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Fitch Some Past Chapter 11 Filers Again at Risk of Default

ABI Bankruptcy Brief | August 23, 2012
 
  

August 23, 2012

 
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FITCH: SOME PAST CHAPTER 11 FILERS AGAIN AT RISK OF DEFAULT

US Airways Group Inc. and Great Atlantic & Pacific Tea Co. top a list of companies that restructured under chapter 11 but remain at risk of another default in the future, according to a new report by Fitch Ratings, Dow Jones Daily Bankruptcy Review reported yesterday. Fitch analysts Sharon Bonelli and Michael Simonton identified 31 companies that have defaulted in the past, whether via a bankruptcy filing, debt exchange or missed bond payment. Five publishing companies made the list, putting that industry most at risk of default. Building products companies came in second, with four in all. Read more. (Subscription required.)

COMMENTARY: A QUICK END TO TARP MEANS A SMALLER PAYOFF FOR TAXPAYERS

The federal government still holds investments in hundreds of small banks around the country in the Troubled Asset Relief Program (TARP), and in an effort to wind down TARP, the government is trying to sell off its holdings of preferred stock of the remaining smaller banks, according to a commentary yesterday in the New York Times DealBook blog. The problem, according to the commentary, is that the Treasury Department is not getting great bids on some of the bank paper, even on the shares of banks with strong profits and strong capital. When the government sold its holdings in MetroCorp Bancshares of Houston this month, the bank itself bought back most of it – at 98 cents on the dollar. Wilshire Bancorp of Los Angeles bought back its paper at 94 cents on the dollar. The Treasury Department sold preferred shares of Ohio-based First Defiance at 96 cents, and Peoples Bancorp of North Carolina at 93 cents. While all of these small banks are regarded as healthy, the taxpayers take the loss, according to the commentary. Read more.

FHFA: SECOND QUARTER U.S. HOUSING PRICES INCREASED MOST SINCE 2005 IN SECOND QUARTER

The Federal Housing Finance Agency (FHFA) reported that U.S. house prices jumped 1.8 percent in the second quarter from the previous three months, fueled by record-low mortgage rates and tight inventory, Bloomberg News reported today. The seasonally adjusted increase was the biggest since the fourth quarter of 2005, the FHFA said. Prices climbed 3 percent from a year earlier. The number of Americans who owed more than their homes were worth fell by about 400,000 in the second quarter, according to a report today by Zillow Inc. Read more.

MASSACHUSETTS FORECLOSURE PREVENTION ACT SIGNED INTO LAW

Massachusetts Governor Deval Patrick (D) on August 3, 2012, signed into law Massachusetts’ Foreclosure Prevention Law, according to a recent post on the Massachusetts Real Estate Law blog. The new law makes significant changes to existing foreclosure practices in Massachusetts, and also attempts to clean up the recent turmoil surrounding defective foreclosure titles after the U.S. Bank v. Ibanez and Eaton v. FNMA rulings. Provisions of the new law include:

• New requirement that mortgage assignments be recorded
• New mandatory requirement to offer loan modifications and mediation to qualified borrowers
• New Eaton foreclosure affidavit confirming ownership of note/mortgage loan
• Protection for third party buyers of foreclosed properties

The new Massachusetts law goes into effect on Nov. 1, 2012. Click here to read the full text of the law.

COMMENTARY: GOVERNMENT STILL FRUSTRATED BY GMAC

Among the companies that were bailed out by the federal government during the financial crisis, perhaps the most intractable is the company formerly known as the General Motors Acceptance Corp. (GMAC), according to a commentary in the New York Times DealBook blog yesterday. GMAC was the financial arm of General Motors, and in the years leading up to the financial crisis, it was also GM's most profitable unit. In 2005, desperate to raise cash, General Motors sold a 51 percent stake in GMAC to the private equity firm Cerberus Capital Management. During the financial crisis, however, the only way that GMAC staved off collapse was thanks only to a government infusion of $17.2 billion. The company was renamed Ally Financial and the Treasury Department now owns 73.8 percent of Ally, with Cerberus retaining an 8.7 percent stake. Almost since that time, the Treasury Department has wanted to rid itself of its Ally stake, according to the commentary. Ally filed for an initial public offering in March 2011, but it has so far languished in the face of a weak market and concerns over Ally itself. The Treasury Department has been paid back about $5.7 billion and still controls the company through its stock ownership and appointment of a majority of Ally's directors. Despite lingering concerns about Ally, the automobile sales market is recovering and Ally's auto finance operations turned a profit last year. But Ally is still suffering from legacy debts, according to the commentary primarily concentrated in its ResCap unit. Despite having “General Motors” as part of its former title, the company did not just finance automobiles, but was also one of the largest subprime housing lenders through its ResCap subsidiary. Read more.

