Bankruptcy Brief

Report Big Banks Engaging in Payday Lending

ABI Bankruptcy Brief | March 21 2013
 
  

March 21, 2013

 
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  NEWS AND ANALYSIS   

REPORT: BIG BANKS ENGAGING IN PAYDAY LENDING

A new report from the Center for Responsible Lending found that some of the nation's largest banks are providing short-term loans with interest rates of up to 300 percent, driving borrowers into a cycle of debt, the Washington Post reported today. The study that was released today gives an updated look at the perils of advance-deposit loans offered by Wells Fargo, U.S. Bancorp, Regions Bank, Fifth Third Bank, Guaranty Bank and Bank of Oklahoma. Researchers looked at a sample of 66 direct-deposit advances over a 12-month period. Critics say that the structure of advance-deposit loans promotes a cycle of debt. Account holders typically pay up to $10 for every $100 borrowed, with the understanding that the loan will be repaid with their next direct deposit. If the deposited funds are not enough to cover the loan, the bank takes whatever money comes in, triggering overdraft fees and additional interest. Banks contend that they are offering a vital service to customers at more reasonable price points than storefront lenders, who often charge twice as much as banks. The Consumer Financial Protection Bureau has supervisory and enforcement authority for storefront and bank payday lenders with more than $10 billion in assets. The bureau issued a request for comment last year to gauge consumer and industry concerns. Read more.

In related news, a New York Times editorial today found that even though JPMorgan Chase has instituted new policies intended to shield customers from predatory lenders, which can charge up to 500 percent in interest, banks should be doing more to protect their customers. State and federal banking officials also need to expedite their investigations into the relationship between banks and predatory lenders, according to the editorial, with the aim of developing industrywide regulations that protect the public. New rules that go into effect at JPMorgan in May will limit the overdraft fees charged to customers in situations where the lender tries to collect a payment multiple times. Banks could adopt common practices that would allow customers to close their accounts at any time and deny lenders access to automatic payments in states where predatory loans are illegal. Read more.

JUSTICE DEPARTMENT PROBING BANKS' ROLE IN FRAUD BY CUSTOMERS

The U.S. Justice Department is examining the role financial institutions play in fraud schemes perpetrated by bank customers offering deceptive products, Reuters reported yesterday. Attorneys and investigators in the DOJ's Civil Division are examining banks' possible role in assisting scammers who offer questionable payday loans, false offers of debt relief, fraudulent health care discount cards and phony government grants, according to Michael Bresnick, who heads the department's Financial Fraud Enforcement Task Force. That task force has been focused on pursuing the type of misconduct that fueled the financial crisis, but the new priorities suggest that investigators are looking beyond those cases into other types of financial misconduct that extends to different industries, from payday lending to auto loans. Read more.

WITH FREDDIE MAC SUIT, BANKS FACE BILLIONS MORE IN LIBOR CLAIMS

The fallout from the manipulation of the London interbank offered rate (Libor) has already cost banks $2.5 billion in penalties, but that sum pales in comparison to payouts that will come from private lawsuits, the New York Times DealBook blog reported yesterday. Any finding of liability could be compounded because of the potential for any award to be tripled under the antitrust laws. The latest salvo comes from mortgage finance company Freddie Mac, which has filed a lawsuit in the Federal District Court in Alexandria, Va. It asserts that the company was harmed by collusive activity among the banks that lowered the benchmark interest rate. And where Freddie Mac goes, Fannie Mae, its larger sibling, usually follows, so we can expect it to file a suit seeking damages from Libor manipulation. The three regulatory settlements to date – with Barclays, UBS and the Royal Bank of Scotland — provide much of the evidence Freddie Mac relies on in its complaint. Among the documents now public is a litany of e-mails demonstrating just how the banks worked to lower their Libor submissions to benefit their trading positions and make themselves appear stronger during the height of the financial crisis. Read more.

