Senate Confirms Pamela Pepper as U.S. District Judge

Senate Confirms Pamela Pepper as U.S. District Judge

ABI Bankruptcy Brief | November 11, 2014
 
  

November 20, 2014

 
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SENATE CONFIRMS PAMELA PEPPER AS U.S. DISTRICT JUDGE

Bankruptcy Judge Pamela Pepper will be the first female U.S. district judge for the Eastern District of Wisconsin after the Senate confirmed (95-0) her nomination to the post today, the Milwaukee Journal Sentinel reported today. Judge Pepper replaces the first African-American judge on the court, Charles N. Clevert, who took senior status in 2012, a semiretirement that allows federal judges to draw their salary but manage a reduced caseload. President Barack Obama appointed Pepper for the lifetime position in May, after she was among three names forwarded by a judicial nominating commission formed by Wisconsin Sens. Ron Johnson and Tammy Baldwin. A member of ABI's Board of Directors and ABI member since 2005, Pepper graduated from Northwestern University in 1986 and Cornell Law School in 1989. She clerked for a federal appeals court judge and worked as a federal prosecutor and a private criminal defense attorney before becoming a bankruptcy judge in Milwaukee in 2005. She currently serves as the chief bankruptcy judge. Read more.

LENDERS SHIFT TO HELP STRUGGLING STUDENT BORROWERS

After years of resisting the move, two of the biggest providers of private student loans are easing terms for struggling borrowers by lowering interest rates, extending repayment periods and waiving some balances, the Wall Street Journal reported today. Wells Fargo & Co., which has $11.9 billion of private student loans outstanding, has decided to potentially lower interest rates for all eligible borrowers for the first time starting this month, and it also plans to extend repayment periods starting in February. The moves have the potential to save borrowers thousands of dollars in interest payments. Discover Financial Services Inc., another major lender, is planning to begin modifying loans early next year, and it is considering lowering interest rates and waiving a portion of balances for some of the hardest-hit borrowers. The programs will initially affect a small group of borrowers. Wells Fargo says it expects to modify loans for between 600 and 1,000 customers by the end of next year. SLM Corp., the largest private student lender in the U.S. by loan-origination volume, began offering modifications in 2009, reducing interest rates to as low as 1 percent for delinquent borrowers for periods of as long as two years. The company, known as Sallie Mae, has allowed some struggling borrowers to extend their repayment periods in order to lower their monthly loan payments. Wells Fargo is the second-largest private student lender, followed by Discover. Together, the three firms account for about 30 percent of private student-loan balances. Read more. (Subscription required.)

ANALYSIS: AFTER DETROIT'S CLOSE CALL

As Bankruptcy Judge Steven Rhodes declared that "What happened in Detroit must never happen again" in his landmark Nov. 7 ruling approving the city's bankruptcy exit plan, museum officials might add a corollary: "What happened to the Detroit Institute of Arts must never happen again to another cultural institution," the Wall Street Journal reported today. During the bankruptcy proceedings, city creditors sought permission to get some of the money Detroit owed them through the liquidation of masterpieces from the DIA's city-owned collection. Instead, under the "Grand Bargain" approved by the court, the city is to receive $816 million over 20 years from nonprofit foundations, the state of Michigan and DIA donors, to be used to reduce the cuts to city workers' pensions and to allow for the transfer of ownership of the museum's collection and building from the city to the museum's own nonprofit corporation. The DIA has currently raised some $87 million of its $100 million commitment to the Grand Bargain. The DIA's supporters and museum officials around the country sighed with relief at Judge Rhodes's ruling, which extolled the DIA as "an invaluable beacon of culture" and ringingly declared that "to sell the DIA art would be to forfeit Detroit's future." But there are other museums around the country whose objects are owned, in whole or in part, by government entities, and the DIA's excruciating experience in defending its collection against the predations of the city's creditors should be a wake-up call to them. Read more. (Subscription required.)

SENATOR URGES END TO U.S. CONTROL OVER FANNIE MAE AND FREDDIE MAC

Current Senate Banking Committee Chairman Tim Johnson (S.D.), who wrote a bill to eliminate Fannie Mae and Freddie Mac, yesterday urged Federal Housing Finance Agency director Mel Watt to work to terminate U.S. control of Fannie and Freddie as Congress might never get rid of the two companies, Bloomberg News reported today. "If Congress cannot agree on a smooth, more certain path forward, I urge you, Director Watt, to engage the Treasury Department in talks to end the conservatorship," said Johnson, who is set to retire in December. After the hearing, Watt told reporters that he wouldn't rule out talks with Treasury about ending conservatorship in the long term. Johnson is the first lawmaker to publicly say that regulators may have to take control of the companies' futures. He echoes the predictions of housing analysts that there is no chance that the Republican leadership taking over the Senate will reach an agreement with Democrats and President Barack Obama to reform a system that guarantees affordable mortgages to most Americans. That would leave the overhaul to Watt, who has already begun to make a series of changes, from streamlining operations to transfers of mortgage-bond risk to private investors. Read more.

