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FT Alphaville, a feature at ft.com, put up an amazingly thorough post (may be gated but you can register and read it for free) yesterday (12/18) on the current restructuring and related lawsuits brought by bondholders of Caesars Entertainment Operating Company, a slighltly-less-than-wholly-owned subsidiary of publicly traded Caesars Entertainment Corporation.  Cleverly, it's called "Et tu Caesars".  The article gives you org charts, stock price charts, recovery estimates from the rating agency Fitch's, links to the four complaints, a 475-slide powerpoint prepared by Blackstone that appears to be the basis of discussing restructuring with the first lien, and walks the reader through the significance of all these materials in admirably efficient fashion.  The graphics are too much for me to cut and paste the article in here, so I will provide a brief summary of what the dispute centers on:Recall the two companies mentioned above, CEC and CEOC.  When the LBO was done back in pre-crisis times, CEC owned 100% of CEOC.  CEOC issued the bonds that the plaintiffs hold.  CEC gave a parent guarantee of those bonds.  Pretty normal stuff.  Then, post-financial crisis, the outlook for the owners ever getting a return on their money became bleaker.  Creatively (other words ar

Read More from: Necessary and Proper

3 years 6 months ago
New Jersey has been known to be a buyer’s market due to the exceedingly active foreclosures market for quite some time, but the foreclosure epidemic is really only beginning to be grasped by statisticians who study the real estate market. CoreLogic has cited New Jersey as the state with the highest rate of mortgage foreclosures […]
3 years 6 months ago
2014 has been a tumultuous year, filled with tragedy and interstellar triumphs: Ebola; Sochi; Ukraine; Flight 370; ISIS; Flight 17; Comet 67P. Life in the corporate bankruptcy and restructuring world was considerably more sedate than in the world at large. Now five and six years removed, some of the mega cases of the 2008 and 2009 era linger on and continue to generate interesting legal developments.  Despite the relative paucity of mega cases, 2014 was not a year to forget. With every passing month, new and interesting special situations arose. In case you missed them, here’s a look back at the bankruptcy and restructuring highlights of 2014, as well as a look ahead to what 2015 might have in store. January: Credit Bidding We started 2014 with Judge Gross’s decision in the Fisker Automotive case, limiting the right to credit bid in bankruptcy asset sales. Although Judge Gross’s decision surprised many in the restructuring community, with some observers questioning whether the court set a new standard for what constitutes cause sufficient to abrogate a lender’s right to credit bid, others argued that the Fisker decision was nothing more than an application of long-established law to unfavorable facts. In light of these unanswered questions, and despite several other decisions in the credit bidding arena, some predict that we may see another credit bidding decision make its way up to the Supreme Court in the near future.
3 years 6 months ago
No amount of diligence on the part of financial institutions will help prevent future data breaches until retailers are subject to the same national data security standards that apply to banks and credit unions

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3 years 6 months ago
From time to time it has proved beneficial to revisit existing bankruptcy statutes, and update them where necessary. The American Bankruptcy Institute established the Commission to Study the Reform of Chapter 11 (the “Commission”) for this precise purpose, and on December 8, 2014 the Commission published its recommendations. If enacted by Congress, some of those recommendations might affect a trustee’s ability to avoid and recover preferential transfers under Bankruptcy Code section 547. The primary goals of preference law are (i) to equalize distribution, and (ii) to maximize estate value. As originally contemplated, a trustee could recover payments or property transferred to creditors prepetition to the extent those transfers preferred such creditors over other similarly situated creditors. The trustee would then distribute the recovered value to all similarly situated creditors.

Read More from: Insolvency Insights

3 years 6 months ago
Wall Street Journal Fresno, Calif.: home of raisin farms, a college football team called the Bulldogs, and (who knew?) a federal prosecutor's office that dug up the memo that led to $37 billion in bank fines stemming from the subprime mortgage crisis. The Journal reports on Richard Elias, an assistant U.S. Attorney who discovered JPMorgan Chase documents while working in the Justice Department's Fresno office that led to successful prosecutions of big banks. The JPMorgan memosÂ...

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3 years 6 months ago
Weiss v. JPMorgan Chase Bank, N.A. (In re Thibault), 518 B.R. 635 (Bankr. D. Mass. 2014) – A chapter 7 trustee sought to avoid a mortgage using his “strong-arm” powers on the basis that it was not properly recorded because the spelling … Continue reading →
3 years 6 months ago
I've been remiss in cross-posting my Dealb%k columns. Both of the most recent ones have commented on the ABI's chapter 11 reform proposal. You can find them here.

