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Chair White covered a wide array of topics recently at a securities regulation conference, though the press immediately focused on her comments about the possibility of new rules for disclosing board diversity. Her comments on that and other governance issues follow.
2 years 7 months ago
Individuals may want to think twice before seeking relief under chapter 11 following a recent decision from the Ninth Circuit Court of Appeals. In Zachary v. California Bank & Trust, the Ninth Circuit affirmed a bankruptcy court’s order denying confirmation of a plan of reorganization in which individual debtors proposed to retain their pre-petition and post-petition property but to pay a dissenting unsecured creditor just .26% of the creditor’s claim. The Ninth Circuit held that the absolute priority rule still applies to individual chapter 11 debtors, and that individual chapter 11 debtors may not confirm a plan under which they retain prepetition property if they do not pay dissenting creditors in full.

Read More from: eSQUIRE Global Crossings

2 years 7 months ago
Argentina faces a complicated task in settling with its remaining holdouts, but there has been recent progress. The country has agreed to settlement terms with a large group of Italian bondholders and, most recently, several US hedge funds. The remaining barrier to complete resolution is the same as the old barrier: Elliott's NML Capital and assorted other holdouts. Bloomberg has two good explanations of the remaining issues here (by Katia Porzecanski and Chiara Vasarri) and here (by Matt Levine). The short version is that NML cleverly bought a subset of Argentine bonds that accrue pre-judgment interest (on principal) at extraordinarily high rates. Because of this, the settlement terms offered by Argentina are less favorable to them than to other holdouts.

Read More from: Credit Slips

2 years 7 months ago
I have previously discussed the basics of a Chapter 9 bankruptcy as well as two Chapter 9 bankruptcies that occurred in Alabama.  In this post, I’ll examine a current event that involves a discussion of Chapter 9- Puerto Rico’s current debt crisis. Puerto Rico Financial Crisis The United States territory of Puerto Rico is in the midst of a financial crisis. The governor of Puerto Rico has repeatedly asserted that the island cannot pay back all its debts.  Puerto Rico currently has about a $72 billion debt load.  Besides its large debt, Puerto Rico faces other economic hurdles, including a 45% poverty rate and a decreasing tax base as a large number of citizens flee to the United States.  In January of this year, Puerto Rico defaulted on a second bond payment.  This debt crisis has the potential to inflict much harm on Puerto Rico as well as the U.S. economy.

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

2 years 7 months ago
The Federal Home Loan Bank System was designed to provide liquidity to community lenders and traditional insurers, not to unregulated lenders that circumvent the membership rules.

Read More from: BankThink

2 years 7 months ago
Receiving Wide Coverage ... Banks' Stock Slump: Investors have turned on the world's biggest banks so far this year. The KBW Nasdaq Bank Index slipped more than 3% on Monday and has fallen roughly 20% since the start of the year. And many of the largest banks' stock dropped more than 4% Monday. The health of banking behemoths has become a trigger for worry – since a slump in bank stocks can signal turbulence in the...

Read More from: BankThink

2 years 7 months ago
Billing rates at big corporate law firms have reached a new mark: $1,500 per hour, despite low inflation and weak demand. The Wall Street Journal has the Daily Bankruptcy Review article here, but don’t forget to check out a supplementary piece on bankruptcy providing a window into billing practices.
Reuters/Beawiharta
(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.”) New York supermarket chain Fairway Group Holdings Corp. says it may breach its loan agreement, DBR reports via WSJ.

Read More from: WSJ.com: Bankruptcy Beat

2 years 7 months ago
By Donald L. Swanson Mediation should be standard procedure in Chapter 11 plan confirmation processes. Many of us have been arguing this point for years!  Caesars Entertainment now agrees and is placing its bet accordingly. Caesars Entertainment files for Chapter 11 relief in the Northern District of Illinois on January 15, 2015 (Case No.15-01145).  On February 3, 2016, Caesars files its Motion to appoint a mediator in the case (Doc. 3195)—see reports in Reuters, Wall Street Journal, and Las Vegas Review. The Motion requests a mediator “to mediate issues related to a chapter 11 plan of reorganization.”  In support, Caesars Entertainment says: “a neutral, third-party mediator can assist the Debtors and their key constituents in working through plan issues,” and “any mediation should process in parallel” with plan confirmation proceedings. The Motion claims that mediation “has been the successful path in other large chapter 11 cases.”  The Motion cites the following four examples of a successful mediation path to plan confirmation.

