Consumer Debt

DETROIT LOOKS TO REENGINEER HOW CITY GOVERNMENT WORKS

The nation's largest municipal bankruptcy case revealed a startling level of dysfunction inside Detroit's government, including meter maids who were required to wear pants without pockets to prevent the theft of city funds and a jury-rigged firehouse alarm system that relied on a fax machine, the Wall Street Journal reported yesterday. "We found many practices that made no sense," said Chuck Moore, a consultant from restructuring firm Conway MacKenzie Inc. whose team has been embedded in the city's government for more than a year. As the city prepares to exit bankruptcy court, it will have to learn a new approach to providing basic services while staying within its means. Detroit plans to spend $1.7 billion over the next decade to improve services, earmarking about $400 million to tear down abandoned houses, $100 million toward a more reliable bus system, $260 million to make its streets safer and more than $150 million to upgrade outdated technology. "Detroit's inability to provide adequate municipal services runs deep and has for years," U.S. Bankruptcy Judge Steven Rhodes said in his ruling Friday approving the city's restructuring plan, which calls for cutting $7 billion in debt. "It is inhumane and intolerable, and it must be fixed." The process of re-engineering how Detroit works is expected to be bumpy. Financial experts who examined the city's operations say that Detroit remains burdened by out-of-date union rules, local laws and charter provisions. Consequently, Detroit is facing pressure to change the way it does business. Click here to read the full article (subscription required).

Click here to read the transcript of the Oral Opinion on the Record from the Detroit proceedings. To hear a reading of the transcript, click here.

OPPONENTS SAY DETROIT BANKRUPTCY ILLEGAL, PLAN APPEAL

Critics of Michigan's emergency manager law and Detroit's bankruptcy pledged yesterday to keep up their fight against what they called an illegal and immoral attack on a predominantly African-American city, the Detroit Free Press reported yesterday. The groups alleged that the city's bankruptcy exit plan unfairly benefits financial institutions on the backs of retirees of modest means and the poor. Members of Detroiters Resisting Emergency Management and other activist groups say that Detroit's bankruptcy amounted to wealthy banks and other investors getting off easily while impoverished Detroiters continue to face deep sacrifices, including losing homes and access to affordable water, and enduring cuts to pensions and health care. The group We the People of Detroit has also spoken out against bankruptcy deals that reduced pensions and health care for city workers and retirees while giving creditors valuable city real estate. Detroit Water and Sewerage Department retiree William Davis, a member of the Detroit Active and Retired City Employees Association, said that he and others in his group were formulating appeals of U.S. Bankruptcy Judge Steven Rhodes' ruling. Davis, an African-American, said that black Detroiters are bearing the brunt of the bankruptcy, and that few seem to care. "I personally think they all need to go to jail," Davis said of the leaders behind the bankruptcy. "We think this whole process is illegal and just wrong." Click here to read the full article.

ANALYSIS: CAN YOU REALLY END "TOO BIG TO FAIL"?

Taxpayer bailouts of banks will be a thing of the past once rules being hammered out in Switzerland are implemented, or so regulators would have us believe, according to an analysis in the Wall Street Journal yesterday. The world's 30 biggest and most systemically important banks will have to hold up to a fifth of their risk-weighted assets in equity or debt on which investors can take losses if total loss-absorbing capacity (TLAC) proposals unveiled Monday by the Financial Stability Board, a Basel-based international regulatory committee, are adopted. The plans, which would be set in place in 2019 at the earliest, are intended to avoid the chaos, confusion and public-sector rescues of private institutions that characterized the financial crisis triggered by the Lehman Brothers bankruptcy. Instead, if one of these institutions runs into problems because it's been badly run, shareholders and investors of its riskiest tranches of debt will have to suffer the losses. But if investors know they'll be rescued ahead of time, markets might tend to break down more often on the theory that people who are insured will take greater risks than they might have otherwise taken. Banks are critical to the efficient running of a market economy in ways other firms aren't, so when a financial crisis hits, the ramifications can be widespread and self-sustaining — and bank failures trigger further failures in a domino effect. Given the moral hazard risk, central banks are keen to ensure that banks have enough capital to bear the costs of their own bad judgment rather than shifting them onto the general population — hence, a 16 to 20 percent buffer, although even that understates the true scale of the buffer, according to banking specialists. Firms forced into liquidation typically sell assets at a discount to the going rate. Factoring those losses in, the actual buffer will be as much as a quarter of risk capital. But will it work? Click here to read the full analysis.

