||NEWS AND ANALYSIS
SUPREME COURT HEARS ORAL ARGUMENT IN MORTGAGE LIEN-STRIPPING CASES
The Supreme Court heard oral argument today in the cases of Bank of America v. Caulkett and Bank of America v. Toledo-Cardona, and its decision later this year could have big implications for the U.S. housing market, the Financial Times reported today. The cases present the Supreme Court with the issue of whether, under Sect. 506(d) of the Bankruptcy Code (which provides that "[t]o the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void"), a chapter 7 debtor may "strip off" a junior mortgage lien in its entirety when the outstanding debt owed to a senior lienholder exceeds the current value of the collateral. The debate in the Supreme Court today centered on the 1992 case of Dewsnup in which the court ruled that a borrower could not reduce a primary mortgage to the value of the property. Bank of America argued that the same logic should apply whether a loan is a primary mortgage or a junior debt. While it was unclear from the judges' questions today how they would rule, several of the nine members, including Justice Antonin Scalia, who dissented in the original Dewsnup decision, hinted that the Court might need to limit or reconsider the Dewsnup ruling itself. At one point, Justice Elena Kagan interrupted Stephanos Bibas, the lawyer representing the people who owned the homes, to say: "My sort of reaction to this case is that these distinctions that you are drawing between partially underwater and fully underwater are not terribly persuasive. But the only thing that may be less persuasive is Dewsnup itself." Click here to read the transcript from today's oral argument.
ANALYSIS: CASH-STRAPPED OIL COMPANIES TURNING TO HIGH-INTEREST DEBT OR BANKRUPTCY
The oil price crash is taking a growing financial toll on companies throughout the industry, forcing some into bankruptcy and others to issue expensive junk bonds to stay afloat, Agence France-Presse reported on Saturday. Shale producer Quicksilver Resources filed for bankruptcy protection on March 17 for its U.S. operations after missing a bond payment, and earlier bankruptcies include a March 3 filing by Cal Dive International, which installs offshore pipelines and platforms. Energy firms are now the top issuers of junk bonds, which require them to pay much higher yields than conventional bonds. On March 5, U.S. Gulf Coast producer Energy XXI issued $1.45 billion in bonds that pay a steep 11 percent, and said that it is planning to use the money in part to pay other lenders. The rise in junk bonds and bankruptcies is the latest sign of stress in the petroleum sector as U.S. crude prices linger at around $45 a barrel, down nearly 60 percent since June. "It is definitely a challenging environment all around for a smaller (lower-rated) name to get a deal done," said Mark Sadeghian, a senior director for energy at Fitch. "They definitely have to pay up quite a bit." Read more.
Looking for more information about the current distress in the oil industry? Read the feature article in the March edition of the ABI Journal, "The New Energy Crisis: Too Much of a Good Thing (Debt, That Is)."
For more on oil and gas bankruptcies, be sure to pick up a copy of ABI's When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy. Click here to order your copy.
U.S. CONSUMER PRICES RISE FOR FIRST TIME SINCE OCTOBER
U.S. consumer prices climbed for the first time in four months in February, potentially reassuring the Federal Reserve that the economic recovery is on track as it considers raising interest rates, the Wall Street Journal reported today. The consumer-price index, reflecting what Americans pay for everything from groceries to housing, rose 0.2 percent in February from the prior month, the Labor Department said today. That marked the first increase since October and the biggest rise since June. Over the past year, overall consumer prices have remained flat while core prices have increased 1.7 percent. Those figures indicate inflation in the U.S. is still subdued, reflecting sluggish demand for goods and services and flagging growth abroad. Many economists expect prices to remain weak in the coming months due to the strong dollar -- which generally lowers the prices of imports -- and low energy prices. Core prices, which exclude volatile food and energy costs, also rose 0.2 percent last month after increasing at the same pace in January. Read more. (Subscription required.)
DON’T MISS THURSDAY’S FREE LIVE WEBINAR, "EYE ON BANKRUPTCY: LEADING BANKRUPTCY OPINIONS FROM 2014"
Thursday’s "Eye on Bankruptcy: Leading Bankruptcy Opinions from 2014" webinar, co-sponsored by Bloomberg BNA and ABI, provides you with analysis to stay current on the bankruptcy news and issues your clients care about. Bill Rochelle, editor-at-large and bankruptcy columnist for Bloomberg News, Chief Bankruptcy Judge Cecelia Morris (S.D.N.Y.), who is also an editor of Bloomberg Law: Bankruptcy Treatise, and Michael Cook from Schulte Roth in New York will discuss recent developments in bankruptcy opinions. This webinar will be the first in a series of monthly presentations designed to keep you up-to-date on changes in bankruptcy and restructuring; track recent filings, motions, and decisions; and implement revisions to bankruptcy rules and forms. Use promotion code "BNAAB15" when checking out to register for this live webinar at no cost.
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ABI'S NEWEST TITLE, CHAPTER 15 FOR FOREIGN DEBTORS, IS AVAILABLE FOR PRE-ORDER!
ABI’s newest title, Chapter 15 for Foreign Debtors, covers all aspects of the UNCITRAL Model Law on Cross-Border Insolvency, as well as chapter 15 of the Bankruptcy Code. The book also provides details about the foreign representatives, avoidance actions, creditor protections, concurrent proceedings, comity and much more. An extensive appendix filled with sample case documents and forms related to chapter 15 proceedings is included. To pre-order your copy at the ABI member price (log-in required) of $75, please click here. (Printed copies will be delivered in April 2015.)
NEW CASE SUMMARY ON VOLO: CURTIS, ET AL. V. PERKINS (IN RE INTERNATIONAL MANAGEMENT ASSOCIATES LLC; 11TH CIR.)
Summarized by David Bury of Stone & Baxter LLP
The Eleventh Circuit affirmed the Georgia District Court's affirmation of the bankruptcy court's admission of critical business summaries and its Ponzi scheme finding. With respect to the evidentiary issues, the court clarified that the summaries were admissible under F.R.E. 1006 as long as the underlying records were made available for inspection and were otherwise admissible themselves.
There are nearly 1,700 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: WHEN IS BANKRUPTCY A GOOD IDEA FOR FINANCIALLY STRUGGLING SENIOR CITIZENS?
A recent blog post explores different scenarios in which a financially struggling senior citizen might consider bankruptcy.
To read more on this blog and all others on the ABI Blog Exchange, please click here.
ORDER YOUR PRINTED COPY OF THE FINAL REPORT OF ABI'S COMMISSION TO STUDY THE REFORM OF CHAPTER 11!
Order your printed copy of the Final Report of ABI's Commission to Study the Reform of Chapter 11! The 402-page Final Report contains more than 200 discrete recommendations of chapter 11 policy reforms. ABI's Commission to Study the Reform of Chapter 11 was established in 2012 with a mission to study and propose reforms to Chapter 11 of the Bankruptcy Code and related statutory provisions. After months of deliberations, the Commission unanimously adopted this report to provide to Congress. For the special price of $40, you will have all the testimony, studies and figures that went into compiling the recommendations at your fingertips! Click here to order.
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