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Rising Mortgage Rates Elicit Fears They Could Hurt Housing Recovery

ABI Bankruptcy Brief | June 20 2013
 
  

June 20, 2013

 
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  NEWS AND ANALYSIS   

RISING MORTGAGE RATES ELICIT FEARS THEY COULD HURT HOUSING RECOVERY

Mortgage rates have spiked over the past few weeks, rising at the fastest pace since 2010, sparking fears that the housing market could weaken and undermine the country’s economic recovery, the Washington Post reported yesterday. Rates are now hovering near 4 percent, still historically low, but nearly two-thirds of a percentage point higher than last month. They have been driven up by the Federal Reserve’s anticipated move to begin scaling back its generous bond-buying program. “The biggest threat to the recovery is that rates rise too fast,” said Mark Zandi, chief economist at Moody’s Analytics. Already there are signs that higher rates are becoming a drag on the housing market. Refinancing applications fell 11 percent over the past two weeks, according to the Mortgage Bankers Association. They are down 36 percent from the beginning of May. Read more.

REPORT: STUDENT DEBT RELIEF INDUSTRY PROFITING FROM DESPERATION

A report released yesterday by the Boston-based National Consumer Law Center showed that the growing student-loan debt-relief industry is profiting from consumers’ confusion and desperation, with some companies charging as much as $1,600 to sign borrowers up for repayment plans, Bloomberg News reported yesterday. Such companies are proliferating because borrowers are buckling under the weight of student loans, which now total $1 trillion, exceeding all other consumer debt aside from mortgages. Former students are also struggling to navigate the government’s often complicated assistance programs. Student loan debt-relief companies say that they are comparable to organizations that help taxpayers file their returns – something customers could also do for free. The U.S. Consumer Financial Protection Bureau has heard from borrowers who say that companies are marketing special plans that can save thousands of dollars in loan payments, said Rohit Chopra, the agency’s student loan ombudsman. “It is not a special deal,” Chopra said. “It’s often a program they are entitled to by law.” Read more.

COMMENTARY: BILL TAKES THE WRONG APPROACH ON ASBESTOS INJURIES

Republicans pushed a bill through the House Judiciary Committee last month that would make it harder for plaintiffs injured by asbestos to get fair compensation, according to an editorial in yesterday's New York Times. The bill is supposedly designed to root out fraud and abuse, but there is no persuasive evidence of any significant fraud or abuse, according to the editorial. Before plunging ahead with this attempt to protect asbestos companies from lawsuits, the editorial urges Congress to commission an objective study of whether there is even a problem that needs fixing. Millions of workers have been injured by asbestos over the years, and thousands of suits have been filed against asbestos companies, which often were aware of the dangers but concealed the risks from workers and the public. Dozens of companies declared bankruptcy and established trusts, financed with company money, to pay present and future claims against them. The trusts typically pay only a small percentage of the value of a claim. Plaintiffs are also free to sue companies that have not gone bankrupt. The bill, known as the Furthering Asbestos Claim Transparency Act (FACT) of 2013, would allow asbestos companies to demand information from the trusts for virtually any reason, according to the editorial, forcing the trusts to devote limited resources to responding to fishing expeditions that will slow the process of paying claims. Read the full editorial.

LATEST ABI PODCAST EXAMINES SUPREME COURT'S DECISION ON THE MEANING OF “DEFALCATION”

ABI's latest podcast features ABI Resident Scholar Scott Pryor speaking with Prof. Keith Sharfman of St. John's University School of Law and attorney Tom Byrne of Sutherland Asbill & Brennan LLP (Atlanta) on the issues surrounding the Supreme Court's unanimous decision in Bullock v. BankChampaign, N.A. In its decision on May 13, the Court held that a defalcation by a trustee requires a finding of gross negligence or some knowledge that what he or she is doing is improper. Byrne was the counsel of record for Randy Bullock, and Scharfman joined fellow professors on an amici curiae brief in support of BankChampaign. Click here to listen to the podcast.

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: IN RE DESOUZA (1ST CIR.)

Summarized by David Baker of Law Office of David G. Baker

The First Circuit BAP reversed and remanded the lower court's ruling, holding that post-petiiton divorce court orders for alimony did not violate the automatic stay in a chapter 13 case, but when the debtor was found in contempt and incarcerated for failure to pay alimony, the contempt and incarceration were stay violations because they impacted "property of the estate" under §§541 and 1306.

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: DID CORKER-WARNER JUMP THE GUN ON THE "SKIN IN THE GAME" TARGET?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. The Corker-Warner bill would require private investors to take 10 percent of losses before federal mortgage guarantees kick in, but a new blog post says that more research is needed to determine whether that is enough protection for taxpayers.

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.
- 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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Detroit Looks to Reengineer How City Government Works

ABI Bankruptcy Brief | November 11, 2014
 
  

November 11, 2014

 
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  NEWS AND ANALYSIS   

DETROIT LOOKS TO REENGINEER HOW CITY GOVERNMENT WORKS

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

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

OPPONENTS SAY DETROIT BANKRUPTCY ILLEGAL, PLAN APPEAL

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

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

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

DINGED CREDIT? CARD ISSUERS ARE HAPPY TO LEND

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

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

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

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

USTP NOTICE OF PROPOSED RULEMAKING ON CHAPTER 11 MONTHLY OPERATING REPORTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NEW CASE SUMMARY ON VOLO: SUSQUEHANNA BANK V. USA/IRS (IN RE RESTIVO AUTO BODY; 4TH CIR.)

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

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

There are more than 1,500 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI's Volo website.

NEW ON ABI'S BANKRUPTCY BLOG EXCHANGE: CRAMDOWN HURDLES, AND HOW TO PLAY THE CLASSIFICATION GAME (OR NOT)

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

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

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

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

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 43 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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  CALENDAR OF EVENTS
 

2014

November
- abiLIVE Webinar
    Nov. 20, 2014

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

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

  

 

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

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

 

 

 
 
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Senator Richard Durbin Discusses the Student Loan Borrower Bill of Rights on Latest ABI Podcast

 

 

 
  

February 11, 2014

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

SENATOR RICHARD DURBIN DISCUSSES THE "STUDENT LOAN BORROWER BILL OF RIGHTS" ON LATEST ABI PODCAST

Sen. Dick Durbin (D-Ill.), the Assistant Majority Leader for the Senate and sponsor of S. 1803, the "Student Loan Borrower Bill of Rights," joined ABI Resident Scholar Prof. Charles Tabb for a discussion on key issues surrounding student debt. In addition to an overview and insight into his legislation, Durbin provides his thoughts on the risks to the U.S. if action is not taken to address the student debt crisis. Click here to listen to the podcast.

