|NEWS AND ANALYSIS
COMMENTARY: BANKRUPTCY REFORM WOULD HELP SMALL BUSINESSES AND FARMERS
With common-sense reform of chapter 11 of the Bankruptcy Code, small businesses and farmers in Iowa can reorganize, and thus preserve both jobs and property, according to a commentary by Jeffery D. Goetz of Bradshaw, Fowler, Proctor & Fairgrave, P.C., in today's Des Moines (Iowa) Register. When a small business or farmer in Iowa finds the need to reorganize its business under chapter 11 of the current Bankruptcy Code, the deck is stacked against it, according to Goetz. However, the final report of the ABI's Commission to Study the Reform of Chapter 11 recommends an alternative restructuring scheme that enables both small businesses and the court to more efficiently oversee the process that "incentivizes all parties, including enterprise founders and other equity security holders, to work collectively toward a successful restructuring." Read the full commentary.
REPORT: LOW-INCOME WORKERS SEE BIGGEST DROP IN PAYCHECKS
Despite steady gains in hiring, a new study released today by the National Employment Law Project (NELP), a left-leaning advocacy group, found that amidst a falling unemployment rate and other signs of an improving economy, take-home pay for many American workers has effectively fallen since the economic recovery began in 2009, the New York Times reported today. The declines were greatest for the lowest-paid workers in sectors where hiring has been strong -- home health care, food preparation and retailing -- even though wages were already below average to begin with in those service industries. NELP's analysis showed that once inflation was taken into account, median wages across all occupations fell by 4 percent between 2009 and 2014. Wage declines in the lowest-paid occupations were much worse, dropping 8.9 percent for restaurant cooks and 6.2 percent for home health aides. Read more.
ANALYSIS: POT BUSINESSES IN FINANCIAL TROUBLE FACE HAZY FUTURE IN BANKRUPTCY COURT
Frank and Sarah Arenas, the owners of a marijuana wholesaler, may appeal a decision that booted him from bankruptcy court and may burn other financially strapped drug dispensaries, according to an analysis in The Deal today. Judges Tom R. Cornish, Robert E. Nugent and Dale L. Somers of the U.S. Bankruptcy Appellate Panel of the 10th Circuit said in an Aug. 21 opinion that "possessing, growing and dispensing marijuana and assisting others to do that are federal offenses." The BAP bluntly added: "Can a debtor in the marijuana business obtain relief in the federal bankruptcy court? No." Counsel to the debtors, Daniel Garfield at Foster Graham Milstein & Calisher LLP, said that the couple will file a motion seeking to stay the appellate panel's judgment by the end of this week, and "depending on how the [panel] rules, the Arenases may decide to appeal to the [U.S. Court of Appeals for the] 10th Circuit." Garfield said that he hasn't seen another industry where a similar issue has come to a head – where an activity is legal on a state level but illegal on a federal level and the eligibility of bankruptcy protection has been up for debate. "What this illustrates is the problem of some states making legal what the federal government considers to be illegal," said Prof. Juliet Moringiello of Widener University Commonwealth Law School. "It deprives these legal state businesses from taking advantage of certain benefits that they get [under] federal law." That said, "Bankruptcy is a privilege, not a right," Moringiello said. "You need to behave in a certain way to be eligible for bankruptcy relief." She said she doesn't think there needs to be a specific provision included in the Bankruptcy Code barring marijuana-related filings, as courts have been consistent on keeping these debtors out of bankruptcy. Read more.
"Selling Unusual Assets in Bankruptcy (Pot, Porn and Puppies)" will be the subject of a featured session at this year’s ABI Winter Leadership Conference in December. For more information on the panel sessions and to register, please click here.
REPORT: ONLINE ALTERNATIVE LENDERS GROWTH FULED BY SMALL BUSINESSES
A new report by the Federal Reserve Bank of Cleveland found that online alternative lenders are reporting rapid growth and recent surveys suggest more small businesses are turning to them as potential sources of credit. These nonbank lenders offer small-dollar credit products including cash advances, lines of credit, and various types of loans. Many provide the funds in days or even hours, expedience made possible with data-driven technologies and new approaches to underwriting, pricing, loan delivery, and servicing. While the industry holds promise for expanding access to credit, it also raises potential risks for small-business borrowers as these products can be considerably more expensive than traditional credit. Read the full report.