DINGED CREDIT? CARD ISSUERS ARE HAPPY TO LEND

Consumers with dinged credit are back in a borrowing mood, and lenders are more than happy to give them new credit cards, CNBC reported yesterday. Since the Great Recession ended five years ago, consumers have been gradually taking on more debt and lenders have been accommodating them, easing up on tighter standards. Much of the growth has been in so-called non-revolving credit, especially car loans, thanks to record-low interest rates. But revolving credit — mainly in the form of credit cards — is picking up. And the biggest growth in new credit cards is coming from subprime borrowers whose credit scores are less than 660, according to the latest Equifax data. Through July of this year, banks handed out cards to 9.8 million subprime consumers, a six-year high and an increase of 43 percent from the same period last year. Lenders are also giving subprime borrowers higher credit limits. Part of the growth is the result of an easing of the tighter standards that followed the 2008 credit bust after the boom of the early-2000s. Now that banks have repaired the damage from billions of dollars in bad debts, they're better able to take on more risk. As they hand out more accounts and higher limits to consumers with lower credit scores, though, lenders face a higher risk that they won't get paid back. As a result, some card issuers are bracing for a fresh round of bad debts by setting aside more in reserve to cover the cost of charging off unpaid card balances. But card companies are largely banking on profits from issuing new credit cards more than offsetting those higher loan losses. Click here to read the full article.

ANALYSIS: WHAT IF THE MUCH-EXPECTED ECONOMIC GROWTH BURST IS ACTUALLY A BUST?

After last Friday's good news of continued job growth and falling unemployment, economists are starting to wonder aloud how soon unemployment will reach its "natural" or "long-term" rate, according to a Wall Street Journal analysis today. If 5 percent unemployment is achieved in 2015, as some predict, how much room will be left for economic recovery? We've been thinking of the U.S. economy as being below its potential for so many years that it comes as a shock when the data suggest that we might be approaching a new normal, according to the analysis. A working paper by Northwestern University economist Robert Gordon in August lays out the case for pessimism. He runs through several scenarios to try to justify optimistic growth forecasts like that of the Congressional Budget Office. During economic recoveries, growth and employment usually rise hand-in-hand. If the unemployment rate is an accurate indicator, Gordon argues, there is little room left for recovery in growth, and there is little room for improvement in the utilization of industrial capacity, which is only slightly below the levels attained during recent expansions. The last hope for a sudden return of growth is an unexpected boost in productivity. That would be welcome, but there is no reason to expect a sudden change. With the distinct possibility that the long-predicted growth burst will never arrive, policymakers should take seriously warnings about unfunded U.S. obligations and should welcome even small tweaks to policy that could improve efficiency by easing regulations on economic activity. Click here to read the full analysis.

Click here to read Robert Gordon's report, "A New Method of Estimating Potential Real GDP Growth: Implications for the Labor Market and the Debt/GDP Ratio."

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."

NOW AVAILABLE FOR PRE-ORDER: BEST OF ABI 2014 BOOK BUNDLE

Now available for pre-order in the ABI Bookstore is the Best of ABI 2014 book bundle containing The Year in Business Bankruptcy and The Year in Consumer Bankruptcy. These must-have references contain the best ABI Journal articles and papers from ABI's top-rated educational seminars, with Spring 2014 ABI Resident Scholar Prof. Charles Tabb selecting the most important developments in business bankruptcy and Fall 2014 ABI Resident Scholar Prof. Lois Lupica choosing important consumer bankruptcy developments. Make sure to log in to the site to get your discounted ABI member pricing. The ABI member price for each book is $50, but take advantage of this bundle offer and save even more! The books will ship in early December. Click here to order.