AMIDST CONTINUED CHAPTER 11 BANKRUPTCY SLOWDOWN, EXPERTS WEIGH FUTURE TRENDS

Corporate bankruptcy activity has declined to an unprecedented and record-breaking low--despite pundit predictions, according to an analysis in Friday's ABL Advisor. BankruptcyData.com's research reveals that current corporate bankruptcy activity, or the unprecedented lack thereof, just up-ended historical chapter 11 benchmarks and pundit expectations as there were zero public filings in the entire month of January 2014. In fact, up until the chapter 11 filing on Feb. 2 of Tuscany International Drilling, the last public company to seek chapter 11 protection (OCZ Technology Group) was in early December -- making this 60-day stretch a quite a dry spell, according to bankruptcy experts. "We were expecting a lot of action on the restructuring and insolvency front, but what we got were fewer chapter 11 filings, especially among middle-market companies," says Jeffrey Testa, a partner at Newark, N.J.-based McCarter & English. Prof. Edward Altman of the NYU Stern School of Business adds, "Yes, it is unusual that chapter 11 public company filings are zero for a full month; usually the median month is about 4-5." Testa details how this unprecedented and unexpected decline came to be: "For every reason there should have been filings, there were factors that minimized them: Lenders have practiced forbearance rather than taking the collateral, and in their eyes, a marginally performing loan can be acceptable for the time being if revenues are covering operations. Filing for protection is seen as expensive, which eliminates the smaller filings and creates a trend toward out-of-court resolution. There's also a growing realization that not every restructuring results in the emergence of a successful, reorganized and ultimately profitable entity." Altman added that he expects "filings to pick up, however, in 2014, especially if liquidity dries up some" due to an escalation of problems in developing countries. Read more.

ANALYSIS: NEW REGULATIONS LEAVE BUYOUT BUSINESS OUT ON THEIR OWN

As banking rules are redrawn, the Volcker rule is forcing financial institutions to shed their buyout businesses, the Wall Street Journal reported yesterday. The rule -- part of the Dodd-Frank law --aims to limit the risks big banks can take with their own capital. Under the rule, approved by five federal financial-regulatory agencies last year, banks have to sharply reduce their stakes in their private-equity units, or shed them altogether, by 2015. Banks piled into the buyout business during the boom years leading up to the 2008 financial crisis, taking part in some of the era's biggest corporate takeovers. JPMorgan Chase & Co. is currently in the process of spinning off One Equity Partners, a private-equity arm. The bank had been the firm's only investor, but won't put money into a new fund that One Equity Partners is raising, and it is exploring a sale of its stake in the buyout shop's existing investments. Goldman Sachs Group Inc. plans to keep its private-equity businesses, but is reducing the amount of capital it holds in existing funds. To comply with a Volcker requirement that funds' names don't evoke those of their parent banks, it is replacing the moniker "GS Capital" with "Broad Street" on new funds. Read more. (Subscription required.)

COMMENTARY: GARLOCK CASE SENDS WARNING TO TORT BAR IN ASBESTOS BANKRUPTCIES

Garlock Sealing Technologies, which is trying to emerge from bankruptcy after a deluge of asbestos claims, took a courageous risk in taking on the tort bar in court, and it now plans to use the information it found in discovery as the basis for a racketeering, fraud and conspiracy suit against four national asbestos plaintiffs' firms, according to an editorial in Saturday's Wall Street Journal. Garlock, a gasket-maker, was forced into bankruptcy in 2010 by a flood of asbestos claims. Plaintiffs' lawyers were insisting that Garlock set aside $1.3 billion for victims of the deadly asbestos-related disease mesothelioma. Last month, Bankruptcy Judge George Hodges instead accepted Garlock's liability estimate of $125 million and roasted the plaintiffs' bar for its dishonesty. Most companies pushed into asbestos bankruptcies have set up trusts to pay claims. Garlock said that it had evidence that plaintiffs were filing claims with trusts in which they blamed non-Garlock products for their diseases, even as they accused Garlock in court. The judge allowed discovery in 15 cases Garlock had already settled, and as the judge wrote, "Garlock demonstrated that exposure evidence was withheld in each and every one of them." Read the full editorial. (Subscription required.)

ANALYSIS: ROLLING THE DICE ON MUNICIPAL BANKRUPTCIES

Moody's Investors Service said in a report last week that the amount of money that bond investors get back in municipal bankruptcies varies widely -- even among creditors who own debt with similar characteristics, the Wall Street Journal reported on Saturday. The report is timely given the situation in Puerto Rico, which has about $70 billion in outstanding debt that is widely owned among U.S. investors. The commonwealth has been downgraded to junk recently by two major rating firms: Moody's Investors Service on Friday and Standard & Poor's Ratings Services earlier last week. Puerto Rico, which has been faced with a struggling economy in recent years, is not eligible for chapter 9 municipal bankruptcy, but it is unclear how bond investors would fare if the island could not pay back its debt. Island officials say that they are working to improve the commonwealth's finances and have assured investors that they will get their money back. Moody's analysts noted that in the bankruptcy case of Jefferson County, Ala., which was weighed down by more than $3 billion in sewer debt, investors who owned sewer bonds got back 54.1 percent of their money. However, J.P. Morgan Chase ended up with a recovery closer to 30 percent. (Moody's did not include in its calculations a fine that J.P. Morgan paid related to a bribery investigation connected to the county's sewer bonds.) Other creditors got as much as 80 percent, Moody's said. Read more. (Subscription required.)

PUBLIC COMMENT PERIOD ENDS SATURDAY FOR PROPOSED AMENDMENTS TO THE FEDERAL RULES OF BANKRUPTCY PROCEDURE

The Judicial Conference Advisory Committee on Bankruptcy Rules has proposed amendments to the Federal Rules of Bankruptcy Procedure and Official Forms, and requested that the proposals be circulated to the bench, bar, and public for comment. On August 15, 2013, the public comment period opened for the proposed amendments to Bankruptcy Rules 2002, 3002, 3007, 3012, 3015, 4003, 5005, 5009, 7001, 9006, and 9009 and 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. The public comment period closes on February 15, 2014. For more information, please click here.

To access the online comment site for the proposed amendments, please click here.

