Report Bankruptcy Bidder Protections Climbed in 2012

Report Bankruptcy Bidder Protections Climbed in 2012

ABI Bankruptcy Brief | May 30 2013
 
  

June 4, 2013

 
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  NEWS AND ANALYSIS   

REPORT: BANKRUPTCY BIDDER PROTECTIONS CLIMBED IN 2012

A report from Morgan Joseph TriArtisan LLC, an investment bank that focuses on the middle market, found that bankruptcy bidder protections hit their highest level in recent years, the Wall Street Journal Bankruptcy Beat blog reported today. The report found that the average amount of bidder protections a company offered its lead bidder last year was 4.4 percent of the purchase price, while average bidder protections between 2008 and 2011 hovered between 3.5 and 3.7 percent. (They were a low 2.6 percent in 2007, before the economic downturn hit.) Bidder protections include the break-up fee that a company pays its stalking-horse bidder, as well as expense reimbursements, which cover the legal and due-diligence fees a stalking horse incurs as it puts its bid together. The average break-up fee last year was 3.7 percent of the purchase price compared to 2.5-2.9 percent in prior years, while the average expense reimbursement was 2.3 percent versus a past range of 0.4-1.6 percent. Read the full report.

COMMENTARY: A BETTER WAY TO END "TOO BIG TO FAIL"

Big banks and their defenders insist that the changes proposed in the Terminating Bailouts for Taxpayer Fairness Act—which would require them to boost the value of their stock and other equity to 15 percent of the value of their total assets—are unnecessary and would have dangerous consequences for the U.S. economy and our financial competitiveness, according to a commentary by Prof. David Skeel in today's Wall Street Journal. Both of these claims are wrong, according to Skeel, but in making them, the banks have accidentally pointed the way to a far more promising strategy for finally ending "too big to fail." Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) introduced the Terminating Bailouts for Taxpayer Fairness Act on April 24, which would require U.S. financial institutions with more than $500 billion in assets to substantially increase their "equity capital." The banks further insist that Brown-Vitter would force them to cut back their lending to businesses just as the U.S. economic recovery is getting underway, and to shed assets to create the required 15 percent capital buffer. But as Bank of England's Robert Jenkins has argued, it is a widely held myth that banks reduce lending simply because capital obligations are increased. Still, according to Skeel, the giant banks' concerns do suggest a friendly amendment to Brown-Vitter: Rather than force them to fit the same 15 percent capital mode, why not let them choose either to comply with Brown-Vitter's capital requirements, or to downsize to a specific maximize size within five years of the enactment of the legislation? Read the full commentary. (Subscription required.)

LEGISLATION AIMS TO ENSURE MEDICAL-DEBT ACCURACY IN CREDIT REPORTS

Rep. Gary Miller (R-Calif.) on May 24 introduced legislation to give consumers more time to ensure that only accurate medical debt is reported to credit bureaus, according to a press release from Miller's office. H.R. 2211, the "Accuracy in Reporting Medical Debt Act," aims to ensure that consumers have ample time to resolve medical billing questions and potential errors before medical debt can be reported to the credit bureaus. The Accuracy in Reporting Medical Debt Act would delay the ability of a debt collector to report medical debt to a credit bureau if the consumer notifies the debt collector that:

• the consumer is continuing to work with an insurance company;

• the consumer did not know that the debt existed; or

• the consumer has applied for financial assistance.

To read the full copy of H.R. 2211, please click here.

COMMENTARY: SHADES OF 2007 BORROWING

American investors have taken out more margin loans than ever before, indicating that speculative investing has grown among retail investors, reaching levels that in the past indicated that the market was getting to unsustainable levels and might be in for a fall, according to a commentary in Saturday's New York Times. The amount owed on loans secured by investments rose to $384 billion at the end of April, according to data compiled by the Financial Industry Regulatory Authority (FINRA). It was the first time the total had surpassed the 2007 peak of $381 billion, a peak that was followed by the Great Recession and credit crisis. The latest total of borrowing amounts to about 2.4 percent of GDP, a level that in the past was a danger signal. Rising margin debt was once seen as a primary indicator of financial speculation, and the Federal Reserve controlled the amount that could be borrowed by each investor as a way to dampen excess enthusiasm when markets grew frothy. But the last time the Fed adjusted the margin rules was in 1974, when it reduced the down payment required for stocks to 50 percent of the purchase price from 65 percent. That came about during a severe bear market. Read more.