ANALYSIS: BANKS TAKE DIVERGENT VIEWS ON LENDING FOR RISKY DEALS

After repeated attempts by U.S. regulators to curb lending for debt-laden takeovers, Wall Street banks are still taking divergent views on whether they need to pass on potentially lucrative deals, the Wall Street Journal reported today. Barclays PLC, Bank of America Corp., Goldman Sachs Group Inc. and Royal Bank of Canada's RBC Capital Markets have signed up to provide financing for one of the private-equity bidders vying to buy Swiss packaging company SIG Combibloc from Reynolds Group Holdings Ltd. Citigroup Inc., Credit Suisse Group AG, JPMorgan Chase & Co. and UBS AG, meanwhile, are sitting out the deal on the advice of their internal monitors, concerned that it would earn them a black mark from regulators. At issue is a type of financing used by private-equity firms to take over corporations that could leave a company with a high level of debt that it may have trouble repaying. The divide in the SIG deal highlights how banks differ on how to interpret guidance meant to rein in risky lending, even after regulators issued additional clarification this month. The stakes are high for banks in the SIG deal in a year in which sizable private-equity buyouts that generate big fees for lenders have been relatively scarce. The SIG buyout is expected to value the company at roughly $4.5 billion. In a deal this size, fees could exceed $75 million. Read more. (Subscription required.)

HARVARD LAW SCHOOL LOOKING FOR BANKRUPTCY RESEARCH DIRECTOR

Harvard Law Bankruptcy and Financial Restructuring Program is looking for a Research Director to develop legal research and public policy analysis on important bankruptcy and financial restructuring issues. For more information and to apply, please use the following link: http://bit.ly/1qz9LiC

USTP NOTICE OF PROPOSED RULEMAKING ON CHAPTER 11 MONTHLY OPERATING REPORTS

Section 602 of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) authorizes the U.S. Trustee Program (USTP) to issue rules requiring uniform periodic reports by debtors in possession or trustees in non-small business cases under chapter 11. The USTP just published in the Federal Register a notice of proposed rulemaking seeking public comment on the proposed rule and periodic report forms. The proposed rule is published in the Federal Register at 79 FR 66659 (Nov. 10, 2014) (to be codified at 28 C.F.R. pt. 58). The proposed rule, along with the proposed periodic report forms and instructions, may be viewed on the USTP's website. The proposed rule may also be accessed at www.regulations.gov. All public comments must be submitted on or before January 9, 2015, via www.regulations.gov. Please note that the proposed rule and forms only apply in chapter 11 cases filed by debtors that are not small businesses. Small business debtors are already required to use Official Form 25C, "Small Business Monthly Operating Report."

ABI MEMBERS WELCOME TO ATTEND TRIBUTE DINNER ON DEC. 11 TO HONOR BANKRUPTCY JUDGE STEVEN W. RHODES

ABI members are invited to attend a tribute dinner honoring the 29 years of service of Bankruptcy Judge Steven W. Rhodes of the United States Bankruptcy Court for the Eastern District of Michigan for his commitment to the bench, bar and community. The Tribute Dinner will be held at the Roostertail on the Detroit River and is being hosted by the Bankruptcy Community to honor and celebrate Judge Rhodes' service and career. Please contact David Lerner at (248) 901-4010 for more information. To attend, please go to http://www.cbadetroit.com/events/Judge-Rhodes-USBC-Invite-and-Form.pdf

NEW CASE SUMMARY ON VOLO: MORTON V. YONKERS (IN THE MATTER OF VALLECITO GAS LLC; 5TH CIR.)

Summarized by Craig Geno of Craig M. Geno PLLC

The Fifth Circuit ruled that the chapter 11 trustee could not void overriding royalty interests in a gas lease on lands belonging to the Navajo Nation based solely on the fact that the Navajo Nation had not approved the transfers of overriding royalty interests. The trustee was not the party protected by the applicable provisions of the Navajo Code and thus could not invoke them. The Navajo Code provision at issue was designed to protect the Navajo Nation from exploitation. Finally, the court ruled that only parties to a contract, as a general rule, can raise an assertion of illegality.

There are more than 1,500 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: IS THE FDIC SUBSIDIZING A "TOO BIG TO FAIL" MERGER?

A recent blog post suggested that a government tool for unloading failed bank assets and minimizing FDIC losses may be used as a vehicle to publicly subsidize private gains in the proposed merger between CIT Group and OneWest Bank.

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

A single set of mandatory, uniform federal bankruptcy exemptions should be adopted.

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INSOL INTERNATIONAL

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