DUBERSTEIN GALA AWARDS DINNER ON MARCH 3 TO PAY TRIBUTE TO BANKRUPTCY JUDGE BURTON LIFLAND AND CHIEF BANKRUPTCY CLERK JOSEPH HURLEY

The Gala Awards Dinner at this year's 22nd Annual Duberstein Bankruptcy Moot Court Competition on March 3 will feature a special tribute to Bankruptcy Judge Burton J. Lifland of the U.S. Bankruptcy Court for the Southern District of New York and Joseph P. Hurley, Chief Bankruptcy Clerk (retired) of the U.S. Bankruptcy Court for the Eastern District of New York. To purchase tickets for the gala or to find out more information, please visit http://www.dubersteingala.com.

PURCHASE EITHER THE CONSUMER OR BUSINESS EDITION OF THE BEST OF ABI 2013 AND RECEIVE A FREE ADDITIONAL TITLE!

To make room for new books in 2014, ABI is having a special Bookstore clearance sale. Now, when you buy either Best of ABI 2013: The Year in Business Bankruptcy or The Year in Consumer Bankruptcy, you can choose a free book from a select list of ABI publications. You'll be able to make your selection when you click "Buy Now" on either edition of the Best of ABI 2013. To purchase the Best of ABI 2013: The Year in Business Bankruptcy, please click here.

Make your selection when you click "Buy Now" on either edition of the Best of ABI 2013. To purchase the Best of ABI 2013: The Year in Consumer Bankruptcy, please click here.

ABI'S SIXTH ANNUAL LAW STUDENT WRITING COMPETITION DEADLINE APPROACHING

Law school students are invited to submit a paper between now and March 4, 2014 for ABI's Sixth Annual Bankruptcy Law Student Writing Competition. ABI will extend a complimentary one-year membership to all students who participate in this year's competition. Eligible submissions should focus on current issues regarding bankruptcy jurisdiction, bankruptcy litigation, or evidence issues in bankruptcy cases or proceedings. The first-place winner, sponsored by Invotex Group, Inc., will receive a cash prize of $2,000 and publication of his or her paper in the ABI Journal. The second-place winner, sponsored by Jenner & Block LLP, will receive a cash prize of $1,250 and publication of his or her paper in an ABI committee newsletter. The third-place winner, sponsored by Thompson & Knight LLP, will receive a cash prize of $750 plus publication of his or her paper in an ABI committee newsletter. For competition participation and submission guidelines, please visit http://papers.abi.org.

LOOKING FOR A REPLAY OF THE "BACK TO BASICS" WEBINARS? CHECK OUT ABI'S CLE SITE!

The final installment of ABI's "Back to Basics" live webinar series, hosted by the Young and New Members Committee, was held last week, and you now have the opportunity to access the programs at your convenience! The three webinars in the series, an examination of financial statements and operating reports, using financial documents as evidence and issues surrounding bankruptcy and hedge funds, are now posted to ABI's e-Learning website. Let a trusted CLE provider help get your associates up to speed.

LOOKING TO SEE WHAT IS IN STORE FOR ABI'S 32ND ANNUAL SPRING MEETING? WATCH HERE!

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ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: JONES V. MULLEN (IN RE JONES; 9TH CIR.)

Summarized by Kevin M. Baum of St. John's University School of Law

The Ninth Circuit BAP affirmed the bankruptcy court's order approving the chapter 7 trustee's sale of real property transferred to the debtor post-petition upon the death of the grantor under a beneficiary deed under Arizona Law, which had been executed and recorded pre-petition. Particularly, the BAP held that the debtor's contingent interest in the real property under the beneficiary deed was property of the estate under 11 U.S.C. § 541(a)(1).

There are more than 1,200 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: ATTACKING LBO PAYOUTS AS STATE LAW FRAUDULENT TRANSFERS

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent post examines the U.S. Bankruptcy Court for the Southern District of New York's recent decision in Weisfelner v. Fund 1 (In Re Lyondell Chemical Co.), 2014 WL 118036 (Bankr. S.D.N.Y. Jan. 14, 2014). The court held that the safe-harbor provision of 11 U.S.C. § 546(e) did not bar unsecured creditors from seeking, under state fraudulent-transfer law, to recover payouts made to former shareholders of a company acquired in a leveraged buyout.

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 Bankruptcy Code permits a debtor to artificially impair a class for cramdown purposes.

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
 

2014

February
- VALCON14
    Feb. 26-28, 2014 | Las Vegas, Nev.

March
- Bankruptcy Battleground West
    March 11, 2014 | Los Angeles, Calif.
- Alexander L. Paskay Memorial
Bankruptcy Seminar

    March 13-15, 2014 | Tampa, Fla.

April
- Annual Spring Meeting
    April 24-27, 2014 | Washington, D.C.

  

 

May
- Credit & Bankruptcy Symposium
    May 1-2, 2014 | Uncasville, Conn.
- New York City Bankruptcy Conference
    May 15, 2014 | New York, N.Y.
- Litigation Skills Symposium
    May 20-23, 2014 | Dallas, Texas

June
- Central States Bankruptcy Workshop
    June 12-15, 2014 | Lake Geneva, Wis.

July
- Northeast Bankruptcy Conference
    July 17-20, 2014 | Stowe, Vt.

 

 
 
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Administrations Student Debt Plan Would Ease Burden but Critics Say It Could Promote Overborrowing

ABI Bankruptcy Brief | May 14 2013
 
  

May 14, 2013

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

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

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

SURVEY: MILLIONS STRUGGLING WITH MEDICAL DEBT

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

TRANSUNION: CREDIT QUALITY OF MORTGAGE BORROWERS NATIONWIDE HAS IMPROVED

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

CREDIT-RATING AGENCIES POISED TO AVOID OVERHAUL

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

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

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

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

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

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

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

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

ABI GOLF TOUR UNDERWAY; NEXT STOP IS CENTRAL STATES BANKRUPTCY WORKSHOP IN JUNE

Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI's Golf Tour's first stop at Lake Presidential Golf Club. Next up for the Tour is the famed Bear course at the Grand Traverse Resort at the Central States Bankruptcy Workshop on June 14. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour, and women are most welcome.

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

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

ABI IN-DEPTH

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

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

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

There are more than 800 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: FURTHER ANALYSIS OF THE SUPREME COURT'S RULING IN BULLOCK V. BANKCHAMPAIGN

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post takes a closer look at the Supreme Court's ruling yesterday in Bullock v. BankChampaign NA involving the definition of "defalcation" in 11 U.S.C. § 523(a)(4).

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should implement constructive trusts in any case where applicable state law would recognize them.

