Help Center

Commentary: Commission Recommendations Favorable to Secured Lenders on Cramdown Interest Rate, Rejected Till

 

 
 

June 11, 2015

 
home | newsroom | chart of the day | blogs | bankruptcy code and rules | statistics | legislative news | volo
  NEWS AND ANALYSIS

COMMENTARY: COMMISSION RECOMMENDATIONS FAVORABLE TO SECURED LENDERS ON CRAMDOWN INTEREST RATE, REJECTED TILL

Determining secured lender cramdown interest rates in chapter 11 cases has been widely debated, and recent court rulings have proven to be inconclusive, according to a commentary by Kaye Scholer attorneys in the May/June ABF Journal. The rate of interest that a non-consenting secured lender is entitled to when its secured loan is restructured under a chapter 11 plan of reorganization has been a hotly debated issue since the U.S. Supreme Court handed down its decision in Till v. SCS Credit Corp. The decision was made in the context of a chapter 13 case concerning an individual with regular income. As a result of the complex language of Sect. 1129(b)(2)(A) of the Bankruptcy Code and the Supreme Court's decision in Till, case law regarding cramdown interest rates to be afforded secured lenders in the chapter 11 context has been murky and confusing, according to the commentary. Recent case law from the U.S. District Court for the Southern District of New York is decidedly unfavorable to secured lenders in this regard. From the secured lender perspective, the recommendations issued by ABI's Commission to Study the Reform of Chapter 11, at least with respect to the cramdown interest rate issue, present a more favorable approach, according to the commentary. Read more.

SEN. ELIZABETH WARREN AIMS TO MAKE DEBT-FREE COLLEGE A REALITY

Elizabeth Warren (D-Mass.) yesterday called on schools, as well federal and state governments, to create a viable path for Americans to attend college debt-free, MarketWatch.com reported yesterday. Sen. Warren has been one of the most prominent advocates of a proposal from progressive Democrats to allow students to graduate from public universities without any debt. She offered a variety of policy suggestions on Wednesday for achieving that goal, including requiring colleges to have a clear financial stake in their students' success and debt levels, mandating minimum levels of state investment in public schools and establishing a partnership between federal and state governments to fund public universities modeled after the way governments use combined resources to build and maintain interstate highways. Read more.

In related news, the outstanding balance of the nation's student loans is growing by an estimated $3,055.19 every second, according to a "student debt clock" developed for MarketWatch by StartClass, an education data site. As policymakers and pundits debate ways to tackle Americans' $1.2 trillion in student loan debt, this student-loan debt clock provides a window into the growing risks to the economy as well as to student loan borrowers and their families, according to MarketWatch. Click here to view the student debt clock.

COMMENTARY: HOW THE NEXT FINANCIAL CRISIS WILL HAPPEN

Despite good intentions to make the banking system stronger and safer following the 2008 financial crisis, politicians and regulators constructed an expansive and untested regulatory framework that will have unintended consequences for liquidity in our financial system, according to a commentary in yesterday's Wall Street Journal. Taken together, these regulatory changes may well fuel the next financial crisis as well as slow U.S. economic growth, according to the commentary. The Volcker Rule, for example, bans proprietary trading by banks. The prohibition, when combined with enhanced capital and liquidity requirements, has led banks to avoid some market-making functions in certain key equity and debt markets. This has reduced liquidity in the trading markets, especially for debt, according to the commentary. A warning flashed last October in the U.S. Treasury market with huge intraday moves, unrelated to external events. Deutsche Bank has reported that dealer inventories of corporate bonds are down 90 percent since 2001, despite outstanding corporate bonds almost doubling. A liquidity drought can exacerbate, or even trigger, the next financial crisis, according to the commentary. Read more. (Subscription required.)

