Report Assets Liabilities Decrease with Drop in 2011 Consumer Filings

ABI Bankruptcy Brief | August 28, 2012

August 28, 2012

NEWS AND ANALYSIS

REPORT: ASSETS, LIABILITIES DECREASE WITH DROP IN 2011 CONSUMER FILINGS

Liabilities and assets of debtors decreased along with overall personal bankruptcy filing numbers, according to a report released yesterday by the Administrative Office of the U.S. Courts (AOUSC). The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) requires the annual compilation of statistics by the AOUSC on debtors who are individuals with primarily consumer debts seeking relief under chapters 7, 11, and 13. Compared to 2010 data, the AOUSC found the following decreases among debtors filing for personal bankruptcy in 2011:

• 11 percent decrease in overall filings
• 23 percent decrease in filer assets
• 25 percent decrease in filer liabilities
• 28 percent incidence of repeat filers

To read the AOUSC's full 2011 BAPCPA Report, please click here.

REGULATORS SAY LOAN QUALITY IMPROVING

The credit quality of large loan commitments owned by financial institutions regulated in the U.S. improved in 2012 for the third consecutive year, according to a review by the Federal Reserve and two other regulators, MarketWatch.com reported yesterday. However, the review also added that, despite the progress, poorly originated large loans in 2006 and 2007 "with weak underwriting standard" continued to hurt the portfolio of institutions reviewed. The agencies reviewed loan commitments of $20 million or more in real estate, stocks, notes or bonds extended by American and foreign financial institutions regulated in the U.S. The study noted that so-called nonbank firms, such as hedge funds insurance companies and pension funds, held the smallest share of large loan commitments but the largest share of credits rated "substandard or doubtful" or considered uncollectible and of little value. According to the report, institutions held roughly $2.8 trillion of large loans, with roughly 8,700 credit facilities going to roughly 5,600 borrowers. That number is up from about $2.5 trillion in 2011. Read more.

FSOC MAY HAVE TO MOVE SLOWLY ON MONEY FUNDS

Though the Securities and Exchange Commission said on Wednesday that it would have to drop its proposed overhaul of the money market mutual fund industry, regulators are contemplating pursuing money fund overhaul through the Financial Stability Oversight Council (FSOC), the New York Times DealBook blog reported on Saturday. The FSOC was set up by the Dodd-Frank legislation to identify systemic risks and then set in motion plans to remove those risks. The council, which is led by Treasury Secretary Timothy F. Geithner, has said that money funds are a concern, and backed the reforms scuttled at the SEC. While the FSOC certainly has the freedom and power to take up the issue of money market funds, some experts question whether the council will officially designate money funds as a risk, especially in the last few months before the presidential election. Read more.

CONSOLIDATION OF SMALL BANKS ON THE RISE

A growing number of small- and medium-sized banks are merging as shrinking profit margins, tepid loan demand and low interest rates place pressure on their operations, the Washington Post reported today. Community banks also are contending with the added cost of complying with new regulations stemming from the Dodd-Frank financial reform law. Industry watchers say all of these factors will spur buying activity in the coming quarters. M&T Bank, with $81 billion in assets, became the latest bank buyer, with a $3.7 billion deal yesterday to acquire Hudson City Bancorp, a $43.6 billion community bank in Paramus, N.J. Banking analyst Bert Ely said that the Dodd-Frank Act places the heaviest burden on banks with less than $500 million in assets, which will likely be the primary source of deal activity. Small banks, he said, will be especially taxed by new requirements to keep 5 percent of the loans they issue through mortgage-backed securities on their books. He also thinks smaller banks will be discouraged by higher and stricter capital requirements. Read more.

U.S. HOME PRICES CONTINUE UPWARD MOVE IN JUNE

The S&P/Case-Shiller 20-city composite index showed that U.S. home prices bounced higher for a second month in June, MarketWatch.com reported today. The S&P/Case-Shiller index registered a 2.3 percent advance in June, matching upwardly revised gains in May. Prices in the second quarter of 2012 gained 6.9 percent compared to the first quarter.All 20 cities in the index managed monthly gains, including a 6 percent surge in hard-hit Detroit and a 4.8 percent advance in Minneapolis. Read more.

For a historic look at housing prices, be sure to check out ABI’s Chart of the Day to browse house price data since 1976.

ABI IN-DEPTH

ABI MEMBERS WELCOME TO ATTEND ACB'S FREE HALF-DAY "BANKRUPTCY: BACK TO THE FUTURE" PROGRAM IN SEPTEMBER

The American College of Bankruptcy invites you to attend a free half-day program on Sept. 28 in Chicago for a discussion of many of the challenging topics facing current bankruptcy and reorganization professionals. Topics to be addressed include recent decisions of the U.S. Supreme Court and Court of Appeals, important work of the Advisory Committee on Bankruptcy Rules, and developments in the field of bankruptcy ethics. The nation’s leading judges, academics and bankruptcy professionals are among the speakers for the program. While there is no cost to attend, seating is limited, so early reservation is suggested. For more information and to register, please click here.

LATEST CASE SUMMARY ON VOLO: IN RE DAHLGREN (3D. CIR.)

Summarized by Emil Khatchatourian of the U.S. Bankruptcy Court for the Eastern District of California

Affirming the district court ruling, the Third Circuit held that a debtor's plan, as submitted by his counsel, would have voided the state court's sale order issued prior to the bankruptcy filing. Without deciding whether the Rooker-Feldman doctrine actually applied, the debtor's attempt to confirm a plan that contemplated a forced sale was improper.

There are more than 600 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: SIXTH CIRCUIT RULES THAT TORTIOUS USE OF PROPERTY IS NOT PROTECTED BY THE AUTOMATIC STAY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Noting that the “commission of a tort is not protected by the Bankruptcy Code,” a recent blog post examined the ruling by the U.S. Court of Appeals for the Sixth Circuit that found that the automatic stay imposed by section 362(a) of the Bankruptcy Code did not apply to a contempt proceeding against a debtor for violation of an injunction. The injunction related to, among other things, a suit for trademark infringement and trademark dilution.

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

Client matters left unfinished at a firm when it files for bankruptcy are the property of the defunct firm.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

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Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 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.

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