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

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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May 15, 2013
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May 16, 2013
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May 21-24, 2013
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May 29, 2013
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June 7, 2013
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June 13-16, 2013
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Golf Tournament 2013
June 14, 2013
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INSOL’s Latin American Regional Seminar in São Paulo, Brazil
June 13, 2013
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July 11-14, 2013
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July 18-21, 2013
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Aug. 8-10, 2013
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Aug. 22-24, 2013
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Sept. 10, 2013
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Sept. 12, 2013
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  CALENDAR OF EVENTS
 

2013

May
- "Nuts and Bolts" Program at NYCBC
     May 15, 2013 | New York, N.Y.
- ABI Endowment Cocktail Reception
     May 15, 2013 | New York, N.Y.
- New York City Bankruptcy Conference
     May 16, 2013 | New York, N.Y.
- Litigation Skills Symposium
     May 21-24, 2013 | Dallas, Texas
- ABI Live Webinar: Consumer Class Actions
     May 29, 2013

June
- Memphis Consumer Bankruptcy Conference
     June 7, 2013 | Memphis, Tenn.
- Central States Bankruptcy Workshop
     June 13-16, 2013 | Grand Traverse, Mich.
- INSOL’s Latin American Regional Seminar
     June 13, 2013 | São Paulo, Brazil
- Charity Golf Tournament
     June 14, 2013 | City of Industry, Calif.


  

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 11-14, 2013 | Newport, R.I.
- Southeast Bankruptcy Workshop
     July 18-21, 2013 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
    August 8-10, 2013 | Hershey, Pa.
- Southwest Bankruptcy Conference
    August 22-24, 2013 | Incline Village, Nev.

September
- ABI Endowment Golf & Tennis Outing
    Sept. 10, 2013 | Maplewood, N.J.
- ABI Endowment Baseball Game
    Sept. 12, 2013 | Baltimore, Md.


 
 
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More Homeowners Emerge from Underwater Status

ABI Bankruptcy Brief | March 19 2013
 
  

March 19, 2013

 
home  |  newsroom  |  chart of the day  |  blogs  |  bankruptcy code and rules  |  statistics  |  legislative news  |  volo
  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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FRIDAY:

 

 

BBW 2013
March 22, 2013
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COMING UP

 

 

 

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

2013

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

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


  

 

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

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

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 11-14, 2013 | Newport, R.I.
- Southeast Bankruptcy Workshop
     July 18-21, 2013 | Amelia Island, Fla.


 
 
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Analysis Nearly a Third of Companies that Filed for Chapter 11 Did Not Disclose Plans in Advance

ABI Bankruptcy Brief | November 6 2012
 
  

November 8, 2012

 
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  NEWS AND ANALYSIS   

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

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

U.S. CONSUMER CREDIT EXPANDS IN SEPTEMBER

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

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

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

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

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

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

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

The current 14-year term of office for Judith H. Wizmur, U.S. Bankruptcy Judge for the District of New Jersey at Camden, is due to expire on Sept. 4, 2013. The U.S. Court of Appeals for the Third Circuit is considering the reappointment of the judge to a new 14-year term of office. Members of the bar and the public are invited to submit comments for consideration by the Court of Appeals regarding the reappointment of Bankruptcy Judge Wizmur. All comments should be directed to one of the following addresses: by e-mail at Wizmur_Reappointment@ca3.uscourts.gov or by mail to the Office of the Circuit Executive, 22409 U.S. Courthouse, 601 Market St., Philadelphia, PA 19106-1790. Comments must be received no later than noon on Monday, December 3, 2012.

ABI IN-DEPTH

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

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

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

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

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

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

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

TUCK SCHOOL OF BUSINESS WINS NINTH ANNUAL CORPORATE RESTRUCTURING COMPETITION

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

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

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

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

There are nearly 700 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SECOND CIRCUIT ADOPTS DEFERENTIAL ABUSE OF DISCRETION STANDARD OF REVIEW FOR EQUITABLE MOOTNESS APPEALS

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

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

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

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

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

Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL

INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

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TOMORROW:

 

4TH ANNUAL PROFESSIONAL DEVELOPMENT PROGRAM
Nov. 9, 2012
Register Today!

 

MONDAY:

 

SE 2012
Nov. 12, 2012
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COMING UP:

 

SE 2012
Nov. 29 - Dec. 1, 2012
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MT 2012
Dec. 4-8, 2012
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WCBC 2013
Jan. 21, 2013
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ACBPIKC 2013
Jan. 24-25, 2013
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ACBPIKC 2013
Feb. 7-9, 2013
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ACBPIKC 2013
Feb. 17-19, 2013
Register Today!

 

 

ACBPIKC 2013
Feb. 20-22, 2013
Register Today!

 
   
  CALENDAR OF EVENTS
 

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

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

2013

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


  

 


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

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


 
 
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Home Vacancies Fall in Cities Hit Hardest by Foreclosures

ABI Bankruptcy Brief | August 2, 2012
 
  

August 2, 2012

 
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  NEWS AND ANALYSIS   

HOME VACANCIES FALL IN CITIES HIT HARDEST BY FORECLOSURES

Trulia Inc. has reported that the home-vacancy rate is falling in U.S. cities such as Las Vegas and Phoenix that were hit hardest by the housing crisis, Bloomberg News reported today. San Jose, Calif., led the declines among metropolitan areas, with a 24.1 percent drop in the number of empty homes and apartments this year through mid-July, according to Trulia, a real estate information company in San Francisco. It was followed by Las Vegas, Denver, the California areas of Bakersfield and Orange County, Seattle and Phoenix. Falling vacancies, based on an analysis of homes where the U.S. Postal Service delivered no mail for at least 90 days, indicate a gain in the number of new occupants, caused by population growth and more household formation, Trulia Chief Economist Jed Kolko said. Home prices rose for a third consecutive month in May in the 20 U.S. cities tracked by the S&P/Case-Shiller index, according to a July 31 report. U.S. apartment rents rose the most in five years in the second quarter as shrinking vacancies allowed landlords to charge more, research firm Reis Inc. (REIS) said on July 5. Read more.

