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Report Many Cant Pay Their Direct Federal Student Loans

ABI Bankruptcy Brief | August 6, 2013
 
  

August 6, 2013

 
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  NEWS AND ANALYSIS   

REPORT: MANY CAN'T PAY THEIR DIRECT FEDERAL STUDENT LOANS

Just about four in 10 borrowers with direct federal student loans are paying them back, according to a report released yesterday that offers the first comprehensive snapshot of the program since the government created it in 2010, the Wall Street Journal reported today. Many of the 27.8 million borrowers with these newer direct federal loans aren't yet required to make payments: About 35 percent are still in school or within a six-month grace period after graduation, the report said. But about 18 percent are in programs designed to help distressed borrowers or have returned to school. Nearly 8 percent are in default, meaning the borrower hasn't made a payment in at least a year, according to the Consumer Financial Protection Bureau, the federal regulator that released the report. The report indicates that a significant number of borrowers in the new program are unable to repay. Excluding borrowers who don't yet have to make payments because they are still in school or within the grace period, more than a fifth -- about 22 percent -- are in default or forbearance. Read more. (Subscription required.)

Click here to read the CFPB's report.

COMMENTARY: MOTOWN'S PENSION SHOWDOWN

Detroit's unions have found an unlikely ally in Michigan's Republican Attorney General Bill Schuette, who has taken up their argument that the state constitution precludes federal bankruptcy court from reducing pension benefits, according to an editorial in the Wall Street Journal today. If this view holds, according to the editorial, unions and politicians in financially strapped cities will be able to use chapter 9 as a new political default to shed their bond debts. The Detroit case is likely to set precedents because it's the first large city that has tried to force haircuts on pensioners through bankruptcy. Politicians in the bankrupt cities of Vallejo and Stockton, Calif., sidestepped the issue of whether federal bankruptcy law pre-empts state pension protections after the California Public Employees' Retirement System threatened an expensive legal fight. But with $3.5 billion in unfunded pension liabilities, Detroit can't afford to duck. While the U.S. Constitution's Supremacy Clause would seem to give federal bankruptcy law the upper hand, Congress has traditionally sought to straddle the U.S. system of dual sovereignty by including explicit pre-emptory language in statutes that are intended to supersede state laws. Chapter 9's language doesn't explicitly pre-empt state laws, according to the editorial, but there's a strong case to be made that pre-emption is intrinsic to municipal bankruptcy. The legal tension comes because Michigan's constitution, which passed in 1963, holds that "accrued financial benefits of each pension plan and retirement system of the state and its political subdivisions shall be a contractual obligation thereof which shall not be diminished or impaired thereby." Read more. (Subscription required.)

A similar commentary in yesterday's New York Times finds that while it isn't politically feasible for the federal government to bail out Detroit, President Obama and Congress must step in to avert the worst fiscal collapse in urban American history. The commentary makes the case that the government must intervene because the symptoms of the municipal illness that made Detroit, with an estimated $18 billion in liabilities, the largest city in American history to declare bankruptcy are showing up in other cities. Emergency response times are lengthening in cash-starved cities. Libraries, parks and recreation facilities are shortening their hours or closing. Potholes go unfilled, sidewalks unrepaired and trees untrimmed. All that makes urban life rewarding and uplifting is under increasing pressure, in large part because of unaffordable public employee pension and health care costs. Read the full commentary.

For the latest information and analysis about the Detroit case, be sure to visit ABI's dedicated website, http://news.abi.org/Detroit.

PRIVATE-EQUITY PAYOUT DEBT SURGES

Private-equity firms are adding debt to companies they own in order to fund payouts to themselves at a record pace, as fears are mounting that the window for these deals will close if interest rates rise, the Wall Street Journal reported today. So far this year, $47.4 billion of new loans and bonds have been sold by companies to pay dividends to the private-equity firms that own them, according to data provider S&P Capital IQ LCD. That is 62 percent more than the same period last year, which wound up being the biggest year on record, with $64.2 billion sold to fund private-equity payouts. The added debt, known as a recapitalization, can increase companies' risk of default, according to a recent study by Moody's Investors Service. As dividend deals increase, many also are unusually risky lately, carrying low credit ratings and paying historically low interest rates to investors. "This is the leveraged-finance debt market that you can't quite kill," said Richard Farley, a lawyer with Paul Hastings LLP who represents banks in buyouts. Read more. (Subscription required.)

ANALYSIS: RETURN OF MEGA-MERGERS REFLECTS GROWING CONFIDENCE IN ECONOMY

Analysts say that the recent spike in merger activity reflects the return of the mega-merger and a gradual uptick in business confidence in the economy, the Washington Post reported today. It has been most evident in the ongoing battle for Dell computers, with founder Michael Dell upping his bid for the company to $25 billion Friday, and the high-profile buyout of H.J. Heinz by Warren Buffett's Berkshire Hathaway. Although the number of mergers is down compared with the corresponding period last year, a series of mega-mergers has helped increase the value of merger activity in 2013 to $607 billion from $486 billion during the corresponding period in 2012. Activity is picking up after an uneventful 2012, when no mega-mergers were announced, analysts said. But it is still far from 2011 levels, when low valuations contributed to a rush for deals. Read more.

CONSUMER SPENDING, INCOME CLIMB IN JUNE

U.S. consumer spending increased and inflation pushed higher in June, which could strengthen expectations that the Federal Reserve will curtail its bond purchases later this year, Reuters reported on Friday. The Commerce Department said on Friday that consumer spending rose 0.5 percent, lifted by automobile purchases and higher gasoline prices. May's increase was revised down to 0.2 percent from a previously reported 0.3 percent. June's increase in consumer spending, which accounts for more than two-thirds of U.S. economic activity, was in line with economists' expectations. With prices picking up, consumer spending adjusted for inflation nudged up 0.1 percent. The consumer spending numbers were included in the second-quarter GDP report on Wednesday, which showed that the economy grew at a 1.7 percent annual pace after expanding at a 1.1 percent rate in the first three months of the year. Read more.

IN CASE YOU MISSED IT - abiLIVE WEBINAR DISCUSSING § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES RECORDING IS NOW AVAILABLE!

If you were not able to attend ABI's recent abiLIVE webinar examining § 1111(b), a recording of the program is now available for downloading! Utilizing a case study, ABI's panel of experts explored the issues surrounding a lender's decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel also walked attendees through the necessary mathematical analyses used to examine these issues. The 90-minute recording is available for the special price of $75 and can be purchased here.

abiLIVE WEBINAR ON AUGUST 20: HOW WILL THE NEW U.S. TRUSTEE FEE GUIDELINES IMPACT YOU?

The new U.S. Trustee Fee Guidelines will affect all attorneys and firms who work on larger chapter 11 cases filed on or after Nov. 1. ABI's Ethics & Professional Compensation Committee will present a panel of experts, including Clifford J. White, the director of the U.S. Trustee Program, to discuss 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. Register today to hear government, attorney and academic perspectives speak on this important and timely topic.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE MID-ATLANTIC BANKRUPTCY WORKSHOP ON FRIDAY

The 5th stop for the ABI Golf Tour is the Hershey Country Club, held in conjunction with this week's Mid-Atlantic Bankruptcy Workshop. 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! A 22-handicapper won the tour event at July’s Southeast Conference. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

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!

NEW CASE SUMMARY ON VOLO: CHARLES W. RIES V. SCARLETT & GUCCIARDO, PA, ET AL. (8TH CIR.)

Summarized by Michael Cooley of Akin Gump Strauss Hauer & Feld LLP

Applying the plain language of Fed. R. Civ. P. 15(c)(1), the Eighth Circuit affirmed the principle that whether the party seeking to amend a pleading knew, when the original pleading was filed, of the identity of the party left out is irrelevant to the question of whether the amended pleading may relate back to the date of the original pleading. Rather, the ability to relate back an amendment to the date of the original pleading depends on whether the party to be added knew or should have known that, but for the mistake, it would have been named in the original pleading. Additionally, this case serves as an important reminder of the value in structuring settlement agreements to safeguard against the possibility that a bankruptcy filing thereafter could leave the nondebtor party to disgorge settlement payments as preferential transfers without the ability to resurrect the claims originally settled in consideration therefore.

There are more than 900 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: ONLY CONGRESS THINKS MAIN STREET BANKS ARE "TBTF"

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Removing the arbitrary size designation for systemically important financial institutions would reduce costly regulation for regional banks, encourage industrywide competition and concentrate regulators' efforts on firms that actually warrant attention, according to a recent blog post.

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 class of claims should not be considered impaired for purposes of § 1129(a)(10) if the impairment results from the plan proponents' exercise of discretion (i.e., artificial impairment) and not driven by economic need. (In re Village at Camp Bowie I LP).

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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  CALENDAR OF EVENTS
 

2013

August
- Mid-Atlantic Bankruptcy Workshop
    August 8-10, 2013 | Hershey, Pa.
- abiLIVE Webinar: How Will the New U.S. Trustee Fee Guidelines Impact You?
     August 20, 2013
- 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.
- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
    Sept. 18-19, 2013 | New York
- abiLIVE Webinar: Complex Requirements and Ethical Duties of Representing Consumer Debtors
     Sept. 24, 2013
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.

October
- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum
    Oct. 4, 2013 | Kansas City, Mo.
- 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
- 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.

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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Supreme Court Takes Case that Will Directly Impact CFPB FDIC

ABI Bankruptcy Brief | June 25 2013
 
  

June 27, 2013

 
home  |  newsroom  |  chart of the day  |  blogs  |  bankruptcy code and rules  |  statistics  |  legislative news  |  volo
  NEWS AND ANALYSIS   

SUPREME COURT TAKES CASE THAT WILL DIRECTLY IMPACT CFPB, FDIC

The Consumer Financial Protection Bureau – which oversees regulations for mortgages and other credit products – and a major bank regulator will be closely watching the Supreme Court this fall, Marketwatch.com reported on Tuesday. The Supreme Court on Monday decided to hear Noel Canning v. NLRB about whether the White House recess appointments for the labor board violated the Constitution. The Court's decision on the case will also impact the appointment of Richard Cordray, who directs the CFPB, since he was installed at the bureau in the same controversial way as the NLRB nominees. All this means that the consumer bureau’s existing rules for mortgages and future rules could be in doubt. Without Cordray, the bureau won’t be able to write or enforce rules on many mortgage lenders, payday lenders, credit-reporting bureaus and debt collectors. However, it could still enforce existing consumer laws on many banks and credit card companies. Cordray is also a Democratic member of the five-person bipartisan Federal Deposit Insurance Corp. A decision by the court to invalidate the NLRB nominations could also impact the validity of any big bank capital rules that Cordray votes to approve as a member of the bank regulator. The D.C. Circuit ruled in January that President Obama lacked the power to make recess appointments without Senate consent. The NLRB appealed that ruling in March. The litigation battle comes after Cordray and the NLRB board nominees cannot win the 60 votes needed to be approved by the Senate over the past couple of years. Read more.

SURVEY: LAWYER FEES INCREASED LAST YEAR

Legal fees rose 10 percent from 2010 to 2012 and increased 4.8 percent last year, according to a survey by Tymetrix and CEB, which looked at billing information from more than 4,800 law firms and 99,000 lawyers, Bloomberg News reported yesterday. Finance and securities rates increased the most last year, at 5.8 percent, while general corporate, intellectual property, and mergers and acquisitions had increases of 4 percent and 5 percent on average, according to the survey. The largest law firms and those in the most expensive U.S. cities had the greatest increases. Large law firms increased their rates by 5.6 percent, on average two times the rate of firms with fewer than 100 lawyers, according to the survey. In New York City, Washington, D.C., Boston, Dallas, Los Angeles and Houston, increases were between 5 percent and 6 percent last year. Read more.