Read More from: Mediatbankry

2 years 7 months ago
In the recent decision of Village Green I, GP v. Fed. Nat’l Mortgage Ass’n (In re Village Green I, GP), 2016 WL 325163 (6th Cir. Jan. 27, 2016), the U.S. Court of Appeals for the Sixth Circuit held that the contrived nature of the impairment will cause the plan to fail Section 1129(a)(3)’s good faith requirement. The debtor’s proposed plan at issue crammed down secured debt by paying it over ten years, and impaired unsecured claims by paying them over sixty days.  After the district court vacated and remanded twice, the case was appealed to the Sixth Circuit, which affirmed the ruling of the district court. On the issue of impairment, the Sixth Circuit found that:
[T]he plan undisputedly would alter the minor claimants’ rights, because these claimants are legally entitled to payment immediately rather than in two installments over 60 days.  That this impairment seems contrived to create a class to vote in favor of the plan is immaterial.  Section 1124(1) by its terms asks only whether a plan would alter a claimant’s interests, not whether the debtor had bad motives in seeking to alter them.
2 years 7 months ago
Upcoming Committee Formation Meeting:   Friday, February 12, 2016, 10:00 a.m. Case Name:  SFX Entertainment, Inc., et al. Case Number:  16-10238 (MFW) Location:  The DoubleTree Hotel, 700 King St., Wilmington, DE 19801 Notice of Formation Meeting for Official Committee of Unsecured Creditors can be found here. Additional information and documents are available from Kurtzman Carson Consultants LLC. Contact Norman L. Pernick, Nicholas J. Brannick, or David W. Giattino for more information.
2 years 7 months ago
Zuma Press
Companies seeking the fresh start of bankruptcy aren’t the only ones that have to contend with the transparency that is at the heart of chapter 11. It also applies to the lawyers and other professionals who work on the cases. To report on rising legal fees at the nation’s top law firms, The Wall Street Journal reviewed dozens of bankruptcy filings disclosing the ranges of firms’ hourly billing rates as well as the individual rates of partners in a variety of practices. “Bankruptcy court is one of the few places where this stuff becomes public,” said legal consultant Ward Bower of Altman Weil. The filings, made in some of the largest chapter 11 cases filed last year, show that some law firms have increased their maximum partner rates to approach $1,500 per hour. Many senior partners routinely billed between $1,200 and $1,400 an hour last year. The filings, made in some of the largest chapter 11 cases filed last year, show that many senior partners billed between $1,200 and $1,300 per hour, with some approaching $1,400. Some firms have recently increased their maximum partner rates to approach $1,500 per hour, while a few star lawyers can command close to $2,000 per hour.

Read More from: WSJ.com: Bankruptcy Beat

2 years 7 months ago
Problems Getting Paid In The Past Over the past 20 years, I have been searching for the reason or reasons why bankruptcy judges make it so difficult for bankruptcy attorneys to get paid in Chapter 13 consumer bankruptcy cases. This goes all the way back to the early 1990’s when some judges would simply not+ Read More The post Some Judges Making It Difficult For Bankruptcy Attorneys To Get Their Fees Ordered appeared first on David M. Siegel.
2 years 7 months ago
Last June we covered the U.S. Supreme Court’s decision in Baker Botts LLP v. ASARCO, which held that the estate may not compensate professionals under section 330(a)(1) of the Bankruptcy Code for fees incurred in defending fee applications.  At the time, we suggested as a potential work-around that estate professionals could seek contractual language in their engagement letters and retention orders providing that the estate would compensate the professionals for any fees associated with defending fee applications.  A recent ruling by Judge Walrath of the United States Bankruptcy Court for the District of Delaware in In re Boomerang Tube, Inc., however, calls into question that proposed solution.  Background:
2 years 7 months ago
In re Boomerang Tube, Inc.,Case No. 15-11247 (MFW), 2016 WL 385933 (Bankr. D. Del. Jan. 29, 2016) In this case, the Delaware Bankruptcy Court addressed a question remaining in the wake of the Supreme Court’s ASARCO opinion:  Although fees incurred by debtors’ attorneys in defending challenges to their fees are generally not permitted under section 330 of the Bankruptcy Code, may such fees be approved if they are provided in the attorneys’ retention application under section 328(a)?  See Baker Botts LLP v. ASARCO LLC, 135 S.Ct. 2158 (2015).  In a succinct Opinion, Judge Mary F. Walrath ruled that they may not.  After ASARCO, Her Honor held no “contract exception” remains for fee defense provisions under section 328 even if such provisions would have previously been permitted under Third Circuit precedent. Read More › Tags: Employment, Retention & Compensation