COMMENTARY: REGULATE, DON'T SPLIT UP, HUGE BANKS

While Sanford I. Weill, the mastermind behind the creation of Citigroup, last week called for the dismantling of megabanks, the bank merger frenzy that Weill set off in the late 1990s was not the proximate cause of the 2008 financial crisis, according to an op-ed by Steven Rattner, a former counselor to the Treasury secretary, in today's New York Times. None of the institutions that toppled like dominoes in 2008 — the investment banks Bear Stearns and Lehman Brothers, the mortgage-finance giants Fannie Mae and Freddie Mac, the insurance company American International Group — were commercial banks, according to Rattner. Nor was the concentration of our banking system, which is less centralized than those in Britain, France, Germany, Italy, Japan, Switzerland and many other countries. What brought our financial system to its knees, according to Rattner, was poor management that expanded the banks' portfolios and activities too aggressively without sufficient risk controls, enabled by lax oversight by regulators. Many of those excesses were concentrated in the housing sector, where a now-legendary bubble formed without regulators or industry leaders recognizing it, according to the op-ed. When the bubble inevitably deflated, in 2007, the weakest institutions imploded with it, and systemic risks were exposed. Only with billions of government money — much of it now recouped — was the system saved. The Dodd-Frank Act was passed and includes a rule, proposed by the former Fed chairman Paul A. Volcker, that forbids banks to gamble with insured deposits. We should focus on putting this and other new regulations into effect, and devising better ways to deal with financial giants — not distractions like Weill's call for reinstating an outmoded concept like Glass-Steagall Act, according to Rattner. Read the full op-ed.

MICHIGAN UNVEILS DEMOLITION PLAN FOR PORTIONS OF DETROIT

Michigan's governor unveiled a new urban policy today aimed at jumpstarting the demolition of thousands of vacant and abandoned homes in Detroit, the Wall Street Journal reported today. Detroit, which lost a quarter of its population between 2000 and 2010, is estimated to have as many as 40,000 vacant and dangerous structures across its 139-square-mile spread. Such homes are a magnet for criminal activity and create a hazard for children walking to schools. Michigan Governor Rick Snyder (R) plans to use about $10 million of Michigan's $97 million payout from a national mortgage-settlement fund to help demolish abandoned houses that surround nine schools in three of Detroit's deteriorating communities. The state's broader role in running Detroit is the result of a power-sharing agreement struck in April—and endorsed by Detroit Mayor Dave Bing—to help the city stave off bankruptcy. Read more. (Subscription required.)

BILL PROVIDES NEW PROTECTIONS FOR ANTITRUST WHISTLEBLOWERS

Whistleblowers would get more protections for reporting criminal antitrust violations to the Department of Justice under new legislation introduced on Tuesday by Sens. Patrick Leahy (D-Vt.) and Chuck Grassley (R-Iowa ), the top members of the Senate Judiciary Committee, the Legal Times reported yesterday. The Criminal Antitrust Anti-Retaliation Act would provide a civil remedy for those who are retaliated against for reporting violations such as price-fixing, market allocation and bid-rigging, which can result in reduced competition and more overcharges for businesses and consumers. The bipartisan bill is based on the results of the General Accountability Office's 2011 study on enforcing antitrust laws, where antitrust attorneys and law professors broadly supported the addition of that remedy because it would motivate more people to come forward with evidence. The DOJ's Antitrust Division, the enforcer of antitrust laws, has relied heavily upon a leniency program to help the agency uncover and prosecute illegal cartel activity, according to the GAO report. Under that current leniency program, the first individual or company that reports its involvement in a criminal antitrust conspiracy to the Antitrust Division will avoid criminal conviction, fines and prison sentences. The bill introduced on Tuesday does not propose a rewards program for whistleblowers, which DOJ officials said could jeopardize witness credibility in criminal cases and could undermine companies' internal compliance programs. Read more.

ABI MEMBERS WELCOME TO ATTEND ABC'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 at the IIT Chicago-Kent College of Law 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 speakers for the program are among the nation’s leading judges, academics and bankruptcy professionals. While there is no cost to attend, seating is limited, so early reservation is suggested. To register, please click here.

For more information on the program, please contact Claudia Gunderson at cgunderson@mcguirewoods.com or (312) 750-3540.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: U.S. V. CONEY (5TH CIR.)

Summarized by Gregory Hesse of Hunton & Williams LLP

The Fifth Circuit ruled that the chapter 7 discharge that was issued in favor of the defendants did not discharge their tax obligations because the debtors' conduct violated Sec. 727(a)(1)(C).

More than 570 appellate opinions are summarized on Volo typically 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: THE GROWING TREND OF MIDDLE-AGED AMERICANS WITH STUDENT LOAN DEBT

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines how middle-aged Americans are caught up in the student loan debt crisis at a growing rate.

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.

IS YOUR ABI MEMBERSHIP PROFILE CURRENT?

Keeping a current profile will allow you to benefit from one of ABI's most important services - networking. When you update your profile, you are putting your most valuable information in the membership directory. Be sure to include your areas of expertise, firm information, education and join any other committees that are of interest. Click here to update your profile.

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.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

  

 

NEXT EVENT:

SE 2012
Sept. 13-14, 2012
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COMING UP:

 

SW 2012
Sept. 13-15, 2012
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NYU 2012
Sept. 19-20, 2012
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NABMW 2012
Oct. 4, 2012
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SE 2012
Oct. 5, 2012
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SE 2012
Oct. 5, 2012
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SE 2012
Oct. 8, 2012
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SE 2012
Oct. 18, 2012
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U.S./Mexico Restructuring Symposium
Mexico City, Mexico
Nov. 7, 2012

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SE 2012
Nov. 12, 2012
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  CALENDAR OF EVENTS
 

September
- 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.
- 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.
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy

November
- U.S./Mexico Restructuring Symposium
     November 7, 2012 | Mexico City, Mexico
- Detroit Consumer Bankruptcy Conference
     November 12, 2012 | Detroit, Mich.


 
 
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Consumers Paying Down Debt Helps Boost U.S. Expansion

ABI Bankruptcy Brief | October 16, 2012
 
  

October 16, 2012

 
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  NEWS AND ANALYSIS   

CONSUMERS PAYING DOWN DEBT HELPS BOOST U.S. EXPANSION

Federal Reserve figures show that household debt as a share of disposable income sank to 113 percent in the second quarter from a record high of 134 percent in 2007 before the recession hit, Bloomberg News reported yesterday. Debt payments on that basis are the smallest in almost 18 years, while the delinquency rate for credit cards is the lowest since the end of 2008. The progress that consumers have been making will allow gross domestic product to absorb stepped-up deficit reduction by the federal government next year and keep on expanding, according to Mark Zandi, chief economist at Moody’s Analytics Inc. He sees GDP growing 2.1 percent in 2013, a bit slower than this year’s projected 2.2 percent, as Congress allows some, but not all, of the scheduled year-end tax increases and spending cuts to go ahead. The GDP number will mask stronger growth for the private side of the economy, which Zandi expects to increase to 3.6 percent from 3.1 percent. Read more.

