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Analysis: Rescue Plans Continue to Elude Financially Distressed Energy Companies as Debts Come Due

ABI Bankruptcy Brief
ABI Bankruptcy Brief
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January 12, 2017

ABI Bankruptcy Brief

Analysis: Rescue Plans Continue to Elude Financially Distressed Energy Companies as Debts Come Due

Debt-laden energy companies that still don’t have a financial escape plan in place are running out of time and willing lenders, even after oil doubled from its February lows, Bloomberg News reported yesterday. Crude prices topping $50 a barrel helped to ease pressure on distressed energy companies, allowing at least 27 issuers to sell $16 billion of junk-rated bonds in last year’s final quarter, according to data compiled by Bloomberg. That still leaves about $44.5 billion that will mature by the end of 2020, according to Fitch Ratings. A "mountain" of more than $18 billion in credit-line commitments comes due in 2019, said Spencer Cutter at Bloomberg Intelligence. Those still vying for new capital such as Vanguard Natural Resources LLC and Pacific Drilling SA need prices above $55 to $60 to win over lenders, according to credit analysts.
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The featured keynote at ABI's 2017 Annual Spring Meeting will be Spencer Abraham, former U.S. Senator and former U.S. Secretary of Energy. Click here to register!

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.

States to Feds: Back Off on New Fintech Bank Plan

A long-running conflict between states and the federal government over how to regulate online banking is coming to a head, according to a Wall Street Journal analysis. The U.S. Office of the Comptroller of the Currency will soon begin considering applications by financial-technology companies for national banking charters as a way to promote competition while both streamlining and strengthening regulation. That could bring more fintech firms — which offer online loans, smartphone payments and other services — under the direct supervision of the federal government, giving them the power to make loans or transfer money without state approval. Under federal law, banks with national charters don’t have to abide by some state lending rules, a practice known as “pre-emption.” In response, banking regulators in some of the largest states say they plan to aggressively challenge the federal government’s power to override them, arguing that states have been much tougher on “fintech” firms than their federal peers — and warning against abusive payday lenders being able to exploit policies intended for tech startups.
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Commentary: Failing Multi-Employer Pension "Rehabilitation Plans" Don't Address Mismanagement of Investments

According to the Pension Rights Center, there are more than 10 million workers and retirees in 1,400 multi-employer plans, and approximately 150 to 200 of these plans are projected to run out of money within the next 20 years, according to a commentary in Forbes on Tuesday. Since 2008, the Pension Protection Act of 2006 has required an annual "actuarial status determination" for multi-employer pension plans. A pension generally is in “endangered” status if its funded percentage is less than 80 percent, in “critical” status if the funded percentage is less than 65 percent, or in “critical and declining” status if it is in critical status and is projected to become insolvent (run out of money to pay benefits) within 15 or 20 years, according to the commentary. The PPA requires the board of trustees of a multi-employer pension plan that has been certified by its actuary as being in critical status to develop a “rehabilitation plan.” A rehabilitation plan is intended to enable a pension fund to emerge from critical status by the end of its rehabilitation period. The federal government mandating rehabilitation plans for failing pensions certainly sounds like a good idea. Unfortunately, these plans generally miss the mark, according to the commentary.
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In related news, nonprofit Truth in Accounting provided a ranking of the finances of the 50 largest U.S. cities (best to worst). Click here to view the rankings.

Authors Discuss Second Edition of Graduating with Debt and Issues Surrounding Student Loan Debt and Bankruptcy

ABI Deputy Executive Director Amy Quackenboss talks with Prof. Susan E. Hauser of North Carolina Central University School of Law (Durham, N.C.) and attorney Dr. Daniel A. Austin (Erie, Pa.), authors of the recently released Graduating with Debt: Student Loans under the Bankruptcy Code, 2nd Edition. Hauser and Austin, authors of the original edition of Graduating with Debt, provide insights into the new edition and their perspectives on new case law, litigation issues and legislation centered on student loans and bankruptcy. Click here to listen.

Pick up your copy of the updated and revised Graduating with Debt: Student Loans under the Bankruptcy Code, Second Edition in the revamped ABI Online Store.

Bid on 2 Tickets to the Presidential Inauguration; All Proceeds Benefit the ABI Endowment Fund!

As a Washington, D.C.-based professional association, ABI has access to the presidential inauguration next Friday, Jan. 20. ABI has two seats for the ceremony at the U.S. Capitol in the "yellow" section seating area. ABI is making these rare tickets available via an automated online auction, with all proceeds benefiting the ABI Endowment Fund. Click here to register a bid.

Not Registered for the 2017 Annual Spring Meeting? Take a Look at the Opportunities that Await at This Year's Conference!

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ABI Live Webinar: New Official Form 113 and the Conforming Amendments January 17, 2017 Online Webinar
ABI & NARCA Joint Webinar: Collections Gone Bankrupt January 24, 2017 Online Webinar
Rocky Mountain Bankruptcy Conference January 26-27, 2017 Denver, Colo.
ABI Live Webinar: Enforceability of Intercreditor Agreements February 2, 2017 Online Webinar
Alexander L. Paskay Bankruptcy Seminar February 2-4, 2017 Tampa, Fla.
Caribbean Insolvency Symposium February 9-11, 2017 Grand Cayman, Cayman Islands
VALCON March 1-3, 2017 Las Vegas, Nev.
Bankruptcy Battleground West March 21, 2017 Los Angeles, Calif.
Annual Spring Meeting April 20-23, 2017 Washington, D.C.
Click here for Full calendar

To Cap or Not to Cap: Ninth Circuit Vacates Order of District Court and Revisits Section 502(b)(6)
A new blog post examined a recent decision from the U.S. Court of Appeals for the Ninth Circuit in Kupfer v. Salma (In re Kupfer), in which the Ninth Circuit vacated the affirmance by the U.S. District Court for the Northern District of California of the bankruptcy court’s order allowing a claim for breaches of leases and awarding attorneys’ fees and arbitration awards. The Ninth Circuit held that the statutory cap on a landlord’s claims against a tenant in bankruptcy, as set forth in section 502(b)(6) of the Bankruptcy Code, applies only to claims that result directly from the termination of a lease but not to collateral claims.

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

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