CONSUMER SPENDING IN U.S. REBOUNDS AS INCOMES INCREASE

Consumer spending in the U.S. rebounded in May following the largest drop in more than three years, a sign that the biggest part of the economy will largely affect growth this quarter, Bloomberg News reported today. Household purchases, which account for about 70 percent of the economy, rose 0.3 percent after a 0.3 percent decline the prior month that was the biggest since September 2009, Commerce Department figures showed today. Consumer purchases were trimmed to a 2.6 percent advance – still the fastest in two years – from the 3.4 percent gain estimated last month as Americans cut back on services from vacations to legal advice. The saving rate increased to 3.2 percent from 3 percent. At the same time, wages and salaries climbed 0.3 percent. Disposable income, or the money left over after taxes, increased 0.4 percent after adjusting for inflation, today’s report showed. Read more.

For more on personal consumption figures, be sure to visit the ABI Chart of the Day.

ANALYSIS: COST OF PUBLIC PROJECTS IS RISING, AND PAIN WILL BE FELT FOR YEARS

Interest rates have been inching up everywhere, sending America’s vast market for municipal bonds, a crucial source of financing for roads, bridges, schools and more, into its steepest decline since the dark days of the financial crisis in 2008, the New York Times DealBook blog reported today. For one state, Illinois, the higher interest rates will add up to $130 million over the next 25 years — and that is for just one new round of borrowing. All told, the interest burden of states and localities is likely to grow by many billions, sapping tax dollars that might otherwise have been spent on public services. Over the last few days, Georgia, Philadelphia, the Metropolitan Transportation Authority in New York and others have delayed sales of new bonds, citing the precipitous plunge in prices that is driving up interest rates. Illinois Governor Pat Quinn (D) attributed the extra cost to the state’s failure to shore up its finances, particularly its rickety pension system. Illinois has the lowest credit rating of any state, and as interest rates rise they tend to rise fastest for the weakest borrowers. Read more.

LATEST BLOOMBERG "BILL ON BANKRUPTCY" VIDEO: SUPREME COURT CASES WILL HAVE WIDE IMPACT

The two bankruptcy cases (Stephen Law v. Alfred Siegel and In re Bellingham Insurance Agency) going before the U.S. Supreme Court in the term beginning in October are the first topics of conversation on the video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. Click here to watch.

NEW ABI LIVE WEBINAR ON JULY 15 WILL FOCUS ON THE § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES

Utilizing a case study, ABI's panel of experts will explore issues surrounding a lender’s decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel will also walk attendees through the necessary mathematical analyses used to analyze these issues. The webinar will take place on July 15 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE NORTHEAST BANKRUPTCY CONFERENCE ON JULY 12

The next stop for the ABI Golf Tour is the famed Newport National course in Newport, R.I., in conjunction with the Northeast Bankruptcy Conference on July 12. 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.

ABI IN-DEPTH

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

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

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

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

NEW CASE SUMMARY ON VOLO: GROUND IMPROVEMENT TECHNIQUES, INC. V. THE PLAN COMMITTEE (IN RE WASHINGTON GROUP INTERNATIONAL, INC.; 9TH CIR.)

Summarized by Jamie Edmonson of Venable LLP

The Ninth Circuit affirmed the ruling of the district court that § 502(b)(2) does not alter the liability of a nondebtor third party.

There are more than 900 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SAYING GOODBYE TO FANNIE AND FREDDIE?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post takes a closer look at the “Secondary Mortgage Market Reform and Taxpayer Protection Act of 2013,” introduced this week by Sens. Bob Corker (R-Tenn.) and Mark Warner (D-Va.). The bill proposes winding down Fannie Mae and Freddie Mac and replacing them with a new government agency called the Federal Mortgage Insurance Company (the “FMIC”).

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

Law firms should provide support for law student-staffed bankruptcy clinics for consumer debtors.

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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  CALENDAR OF EVENTS
 

2013

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 11-14, 2013 | Newport, R.I.
- abiLIVE Webinar
     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.
- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
    Sept. 18-19, 2013 | New York
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.


  


October
- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum
    Oct. 4, 2013 | Kansas City, Mo.
- ABI Endowment Football Game
    Oct. 6, 2013 | Miami, Fla.
- Chicago Consumer Bankruptcy Conference
    Oct. 14, 2013 | Chicago, Ill.

November
- Austin Advanced Consumer Bankruptcy Practice Institute
   Nov. 10-12, 2013 | Austin, Texas
- Detroit Consumer Bankruptcy Conference
   Nov. 11, 2013 | Detroit, Mich.

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


 
 
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Commentary Why Has Congress Left Housing to Fannie Mae and Freddie Mac

ABI Bankruptcy Brief | March 7 2013
 
  

March 7, 2013

 
home  |  newsroom  |  chart of the day  |  blogs  |  bankruptcy code and rules  |  statistics  |  legislative news  |  volo
  NEWS AND ANALYSIS   

HOUSING COMMENTARY #1: WHY HAS CONGRESS LEFT HOUSING TO FANNIE MAE AND FREDDIE MAC?

Fannie Mae and Freddie Mac, along with their regulator, are doing more to dismantle themselves than Congress can be bothered to do, according to a commentary in the Washington Post Tuesday. On Monday, their regulator, Ed DeMarco of the Federal Housing Finance Agency, said that a new company will be formed that will do much of the back-office work of both firms, setting the stage for whatever Congress decides to do next to overhaul the mortgage sector. The two government-sponsored mortgage finance companies are nearing the five-year anniversary of when the feds took them over, a bailout that has cost taxpayers $131 billion so far. They have been vilified, particularly by conservatives, as representing the worst of crony capitalism (fairly) and as being major drivers of the financial crisis (unfairly). For many Republicans, their stated objection to the Dodd-Frank financial reform act was that it didn't do anything to reform Fannie and Freddie. No legislation to overhaul the nation's mortgage finance has passed either the Republican-led House or the Democratic-led Senate. The White House unveiled a plan for what to do—more than two years ago—that was less a plan than a menu of options from which Congress might choose in sculpting its own approach to reforming the government-sponsored enterprises, or GSEs. So what is going on here? How is this an area where seemingly everybody agrees there needs to be an overhaul, yet no actual legislative action has taken place? The answer boils down to this: Too many people benefit from the current system, and too many people have something to lose in any overhaul, according to the commentary. But something will have to change in order to give the U.S. a system of housing finance that doesn't leave taxpayers on the hook for everyone who wants a place to live. Click here to read the full commentary.

HOUSING COMMENTARY #2: HOW TO REPEAT THE MORTGAGE MESS

In September 2008, amid the financial panic and collapse of the housing market, the federal government bailed out and took control of Fannie Mae and Freddie Mac—two government-sponsored enterprises that dominated the mortgage market. After four years and $180 billion of taxpayer funds to keep them afloat, they are beginning to make profits from their near monopoly. This week, the head of the federal agency that supervises Fannie and Freddie, Edward DeMarco, outlined a sensible plan that would prepare the companies—which remain the dominant players in housing finance—for either full privatization or government ownership. These are the obvious alternatives, but there is a third idea in the mix, one that is as seductive as it is dangerous: a private system with an explicit government mechanism for future bailouts when they prove necessary, according to a commentary in the Wall Street Journal yesterday. The rationale? If there's a problem in housing finance, the government will inevitably step in as it did in 2008. So why not create a government insurance program now, compensating taxpayers for the burdens they will have to shoulder eventually anyway? This argument has been advanced many times since Fannie and Freddie went under, most recently by the Bipartisan Policy Center, a Washington think tank. A system for private housing finance with a government insurance backstop may sound reasonable, even sophisticated. But it is seriously flawed. At the end of this road is bailout nation: a government insurance backstop for every industry. Also, taxpayers never get compensated from insurance funds, and federal insurance encourages careless behavior by those who know that if things go bad, someone will be there with a bailout. Once a fund of any size is created to back a particular industry, the arguments against a bailout virtually disappear. The reality is that sufficient funds are not going to be there. The only way to ensure a stable mortgage market is to get the government out, and keep it out. Click here to read the full commentary (subscription required).

ANALYSIS: STUDENT DEBT IS A DRAG ON ECONOMIC RECOVERY

Roughly 39 million Americans have a total of $966 billion in educational debt—a sum that has tripled since 2004, the Federal Reserve Bank of New York finds, according to an analysis in the Financial Times Tuesday. It was the only type of borrowing that expanded through the Great Recession, and in 2010 it jumped ahead of car loans, credit card debt and home equity credit to become the largest source of indebtedness behind mortgages. Faced with tighter scrutiny from banks and their own cautious behavior about running up balances, this new generation of borrowers has cut back on spending. They keep their credit cards in their wallets, put off purchasing houses and cars, and delay starting savings accounts for their own children's education. Experts warn that this trend raises the possibility that the explosion in student debt will sap economic growth in the U.S., where consumer spending accounts for around 70 percent of gross domestic product. "Consumers with large student debt burdens may spend less and are more likely to have difficulty securing a mortgage," the U.S. Treasury's Office of Financial Research said in its 2012 annual report. "These factors could significantly depress demand for mortgage credit and dampen consumption." Those fears have been supported by recent studies, such as a Pew Research Center report last month showing that young adults are less likely to own homes, cars and other "big-ticket consumer durables," such as refrigerators and washing machines, than their peers were in 2001. Simply put, more people are paying more money for school. Click here to read the full analysis (subscription required).

HOMEOWNERS ARE INCREASINGLY TURNING TO SHORT SALES OVER FORECLOSURES

The number of American homes that end up in foreclosure has started to decline, a welcome development that partly reflects an improving housing market. But a look at data that tracks distressed home sales reveals another reason why foreclosures are becoming less prevalent: More homeowners are turning to so-called short sales—where they sell their homes for less than what they owe in mortgage debt and the bank typically eats the difference, the Wall Street Journal reported Tuesday. In the past, short sales were rare. Now they are becoming increasingly common in part because lenders, homeowners and real estate agents have become more experienced at marketing and pricing the properties, and because short sales are considered a more efficient way than foreclosure to sell underwater properties. The shift is helping the housing market pare the backlog of distressed mortgages while cutting the amount of time that vacant homes sit empty. That in turn has helped keep home prices firm at a time when the real estate industry is still recovering from its multiyear slump. Foreclosures accounted for 11.5 percent of total home sales in October, down from 17.3 percent in October 2011 and close to 30 percent during the depths of the recession, according to CoreLogic, a real estate research firm that tracks foreclosure and home-sales data. Over the same period, short sales have climbed to 10.4 percent from 8.1 percent. From an economic perspective, short sales leave everyone better off: Banks and investors see narrower losses, homeowners incur less damage to their credit, and neighboring homes are less likely to be dragged down in value because of the typically higher sale prices and reduced vacancy times. But despite the progress being made in the housing market in general, there are still millions of homeowners who are in some form of pre-foreclosure distress—a "shadow inventory" that could hit the market and spell trouble for the housing recovery. Click here to read the full article (subscription required).