NEXT FREE COMMITTEE TELECONFERENCE WILL BE TOMORROW'S ASSET SALES COMMITTEE CALL ON CHAPTER 11 COMMISSION PROPOSAL!

Members are encouraged to dial-in and listen to or participate on upcoming ABI Committee conference calls. While committee membership is encouraged, it is not required to join the free teleconferences. Upcoming committee teleconferences include:

- Asset Sales Committee: Wednesday, Nov. 12; 4 p.m. ET
Topic: "Chapter 11 Reform Commission's Consideration of a Proposal to Surcharge Secured Lenders for 363 Asset Sales"
Speakers: Kathryn A. Coleman of Hughes Hubbard & Reed LLP and Gregory A. Bray. Moderator: Risa Wolf-Smith of Holland & Hart LLP.

All committee teleconferences are free to ABI members, and registration is not required. Simply utilize the following dial-in information:

Call in: (712) 432-1500
Participant code: 692933

NEXT ABI LIVE WEBINAR ON NOV. 20 FOCUSES ON PROFESSIONAL FEE CASE BEFORE THE SUPREME COURT

The next abiLIVE webinar will be held on Nov. 20 and will feature a discussion on a case before the Supreme Court that could have a major impact on professional fees for bankruptcy practitioners. In this 75-minute webinar, Thomas J. Salerno of Gordon Silver (Phoenix) and J. Maxwell Tucker of Squire Patton Boggs LLP (Dallas), along with moderator Judge Gregg W. Zive (D. Nev.; Reno, Nevada), will discuss the professional fee issues presented in Baker Botts LLP v. ASARCO LLC, No. 14-103, which was granted certiorari by the Supreme Court on Oct. 2. Click here to register for this important webinar!

ABI MEMBERS IN SOUTHERN CALIFORNIA: DON'T MISS TOMORROW'S SPECIAL TMA EVENT TO BENEFIT THE WOUNDED WARRIOR PROJECT

ABI members are invited to attend TMA Southern California's special fundraiser to support the Wounded Warrior Project and SoCal veteran support groups on Nov. 12 at the Beverly Hilton. Funds raised will benefit the Wounded Warrior Project, Veterans Legal Institute and the Public Law Center. For more information or to attend, please click here.

ABI MEMBERS INVITED TO ATTEND RETIREMENT DINNER FOR BANKRUPTCY JUDGE PETER J. WALSH ON NOV. 19

ABI members are invited to a special retirement dinner on Nov. 19 honoring the Hon. Peter J. Walsh's 50 years of dedicated service to the bench and bar. The event will be held at the Chase Center on the Riverfront in Wilmington, Del., and is being hosted by the Bankruptcy Section of the Delaware State Bar Association and the Delaware Chapter of the Federal Bar Association. Questions should be directed to Karen B. Owens at 302-654-1888. To attend, please go to https://sites-pepperhamilton.vuturevx.com/107/772/uploads/judge-walsh-retirement-dinner-form.pdf

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: SUSQUEHANNA BANK V. USA/IRS (IN RE RESTIVO AUTO BODY; 4TH CIR.)

Summarized by Ann Brogan of Crowley, Liberatore, Ryan & Brogan, P.C.

The Fourth Circuit affirmed the judgment of the U.S. District Court for the District of Baltimore affirming an appeal from the bankruptcy court but reversed the lower court, finding that Maryland's relation back statute applied. Instead, the Fourth Circuit upheld the alternative holding of the district court that the Maryland doctrine of equitable conversion gave the bank deed-of-trust priority over the IRS lien.

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: CRAMDOWN HURDLES, AND HOW TO PLAY THE CLASSIFICATION GAME (OR NOT)

A recent blog post takes a look at what happens when an amended reorganization plan creates separate classes of unsecured creditors, and whether it is always reasonable to do so.

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.

