|NEWS AND ANALYSIS
EOUST DIRECTOR HIGHLIGHTS USTP EFFORTS, COMMISSION RECOMMENDATIONS AT HOUSE HEARING
EOUST Director Cliff White was among the DOJ witnesses testifying today before the "Ongoing Oversight: Monitoring the Activities of the Justice Department’s Civil, Tax and Environment and Natural Resources Divisions and the U.S. Trustee Program" hearing held by the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law. White highlighted the U.S. Trustee Program's ongoing efforts, such as oversight of means testing, consumer protection, mortgage servicer violations, criminal enforcement and chapter 11 issues. White, a member of ABI's Commission to Study the Reform of Chapter 11, also testified that two recommendations of the Commission's Final Report would help support the role of the USTP in carrying out its duties and help clarify the law. Click here to read White's prepared testimony.
COMMENTARY: ABI CHAPTER 11 REFORM COMMISSION'S RECOMMENDATIONS ON SECURED CREDIT PROVIDE CONGRESS WITH ROADMAP TO MODERNIZING CODE
While today's American economy is primarily an information, service and finance economy, the Bankruptcy Code has not changed accordingly, a BakerHostetler blog noted. When the Bankruptcy Code was enacted in 1978, America boasted the world's dominant manufacturing economy, corporate debt was mostly unsecured trade debt, and secured loans provided tangible-asset financing for property, plants, and equipment. The concept of several "tranches" of secured debt covering goodwill and intangible assets, resulting in debt well over any measure of a company’s worth, would have seemed nonsensical to both Congress and the lending industry, according to the commentary. Reviewing the recommendations pertaining to secured credit, the blog said that the ABI Commission to Study the Reform of Chapter 11's effort to "level the playing field" regarding secured lender rights was perhaps the most contentious and important issue the Commission reviewed. While the Commission's Final Report reflects substantial compromises and relays the differing views expressed during the negotiations, the end result appears to provide debtors with a more reasonable opportunity to survive the bankruptcy process. Read the full blog post.
STUDY: MANY ON WALL STREET SAY IT REMAINS UNTAMED
Rather than indicating that Wall Street has cleaned itself up, a new study suggests that many of the lessons of the crisis still haven't been learned, the New York Times DealBook blog reported today. The study, conducted by the University of Notre Dame and Labaton Sucharow LLP, shows that billion-dollar settlements and stringent new rules brought on by the Dodd-Frank regulatory overhaul in 2010 appear to have had little deterrent effect. In the study released today, about a third of the people who said that they made more than $500,000 annually contend that they "have witnessed or have firsthand knowledge of wrongdoing in the workplace." One in 10 respondents in the study said that they had directly felt pressure "to compromise ethical standards or violate the law." And nearly half of the high-income earners say that law enforcement and regulatory are ineffective "in detecting, investigating and prosecuting securities violations." Read more.
Click here to read the study.
COMMENTARY: BANKRUPTCY PROTECTION, NOT A TAXPAYER BAILOUT, FOR PUERTO RICO
The U.S. territory of Puerto Rico is on the brink of financial collapse due to the incoherent mix of federal laws being applied, according to a commentary in today's Daily Caller. The territory is treated as a state in some laws, foreign in others, and unique in yet others. The territory's population is shrinking, and the island's economy has lagged that of the U.S. for four decades and been in recession for almost all of nine years. New Deal experimentation in Puerto Rico transformed private utilities into subsidized government "corporations" that could borrow easily -- and too much -- because the interest from their bonds is taxed even less than bonds of states and their municipalities, according to the commentary. With Puerto Rico's recession, at least one such corporation, the Electric Power Authority, can't pay all of its debts when due. Congress should pass the bill to give the territory the bankruptcy authority of a state, according to the commentary, and put the issue where it belongs: first with the territorial government, and then if the territorial government chooses, in a forum presided over by a federal bankruptcy judge. This would have the parties settle the dispute among themselves and not try to get the federal taxpayer to foot the bill. Read the full commentary.