ANALYSIS: BUYOUTS BOOM, BUT NOT LIKE 2007

Private-equity buyouts are back but with a twist—they are smaller and less flashy than in past booms, according to an analysis in today's Wall Street Journal. Emboldened by a flurry of activity, private-equity executives say that the buyout market is crawling back from the doldrums of the financial crisis, when the debt that fueled such deals disappeared and potential sellers were put off by low valuations. Private-equity firms have snapped up $64.7 billion worth of U.S. companies since January, the highest amount year-to-date since 2007, according to data provider Dealogic. Experts cite a range of reasons, from relatively inexpensive financing to a push by troubled European banks to sell assets. Activity could cool off for the rest of the year amid uncertainty over the global economy and the U.S. presidential election, according to experts. And unlike in 2007, a blockbuster year for private equity that witnessed a bevy of large buyouts for household names, the current targets are smaller and lesser known. Read more. (Subscription required.)

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

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

Panelists on the webinar include:

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

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

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

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

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

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: OKLAHOMA DEPARTMENT OF SECURITIES V. WILCOX (10TH CIR.)

Summarized by Daniel Glasser of Chipman Glasser, LLC

Reversing an earlier district court decision, the 10th Circuit held that debtors were entitled to a discharge of a claim related to debtors' unjust enrichment from proceeds of a Ponzi scheme, because such proceeds fell outside the exception in 11 U.S.C. § 523(a)(19) – judgments for the violation of securities laws. The Tenth Circuit held that the plain language of section 523(a)(19) is limited to the perpetrators of securities violations, not to debtors unjustly enriched by a third party's violation of the law. Chief Circuit Judge Briscoe, however, dissented. He disagreed with the majority’s reading of the statute and argued that at least one of the debtors was complicit in the Ponzi scheme.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: THE CONTRACTS CLAUSE VERSUS THE BANKRUPTCY CLAUSE: BANKRUPTCY COURT HOLDS BANKRUPTCY CLAUSE REIGNS SUPREME

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new blog post examines a recent decision by the Bankruptcy Court for the Eastern District of California that affirmatively held that the contracts clause did not eclipse the bankruptcy clause in the chapter 9 case of Stockton, Calif. Shortly after Stockton filed for chapter 9 protection in June, a group of retired employees commenced an adversary proceeding to prevent termination of their benefits on the theory that the contracts clause of the Constitution prevented the city from reducing retiree health benefits.

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

Client matters left unfinished at a firm when it files for bankruptcy are the property of the defunct firm.

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

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  CALENDAR OF EVENTS
 

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

October
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     October 4, 2012 | Kansas City, Mo.
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Feds Find Racial Hostility Discrimination to Be Rampant Inside CFPB

ABI Bankruptcy Brief | August 28, 2014
 
  

August 28, 2014

 
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  NEWS AND ANALYSIS   

FEDS FIND RACIAL HOSTILITY, DISCRIMINATION TO BE RAMPANT INSIDE CFPB

America's newest federal agency, charged with regulating financial institutions to prevent another hostile economic downturn, is reportedly having trouble regulating hostilities and discrimination among its own employees, the Washington Times reported yesterday. Evidence gathered by congressional investigators, internal agency documents and Washington Times interviews with workers discloses scores of cases of U.S. Consumer Financial Protection Bureau employees seeking protection from racially offensive, sexist or discriminatory behavior, including: (1) a naturalized U.S. citizen with more than a decade of service with the U.S. government was called an "f'ing foreigner" by management; (2) a department was internally dubbed "the Plantation" because of the number of African Americans working in it — all supervised by white managers — without any obvious promotional track or way to get transferred; (3) white employees were twice as likely as minorities to get the most favorable personnel ratings in employee reviews; and (4) managers intimidated and retaliated against employees for voicing complaints or offering an alternative point of view — from denying vacation requests to hiring unqualified friends to supervise jobs and then asking subordinates to train them. The CFPB acknowledges its employees' complaints about a hostile working environment and says it is working with the National Treasury Employees Union — which represents CFPB employees — to settle worker protests and iron out new performance reviews, which are at the heart of many of the protests. However, current CFBP employees say that more work needs to be done. Click here to read the full article.