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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2014

November
- abiLIVE Webinar
    Nov. 20, 2014

December
- Winter Leadership Conference
    Dec. 4-6, 2014 | Palm Springs, Calif.
- 40-Hour Mediation Training Program
   Dec. 7-11, 2014 | New York

January
- New Orleans Consumer Bankruptcy Conference
    Jan. 19, 2015 | New Orleans
- Rocky Mountain Bankruptcy Conference
    Jan. 22-23, 2015 | Denver

February
- Caribbean Insolvency Symposium
    Feb. 5-7, 2015 | Grand Cayman, Cayman Islands
- VALCON 2015
    Feb. 25-27, 2015 | Las Vegas

March
- Bankruptcy Battleground West
    March 24, 2015 | Los Angeles, Calif.

ADMINISTRATION’S STUDENT DEBT PLAN WOULD EASE BURDEN, BUT CRITICS SAY IT COULD PROMOTE OVERBORROWING

The White House proposal that the government forgive billions of dollars in student debt over the next decade is supported by student advocates, but critics say that it would expand a program that already encourages students to borrow too much and stick taxpayers with the bill, the Wall Street Journal reported yesterday. The proposal, included in President Barack Obama's budget for next year, would increase the number of borrowers eligible for a program known as income-based repayment (IBR), which aims to help low-income workers stay current on federal student debt. Borrowers in IBR programs make monthly payments equivalent to 10 percent of their income after taxes and basic living expenses, regardless of how much they owe. After 20 years of on-time payments—10 years for those who work in public or nonprofit jobs—the balance is forgiven. Under the program today, most borrowers with loans issued since October 2007 are eligible to participate. The budget proposal—which requires congressional approval—would let all borrowers with pre-2007 loans participate and would make tax exempt any debt forgiven through the program. (Loan forgiveness can be considered taxable income.) Read more. (Subscription required.)

SURVEY: MILLIONS STRUGGLING WITH MEDICAL DEBT

A recent survey found that medical debt continues to weigh on the shoulders of millions of consumers, according to a column in yesterday’s Dallas Morning News. Last year, 41 percent of adults ages 19 to 64 said that they had problems paying medical bills or were paying off medical debt over time, according to a survey by the Commonwealth Fund, a private foundation that promotes improvements in the health care system. Twenty-nine percent of those paying off medical bills said they were carrying more than $4,000 in debt, and 16 percent reported $8,000 or more in medical debt. Gaps in health insurance, inadequate coverage and large medical bills have left millions with medical debt, said Sara Collins, vice president of Affordable Health Insurance at the Commonwealth Fund. The Affordable Care Act, which goes into full effect next year, has improved the situation somewhat, she said. In particular, a provision that allows adult children to remain on their parents’ health insurance policies until they are age 26 has had an impact. Another bill currently being considered in Congress, the "Medical Debt Responsibility Act," would prohibit credit bureaus from using paid-off or settled medical debt collections in determining a consumer’s creditworthiness. The bureaus also would have 45 days from the date the medical debt collection is paid off or settled to expunge the collection from the consumer’s credit report. Read more.

TRANSUNION: CREDIT QUALITY OF MORTGAGE BORROWERS NATIONWIDE HAS IMPROVED

Widely reported mortgage delinquency rates are being weighed down by older mortgages and loans long past due, but more recent mortgages are performing at pre-housing-bubble norms, according to an analysis of national lending data by TransUnion, the Chicago Tribune reported today. In a study of 52 million mortgages, the credit information provider found that mortgages originated before 2009 comprised 50 percent of all outstanding loans and 86 percent of all loans that were 60 days or more past due. That translates to 14.5 percent of loans originated in 2007 falling delinquent within their first three years, compared with only 2.5 percent of mortgages originated in 2010, after the housing bubble burst and lending standards tightened. Read more.

CREDIT-RATING AGENCIES POISED TO AVOID OVERHAUL

Three years after Congress told federal regulators to consider changing the way credit-rating agencies are paid, the industry appears poised to dodge a major overhaul, the Washington Post reported today. The ratings firms have been widely criticized for contributing to the 2008 financial crisis by issuing high ratings to toxic securities backed by residential mortgages. Since then, the way these firms are compensated has come under scrutiny, with critics arguing that the agencies have a conflict of interest because they are paid for their analysis by the very banks and corporations whose products they are rating. One proposal designed to end this “pay to play” dilemma comes from Sen. Al Franken (D-Minn.), who is pushing to have the Securities and Exchange Commission set up an independent board that would assign financial products such as bonds to credit-rating agencies to rate, rather than allow banks and companies to choose which agencies to use. The approach will be debated today when the SEC holds a day-long roundtable to discuss the credit-rating agencies’ business model with industry officials, academics and investor advocates. But several analysts who track the issue say it is unlikely that the SEC will adopt a plan that separates hiring from payment, in part because doing so is not as simple as it appears. Read more.