ABI WEBSITE (ABI.ORG) WILL BE DOWN THIS WEEKEND FOR SCHEDULED MAINTENANCE

From 10 p.m. ET on Friday, June 7, through Sunday evening, June 9, the ABI homepage (abi.org) will be down for scheduled maintenance. During this period, members will not be able to access certain features, including registering for conferences, printing and viewing CLE certificates, and purchasing publications. Other ABI sites, like Search.abi.org, Volo.abi.org, Journal.abi.org, law.abi.org, blogs.abi.org and news.abi.org, will be operational during this time, but users may experience limited functionality. ABI intends to limit this downtime as much as possible. If you have any questions, please email [email protected]

NEW ABI "BANKRUPTCY IN DEPTH" ON-DEMAND CLE PROGRAM LOOKS AT PRINCIPLES OF PROPERTY OF THE ESTATE: DEMYSTIFYING EQUITABLE INTERESTS

In this 90-minute seminar, Profs. Andrew Kull of Boston University School of Law and Scott Pryor of Regent University School of Law provide an in-depth analysis of a legal principle that has become, in their words, "a long-lost area of the law": § 541 of the Bankruptcy Code. Seeking to demystify what is meant by "property of the estate" and, in particular, the distinction between legal or equitable interests of the debtor in property, Kull and Pryor describe the legal entanglements that ensue when legal title belongs to one person but the equitable title belongs to someone else. The cost of the seminar, which includes written materials and qualifies for 1.5 hours of CLE, is $95. To order or to learn more, click here.

ASSOCIATES: ABI'S NUTS & BOLTS ONLINE PROGRAMS HELP YOU HONE YOUR SKILLS WHILE SAVING ON CLE!

Associates looking to sharpen their bankruptcy knowledge should take advantage of ABI's special offer of combining general, business or consumer Nuts & Bolts online programs. Each program features an outstanding faculty of judges and practitioners explaining the fundamentals of bankruptcy, offering procedures and strategies tailored for both consumer and business attorneys. Click here to get the CLE you need at a great low price!

ABI GOLF TOUR UNDERWAY; NEXT STOP IS CENTRAL STATES BANKRUPTCY WORKSHOP IN JUNE

Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI Golf Tour's first stop at Lake Presidential Golf Club. Next up for the Tour is the famed Bear course at the Grand Traverse Resort at the Central States Bankruptcy Workshop on June 14. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour, and women are most welcome.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: FADEL V. DCB UNITED LLC (IN RE FADEL; 9TH CIR.)

Summarized by Mark Hudson of Schian Walker PLC

The Ninth Circuit BAP affirmed the bankruptcy court's granting of relief from the automatic stay to permit a purchaser at a foreclosure sale to pursue a forcible detainer action against the debtor in state court and denying motion for reconsideration.

There are more than 900 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: FURTHER EXAMINATION OF THE SUPREME COURT'S RULING IN BULLOCK V. BANKCHAMPAIGN

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post provides further examination of the Supreme Court's ruling on May 13 in the case of Bullock v. BankChampaign, N.A.

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

Bankruptcy courts should implement constructive trusts in any case where applicable state law would recognize them.

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

INSOL INTERNATIONAL

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  CALENDAR OF EVENTS
 

2013

June
- Memphis Consumer Bankruptcy Conference
     June 7, 2013 | Memphis, Tenn.
- Central States Bankruptcy Workshop
     June 13-16, 2013 | Grand Traverse, Mich.
- INSOL’s Latin American Regional Seminar
     June 13, 2013 | São Paulo, Brazil
- Charity Golf Tournament
     June 14, 2013 | City of Industry, Calif.

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 11-14, 2013 | Newport, R.I.
- Southeast Bankruptcy Workshop
     July 18-21, 2013 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
    August 8-10, 2013 | Hershey, Pa.
- Southwest Bankruptcy Conference
    August 22-24, 2013 | Incline Village, Nev.


  


September
- ABI Endowment Golf & Tennis Outing
    Sept. 10, 2013 | Maplewood, N.J.
- ABI Endowment Baseball Game
    Sept. 12, 2013 | Baltimore, Md.
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.

October
- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum
    Oct. 4, 2013 | Kansas City, Mo.
- ABI Endowment Football Game
    Oct. 6, 2013 | Miami, Fla.

November
- Detroit Consumer Bankruptcy Conference
   Nov. 11, 2013 | Detroit, Mich.

December
- ABI/St. John’s Bankruptcy Mediation Training
    Dec. 8-12, 2013 | New York


 
 
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