APRIL BANKRUPTCY FILINGS FALL 16 PERCENT FROM 2011, COMMERCIAL FILINGS DROP 25 PERCENT
Total bankruptcy filings in the United States for April 2012 decreased 16 percent compared to the previous year, according to data provided by Epiq Systems, Inc. April bankruptcy filings totaled 108,865, down from the 129,815 filings registered in April 2011. Total commercial filings for April 2012 were 5,132, representing a 25 percent decrease from the 6,868 filings during the same period in 2011. The 103,733 total noncommercial filings for April represented a 16 percent drop from the April 2011 noncommercial filing total of 122,947. The April 2012 total bankruptcy filings also decreased 11 percent from the March total of 122,155. Commercial filings dropped 9 percent in April from the March total of 5,668, and noncommercial filings dropped 11 percent from the March total of 116,487. Changes to total commercial chapter 11 filings also decreased in April. Overall, the April total commercial chapter 11 filing total of 657 represented an 18 percent decrease over the April 2011 total of 800, and a decrease of 3 percent from the March 2012 total of 680. Click here to read the full press release.
ABI LAUNCHES RETOOLED NEWSROOM
ABI today launched its redesigned ABI Newsroom to provide members, press and the public with a new central location to find all of the latest bankruptcy news and information. When you visit the Newsroom, you will have one landing spot for the ABI Headlines (member log-in required), latest court decisions, breaking legislative news, ABI press materials, bankruptcy statistics, videos and more. No need to navigate to different areas of the ABI website for such items as the Chart of the Day, Blog Exchange, press briefings or the Quick Poll! You will also have access to the latest activity on ABI's Twitter and Facebook feeds, and will be able to watch videos from past ABI conferences. Stay on top of all the latest news and issues in bankruptcy by visiting ABI's Newsroom today.
FANNIE MAE, FREDDIE MAC TO ADOPT NEW SHORT-SALE RULES
Fannie Mae and Freddie Mac are adopting new guidelines to streamline the process for short sales, which most real estate observers expect will outpace foreclosures in the coming year, the Philadelphia Inquirer reported today. The guidelines, required by the Federal Housing Finance Agency and effective June 15, would require servicers of mortgages backed by Freddie and Fannie to review and respond to requests for short sales within 30 calendar days of receipt of a buyer’s offer. On average, according to recent data from foreclosure search engine RealtyTrac, short sales are taking 306 days from start to finish, compared with 113 days in 2006 as the housing market started to unravel. In January, there were more than 35,000 short sales nationwide, on pace for more than 105,000 pre-foreclosure sales for the first quarter. That would be the highest quarterly total since the first three months of 2009. Read more.
COMMENTARY: BAD MODELS MISTOOK HOUSING BUST FOR DOT-COM BUBBLE
While Federal Reserve Chairman Ben S. Bernanke noted that the initial losses from the dot-com bust were about the same size as those from the housing meltdown, a commentary in Bloomberg News on Tuesday said that the two episodes had very different economic consequences. According to the commentary, what made the Fed and many financial forecasters underestimate the depth of the latest downturn so badly is that the predictive economic models effectively treated the housing collapse as if it were merely dot-com bust 2.0. Bernanke did point out that the housing crisis was much more damaging because the initial impact was concentrated in a highly leveraged financial sector and then substantially amplified as those losses cascaded. The problem, according to the commentary, is that the macroeconometric models used by the Fed -- like those used by the Congressional Budget Office, the White House and others -- had at best a very rudimentary financial sector built into them. As a result, they took into account the macroeconomic impact from the housing bust -- but for the most part did not reflect the concentrated loss of wealth and degree of leverage in the financial industry. Read more.
STUDY: LENDING TO SMALL BUSINESS DECREASES IN MARCH
A study released on Tuesday by PayNet, a research firm that tracks loans to small businesses, shows that lending to small businesses fell 3 percent in March, the Associated Press reported yesterday. The Thomson Reuters/PayNet Small Business Lending Index was at 98.5 in March, down from a revised 101.8 in February. The index had reached 110.5 in December, when companies were rushing to acquire equipment before the expiration of tax deductions at the end of 2011. PayNet's analysis shows that while lending is up 10 percent from a year ago, it is still only at the level where it was in 2005. Read more.
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), former chief counsel of the PBGC 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.
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.
ABI IN-DEPTH
LATEST CASE SUMMARY ON VOLO: LAROSA V. LAROSA (4TH CIR.)
Summarized by Cullen Speckhart of Drescher-Speckhart, PC
On appeal and cross-appeal from the judgment of the U.S. District Court for the Northern District of West Virginia, the Fourth Circuit considered whether the plaintiff's West Virginia Uniform Fraudulent Transfer Act (WVUFTA) claim was time-barred, and whether the district court's denial of the plaintiff's Rule 59(e) motion to increase a damage award was an abuse of discretion. As to the first issue, the Fourth Circuit reversed the district court's determination that the WVUFTA claim was not time-barred. Regarding the second issue, the Fourth Circuit vacated the district court's denial of the plaintiff's Rule 59(e) motion and remanded the case to the district court for further proceedings consistent with its opinion.
Nearly 500 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: PAYMENT OF RETAINERS BY THIRD PARTIES MAY BE PERMITTED, BUT NONDISCLOSURE IS COSTLY
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post discusses how the U.S. Court of Appeals for the Fifth Circuit considered an issue of first impression in the case of In re Am. Int'l Refinery, Inc. over whether a retainer payment to a debtor's counsel – which would usually be made by the debtor – may be made by a third-party creditor on behalf of the debtor without creating a disqualifying adverse interest under the Bankruptcy Code. The court held that while such payments certainly may arouse suspicion of favoritism toward, or undue influence of, the third party, the totality of the circumstances must be considered, and in the instant case, no disqualifying adverse interest was demonstrated. Despite its ultimate finding that no disqualifying interest existed, however, the court reaffirmed the imperative in the Bankruptcy Rules that a professional must disclose any potential interest that may be adverse or a disqualifying adverse interest and upheld a sanction of 20 percent of the debtors' counsel's fees for failure to do so.
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.
ABI Quick Poll The debtor-in-possession model has proven too susceptible to abuse; a trustee should be appointed in every chapter 11 case, at least as a check on a DIP with more limited management authority.Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
INSOL INTERNATIONAL
INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.