COMMENTARY: THE PROBLEM WITH "TOO BIG TO FAIL" BANKS

The real issue with "too big to fail" financial institutions resides in the government-provided incentives for banks to get inefficiently big in the first place, according to a commentary in yesterday's Wall Street Journal. In the absence of such incentives, according to the commentary, the risk-averse funding on which banks thrive would not be available to allow banks to create sprawling credit portfolios impossible for regulators or investors in the marketplace to assess. Modern governments, as long as they are assuming the risks of the financial system, find it convenient to have those risks concentrated in a few very large, very handy institutions. A lean solution would be to require banks to hold Treasury paper against their insured deposits, according to the commentary. Those experts who prefer solutions like higher capital requirements maintain that the business of banks would survive, forcing banks to rely more on equity than debt to finance their activities. If so, then experts should also consider that equity markets might erect new business models to finance small businesses and credit-worthy consumers if government-insured deposits were no longer available at all to underwrite such risks. Read the full commentary. (Subscription required.)

ANALYSIS: SYNTHETIC CDOs MAKING COMEBACK

Derivatives that pool credit-default swaps to make magnified bets on corporate debt, popularized in the last credit bubble, are making a comeback as investors search farther afield for alternatives to bonds at record-low yields, Bloomberg News reported yesterday. Citigroup Inc. is among several banks that have sold as much as $1 billion of synthetic collateralized debt obligations (CDOs) this year, following $2 billion in all of 2012, according to estimates from the New York-based lender. Trading in tranches of indexes that use a similar strategy to juice yields rose 61 percent in the past month. Synthetic credit, which amplified the financial crisis five years ago, is enticing investors after corporate-bond yields dropped to less than half the 20-year average. Read more.

LATEST ABI PODCAST EXAMINES EFFECTIVENESS OF CURRENT FINANCIAL EDUCATION PROGRAMS

The latest ABI podcast features ABI Resident Scholar Prof. Scott Pryor speaking with Prof. Lauren Willis of Loyola Law School talking about the effectiveness of current financial education programs. Willis discusses the strengths and weaknesses of current financial education programs and what improvements can be made going forward. Click here to listen to the podcast.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: WHY IS KODAK'S STOCK SOARING?

Despite Eastman Kodak Co. stock shooting up dramatically in a week's time, investors might not have the same long-term profitable outcome that owners of American Airlines shares enjoyed, as Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss on their new video. Click here to watch the video.

DON'T MISS ACB'S FREE EVENT TOMORROW, "THE AUTO BANKRUPTCIES: CHECKING THE REARVIEW MIRROR," ON MARCH 22!

ABI members are encouraged to register for the American College of Bankruptcy's "The Auto Bankruptcies: Checking the Rearview Mirror" on March 22 at Boston College Law School in Newton, Mass. The afternoon event will feature key players looking back at the events that led to GM and Chrysler being placed into bankruptcy and the lessons that have been learned from the cases. Panelists include:

Corinne Ball of Jones Day (New York), who served as lead bankruptcy counsel to Chrysler.

Matthew A. Feldman of Willkie Farr and Gallagher LLP (New York), who served as chief legal advisor to the Obama administration's Task Force on the Auto Industry.

• Hon. Arthur J. Gonzalez, a Senior Fellow at New York University School of Law and formerly the Chief Bankruptcy Judge for the U.S. Bankruptcy Court for the Southern District of New York, who presided over the Chrysler chapter 11 proceedings.

Harvey R. Miller of Weil, Gotshal & Manges LLP (New York), who served as lead bankruptcy counsel to GM.

The moderator will be Mark N. Berman of Nixon Peabody LLP (New York).

Registration for the afternoon event is free, so be sure to sign up today before it reaches capacity!

HOTEL BLOCK FOR ABI'S ANNUAL SPRING MEETING ALMOST SOLD OUT! REGISTER TODAY!

The hotel block at the Gaylord National Resort and Convention Center in National Harbor, Md., is almost sold out for ABI’s 2013 Annual Spring Meeting! Held April 18-21, 2013, ASM features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

• 17th Annual Great Debates
• Mediation: An Irrational Approach to a Rational Result
• Creditors’ Committees and the Role of Indenture Trustees and Related Issues
• Current Issues for Financial Advisors in Bankruptcy Cases
• The Individual Conundrum: Chapter 7, 11 or 13?
• The Power to Veto Bankruptcy Sales
• Real Estate Issues in Health Care Restructurings
• How to Be a Successful Expert
• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors
• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes
• And much more!