SURGING CONSUMER COMPLAINTS TO CFPB DRAW BANKS’ ATTENTION
Four years after the Consumer Financial Protection Bureau CFPB started taking complaints about financial products, consumers are finding it's a good way to get companies' attention, Bloomberg News reported yesterday. A record 26,704 complaints were registered in July, up 15 percent from the previous month and up 20 percent from a year ago. Debt collectors inspire the most complaints, followed by problems with credit reports and with mortgages. Rather than continually calling customer service, consumers can complain to the CFPB online or over the phone. Within days, those complaints are reviewed and routed to companies electronically, and companies must respond within 60 days. While the CFPB can't require companies to respond in a particular way, it does demand that customers get something more detailed than a form letter. "When we ask the questions, sometimes it gets a better response for consumers," says Darian Dorsey, the CFPB's chief of staff for consumer response. Read more.
MARKETS' WILD MOVES MIGHT MAKE U.S. PUBLIC PENSION FUNDS VULNERABLE
Last week's wild gyrations in global financial markets almost certainly exposed the vulnerability of U.S. state and local authority public pension funds, which have piled into riskier assets in recent years, according to actuaries and other pension experts, Reuters reported yesterday. Based on data from the Federal Reserve, the funds are sitting on nearly $4 trillion in assets that are more than 70 percent exposed to equities and other riskier assets, such as commodities and hedge funds. And some states with massive pension funding deficits, such as Illinois, are likely most in danger of suffering big losses given their risk profiles. Since the financial crisis, many public pension funds have increased their exposure to hedge funds and other higher-risk assets to meet ambitious investment return targets. Most funds assume a rate of return of 7-8 percent a year, according to a May report by the National Association of State Retirement Administrators. Those assets can also take a big hit when equity and related markets plunge. Most major pension funds have also stopped short of employing other approaches to limiting losses in broad market sell-offs such as volatility management or dynamic asset allocation strategies that have attracted more attention in recent years, according to industry experts. Direct stock market exposure has fallen from 52 percent in 1992, to 49 percent at the end of 2014. Of total assets, 27 percent is in international stocks compared with just 4 percent in 1992, according to the latest data from CEM Benchmarking. Read more.
NEW WEEKLY SCHEDULE FOR BANKRUPTCY BRIEF AND MEMBERSHIP INSIGHTS NEWSLETTERS
Beginning next week, ABI is pleased to announce the launch of a new weekly newsletter, Membership Insights, a digest that will include all of the most recent and timely content from abi.org, in addition to highlights and tips on using our services and products. Membership Insights will debut on Tuesday, September 8.
ABI Bankruptcy Brief -- featuring a fresh, new design -- will continue to provide ABI members with the same timely news and analysis they have come to expect, now in one succinct email per week, beginning on Thursday, September 10.
FALL ABILIVE WEBINARS EXAMINE PRE-PETITION TAX DEBT PLANNING, FEE DEFENSE AND INVESTIGATION OF A COMMERCIAL FRAUD CASE
Three abiLIVE webinars have been scheduled by ABI Committees this Fall to provide you with convenient access to discussions on cutting-edge insolvency topics while earning CLE. The webinars include:
- "Pre-Petition Tax Debt Planning and Post-Petition Consequences" on Sept. 23: This webinar, presented by ABI's Consumer Bankruptcy Committee, will discuss the effect of the hanging paragraph under Sect. 523(a)(1), post-petition issues, considerations in filing tax returns for the individual chapter 11 debtor, and tax implications for trustees in administering debtors' estates. Register here.
- "Does It Pay to Be a Bankruptcy Lawyer Anymore? Baker Botts LLP v. ASARCO" on Oct. 5: Hosted by ABI's Unsecured Trade Creditors Committee, G. Eric Brunstad, Jr. of Dechert and Dylan Trache of Nelson Mullins Riley & Scarborough LLP will discuss the Supreme Court's ASARCO opinion, the practical impact of the opinion on your practice, and developing case law and arguments to be made in defending your fees. Register here.