ANALYSIS: IP TRANSACTIONS NEED SPECIAL CARE WHEN COMPANY IS IN FINANCIAL DISTRESS

In intellectual property licensing deals where one party is in financial distress, practitioners must take particular care as the transaction unfolds, according to experts on the topic, Reuters reported yesterday. IP counsel Daniel Ilan and bankruptcy partner Lisa Schweitzer, both of Cleary Gottlieb Steen & Hamilton, who in 2011 represented Nortel Networks in the $4.5 billion bankruptcy sale of its residual patents, said that caution is especially needed when balancing the fate of intellectual property during bankruptcy. Due to the way that recent transactions are scrutinized by bankruptcy courts for fairness, they may be voided or challenged if they appear to have been made for less than market value, said Schweitzer. If the company seeking to license its IP is financially distressed, including on the verge of bankruptcy, the company that pays for the license must make sure it is paying a fair price for the property, Schweitzer said. U.S. appeals courts have disagreed over whether certain obligations under IP licensing contracts, including the responsibility of the licensor to protect the "quality" of the trademark, constitute obligations that are absolutely necessary in order to complete the contract, Ilan said. Read more.

For more information about intellectual property in bankruptcy or valuation issues in bankruptcy, be sure to pick up a copy of Bankruptcy and Its Impact on Intellectual Property Law, Second Edition and A Practical Guide to Bankruptcy Valuation from ABI's Bookstore.

NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CLASS ACTIONS IN BOTH BUSINESS AND CONSUMER CASES

Class action lawsuits in both chapter 11 and 13 cases are becoming more prevalent. Are you wondering whether your clients’ WARN Act claims would be better pursued against a debtor company in a class action adversary proceeding or in a class proof of claim, or both? If your client has been sued in a debtor’s consumer class action adversary proceeding, do you know the best defenses against class certification? ABI's panel of experts will highlight the case law and explore the potential benefits and pitfalls of class actions by creditors against debtor companies in chapter 11 cases and by debtors/trustees against creditors in chapter 13 cases on May 29 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

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's 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 MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO

ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: BRANIGAN V. DAVIS (IN RE DAVIS; 4TH CIR.)

Summarized by Ann Brogan of Crowley, Liberatore, Ryan & Brogan, P.C.

In two “Chapter 20” cases, the Fourth Circuit affirmed confirmation orders stripping off valueless junior liens against debtors’ property. In a 2-1 ruling, the Court rejected the argument of the chapter 13 bankruptcy trustee that the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 created a per se rule that barred lien-stripping in Chapter 20 cases.

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: FURTHER ANALYSIS 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 post takes a closer look at the Supreme Court's ruling yesterday in Bullock v. BankChampaign NA involving the definition of "defalcation" in 11 U.S.C. § 523(a)(4).

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

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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2013

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
- ABI Live Webinar: Consumer Class Actions
     May 29, 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.

ANALYSIS: NEARLY A THIRD OF COMPANIES THAT FILED FOR CHAPTER 11 DID NOT DISCLOSE PLANS IN ADVANCE

More than two dozen companies in the past five years did not disclose chapter 11 bankruptcy preparations to investors, according to a Wall Street Journal analysis of regulatory filings. The companies, including Eastman Kodak Co. and American Airlines parent AMR Corp., refrained from warning investors about potentially seeking chapter 11 protection from creditors despite facing dire financial straits or, in some cases, hiring restructuring advisers to make the preparations. Some of the firms only disclosed later in court documents that they had laid the groundwork for the filings in advance. The law is murky in this area: Federal securities laws and regulations do not require disclosure of bankruptcy preparations in most circumstances, even though such information could be deemed "material" to investors, according to securities-law specialists. The Financial Accounting Standards Board is working on proposing a rule that would require executives under certain circumstances to be responsible for disclosing issues related to a company's ability to continue as a going concern. Under current rules, auditors determine whether companies must make that sort of disclosure. The "going concern" disclosure is separate from other general bankruptcy-preparation notifications a company could choose to make. Read more. (Subscription required.)

