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New Bankruptcy Rules to Take Effect December 1

ABI Bankruptcy Brief
ABI Bankruptcy Brief
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November 16, 2017

 
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NEWS AND ANALYSIS

New Bankruptcy Rules to Take Effect December 1

The majority of rule amendments to the Federal Rules of Bankruptcy Procedure effective Dec. 1 involve consumer cases. One notable change should lead to the creation of a national form chapter 13 plan whose use will be required — unless a local form chapter 13 plan has been adopted in its place. 
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All rule changes effective Dec. 1 will be incorporated into ABI's Interactive Code and Rules website. Be sure to bookmark this page so that you can access ABI’s U.S. Bankruptcy Code and Federal Rules of Bankruptcy Procedure site (law.abi.org), which features recent case summaries from the Collier Bankruptcy Case Updates, provided by LexisNexis.

Commentary: 5 Flaws That Kill Student Loan Collection Lawsuits

Seeking payment on the now-billions of dollars in defaulted private student loan debt, creditors file tens of thousands of lawsuits each year. But those lawsuits often contain legal and factual errors, according to borrowers’ lawyers — and a growing number of judges have upheld their arguments and rejected creditors’ claims, according to a New York Times DealBook blog commentary. The following five defenses have been successfully used to halt student loan collection cases:

1.    The creditor cannot prove that it owns the debt.
2.    The creditor’s business records are not admissible.
3.    The debt is beyond the statute of limitations for collection.
4.    The creditor is not licensed to do business in the jurisdiction.
5.    The creditor failed to comply with court requests for additional information.
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For more on student loan debt and bankruptcy, be sure to pick up your copy of the updated and revised Graduating with Debt: Student Loans under the Bankruptcy Code, Second Edition from the ABI Store!
 

Analysis: How Mt. Gox’s Bitcoin Customers Could Lose Again

When Mt. Gox, the world’s largest bitcoin trading exchange, collapsed in early 2014, more than 24,000 customers around the world lost access to hundreds of millions of dollars’ worth of cryptocurrency and cash. More than three years later, with the price of bitcoin skyrocketing to more than $7,000, not a single customer has recouped a single cent, crypto or otherwise, according to a Reuters analysis today. It’s not clear when they will, either. The failed exchange has become stuck in litigation: bankruptcies in Japan and New Zealand, four in all, plus lawsuits in the U.S. and competing claims from creditors. And although the Mt. Gox bankruptcy trustee recovered digital currency now worth more than $1.6 billion, under Japanese law the exchange’s customers likely will recover only a fraction of that. The problem for Mt. Gox’s thousands of creditors is that under Japanese bankruptcy law, their claims were valued at the market price of bitcoin in April 2014 just before the Tokyo District Court ordered that the exchange be liquidated. At that time, one bitcoin was worth $483. On the basis of the April 2014 value, the claims ultimately approved were fixed at 45.6 billion Japanese yen, currently about $400 million. Based on the current price of bitcoin, Mt. Gox’s bankruptcy trustee is sitting on enough cash to repay creditors whose claims have been approved at more than three times that amount, according to Reuters’ calculation. But that likely won’t happen, according to two Japanese bankruptcy attorneys. In Japan, by law any funds left over in a bankrupt company’s estate after creditors have been paid go to shareholders.
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Commentary: The Pain Ahead for Retail Chains

To look dispassionately at what's plaguing the retail industry and how it can fix its problems, consider a surprising historical parallel: the airline industry, according to a Bloomberg View commentary today. In the 2000s, the airline industry was in terrible shape. US Airways and United Airlines filed for bankruptcy in 2002 in the aftermath of September 11, 2001. Delta Air Lines and Northwest Airlines filed for bankruptcy in 2005, plagued by rising oil prices and competition from low-cost airlines. American Airlines filed in 2011. However, the story of airlines in the current decade is one of record profits, as that wave of bankruptcies created space for the industry to restructure itself. Firms merged, debts were written off, labor contracts were renegotiated, unnecessary hubs in places like Memphis and Northern Kentucky were abandoned, and the management teams that emerged from bankruptcy became laser-focused on shareholder returns rather than market share and capacity growth. This is the future the retail industry is stumbling toward, according to the commentary. Amazon is a big and growing presence in retail, but there's a limit to its growth. The "last mile" problem in delivering retail products, particularly outside of dense and wealthy communities, will remain challenging for the foreseeable future. Amazon's purchase of Whole Foods can be seen as an admission of this hard limit on its past business model. Walmart's stock price hit an all-time high last week, showing that the market realizes there's room for more than one winner in the industry.
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Find out how overleveraged and poorly merchandised stores will continue to disappear in retail's accelerating evolution in this November ABI Journal article.

Retail apocalypse? Experts will examine key issues in the current downturn, and how retailers might survive, during the "Dead Malls Walking" session at ABI's Winter Leadership Conference in Palm Springs, Calif., taking place Nov. 30-Dec. 2. Click here to register.

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Consumer Commission to Wrap Up 2017 Open Meeting Schedule at Winter Leadership Conference

ABI's Commission on Consumer Bankruptcy will hold its final open meeting on December 1 at ABI’s Winter Leadership Conference. The Consumer Commission invites WLC attendees to request time to make an oral statement at this public meeting, and in addition (or alternatively) to submit a written statement to the Commission. To request a time for a public statement or to send a written statement, please use the Commission’s public email address: ConsumerCommission@abiworld.org.

To access the list of topics under consideration by the Commission’s committees and previous hearing statements, please click here. To view written statements made at previous open meetings, please click here.

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BLOG EXCHANGE

New on ABI’s Bankruptcy Blog Exchange: Radical Changes Ahead for CFPB After Cordray Departure

The resignation of CFPB Director Richard Cordray gives President Trump the chance to name a director who could roll back agency rules and supervisory policies, according to a recent blog post.

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

 
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