FITCH: MARKET CONDITIONS POINT TO INCREASED BANKRUPTCY POSSIBILITIES IN U.S. COAL SECTOR
The deep commodity pricing trough and falling demand could lead to an increase in bankruptcy filings in the U.S. coal industry, according to a new Fitch Ratings report released on Tuesday. Fitch's 2013 outlook for the coal industry is negative, driven by a number of market, pricing, regulatory and macroeconomic conditions. The report anticipates that 2013 will be the trough year for coal pricing. Since 1994, there have been 11 mining company defaults among producers with assets of at least $25 million as of the bankruptcy filing date. Three of these defaults occurred in 2002, driven by the effects of rising operating costs compounded by fixed-price sales contracts at the time. Patriot Coal Corp., which filed for bankruptcy in 2012, was more than 11 times the size (in terms of assets) of the next-largest defaulted coal company. Read more.
ANALYSIS: CDO FAILURE IN 2007 UNDERSCORES CREDIT RATINGS' CONTRIBUTION TO DOWNTURN, ACCORDING TO LAWSUIT
Standard & Poor's confirmed its initial AAA ratings in May 2007 on $772 million of a collateralized debt obligation (CDO) known as Octonion I and within 10 months the Citigroup Inc. deal defaulted, costing investors and the bank almost all their money, Bloomberg News reported yesterday. The CDO, which repackaged mortgage-backed securities and other similar bundles of debt, was among dozens of transactions valued at tens of billions of dollars in 2007 that the ratings firm never should have blessed, the Justice Department said in a lawsuit filed on Feb. 4. Octonion I underscores how inflated grades during the credit boom contributed to more than $2.1 trillion in losses at the world's financial institutions after home loan defaults soared and residential prices plummeted. The U.S. is seeking penalties against S&P and its New York-based parent, McGraw-Hill Cos., that may amount to more than $5 billion, based on losses suffered by federally insured banks. "During this period, nearly every single mortgage-backed CDO that was rated by S&P not only underperformed but failed," Attorney General Eric Holder said. "Put simply, this alleged conduct is egregious, and it goes to the very heart of the recent financial crisis." Read more.
POLL: AMERICANS EXPECT ECONOMIC PAIN TO CONTINUE
A poll released today by the John J. Heldrich Center for Workforce Development at Rutgers University found that Americans remain deeply pessimistic about the nation's economic future nearly four years into the recovery, and the vast majority think it will take "many years" for things to return to the way they were before the downturn, the Washington Post reported today. Nearly one in four respondents said that they were laid off at some point during the past four years, and even larger numbers said that they had immediate family members or close friends who were laid off. Many of those who found new jobs were forced to settle for less. Nearly half said they took a step down in status from their previous jobs, while 54 percent said they have had to accept lower pay. Often, the pay cuts were severe. One-third of re-employed workers said that they swallowed salary cuts of more than 30 percent, while another third said their pay went down between 11 percent and 20 percent. Read more.
ENTREPRENEURS CONCERNED ABOUT DELAY IN SEC'S CROWDFUNDING RULES
Start-up founders, investors and researchers said that entrepreneurs and their young businesses have the potential to accelerate the national economic recovery this year, but only if they get a little help from federal regulators, the Washington Post reported yesterday. "The spirit of the JOBS Act was to encourage innovation and expand the experimental platform of crowdfunding, and its successes or failures should be determined in the marketplace, not by regulators," Kauffman Foundation chief executive Tom McDonnell said. He added that the federal government should remove financial barriers for entrepreneurs and encourage growth and hiring by early-stage businesses. In the case of the Jumpstart Our Business Startups Act, entrepreneurs are growing increasingly concerned in the wake of missed deadlines by the Securities and Exchange Commission, which by the end of last year was supposed to issue new rules allowing businesses to sell equity stakes through "crowdfunding" platforms authorized by the legislation. But as the wait continues, many are worried that regulators will water down the impact of the law by placing too many restrictions on investors. Citing recent discussions with SEC officials, Chance Barnett, CEO of crowdfunder.com, says he expects the agency to issue rules allowing only accredited investors to begin using crowdfunding portals as early as April or May, depending on the level of priority that it is given by incoming SEC Chief Mary Jo White. But it could be much longer before broadbased crowdfunding becomes available to the public and can reach its full economic potential. Read more.
