PUBLIC PENSION TABS MULTIPLY AS STATES DEFER COSTS AND HARD CHOICES
More than 40 states have taken steps in recent years to rein in mounting public employee pension costs that threaten to strangle government services, but pension experts say that while some of those overhauls have whittled away at state shortfalls, many of them have simply deferred their pension costs to the future, the New York Times reported today. And none have come close to closing their pension gaps quickly enough to keep pace with a rapidly aging -- and retiring -- public workforce. The most effective solutions, those experts contend, remain the most politically difficult, and thus the least-often tried: raising taxes substantially, or cutting the future retirement benefits that current public workers will accrue in their remaining years of service, a practice that is routine for companies but illegal for governments in some states and labeled immoral by unions. The clearest evidence that pension overhauls have fallen short is that the gap between the projected cost of the benefits and the money set aside to pay for them has continued to grow -- to $4 trillion this year from $3.1 trillion in 2009, according to Joshua D. Rauh, a finance professor at Stanford University who has written extensively on public pensions but whose projections have been disputed by unions. Read more.
COMMENTARY: THE HEFTY YOKE OF STUDENT LOAN DEBT
At one time, student loans were a clear way to provide economic opportunity to people who might not have been able to attend college otherwise, but increasingly it is becoming obvious that student loans are creating large problems that may persist for decades to come, according to a commentary in the New York Times on Friday. Since 2003, the New York Fed has been using a unique database of consumer credit -- the credit files from Equifax, one of the main credit reporting services. Taking a sample of accounts, the Fed is able to see the trends in both lending and repaying and determine what is happening to people who do, or do not, have student loans outstanding. Until 2009, young adults with student loan debt were more likely to own homes and were more likely to have car loans outstanding than were people of the same age without student loans. Those loans had enabled many of them to obtain college degrees and earn more money, qualifying them for mortgages. Those with student loans generally had better credit scores than those who did not. But now the opposite is true. "Young people with student loans are less likely to buy a house," said Wilbert van der Klaauw, a senior vice president of the New York Fed's research and statistics group. Read more.
On May 30, ABI will be holding a Student Debt Crisis Symposium at the Georgetown University Law Center featuring academics, consumer bankruptcy practitioners, bankruptcy judges, consumers and policy-makers addressing the causes, consequences and possible reform of the student debt problem. For more information or to register, click here.
For an additional perspective of the student crisis and legislative approaches to addressing the problem, make sure to listen to ABI's podcast featuring Sen. Richard Durbin (D-Ill.). The student debt crisis is also the subject of Graduating with Debt: Student Loans under the Bankruptcy Code, available for purchase in the ABI Bookstore.
MUNI MARKET BLASTS DETROIT DEBT PLAN
A pair of bond insurers that carry a chunk of Detroit's unsecured debt condemned the debt adjustment plan that the city filed in bankruptcy court on Friday, saying that it would only lead to more litigation, BondBuyer.com reported on Saturday. The city wants to pay general obligation bondholders 20 cents on the dollar. Pensioners would see recovery rates of around 30 percent on the unfunded portions of their pension plans, and potentially more if an $820 million arts-for-pensions plan put together by the state and a group of foundations is realized. "While we understand that favoring pensioners and discriminating against bondholders might be politically popular, we believe this is contrary to bankruptcy law and will result in costly litigation that will hamper the city's emergence from bankruptcy," said Steve Spencer, financial advisor to bond insurer Financial Guaranty Insurance Co., the city's largest unsecured creditor. Syncora Guarantee, which, with FGIC, insures the city's $1.4 billion of pension certificates, also protested the plan, saying that Detroit emergency manager Kevyn Orr is leaving "more than half a billion dollars" in potential savings on the table by failing to improve city services or boost revenues. Read more. (Registration required.)
