In the wake of the latest push against the too-big-to-fail banks, the banks are pushing back against regulators and legislators, the Wall Street Journal reported today. The banks have hired longtime influential Washington, D.C., personnel to deflect regulatory and political pressure to strengthen their finances and to sell assets. Regulators and some lawmakers have raised concern that large banks remain "too big to fail" and could require another government bailout in the event of another financial meltdown. The effort by banks marks a lobbying turning point for the industry, which adopted a mostly low-profile stance to new regulations in the wake of the financial crisis. It also comes as banks such as Morgan Stanley, Bank of America Corp. and Goldman Sachs Group Inc. are shedding lucrative assets that would have required them to hold more capital to compensate for their risk-taking. Several banks and the Financial Services Forum, a top trade association, have hired Tony Fratto, a former Bush administration official, to provide what they call a "rapid response" to criticism that the banks remain too large. Regulators and lawmakers are increasingly signaling that more work is needed to lessen the risk posed by large, complex banks, including bigger capital cushions and minimum amounts of expensive long-term debt. The moves by banks include pushing back against bipartisan legislation sponsored by Sens. David Vitter (R.-La.) and Sherrod Brown (D-Ohio) that would sharply increase capital cushions at large banks to the point where most analysts expect firms would be forced to shrink. Read more. (Subscription required.)
REALTYTRAC: FORECLOSURE ACTIVITY AT SIX-YEAR LOW IN APRIL
A report from RealtyTrac on Thursday showed that foreclosure activity fell in April to its lowest level in more than six years, the latest sign that the recovery in the housing market is on track, Reuters reported yesterday. Foreclosure activity – which includes default notices, scheduled auctions and bank repossessions – was seen on 144,790 properties last month, down 5 percent from March and down 23 percent from a year earlier, the lowest level since February 2007. There were also signs that some foreclosures that had been deferred were working their way through the process in states that use the court system to handle foreclosures, known as judicial states. There are 26 judicial or quasi-judicial foreclosure states, according to RealtyTrac. Scheduled foreclosure auctions in judicial states rose 22 percent in April to their highest level since October 2010. Scheduled auctions in non-judicial states fell 7 percent. Read more.
U.S. PUBLISHERS STILL REELING FROM BORDERS BANKRUPTCY
The closure of Borders Group, Inc. is still causing problems for the U.S. publishing industry two years after the nation's number two bookseller closed down, the (London) Telegraph reported today. According to a report in Publishers Weekly, the 20 largest unsecured publishing creditors were owed $241 million when the company filed for chapter 11 protection in February 2011. It is not yet clear which publishers have settled, but figures have emerged showing the extent they were left out of pocket and how much they have so far been remunerated. Penguin Putnam was owed $41 million and has only received $12 million. Hachette Book Group was owed almost $37 million and has only been paid back $4.9 million. Simon & Schuster was owed $33.7 million and has received $10.7 million. Read more.
REPORT: COLLEGES SOAK POOR STUDENTS TO FUNNEL AID TO RICH
A report by the New America Foundation released yesterday found that U.S. colleges such as Boston University are using financial aid to lure rich students while shortchanging the poor, forcing those most in need to take on heavy debt, Bloomberg News reported yesterday. Almost two-thirds of private institutions require students from families making $30,000 or less annually to pay more than $15,000 a year, according to the report released today by the Washington, D.C.-based New America Foundation. The research analyzing U.S. Education Department data for the 2010-2011 school year undercuts the claims of many wealthy colleges that financial aid practices make their institutions affordable, said Stephen Burd, the report’s author. To increase their standing on college rankings, more private colleges are giving “merit aid” to top students, who are often affluent, while charging unaffordable prices to the needy, according to the report. The percentage of students receiving merit aid jumped to 44 percent in 2007-2008 from 24 percent in 1995-1996, the report found. Read more.
BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: LEHMAN TEST CASE ON JUDICIAL NULLIFICATION
Although Lehman Brothers Holdings Inc. has been out of bankruptcy for a year, Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss how Lehman is becoming a test case to decide whether a prohibition in one specific provision in bankruptcy law can be sidestepped by reliance on a general provision. To watch the full video, please click here.
NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CLASS ACTIONS IN BOTH BUSINESS AND CONSUMER CASES
Class action lawsuits in both chapter 11 and 13 cases are becoming more prevalent. Are you wondering whether your clients’ WARN Act claims would be better pursued against a debtor company in a class action adversary proceeding or in a class proof of claim, or both? If your client has been sued in a debtor’s consumer class action adversary proceeding, do you know the best defenses against class certification? ABI's panel of experts will highlight the case law and explore the potential benefits and pitfalls of class actions by creditors against debtor companies in chapter 11 cases and by debtors/trustees against creditors in chapter 13 cases on May 29 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.
ASSOCIATES: ABI'S NUTS & BOLTS ONLINE PROGRAMS HELP YOU HONE YOUR SKILLS WHILE SAVING ON CLE!
Associates looking to sharpen their bankruptcy knowledge should take advantage of ABI's special offer of combining general, business or consumer Nuts & Bolts online programs. Each program features an outstanding faculty of judges and practitioners explaining the fundamentals of bankruptcy, offering procedures and strategies tailored for both consumer and business attorneys. Click here to get the CLE you need at a great low price!
ABI GOLF TOUR UNDERWAY; NEXT STOP IS CENTRAL STATES BANKRUPTCY WORKSHOP IN JUNE
Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI's Golf Tour's first stop at Lake Presidential Golf Club. Next up for the Tour is the famed Bear course at the Grand Traverse Resort at the Central States Bankruptcy Workshop on June 14. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour, and women are most welcome.
ABI MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO
ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.
ABI IN-DEPTH
NEW CASE SUMMARY ON VOLO: WEBER V. SEFCU (IN RE WEBER; 2D CIR.)
Summarized by Joel Levitin, Cahill Gordon & Reindel LLP
The Second Circuit affirmed the district court's ruling and held that failing to deliver repossessed vehicle to the debtor promptly after receiving notice of pending petition constituted willful violation of the automatic stay under chapter 13 of the Bankruptcy Code, and that the creditor is responsible for actual damages, costs and attorney's fees.
There are more than 800 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: CONSUMER FINANCIAL PROTECTION BUREAU CRACKS DOWN ON DEBT-SETTLEMENT SCAM
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post takes an in-depth look at the Consumer Financial Protection Bureau's (CFPB) referral of a case for criminal prosecution against a debt-settlement company, Mission Settlement Agency. The action is the first-ever criminal referral by the CFPB.
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
Bankruptcy courts should implement constructive trusts in any case where applicable state law would recognize them.
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.