 

 

REALTYTRAC: HOMEOWNER-VACATED FORECLOSURES DECLINE IN 2Q 2015

RealtyTrac reported today that the number of vacant and abandoned properties that are in foreclosure decreased in the second quarter, NationalMortgageNews.com reported. The number of "zombie" foreclosures fell 10 percent to 127,021 nationwide, compared to a year earlier, RealtyTrac said. Zombie foreclosures are created when a mortgage servicer starts the foreclosure process, but then fails to complete it, leaving borrowers on the hook for taxes and maintenance, even though they may have already moved out. Zombie foreclosures represented about 20 percent of all foreclosures in the second quarter. Even so, zombie foreclosures rose in about half of the 183 metropolitan areas examined in the study, including New York, Los Angeles, Houston, Philadelphia and Boston. Miami, on the other hand, had the biggest decline in zombie foreclosures. Read more.

EXPLORE THE CAPABILITIES OF THE NEW ABI "COMMITTEES" PAGE!

Make sure to peruse the new "Committees" page on the ABI website! The page is home for links to ABI's 18 active committees, which focus on specific areas of insolvency. Each committee page contains committee newsletter articles, archived recordings of informative committee webinars, calls and conference sessions, details about committee leaders and an archive of committee listserv e-mails. Serving on a committee provides the opportunities to expand your professional network, strengthen ties within the industry, and develop a leadership role within your peer community. Find out how through the new ABI Committees page!

 

 

NEXT TUESDAY: ABI LIVE WEBINAR EXAMINES ASSET SALES ISSUES IN OIL AND GAS BANKRUPTCIES

Join the latest abiLIVE Webinar next Tuesday to explore the unique challenges that can arise in a § 363 sale of the assets of a business involved in the energy industry, with a particular emphasis on oil and gas bankruptcies. Presented by ABI's Asset Sales Committee, the webinar features experts discussing the interplay in energy company bankruptcy cases among the Bankruptcy Code, federal and state laws, the regulatory structure governing the energy industry, and the political and practical realities of the industry’s significance on national, regional and local levels. Speakers on the program are Bryan M. Gaston of Conway MacKenzie (Houston), Ira L. Herman of Thompson & Knight LLP (New York) and Shari L. Heyen of Greenberg Traurig, LLP (Houston). Click here for the ABI member price.

For additional information on oil and gas company bankruptcies, be sure to pick up a copy of ABI's When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy.

REGISTER FOR FREE: JUNE 25 ABI LIVE WEBINAR EXAMINES PRACTICAL IMPACT OF CHAPTER 11 COMMISSION RECOMMENDATIONS ON PREFERENCE REFORMS

The ABI Young and New Members and Bankruptcy Litigation Committees will present a free abiLIVE webinar on June 25 to explore the ABI Chapter 11 Reform Commission Report recommendations regarding the preferential transfer statute in Section 547. This webinar will examine the rationale behind the recommendations, such as the good faith belief for filing a demand letter or preference complaint, the increase in the statutory minimum to bring a preference action, venue reform for small dollar cases and more. Most importantly, the panel will assess the practical effects and foreseeable impact of implementing these recommendations. This webinar is a must-attend for attorneys who regularly represent creditors, liquidating trustees, and panel trustees in preference actions. Click here for more information and to register for free!

 

 

NEXT ABI WORKSHOP TO FEATURE BANKRUPTCY JUDGES EXAMINING COMMISSION RECOMMENDATIONS ON RESOLVING COURT SPLITS

The next ABI Workshop, the 2015 Bankruptcy Judges Roundtable, will take place at ABI headquarters on Aug. 4 to examine the Chapter 11 Reform Commission's recommendations on resolving court splits. The Commission identified more than 30 splits in case law on important bankruptcy issues. Attend the program from 3:00-4:30 p.m. ET in person or via live webstream to hear five bankruptcy judges discuss the recommendations and issues surrounding the court splits. ABI will seek 1.5 hours of general CLE credit in 60-minute-hour states and 1.5 hours of credit in 50-minute-hour states for the program. Networking reception to follow from 5-7 p.m. ET for in-person attendees, and registration for just the reception is also available. Click here to register.

 

 

NEW CASE SUMMARY ON VOLO: WILLIAMS V. LYNCH (IN RE LEWIS, JR.; 4TH CIR.)