PRE-ORDER YOUR COPY OF ABI'S NEWEST PUBLICATION, ADVANCED FRAUDULENT TRANSFERS: A LITIGATION GUIDE
ABI's newest publication, Advanced Fraudulent Transfers: A Litigation Guide, provides insight into the differences between constructive and intentional fraud claims, how the elements of the claims can be proved, and the defenses that are typically raised. Also discussed are some of the modern issues arising in failed leveraged transactions. Written by Edward S. Weisfelner of Brown Rudnick LLP (New York), an active participant in major fraudulent conveyance litigation, the book analyzes such recent cases as Tribune, Lyondell, SemGroup and Tronox, and explores the future of bankruptcy court adjudication of fraudulent conveyance litigation in light of Stern v. Marshall. Advanced Fraudulent Transfers is an indispensable guide for legal and financial professionals who find themselves dealing with the structuring of leveraged deals -- as well as the fallout when those businesses fail. To receive ABI member pricing, be sure to log in to the site prior to ordering. Pre-orders only; the book will ship in late March.
LOOKING TO SEE WHAT IS IN STORE FOR ABI'S 32ND ANNUAL SPRING MEETING? WATCH HERE
DUBERSTEIN GALA AWARDS DINNER ON MONDAY TO PAY TRIBUTE TO BANKRUPTCY JUDGE BURTON LIFLAND AND CHIEF BANKRUPTCY CLERK JOSEPH HURLEY
The Gala Awards Dinner at this year's 22nd Annual Duberstein Bankruptcy Moot Court Competition on March 3 will feature a special tribute to Bankruptcy Judge Burton J. Lifland of the U.S. Bankruptcy Court for the Southern District of New York and Joseph P. Hurley, Chief Bankruptcy Clerk (retired) of the U.S. Bankruptcy Court for the Eastern District of New York. To purchase tickets for the gala or to find out more information, please visit http://www.dubersteingala.com.
LAST WEEK TO TAKE ADVANTAGE OF THE ABI BOOKSTORE CLEARANCE SALE!
To make room for new books in 2014, ABI is having a special Bookstore clearance sale. Now, when you buy either Best of ABI 2013: The Year in Business Bankruptcy or The Year in Consumer Bankruptcy, you can choose a free book from a select list of ABI publications. You'll be able to make your selection when you click "Buy Now" on either edition of the Best of ABI 2013. To purchase the Best of ABI 2013: The Year in Business Bankruptcy, please click here.
But the offer ends at the end of February, so act now to claim your free book! Make your selection when you click "Buy Now" on either edition of the Best of ABI 2013. To purchase the Best of ABI 2013: The Year in Consumer Bankruptcy, please click here.
MONDAY IS THE DEADLINE FOR SUBMISSIONS FOR ABI'S SIXTH ANNUAL LAW STUDENT WRITING COMPETITION!
Law school students are invited to submit a paper between now and March 3, 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 ABILIVE WEBINAR ON MARCH 20 EXAMINES HOW TO DRAFT LOAN WORKOUT AGREEMENTS
The next abiLIVE webinar will take place on March 20 from 1-2:30 p.m. ET and will examine how to draft loan workout agreements. Learn the purpose and legal underpinnings of the various component parts of frequently used workout documents such as forbearance agreements, intercreditor agreements and restructuring/override agreements. The panel will focus on real-world examples of good and bad provisions of workout documents and will provide drafting tips. Group discounts available! Click here to register.
ABI IN-DEPTH
NEW CASE SUMMARY ON VOLO: NEW CASE SUMMARY ON VOLO: BLIXSETH V. YELLOWSTONE MOUNTAIN CLUB LLC, ET AL. (9TH CIR.)
Summarized by David Hercher of Miller Nash LLP
The Ninth Circuit ruled that the bankruptcy judge properly denied a recusal motion. According to the ruling the alleged ex parte communications by the judge were not improper, the judge did not act out of an improper or corrupt motive, and the judge did not make antagonistic or biased statements about the appellant.
There are more than 1,200 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: DETROIT'S PROPOSED PLAN OF ADJUSTMENT -- TWO CRUCIAL QUESTIONS
A recent blog post examines Detroit's plan of adjustment, proposed last Friday by Emergency Manager Kevyn Orr, and poses two crucial questions about the plan.
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
The U.S. Trustee should generally appoint a single creditors' committee in jointly administered bankruptcy cases.
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.