The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!

Make sure to register today!

ABI IN-DEPTH

TEE OFF ON THE NEW ABI GOLF TOUR!

Starting with the Annual Spring Meeting, ABI will offer conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour is designed to enhance the golfing experience for serious golfers, while still offering a fun networking opportunity for players of any ability. As opposed to the format used in the regular ABI conference events, Tour participants will "play their own ball." They will be grouped on the golf course separately from other conference golf participants and will typically play ahead of the other participants, expediting Tour play. Tour participants will randomly be grouped in foursomes, unless otherwise requested of the Commissioner in advance of each tournament. Prizes will be awarded for each individual Tour event, which are sponsored by Great American Group. The grand prize is the "Great American Cup," also sponsored by Great American Group, and will be awarded to the top player at the end of the Tour season. Registration is free. Click here for more information and a list of 2013 ABI Golf Tour event venues.

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!

An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

LATEST CASE SUMMARY ON VOLO: STAKER V. JUBBER (IN RE STAKER; 10TH CIR.)

Summarized by Geoffrey Miller from the U.S. Bankruptcy Court for the District of Arizona

Dismissing the appeals of the bankruptcy court's orders remanding two quiet title actions to state court, the Tenth Circuit BAP held that the appeals were moot and that the debtors lacked the requisite standing to appeal the bankruptcy court's orders.

There are more than 800 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: EXAMINATION OF PENSION AND OPEB LIABILITIES FACING MUNICIPALITIES

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines two of the largest issues facing municipalities today: underfunded pensions and unfunded "other" post-employment obligations (OPEB).

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

Who will win the NCAA basketball tournament?

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

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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TOMORROW:

 

 

BBW 2013
March 22, 2013
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COMING UP

 

 

 

BBW 2013
April 5, 2013
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BBW 2013
April 10, 2013
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ASM NAB 2013
April 18, 2013
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ASM 2013
April 18-21, 2013
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NYCBC 2013
May 15, 2013
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ASM 2013
May 16, 2013
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ASM 2013
May 21-24, 2013
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ASM 2013
June 7, 2013
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ASM 2013
June 13-16, 2013
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NE 2013
July 11-14, 2013
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ASM 2013
July 18-21, 2013
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  CALENDAR OF EVENTS
 

2013

March
- Bankruptcy Battleground West
     March 22, 2013 | Los Angeles, Calif.
- ACB's Free Event, "The Auto Bankruptcies: Checking the Rearview Mirror" Program
     March 22, 2013 | Newton, Mass.

April
- ABI Live Webinar: "Legacy Liabilities : Dealing with Environmental, Pension, Union and Similar Types of Claims"
     April 5, 2013
- ABI Live Webinar: "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?"
     April 10, 2013
- "Nuts and Bolts" Program at ASM
     April 18, 2013 | National Harbor, Md.
- Annual Spring Meeting
     April 18-21, 2013 | National Harbor, Md.


  

 

May
- "Nuts and Bolts" Program at NYCBC
     May 15, 2013 | New York, N.Y.
- ABI Endowment Cocktail Reception
     May 15, 2013 | New York, N.Y.
- New York City Bankruptcy Conference
     May 16, 2013 | New York, N.Y.
- Litigation Skills Symposium
     May 21-24, 2013 | Dallas, Texas

June
- Memphis Consumer Bankruptcy Conference
     June 7, 2013 | Memphis, Tenn.
- Central States Bankruptcy Workshop
     June 13-16, 2013 | Grand Traverse, Mich.

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.


 
 
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Commentary Is Richmond Calif.s Mortgage Seizure Scheme Even Legal

ABI Bankruptcy Brief | September 24, 2013
 
  

September 24, 2013

 
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  NEWS AND ANALYSIS   

COMMENTARY: IS RICHMOND, CALIF.'S MORTGAGE SEIZURE SCHEME EVEN LEGAL?

