JUDGE RULES DETROIT ELIGIBLE FOR CHAPTER 9, SAYS PENSIONS COULD BE CUT
The city of Detroit today officially became the largest municipality in U.S. history to enter chapter 9 bankruptcy after Bankruptcy Judge Steven Rhodes declared that it met the specific legal criteria required to receive protection from its creditors, the Detroit Free Press reported today. The landmark ruling ends more than four months of uncertainty over the fate of the case and sets the stage for a fierce clash over how to slash an estimated $18 billion in debt and long-term liabilities while the city attempts to recover from pervasive blight and violent crime. Judge Rhodes found that the city was and is insolvent. While he found that the city did not negotiate in good faith, he excused this pre-filing requirement because it was impractical under the circumstances. The decision clears the way for pension cuts, though Judge Rhodes emphasized that he won't agree to pension cuts unless the entire plan is fair and equitable. "Resolving this issue now will likely expedite the resolution of this bankruptcy case," he said. Unions announced an immediate appeal. Read more.
ANALYSIS: NEW BOOM IN LEVERAGED LOANS FOR SMALLER BUSINESSES
Wall Street and private-equity firms, hedge funds and other opaque financing pools have grown frustrated by low returns on other forms of debt and have turned instead to riskier but more lucrative bets on ever-smaller companies, the New York Times reported on Thursday. "Weaker credit is traveling down to smaller companies that ordinarily would not have this kind of leverage," said Barbara M. Goodstein, a banking and finance lawyer at Mayer Brown in New York. Leveraged loans became popular before the 2008 collapse but nearly disappeared afterward, regarded as a symbol of unbridled lending. But they started to return in 2010 and are now back in force, with volumes of $548.4 billion this year through Nov. 14, already exceeding the precrisis level of $535.2 billion in 2007. Read more.
VOLCKER RULE SET FOR DEC. 10 APPROVAL BY REGULATORS
At least three U.S. regulators will meet on Dec. 10 to adopt the final version of the Volcker rule, which bans banks from making speculative bets with their own money, Bloomberg News reported yesterday. The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. are scheduling meetings to act on the rule on that date. Two other agencies that need to approve the rule -- the Commodity Futures Trading Commission and the Securities and Exchange Commission -- are trying to arrange Dec. 10 votes as well. The agencies are not required to approve the rule at the same time. "If one or more of the other regulators have set December 10, I would expect us to act on or about that date as part of that coordination," SEC Chairman Mary Jo White said. The agencies' approval would be the final stage in the process of adopting the Volcker rule, a centerpiece of the 2010 Dodd-Frank Act designed to prevent a repeat of the 2008 global credit crisis. The final version is also expected to extend the rule's compliance dates, a move that was sought by Wall Street banks and trade groups. Read more.
ANALYSIS: PUERTO RICO, WITH AT LEAST $70 BILLION IN DEBT, CONFRONTS A RISING ECONOMIC MISERY
The economy in Puerto Rico has been in recession for nearly eight years, crimping tax revenue and pushing the jobless rate to nearly 15 percent, the Washington Post reported on Saturday. Meanwhile, the government is burdened by staggering debt, spawning comparisons to bankrupt Detroit and forcing lawmakers to severely slash pensions, cut government jobs and raise taxes in a furious effort to avert default. The implications are serious for Americans outside of Puerto Rico, both because a taxpayer bailout would be expensive and a default would be far more disruptive than Detroit's record bankruptcy filing in July. Officials in San Juan and Washington, D.C., are adamant that a federal bailout is not on the table, but the situation is being closely monitored by the White House, which recently named an advisory team to help Puerto Rican officials navigate the crisis. The island's problems have ignited an exodus not seen here since the 1950s, when 500,000 people left for jobs on the mainland. Now Puerto Ricans, who are U.S. citizens, are again leaving in droves. Read more.
ABI'S INTERACTIVE CODE AND RULES SITE UPDATED WITH DEC. 1 AMENDMENTS
ABI's Interactive Code and Rules site (http://law.abi.org) has been updated with several changes to the federal court miscellaneous fee schedules that relate to bankruptcy courts and that became effective on Dec. 1. The changes, which were approved by the U.S. Judicial Conference, include:
- A new $176 fee for the filing of motions for the sale of property free and clear of liens under § 363(f).
- An increase in the records-retrieval fee from $53 to $64 for the first box requested from the Federal Records Center, and a new fee of $39 for each additional box requested.
For the most up-to-date version of the Bankruptcy Code and Rules, be sure to visit ABI's Code and Rules website.
