With oral arguments concluding yesterday in the RadLAX case, ABI has two free programs to provide members with more analysis on the case and issues surrounding credit-bidding in bankruptcy. The first is an ABI Podcast available now that features ABI Resident Scholar David Epstein talking with Prof. Douglas Baird of the University of Chicago Law School in which they take a preliminary look at the case before the oral arguments. Click here to listen to the podcast between Profs. Epstein and Baird.
The second program, which will be available soon on the ABI website, is a teleconference earlier today featuring experts examining the oral arguments and issues in the RadLAX case. Experts on the program include:
• David Neff of Perkins Coie LLP (Chicago), the counsel of record for petitioner RadLAX Gateway Hotel LLC and participant in the argument.
• Jason S. Brookner of Andrews Kurth LLP (New York), whose article was cited in the brief for the respondent.
• Prof. Charles Tabb, the Alice Curtis Campbell Professor of Law at the University of Illinois College of Law, who recently published a paper titled "Credit Bidding, Security, and the Obsolescence of Chapter 11."
The moderator for the session is ABI Resident Scholar Prof. David Epstein.
The recording will be posted soon to the ABI website. The availability of the recording will also be announced in Thursday’s edition of the Bankruptcy Brief. For more information on the RadLAX case, including obtaining a transcript of the oral arguments, please click here.
MF GLOBAL TRUSTEE FREEH WILL NOT SEEK BONUSES FOR EXECUTIVES
Louis Freeh, the trustee overseeing MF Global Holdings Ltd.'s bankruptcy estate, told the Senate Banking Committee today that he will not seek bonuses for executives who were at the securities firm when it collapsed, the Wall Street Journal reported today. Three of the executives—operations chief Bradley I. Abelow, finance chief Henri I. Steenkamp and general counsel Laurie R. Ferber—were all at MF Global when it collapsed Oct. 31 resulting in an estimated $1.6 billion shortfall in customer funds. They are currently working to help return money to creditors. Freeh, the former FBI director now running MF Global's estate, said that he would not seek bonuses for former executives who have remained employed by the company as Freeh goes through the firm's books. Asked by the committee's chairman, Sen. Tim Johnson (D- S.D.), whether Freeh could confirm that he did not intend to seek the bonuses, Freeh responded, "Yes." Freeh's remarks come several weeks after the Senate passed a resolution urging the trustee to drop any plans to pay bonuses to MF Global executives, including Abelow, Steenkamp and Ferber. Read more. (Subscription required.)
Click here to read the written statements from today's hearing.
FEDS AIM TO CLOSE SMALL BUSINESS TAX “LOOPHOLE” TO FUND STUDENT LOAN POLICY
The White House and Senate Democrats are looking to end a tax provision benefiting some small business owners in order to pay for a year-long extension of a freeze in student loan interest rates, which are scheduled to double from 3.4 percent to 6.8 percent this summer, the Wall Street Journal reported today. The measure would change a feature of tax law that critics say has allowed many owners of small businesses—particularly those known as Subchapter S corporations—to escape employment taxes on much of their earnings. Employment taxes totaling 15.3 percent are generally imposed on the wages that owners pay to themselves from their businesses, subject to some limits. However, employment taxes have not been generally imposed on other corporate or business distributions. The change in the law would tighten up the rules to force such business owners to pay employment tax on more of their income. A year-long extension of the 3.4 percent interest rate on federal student loans would cost $6 billion. Read more. (Subscription required.)
REPORT SHOWS U.S. SOCIAL SECURITY FUND POTENTIALLY RUNNING DRY IN 2035
The budget outlook for Social Security is getting dimmer, the U.S. government said, with its primary trust fund now projected to run dry three years sooner than anticipated, Bloomberg News reported today. The fund that helps finance benefits for 44 million senior citizens and survivors of deceased workers will be exhausted by 2035, the program's trustees said in an annual report yesterday. Aid would have to be cut at that point if Congress does not intervene. Social Security's disability program, which helps support 11 million Americans, will run through its trust fund in 2016, two years earlier than predicted. The report attributed the fiscal stress in part to the weak economy. The main trust fund that supports the Medicare health care program for the elderly will run out of money in 2024, the report said. Read more.
U.S. TRUSTEE PROGRAM RE-OPENS COMMENT PERIOD ON PROPOSED GUIDELINES FOR ATTORNEY COMPENSATION IN LARGE CHAPTER 11 CASES
The U.S. Trustee Program has re-opened the comment period until May 21, 2012, on proposed guidelines for reviewing applications for attorney compensation in large chapter 11 cases ("fee guidelines"). The USTP also scheduled a public meeting for June 4, 2012, at the U.S. Department of Justice in Washington, D.C. on the proposed fee guidelines. Click here for more information on submitting comments or attending the public hearing.
LATEST CASE SUMMARY ON VOLO: STATE OF CALIFORNIA EMPLOYMENT DEVELOPMENT DEPT. V. HANSEN (IN RE HANSEN; 9TH CIR.)
Summarized by Laury Macauley of Lewis and Roca LLP
The Ninth Circuit Bankruptcy Appellate Panel held that unemployment taxes assessed by the State of California's Employment Development Department do not constitute priority taxes under Bankruptcy Code Section 507(a)(8)(C) and therefore did not give rise to a nondischargeable debt pursuant to Bankruptcy Code Section 523(a)(1)(A). Because California unemployment taxes do not have to be collected and/or withheld by a debtor from a third party, they do not constitute the type of tax intended to be included within the meaning of Section 507(a)(8)(C).
More than 470 appellate opinions are summarized on Volo typically within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.
NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: NINTH CIRCUIT REJECTS ARGUMENT THAT A "WHOLE ENTERPRISE EXCEPTION" SHOULD APPLY IN SINGLE ASSET REAL ESTATE CASES
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines the case of Meruelo Maddux Properties-760 S. Hill Street v. Bank of America in which the Ninth Circuit rejected the argument that a "whole enterprise exception" should apply in single asset real estate cases.
Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.
REGISTER FOR THE LABOR & EMPLOYMENT COMMITTEE'S "EVOLVING LABOR ISSUES IN CHAPTER 11" WEBINAR
Make sure to mark your calendars for May 23 from 2-3 p.m. ET for the ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar. A panel of experts will be discussing recent developments in several large complex bankruptcy cases, including Hostess, Kodak, Nortel and American Airlines. The expert panel includes Babette A. Ceccotti of Cohen, Weiss & Simon LLP (New York), Jeffrey B. Cohen of Bailey & Ehrenberg PLLC (Washington, D.C.), Marc Kieselstein of Kirkland & Ellis LLP (New York) and Ron E. Meisler of Skadden, Arps, Slate, Meagher & Flom LLP.
Issues to be discussed include:
• Hostess' efforts to eliminate their multi-employer pension plan contribution liability through motions to reject their labor agreements under Section 1113.
• Kodak's attempt to terminate retiree health benefits.
• The effect of the automatic stay upon efforts by the U.K. Pension Protection Fund and the U.K. Nortel Pension Plan to enforce its powers under the U.K. Pensions Act.
• American Airlines' efforts to reduce legacy costs in bankruptcy.
ABI Quick Poll Section 363 sales should be possible only for a limited percentage of assets; sales of a greater percentage of assets should be subject to creditor voting in the plan confirmation process.Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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