BELLINGHAM ORAL ARGUMENT RECAP: BANKRUPTCY AND THE SLIPPERY SLOPE
The Supreme Court's recent strong record of confining bankruptcy judges within a tight sphere of power seemed a bit shaky on Tuesday, but mainly because the Court spent significant time looking beyond bankruptcy law, according to a SCOTUSBlog analysis of Tuesday's oral argument in Executive Benefits Insurance Agency v. Arkison (In re Bellingham) currently before the Supreme Court. Concerns about the impact that a decision in a chapter 7 case may have on the ranks of federal magistrate judges, and even on arbitrators who keep a lot of private disputes out of courts, were evident during the argument on In re Bellingham. That case was about the power that federal law appears to give to a bankruptcy judge, and it is a test of whether, if that power contradicts the limits of the Constitution's Article III, the power can be exercised anyway because the parties consent to it. It was immediately clear that if insurance firm Executive Benefits wins the case, the chances are good that bankruptcy judges will have less power than Congress wanted them to have, and that the lost power would not be revived just because the parties agreed that it should exist. With Justice Scalia, the Court's strongest proponent of a strict construction of the Constitution, taking the lead, there were fervent comments from the bench suggesting that bankruptcy judges who are not appointed under Article III might well wind up with a diminished role: they would not be able to issue final decisions on many disputes, and might not even be able to propose decisions for adoption by an Article III judge. That impression was consistent with the Court's most recent major decision on bankruptcy court authority, the 2011 decision in Stern v. Marshall. Chief Justice Roberts, the author of the main Stern opinion, bluntly suggested on Tuesday that if Congress cannot act to beef up the roles of bankruptcy judges without violating Article III, why would the Court permit "people taken off the street" to do so just because they were parties to a case and had consented to enlarged bankruptcy court authority? Click here to read the full SCOTUSBlog analysis.
Click here to access the transcript from Tuesday's oral argument.
In addition, ABI is set to release a video next week with experts talking about the oral arguments in both In re Bellingham and Law v. Siegel. ABI Resident Scholar Charles Tabb speaks with both Prof. John Pottow of the University of Michigan Law School (Ann Arbor, Mich.) and Danielle Spinelli of WilmerHale (Washington, D.C.) to analyze the arguments made in each case.
ANALYSIS: BANKS THAT MARKET TO U.S. MILITARY ARE AMONG TOP FEE COLLECTORS
A Wall Street Journal analysis today of bank filings found that Fort Hood National and three other banks that have on-base branches were among the top 10 U.S. banks in terms of service-charge income as a percentage of deposits in the 12 months ended Sept. 30. Officials at the U.S. Army, which runs many of the bases at which these banks operate, say they aren't aware of any issues with overdraft fees at those banks or in its wider banking program. Among the other six banks in the top 10 in the Journal's analysis of almost 7,000 banks with more than $5 million in deposits, three have head offices near major military bases and share ownership with at least one of the four on-base banks flagged as having high fees. The filings don't break out overdraft charges, but federal regulators generally estimate that overdraft fees make up the majority of bank service charges. Moebs Services Inc., a banking research and consulting firm, estimates that the figure is close to 75 percent. Across the U.S., military posts typically have one on-base bank and one on-base credit union, ranging from small local players like Fort Hood National to big institutions such as Bank of America Corp. Each base sets the maximum fees that its financial institutions can charge. Read more. (Subscription required.)
To learn more about service member finance protections, make sure to pick up a copy of ABI's Bankruptcy and Debt under the Servicemembers Civil Relief Act, now available in the ABI Bookstore.
REALTYTRAC: 2013 U.S. FORECLOSURE ACTIVITY DECLINES 26 PERCENT
RealtyTrac, an online marketplace for real estate data, reported today that foreclosure activity in the U.S. declined 26 percent in the year 2013 and was the lowest annual total since 2007, RTTNews.com reported. In its U.S. Foreclosure Market Report, the agency noted that foreclosure filings, default notices, scheduled auctions and bank repossessions were reported on about 1.36 million U.S. properties in 2013, down 26 percent from 2012 and down 53 percent from the peak period of 2010. The number of total properties with foreclosure filings in 2013 was the lowest annual total since 2007, when there were 1.3 million properties with foreclosure filings. The report also showed that 1.04 percent of U.S. housing units, or one in every 96, had at least one foreclosure filing during the year, down from 1.39 percent of housing units in 2012. Read more.
ANALYSIS: AS REFINANCING WANES, BANKS ARE WARY OF NEW LOANS
Despite the confluence of promising economic signs, little in the system that provides Americans with mortgages has returned to normal since the 2008 financial crisis, leaving a large swath of people virtually shut out of the market, according to an analysis in yesterday's New York Times. Even as the housing market improves, new home loans are still scarce as interest rates have started to creep up -- a situation that was starkly underlined in the two banks' results on Tuesday. The nation's biggest mortgage lender, Wells Fargo, extended $50 billion in mortgages in the fourth quarter, down 60 percent from a year ago. The nation's largest bank, JPMorgan, for its part, extended $23 billion in mortgages, down 55 percent from a year ago. The declines reflected the waning of the refinancing boom prompted by record-low interest rates. Without substantial income from refinancing, the banks' mortgage businesses will now depend on making fresh loans to purchase houses, a business that, despite some revival, remains tepid. Read more.