U.S. HOUSEHOLD WEALTH AT HIGHEST LEVEL SINCE LATE '07

The net worth of U.S. families rose by $1.17 trillion at the end of 2012 to the highest level since late 2007, as rising home values and gains in stock holdings boosted household balance sheets, the Wall Street Journal reported today. The net worth of U.S. households—the value of homes, stocks and other investments minus debts and other liabilities—rose 1.8 percent to $66.07 trillion from October through December, the highest level since the fourth quarter of 2007, according to a Federal Reserve report released Thursday. The recession began in December 2007 and ended in June 2009. Household net worth was up 9 percent at the end of 2012 compared with the fourth quarter of 2011, the latest sign that Americans are repairing their balance sheets in the wake of the financial crisis. Stocks have recovered from their sluggish performance in the fourth quarter. Americans also have much more equity in their homes. A measure of owners' equity in household real estate as a percentage of household real estate hit 46.6 percent, the highest since the first quarter of 2008. The Fed report also showed that household debt grew at an annual rate of 2.4 percent in the fourth quarter after contracting in the third quarter. Click here to read the full article (subscription required).

DON’T MISS THE ABI LIVE WEBINAR ON APRIL 5 - "LEGACY LIABILITIES: DEALING WITH ENVIRONMENTAL, PENSION, UNION AND SIMILAR TYPES OF CLAIMS"

A panel of experts has been assembled for a webinar on April 5 from 1-2:15 p.m. ET to discuss environmental and pension liabilities, the statutory schemes under which these liabilities arise and the key players involved. Are non-monetary environmental claims dischargeable? Do post-petition expenditures for environmental cleanup constitute administrative expenses? When can an employer terminate a pension plan in bankruptcy, what is the process and what are the consequences? Learn the answer to these questions and more from the comfort of your own office. Special ABI member rate is available! Register here as this webinar is sure to sell out.

ABI'S ANNUAL SPRING MEETING: CONSUMER PROGRAMMING WITH CROSS-OVER APPEAL

With four session tracks looking at issues geared toward chapter 11 restructurings, financial advisors, professional development and consumer bankruptcy, a number of sessions at ABI's Annual Spring Meeting have cross-over appeal for both consumer and business practitioners. Sessions include:

The Appellate Process: This distinguished panel will explore recent issues in appellate practice that are of interest to both consumer and business practitioners, including the ability to bypass intermediary appellate courts and take appeals directly to the circuit courts.

Consumer Class Actions: This panel will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases, which are highlighted by two recent decisions of the Fifth Circuit. Many of the issues discussed during this panel will be useful in business cases as well.

The Individual Conundrum - Chapter 7, 11 or 13?: Deciding on the appropriate chapter for a high net worth individual contemplating a bankruptcy filing can be a daunting task. This panel will explore the considerations that guide the practitioner in advising individual clients in making this decision.

To register for the Annual Spring Meeting and to see the full schedule of program tracks and events, please click here.

ABI IN-DEPTH

MARK YOUR CALENDARS FOR APRIL 10 TO TAKE PART IN ABI’S LIVE WEBINAR "STUDENT LOANS: BANKRUPTCY MAY NOT HAVE THE ANSWERS – BUT DOES CONGRESS?"

Do not miss the "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?" webinar presented by ABI's Consumer Bankruptcy Committee on April 10 from noon-1:15 ET. ABI's panel of experts will provide an overview of the student loan industry, examine the numbers behind and causes of student loan debt, and discuss federal loan programs as well as federal consolidation and forgiveness programs. Faculty on the webinar includes:

  • Prof. Daniel A. Austin of Northeastern University School of Law (Boston)

  • Edward "Ted" M. King of Frost Brown Todd LLC (Louisville, Ky.)

  • Craig Zimmerman of the Law Offices of Craig Zimmerman (Santa Ana, Calif.)

CLE credit will be available for the webinar. This webinar is sure to sell out; register now for the special ABI member rate of $75!

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: IN RE ALABAMA AIRCRAFT INDUSTRIES INC. (3D CIR.)

Summarized by John Eggum of Foran Glennon Palandech Ponzi & Rudloff

A transfer of a cause of action to a litigation trust, in accordance with the terms of an asset purchase agreement, can be insulated from attack on appeal pursuant to § 363(m). In this case, the Third Circuit found that invalidating the transfer of the cause of action would invalidate the related sale, since the value of the assets sold would be altered if the cause of action was not transferred in accordance with the terms of the applicable asset purchase agreement. Accordingly, the Third Circuit dismissed the appeal as moot.

There are more than 750 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 CAN AUTOMATIC STAY BE EXTENDED TO NONDEBTOR THIRD PARTY?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post discusses whether the automatic stay can be extended to protect nondebtor third parties by examining the case of In re Brier Creek Corp. Center Assocs. LP (Bankr. E.D.N.C.).

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

As a result of the RadLAX decision, the right to credit-bid will likely chill bidding at auctions, as potential purchasers may be dissuaded from participating in the bidding process.

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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March 22, 2013
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June 7, 2013
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June 13-16, 2013
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  CALENDAR OF EVENTS
 

2013

March
- Bankruptcy Battleground West
     March 22, 2013 | Los Angeles, Calif.

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.


 
 
ABI BookstoreABI Endowment Fund ABI Endowment Fund
 

More Homeowners Emerge from Underwater Status

ABI Bankruptcy Brief | March 19 2013
 
  

March 19, 2013

 
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  NEWS AND ANALYSIS   

ANALYSIS: MORE HOMEOWNERS EMERGE FROM "UNDERWATER" STATUS

Rising home values have lifted more borrowers out of the hole of owing more than their properties are worth, an encouraging sign for an economy still closely tied to the health of the housing market, the Wall Street Journal reported today. The number of "underwater" homeowners in the fourth quarter of 2012 declined by 1.7 million from a year earlier, meaning 1.7 million U.S. households have regained home equity, according to data released Tuesday by CoreLogic, a research company. Overall, the company said 21.5 percent of households with a mortgage were underwater at the end of 2012, down from 25.2 percent at the end of 2011. While the trends are encouraging, some newly above-water households are just barely at breakeven and therefore are a long way off from being able to change their finances in any significant way. And the overall ranks of those underwater remain large, at about 10.4 million, down from 12.1 million at the end of 2011, according to CoreLogic. Read more. (Subscription required.)

To see a state-by-state analysis of CoreLogic's 4Q 2012 data, be sure to check out ABI's Chart of the Day site.

FANNIE MAE SEES WAY TO REPAY BILLIONS TO U.S. TREASURY

The rebounding housing market has helped return Fannie Mae to profitability and now might allow the government-controlled mortgage-finance company to repay as much as $61.5 billion in rescue funds to the U.S. Treasury, the Wall Street Journal reported. The potential payment would be the upshot of an accounting move whereby the company would reclaim certain tax benefits that were written down shortly after the company was placed under federal control in 2008. The potential move was disclosed last week in a regulatory filing in which the company said that it would delay the release of its annual report, due yesterday, as it tries to reach a resolution with its accountants and regulator over the timing of the accounting move. The debate about when Fannie should be allowed to reclaim the deferred-tax assets comes as Fannie and its smaller sibling, Freddie Mac, are likely to show large profits in the coming quarters as the housing market gradually recovers from its prolonged bust. The potential payment also has political implications as lawmakers and regulators wrangle over the fate of the firms, which were placed into a federal conservatorship amid soaring losses. The Obama administration has publicly said that the two companies eventually would be wound down and has blocked them from retaining profits, but has done little to de-emphasize their role in the mortgage market. Read more. (Subscription required.)

CFPB ISSUES PROPOSAL TO SUPERVISE STUDENT LOAN SERVICERS

The Consumer Financial Protection Bureau on Friday issued a proposal to supervise nonbank servicers of private and federal student loans that qualify as "larger participants" in the student loan servicing market, according to an analysis yesterday by Ballard Spahr LLP. The proposal represents an attempt by the CFPB to significantly expand its supervisory authority over student loan servicers. Because it already has supervisory authority over larger banks and nonbank private student lenders, the CFPB believes it should oversee student loan servicing by those entities. The CFPB's current authority to supervise nonbank private student lenders, however, does not allow it to supervise the nonbank student loan servicers that do not offer or provide private student loans. The proposal would allow the CFPB to supervise servicing of private and federal student loans by such nonbank servicers. Comments on the proposal will be due 60 days after its publication in the Federal Register. Click here to read the proposal.

OBAMA CUTS STUDENT-DEBT COLLECTOR COMMISSIONS TO AID BORROWERS

President Barack Obama's administration slashed the commissions paid to private collection companies that chase overdue student loans, reducing an incentive to squeeze borrowers, Bloomberg News reported today. Previously, the U.S. Education Department paid a commission as high as 16 percent of the entire loan amount only if collectors convinced defaulted borrowers to make stiff monthly payments. Starting this month, the fee dropped to as low as 11 percent, regardless of payment size. With $77.4 billion worth of student loans in default, the federal government turns to an army of private collectors to pursue borrowers. These companies, which receive about $1 billion annually in commissions, have sparked growing complaints that they insist on high payments, even when borrowers qualify for leniency. Under the new schedule, collectors will no longer have an incentive to avoid offering affordable payments tied to borrowers' incomes. Read more.

PLASTIC-SHY YOUNG IN U.S. SPUR MOVE TO USE NEW CREDIT DATA

Thirty-nine percent of undergraduate students between the ages of 18 and 24 owned a credit card in 2012, down from 49 percent in 2010, a Sallie Mae and Ipsos Public Affairs survey found, Bloomberg News reported today. And young adults who do have credit cards are carrying smaller balances: A median of $1,600 in 2010 compared with $2,500 in 2001 for under-35 households, according to Federal Reserve data. The trend, rooted in stricter lending rules and weaker job outlooks for young Americans since the 2008-09 recession, has implications for the strength of the economy. Fewer are building the traditional credit histories that would help them obtain financing for the purchases of homes and cars, which is critical to economic growth. Credit bureaus and the lending industry are stepping up their search for new ways to bolster credit files, and young people who do not pay credit card bills often do pay mobile phone bills. As reporting agencies gather data from telephone, rent and other payments, some scoring models incorporate this information to help assess candidates' creditworthiness. Read more.

ANALYSIS: WORKERS SAVING TOO LITTLE TO RETIRE

Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement, the Wall Street Journal reported today. New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last. Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49 percent reported having so little money saved in 2008. The survey also found that 28 percent of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study's 23-year history. Read more. (Subscription required.)

NUMBER OF CASES FILED BY SEC SLOWS

The Securities and Exchange Commission is filing significantly fewer civil fraud cases this year as its efforts to punish misconduct related to the financial crisis start to ebb, the Wall Street Journal reported yesterday. The agency is likely to fall short this fiscal year of its record-breaking number of enforcement actions in the previous two years. The expected drop in the numbers could be a headache for Mary Jo White, the former prosecutor nominated by President Barack Obama to be SEC chairman. A Senate panel is set to approve White's appointment today, the last step before the full Senate votes on it. White last week told a Senate hearing that she would strengthen the SEC's enforcement function to ensure that "all wrongdoers … will be aggressively and successfully called to account." The slowdown in enforcement actions reflects changes in the economic cycle, according to SEC officials. "We're at a point of inflection in our enforcement program," George Canellos, acting SEC enforcement head, said last month. Market meltdowns on the scale of the 2008 crisis, when companies implode and trillions of dollars are wiped off asset values, tend to expose major frauds and produce big cases, Canellos said. "We're now in a different era," he added. Read more. (Subscription required.)

