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INSOL International Endorses ABI's Chapter 11 Reform Commission Recommendations for Restructuring Small and Medium-Sized Enterprises

ABI Bankruptcy Brief
ABI Bankruptcy Brief
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April 5, 2018

 
ABI Bankruptcy Brief
 
 
 
 
NEWS AND ANALYSIS

INSOL International Endorses ABI's Chapter 11 Reform Commission Recommendations for Restructuring Small and Medium-Sized Enterprises

In a report titled “Restructuring Options for MSMEs and Proposals for Reform,” INSOL International endorsed recommendations proposed by ABI's Commission to Study the Reform of Chapter 11 for restructuring small and medium-sized enterprises (SMEs). “The ABI’s changes appear geared to making the Chapter 11 process more efficient and less expensive for small and medium-sized business enterprises,” according to the report. “The United States Bankruptcy Code presents an excellent framework for small and medium-sized businesses to reorganize (or liquidate); however, too few small and medium business enterprises are taking advantage of Chapter 11 because of the perceived (and real) concerns of cost and complexities of the process.”
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First Quarter Bankruptcy Filings Down 4 Percent from 2017, Commercial Chapter 11 Filings Increase 22 Percent

Total U.S. bankruptcy filings fell 4 percent in the first calendar quarter (Jan. 1 - March 31) of 2018 from the same period in 2017, according to data provided by Epiq Systems, Inc. Bankruptcy filings totaled 187,331 in the first quarter of 2018, down 4 percent from the 195,283 filings registered in the first calendar quarter of 2017. The 178,004 total noncommercial filings recorded in the first calendar quarter of 2018 represented a 4 percent decrease from the 2017 total of 185,850. Total commercial filings fell slightly during the first three months of 2018, as the 9,327 filings were down 1 percent from the 9,433 filings during the same period in 2017. However, total commercial chapter 11 filings increased 22 percent from 1,280 the first quarter of last year to 1,562 during the first three months of 2018.
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States Target Consumer Issues as Federal Oversight Eases

States such as Pennsylvania and Virginia are targeting student loan servicing, payday lending and other financial services, areas where federal consumer regulators are easing oversight under Trump-appointed leadership, the Wall Street Journal reported. Pennsylvania Attorney General Josh Shapiro set up a consumer financial protection division within his office last year. He hired a former Consumer Financial Protection Bureau enforcement attorney to lead the group, sued student loan servicing company Navient Corp., and now is investigating several Philadelphia financial institutions suspected of racial discrimination in mortgage lending. The Navient litigation mirrors a case filed by the CFPB during the Obama administration, alleging the student loan servicing company created obstacles to tens of thousands of borrowers repaying their debts — allegations the company has denied. Washington and Illinois have also filed suits against Navient. Since the Trump administration took over the CFPB in November, the bureau has temporarily frozen new regulations and instituted a review of enforcement activities under acting director Mick Mulvaney, a longtime critic of the agency. The CFPB hasn’t filed any new enforcement actions since November.
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Student loans in bankruptcy is one of many issues being examined by ABI’s Commission on Consumer Bankruptcy. Be sure to attend the Commission’s last open meeting on April 20 at the Annual Spring Meeting. Click here to register.

Commentary: Why Elizabeth Warren’s Effort to Hold Bank Executives Accountable May Fall Short

A persistent complaint about the government’s response to the financial crisis has been that the executives who helped push the economy to the brink were not charged with crimes, according to a commentary in the New York Times. Prosecutors have not been able to prosecute managers with the usual tools for pursuing white-collar cases, like wire fraud or false statements, because defenses of ignorance or good faith could not be overcome. Sen. Elizabeth Warren (D-Mass.) is the latest official to try to change the calculus for holding executives accountable for misconduct at financial institutions. She introduced the “Ending Too Big To Jail Act” last month. The name comes from the notion, bolstered in 2013 by then-Attorney General Eric H. Holder Jr., that some banks were so large that it was “difficult for us to prosecute them.” The legislation requires officers of any bank with more than $10 billion in assets to certify each year that they have not uncovered any criminal conduct or civil fraud to the Justice Department. Even if it did pass — which seems unlikely in the current anti-regulation environment — the proposed certification requirement is unlikely to result in a wave of prosecutions, according to the commentary. The criminal law is a blunt instrument for pursuing corporate misconduct, and executives are experts at keeping problems at arm’s-length, or at least maintaining the kind of plausible deniability that makes it difficult to prosecute them.
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Join thought leaders from academia and the bench, representatives from U.S. and European governmental agencies and private organizations on April 19 for a symposium to examine the policies, strategies and proposals erected in the 10 years since the Financial Crisis. Click here for more information and to register.


Nominations Now Being Accepted for the 2018 Class of ABI's “40 Under 40” Program!

Nominations are now open for ABI's “40 Under 40” program. This program recognizes outstanding young insolvency professionals who are driven by success, motivated by challenges and are role models for their peers. If you are, or know of, a dynamic insolvency professional who is committed to growth and excellence both professionally and in your community, this is one opportunity not to be missed! Visit the website for additional details on nominations and applications.

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BLOG EXCHANGE

New on ABI's Bankruptcy Blog Exchange: Lenders Punished in Veterans' Mortgage Crackdown

Two lenders have been punished by Ginnie Mae amid its concern that they enabled costly rapid refinances of veterans' home loans. 

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

 
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