COMMENTARY: RECENT RULING TAKES AIM AT FORUM-SHOPPING
Bankruptcy Judge Russell F. Nelms recently decided to use a ruling in a local case to take aim at the practice of large corporations filing bankruptcy cases "in venues that have almost no connection to the debtor," according to a commentary in the New York Times DealBook blog yesterday. The case in question is Crosby National Golf Club in San Diego, which is controlled by a Texas company that oversees many golf courses. The club filed for bankruptcy as a result of a dispute with a gated residential community that borders the course. The case was filed in Texas, given that the executives calling the shots have offices in Fort Worth. One of the residents in the dispute presented the judge with a motion to move the case to San Diego, the other place where this case might have reasonably been filed. The judge ultimately agreed, given that the golf course is in San Diego. However, the court's opinion did not end there. Judge Nelms in the final pages of the ruling railed against RadioShack and Quicksilver Resources -- both with corporate headquarters in the judge's jurisdiction in Fort Worth -- for filing in Delaware. Read the full commentary.
CAR DEALERS URGED TO POLISH FAIR LENDING PRACTICES AS CFPB RULE LOOMS
Legal experts are encouraging car dealers to learn their lenders' fair lending policies in advance of the Consumer Financial Protection Bureau's (CFPB) final larger participant rule, which takes effect Aug. 31, Automotive News reported today. The rule will allow the CFPB to supervise and examine any nonbank finance company that originates, in aggregate, at least 10,000 auto loans and leases a year. There are 34 nonbank auto lenders, including automakers' captive finance companies, in that group. Together, they generate 90 percent of nonbank auto loans and leases. The rule will indirectly affect car dealers since the CFPB will have authority over more of their lenders. Those lenders, in turn, will monitor more closely dealers’ discretionary markups on customer auto loans. "The kinds of communication dealers have received from large lenders, they will receive in a larger quantity from the 34 nonbanks," said Randy Henrick, associate general counsel for Dealertrack. "The CFPB will review and audit lenders and will require large lenders to send communications to dealers and do analyses of their portfolios," Henrick added. The CFPB has told lenders to put into place a system for monitoring dealers on loan markups, said Nick Smyth, a financial services regulatory attorney at Reed Smith law firm in Pittsburgh. Read more.
ANALYSIS: OIL INDUSTRY NEEDS HALF A TRILLION DOLLARS TO ENDURE PRICE SLUMP
The number of oil and gas company bonds with yields of 10 percent or more, a sign of distress, has tripled in the past year, leaving 168 firms in North America, Europe and Asia holding this debt, according to an analysis today by Bloomberg News. The ratio of net debt to earnings is the highest in two decades. If oil stays at about $40 a barrel, the shakeout could be profound, according to Kimberley Wood, a partner for oil mergers and acquisitions at Norton Rose Fulbright LLP in London. Debt repayments will increase for the rest of the decade, with $72 billion maturing this year, about $85 billion due in 2016 and $129 billion due in 2017, according to BMI Research. About $550 billion in bonds and loans are due for repayment over the next five years. U.S. drillers account for 20 percent of the debt due in 2015, Chinese companies rank second with 12 percent, and U.K. producers represent 9 percent. In the U.S., the number of bonds yielding greater than 10 percent has increased more than fourfold to 80 over the past year, according to data compiled by Bloomberg. Read more.
FUNDS STILL STRUGGLE TO SET VALUES AMID COMPUTER WOES
Computer problems plagued the U.S. asset-management industry for a fourth day as Bank of New York Mellon Corp. said today that it was still working to correct a glitch that caused hundreds of mutual and exchange-traded funds to miscalculate the value of fund assets, the Wall Street Journal reported today. The bank said that the accounting platform it uses to price fund securities, the SunGard InvestOne platform operated by SunGard Data Systems Inc., began to work better in the early morning hours today, “although some performance issues remain.” BNY Mellon, the largest fund custodian in the world by assets, provides accounting services for money managers that include calculating the price of a fund’s securities each day. Pricing is crucial for money managers, which are obliged to provide investors with an accurate price for securities in their funds. On Monday, the pricing system went down. While it went back online yesterday, the system is now working through a backlog, the bank said. Fund research firm Morningstar Inc. said about 800 mutual funds were missing their net asset values yesterday. Read more. (Subscription required.)
LATEST ABI PODCAST: RESEARCHER EXAMINES WHETHER BAPCPA FORCES CHAPTER 11 DEBTORS TO EMERGE TOO SOON
The latest ABI Podcast features ABI Executive Director Sam Gerdano speaking with Foteini Teloni of Shearman & Sterling LLP (New York) about whether the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) forces debtors to exit chapter 11 before they are truly rehabilitated. Teloni, previously an adjunct professor of law at Fordham University School of Law, authored "Chapter 11 Duration, Pre-Planned Cases, and Refiling Rates: An Empirical Analysis in the Post-BAPCPA Era," which appears in the Summer 2015 ABI Law Review. Click here to listen.
To read Teloni's analysis in the Summer 2015 ABI Law Review, please click here (ABI log-in required).
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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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: RICHER V. MOREHEAD (7TH CIR.)
Summarized by Elizabeth Peterson of The Law Offices of Roger Higgins LLC
The Seventh Circuit affirmed the District Court (N.D. Ill.), finding that the creditor (Morehead) converted his participation interest in commercial real estate owned by a trust controlled by one of the debtors (Richer) to a demand note in a timely manner, and therefore had an unsecured claim against the debtors' estate. The Seventh Circuit also held that the bankruptcy judge acted within his jurisdiction in deciding this issue of Illinois common law because 1) the parties' implicit consent to the bankruptcy court's adjudication of the claim was sufficient because the parties were "sophisticated businessmen represented by counsel who can be presumed to be aware of their clients' legal rights" and 2) the parties failed to object to the bankruptcy court's adjudication of the claim at any point during the litigation.
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: EXAMINING THE MILITARY LENDING ACTN
A recent blog post examines the final rule by the Department of Defense (DOD) on July 22 to implement the Military Lending Act (MLA). Enacted in 2006, the MLA seeks to protect active-duty military members and their dependents from predatory lending in high-cost consumer credit transactions.
To read more on this blog and all others on the ABI Blog Exchange, please click here.
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41st Lawrence P. King & Charles Seligson Workshop on Bankruptcy and Business Reorganization
Sept. 16-17, 2015 Register Today!