NEW ABI BOOK EXPLORES THE DEPTHS OF DEEPENING INSOLVNECY

Any company executive juggling the competing demands of the troubled firm and its obligations to investors, as well as litigators practicing on either side of the insolvency aisle, will be interested in ABI’s latest publication, The Depths of Deepening Insolvency: Damage Exposure for Officers, Directors and Others. Authors Kathy Bazoian Phelps (Diamond McCarthy LLP) and Prof. Jack F. Williams (Mesirow Financial) wrote the book from both the plaintiffs' and defendants' perspectives to offer a deep analysis of the legal principle known as "deepening insolvency." The book also provides potential defenses that may be asserted to deepening insolvency allegations, as well as a state-by-state list of significant case law on this issue. To find out more about the book or to pre-order your copy, please click here. (Make sure to log in using your ABI member credentials to obtain the ABI member discount.)

DON'T MISS ACB'S FREE EVENT, "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 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: GORDON V. PAPPALARDO (IN RE GORDON; 1ST CIR.)

Summarized by Jennifer L. Saffer of J.L. Saffer, P.C.

In this appeal by a debtor in her chapter 13 case, the Bankruptcy Appellate Panel (BAP) for the First Circuit affirmed, after de novo review, the bankruptcy court’s order sustaining the chapter 13 trustee’s objection to the debtor's claimed exemption in a scheduled remainder interest in real estate. Affirming the decision of the bankruptcy court, the BAP determined that the property claimed as exempt was not "owned" by the debtor as required by and within the meaning of Mass. Gen. Laws ch. 188, § 3(a); the debtor had elected Massachusetts exemption rules rather than the federal, as was her option under 11 U.S.C. § 522(b).

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: CONGRESS, NOT FHFA, SHOULD BE REFORMING THE GSEs

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post found that while there is an emerging bipartisan consensus on the way forward for the secondary mortgage market, Congress has punted on what should be done with Fannie Mae and Freddie Mac, and the (Federal Housing Finance Agency) FHFA is taking significant steps without hearings or public discussion.

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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BBW 2013
March 22, 2013
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BBW 2013
April 5, 2013
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BBW 2013
April 10, 2013
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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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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.


 
 
ABI BookstoreABI Endowment Fund ABI Endowment Fund
 

Big U.S. Banks Get Three-Month Extension for Living Wills

ABI Bankruptcy Brief | April 16 2013
 
  

April 16, 2013

 
home  |  newsroom  |  chart of the day  |  blogs  |  bankruptcy code and rules  |  statistics  |  legislative news  |  volo
  NEWS AND ANALYSIS   

BIG U.S. BANKS GET THREE-MONTH EXTENSION FOR "LIVING WILLS"

The Federal Reserve and Federal Deposit Insurance Corp. gave large U.S. banks an additional three months to draw up "living wills" to assist regulators in winding them down in case of a future insolvency, Bloomberg News reported yesterday. The agencies also provided new details on what information the living wills should contain, including obstacles that might arise from taking the banks apart safely under the Bankruptcy Code, according to a statement today from the regulators. The documents, originally due July 1, are now due Oct. 1. Institutions with non-bank assets greater than $250 billion had to file their plans last year. Those 11 banks, including JPMorgan Chase & Co., Bank of America Corp. and Goldman Sachs Group Inc., must now provide a second version of the living will, and a group of the next-largest banks must file for the first time. Regulators are looking for more detailed information on "global issues, financial market utility interconnections, and funding and liquidity… to provide analysis to support the strategies and assumptions contained in the firms' resolution plans," according to the statement. Read more.

COMMENTARY: PUBLIC PENSIONS IN BANKRUPTCY COURT

Devastated by the recession, the city of Stockton, Calif., is trying to renegotiate its debts in a bankruptcy case that could set an important precedent on whether courts can forcibly reduce the pensions of government employees, according to a New York Times editorial on Sunday. Even after drastic cuts to city services that have sent the crime rate soaring, the city of 300,000 people about 80 miles east of San Francisco has an annual budget deficit of $26 million. It has laid off a quarter of its police force, which has meant that officers often respond only to crimes in progress. To fix its finances, Stockton is asking the bankruptcy court to restructure debts totaling about $250 million. But the city’s creditors, which include bondholders and insurance companies that have guaranteed some of its bonds, want the city to reduce the $30 million it spends annually on pension benefits for its 2,400 retirees. The California Public Employees’ Retirement System, which manages Stockton’s pensions, argues that the state’s Constitution and court rulings forbid state and local governments from ever lowering the pensions of retirees and current employees. The creditors assert that federal bankruptcy law, which lets judges break contracts, should trump state law. So far, city officials have said they do not intend to trim pensions, though they have reduced health benefits for retirees. Many legal analysts say that the Stockton case could eventually be appealed to the Supreme Court. While a Supreme Court decision would help clarify an important area of the law, a drawn-out court case is the last thing Stockton needs, according to the editorial. The way to get the city back on its feet is for city officials, creditors and retirees to negotiate a fair settlement quickly. Read the full editorial.

AMERICAN DREAM ELUDING THOSE WITH STUDENT DEBT BURDENS

Two-thirds of student loans are held by people under the age of 40, according to the Federal Reserve Bank of New York, blocking millions of them from taking advantage of the most affordable housing market on record, Bloomberg News reported on Saturday. The number of people in that age group who own homes fell by 4.6 percent in the fourth quarter from the third, the biggest drop in records dating to 1982. The issue is being exacerbated by an explosion in the $150 billion private market for student debt, with interest rates for some existing loans surpassing 12 percent. Unlike mortgage-holders, borrowers have little hope of refinancing at lower rates. Interest on some new federal loans is set to double to 6.8 percent in July if Congress does not extend the current rate, as it did last year. Read more.

COMMENTARY: CAN DODD-FRANK FIX MORTGAGE SERVICING IF WE DO NOT KNOW WHAT WENT WRONG?

A new obstacle has arrived for those seeking justice for past wrongdoing in the mortgage-servicing industry and those looking to prevent trouble in the future: federal regulators blocking the release of records they have collected documenting illegal abuses, according to a commentary in the Washington Post on Sunday. A heated exchange broke out at a Senate hearing last week, when Sen. Elizabeth Warren (D-Mass.) asked regulators from the Office of the Comptroller of the Currency (OCC) and the Federal Reserve why they were not sharing the results of their investigations into mortgage-servicing abuses and illegal activities with Congress and the people who were subject to abuses. These investigations began two years ago, after the OCC found that there were "violations of applicable federal and state law" that had "widespread consequences" in the servicer markets at 14 large banks. This Independent Foreclosure Review (IFR) wrapped up suddenly earlier this year, and it is not clear what it found, according to the commentary, although the servicers did manage to spend $2 billion on consultants. According to the latest letter from Warren and Rep. Elijah Cummings (D-Md.), regulators at the Federal Reserve argued that their documents showing illegal behavior are "trade secrets" of mortgage-servicing companies, while the OCC argues that this violates disclosure requirements. Click here to read the full commentary.

RECORD-LOW DEFAULTS MAY NOT BE GOOD NEWS

In December 2008, investors expected a default Armageddon after global "junk" bond yields spiked to over 20 percent, but the last decade has seen the lowest default rate on record in the modern era, according to an analysis by the Wall Street Journal today. The power of central banks and governments lies behind this remarkable turnaround—but it may come with a price. The average annual Moody's default rate since 2003 for single-B rated companies, the largest part of the high-yield market, stands at just 1.6 percent, Deutsche Bank noted. That's the lowest rolling 10-year rate since the market became full-fledged in the early 1980s, and compares with an annual average of 5 percent since 1983. In fact, nine of the past 10 years have seen single-B defaults mostly at below average, with six of them defaults of 1 percent or below—a rate never achieved between 1980 and 2003. The decade falls into two halves: From 2003 to 2007, the credit bubble drove default rates down, but since early 2009, central banks and governments have re-inflated this bubble, pushing down yields and making refinancing possible on easy terms for high-yield companies—despite sharply lower growth and, indeed, a renewed recession in Europe. Read more. (Subscription required.)

LATEST ABI PODCAST EXPLORES THE DEPTHS OF DEEPENING INSOLVENCY

The latest ABI podcast features ABI Resident Scholar Prof. Scott Pryor talking with Prof. Jack Williams and Kathy Phelps, the authors of ABI's publication The Depths of Deepening Insolvency: Damage Exposure for Officers, Directors and Others. Williams and Phelps offer a historical analysis of the “deepening insolvency” principle, its significance in calculating damages in a variety of liability scenarios, and the interplay of the doctrine with the fiduciary duties of company executives. Click here to listen to the podcast.

To order a copy of The Depths of Deepening Insolvency: Damage Exposure for Officers, Directors and Others, click on the banner below:

 

ASM MOBILE WEB APP NOW AVAILABLE FOR SMARTPHONES AND TABLETS!

The official Annual Spring Meeting mobile web app, sponsored by Diamond McCarthy LLP, is now available for iOS, Android and Blackberry devices! Utilize the app during ASM next week to view your personal schedule, browse what programs are taking place or to search for information related to the meeting. The mobile web app stores the schedule data locally on your phone for offline access too.

To take advantage of the ASM web app, bookmark the following address on your device’s browser: http://31stannualspringmeeting2013.sched.org/mobile

Haven’t registered for next week’s Annual Spring Meeting? Hurry, the hotel block at the Gaylord National Resort and Convention Center in National Harbor, Md., is almost sold out! 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

NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CONSUMER CLASS ACTIONS

Class action lawsuits in chapter 13 cases are becoming more prevalent. Are you wondering whether your client's claims would be better pursued in a class action? If your client is a defendant in a consumer class action, do you know what your client's best defenses are against class certification? ABI's panel of experts on May 29 from 1-2:15 p.m. ET will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases by highlighting two recent appeals court decisions. Special ABI member rate available! Click here to register.

LATEST CASE SUMMARY ON VOLO: STEPHEN V. MAY (IN RE STEPHEN; 9TH CIR.)

Summarized by Emil Khatchatourian of the U.S. Bankruptcy Court for the Eastern District of California

Affirming the bankruptcy court, the Ninth Circuit Bankruptcy Appellate Panel held that the bankruptcy court did not err in dismissing the debtor's case because the debtor did not establish that he was entitled to relief from automatic dismissal for his failure to file a complete list of creditors and schedule of assets and liabilities within 45 days of the filing of his bankruptcy petition.

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: SECTION 903 - IN CHAPTER 9, DOES FEDERAL LAW TRUMP STATE LAW, OR VICE VERSA?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the fight that is brewing in San Bernardino, Calif., regarding the scope of §903 of the Bankruptcy Code. It stems from the motions filed by the San Bernardino Public Employees Association (SBPEA), the San Bernardino Police Officers Association (SBPOA) and the San Bernardino City Professional Firefighters (SBCPF) in response to the city’s motion to reject collective bargaining agreements with these unions.

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.

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 at ABI’s regular 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 be randomly 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, which 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.

ABI Quick Poll

The scope of protection of "financial contracts" in bankruptcy should be rolled back to what it was before BAPCPA expanded it in 2005.

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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THURSDAY:

 

 

 

ASM 2013
April 18-21, 2013
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ASM NAB 2013
April 18, 2013
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COMING UP

 

 

 

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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ABI Live Webinar Examining Consumer Class Actions!
May 29, 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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MA 2013
Aug. 8-10, 2013
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  CALENDAR OF EVENTS
 

2013

April
- "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
- 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.

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.