The possibility of using eminent domain to reduce underwater mortgage debt in the city of Richmond, Calif., survived several tough challenges a week ago, according to a Washington Post commentary on Sunday. The Richmond City Council decided to go ahead with the process after a long hearing that could have possibly derailed it. Meanwhile an attempt by Wells Fargo and Deutsche Bank to have the action shut down even before it properly started was tossed out by a U.S. district court. The arguments will now proceed to the two parts of eminent domain law: demonstrating public purpose for the takings and offering fair value. If the case succeeds, according to the commentary, it is likely that other cities that have been hesitant to adopt the tactic will consider moving forward. The biggest remaining worry, according to the commentary, is whether or not this proposal will permanently harm the ability of people in Richmond to obtain new mortgages. One of the main arguments from the banks is that the housing market is recovering at a rapid clip, and if this process scares off lenders, then it could hurt both future homeowners and the fragile economic recovery. Read more.

ANALYSIS: RETHINKING FANNIE, FREDDIE -- AND THE 30-YEAR MORTGAGE

While Congress debates how to replace Fannie Mae and Freddie Mac, an additional question has surfaced as to whether all Americans should continue to have relatively easy access to the pre-payable, 30-year, fixed-rate mortgage, the Wall Street Journal reported yesterday. The 30-year mortgage provides payments that are stable for the life of the loan, which makes finances easier to manage. In many other countries, homes are financed with adjustable-rate mortgages, where payments rise and fall with prevailing interest rates. The government plays an unusually large role in the U.S. mortgage market because banks don't like holding 30-year mortgages. During the 1980s, many savings-and-loan associations failed when rates jumped because the interest they had to pay to depositors soared above the payments they received on those 30-year mortgages (known as "interest-rate risk"). While Fannie and Freddie take on the risk by buying the mortgages from lenders, package them into securities and sell those to investors, they also promise to make investors whole when mortgages default. Those who want the government out of the mortgage business say the 30-year fixed isn't all it's cracked up to be. Because borrowers pay a lot of interest during the first few years of the loan, it's hard to build equity quickly. Defenders, however, say it's the wrong time to push more people into adjustable-rate loans because interest rates are likely to increase over the coming decade. Read more. (Subscription required.)

STRUGGLING SAN JOSE TESTS A WAY TO CUT BENEFITS

San Jose, the third-largest city in California, now spends one-fifth of its $1.1 billion general fund on pensions and retiree health care, and the amount keeps rising, the New York Times reported today. To free up the money, services have been cut, libraries and community centers closed, the number of city workers trimmed, salaries reduced, and new facilities left unused for lack of staff. From potholes to home burglaries, the city's problems are growing. The situation in San Jose is not anywhere near as dire as it is in Detroit or two other California cities, Stockton and San Bernardino, which are already in bankruptcy. But government officials and municipal bankruptcy experts across the country are watching San Jose closely because of a plan to reduce benefits, which was drafted by Mayor Chuck Reed (D) and passed by 70 percent of voters in a referendum last year. The plan is being opposed in court by unions that say that it is illegal under state law. It would introduce a second tier for new city employees involving much lower pension and health benefits. It would also alter pension benefits for existing workers, allowing them to choose either a similar, second-tier benefits plan or to pay significantly more out of their own pockets for the benefits they have come to expect. Read more.

SOME SMALLER BANKS STILL OWE TARP MONEY

Five years after the financial crisis, 113 small to midsize U.S. banks still owe taxpayers about $2.7 billion, turning what was supposed to be a short-term government lifeline into a long-term source of capital, the Wall Street Journal reported today. The banks, which received funds through the Troubled Asset Relief Program (TARP), pose a challenge for the Treasury Department, which is eager to get rid of its financial stakes but is finding many of the banks too weak to forgo government capital. Repaying the government is about to get harder, as quarterly dividend payments owed to the Treasury are set to nearly double to 9 percent. The institutions left in TARP highlight an incongruity in the banking sector: While much of the industry has returned to health, some smaller banks -- particularly those with heavy exposure to commercial real estate loans -- still are clawing their way back. Many of the banks are so weak that they have been unable to make required dividend or interest payments to the government: Seventy-nine of the remaining banks are behind, owing about $217 million to the government, according to the Treasury. Of those, 63 have missed 10 or more payments, which can be a harbinger of trouble: Anchor BanCorp Wisconsin Inc., which had a $110 million TARP infusion, missed at least 17 payments before filing for bankruptcy in August, wiping out the taxpayers' shares in the bank. California's Saigon National Bank owes roughly $1.5 million, plus an additional $390,000 in missed dividend payments. It has missed 18 of those payments, more than any other bank in the program. Read more. (Subscription required.)