- "Fraud and Forensics: The Investigation Phase of a Commercial Fraud Case" on Oct. 8: This is the first of three webinars from the Commercial Fraud Committee stemming from ABI's recently published book Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case. Each webinar takes an in-depth look at areas of specialty, challenge and reward for forensic accountants and the professionals who work with them in commercial fraud cases. Register here.
IRELAND'S FORMER PRIME MINISTER JOHN BRUTON TO KEYNOTE INTERNATIONAL INSOLVENCY & RESTRUCTURING SYMPOSIUM!
Ireland's Former Prime Minister John Bruton will be the keynote speaker at ABI's Eleventh Annual International Insolvency and Restructuring Symposium in Madrid, Spain. The Symposium, taking place on Oct. 23 at the Hotel Ritz Madrid, provides attendees with an interactive learning experience led by a faculty of prominent international insolvency practitioners. The advisory board for the program is chaired by Ian G. Williams of Baker Tilly Restructuring & Recovery LLP (London, England). Sessions at the Symposium will include:
- America Now! Current U.S. Restructuring Trends
- What's Wrong with U.S. Chapter 11? A Guide for European Practitioners
- Current Restructuring Issues in Southern Europe
- Investing in Distressed Assets and Infrastructure in Europe: Market Trends, Successes and Failures
ABI WANTS TO SEE YOU IN PHOENIX THIS DECEMBER FOR THE WINTER LEADERSHIP CONFERENCE!
Join ABI on Dec. 3-5, 2015, at the historic Arizona Biltmore in downtown Phoenix for the 27th Annual Winter Leadership Conference. This can't-miss event is always a member favorite and this year will be no exception! There will be topics designed for consumer and business practitioners, as well as financial advisors. Earn up to 12/14 hours of CLE/CPE credit and 2.75/3 hours of ethics, and enjoy a plethora of social and networking events.
Highlights from the conference include:
- Optional events, including a golf tournament, kayaking, tennis, horseback riding and much more
- Great Debates on chapter 11 plans, whether a bankruptcy judge can disband a creditors' committee and must a creditor file a proof of claim
- BAPCPA Consumer Issues: 10-Year Anniversary Special
- Nine joint committee sessions, provided by ABI's 18 committees
- A live Bloomberg "Eye on Bankruptcy" luncheon presentation
- A special Casino Night!
- A judges' roundtable on hot-button issues
Early-bird registration ends Oct. 2 so be sure to register to take advantage of the savings!
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ABI thanks Donlin, Recano & Co. for its generous sponsorship of the ABI Events app.
ON-DEMAND VIDEO COURSE HELPS YOU PREPARE FOR THE ABC BOARD CERTIFICATION TEST!
Achieving American Board Certification (ABC) means you have met the rigorous, objective standards of a top professional in the areas of bankruptcy and/or creditors' rights. The ABC Exam is the essential step in this process, and this 5-part on-demand course will prepare you for the test. This intro video explains the benefits of ABC certification, the steps in the process and what to expect in the exam. The full exam prep course will qualify for 6 hours of CLE credit (where permitted for online learning), including 1 hour of ethics. The course is $295 for ABI members; $395 for non-members. The non-member $395 fee also includes 1 year of ABI Membership (a $295 value). Click here for more information and to purchase the course.
NEW CASE SUMMARY ON VOLO: LNV CORP. V. M. JULIA HOOK, ET AL. (10TH CIR.)
Summarized by Lars Fuller of BakerHostetler
The 10th Circuit affirmed the ruling of the district court (D. Colo.) denying a plaintiff's emergency motion for temporary restraining order and/or a preliminary injunction, and request for an evidentiary hearing. Pro se plaintiff, an attorney and the 10th Circuit found no reversible error in the district court's finding that the plaintiff failed to establish two of the four factors necessary to obtain preliminary injunctive relief.
There are more than 1,800 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: FURTHER ANALYSIS OF DEAL REACHED BY PUERTO RICO'S PREPA WITH BONDHOLDERS
A recent blog post examines the deal reached yesterday by Puerto Rico's power authority with a group of bondholders on a debt restructuring plan to reorganize the utility's $9 billion in debt.
For more information on Puerto Rico's debt crisis, be sure to visit and book mark ABI's "Puerto Rico in Distress" webpage.
To read more on this blog and all others on the ABI Blog Exchange, please click here.
INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 23 member associations worldwide with more than 9,800 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.
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