FED GOVERNOR'S PLAN TO LIMIT BANK SIZE FUELS DEBATE

While academics, politicians and even former bank chiefs have called for the nation's banking behemoths to be broken up or shrunk, Daniel K. Tarullo, a Federal Reserve governor who oversees bank regulation, said in a speech last week that an important part of a bank's balance sheet could be capped at a set percentage of the nation's gross domestic product, the New York Times DealBook blog reported yesterday. That a regulator at the Fed – the most powerful of the banking industry's overseers – would say that such a structural overhaul of the financial system might be considered was a sign that the policy debate over what to do about "too big to fail" might be shifting. Some Republicans looking to repeal the Dodd-Frank Act say that they still want to constrain large banks. Their concern is that the law may lead the market to believe that the government protects large banks. In turn, investors might then provide cheap loans to the biggest banks, fueling even more growth in the banks' balance sheets. "I am completely open to the proposal because of my similar concern about the growing size of institutions that are too big to fail," said Sen. David Vitter (R-La.). "Beyond this specific proposal, there is a growing nonpartisan consensus to do a lot more to limit the size of the megabanks." Read more.

BANKS SEE HOME LOANS AS GATEWAY TO BIG GAINS

Federal stimulus has ignited a boom in mortgage refinancing, and the trend could continue as the government steps up its support of the broad housing market, according to a report in the New York Times DealBook blog on Friday. In the third quarter, banks may have likely originated as much as $450 billion of home loans, according to estimates by Inside Mortgage Finance, a publication that tracks the industry. That figure, which includes both refinances of existing mortgages and new loans to buy a house, would be a considerable jump from the previous period. In the second quarter, banks originated $405 billion, with 68 percent in refinancings. In September, the Fed announced plans to buy large amounts of mortgage-backed bonds. The proposal has driven the price of such securities higher, letting banks earn an even bigger financial gain when they sell mortgages into the market. Read more.

ANALYSIS: FLIPPING HOUSES IS ONCE AGAIN A BOOMING BUSINESS

Flipping houses earned a bad reputation during the housing boom thanks to speculators who bought and sold millions of homes in search of easy profits, but the practice is gaining popularity again as the nation’s real estate market shows signs of life, the Washington Post reported yesterday. The number of flips rose 25 percent during the first half of 2012 from the same period a year earlier, according to research firm RealtyTrac, and the gross profit on each property averaged $29,342. Areas of the country that were hit particularly hard by the housing crash have seen the most pronounced boom in flipping, as investors gobble up foreclosures and short sales — properties sold for less than the owners owe on the mortgage — and resell them to buyers eager to take advantage of record-low interest rates. The Phoenix area leads the country with nearly 10,000 flipped properties during the first half of this year. Las Vegas, Los Angeles, Miami and Atlanta also are high on the list. Read more.

NEW JERSEY CASE MAY UPEND HOME LOAN DISCRIMINATION RULES

A fight between the government and residents of what remains of Mount Holly Gardens in New Jersey has now reached the U.S. Supreme Court, which may decide in the next several weeks whether to take up a case with nationwide implications for the housing industry, Bloomberg News reported yesterday. Civil rights advocates are battling the industry over whether the 1968 Fair Housing Act authorizes discrimination suits even without allegations of intentional bias. Lower courts have said that suits can claim that a government policy or company lending practice has a discriminatory effect, known as "disparate impact," even if that was not the intent. Mount Holly has been buying up what it says had become a blighted, high-crime neighborhood, with an eye toward redevelopment. The opponents say that the effort has hurt black and Hispanic residents, devastating the township's only predominantly minority neighborhood. Although the Mount Holly case involves municipal action, the U.S. Justice Department also enforces the disparate impact doctrine against financial institutions. The statute lacks the language supporting this doctrine, which Congress affirmatively included in other laws, so it should not apply, said Jeffrey Naimon, a banking attorney with BuckleySandler LLP. The courts have disagreed. "Allowing disparate impact claims under the FHA would render illegal many legitimate governmental and private activities designed to promote the general welfare of the community," Mount Holly argued in its appeal to the Supreme Court. Read more.

CFPB REPORT FINDS PRIVATE STUDENT LOAN BORROWERS FACE ROADBLOCKS TO REPAYMENT

The Consumer Financial Protection Bureau (CFPB) Student Loan Ombudsman released a report today saying that private student loan borrowers are sometimes surprised by the terms and conditions of their loans, are given the runaround by their loan servicer and have few options to refinance or modify repayment for a better deal, insideARM.com reported. "Graduates don't have a fair chance to pay back their debts if they are faced with surprises, runarounds, and dead-ends by student loan servicers," said CFPB Director Richard Cordray. "Student loan borrower stories of detours and dead-ends with their servicers bear an uncanny resemblance to problematic practices uncovered in the mortgage servicing business," said CFPB Student Loan Ombudsman Rohit Chopra, who authored the report. Earlier this year, the CFPB announced that outstanding student loan debt crossed the $1 trillion mark. The Dodd-Frank Act established an ombudsman for student loans within the CFPB to assist borrowers with private student loan complaints. Today’s report, which was mandated by Congress, analyzed approximately 2,900 private student loan complaints, comments, and other submissions and input from borrowers. The report found that roughly 95 percent of the complaints are about loan servicing – when borrowers try to pay back their debt or are unable to pay. Read more.

Click here to read the CFPB report.

STUDY: WELL-OFF WILL BENEFIT MOST FROM CHANGE TO STUDENT DEBT RELIEF PLAN

While the federal government is making changes to its income-based student loan repayment plan to help borrowers with relatively high debt, a report released today by the New America Foundation, a nonprofit and nonpartisan policy institute, says that the changes ultimately will provide only marginal help for borrowers who are at the greatest risk of default, the New York Times reported. Rather, the changes would provide big benefits to middle- and high-income borrowers, particularly for those seeking a graduate degree, the authors found. The report says that at least one financial planning company is telling law school students that the changes could allow them to write off $100,000 in student debt. Under current rules, borrowers pay 15 percent of their discretionary income, based on a formula that is meant to exclude money spent on basic life necessities. The remaining balance and accrued interest is forgiven after 25 years of payments. The Obama administration is tweaking the program to lessen the burden for some borrowers by expediting changes that will reduce monthly payments from 15 percent of discretionary income to 10 percent and forgive outstanding balances after 20 years of payments, instead of 25 years. The New America Foundation report says the changes to income-based repayment could provide some benefits to all participants. But the primary beneficiaries would be high-income, high-debt participants who could make relatively small payments for 20 years and then have a large part of their debt forgiven, the authors said. Read more.