Summarized by John Bollinger of Boleman Law Firm, PC

In an unpublished opinion, the Fourth Circuit found no reversible error and affirmed the district court's order affirming the bankruptcy court's order suspending an attorney from practicing in the bankruptcy court, the disgorgement of attorney's fees and the imposition of a $2,500.00 monetary sanction. The Fourth Circuit held that the bankruptcy court statutorily and inherently has jurisdiction and authority to sanction attorneys that present themselves as an attorney and officer of the court.

There are more than 1,700 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: SCOTUS RULES THAT COMPLETELY UNDERWATER LIENS RIDE THROUGH, AT LEAST IN A CHAPTER 7 CASE

A recent blog post examined the Supreme Court's recent decision in Bank of America, N.A. v. Caulkett in which the Court reversed the Eleventh Circuit's decision allowing individual chapter 7 debtors to "strip" junior liens on their homes when the first priority liens are underwater.

For further analysis of this and other Supreme Court decisions from the October 2014 term, be sure to visit ABI's Supreme Court page. The page features each case, including a media teleconference with experts presenting their perspectives of the decision.

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

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.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

 

 


NEXT TUESDAY:

abiLIVE Webinar:
"Asset Sales Issues in Oil and Gas Bankruptcies"

June 16, 2015
Register Today!

UPCOMING EVENTS:

FREE abiLIVE Webinar:
"The ABI Commission and Preference Actions: The Practical Impact on your Practice"

June 25, 2015
Register Today!

Cross-Border Insolvency Symposium
June 18, 2015
Register Today!

22nd Annual Northeast Bankruptcy Conference
July 9-12, 2015
Register Today!

10th Annual Northeast Consumer Forum
July 9-11, 2015
Register Today!

20th Annual Southeast Bankruptcy Workshop
July 23-26, 2015
Register Today!

ABI Workshop: 2015 Bankruptcy Judges Roundtable
Aug. 4, 2015
Register Today!

11th Annual Mid-Atlantic Bankruptcy Workshop
Aug. 6-8, 2015
Register Today!

23rd Annual Southwest Bankruptcy Conference
Sept. 10-12, 2015
Register Today!

41st Lawrence P. King & Charles Seligson Workshop on Bankruptcy and Business Reorganization
Register Today!

20th Annual Views from the Bench Conference
Oct. 9, 2015
Register Today!

7th Circuit Consumer Bankruptcy Conference
Oct. 12, 2015
Register Today!

35th Annual Midwestern Bankruptcy Institute
Oct. 15-16, 2015
Register Today!

 
   
  CALENDAR OF EVENTS
 

2015

June
- abiLIVE Webinar: "Asset Sales Issues in Oil and Gas Bankruptcies"
June 16, 2015
- Cross-Border Insolvency Program
June 18, 2015 | New York
- abiLIVE Webinar: "The ABI Commission and Preference Actions: The Practical Impact on your Practice"
June 25, 2015

July
- Northeast Bankruptcy Conference
July 9-12, 2015 | North Falmouth, Mass.
- Northeast Consumer Bankruptcy Forum
July 9-11, 2015 | North Falmouth, Mass.
- Southeast Bankruptcy Workshop
July 23-26, 2015 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
Aug. 6-8, 2015 | Hershey, Pa.
- ABI Workshop: Bankruptcy Judges Roundtable
Aug. 4, 2015 | Alexandria, Va.

 

 

September
- Southwest Bankruptcy Conference
Sept. 10-12, 2015 | Las Vegas, Nev.
- Lawrence P. King & Charles Seligson Workshop on Bankruptcy and Business Reorganization
Sept. 16-17, 2015 | New York, N.Y.

October
- Views from the Bench Conference
Oct. 9, 2015 | Washington, D.C.
- 7th Circuit Consumer Bankruptcy Conference
Oct. 12, 2015 | Chicago, Ill.
- Midwestern Bankruptcy Institute
Oct. 15-16, 2015 | Kansas City, Mo.

 

 
 
FDICABI Endowment FundAsstDir