a growing number of online financial institutions, Reuters reported. The watchdog proposed updating the 2010 Dodd-Frank Financial Reform law to ensure online banks, financial technology firms and data aggregators act in a consumer’s best interest when collecting their data, the agency said. “While consumer access to financial records can enable the development of innovative and beneficial consumer financial products, it can also present consumer risks,” it said in a statement. From tracking expenditures to trading stocks, there has been an explosion in apps that pull data from consumer checking and saving accounts. App providers say that authorized access to that account data helps make it easier for consumers to invest, borrow money or make payments. But consumer advocates say growing competition between firms to hoard such data puts consumers at risk, since it is not always clear how that data is then used. They point in particular to the growth of artificial intelligence-driven alternative credit scoring and lending data models, which draw on data beyond traditional FICO scores and general credit reports, to make better underwriting decisions.

Speedcast Restructuring Presses Forward While Lender Challenge Looms

A bankruptcy judge is allowing Speedcast International Ltd. to move forward with a proposed financial restructuring backed by Centerbridge Partners LP but warned of problems that could prevent the satellite communications company from ultimately exiting chapter 11, WSJ Pro Bankruptcy reported. Bankruptcy Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston said on Wednesday that he would grant conditional approval to Speedcast’s disclosure statement, a document outlining the restructuring plan that will be sent to creditors to vote on. The decision allows the Australian company to move forward with a planned transfer of control to Centerbridge, one of its largest lenders, in exchange for a $500 million equity investment. But Speedcast’s largest lender, Black Diamond Capital Management LLC, is challenging the proposed restructuring and argued that creditors shouldn’t vote on it because it violates provisions of the Bankruptcy Code. Judge Isgur said that he was denying Black Diamond’s challenge for the moment since creditors haven’t yet cast their votes, which he said was a necessary step before considering the lender’s challenge to the restructuring plan. However, the judge said he found arguments made against the proposal made by Black Diamond “very persuasive.” Among the issues Black Diamond raised with the plan is that some debt it owns would take a back seat to more junior company claims, violating bankruptcy rules requiring Black Diamond’s debt gets repaid first.

Trump Orders Review of Auto Parts Firm Pension Cuts

President Donald Trump ordered a review of decade-old pension cuts to some retirees at a former General Motors auto parts unit, the White House said yesterday, 12 days before the Nov. 3 U.S. presidential election, Reuters reported. In a memo released by the White House, Trump ordered the heads of the Treasury, Commerce and Labor departments to address cuts to non-union retiree pension payments within 90 days at Delphi Corp after the pension plan was turned over to the Pension Benefit Guaranty Corp (PBGC) in 2009. The cuts affected about 20,000 salaried retirees, including about 5,000 in Ohio, a battleground state that could help decide an election pitting the Republican Trump against Democrat Joe Biden, the former vice president under President Barack Obama. The memo stops short of any specific plan to restore the pension cuts of Delphi salaried retirees, who experienced reductions of up to 70 percent.