Click here to read the New America Foundation report.

WATCH COMMISSION HEARING LIVE TOMORROW!

ABI's Commission to Study the Reform of Chapter 11 will hold a public hearing tomorrow, October 17, at the LSTA Annual Conference in New York. The event will be live webcast beginning at 3:15 p.m. ET at the Commission's website (commission.abi.org).

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A COLLEAGUE AND ABI LEADER

Our friend Steven Golick (Osler Hoskin & Harcourt LLP, Toronto) is facing a medical crisis. He has been diagnosed with a serious brain tumor, requiring complex surgery and treatment. Steven’s spirits are very strong and he and his family remain optimistic, but he can use our support. A prominent international restructuring attorney and an ABI member since 1994, Steven is also a founding member of the ABI house band, the Indubitable Equivalents. Because the band is important to Steven, his fellow band-mates have organized a new Blog site for Steven's friends and colleagues to show their love and support at this critical time. Please click on this link to share your thoughts with many others, and post as often as you'd like.

ABI IN-DEPTH

LATEST ABI PODCAST EXAMINES LITIGATION SURROUNDING THE DISSOLUTION OF A DISTRESSED LAW FIRM

The latest ABI podcast features Executive Director Sam Gerdano talking with Paul Hage of Jaffe, Raitt, Heuer & Weiss, PC (Southfield, Mich.) and Dylan Trache of Wiley Rein LLP (McLean, Va.) about unfinished business litigation and other issues surrounding the dissolution of a financially distressed law firm. Click here to listen.

MEMBERS WILL NOT WANT TO MISS ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING ON OCT. 26

Members planning to attend the 86th Annual NCBJ Annual Conference in San Diego from Oct. 24-27 will not want to miss the exciting line-up scheduled for the ABI program track on Oct. 26. In addition to roundtable discussions on the hottest consumer and business bankruptcy topics, ABI will be hosting a ticketed luncheon that will feature the presentation of the 7th Annual Judge William L. Norton, Jr. Judicial Excellence Award and entertainment by Apollo Robbins, a sleight-of hand artist, security consultant and self-described gentleman thief. Click here to register for the Conference.

To view the list of ABI programs on Oct. 26 and the full NCBJ Annual Conference schedule, please click here.

ABI's Chapter 11 Reform Commission will also be holding a public hearing on Oct. 26 from 2:30-4:30 p.m. PT at the San Diego Marriott. Interested parties have the opportunity to submit testimony at the hearing. For further information, please contact ABI Executive Director Samuel J. Gerdano at sgerdano@abiworld.org.

LATEST CASE SUMMARY ON VOLO: THE PRUDENTIAL INSURANCE COMPANY OF AMERICA V. CITY OF BOSTON (IN RE SW BOSTON HOTEL VENTURE LLC; 1ST CIR.)

Summarized by Neal Paul Donnelly of the U.S. Bankruptcy Court for the District of Delaware

In a dispute between a developer-debtor and its primary secured lender, the BAP affirmed the bankruptcy court's decision to calculate postpetition interest (§506(b)) owing to the lender at the contractual default rate. The BAP also reversed the lower court's ruling as to when the post-petition interest began accruing, finding that the lender had been oversecured since the petition date, so that was when the lender became entitled to interest payments under § 506(b).

There are more than 650 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: SUMMARY OF KEY DIFFERENCES BETWEEN CHAPTER 9 AND CHAPTER 11 BANKRUPTCY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post summarizes several of the key differences between chapter 9 and chapter 11 bankruptcy.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should adopt formal loss mitigation procedures to facilitate the negotiation of residential mortgage modifications for consumer debtors.

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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Join our networks to expand yours.

  

 

THIS WEEK:

 

WATCH THE CHAPTER 11 COMMISSION HEARING LIVE TOMORROW AT 3:15 P.M. ET VIA WEBCAST!
CLICK HERE
Oct. 17, 2012

 

 

SE 2012
Oct. 18, 2012
Register Today!

 

 

ABI/ST. JOHN'S "BANKRUPTCY AND RACE: IS THERE A RELATION?" SYMPOSIUM
Oct. 19, 2012
Register Today!

 

 

COMING UP:

 

 

ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING
Oct. 26, 2012
Register Today!

 

 

MEXICO 2012
Nov. 7, 2012
Register Today!

 

 

4TH ANNUAL PROFESSIONAL DEVELOPMENT PROGRAM
Nov. 9, 2012
Register Today!

 

 

SE 2012
Nov. 12, 2012
Register Today!

 

 

SE 2012
Nov. 29 - Dec. 1, 2012
Register Today!

 

 

MT 2012
Dec. 4-8, 2012
Register Today!

 

 

ACBPIKC 2013
Jan. 24-25, 2013
Register Today!

 

 

ACBPIKC 2013
Feb. 7-9, 2013
Register Today!

 

 

ACBPIKC 2013
Feb. 17-19, 2013
Register Today!

 
   
  CALENDAR OF EVENTS
 

October
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy
- ABI/St. John's "Bankruptcy and Race: Is There a Relation?" Symposium
     October 19, 2012 | Queens, N.Y.
- ABI Program at NCBJ's Annual Conference
     October 26, 2012 | San Diego, Calif.

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.

  

 

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

2013

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

February
- Caribbean Insolvency Symposium
     February 7-9, 2013 | Miami, Fla.
- Kansas City Advanced Consumer Bankruptcy Practice Institute
     February 17-19, 2013 | Kansas City, Mo.


 
 
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Analysis How Chapter 11 Saved the U.S. Economy

ABI Bankruptcy Brief | March 26 2013
 
  

March 26, 2013

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

ANALYSIS: HOW CHAPTER 11 SAVED THE U.S. ECONOMY

Harvard Business School Prof. Stuart C. Gilson’s recent study of the 2008 financial crisis says that restructuring and chapter 11 played a heroic role in helping the country rebound. In his article in the 2012 Journal of Applied Corporate Finance, Gilson writes that the "amount of debt that needed to be restructured posed a seemingly insurmountable challenge." At one point, "$3.5 trillion of corporate debt was distressed or in default. [Between] 2008 and 2009, $1.8 trillion worth of public company assets entered chapter 11 bankruptcy protection—almost 20 times more than during the prior two years," according to Gilson. A significant portion of the private-equity industry, he says, was "widely believed to be on the verge of extinction." Instead, in a relatively short time, much of the corporate debt that defaulted during the financial crisis has been managed down, mass liquidations have been averted, and corporate profits, balance sheets and values have rebounded with remarkable speed, according to Gilson's analysis. Read more.