ANALYSIS: FHA "SINGLING" OUT FANNIE AND FREDDIE
The Federal Housing Finance Agency, which regulates the mortgage giants, released critical details on Friday about the so-called single security that would replace separate mortgage-backed debt issued by Fannie and Freddie, the Wall Street Journal reported today. The FHFA said that the companies were on track to complete the final structure of the single security by year-end. The single security will resolve differences between the types of disclosures and timing of payments around mortgage bonds backed by Fannie and Freddie. But the biggest benefit would come from improved liquidity for such debt. Currently, Fannie's securities are far more liquid than Freddie's, with trading volume on a typical day for the former about 10 times that of the latter. As a result, Freddie has to compensate investors by rebating guarantee fees. Since all income of both companies is currently swept to the Treasury, this cost is borne by taxpayers. The issuance of a single security would not only eliminate the need for this rebate, it would result in greater overall liquidity in the market for mortgage securities and could lower mortgage rates. Read more. (Subscription required.)
LATEST ABI PODCAST LOOKS AT LIMITED LIABILITY PARTNERSHIPS IN BANKRUPTCY
ABI's latest podcast features former ABI Resident Scholar Anne Lawton speaking with Prof. Christine Hurt of BYU Law about issues that can arise with limited liability partnerships in bankruptcy. Prof. Hurt discusses her research about these issues, including recent "unfinished business claims" in law firm bankruptcies. Click here to listen.
To read Prof. Hurt's research, please click here.
DON'T MISS NEXT WEDNESDAY'S "TOP OF THE TOWN" D.C. NETWORKING EVENT WITH TMA CHESAPEAKE, ABI, IWIRC GREATER MD & DC AND ARNOLD & PORTER!
Don't miss next Wednesday's Annual "Top of the Town" Networking Event on the rooftop deck of Arnold & Porter LLP in Washington, D.C. The event is co-sponsored by ABI, TMA Chesapeake, IWIRC Greater MD, IWIRC DC and Arnold & Porter. Enjoy this D.C. networking event from 6-8 p.m. ET with a full bar and heavy hors d'oeuvres. For more information to register, please click here.
BLOOMBERG AND ABI'S "EYE ON BANKRUPTCY" WEBINAR ON MAY 28 EXAMINES LEADING BANKRUPTCY OPINIONS FROM APRIL
ABI members are invited to watch the next edition of Bloomberg's complimentary "Eye on Bankruptcy" webinar from 1-2 p.m. ET on May 28 to examine the latest opinions. The program is jointly prepared by ABI and Bloomberg Law, and features Bill Rochelle, editor-at-large and bankruptcy columnist for Bloomberg News, talking with G. Eric Brunstad, Jr. of Dechert LLP and Prof. Charles J. Tabb of the University of Illinois College of Law and an editor of Bloomberg Law: Bankruptcy Treatise.
This webinar is the third in a series of monthly presentations designed to keep you up to date on changes in bankruptcy and restructuring; track recent filings, motions, and decisions; and implement revisions to bankruptcy rules and forms. For your complimentary registration, please register here.
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.
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NEW CASE SUMMARY ON VOLO: KAYMARK V. BANK OF AMERICA (3D CIR.)
Summarized by Ferve Ozturk of BakerHostetler
The Third Circuit ruled that the plaintiff in a state and federal fair debt collection action sufficiently pled that the disputed fees in the body of a foreclosure complaint against his home constituted an actionable misrepresentation under the Fair Debt Collection Practices Act.
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: STUDY EXAMINES CHALLENGES SHAREHOLDERS FACE IN GETTING AN EQUITY COMMITTEE IN BANKRUPTCY
A recent blog post looks at a recent study by Prof. Diane Lourdes Dick at Seattle University School of Law that traces the real challenges shareholders face in getting an equity committee appointed or being taken seriously in bankruptcy. Click here to read the study.
To read more on this blog and all others on the ABI Blog Exchange, please click here.
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