The Obama administration announced today that its signature consumer-mortgage modification initiative, due to expire at the end of the year, will be extended for two more years, the Wall Street Journal reported today. Senior administration officials said yesterday that, despite a growing housing-market recovery, it did not make sense to dismantle the Home Affordable Modification Program (HAMP) given the real estate bust's lingering damage. About 1.1 million borrowers were still in some stage of foreclosure at the end of April, according to a report released yesterday by CoreLogic, and banks have been completing nearly 52,000 foreclosures a month. Read more. (Subscription required.)
REALTYTRAC: FORECLOSURE SALES TUMBLE IN FIRST QUARTER
Sales of U.S. homes in foreclosure fell in the first quarter, a report from RealtyTrac showed today, the latest data to suggest that the housing market is on the mend, Reuters reported. There were 190,121 properties sold that were in the foreclosure process or already seized by lenders, down 18 percent from the last quarter of 2012 and a 22 percent decrease from the first quarter the year before. That accounted for 21 percent of all home sales, down from 25 percent in the first quarter of 2012. It was also well off the peak of 45 percent seen during the first quarter of 2009 as the housing market was still reeling from its collapse and the global financial crisis. Read more.
U.S. TRUSTEE PROGRAM REPORT SHOWS EFFORTS CONTINUE TO REIN IN EXECUTIVE BONUSES IN BANKRUPTCY
In a self-generated report card, the U.S. Trustee Program said that it has made significant accomplishments in many areas of monitoring the bankruptcy system and expects that its efforts will continue to rein in executive bonuses in bankruptcy, the Wall Street Journal reported yesterday. According to the U.S. Trustee Program, the executive bonus plans that many companies are putting forth for court approval today aren’t true incentives. Instead, trustees argue, the bonus plans set easily achievable goals, making them disguised—and illegal—retention payments. One focus of the program has been to crack down on the bonuses that companies in chapter 11 seek to pay to their executives while other obligations go unpaid—an effort in which trustees have a 66.7 percent success rate, according to a recently filed annual report. The report showed that U.S. Trustees earned better grades for their role objecting to professional fees (94.7 percent success rate), bringing motions to appoint an independent trustee or examiner (90.3 percent), asking that a chapter 11 case be dismissed or converted to a chapter 7 liquidation (97.9 percent) and chapter 11 plan objections (95.3 percent). Read more.
DETROIT SURVIVAL DEPENDS ON SPEED OF DESTRUCTION, ACCORDING TO HOMEBUILDER
Homebuilder William Pulte says that the only way to truly save Detroit and get the housing market functioning properly again is to destroy large swaths of the city as quickly as possible, Bloomberg News reported today. Pulte, a scion of the family that created PulteGroup Inc., the largest U.S. homebuilder by revenue, has already knocked down 10 blocks in Detroit’s Southeast section of the city as part of the nonprofit Detroit Blight Authority program, which Pulte co-created with Detroit Mayor David Bing. It’s a preview of the effort he says is needed to get ahead of the metal strippers and arsonists devastating the city’s property values. Housing markets in Detroit and other rustbelt cities such as Cleveland and Buffalo are hampered by decaying, vacant homes, even as sales of existing homes hover around a three-year high nationally. In addition, pilfering of vacant units in urban areas cut the number of U.S. homes with complete plumbing by about 10.4 percent from 2008 to 2011, according to U.S. Census data compiled by Bloomberg, including 66,722 such homes in Detroit alone. Read more.
FITCH: U.S. STATES' RECOVERY TO REMAIN SLOW, STEADY
Fitch Ratings released a report yesterday stating that the economic recovery will continue at a slow pace in fiscal 2014 for most U.S. states, with federal budget deals and health care reforms creating uncertainty in many budgets, Reuters reported yesterday. For most states, the new fiscal year starts July 1 and legislators and governors are putting the final touches on their budgets. Fitch found that the automatic federal spending cuts that began on March 1, known as "sequestration," have had a limited effect on states' economies and finances. According to a report released yesterday by the Economic Policy Institute (EPI), a liberal-leaning think tank, states will lose out on $5.1 billion in grants this federal fiscal year, which ends in September, under sequestration. In recent years, they have received more than $600 billion in federal grants, according to EPI. Read more.
NEW ABI "BANKRUPTCY IN DEPTH" ON-DEMAND CLE PROGRAM LOOKS AT PRINCIPLES OF PROPERTY OF THE ESTATE: DEMYSTIFYING EQUITABLE INTERESTS
In this 90-minute seminar, Profs. Andrew Kull of Boston University School of Law and Scott Pryor of Regent University School of Law provide an in-depth analysis of a legal principle that has become, in their words, "a long-lost area of the law": § 541 of the Bankruptcy Code. Seeking to demystify what is meant by "property of the estate" and, in particular, the distinction between legal or equitable interests of the debtor in property, Kull and Pryor describe the legal entanglements that ensue when legal title belongs to one person but the equitable title belongs to someone else. The cost of the seminar, which includes written materials and qualifies for 1.5 hours of CLE, is $95. To order or to learn more, click here.
ASSOCIATES: ABI'S NUTS & BOLTS ONLINE PROGRAMS HELP YOU HONE YOUR SKILLS WHILE SAVING ON CLE!
Associates looking to sharpen their bankruptcy knowledge should take advantage of ABI's special offer of combining general, business or consumer Nuts & Bolts online programs. Each program features an outstanding faculty of judges and practitioners explaining the fundamentals of bankruptcy, offering procedures and strategies tailored for both consumer and business attorneys. Click here to get the CLE you need at a great low price!
ABI GOLF TOUR UNDERWAY; NEXT STOP IS CENTRAL STATES BANKRUPTCY WORKSHOP IN JUNE
Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI Golf Tour's first stop at Lake Presidential Golf Club. Next up for the Tour is the famed Bear course at the Grand Traverse Resort at the Central States Bankruptcy Workshop on June 14. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. 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! There's no charge to register or participate in the Tour, and women are most welcome.
ABI IN-DEPTH
NEW CASE SUMMARY ON VOLO: THE MAJESTIC STAR CASINO LLC V. BARDEN DEVELOPMENT INC. (IN RE THE MAJESTIC STAR CASION LLC; 3D CIR.)
Summarized by John Eggum of Foran Glennon Palandech Ponzi & Rudloff
The Third Circuit ruled that the debtor lacked standing to challenge the nondebtor parent/shareholder's revocation of an election to S Corp status. Rejecting cases from other circuits, the Third Circuit found that S Corp status is not a property interest. Alternatively, even if S Corp status were a property interest, S Corp status is not an interest of the debtor entity because the right to revoke S Corp status belongs to the shareholder parent.
There are nearly 900 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: WORKERS’ COMPENSATION BENEFITS IN BANKRUPTCY
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post looks at case law and issues surrounding workers’ compensation benefits in bankruptcy.
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
Bankruptcy courts should implement constructive trusts in any case where applicable state law would recognize them.
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 37 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.
