October Commercial Chapter 11 Filings Increase 19 Percent, Total Bankruptcy Filings Increase 2 Percent

October Commercial Chapter 11 Filings Increase 19 Percent, Total Bankruptcy Filings Increase 2 Percent

November 4, 2021

ABI Bankruptcy Brief

October Commercial Chapter 11 Filings Increase 19 Percent, Total Bankruptcy Filings Increase 2 Percent​​​​​​

The 294 commercial chapter 11 filings recorded in October 2021 represented a 19 percent increase from the 247 commercial chapter 11 filings in September 2021, according to data provided by Epiq. Overall October 2021 business filings increased 4 percent to 1,775 from September’s business total of 1,705. Total bankruptcy filings increased 2 percent, as the 31,477 filings in October 2021 were up from the 30,915 filings recorded in September. The 29,702 consumer filings in October also represented a 2 percent increase from September’s consumer total of 29,210.​​

Jobless Claims Fall to 269,000, Hitting New Post-Lockdown Low​​​​​​

Claims for unemployment insurance fell to a new post-lockdown low during the final week of October, according to data released Thursday by the Labor Department, The Hill reported. In the week ending Oct. 30, initial claims for unemployment insurance totaled 269,000, a decline of 14,000 from the previous week’s revised level of 283,000. New weekly claims have reached the lowest total since March 14, 2020, when roughly 225,000 Americans filed first-time jobless aid applications shortly before the U.S. locked down to contain the spread of COVID-19. Claims have fallen steadily through October after plateauing in September as employers scramble to meet strong consumer demand. While the emergence of the delta variant in late July derailed the labor market, the economy was largely able to avoid layoffs and is poised to see a recovery in job growth after two disappointing months.​​

Analysis: Amendments to the Federal Rules of Bankruptcy Procedure Take Effect December 1, 2021​​​​​​

This year, there are only four bankruptcy rule amendments expected to take effect on Dec. 1, according to an analysis by Robert Eisenbach on JD Supra. They are all relatively minor technical or administrative revisions. Amendments include:

• Rule 2005, addressing release conditions for a debtor taken into custody, was amended to refer to the correct section of Title 18.

• Rule 3007, governing the servicing of claim objections, was amended to make clear that an insured depository institution, now identified only as one “defined in section 3 of the Federal Deposit Insurance Act,” also has to be served pursuant to Rule 7004(h) and its more rigorous service requirements (including certified mail in some situations). Although a minor change, it’s a good reminder of the special service rules that apply to FDIC-insured depository institutions. The Committee Note clarifies that this provision does not apply to credit unions because they’re covered by National Credit Union Administration insurance instead of FDIC insurance.

• Rule 7007.1, involving corporate ownership disclosures, was amended to align with similar disclosure rules in the Federal Rules of Appellate Procedure and the Federal Rules of Civil Procedure. It has been revised to apply only to nongovernmental corporations, including when such corporations intervene in bankruptcy cases and adversary proceedings.

• Rule 9036, governing notice and service, was amended to address high-volume paper-notice recipients and to specify procedures for such recipients related to the Bankruptcy Noticing Center (BNC).

• Although not a Bankruptcy Rule, Federal Rule of Appellate Procedure 6, which governs bankruptcy appeals, was also revised slightly but only to change the reference to a form given the amendments made to Federal Rule of Appellate Procedure Rule 3 (which, in turn, split former Form 1 into Form 1A and Form 1B).

Click here for the full set of rule changes.

