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Mission Coal Creditors Object to Lead Bid, Proposed Bid Procedures

Creditors of Mission Coal Co. are objecting to a $145 million offer for its Alabama and West Virginia mining operations, as well as the coal-mining company’s proposed bid procedures, WSJ Pro Bankruptcy reported. In a court filing on Friday, the unsecured creditors' committee said that the fine print of the offer from Mission Coal’s debtor-in-possession lenders will make it difficult for the company to solicit higher competing bids. The proposed bidding and auction rules — which still need approval from a judge — could cause confusion for some other potential bidders who have already given “indications of interest,” lawyers for the committee said in a document filed in U.S. Bankruptcy Court in Birmingham, Ala.

Big Law Firms Urge DC Court to Reject 'Unfinished Business' in Howrey Bankruptcy

Weighing a key issue in the bankruptcy of the now-defunct law firm Howrey, a Washington, D.C., appeals court yesterday grappled with competing views on whether dissolved law firms can claim a portion of hourly fees from matters that departed partners brought to a new firm, reported. A panel at the District of Columbia Court of Appeals — comprised of Chief Judge Anna Blackburne-Rigsby, Associate Judge Corinne Beckwith and Senior Judge Vanessa Ruiz — heard oral arguments pitting Howrey’s bankruptcy trustee, Allan Diamond, against several large law firms that hired former Howrey partners around the time of the firm’s dissolution in 2011. Yesterday’s arguments focused on the so-called unfinished business doctrine, the idea that a defunct law firm’s bills for ongoing matters qualify as assets for the bankrupt firm that can, in turn, be used to repay creditors.

U.S. Trustee Program Files Objection to the Appointment of the Debtor’s Proposed Future Claimants’ Representative in In Re The Fairbanks Company

The Justice Department’s U.S. Trustee Program (USTP) filed on Friday an objection to a debtor company’s proposed candidate for appointment as a Future Claimants’ Representative (FCR) in In Re The Fairbanks Company, No. 18-41768 (Bankr. N.D. Ga.) involving a trust to compensate those suffering from asbestos disease, according to a USTP press release. In its objection, the USTP argued that the court is required to select the best candidate without deference to the debtor or plaintiffs’ lawyers. The objection asserts that the proposed candidate currently serves as FCR for several other trusts and has other connections to trusts that have contained inadequate safeguards against fraudulent claims, inflated professional fees, and other costs that threaten to deplete the trusts and reduce compensation to future claimants. The USTP asked the court to adopt an open selection process that allows candidates without connections to the professionals in the case or other conflicts to be considered. As noted in its brief, “the USTP was created to be the ‘watchdog’ for the bankruptcy system to ensure that cases are not administered for the narrow benefit of the lawyers and other professionals instead of stakeholders such as creditors and employees.”

U.S. Prepares More Payments to Trade-Hit Farmers

The U.S. government will make a second, multibillion dollar payment to U.S. farmers struggling against tariffs on American soybeans, pork and dairy products, the Wall Street Journal reported. The move soothed nerves in the U.S. Farm Belt, after some farmers wondered whether the payments would come as trade relations improved between the U.S. and top food-importing countries Mexico and China. Despite a new North American free trade deal signed in November and this month’s trade truce between the U.S. and China, farmers and livestock producers continue to face low prices for many of their goods, pushed down by tariffs that remain in effect. "This assistance will help with short-term cash flow issues as we move into the new year,” said Agriculture Secretary Sonny Perdue. However, Perdue also called it the “final” round of trade-related government payments to farmers. The U.S. Department of Agriculture estimated yesterday that both rounds of payments would direct a total of $9.6 billion to farmers hit by tariffs on everything from pork chops to soybeans and cheese.

Federal Reserve Expected to Hike Interest Rates Wednesday, Trump Calls Move ‘Foolish’

President Trump urged the Federal Reserve not to raise interest rates, but Fed officials are widely expected to do so this week despite the president’s ongoing public effort to dissuade the US central bank from putting any brakes on the economy, the Washington Post reported. "It is incredible that with a very strong dollar and virtually no inflation, the outside world blowing up around us, Paris is burning and China way down, the Fed is even considering yet another interest rate hike. Take the Victory!" Trump wrote yesterday in a Twitter post. Fed officials will conclude a two-day meeting on Wednesday, and Wall Street traders predict nearly an 80 percent chance the Fed raises rates a quarter-point this week, setting them at a range of 2.25 percent to 2.5 percent. That hike would keep rates low by historical standards but put them at the highest level in a decade. The president’s repeated exhortations against the Fed raising rates break with his predecessors, who generally avoided commenting publicly on the central bank’s policies to protect its credibility and independence.

U.S. Banks Quietly Pull Back from Riskiest Loans Amid Recession Fears

As U.S. bank stocks tanked this month over fears of an impending recession, industry executives downplayed concerns to colleagues, analysts and journalists, arguing that the economy is in great shape, Reuters reported. But looking behind headline numbers showing healthy loan books, problems appear to be cropping up in areas such as home-equity lines of credit, commercial real estate and credit cards, according to federal data reviewed by Reuters. Lenders are also starting to cut relationships with customers who seem too risky. All of that suggests U.S. lenders will feel the pain of a recession soon, even if losses are not cropping up quite yet. “We are in somewhat of a goldilocks period of banking,” Andy Schornack, chief executive officer of Flagship Bank Minnesota, told Reuters. “Interest rates are high enough that you can make good money and credit quality is at high enough levels where it’s pretty hard to lose money.” Bank executives acknowledge that the U.S. economy is probably in the final stages of a long recovery from the 2007-09 global financial crisis. But they say that until credit metrics start to deteriorate meaningfully, there is no reason to boost reserves or slash customer financing.