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3 years 6 months ago
“How to Lie With Statistics” has sold more than 500,000 copies since it was written by Darrell Huff in 1983. It remains a strong seller on Amazon, though the text (but not the pictures) is available for free (the pictures are necessary, really). Read more here.
3 years 6 months ago
The following article was written by Kenneth R. Epstein and Nelly Almeida and originally published in the December 8, 2014 edition of the New York Law Journal.  Kenneth Epstein is the Managing Director of the Insured Portfolio Management Special Situations Group at MBIA Insurance Corporation. A link to the journal can be found here.”  A successful restructuring depends, in part, on disclosure by a debtor of information pertaining to its finances and operations. This feature, however, is notably absent in most municipal bankruptcies. Chapter 9 of the Bankruptcy Code, available to municipalities seeking to reorganize their debts, imposes few statutory requirements on municipal debtors. Additionally, federal courts have been careful not to interfere with the affairs of a municipality due to the inherent constitutional limitations on courts’ powers. The absence of mandatory disclosures by municipal debtors often creates inefficiencies and increased costs during a bankruptcy process and should, therefore, be addressed. This article compares and contrasts Chapter 11 and Chapter 9 disclosure requirements and discusses a bankruptcy court’s ability to compel greater disclosure from municipal debtors under the current Chapter 9 framework. A Comparison of Disclosure Requirements
3 years 6 months ago
The repeal of the swaps push-out provision will reduce banks' operational costs, but it makes little difference in terms of increasing the size of the government safety net. The reason: with or without the rule, the government protects the swaps contracts of the largest institutions.

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3 years 6 months ago
Bernstein-Burkley, P.C. Managing Partner, Robert S. Bernstein, discusses the different […] The post 5 Minute Legal Master Series: Reviewing a New Commercial Collections Claim appeared first on Bernstein-Burkley, P.C..

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3 years 6 months ago
Big banks have successfully reversed a Dodd-Frank provision that would have required them to move swaps from their FDIC-insured depository institutions into uninsured subsidiaries. But in so doing, they have inadvertently thrust the issue of implicit subsidies back into the spotlight.

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3 years 6 months ago
Receiving Wide Coverage ... Fed Stays Patient: As expected, the Fed said on Wednesday that it would remain patient when it comes to raising interest rates, and the Journal, New York Times, Financial Times and Washington Post all produced reports on the Fed's meeting. Fed Chair Janet Yellen said the Fed will likely raise interest rates next year, but no sooner than late April, as the central bank exercises patience in waiting for the precise momentÂ...

Read More from: BankThink

3 years 6 months ago
I was thrilled to hear the news today that President Obama has set the nation on a path toward normalization of diplomatic relations with Cuba.  I think that is clearly in the best interests of the United States in the long-term.  Since I visited Havana back in October,  one thing that stuck in my head was the statement of the #2 guy at the U.S. Interests section (the "don't call it an embassy" that is nevertheless the largest diplomatic delegation in Cuba) that "you won't find a more pro-American population on the face of this planet than the Cuban people."  That made huge sense to me.  I think the best way to create people deeply committed to traditional American values is to expose them to decades of socialist repression.   Watching CNN en español this afternoon, they were reporting widespread celebration and jubilation among the people in Havana.  Obviously many people have relatives in the US and this will facilitate family connections, but I would bet that even among those who don't see it through a family prism, they see this as a step toward a better economy and polity.One of the news angles on this story is that the Pope somehow played a major role in this breakthrough. I discount that quite a bit.

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3 years 6 months ago
“Always look out for Number One, but don’t step in Number Two” – Rodney Dangerfield “What-eva – I’ll do what I want [as long as my company is solvent]” – Eric Cartman, South Park It is widely known that under Delaware law, officers and directors of a solvent corporation owe fiduciary duties not to the corporation’s creditors, but to the corporation’s shareholders, who bear the risks and rewards of any rise or fall in the company’s value. In Lightsway Litig. Servs., LLC v. Yung (In re Tropicana Entmt., LLC), the United States Bankruptcy Court for the District of Delaware teaches us that the logical consequence of this regime of fiduciary duties is that officers and directors of a solvent corporation who are also the sole owners of that corporation are charged with maximizing value for themselves, even where those actions may negatively impact the corporation itself. 
3 years 6 months ago
When it comes down to consumer bankruptcy, the official forms do a pretty good job of setting forth the facts of the case, the assets involved in the case, the liabilities in the case, and the debtor’s statement of financial affairs. However, there is a very important document that is missing from the official forms,+ Read More The post Chapter 13 Bankruptcy Forms: Do You Know What Is Missing? appeared first on David M. Siegel.
3 years 6 months ago
Rigid state licensing laws have compelled some payments startups to partner with licensed money transmitters in order to get their programs off the ground. That's a good thing.

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3 years 6 months ago
Professor Joseph Grundfest of Stanford Law School and SEC Commissioner Daniel Gallagher have co-authored an academic paper with the provocative title “Did Harvard Violate Federal Securities Law?  The Campaign Against Classified Boards of Directors.”  The paper pointedly criticizes the work of the Harvard Shareholder Rights Project, which assists several pension funds and other investors in submitting shareholder proposals to declassify boards of directors.  
3 years 6 months ago
The government conservatorship of Fannie Mae and Freddie Mac was never meant to authorize lasting control over the housing sector, according to one of the people who advised Congress on the Housing and Economic Recovery Act.

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3 years 6 months ago