U.S. CONSUMER CREDIT EXPANDS IN SEPTEMBER

Federal Reserve data released yesterday showed that U.S. consumer credit grew $11.36 billion in September, although Americans appeared to use their credit cards more sparingly, Reuters reported yesterday. So far this year, overall consumer credit has expanded in eight of nine months. Nonrevolving credit, which includes student and auto loans, rose $14.27 billion in September. Student loans made by the government rose 27.9 percent in the 12 months through September, slightly less than the 12-month growth posted through August. The figures also showed a contraction in revolving credit, which mostly measures credit card use. That category dropped to $2.90 billion in September. Read more.

TARIFFS UPHELD, BUT MAY NOT HELP U.S. SOLAR INDUSTRY'S STRUGGLES

Though the U.S. International Trade Commission decided yesterday to uphold tariffs of about 24 to 36 percent on most solar panels imported from China, the action might not do much to aid the financially struggling U.S. solar panel industry, according to a report from today's New York Times. Domestic solar manufacturers said that the duties, to be in place for five years, would make up for unfair business practices by Chinese companies that had harmed the domestic market and allow homegrown companies to hire more workers and thrive. Because the duties apply to panels made of Chinese-produced solar cells, Chinese companies are already avoiding the duties by assembling their panels from cells produced elsewhere, like Taiwan, even if the cell components come from China. The case is also unlikely to have much effect on the central market dynamic that analysts say is driving companies out of business: oversupply. About a dozen panel makers in the United States have gone bankrupt or closed factories since the start of last year. "There have been a few bankruptcies and a few plant closures and so on, but at this point it's just a drop in the bucket," said Shayle Kann, the head of GTM Research, a unit of Greentech Media. Read more.

VIDEO AND PREPARED WITNESS STATEMENTS FROM THE CHAPTER 11 COMMISSION'S 11/3 HEARING NOW AVAILABLE

The video recording of ABI's Chapter 11 Reform Commission’s hearing on 11/3 at TMA's annual conference is now available. Additionally, prepared witness statements can also be downloaded. Click here to watch the video and access the prepared witness statements.

The next public hearing will be Thursday, Nov. 15, at the CFA Annual Convention in Phoenix. For future Commission hearings, please click here: http://commission.abi.org/.

MEMBERS ENCOURAGED TO WEIGH IN ON REAPPOINTMENT OF BANKRUPTCY JUDGE JUDITH WIZMUR

The current 14-year term of office for Judith H. Wizmur, U.S. Bankruptcy Judge for the District of New Jersey at Camden, is due to expire on Sept. 4, 2013. The U.S. Court of Appeals for the Third Circuit is considering the reappointment of the judge to a new 14-year term of office. Members of the bar and the public are invited to submit comments for consideration by the Court of Appeals regarding the reappointment of Bankruptcy Judge Wizmur. All comments should be directed to one of the following addresses: by e-mail at [email protected] or by mail to the Office of the Circuit Executive, 22409 U.S. Courthouse, 601 Market St., Philadelphia, PA 19106-1790. Comments must be received no later than noon on Monday, December 3, 2012.

ABI IN-DEPTH

ELECTION ANALYST AND AUTHOR LARRY SABATO TO DISSECT THE 2012 ELECTION RESULTS AT ABI’S 24TH ANNUAL WINTER LEADERSHIP CONFERENCE!