ABI'S UNSECURED TRADE CREDITORS COMMITTEE INVITES YOU TO TAKE PART IN ITS OCT. 2 DISCUSSION: CONSIDERATIONS ARISING OUT OF CLAIM-TRANSFER TRANSACTIONS

Members are encouraged to join ABI's Unsecured Trade Creditors' Committee in a discussion on Oct. 2 at 4 p.m. ET about considerations that arise out of claim-transfer transactions. Bankruptcy claim transfers are an active part of the bankruptcy process in today's marketplace, and for this reason, the Judicial Conference of the United States imposed a new fee on each transfer, effective May 1, 2013. The moderator for the call, Neil B. Glassman of Bayard, P.A. (Wilmington, Del.), will lead a discussion focusing on the steps in a claim-sale transaction, standard provisions in the transaction documents, developments in the industry, and tricks and traps creditors' counsel can avoid. If you would like to participate on the committee call, please contact Martha Cannon at [email protected].

ABILIVE WEBINAR NEXT WEEK LOOKS AT THE INTERSECTION OF INTELLECTUAL PROPERTY AND BANKRUPTCY: KODAK, NORTEL AND OTHER CASES

IP experts will shed light on the mysteries of understanding IP law and navigating the often puzzling sales processes, drawing from their experiences in Nortel, Kodak and other important cases, in an abiLIVE webinar on Oct. 3 from 1:00-2:15 p.m. ET. Speakers will include David Berten (Global IP Law Group, LLC; Chicago), Pauline K. Morgan (Young Conaway Stargatt & Taylor, LLP; Wilmington, Del.), Cassandra M. Porter (Lowenstein Sandler LLP; Roseland, N.J.), Kelly Beaudin Stapleton (Alvarez & Marsal; New York) and Christopher Burton Wick (Hahn Loeser & Parks LLP; Cleveland). To register, click here.

FIRST ABI WORKSHOP PROGRAM LOOKS AT RISKY TIMES FOR SECURED LENDERS AND SERVICERS! ATTEND IN PERSON OR VIA LIVE WEBSTREAM

You will not want to miss the abiWorkshops series' inaugural program, "Risky Times for Secured Lenders and Servicers." The program is cosponsored by TMA (Chesapeake), IWIRC (D.C./Greater Maryland) and RMA (Potomac), and will be held on Nov. 6 from 9 a.m. to 3 p.m. ET in the ABI Headquarters Conference Center in Alexandria, Va. The abiWorkshops series provides attendees two great ways of participating: You can register to attend in person at the ABI Conference Center, or you can participate via a live webstream! Topics that will be covered on the Nov. 6 program include:

- Living with the New CFPB Mortgage Servicing Rules
- Business Lending: Navigating What Lies Ahead
- Business Lending: Recent Legal Developments

For more information or to register for the "Risky Times for Secured Lenders and Servicers" abiWorkshop on Nov. 6, please click here.

RECORDING AVAILABLE OF THE ABILIVE WEBINAR EXAMINING THE NEW U.S. TRUSTEE FEE GUIDELINES!

If you were not able to join ABI's recent well-attended abiLIVE webinar examining the U.S. Trustee Fee Guidelines for chapter 11 cases filed on or after Nov. 1, a recording of the program is now available for downloading! A panel of experts, including Clifford J. White, the director of the U.S. Trustee Program, discussed some of the ways the new guidelines could change day-to-day operations in firms, issues relating to the new market rate benchmarks, and how these changes might alter insolvency practice. The 90-minute recording is available for the special ABI member price of $75 and can be purchased here.