REPORT: U.S. STUDENT LOAN WRITE-OFFS HIT $3 BILLION IN FIRST TWO MONTHS OF 2013

An Equifax study showed that U.S. banks wrote off $3 billion of student loan debt in the first two months of 2013, up more than 36 percent from the same period a year ago, Reuters reported yesterday. The credit reporting agency also said that student lending has grown from last year because more people are going back to school and the cost of higher education has risen. "Continued weakness in labor markets is limiting work options once people graduate or quit their programs, leading to a steady rise in delinquencies and loan write-offs," Equifax Chief Economist Amy Crews Cutts said in a statement. U.S. student loan debt reform has become a more pressing issue since the U.S. Consumer Financial Protection Bureau (CFPB) reported in March 2012 that the total surpassed $1 trillion by the end of 2011 and as interest rates on subsidized Stafford loan rates are set to double in July. The cost of earning a 4-year undergraduate degree has gone up by 5.2 percent per year in the last decade, according to the CFPB, forcing more students to take out loans. Read more.

For more information, be sure to register for ABI's "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. Click here for more information.

U.S. CRACKS DOWN ON "FORCED" INSURANCE

A U.S. housing regulator is cracking down on a little-known practice that has hit millions of struggling borrowers with high-price homeowners' insurance policies arranged by banks that benefit from the costly coverage, the Wall Street Journal reported today. The Federal Housing Finance Agency (FHFA), which regulates mortgage giants Fannie Mae and Freddie Mac, plans to file a notice today to ban lucrative fees and commissions paid by insurers to banks on so-called force-placed insurance. Such "forced" policies are imposed on homeowners whose standard property coverage lapses, typically because the borrower stops making payments. Critics say that the fee system has given banks a financial incentive to arrange more expensive homeowners' policies than are necessary. FHFA's move would apply nationwide to all mortgages guaranteed or owned by Fannie and Freddie—about half of the housing market. Read more. (Subscription required.)

COMMENTARY: IS IT ALREADY TIME TO WEAKEN DODD-FRANK?

A key effort in the Dodd-Frank financial reform act has been to bring transparency and reforms to the complex market of derivatives, but Republicans and Democrats on the House Agriculture Committee on Wednesday approved seven bills that would roll back parts of the Dodd-Frank financial regulations, according to a commentary in Sunday's Washington Post. However, Dodd-Frank's regulation of derivatives is crucially important to alleviate future financial crises and set a proper course for reform, according to the commentary. The bills now headed to the House floor for a vote weaken Title VII of Dodd-Frank, which is the part that regulates derivatives. "Derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal," financier Warren Buffett said. Bill Clinton said that he was wrong to avoid regulating derivatives when he had the chance. These financial instruments played a central role in the financial crisis, culminating in the collapse and bailout of AIG. Since Dodd-Frank, there has been extensive debate about the new rules for derivatives, which range from collateral to price transparency. But there has also been a counter-debate about who has to follow the new rules. Those who fall under "end-user exemptions" are largely able to forgo following the Dodd-Frank rules, and the easiest way to understand the bills passed out of the Agriculture Committee is to note that they seek to expand the scope of those exemptions. One bill would weaken cross-border regulations, allowing U.S. firms that run their derivatives in other countries to avoid following the new derivative rules. In the age of electronic trading and overlapping jurisdictions, this limits the ability of regulators to make sure that prudential standards are set in this country. Read more.

LAWSUIT SHEDS LIGHT ON ALLEGED INFLATION OF LEGAL BILL

The thorny issue of law firm billing is at the heart of a lawsuit involving a fee dispute between a law firm and Adam H. Victor, an energy industry executive, the New York Times DealBook blog reported yesterday. After DLA Piper sued Victor for $675,000 in unpaid legal bills, Victor filed a counterclaim, accusing the law firm of a "sweeping practice of overbilling." Victor's feud with DLA Piper began after he retained the firm in April 2010 to prepare a bankruptcy filing for one of his companies. The lawsuit has brought to light e-mails from DLA Piper’s lawyers about how the bill was running way over budget. Another described a colleague’s approach to the assignment as "churn that bill, baby!" Legal ethics scholars said that it is highly unusual to find documentary evidence of possible churning — the creation of unnecessary work to drive up a client's bill. Read more.

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

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

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

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

Make sure to register today!

ABI IN-DEPTH

TEE OFF ON THE NEW ABI GOLF TOUR!

Starting with the Annual Spring Meeting, ABI will offer conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour is designed to enhance the golfing experience for serious golfers, while still offering a fun networking opportunity for players of any ability. As opposed to the format used 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.

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: NORTH AMERICAN BANKING CO. V. LEONARD (IN RE WEB2B PAYMENT SOLUTIONS INC.; 8TH CIR.)

Summarized by Brendan Gage, U.S. Bankruptcy Court, Eastern & Western Districts of Arkansas

Affirming the bankruptcy court, the Bankruptcy Appellate Panel for the Eighth Circuit held that a creditor loses its possessory lien in deposit accounts when it turns over the account funds to the trustee without requesting a court to adequately protect its lien in the funds.

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: WHAT IS NEXT FOR CREDITORS OF DETROIT?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines the potential next steps for creditors of financially distressed Detroit.

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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Join our networks to expand yours.

  

 

NEXT EVENT:

 

 

 

BBW 2013
April 5, 2013
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COMING UP

 

 

 

BBW 2013
April 10, 2013
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ASM NAB 2013
April 18, 2013
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ASM 2013
April 18-21, 2013
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NYCBC 2013
May 15, 2013
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ASM 2013
May 16, 2013
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ASM 2013
May 21-24, 2013
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ASM 2013
June 7, 2013
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ASM 2013
June 13-16, 2013
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NE 2013
July 11-14, 2013
Register Today!

 

 

 

 

 

ASM 2013
July 18-21, 2013
Register Today!


 
   
  CALENDAR OF EVENTS
 

2013

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

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


  

 

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

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 11-14, 2013 | Newport, R.I.
- Southeast Bankruptcy Workshop
     July 18-21, 2013 | Amelia Island, Fla.


 
 
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