 
 
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Analysis Corporate Pension Gap Is Soaring

ABI Bankruptcy Brief | February 26 2013
 
  

February 26, 2013

 
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  NEWS AND ANALYSIS   

ANALYSIS: CORPORATE PENSION GAP IS SOARING

Big companies have disclosed widening pension gaps this earnings season, extending the deficit to a near record between what companies expect to owe retirees and what they have on hand to pay them, the Wall Street Journal reported today. During the current earnings season, companies including UPS, Boeing Co., Ford Motor Co. and Goodyear Tire & Rubber Co. have disclosed growing pension-fund deficits, even though they have plowed billions of dollars into their plans and strong stock markets have boosted their investment returns. Across America's business landscape, the gap between the amount that companies expect to owe retirees and what they have on hand to pay them was an estimated $347 billion at the end of 2012. That is better than the $386 billion gap recorded at the end of 2011, but the two years represent the worst deficits ever, according to J.P. Morgan Asset Management. The firm estimates that companies now hold only $81 of every $100 promised to pensioners. Read more. (Subscription required.)

For further analysis of the pension gap currently facing companies, as well as an in-depth look at liability issues in bankruptcies, be sure to register for the ABI Live Webinar on April 5 examining the issues tied to legacy liabilities.

COMMENTARY: LIQUIDATION AUTHORITY AND THE BANKRUPTCY CLAUSE

The litigation against the Dodd-Frank Act's orderly liquidation authority continues, with an amended complaint filed last week, adding a few more states to the mix, and the deadlines with regard to the government’s motion to dismiss reset accordingly, according to a commentary yesterday by Prof. Stephen Lubben in the New York Times DealBook blog. The revised complaint continues to assert that the authority "constitutes an exercise of Congress's power under the Bankruptcy Clause." The Bankruptcy Code, according to Lubben, is all about providing the debtor with options. Today, an individual debtor can file under as many as four distinct chapters. During the New Deal era, the bankruptcy laws included Section 77 for railroads, Chapters X and XI for other corporations, and liquidation, reorganization and composition proceedings for individuals. At the time, Congress created the FDIC and vested it with authority over bank insolvencies – probably under the Bankruptcy Clause, whether or not the banking lawyers know it. In chapter 11 alone, the debtor is given broad flexibility to shape a plan that fits the debtor's particular needs. There is no requirement that all debtors follow any specific path. The orderly liquidation authority litigation proceeds from the faulty notion that chapter 11 provides a one-size-fits-all solution, whereas it is clear that one reason chapter 11 and its predecessors have been so successful rests in the flexible nature of the proceedings. Read more.

SURVEY: AMERICANS ANXIOUS ABOUT RETIREMENT

Even as the economy slowly improves, the vast majority of Americans remain deeply worried about their ability to achieve a secure retirement, according to a new survey, the Washington Post reported today. The poll, released today by the National Institute on Retirement Security (NIRS), found that 55 percent of Americans are "very concerned" that the current economic conditions are harming their retirement prospects. An additional 30 percent reported being "somewhat concerned" about their ability to retire. As aging Americans are increasingly burdened by debt, spiraling health care costs and diminishing pension coverage, an increasing number of researchers argue that a long era of improved living standards for the elderly is now in jeopardy. The Senate's Health, Education, Labor and Pension Committee says that the nation faces a $6.6 trillion retirement-savings deficit. Meanwhile, a retirement security index developed by Boston College’s Center on Retirement Research, as well as economists at the New School, have found that a majority of Americans are at risk of being financially worse off than their parents in retirement. Read more.

TREASURY TO SELL $158 MILLION TARP STAKE IN NINE BANKS

The Treasury Department has begun an auction for its Troubled Asset Relief Program (TARP) stake in nine more banks, American Banker reported today. The Treasury yesterday began a Dutch auction for the shares, which it expects to close on Thursday evening to sell approximately $158 million and represents its full TARP holdings in nine banks. The single largest stake the Treasury plans to auction is its $73 million holding in Old Second Bancorp in Aurora, Ill., the parent company of the $1.9 billion-asset Old Second National Bank. The Treasury has held a number of auctions over the past year as part of its effort to wind down the TARP program, and to date, it has sold stakes in nearly 100 banks. A little more than 200 banks remain in the program, and its plan is to sell its stakes in roughly two-thirds of them. Read more.

In related news, the House Oversight and Government Reform Committee held a hearing today titled "Bailout Rewards: The Treasury Department's Continued Approval of Excessive Pay for Executives at Taxpayer-Funded Companies." For more information and to read the prepared witness testimony from Christy Romero, the Special Inspector General for TARP, and Patricia Geoghegan, the Acting Special Master for TARP Executive Compensation, please click here.

ANALYSIS: DETROIT'S RACE FOR MAYOR OFFERS UNCERTAIN PRIZE

As Michigan Governor Rick Snyder (R) moves closer to taking control of the state's largest city, contestants are lining up to fight for what could turn into a largely powerless job: mayor of Detroit, according to a Wall Street Journal analysis yesterday. Mike Duggan, a former prosecutor who later led a turnaround at one of Detroit's largest hospitals, is expected to announce his candidacy today. Duggan will likely face Wayne County Sheriff Benny Napoleon, a lifelong Detroiter who worked in the city's police department for years before becoming chief in 1998, a post he held for three years. In 2009, he was elected sheriff for Wayne County, which includes Detroit. Napoleon, a Democrat, said in an interview that while his administration would address the city's economic crisis, blight and struggling public schools, "none of it means very much if we can't get a handle on the violence." A poll Duggan's campaign commissioned showed Napoleon to have the greatest name recognition among the challengers, and Napoleon and Duggan to be the leading potential candidates, well ahead of the current mayor, Dave Bing. Bing, for his part, said last week that he has not decided whether to seek re-election. The potential candidates are vying for a post that may have no real power if Republican Gov. Rick Snyder puts an emergency manager in charge of Detroit's government in an effort to avert what could be the biggest municipal bankruptcy in U.S. history. Read more. (Subscription required.)

DON’T MISS THE ABI LIVE WEBINAR ON APRIL 5 - "LEGACY LIABILITIES: DEALING WITH ENVIRONMENTAL, PENSION, UNION AND SIMILAR TYPES OF CLAIMS"

A panel of experts has been assembled for a webinar on April 5 from 1-2:15 p.m. ET to discuss environmental and pension liabilities, the statutory schemes under which these liabilities arise and the key players involved. Are non-monetary environmental claims dischargeable? Do post-petition expenditures for environmental cleanup constitute administrative expenses? When can an employer terminate a pension plan in bankruptcy, what is the process and what are the consequences? Learn the answer to these questions and more from the comfort of your own office. Special ABI member rate is available! Register here as this webinar is sure to sell out.

ABI'S ANNUAL SPRING MEETING: CONSUMER PROGRAMMING WITH CROSS-OVER APPEAL

With four session tracks looking at issues geared toward chapter 11 restructurings, financial advisors, professional development and consumer bankruptcy, a number of sessions at ABI's Annual Spring Meeting have cross-over appeal for both consumer and business practitioners. Sessions include:

The Appellate Process: This distinguished panel will explore recent issues in appellate practice that are of interest to both consumer and business practitioners, including the ability to bypass intermediary appellate courts and take appeals directly to the circuit courts.

Consumer Class Actions: This panel will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases, which are highlighted by two recent decisions of the Fifth Circuit. Many of the issues discussed during this panel will be useful in business cases as well.

The Individual Conundrum - Chapter 7, 11 or 13?: Deciding on the appropriate chapter for a high net worth individual contemplating a bankruptcy filing can be a daunting task. This panel will explore the considerations that guide the practitioner in advising individual clients in making this decision.

To register for the Annual Spring Meeting and to see the full schedule of program tracks and events, please click here.

ABI IN-DEPTH

MARK YOUR CALENDARS FOR APRIL 10 TO TAKE PART IN ABI’S LIVE WEBINAR "STUDENT LOANS: BANKRUPTCY MAY NOT HAVE THE ANSWERS – BUT DOES CONGRESS?"

Do not miss the "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?" webinar presented by ABI's Consumer Bankruptcy Committee on April 10 from noon-1:15 ET. ABI's panel of experts will provide an overview of the student loan industry, examine the numbers behind and causes of student loan debt, and discuss federal loan programs as well as federal consolidation and forgiveness programs. Faculty on the webinar includes:

  • Prof. Daniel A. Austin of Northeastern University School of Law (Boston)

  • Edward "Ted" M. King of Frost Brown Todd LLC (Louisville, Ky.)

  • Craig Zimmerman of the Law Offices of Craig Zimmerman (Santa Ana, Calif.)

CLE credit will be available for the webinar. This webinar is sure to sell out; register now for the special ABI member rate of $75!

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: CLINTON GROWERS V. PILGRIM'S PRIDE CORP. (IN RE PILGRIM'S PRIDE CORP.; 5TH CIR.)

Summarized by John Jones of JRJONESLAW PLLC

The Fifth Circuit affirmed the bankruptcy court's grant of summary judgment for Pilgrim's Pride Corporation (PPC) on the ground that written contracts between PPC and Clinton Growers had barred the alleged oral promises of a contract for the long haul and the promissory estoppel claim under the "contract bar" doctrine. The Fifth Circuit held that promissory estoppel applies only when the elements of a contract cannot be shown to exist. Under the "contract bar" doctrine, a party alleging promissory estoppel can succeed only by showing that the written contract does not cover the subject matter underlying the promissory estoppel claim.

There are more than 750 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: ASSIGNMENT OF RENTS: SAN BERNARDINO AND CALPERS CONTINUE BATTLE OVER CITY'S DEBTOR ELIGIBILITY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. While the city of San Bernardino, Calif., filed its chapter 9 petition on August 1, 2012, the city and the California Public Employees’ Retirement System (CalPERS) continue to be at odds, according to a recent blog post. Prior to a status conference scheduled for February 12, CalPERS filed a report contending that the city's condition had "deteriorated" since the December status conference held at the bankruptcy court. CalPERS argued that there has been a "mass exodus" of key personnel that "were critical to the city's restructuring efforts and instrumental in developing and maintaining the city's relationship with CalPERS and other key creditor constituencies." In addition, CalPERS accused the city of not being "transparent" in its dealings with creditors.

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

As a result of the RadLAX decision, the right to credit-bid will likely chill bidding at auctions, as potential purchasers may be dissuaded from participating in the bidding process.

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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NEXT WEEK:

 

 

 

Paskay 2013
March 7-9, 2013
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COMING UP

 

 

 

 

BBW 2013
March 22, 2013
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NEW WEBINAR!

BBW 2013
April 5, 2013
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BBW 2013
April 10, 2013
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BBW 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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  CALENDAR OF EVENTS
 

2013

March
- 37th Annual Alexander L. Paskay Seminar on Bankruptcy Law and Practice
     March 7-9, 2013 | St. Petersburg, Fla.
- Bankruptcy Battleground West
     March 22, 2013 | Los Angeles, Calif.

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.


 
 
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Commentary The Lessons of Lehman Are We Ready for the Next Meltdown

ABI Bankruptcy Brief | September 3, 2013
 
  

September 3, 2013

 
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  NEWS AND ANALYSIS   

COMMENTARY: THE LESSONS OF LEHMAN: ARE WE READY FOR THE NEXT MELTDOWN?