ABI GOLF TOUR UNDERWAY; LAST STOP FOR 2013 IS WINTER LEADERSHIP CONFERENCE IN DECEMBER

The 7th and final stop for the 2013 ABI Golf Tour is on Dec. 5 at the Trump National Golf Club, held in conjunction with ABI’s Winter Leadership Conference. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores from the seven ABI events. 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! A 22-handicapper won the tour event at July’s Southeast Bankruptcy Workshop. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: BANK OF AMERICA, N.A. V. ARMSTRONG (IN RE ARMSTRONG; 8TH CIR.)

Summarized by Bruce Weiner of Rosenberg, Musso & Weiner

The Eighth Circuit BAP affirmed the bankruptcy court's ruling that the debt owed by the debtor to Bank of America was nondischargeable under § 523(a)(4). The debtor received insurance checks payable to his business and the mortgage-holder on the property owned by the business. The debtor used almost all the money for personal expenses instead of repairs or paying it to the mortgage-holder. Bank of America succeeded the rights of the mortgage-holder. Because the mortgage-holder was a loss payee on the policy, it was the owner of the insurance proceeds, and therefore when the debtor failed to remit the funds or even inform the mortgage-holder about the funds, he knowingly took funds that he knew belonged to the mortgage-holder. The debtor was not lawfully entitled to use the funds, and therefore the obligation of the debtor to Bank of America was nondischargeable under § 523(a)(4).

There are more than 1,000 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: BANKRUPTCY COURT DECIDES IRS FORM 1099-C CONSTITUTES ADMISSION THAT BANK CANCELLED CLAIM

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post examines a decision from the U.S. Bankruptcy Court for the Eastern District of Tennessee that highlights the interplay between bankruptcy and tax issues. In In re Reed, Judge Richard Stair, Jr. held that an Internal Revenue Service "Cancellation of Debt" Form 1099-C delivered by a bank to a debtor, who as a result of which reported cancellation-of-debt income, constituted an admission by the bank that its claim had been cancelled. The court emphasized that the issuance of Form 1099-C itself did not discharge the debt. Rather, the issuance of the form "reflects" the discharge or cancellation of the debt.

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

Success fees for financial advisors should be prohibited.

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

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 43 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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FRIDAY:

 

 

VFB2013
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COMING UP

 

 

MW2013
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MW2013
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Mid-Level PDP 2013
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Detroit
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Detroit
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CFRP13
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CRC13
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Delaware
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40-Hour Mediation Program
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  CALENDAR OF EVENTS
 

2013

September
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.

October
- abiLIVE Webinar: The Intersection of Intellectual Property and Bankruptcy: Kodak, Nortel and Other Cases
     Oct. 3, 2013
- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum
    Oct. 4, 2013 | Kansas City, Mo.
- Professional Development Program
    Oct. 11, 2013 | New York, N.Y.
- Chicago Consumer Bankruptcy Conference
    Oct. 14, 2013 | Chicago, Ill.
- International Insolvency & Restructuring Symposium
    Oct. 25, 2013 | Berlin, Germany

November
- abiWorkshop: "Risky Times for Secured Lenders and Servicers"
   Nov. 6, 2013 | Alexandria, Va.

  



- Complex Financial Restructuring Program
   Nov. 7, 2013 | Philadelphia, Pa.
- Corporate Restructuring Competition
   Nov. 7-8, 2013 | Philadelphia, Pa.
- Austin Advanced Consumer Bankruptcy Practice Institute
   Nov. 10-12, 2013 | Austin, Texas
- Detroit Consumer Bankruptcy Conference
   Nov. 11, 2013 | Detroit, Mich.
- Delaware Views from the Bench
   Nov. 25, 2013 | Wilmington, Del.

December
- Winter Leadership Conference
    Dec. 5-7, 2013 | Rancho Palos Verdes, Calif.
- ABI/St. John’s Bankruptcy Mediation Training
    Dec. 8-12, 2013 | New York


 
 
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