NOW AVAILABLE FOR PRE-ORDER: BEST OF ABI 2013: THE YEAR IN CONSUMER BANKRUPTCY
Now available for pre-order in the ABI Bookstore is Best of ABI 2013: The Year in Consumer Bankruptcy. This must-have reference contains the best ABI Journal articles and papers from ABI's top-rated educational seminars selected by ABI Board Member Alane Becket of Becket & Lee LLP (Malvern, Pa.) to cover the most important developments in consumer bankruptcy for 2013. The book delves into such timely topics as the foreclosure crisis, tax issues, the latest on chapter 13, student loans and much more, and it also features relevant case summaries drawn from ABI's Volo site (volo.abi.org). Make sure to log into www.abi.org to get your discounted ABI member pricing. The book will ship in mid-December. Click here to order.
ABI GOLF TOUR UNDERWAY; LAST STOP FOR 2013 IS THIS WEEK'S WINTER LEADERSHIP CONFERENCE!
The 7th and final stop for the 2013 ABI Golf Tour is on Dec. 5 at the Trump National Golf Club, held in conjunction with ABI’s Winter Leadership Conference. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores from the seven ABI events. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! A 22-handicapper won the tour event at July’s Southeast Bankruptcy Workshop. There's no charge to register or participate in the Tour.
NEXT WEEK'S ABILIVE WEBINAR LOOKS AT HOW TO HIRE THE RIGHT FINANCIAL ADVISORS
ABI's Financial Advisors & Investment Banking Committee is proud to present the next abiLIVE webinar, "How to Hire the Right Financial Advisors," on Dec. 11 from 1-2:15 p.m. ET. The program will provide attendees with an overview and basic understanding of the different types of financial advisors that may be relevant for in- and out-of-court cases. Topics include:
- The different types of financial advisors available;
- The benefits and limitations for each category of advisor; and
- How to select the right advisor for the job.
Speakers on the webinar include:
-Daniel F. Dooley of MorrisAnderson (Chicago)
-Gregory S. Hays of Hays Financial Consulting LLC (Atlanta)
-Ivan Lehon of Ernst & Young (New York)
-Allen Soong of Deloitte CRG (Los Angeles)
-Teri Stratton of Piper Jaffray & Co. (El Segundo, Calif.)
Registration is $75 for ABI members/$175 for non-members. Have a number of colleagues that would like to participate? Take advantage of group pricing for ABI members: register 5 or more and the registration cost drops to $60 per person!
Beginning in January 2014, ABI will institute its first dues increase to the regular dues rate in six years. The $20 increase will ensure that ABI can continue to provide you with the latest and most effective tools available in insolvency information and education. You can lock in 2013 rates, and additional discounts, for up to three years by using a multi-year renewal option (save $75!). You can also save 10 percent on future dues by opting into the automated dues program. To renew your membership and save, please go to renew.abi.org.
ABI LAUNCHES SIXTH ANNUAL WRITING COMPETITION FOR LAW STUDENTS
Law school students are invited to submit a paper between now and March 4, 2014 for ABI's Sixth Annual Bankruptcy Law Student Writing Competition. ABI will extend a complimentary one-year membership to all students who participate in this year's competition. Eligible submissions should focus on current issues regarding bankruptcy jurisdiction, bankruptcy litigation, or evidence issues in bankruptcy cases or proceedings. The first-place winner, sponsored by Invotex Group, Inc., will receive a cash prize of $2,000 and publication of his or her paper in the ABI Journal. The second-place winner, sponsored by Jenner & Block LLP, will receive a cash prize of $1,250 and publication of his or her paper in an ABI committee newsletter. The third-place winner, sponsored by Thompson & Knight LLP, will receive a cash prize of $750 plus publication of his or her paper in an ABI committee newsletter. For competition participation and submission guidelines, please visit http://papers.abi.org.
NEW CASE SUMMARY ON VOLO: BEHRENS V. U.S. BANK NATIONAL ASSOCIATION (IN RE BEHRENS; 8TH CIR.)
Summarized by Bryan Robinson of the Law Offices of Bryan Robinson
The Eighth Circuit Bankruptcy Appellate Panel affirmed the bankruptcy court's order granting the secured creditor relief from the automatic stay to complete its foreclosure proceedings.
There are more than 1,000 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: APPEAL FILED IN ARCAPITA BANKRUPTCY CASE CENTERS ON CHOICE OF LAW
The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A new blog post looks at the appeal filed concerning the choice of law used in the ground-breaking bankruptcy proceedings of Bahrain-based Arcapita Bank B.S.C.(c)
For witness testimony and a video of the hearing, please be sure to visit http://commission.abi.org.
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
A holder of an unstayed judgment, which is subject to an ongoing appeal, can qualify as a petitioning creditor under § 303(b)(1).
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
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.