It's been five years since Lehman Brothers failed, setting off a chain of unanticipated consequences that came perilously close to melting down the world's financial system. Had the Federal Reserve, other central banks and the U.S. government not intervened and thrown trillions of dollars at the crisis to keep financial markets afloat, we would be talking about Great Depression II. The true lesson to take from Lehman is that a simple move that was praised by free-market types at the time — letting Lehman fail — set off unanticipated consequences that brought the financial world to its knees within days. It was an object lesson about how things that seem simple on the surface can come back to bite you in unanticipated places in unanticipated ways, according to an editorial in Friday's Washington Post. When Lehman went under, the Reserve Fund, a big money-market fund, had to take losses because it owned Lehman paper, and some hedge funds that used Lehman's London office as their "prime broker" found their assets frozen as a result of its bankruptcy. That triggered a mad scramble in the U.S. as hedge funds pulled their accounts out of Goldman Sachs and Morgan Stanley, neither of which had full access to the array of Fed lending programs that commercial banks did. Both firms would have gone under — inflicting catastrophic pain on the financial system by setting off a worldwide cascade of failures — had the Fed not made Goldman and Morgan Stanley bank holding companies and given them access to unlimited cash to meet customer withdrawals. These two Lehman side effects, which many people have forgotten, typify the problems of dealing with financial crises. We've forced giant, too-big-to-be-allowed-to-fail financial institutions to beef up their capital relative to their assets, which is a good thing. However, we've gravely weakened the ability of the Federal Reserve by taking away key powers that it had used to stabilize things. This problem, combined with the unhappy fact that much of the rest of the federal government is dysfunctional, will cost us dearly when the next financial crisis hits, according to the editorial. And there always is a next one. Click here to read the full commentary.

ABI will host a media call on Sept. 12 at 2:00 p.m. ET on lessons learned at the Lehman anniversary, featuring guests Bankruptcy Judge James M. Peck (S.D.N.Y.; New York) and Harvey R. Miller (Weil, Gotshal & Manges LLP; New York). Contact (703) 739-0800 for more information.

ANALYSIS: BIG DREAMS, BUT LITTLE CONSENSUS, FOR A NEW DETROIT

There are 78,000 abandoned buildings in Detroit standing in various levels of decay. Services have fallen into dysfunction, and debts are piling ever higher. Yet for all the misery, Detroit's bankruptcy gives an American city a rare chance to reshape itself from top to bottom, according to an analysis in the New York Times yesterday. But reinventing a city so devastated is hardly a sure thing, and the questions about how to proceed loom as large as the answers: Should its areas of nearly vacant blocks be transformed into urban farms, parks and even ponds made from storm water? Could its old automobile manufacturing economy be shifted into one centering on technology, bioscience and international trade? Should Detroit, which lost a million residents over the last 60 years, pin its sharpest hopes on luring more young people here, counting on an influx of artists and entrepreneurs? Some have long been searching for solutions to the hollowing out of Detroit, a city that measures six times the landmass of Manhattan but is now home to only 700,000 people, down from 1.8 million at its peak. No single economic answer will be enough to rescue Detroit on its own, experts say. Instead, leaders have their hopes set on a range of fields, many of which have already found some success here. They have pushed for new medical and science-related businesses near the city's universities and new technology companies and start-ups in the city's downtown. And some are pondering prospects for expanding international trade, given plans for a new bridge to Canada. Click here to read the full analysis.

COMMENTARY: THE NATION'S FUTURE DEPENDS ON ITS CITIES

The residents of Minneapolis-St. Paul suffer, collectively, from a serious insecurity complex. They're always talking about how no one knows anything about their "twin" cities on the upper Mississippi River. Yet the Twin Cities' identity crisis has also proven to be one of their greatest economic strengths. One can't quite put one's finger on exactly what's there because, well, there's an awful lot there. Diversity, in a word, is the secret sauce that creates urban success, according to a commentary in last week's National Journal. Detroit, of course, never suffered from an identity crisis. Everyone always knew what the Motor City stood for: the Big Three automakers. But a lack of diversity was one of Detroit's biggest problems, contributing to its bankruptcy filing. What also sank Detroit, according to the commentary, was that its leaders failed to connect with the sprawl around it and turn the suburbs into part of a unified economic base. In the Detroit area, the city and its suburbs became virtual enemies. Ironically, given the nature of our high-tech, super-connected age, the future will look increasingly like the city-states that ruled the world for millennia. The future, in other words, is going medieval. The rise of the city-state has been a long-term trend, but it's gaining speed. Today, the 388 metro areas in the United States make up 84 percent of the nation's population and 91 percent of its gross domestic product. Urban centers are estimated to generate 80 percent of economic growth in the world, and the percentage may be growing because of the way well-built urban areas with good infrastructure can better apply resources and make more efficient use of tight public funds. Read the full commentary (subscription required).

ANALYSIS: CAN KODAK REINVENT ITSELF AFTER BANKRUPTCY?

Eastman Kodak Co. scientists are tinkering with a new technique, called Stream Inkjet Technology, to improve printing performance, and are working on further perfecting SquareSpot laser-writing technology and potentially toward breakthroughs in spatial atomic layer deposition. The hope is that these kinds of technologies can save a 121-year-old company emerging from 20 months of bankruptcy this week, according to an analysis in Sunday's Rochester (N.Y.) Democrat and Chronicle. The question of whether Kodak can succeed will take years to answer. But sink or swim, the company is now officially entering its next era with a much smaller workforce, dramatically cut costs and a narrower focus on a specific set of markets and offerings. Kodak has bet its immediate survival in part on commercial printing. But for tomorrow, it has its atomic layer research and other similar technology, bonding microscopically thin materials to surfaces. If all of Kodak's plans pan out, it will stop a slide in revenues that dates back to 2005 — the last year Kodak grew. Kodak projections have it bottoming out this year with sales of $2.5 billion, and then slowly growing to $3.2 billion in 2017. However, the company has a lengthy history of promising that it's finally turned the corner and that starting next year, things are going to be better. Kodak has argued that bankruptcy gave it the ability to essentially catch its breath and unload a variety of costs — including retiree health care coverage and some pensions — and that it is ready to soar. Now comes the challenge of taking that revamped and slimmed-down Kodak and making it into something the old Kodak has not been for years: consistently profitable. Click here to read the full analysis.

NEW LIFELINE FOR HOME BUYERS

The Obama administration wants to create a mortgage market that is more forgiving to borrowers who lost their homes due to the recession, an effort that could widen the pool of potential homeowners, according to an article in the Wall Street Journal yesterday. A recent rule change lets certain borrowers who have gone through a foreclosure, bankruptcy or other adverse event — but who have repaired their credit — become eligible to receive a new mortgage backed by the Federal Housing Administration after waiting as little as one year. Previously, they had to wait at least three years before they could qualify for a new government-backed loan. To be eligible for the new FHA loans, borrowers must show that their foreclosure or bankruptcy was caused by a job loss or reduction in income that was beyond their control. Borrowers also must prove that their incomes have had a "full recovery" and complete housing counseling before getting a new mortgage. But it isn't clear whether banks will be eager to offer loans with the new terms at a time when they are facing a wave of lawsuits and investigations related to other government-backed loans. In addition, over the past four years, banks have had to buy back tens of billions of defaulted loans as Fannie, Freddie and the FHA faced mounting losses. Because of uncertainties about these "put-backs," lenders have imposed more conservative standards than what the federal entities require. The FHA says it has a separate effort under way to provide greater clarity about when banks could face put-backs. However, lenders say those changes haven't been specific enough to change their lending posture. Click here to read the full article.

EQUIFAX: AUTO, STUDENT LENDING EACH RISE MORE THAN 10%

Student and auto lending surged in the 12-month period ended in July, according to an Equifax report released Thursday, American Banker reported Friday. The total balance on federal and private student loans increased to $884.2 billion in July 2013, up 11.3% from a year earlier, according to the Atlanta credit bureau's National Consumer Credit Trends Report. However, Americans also took out fewer student loans in the first half of the year. The total number of loans originated between January and May fell 9.3% to 4.2 million. Auto loans rose 10.9% to $826.8 billion in July from a year earlier. Meanwhile, bank credit card balances rose for the first time in five years to $536.6 billion, a scant 0.6%. New credit opened between January and May rose 6% to $77.7 billion — the highest level since 2008. "In all other segments, consumers are reducing their debt burdens," Equifax Chief Economist Amy Crews Cutts said. Total balances on first mortgages, home-equity installments and home-equity revolving all fell, and severely delinquent balances for each loan type were at five-year lows. Click here to read the full article.

PROPOSED AMENDMENTS PUBLISHED FOR PUBLIC COMMENT

The Judicial Conference Advisory Committees on Bankruptcy and Civil Rules have proposed amendments to their respective rules and requested that the proposals be circulated to the bench, bar and public for comment. The following proposed amendments were approved for publication by the Judicial Conference Committee on Rules of Practice and Procedure in June 2013:

Preliminary Draft of Proposed Amendments to the Federal Rules of Bankruptcy and Civil Procedure: The public comment period is open for proposed amendments to Bankruptcy Rules 2002, 3002, 3007, 3012, 3015, 4003, 5005, 5009, 7001, 9006 and 9009; Official Forms 17A, 17B, 17C, 22A-1, 22A-1Supp, 22A-2, 22B, 22C-1, 22C-2, 101, 101A, 101B, 104, 105, 106Sum, 106A/B, 106C, 106D, 106E/F, 106G, 106H, 106Dec, 107, 112, 113, 119, 121, 318, 423 and 427; and Civil Rules 1, 4, 6, 16, 26, 30, 31, 33, 34, 36, 37, 55, 84 and Appendix of Forms. The public comment period closes on Feb. 15, 2014. Your comments are welcome on all aspects of each proposal. The advisory committees will review all timely comments, which are made part of the official record and are available to the public. Click here to read the proposed amendments and submit comments.

NEW ABILIVE WEBINAR OCT. 3: 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.

RECORDING NOW 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: IN RE TOWNE (3D CIR.)

Summarized by Terry Hall of Faegre Baker Daniels LLP

In an opinion marked "Not Precedential," the Third Circuit Court of Appeals affirmed the bankruptcy and district courts' holdings that the law firm hired as special counsel to the chapter 11 debtors was not entitled to payment of its fees and expenses from the secured creditor's collateral sale proceeds under § 506(c) following a sale conducted by a chapter 7 trustee after conversion of the case because (a) the law firm's efforts were not necessary to preserve or dispose of the collateral and there was no direct benefit to secured creditor, (b) the secured creditor was not estopped from refusing payment from the proceeds, and (c) conduct by the secured creditor, either lawful or unlawful, is not relevant to the analysis under § 506(c).

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: COMING RULES COULD CUT OFF BANKS FROM AFFILIATES

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post discusses the Fed's preparation of a proposal to toughen Regulation W, which governs how banks do business with their subsidiaries and affiliates.

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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September
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- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
    Sept. 18-19, 2013 | New York
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    Sept. 27, 2013 | Washington, D.C.

October
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     Oct. 3, 2013
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    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
- 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
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    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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Commentary Allow Private Education Loan Debts to Be Erased in Bankruptcy

ABI Bankruptcy Brief | December 20 2012
 
  

December 27, 2012

 
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  NEWS AND ANALYSIS   

COMMENTARY: ALLOW PRIVATE EDUCATION LOAN DEBTS TO BE ERASED IN BANKRUPTCY

As total student loan debt exceeded $1 trillion in 2012, debt from student loans issued by private for-profit lenders is still not eligible to be discharged under the Bankruptcy Code, according to a commentary by Rep. Steve Cohen (D-Tenn.) in yesterday's edition of U.S. News & World Report. Private for-profit student loans often lack consumer protections and typically have variable interest rates with no caps, exorbitant fees, and hidden charges, according to Cohen. Private lenders do not deserve protection under the Bankruptcy Code because the "undue hardship" provision, first enacted in 1976, was intended to protect the taxpayer dollars that fund federal student loan programs, according to Cohen. "Yet Congress, in 2005, extended this protection to for-profit educational lenders, even though no taxpayer money was at stake," Cohen writes. He introduced H.R. 2028, the "Private Student Loan Bankruptcy Fairness Act," which would allow private education loan debts to once again be erased in bankruptcy just like other types of debts. "By restoring bankruptcy dischargeability, my legislation will ensure that lenders only make prudent loans and will encourage private lenders to work with financially distressed borrowers to modify loan terms," according to Cohen. Read the full commentary.