NEW ABI MEDIATION COMMITTEE FORMED
The ABI Executive Committee has created a new committee to focus on the growing importance of bankruptcy mediation. The new committee will be chaired by Robert Fishman of Shaw Fishman Glantz & Towbin LLC (Chicago) and is open to all ABI members with an interest in mediation issues. Among the committee's initiatives are Model Rules for courts when using mediators. The Mediation Committee will hold its first formal meeting at the Annual Spring Meeting in April 2014. For more information on the committee, be sure to visit http://committees.abi.org/committees/mediation.
MAKE SURE TO COMPLETE YOUR ABI MEMBER SURVEY BY MONDAY TO BE ELIGIBLE FOR GREAT PRIZES!
Be sure to complete your ABI member survey by Monday, Jan. 20, to be eligible for the drawing of a 1-year ABI membership, Kindle Fire HDX or Kindle Fire HD. The survey arrived via your e-mail and takes just five minutes to complete, so be sure to help us improve your services as an ABI member -- and you could win a great prize!
NEXT WEEK! ABILIVE "BACK TO BASICS" WEBINAR EXAMINES USING FINANCIAL DOCUMENTS AS EVIDENCE
Send your associates to ABI's "Back To Basics" webinar series, hosted by the Young and New Members Committee. Next Tuesday's webinar will cover using financial documents as evidence, while the Jan. 28 webinar will look at issues surrounding bankruptcy and hedge funds. The first webinar in the series examining financial statements and operating reports was held Tuesday and will be posted to ABI's e-Learning website. Let a trusted CLE provider help get your associates up to speed.
ABI LAUNCHES SIXTH ANNUAL WRITING COMPETITION FOR LAW STUDENTS
Law school students are invited to submit a paper between now and March 4, 2014 for ABI's Sixth Annual Bankruptcy Law Student Writing Competition. ABI will extend a complimentary one-year membership to all students who participate in this year's competition. Eligible submissions should focus on current issues regarding bankruptcy jurisdiction, bankruptcy litigation, or evidence issues in bankruptcy cases or proceedings. The first-place winner, sponsored by Invotex Group, Inc., will receive a cash prize of $2,000 and publication of his or her paper in the ABI Journal. The second-place winner, sponsored by Jenner & Block LLP, will receive a cash prize of $1,250 and publication of his or her paper in an ABI committee newsletter. The third-place winner, sponsored by Thompson & Knight LLP, will receive a cash prize of $750 plus publication of his or her paper in an ABI committee newsletter. For competition participation and submission guidelines, please visit http://papers.abi.org.
DETROIT EMERGENCY MANAGER KEVYN ORR TO KEYNOTE ABI'S 32ND ANNUAL SPRING MEETING ON APRIL 25
Kevyn Orr, emergency manager to the city of Detroit, will provide the keynote at the Friday Luncheon at ABI's 32nd Annual Spring Meeting at the JW Marriott in downtown Washington, D.C. The conference, taking place April 24-27, 2014, features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various "tracks," including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. The Annual Spring Meeting offers 18.25/22 hours of CLE/CPE credit, along with ethics credit totaling 3.25/4 hours. In addition, committee sessions will drill down on topics covered in the larger sessions to provide you with the most practical and varied CLE/CPE experience ever. Also featured will be a special half-day optional event sponsored by ABI and the FCBA titled "The Intersection of the FCC and Bankruptcy Law."
Sessions at the 2014 Annual Spring Meeting include:
- 18th Annual Great Debates
- Where the Work Is (and Isn't)
- The Ever-Changing Role of Committees
- Large Complex Trusts: A General Motors Case Study
- Municipal Bankruptcies
- Use of Governmental Assistance Programs in Chapter 13
- The Financial Professional’s Role in Out-of-Court Restructurings and Dissolutions
- Civility in the Restructuring Profession
- Union Contracts
- Student Loan Update
- Social Media: What You Don't Know Can Hurt You
- The § 363 Sale Process from a Transactional Perspective
The conference kicks off with an Opening Reception at the Smithsonian's National Museum of the American Indian, offering a truly D.C. experience. Optional events include a golf tournament at Westfields Golf Club, a Washington Nationals vs. San Diego Padres baseball game and an evening at the Kennedy Center with the National Symphony Orchestra.
NEW CASE SUMMARY ON VOLO: ARVEST BANK V. COOK (IN RE COOK; 8TH CIR.)
Summarized by Michael Tamburini, Commercial Law Group P.A.
The Eighth Circuit BAP did not disturb the finding of the bankruptcy court that the Arvest Bank judgment lien had priority over Empire Bank's judgment lien; the BAP held that the guaranty obligations owed to Empire Bank from certain real estate transactions were at least partially secured by the Empire Bank deed of trust prior to a settlement reached between Empire Bank and the debtors, and thus the bankruptcy court's preference analysis regarding such settlement must change accordingly.
There are nearly 1,200 appellate opinions summarized on Volo, and summaries typically appear 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: THE BASIC PROBLEM WITH "CHAPTER 14"
The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent post examines how there has been a big push recently, from several different directions, to develop a more "free market" approach -- as compared with Dodd-Frank's OLA -- to financial institution insolvency, the Hoover Institute's "chapter 14" proposal being the most famous of these "pushes." The problem, according to the blog post, is in the funding. Chapter 11 depends on private DIP funding, but even the largest DIP loans are much smaller than the liquidity needs of a systemically important financial institution.
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
A debtor may strip liens in a "chapter 20" case.
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 43 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.