Next Week's Mid-Level Professional Development Virtual Program: Hospitality Insolvencies, Artificial Intelligence in Bankruptcy, Ethics and More!​​​​​​

ABI will be presenting its 2021 Annual Mid-Level Professional Development Program, geared specifically toward mid-level insolvency and restructuring professionals, on Nov. 9 via an innovative virtual platform. This specialized one-day event, spearheaded by honorees of ABI’s “40 Under 40” program, will feature a range of interactive educational sessions delivered via an innovative conference platform, capped off by a virtual mix-and-mingle networking event with colleagues. Attendees have the opportunity to earn up to 5 hours of CLE credit, including 1 hour of ethics, 1 hour of technology, 1 hour of skills and 1 hour of law office management. Program session recordings will be viewable until Dec. 9, 2021. Please note that CLE credit is not available for viewing on-demand recorded sessions. Register here!​​

SEC Chairman Says Cryptomarket Won’t Mature Without Oversight​​​​​​

Securities and Exchange Commission Chairman Gary Gensler said the regulator will be “very active” in bringing the digital currency market under its investor protection framework, as the Biden administration increases scrutiny of cryptocurrencies, the Wall Street Journal reported. Gensler’s comments on Tuesday came a day after a Treasury Department-led panel issued a report on stablecoins, which are cryptocurrencies pegged to assets such as the U.S. dollar. The report asks Congress to impose a new regulatory framework around stablecoins and to limit the issuance of such digital assets to banks. Stablecoins are issued by companies such as Tether Ltd. and Circle Internet Financial Inc. and are designed to combine the ability to trade quickly online like bitcoin with the stability of national currencies such as the dollar. But the panel said stablecoins could fuel instability if users come to doubt the value of the underlying assets that keep their prices stable, among other risks. Gensler at the conference compared cryptocurrency technology, which has been around for about 13 years, to a teenager, adding that he believes the technology won’t reach “adulthood” if it isn’t brought within broader regulatory oversight for issues such as anti-money-laundering and tax compliance. (Subscription required.)​​

House Democrats Add Paid Leave, State and Local Tax Deduction to Bill​​​​​​

House Democrats released an updated version of the party’s social spending and climate package, adding back a paid-leave program that had previously fallen out of the bill and including a measure sharply raising the $10,000 cap on the state and local tax deduction, the Wall Street Journal reported. The House bill, which top Democrats want to bring up to a vote in the chamber soon, is the latest proposal in the monthslong negotiations among Democrats over President Biden’s agenda. But it is set to face changes in the Senate, where Sen. Joe Manchin (D-W.Va.) has objected to the inclusion of a paid-leave benefit. The bill includes a variety of measures, proposing a universal prekindergarten program for three- and four-year-olds, subsidies for child care and health care costs, and tax credits for reducing carbon emissions, among other measures. The House text leaves many of those items, as well as proposed corporate minimum taxes and surtaxes on high-income individuals, largely unchanged from the White House’s $1.85 trillion framework released last week. In recent days, Democrats have rushed to resolve a final set of issues on prescription drug pricing, immigration and the capped deduction on state and local taxes. The measure faces an uphill battle in the Senate, where Manchin said yesterday that he continued to oppose its inclusion in the bill. Democratic leaders had stripped it out of the bill because of the West Virginia Democrat’s continued opposition, which other Democrats, several of them women, have pushed him to reconsider. (Subscription required.) ​​

Biden Administration Sets Jan. 4 Vaccination Deadline for Private-Sector Workers​​​​​​

The Biden administration said on Thursday that large companies have until Jan. 4 to ensure that their workforces are fully vaccinated under a sweeping new coronavirus health measure that will cover 84 million private sector workers, the New York Times reported. The plan was first announced in September by President Biden, who directed the Labor Department to invoke its emergency powers over the safety of workplaces to require businesses with 100 or more employees to mandate vaccinations for all employees. Workers who refuse to get vaccinated must undergo weekly testing. Also on Thursday, the administration unveiled new emergency regulations for health care workers, including those at nursing homes caring for elderly and sick residents who are at high risk for infection. All 17 million workers at health care facilities receiving either Medicare or Medicaid funding must be vaccinated by Jan. 4.​​

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New on ABI’s Bankruptcy Blog Exchange: Narrower SBA Direct Lending Plan Fails to Appease Banks, Credit Unions

In a bid to win support among moderate lawmakers for its Build Back Better plan, the Biden administration agreed to more than halve the budget for a proposal that would let the Small Business Administration make direct loans. But even a hefty budget cut isn't enough to appease the banks and credit unions that oppose the plan, 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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