ANALYSIS: DO OR DIE FOR FOUR RETAILERS

While 2013 will be a tough year for retailers due to the tepid economic recovery, Best Buy, J.C. Penney, RadioShack and Sears face a critical 12 months, the Wall Street Journal reported today. These unlucky retailers are going into the New Year with extra woes: slipping sales, questionable strategies and tight finances. Best Buy Co. has been plagued by the retail phenomenon called "showrooming," where shoppers examine products in its stores but buy online through rivals. J.C. Penney Co. has been trying to shed its image as an old-fashioned department store, but its rapid and radical makeover has left it burning through cash and struggling to attract shoppers. RadioShack Corp.'s bet on mobile phones and tablets has backfired. Sears Holdings Corp.'s sales and profits continue to slide as the department store chain has been shoring up its liquidity by selling itself off in pieces—but some of its remaining assets might be tough to unload at a time when retailing is under pressure. Read more. (Subscription required.)

CONSUMER CONFIDENCE DECREASES IN DECEMBER

Confidence among U.S. consumers declined more than forecast in December as the budget debate in Washington, D.C., soured Americans' outlook on the economy, Bloomberg News reported today. The Conference Board's index of sentiment fell to 65.1 from a revised 71.5 reading the prior month, figures from the New York-based private research group showed today. A drop in consumer expectations for the next six months to a one-year low coincides with mounting concerns about looming tax increases and government budget cuts in 2013 that threaten expansion. At the same time, employment gains, rising home values, and lower gas prices may keep spending, which accounts for about 70 percent of the economy, from foundering. Read more.

SEC GOING HIGH-TECH WITH REAL-TIME TRADE DATA

As computing power and big data have revolutionized stock trading in recent years, the Securities and Exchange Commission is trying to catch up, the Washington Post reported today. This month, the agency is in the final phases of testing software that will stream real-time trade data into its headquarters, helping regulators better grasp the market’s plumbing. The technology should go live in early 2013, at a cost of $2.5 million for the year. The SEC is still coping with the public fallout from the “flash crash” that took place on May 6, 2010, when the stock market plunged nearly 1,000 points in minutes then whipsawed back up. It took the SEC about four months to unwind the billions of orders that took place that day and issue a report of what happened. Although the SEC started collecting the data in June 2010, it could not aggregate them into a single database for analysis until three months later. The incident made the wide gulf in technical prowess between the regulators and the regulated painfully clear, prompting the SEC to explore hiring an outside firm that could gather up-to-the-minute market feeds from the public exchanges. Read more.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: IN RE SPANSION INC. (3D CIR.)

Summarized by Eduardo Glas of McCarter & English, LLP

The Third Circuit ruled that an agreement that settled litigation between Spansion and Apple at the International Trade Commision pursuant to which the debtor agreed not to sue Apple in the future over the use of flash memory products was a license, and its rejection by the debtor pursuant to 11 U.S.C. § 365 permitted Apple to elect to retain its rights as licensee under 11 U.S.C. § 365(n).

There are more than 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: CALPERS SLAMS SAN BERNARDINO BANKRUPTCY AS "SHAM"

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog discusses CalPERS firing back at the city of San Bernardino and its pendency plan for operating during the Chapter 9 case, calling it “criminal” and a “sham.” Since filing for bankruptcy, the city has stopped making its biweekly payments to CalPERS. As a result, San Bernardino now owes CalPERS approximately $8 million.

For more on the San Bernardino case and chapter 9 issues, make sure to order a copy of ABI's latest publication, Municipalities in Peril: The ABI Guide to Chapter 9, Second Edition, now available for pre-order in ABI's Bookstore.

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 licensee of a trademark has the right to retain the license even when a debtor rejects the underlying contract creating the license. (Sunbeam Products, 7th Cir.)

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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January
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     January 21, 2013 | Las Vegas, Nev.
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February
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Analysis New Flash of Optimism for Small Business Owners

ABI Bankruptcy Brief | August 29, 2013
 
  

August 29, 2013

 
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  NEWS AND ANALYSIS   

ANALYSIS: NEW FLASH OF OPTIMISM FOR SMALL BUSINESS OWNERS

Small-business optimism surged in July and August to some of the highest levels since the recession started, according to a handful of recent surveys, the Wall Street Journal reported today. A quarterly small-business optimism index from Wells Fargo and Gallup also reached its highest level since the third quarter of 2008, and a similar index from the National Federation of Independent Business released in August had its fourth-highest reading since December 2007. While small-business confidence is at its highest level in years, it is still well under pre-recession levels. "Let's not get too excited," said NFIB chief economist Bill Dunkelberg, who added that its own confidence index "is still well below the average reading" of the past 35 years. Read more. (Subscription required.)

For more on the outlook for small businesses in bankruptcy, be sure to listen to the latest ABI podcast featuring Fall 2013 ABI Resident Scholar Prof. Kara Bruce speaking with Prof. Anne Lawton of Michigan State University. Prof. Lawton proposes to simplify the definition of a small-business debtor in bankruptcy to help produce better results in the middle market. Prof. Lawton's proposal was featured in an article in the Summer edition of the ABI Law Review. To listen to the podcast, please click here.

CFPB WANTS PUBLIC WORKERS BETTER INFORMED ABOUT STUDENT LOAN BREAKS

Following President Obama's call to ease the burden of student loan debt for graduates, the Consumer Financial Protection Bureau launched an initiative yesterday to urge public-service organizations to better inform their employees about loan-repayment and forgiveness options, U.S. News and World Report reported today. In a report issued in tandem with the initiative, the CFPB reports that one in four American workers may be eligible for student loan debt-forgiveness programs that are open to public service employees, such as teachers, health workers, police officers, firefighters and social workers. "People give up higher incomes to serve their city, their state, or their country," said CFPB Director Richard Cordray in a call with reporters Wednesday. "We believe that people who contribute part of their talents, part of the benefits of their education, to society as a whole should not be mired in debt because they stir themselves to the calling of public service." The starting salary for a social worker, according to the U.S. Census Bureau, is around $32,000, but after completing the master's work necessary to become a social worker, most students have incurred $36,000 in student loan debt and would end up paying $415 each month under a standard 10-year repayment plan. Federal loan repayment programs such as the Public Service Loan Forgiveness program wipe away remaining debt for public-service employees after 10 years of on-time payments. However, many public-service workers are not aware of these options and may feel pressure to find higher-paying jobs in order to keep up with their student loan payments. Read more.

To read the full CFPB report, please click here.

COMMENTARY: A SIMPLE SOLUTION ON EXECUTIVE PAY THAT MADE A HARD PROBLEM MORE DIFFICULT

Congressional leaders, in their rage against ever-rising executive compensation and income inequality, have ironically created more murkiness, according to a commentary in the New York Times DealBook blog yesterday. The irony, according to the commentary, is that it all came out of such a simple-sounding idea: requiring that the pay of a company's chief executive be compared to the median salary of its employees. Carrying out the law may well result in costs that are just as obscene as the pay it is disclosing. When the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act was being completed, a new section, Section 953(b), was inserted during the final hours of negotiations. What the section required was that all public companies disclose their median worker pay side-by-side with the chief executive's pay. The first problem is how compensation is calculated. We are decades past the time when manager compensation was simply what you received in a paycheck. Now, compensation includes options, pensions, 401(k) matches, health benefits, parking allowances and various other perquisites. Calculating this all as one figure -- and in particular, valuing average stock options for employees as well as top executives -- can be difficult. The ambiguity arises because the rule says that the median is calculated with respect to "all" employees. Read the full commentary.

WALL STREET'S RENTAL BET BRINGS QUANDARY FOR HOUSING POOR

Since private-equity firms, hedge funds and real estate investment trusts have bought more than 100,000 U.S. homes, they have become dominant single-family landlords in markets hardest-hit by the housing crash such as Atlanta, Bloomberg News reported today. As the companies seek thousands of tenants to fill newly renovated properties, their decision as to whether to lease to low-income Americans with Section 8 vouchers stands to affect both their profitability and their poor residents who have been longtime renters. Blackstone -- the largest company in the fledgling industry after spending more than $5 billion to buy 32,000 U.S. homes -- inherited at least 200 Section 8 tenants when it bought a portfolio of Atlanta-area houses in April for about $100 million. That brought the amount of homes occupied by voucher-holders to less than 1 percent of its portfolio, the company said at the time. Invitation Homes, which operates the business, leases to 81 of the almost 17,000 families with vouchers in Atlanta and neighboring DeKalb and Cobb counties, according to data from the three largest Atlanta-area housing authorities. Some institutional landlords, including Waypoint Homes Realty Trust Inc. and Sylvan Road Capital LLC, consider voucher-holders to be a reliable client base because they have a low turnover rate and the government pays most of their rent on a timely basis. Other investors that are building home-rental companies may not want to take on the red tape, stigma of renting to poorer tenants and the potential extra costs, said Christopher Thornberg, principal at research firm Beacon Economics LLC in Los Angeles. They also don't want to leave their homes vacant for long, he said. "As the markets become more saturated with rentals, you may find these guys going to a Section 8 model -- if they don't decide to sell -- simply because they don't want these houses sitting empty," Thornberg said. Investors are buying houses for the potential value appreciation as much as for the rental cash flow, and some may be reluctant to commit to Section 8 tenants because those leases come with long-term constraints that reduce their ability to sell quickly, according to Raphael Bostic, assistant secretary for policy development and research at the U.S. Department of Housing and Urban Development from 2009 to 2012. Read more.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: APPEALS COURT CHANGES THE LAW ON FRAUD

The U.S. Court of Appeals in Chicago may be out on a limb by itself, or an opinion this week may signal a change in attitude toward lenders who discover a customer's fraud and do nothing, as Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss in their new video. To watch the video, please click here.

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

If you were not able to join last week's 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: IN RE SENTINEL MANAGEMENT GROUP, INC. (APPEAL OF FREDERICK J. GREDE; 7TH CIR.)

Summarized by Mazyar Hedayat of M. Hedayat & Associates PC

The Seventh Circuit affirmed the district court's denial of an illegal contract claim that had been filed by the trustee, but reversed the lower court's denial of fraudulent-transfer and equitable-subordination claims, remanding the case back to the district court for further proceedings.

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: FIFTH CIRCUIT PERMITS SECURED CREDITOR TO DISREGARD CHAPTER 11 CASE

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post reported that a few weeks ago in In re S. White Transportation, the U.S. Court of Appeals for the Fifth Circuit permitted a secured creditor that had indisputably received notice of the debtor's chapter 11 case, but took no steps to protect its interests until after the confirmation of the debtor's plan, to continue to assert a lien against the debtor's property post-confirmation.

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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2013

September
- ABI Endowment Golf & Tennis Outing
    Sept. 10, 2013 | Maplewood, N.J.
- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
    Sept. 18-19, 2013 | New York
- abiLIVE Webinar: Complex Requirements and Ethical Duties of Representing Consumer Debtors
     Sept. 24, 2013
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.

