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Amendments to Federal Rules of Bankruptcy Procedure Take Effect December 1

 

 

 

 

 

 

November 21, 2019

 
ABI Bankruptcy Brief
 
 
NEWS AND ANALYSIS

Amendments to Federal Rules of Bankruptcy Procedure Take Effect December 1

There are four rule amendments to the Federal Rules of Bankruptcy Procedure expected to take effect on December 1, 2019, according to the "In the (Red)" blog by Robert L. Eisenbach:

• Rule 4001(c) has been amended to clarify that Rule 4001(c), governing the obtaining of credit, does not apply in chapter 13 cases.
• Rule 6007 has been amended to specify who needs to be served with a motion to abandon, to provide that the objection deadline is within 14 days of service of the motion unless otherwise fixed by the court, and to clarify that a court’s order granting the motion itself effects the abandonment without need for further notice.
• Rule 9036 has been revised to confirm that both notice and service to a registered electronic filing system user can be done by filing the pleading with the court’s electronic filing system. This, however, does not apply to service requirements under Rule 7004.
• Rule 9037 has been amended to add a subsection (h) setting forth procedures for motions seeking to redact previously filed documents otherwise protected under Rule 9037(a). Rule 9037(a) protections cover Social Security numbers, birth dates, names of minors and financial account numbers.

In addition, although not a Federal Rule of Bankruptcy Procedure change, Rule 26.1(c) of the Federal Rules of Appellate Procedure has been revised to require certain disclosures in bankruptcy case appeals, according to Eisenbach. Each debtor, including any debtors not named in the caption, must be identified. For each debtor that is a corporation, the Federal Rule of Appellate Procedure 26.1(a) disclosures must be provided regardless of whether the corporate debtor is named in the caption. For a redline of the rule changes, please click here.

Survey: Private-Credit Boom Seen Continuing Despite Slowdown Concerns

A survey of over 60 asset managers in the industry found that the global private-credit market will continue to expand amid a structural shift toward direct lending, even as money managers increasingly expect a turn in the economic cycle to impact future growth, Bloomberg News reported. The retrenchment of the banking sector and the growing clout of private equity will also underpin the market, according to the report from the Alternative Credit Council, an industry trade group, and law firm Dechert LLP. Private credit has grown into an almost $800 billion asset class as yield-starved investors flock to the market looking for higher returns. Yet with so much cash flowing in, it’s also fueling concerns that growing competition to allocate capital could lead to softer returns and weaker lending standards. “As private equity capacity increases, more deals and larger deals are being done in the private space,” Benoit Durteste, chief executive officer of Intermediate Capital Group, said in the report. “This is why we are seeing larger and larger deals in private debt and the limits keep on being pushed.” Private credit assets under management stood at $787 billion as of March, the most recent data available, up from $42 billion in 2000, according to Preqin Ltd., a London-based research firm.

Analysis: How the Discount Window Became a Pain in the Repo Market

Banks have all but abandoned the Federal Reserve’s discount window, and it is straining Wall Street’s post-crisis infrastructure, the Wall Street Journal reported. Borrowing from the discount window, the Fed’s only channel for lending directly to banks, has plummeted. Through October, banks are on pace to borrow just $750 million from the Fed this year, half of last year’s total and well below the record low of $940 million set in 1961. Banks are desperate to avoid the stigma attached to accessing the window, which is designed to help them weather short-term funding crunches. It is one reason they are hoarding cash at levels well above what regulators require, ensuring that they won’t be caught short if markets go awry. The hoarding has drained liquidity from other parts of the market, contributing to a cash shortfall that roiled overnight-lending markets in September. The resulting spike in rates forced the Fed to inject tens of billions of dollars into the market for repurchase agreements to stabilize it. Two months later, the Fed is still pumping money into the repo market. (Subscription required.)

Critics Say ‘Junk Plans’ Are Being Pushed on ACA Exchanges

The Trump administration is encouraging consumers on the Obamacare individual market to seek help from private brokers, who are permitted to sell short-term health plans that critics deride as “junk” because they don’t protect people with preexisting conditions, or cover costly services such as hospital care, in many cases, the Washington Post reported. Consumers looking at their health insurance options on the website for the federal marketplace, called healthcare.gov, may be redirected to other enrollment sites, some of which allow consumers to click a tab entitled “short-term plans” and see a list of those plans, often with significantly cheaper premiums. Short-term plans were once barred from the exchanges because they were considered inadequate coverage and do not meet the insurance requirements laid out under the Affordable Care Act. The president has repeatedly contended that short-term plans provide “relief” from expensive individual market insurance plans that are unaffordable to many consumers. The rule allowing the sale of such plans was finalized late last year, just weeks before open enrollment, so this is the first year they are widely available. Under the ACA, all health insurance plans have to cover 10 essential health benefits, including maternity and newborn care, prescription drugs, emergency room services and mental health. Short-term health plans do not have to cover those services, can discriminate against those with preexisting conditions and set caps on how much they are willing to pay, which is prohibited for Obamacare plans. Brokers often make higher commissions on short-term plans, health policy experts said, which gives them an incentive to sell them. They are supposed to present ACA-compliant plans to consumers, but are allowed to provide other options, including short-term plans. Some brokers make clear that such plans are not as comprehensive as ACA plans, but experiences differ.



Be sure to mark your calendars for March 5, 2020, as ABI's Health Care Program in Nashville, Tenn., will be examining policies and trends in health care distress. Registration coming soon!


WSJ Pro Cybsercurity Executive Forum: $400 Discount for ABI Members


The 3rd annual WSJ Pro Cybersecurity Executive Forum will be taking place in New York on December 3, 2019. All ABI members are able to take advantage of a $400 discount on the regular rate.

Cybersecurity risks are rapidly changing, so this year’s forum and master classes have been designed to focus on such timely topics as lessons from the most recent major hacks, what and how to report to the board, and navigating the complexities of cyber-insurance. As always, each subject will be examined through a business lens, with actionable takeaways given to senior executives and opportunities to connect with fellow leaders who share your challenges.

For details on the full speaker line-up and agenda, please click here. When booking, please use code ‘cyberabi’ to secure your $400 discount. If you have any questions, please email cyber@wsj.com.

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BLOG EXCHANGE

New on ABI’s Bankruptcy Blog Exchange: CFPB's Final Payday Rule Should Be Ready in Spring, Agency Says

In an update of its rulemaking agenda, the bureau said it "expects to take final action in April 2020" on a proposal that would rescind strong underwriting requirements, according to a recent blog post.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

 
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