For more on crowdfunding, including the prospect of crowdfunding a chapter 11 plan, be sure to check out the February edition of the ABI Journal.
WATCH BLOOMBERG LAW'S LATEST "BILL ON BANKRUPTCY" VIDEO: DELAWARE TO CONTINUE DOMINATING BANKRUPTCY
The dominance of Delaware and New York bankruptcy courts is secure for another two years, for reasons Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle explain on their new video. Click here to watch the video.
ABI LIVE WEBINAR: REVISITING RADLAX AND HALL – NEW LEGAL AND PRACTICAL IMPACT OF THE DECISIONS
See why this was the top-rated panel at the ABI Winter Leadership Conference last month! Join the expert panel on Feb. 19 from 12:00-1:15pm EST as the summarize and discuss the legal impact and practical implications of the Supreme Court’s 2012 decisions in Radlax and Hall. Participants include:
• Susan M. Freeman of Lewis and Roca LLP (Phoenix)
• Adam A. Lewis of Morrison & Foerster LLP (San Francisco)
• Prof. Charles J. Tabb of the University of Illinois College of Law (Champaign, Ill.)
LAW FIRM BANKRUPTCIES AMONG TOPICS TO BE EXAMINED AT ABI'S 31ST ANNUAL SPRING MEETING
The 2013 Annual Spring Meeting, to be held April 18-21, 2013, at the Gaylord National Resort and Convention Center in National Harbor, Md., features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:
• 17th Annual Great Debates
• Mediation: An Irrational Approach to a Rational Result
• Creditors’ Committees and the Role of Indenture Trustees and Related Issues
• Current Issues for Financial Advisors in Bankruptcy Cases
• The Individual Conundrum: Chapter 7, 11 or 13?
• The Power to Veto Bankruptcy Sales
• Real Estate Issues in Health Care Restructurings
• How to Be a Successful Expert
• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors
• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes
• And much more!
The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!
DON'T MISS THE 9TH ANNUAL WHARTON RESTRUCTURING AND DISTRESSED INVESTING CONFERENCE ON FEB. 22!
The University of Pennsylvania's Wharton School of Business will be holding the 9th Annual Wharton Restructuring and Distressed Investing Conference on Feb. 22 at the Hyatt at The Bellevue in Philadelphia. The theme of this year's conference is “Health of Nations: Distress, Recovery or Revival?” It will offer a unique opportunity to hear from a distinguished gathering of keynote speakers and panelists in their discussion of the current economic climate and issues of debt, investing, and restructuring across the globe. To register, please click here.
NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!
An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!
The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!
LATEST CASE SUMMARY ON VOLO: NEWMAN V. SCHWARTZER (IN RE NEWMAN; 9TH CIR.)
Summarized by Laury Macauley of Lewis and Roca LLP
The Bankruptcy Appellate Panel for the Ninth Circuit affirmed the decision of the bankruptcy court holding that, although the debtor had spent a tax refund prior to the entry of an order for turnover under § 542, he was liable to the chapter 7 trustee for the value of the refund despite lack of present possession of the property.
There are more than 750 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: STOCKTON'S DISPLACED LOW INCOME HOUSING TENANTS SEEK RELIEF FROM STAY, ENFORCEMENT OF SETTLEMENT OBLIGATIONS
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Representatives of displaced low income housing tenants who secured a pre-petition judgment against the city of Stockton have filed a motion in the city’s chapter 9 case for relief from the automatic stay to enforce the judgment, according to a recent post.
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
After Stern, bankruptcy courts do not have the constitutional authority to enter final judgments on fraudulent conveyance claims.
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions
Feb. 19, 2013 Register Today!