Don't miss ABI's 24th Annual Winter Leadership Conference, taking place Nov. 29 - Dec. 1 at the JW Marriott Starr Pass Resort & Spa in Tucson, Ariz. This year's conference will feature insights from some of the top insolvency and restructuring experts on issues confronting the profession in 2013, including four specialized tracks geared toward business, consumer, financial advisor and professional development. The featured keynote speaker will be election analyst and author Larry Sabato. ABI's Great Debates a field hearing of ABI’s Commission to Study the Reform of Chapter 11 and 10 committee educational sessions will also be taking place at the conference. Panel sessions include:

Business Track:
• Fraudulent Conveyance Litigation from Soup to Nuts
• Pushing the Envelope
• The Role of the Hedge Fund in Corporate Restructurings: White Knight or Villain?
• Social Networking and Bankruptcy Issues

Financial Advisors Track
• Advising the Corporate Entity
• How to Create Value for the Estate from Your First Client Meeting until Entry of a Final Decree

Consumer Track
• From Infants to Toddlers: Bankruptcy Rules 3001 and 3002.1 Experience First-Year Growing Pains
• The National Mortgage Settlement: How Will It Affect Consumer Bankruptcy Cases?

Professional Development Track
• Litigation Skills: Mock Expert Examination
• “I'm Shocked—Shocked!—to Find that Unethical Conduct Is Going On in Here!”: A Tale of Ethics in Bankruptcy

The conference will also include a final night dinner featuring impressionist, comedian and singer Jeff Tracta, and the sounds of ABI's rock-n-roll band, the Indubitable Equivalents. Register by Monday to save $50 on your registration!

TUCK SCHOOL OF BUSINESS WINS NINTH ANNUAL CORPORATE RESTRUCTURING COMPETITION

A team from Tuck School of Business at Dartmouth College won the Bettina M. Whyte Trophy at the Ninth Annual ABI Corporate Restructuring Competition, held Nov. 1-2 at the University of Pennsylvania Wharton School of Business in Philadelphia. The second-year MBA student winners also shared a $6,000 cash prize. Students from the University of Chicago Booth School of Business won the second-place award of $3,500, while a team from the University of Virginia Darden School of Business received the $2,500 prize for third place. Click here to read the full press release.

LATEST CASE SUMMARY ON VOLO: MICHIGAN STATE UNIVERSITY V. ASBESTOS SETTLEMENT TRUST (IN RE THE CELOTEX CORP.; 11TH CIR.)

Summarized by Jeffrey Snyder of Bilzin Sumberg Baena Price & Axelrod LLP

The Eleventh Circuit ruled that although a district court, at its discretion, may review interlocutory judgments and orders of a bankruptcy court pursuant to 28 U.S.C. §158(a), a court of appeals only has jurisdiction over final judgments and orders entered by a district court or bankruptcy appellate panel sitting in review of a bankruptcy court pursuant to 28 U.S.C. §158(d).

There are nearly 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: SECOND CIRCUIT ADOPTS DEFERENTIAL ABUSE OF DISCRETION STANDARD OF REVIEW FOR EQUITABLE MOOTNESS APPEALS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines how the U.S. Court of Appeals for the Second Circuit, in R2 Investments v. Charter Communications, Inc., recently affirmed the dismissal of an appeal from the confirmation order in the bankruptcy of cable company Charter Communications, concluding that the deferential abuse of discretion standard of review was applicable.

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

Despite the "free and clear" language of Sect. 363(f), purchasers of assets in 363 sales may still be liable for injuries to unidentifiable future claimants. (In re Grumman Olson Indus, SDNY).

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

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?

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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November
- Professional Development Program
     November 9, 2012 | New York, N.Y.
- Detroit Consumer Bankruptcy Conference
     November 12, 2012 | Detroit, Mich.
- Winter Leadership Conference
     November 29 - December 1, 2012 | Tucson, Ariz.

December
- Forty-Hour Bankruptcy Mediation Training
     December 4-8, 2012 | New York, N.Y.

2013

January
- Western Consumer Bankruptcy Conference
     January 21, 2013 | Las Vegas, Nev.

- Rocky Mountain Bankruptcy Conference
     January 24-25, 2013 | Denver, Colo.

February
- Caribbean Insolvency Symposium
     February 7-9, 2013 | Miami, Fla.
- Kansas City Advanced Consumer Bankruptcy Practice Institute
     February 17-19, 2013 | Kansas City, Mo.
- VALCON 2013
     February 20-22, 2013 | Las Vegas, Nev.