October
- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum
    Oct. 4, 2013 | Kansas City, Mo.
- 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
- 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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Obama to Push Congress on Mortgage Relief

ABI Bankruptcy Brief | August 21, 2012
 
  

August 21, 2012

 
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  NEWS AND ANALYSIS   

OBAMA TO PUSH CONGRESS ON MORTGAGE RELIEF

President Obama yesterday called on Congress to act on home mortgage relief when it returns for a brief legislative session in September, The Hill reported today. The housing market is widely believed to be the most significant drag on the economy, and Obama was under fire in a recent New York Times front-page story for the inability of his administration to address the burden of homeowner debt. "We are going to be pushing Congress to see if it can pass a refinancing bill that puts $3,000 in the pocket of the average family that has not yet refinanced their mortgage," he said. The White House is supporting a trio of Senate Democratic bills that streamline refinancing:

• Sens. Robert Menendez (D-N.J.) and Barbara Boxer (D-Calif.) in May introduced the “Responsible Homeowners Refinancing Act of 2012.” The bill would streamline refinancing for Fannie Mae and Freddie Mac borrowers by eliminating upfront fees and appraisal costs, among other changes.

• Sen. Jeff Merkley (D-Ore.) has a bill called the “Rebuilding Equity Act” for loans of 20 years or less. It would require Fannie Mae or Freddie Mac to pay all closing costs.

• Sen. Dianne Feinstein (D-Calif.) has a bill to aid underwater homeowners by allowing them to receive Federal Housing Administration mortgage insurance.

While significant, the White House-backed legislation falls short of the extensive housing action urged by some. Liberal groups and unions want Obama to replace Edward DeMarco — acting director of the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac — to force the agency to approve principal mortgage reductions. Others want legislation to allow bankruptcy judges to approve principal reductions in chapter 13. Read more.

CASE AGAINST FORMER FREDDIE MAC EXECUTIVES HINGES ON DEFINITION OF "SUBPRIME"

Figuring out the definition of a "subprime mortgage" by a U.S. judge could determine whether three former Freddie Mac executives misled investors about loans backed by the mortgage giant before it sank, the Wall Street Journal reported today. Lawyers for the former executives, including Chief Executive Richard Syron, sparred at a hearing with the Securities and Exchange Commission over the definition of "subprime" and "subprime-like." The fight came as lawyers for the former Freddie Mac executives urged U.S. District Judge Richard Sullivan to throw out an eight-month-old fraud lawsuit by the SEC alleging that the former executives made "materially false and misleading public disclosures" about the company's housing-market exposure in 2007 and 2008. Lawyers for Syron, Patricia Cook, a former Freddie Mac executive vice president, and Donald Bisenius, a former senior vice president, asked the judge to dismiss the suit because Freddie Mac told investors it did not classify single-family loans using the words "prime" or "subprime." Instead, Freddie Mac provided investors with tables outlining the characteristics of loans, allowing investors to draw their own inferences about loan quality, the lawyers said. The lawyers cited an investor document that said the amount of loans that would have been subprime if the term that Freddie Mac used was "not significant." Suzanne Romajas, a lawyer for the SEC, agreed that there is no universally accepted definition of "subprime," but she said Freddie Mac used a combination of factors to decide whether a certain loan was high-risk, and the former executives should have disclosed all of the mortgages that were vulnerable to potential default. For example, including mortgages with "subprime-like" characteristics would have increased Freddie Mac's overall high-risk loan exposure to 10 percent of its portfolio, not the 0.1 percent claimed by the company, she added. Read more. (Subscription required.)

SUPREME COURT CASE COULD CURB DEBT-COLLECTION LAWSUITS

Fearing that the legal playing field could be tilted against consumers, a group of federal and private consumer agencies have filed briefs in a U.S. Supreme Court case that threatens to shift the cost of a lawsuit to consumers in debt-collection cases, CreditCards.com reported today. In the past, collectors have absorbed court costs in "good faith" suits by consumers, even if the consumer loses, unless the consumers sued in bad faith or for purposes of harassment. Without this protection from fee shifting, people would be discouraged from suing debt collectors, say the Federal Trade Commission, the Consumer Financial Protection Board and a group of private consumer advocacy groups in legal briefs filed this month. There has been a surge in the number of cases filed against debt collectors under the Fair Debt Collection Practices Act, the 1977 federal law that regulates the activities of third-party debt collectors. The case that made it to the Supreme Court, though, could discourage such suits, the agencies say. The case, known as Marx v. General Revenue Corp., revolves around the experience of Olivea Marx, a Colorado woman who racked up student debt and failed to pay it, then was contacted by a debt collector. Marx, a single mother with two young children and a low-paying job, claimed that the collector's vigor went beyond the limits of the law. The collector called her several times a day, she said, and illegally threatened to garnish half her wages and sent a collection-related fax to her employer. She sued, but the lower court disagreed, finding that the debt collector's contact with the woman's employer did not violate the law because it did not specifically mention her debt. The court ordered her to pay $4,543 in costs -- nearly all of which compensated the debt collector for hiring a court reporter and bringing in witnesses. Read more.

TRANSUNION: U.S. AUTO LOAN DELINQUENCY RATE IN SECOND QUARTER AT LOWEST LEVEL

Credit-information company TransUnion Corp. said that the national delinquency rate of auto loans in the U.S. hit its lowest level for the second consecutive quarter since the firm began tracking the data in 1999, Dow Jones Newswires reported today. Auto loan delinquency rates in the second quarter dropped to 0.33 percent, down from 0.36 percent in the first quarter and 0.44 percent in the period a year ago. In addition to increased demand in new and used autos, bank auto debt per borrower rose to $13,427 in the second quarter from $12,689 in the previous year. TransUnion said that despite growing bank auto debt, the majority of states and cities are experiencing declines in their auto loan delinquency rates. Read more.

REGIONAL AIRLINES FACE CLOSINGS, BANKRUPTCY

Regional airlines operate half the nation's scheduled flights, but several of those carriers are being closed or are in bankruptcy court protection, USA Today reported today. They face significant challenges, as the big airlines they often fly for are phasing out smaller and costlier regional jets and cutting some low-traffic regional routes to focus on those that are more lucrative. Delta, the largest operator of 50-seat aircraft among U.S. airlines, will shutter regional carrier Comair after Sept. 29. Pinnacle Airlines, with subsidiaries such as Colgan that have flown for United, US Airways and Delta, filed for bankruptcy protection in April. AMR, the parent company of American Airlines and regional carrier American Eagle, filed for bankruptcy protection in November. "Airlines are finding these smaller jets just don't make them any money," says industry analyst Mike Boyd. "That's why they're shutting down Comair. That's why Pinnacle is in bankruptcy. It's a sector of (the) industry that provides a type of aircraft that's rapidly becoming obsolete." Read more.

ORCHESTRAS FIGHT HARD TIMES THROUGH BANKRUPTCY SEEKING NEW MODEL

Orchestras across the country continue to struggle financially, and some are following the lead of the Philadelphia Orchestra, Bloomberg News reported today. The Philadelphia Orchestra was the biggest among at least five U.S. symphonies to seek court protection in the wake of the 2008 economic collapse. Others include music organizations in Louisville, Ky., Syracuse, N.Y., Albuquerque, N.M., and Honolulu. Though subject to the same harsh realities of bankruptcy as corporations, the recent reorganization in Philadelphia -- and the decreased debt and expenses the group emerged with -- may serve as a model for other symphonies struggling with fewer donors and lower ticket sales. With its turnaround plan approved, the Philadelphia Orchestra Association exited court protection on July 30 after 15 months, having resolved $100 million in claims with a $5.5 million settlement, shrinking its payroll and winning a release from its pension obligations. Read more.

Click here to listen to an ABI podcast that focuses on orchestra bankruptcies.

DON'T MISS THE "WHEN IS AN INDIVIDUAL CHAPTER 11 THE BEST FIT?" WEBINAR ON SEPT. 27!

Chapter 11 can offer significant relief for certain individuals who need a restructuring of their finances. Learn when and how to use this tool in a 75-minute live webinar on Sept. 27 at noon ET. An expert panel will guide you through a successful individual chapter 11 and discuss key issues such as plan confirmation, modification and treatment of future income and secured debt.

Panelists on the webinar include:

James F. Molleur of the Molleur Law Office (Biddeford, Maine)

John P. Fitzgerald, III, of the Office of the U.S. Trustee (Boston)

Raymond J. Obuchowski of Obuchowski & Emens-Butler, PC (Bethel, Vt.)

Jennifer Rood of Bernstein Shur (Manchester, N.H.)

This panel was the highest rated at ABI's Northeast Bankruptcy Conference in July. The webinar is available to ABI members for $75. To register, please click here.

ABI IN-DEPTH

ABI MEMBERS WELCOME TO ATTEND ACB'S FREE HALF-DAY "BANKRUPTCY: BACK TO THE FUTURE" PROGRAM IN SEPTEMBER

The American College of Bankruptcy invites you to attend a free half-day program on Sept. 28 in Chicago for a discussion of many of the challenging topics facing current bankruptcy and reorganization professionals. Topics to be addressed include recent decisions of the U.S. Supreme Court and Court of Appeals, important work of the Advisory Committee on Bankruptcy Rules, and developments in the field of bankruptcy ethics. The nation’s leading judges, academics and bankruptcy professionals are among the speakers for the program. While there is no cost to attend, seating is limited, so early reservation is suggested. For more information and to register, please click here.

LATEST CASE SUMMARY ON VOLO: NUVEEN MUNICIPAL TRUST V. WITHUMSMITH BROWN, P.C. (3D CIR.)

Summarized by Matthew Heimann of Porzio, Bromberg & Newman, PC

Affirming the district court, the Third Circuit held that the district court did have "related to" jurisdiction under 28 U.S.C. § 1334(b) to adjudicate Appellant's action against the debtor’s accounting firm and counsel regarding an audit report and opinion letter that was prepared for the pre-petition transaction. The Third Circuit enunciated the principles of "related to" jurisdiction and its "conceivability" inquiry that applies to such analyses.

There are more than 600 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: FURTHER EXAMINATION OF THE FIFTH CIRCUIT’S RULING IN THE PILGRIM’S PRIDE CASE

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines the Fifth Circuit's ruling in the Pilgrim's Pride case. The court ruled in the case that a $1 million “enhancement fee" is OK after the company's reorganization plan paid a 100 percent dividend to unsecured creditors.

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
The Twombly/Iqbal rule for pleading ‘plausible’ claims has been applied too stringently in dismissing avoidance actions for failure to state a claim.

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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  CALENDAR OF EVENTS
 

September
- 7th Annual Golf and Tennis Outing
     September 11, 2012 | Maplewood, N.J.
- Complex Financial Restructuring Program
     September 13-14, 2012 | Las Vegas, Nev.
- Southwest Bankruptcy Conference
     September 13-15, 2012 | Las Vegas, Nev.
- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
     September 19-20, 2012 | New York, N.Y.
- "When Is an Individual Chapter 11 the Best Fit?" Live Webinar
     September 27, 2012
- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program
     September 28, 2012 | Chicago, Ill.

October
- Nuts & Bolts for Young and New Practitioners - KC
     October 4, 2012 | Kansas City, Mo.
- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum
     October 5, 2012 | Kansas City, Mo.

  


- Bankruptcy 2012: Views from the Bench
     October 5, 2012 | Washington, D.C.
- Chicago Consumer Bankruptcy Conference
     October 8, 2012 | Chicago, Ill.
- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar
     October 15, 2012
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy

November
- U.S./Mexico Restructuring Symposium
     November 7, 2012 | Mexico City, Mexico
- 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.


 
 
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