Read More from: Delaware Bankruptcy Insider

2 years 7 months ago
Given the volatility in the world over the past several years, I am seeing more security clearance cases as they relate to foreign influence and foreign preference. The United States government can express a concern regarding an individual’s access to classified material in the form of a secret or top-secret security clearance if it has concerns regarding the individual having divided loyalties or foreign financial interests. Specifically, the government’s concern is that an individual with divided loyalties or foreign financial interests may be manipulated or induced to help a foreign person, group, organization or government in a way that is not in US interest or is vulnerable to pressure or coercion by any foreign interest. Conditions That Raise Foreign Influence Security Concerns The conditions stated by the government that may raise a security concern regarding foreign influence and may be disqualifying as far as allowing an individual to obtain or retain a security clearance include:
  1. contact with a foreign family member, business or professional associate, friend or other person who is a citizen or resident in a foreign country if that contact creates a heightened risk of foreign exploitation, inducement, manipulation, pressure or coercion;

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

2 years 7 months ago
Maryland attorney, Jeffrey Scholnick was published in the January 2016 edition of The Advocate, the newsletter of the Baltimore County Bar Association, for his article on Laban Sparks. In Mr. Scholnick’s article under the section, “Historical Perspectives,” he recounts the biography of the third president of the Baltimore Count Bar Association – Laban Sparks. Mr. Sparks was widely remembered within the BCBA community for his splendid address that he gave when he was sworn into office,which dealt with “the power and enfluence [sic] which members of the Bar exert in their respective communities, and appealing for the close and hearty cooperation of the members during the coming year.” Read this article in its entirety here. Mr. Scholnick’s article is printed on page 33 on the online publication. About Jeffrey Scholnick: Jeffrey Scholnick has been practicing law since 1983, and he has dedicated his legal career to being an exemplary attorney, known for his professionalism, competence and courtesy. He is one of the few Spanish-speaking attorneys in the Baltimore, Md. area, and provides legal services for a wide range of practice areas.

Read More from: Scholnick Law

2 years 7 months ago
On June 15, 2015, the U.S. Supreme Court issued its opinion in the case of Baker Botts L.L.P. v. ASARCO LLC, 135 S. Ct. 2158 (2015), denying compensation to two law firms for the fees they incurred in defending objections to their fee applications.  Subsequent to confirmation of ASARCO’s plan of reorganization, the law firms of Baker Botts L.L.P. and Jordan, Hyden, Womble, Culbreth & Holczer, P.C. filed fee applications under section 330(a)(1) of the Bankruptcy Code.  Id. at 2163; 11 U.S.C. §§ 101-1532.  ASARCO, then controlled by a company the two law firms successfully sued during the course of the bankruptcy cases, objected.  135 S. Ct. at 2163.  The bankruptcy court overruled ASARCO’s objection and awarded the law firms, among other sums, approximately $5 million for time spent litigating in defense of their fee applications.  Id.   The Fifth Circuit reversed, holding that section 330(a)(1) does not authorize fees for defending fee applications, and the Supreme Court affirmed.  Id.
2 years 7 months ago
The election of a Republican president could be the first prerequisite to repealing the financial reform law, but banks still need to argue their case for why repeal is necessary.

Read More from: BankThink

2 years 7 months ago
Receiving Wide Coverage ... CEO Slashes Bonus: Credit Suisse chief executive Tidjane Thiam has asked his company's board to cut his bonus. His request comes just days after the bank reported a loss of roughly $5.88 billion in the fourth quarter, which led to a 12% drop in price in the company's stock on the Zurich exchange Thursday. The larger-than-expected quarterly loss resulted from a write-down following a reassessment of the value of Credit Suisse's investment...

Read More from: BankThink

2 years 7 months ago
Tennessee-based Noranda Aluminum Inc. filed for chapter 11 bankruptcy Monday to sell a business segment. 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.”) Retailer American Apparel Inc. has emerged from bankruptcy, WSJ reports. DBR reports via WSJ on private-equity chief Lynn Tilton stepping down from her $2.5 billion funds. Read Bankruptcy Beat’s report on the nearly 13% rise of corporate chapter 11 filings last month.

Read More from: WSJ.com: Bankruptcy Beat

2 years 7 months ago