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Analysis: How Injured Gun Owners Ended Up at the Center of Remington’s Bankruptcy

ABI Bankruptcy Brief
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April 12, 2018

ABI Bankruptcy Brief

Analysis: How Injured Gun Owners Ended Up at the Center of Remington’s Bankruptcy

Remington Outdoor Co.’s newly named panel of unsecured creditors is dominated by members who represent accidental shooting victims, according to court papers filed by the bankrupt arms maker, Bloomberg News reported. The five-member committee includes two women whose daughters were shot while on separate family hunting trips, allegedly because of faulty triggers on Remington rifles. Both have sued Remington. A third seat went to the Lanier Law Firm, which has represented people who assert that Remington’s Model 700 rifles can fire accidentally, according to documents filed on Monday. The company has denied liability for the two suits, but did issue a recall for some of its rifles, which it has said could unintentionally discharge. Remington, whose heavy debts drove it to seek chapter 11 protection last month, faces lawsuits alleging that its guns go off without the trigger being pulled. Those claims gave the plaintiffs standing to get on the committee. While unsecured creditors often get just pennies on the dollar, the reorganization plan calls for them to get 100 percent of their $163 million in claims against Remington. According to earlier reports, under the plan, the company’s primary lenders would assume control of the company while the equity interest of current owner Cerberus Capital would be wiped out.
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Mulvaney Backs Turning CFPB into Bipartisan Commission

The acting director of the Consumer Financial Protection Bureau expressed his support for turning the agency into a commission, an idea that is firmly backed by the financial industry but has lost traction in Congress, the Wall Street Journal reported. Mick Mulvaney, a longtime CFPB critic who has taken steps to overhaul the bureau since assuming his post in November, said moving to a bipartisan commission from a single director would prevent “wild swings” in rules and policies that accompany changes in administrations. As a House member, Mulvaney voted for multiple bills calling to turn the CFPB into a commission. Last week, more than 20 trade groups signed a letter expressing support for the latest House bill calling for a bipartisan commission. The bill has four co-sponsors from both parties, but its prospects for becoming a law are slim due to a lack of bipartisan support in the Senate.
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In related news, retiring House Speaker Paul Ryan (R-Wis.) yesterday pledged to scale back the 2010 Dodd-Frank law in his remaining months in Congress, Politico reported. The House is considering legislation passed by the Senate that would roll back a variety of banking regulations.The bipartisan Senate legislation would not repeal and replace Dodd-Frank, but would make significant changes to the law. The House last year passed more sweeping repeal legislation, known as the Financial CHOICE Act, but it failed to gain traction with any Democrats. House Republicans, with Ryan's backing, have refused to take up the Senate legislation until its sponsors agree to negotiate ways to expand it. Senate Democrats are threatening to kill the bill if the House makes changes.
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Join thought leaders from academia and the bench, representatives from U.S. and European governmental agencies and private organizations on April 19 for a symposium to examine the policies, strategies & proposals erected in the 10 years since the Financial Crisis. Click here for more information and to register.


Report: Financial Outlook Improves for Oil and Gas Producers

The financial outlook for oil and gas borrowers and lenders is showing a modest improvement, according to Haynes and Boone, LLP’s “Borrowing Base Redeterminations Survey: Spring 2018.” More than 80 percent of respondents to the survey expect borrowing bases to increase in the spring of 2018. Kraig Grahmann, head of Haynes and Boone’s Energy Finance Practice Group, noted that most respondents expect borrowing bases to increase at a modest rate of 10 to 20 percent, which is in line with the approximately 20 percent increase in the price of WTI crude oil since October 2017. The survey also found that borrowers are locking in increased oil prices. The respondents estimate that producers have a significant percentage — 50 to 60 percent — of their 2018 production hedged. Additionally, respondents said that producers will use cash flow from operations, bank debt and private equity as their primary sources of capital in 2018.
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Join experts at the "Power Industry: What's Next?" panel at the Annual Spring Meeting to discuss future power-industry issues that you should know about. FTI Consulting's Carlyn Taylor provides a preview. To register, please click here.

Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition.

Trump Administration Considers Depression-Era Program to Bail Out Farmers

President Trump is considering a Depression-era program to help bail out American farmers hurt by the trade dispute with China, the Washington Post reported. Trump’s aides are looking at ways to use the Commodity Credit Corp., a division of the Agriculture Department that was created in 1933 to offer a financial backstop for farmers. But while the White House is considering the idea as a way to protect farmers if China places tariffs on U.S. agricultural products, some GOP lawmakers have told the administration that the approach will not work. The program, the lawmakers say, will not be able to provide the needed relief to farmers, and using it will further inflame trade tensions with China.
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U.K. Financial Watchdog to Expand Use of AI in Investigations

The U.K.'s Serious Fraud Office (SFO) is expanding its use of artificial intelligence (AI) to help solve cases after successfully putting the technology to the test in a major investigation at Rolls-Royce, reported. The government department, which processes large amounts of data to detect major frauds, used iManage’s RAVN AI bot during a four-year bribery and corruption investigation at the firm. The SFO used RAVN to search documents for legal professional privilege content, which is protected communication between lawyers and clients, and the bot was able to do this 2,000 times faster than a human could. This was the first time in the U.K. that AI had been deployed in a criminal case, and in January 2017, Rolls-Royce agreed to pay the SFO a settlement of £497.25m. Following the success of this case, the SFO plans to deploy the Axcelerate AI tool from data management systems provider OpenText alongside RAVN this month to speed up the time it takes for its investigation teams to categorize documents, identify patterns and remove duplicate data.
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A panel of experts will speak on a panel titled, “Artificial Intelligence: Why It Matters to Your Future Bankruptcy Practice” at the Annual Spring Meeting on Saturday, April 20. Click here so you don't miss this important session!

Nominations Now Being Accepted for the 2018 Class of ABI's “40 Under 40” Program!

Nominations are now open for ABI's “40 Under 40” program. This program recognizes outstanding young insolvency professionals who are driven by success, motivated by challenges and are role models for their peers. If you are, or know of, a dynamic insolvency professional who is committed to growth and excellence both professionally and in your community, this is one opportunity not to be missed! Visit the website for additional details on nominations and applications.

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New on ABI's Bankruptcy Blog Exchange: Supreme Court to Hear Oral Argument Next Tuesday over Whether Bankruptcy Code Protects Dishonest Debtors

Nestled among several potential blockbuster cases in the high court’s penultimate week of argument this term is a quiet personal bankruptcy case, according to a recent blog post. Lamar, Archer & Cofrin LLP v. Appling ostensibly concerns the breadth of the word “respecting” in the Bankruptcy Code. But in simpler terms, the case is about how the Bankruptcy Code treats dishonest debtors, according to the blog.

For further analysis of Lamar, Archer & Cofrin LLP v. Appling, including analysis by ABI's Bill Rochelle and to read filings in the case, please click here.

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


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