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November Commercial Chapter 11 Filings Increase 50 Percent over Previous Year, Total Filings Decrease 2 Percent

ABI Bankruptcy Brief
ABI Bankruptcy Brief
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December 6, 2018

 
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NEWS AND ANALYSIS

November Commercial Chapter 11 Filings Increase 50 Percent over Previous Year, Total Filings Decrease 2 Percent

Commercial chapter 11 filings increased 50 percent in November 2018 over November of last year, according to data provided by Epiq Systems, Inc. The 653 commercial chapter 11 filings registered in November 2018 jumped from November 2017’s commercial chapter 11 filing total of 435. Commercial bankruptcy filings totaled 3,185 in November 2018, a 5 percent increase from the 3,039 commercial filings in November 2017. Conversely, the 58,887 total U.S. bankruptcy filings in November 2018 registered a 2 percent decrease over the November 2017 total of 60,327. Consumer bankruptcies also decreased in November 2018, as the 55,702 filings were 3 percent less than the 57,288 consumer filings registered in November 2017.

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Big Banks Continue to Exit Student Loan Landscape

Five years ago, big banks like JPMorgan Chase & Co. and Bank of America were players in the student loan business, Bloomberg reported. Today, the government now makes about 90 percent of all student loans. Financial institutions in the S&P 500 have sliced their loans by $22.5 billion, or 35 percent, in the five years since 2013. The switch was due to the financial crisis and a new law that allowed the government to directly lend to students. JPMorgan and Bank of America ended their student loan programs entirely, while banks such as Wells Fargo & Co. substantially cut them. Private lenders haven’t disappeared. Regional banks like SunTrust Banks Inc. and Discover Financial Services have stepped up their activity, offering loan consolidation or financing to students whose borrowing needs surpass the federal limit

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Senate Confirms Kraninger to Lead CFPB in Partisan Vote

The Senate today confirmed Kathy Kraninger to be director of the Consumer Financial Protection Bureau (CFPB), granting her a five-year term to lead the polarizing watchdog agency, The Hill reported. Senators voted 50 to 49 along party lines to approve the nomination of Kraninger, an associate director at the White House Office of Management and Budget. The Senate ended debate on Kraninger’s nomination last week by the same 50-49 margin. Kraninger’s confirmation process reflected the fierce partisan divide over the CFPB, which was created by the 2010 Dodd-Frank Wall Street reform law and opened in 2011. Republicans have sought to curb the agency's power, while Democrats have tried to defend its broad power to crack down on predatory lending and other abusive behaviors. Kraninger is seen as close to White House budget chief Mick Mulvaney, who's drastically curtailed the CFPB's oversight powers as its acting director since November 2017.

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Bitcoin Derivatives that Cost $1 Million Will Soon Be Worthless

The biggest-ever bet on Bitcoin options is about to expire into worthlessness, according to a Bloomberg analysis. Purchased for almost $1 million on LedgerX’s trading platform just days after Bitcoin peaked a year ago, the call options have a strike price of $50,000 and an expiry date of Dec. 28, 2018. For the contracts to retain any value at expiry, Bitcoin would need to rally more than 1,200 percent. Ari Paul, a cryptocurrency fund manager at BlockTower Capital, has indicated that he bought the options while simultaneously selling some of his fund’s Bitcoin holdings. In a December 2017 interview with CNBC, Paul said the trade allowed him to lock in some profit, reduce exposure to market declines and potentially earn a big payout if Bitcoin soared above $50,000. When the options were purchased, causing a stir in crypto circles, Bitcoin was trading at about $16,200. The virtual currency has since tumbled to $3,800, mired in one of the worst bear markets since its inception a decade ago.

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Don't miss the "Cryptocurrency, Blockchain and Other Breaking News" session tomorrow at ABI's Winter Leadership Conference. This panel will discuss the impact of cryptocurrencies on the financial industry and how to litigate the complex issues they bring.

Banks May Be Safer in a Debt Crisis, but Investors Aren’t

U.S. and U.K. regulators last week sounded warnings about the knock-on effects for corporate debt markets when large institutional investors face demands for liquidity, the Wall Street Journal reported. These demands could cause more turmoil than in the past because investors now provide much more corporate funding and are more exposed to collateral calls from derivatives. One element of this is leverage: The U.S. Federal Reserve in its debut Financial Stability Report and the Bank of England in its regular one both noted a recent rise in borrowing by hedge funds. Separately, the Fed noted that lending commitments by large banks to nonbank financial firms rose to nearly $1 trillion by the middle of this year from less than $600 billion five years ago. Most of the growth went to closed-ended investment and mutual funds, real estate investment trusts and special-purpose vehicles. The Fed is also concerned about the potential for runs from open-ended mutual funds. A drop in corporate debt prices could prompt a rush to redeem funds, sparking further falls.

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ABI’s Law Site Updated with Dec. 1 Amendments to the Federal Rules of Bankruptcy Procedure

ABI’s Law website has been updated with the amendments and news rules that took effect Dec. 1 to the Federal Rules of Bankruptcy Procedure. Be sure to visit ABI’s Law website to get expert analysis and personalize sections/rules for future reference. For an overview of all amendments and new rules effective on Dec. 1, please click here.
 

Notice to All ABI Members

UNITE HERE Local 11 is a labor union based in southern California. They represent more than 20,000 workers in the hotel and restaurant industry. The union has been attempting to organize employees at the Terranea Resort, site of ABI’s 2019 Winter Leadership Conference (WLC). The union has repeatedly contacted ABI leadership, including members of the board and committee leaders, to urge ABI to cancel or move the WLC. ABI has no plans to move or cancel the event, which would result in substantial legal exposure. If you are contacted by phone or email by representatives of the union, ABI encourages you to ignore rather than engage or respond. ABI regrets this development and will continue to closely follow events at the property. This has no effect on the ABI’s 2018 WLC this week in Scottsdale, Ariz.

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UPCOMING EVENTS
Winter Leadership Conference December 6-8, 2018 Scottsdale, Ariz.
Forty-Hour Mediation Training Program December 9-13, 2018 New York, N.Y.
abiLIVE: Let’s Make a Deal: Negotiating the Asset Purchase Agreement in Bankruptcy December 10, 2018 Online Webinar
Caribbean Insolvency Symposium January 7-9, 2019 Grand Cayman, Cayman Islands
Disruption, Consolidation and Innovation in the Health Care Industry January 17, 2019 Washington, D.C.
Rocky Mountain Bankruptcy Conference January 24-25, 2019 Salt Lake City, Utah
Three-Hour Bankruptcy Mediation Training Program January 25, 2019 Boston, Mass.
Alexander L. Paskay Memorial Bankruptcy Seminar February 6-8, 2019 Tampa, Fla.
The Walter Shapero Moot Court Competition and Symposium February 18, 2019 Detroit, Mich.
VALCON 2019: Cutting-Edge Valuation Solutions February 27- March 1, 2019 Las Vegas, Nevada
Click here for Full calendar
BLOG EXCHANGE

New on ABI’s Bankruptcy Blog Exchange: CFPB Fines Nevada Mortgage Lender over Claims It Deceived Veterans

The CFPB ordered Village Capital & Investment in Henderson, Nev., to issue refunds and pay a penalty for allegedly misrepresenting the cost savings in a refi product, 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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