Puerto Rico Seeks Inspector General to Audit Public Funds

Puerto Rico is seeking to hire an inspector general to audit the use of public funds in a U.S. territory mired in a deep economic crisis and where officials have long been accused of corruption, the Associated Press reported. Yesterday's announcement comes as the island awaits nearly $5 billion in aid approved by Congress in late October to help with post-hurricane recovery efforts. The previous administration had eliminated Puerto Rico's Office of Inspector General and handed those responsibilities to the Office of Management and Budget in what legislators at the time said was a bid to save money and avoid redundancies. Puerto Rico is in its 11th year of recession and trying to restructure $73 billion in public debt as it struggles to recover from Hurricane Maria.

Commentary: Let People Declare Bankruptcy on Their Student Loan Debt

Increasing student loan debt burdens many young people, and the federal government is in part responsible for that, according to a segment of a commentary in the National Review looking at potential GOP policy objectives. Congress has made it almost impossible to discharge student loans in bankruptcy, according to the commentary, making public student loans essentially nondischargeable in bankruptcy in 1998 (it did the same to private student loans in 2005). While the government did not force students to take out the loans, it did put conditions on those loans that are not attached to most forms of debt, according to the commentary. It would be relatively straightforward to make new private and public student loans dischargeable in bankruptcy, according to the commentary. However, there is almost $1.4 trillion in existing student loan debt, and about 11 percent of existing student loans are more than 90 days delinquent, according to the New York Fed. If the federal government wanted to retroactively make student loan debt dischargeable in bankruptcy, it could create a stabilization fund to reimburse private lenders for preexisting loans that former students declare bankruptcy on. Read the full commentary*.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI. 

House GOP Seeks to Preserve Spending Rider to Kill DOL Fiduciary Rule

House Republicans will seek to preserve a provision of the chamber's spending bill that would kill the Labor Department's fiduciary rule as they negotiate a measure to fund the federal government, InvestmentNews reported. Republican and Democratic House and Senate leaders were scheduled to meet on Tuesday to begin talks on legislation that would keep the government open beyond the current continuing resolution that expires on Jan. 19. It's not clear whether lawmakers will have to rely on another short-term spending measure or can hammer out a larger bill that would set the government budget through the end of fiscal 2018, which ends on Sept. 30. A spending bill the House passed last fall included a so-called rider that would gut the DOL rule, which requires brokers to act in the best interests of their clients in retirement accounts.

Commentary: The Death of the Law Firm Bankruptcy?

The end has come for Sedgwick, which announced in November its plans to dissolve at the end of 2017, but if all goes according to plan, the firm won’t head into bankruptcy court. Instead, the U.K.-based law firm Clyde & Co. has agreed to hire a number of Sedgwick lawyers and staff members post-dissolution, according to an American Lawyer commentary. Plenty of former firms have collapsed into bankruptcy, from Thelen and Howrey to Heller Ehrman and Dewey & LeBoeuf. Yet in the half-decade since Dewey’s spectacular demise, other struggling firms, among them Bingham McCutchen, Dickstein Shapiro and WolfBlock, managed to avoid bankruptcy as they wound down, in part by striking deals, like Sedgwick’s, in which large groups of lawyers moved to a single new firm, according to the commentary. Part of the reason for law firms to choose a death of dissolution rather than insolvency stems from the experiences of firms that did go bankrupt, according to lawyers who have worked on law firm insolvencies. Among the lessons learned, according to the commentary, is that formal bankruptcy filings by law firms have set off protracted wind-down processes that mean lots of administrative fees spent on lawyers, accountants and other professional services. Read the full commentary*.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI. 

Latest ABI Podcast Features Authors Discussing Strategies for Pre-Planning and Handling Financially Distressed Vendors

ABI Deputy Executive Director Amy Quackenboss talks with Christopher A. Ward of Polsinelli (Wilmington, Del.) and Ryan G. Foley of Shook Hardy & Bacon, LLP (Philadelphia) about their new publication, Business Creditor’s Guide to Distressed Vendors, Debt Collection and Bankruptcy. Ward, a member of ABI's Board of Directors, and Foley, a member of ABI's inaugural "40 Under 40" class, teamed up to write about options available to help screen a business's customers, plan for worst-case scenarios, and, if the situation does arrive, efficiently handle the financial fallout. The authors discuss strategies for business owners in the event that a major customer files for bankruptcy and leaves behind a large unpaid account receivable. Click here to listen.

To order a copy of ABI’s Business Creditor’s Guide to Distressed Vendors, Debt Collection and Bankruptcy, please click here.

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