SEC TIGHTENS RULES ON CREDIT RATING AGENCIES, ASSET-BACKED SECURITIES

The Securities and Exchange Commission yesterday approved final rules cracking down on credit rating agencies and asset-backed securities — two areas that SEC Chairwoman Mary Jo White said were "at the center of the financial crisis," according to an article in yesterday's ThinkAdvisor. In her opening remarks at the SEC open meeting at the agency's Washington headquarters, White said that the final rules in the "two closely related areas" give investors "powerful new tools" for independently evaluating the quality of asset-backed securities and credit ratings. "ABS issuers and rating agencies will be held accountable under significant new rules governing their activities," said White, adding that the issuance of "flawed credit ratings by certain credit rating agencies was a key contributor to the financial crisis." Since 2011, SEC staffers have annually examined each of the nationally recognized statistical rating organizations (NRSROs) registered with the SEC, as required by the Dodd-Frank Act. "While the reports from these reviews have catalogued a number of improvements, they have also identified concerns that persist, including ones related to the management of conflicts of interest, internal supervisory controls, and post-employment activities of former staff of NRSROs," White said. Click here to read the full article.

EXECUTIVES TO BE HELD MORE RESPONSIBLE FOR GOING-CONCERN DISCLOSURES

Corporate managers will have to make more uniform disclosures when there is substantial doubt about their business's ability to survive, the Financial Accounting Standards Board said yesterday, according to a Wall Street Journal blog yesterday. The FASB updated U.S. accounting rules, effective by the end of 2016, to define management's responsibility for evaluating whether their business will be able to continue operating as a "going concern" and to make relevant disclosures in financial statement footnotes. Previously, there were no specific rules under U.S. Generally Accepted Accounting Principles, and disclosures were largely up to auditors. Investors, however, have grown frustrated with the lack of going-concern opinions during the financial crisis; such missing opinions, they believe, failed to warn them of impending bankruptcies. The FASB first issued a proposal at the peak of the financial crisis in 2008, but debate and revisions delayed the final standard, which didn't go up for a vote until May. Supporters of the changes have argued that corporate managers have better information about a company's ability to continue financing their operations than auditors do. Click here to read the full article.

ANALYSIS: MORTGAGE CRISIS IS ABOUT TO FLARE UP AGAIN

We are nearly eight years removed from the beginnings of the foreclosure crisis, and since it began, more than five million homes have been lost. So it would be natural to believe that the crisis has receded. Statistics point in that direction. Financial analyst CoreLogic reports that the national foreclosure rate fell to 1.7 percent in June, down from 2.5 percent a year ago. But these numbers are likely to reverse next year, with foreclosures spiking again, according to an analysis in the New Republic Sunday. A series of temporary relief measures and legacy issues from the crisis will begin to bite in 2015, causing home repossessions that could present economic headwinds. In other words, the foreclosure crisis was never solved; it was deferred. The problem comes from many different angles. Home equity lines of credit will start to feature increased payments, as borrowers must pay back principal instead of just the interest. In addition, the relief offered by the government's Home Affordable Modification Program (HAMP), which provided temporary interest rate easing to borrowers, will start running out, and interest rates will start rising about 1 percent each year. Analysts also believe that the foreclosure backlog, mostly in states that require a court ruling to foreclose, will finally unclog in the coming years, which might already be happening. Despite the mostly rosy statistics, foreclosure activity did rise 2 percent from June to July after months of reductions, a potentially troubling omen of things to come. Click here to read the full analysis.

POOR CITIES CAN GET HIGH CREDIT RATINGS

Detroit's bankruptcy case cast a cloud of doubt over other U.S. cities with large populations of poor residents, but a surprising number of them are in relatively good financial shape, the Wall Street Journal reported yesterday. In a new report, Moody's Investors Service found that 27 of the 50 poorest large cities are rated relatively high in their ability to pay back debts and manage their long-term needs. "Poverty is something that we get asked about a lot," said Moody's Thomas Compton, an analyst and co-author of the report. "What we found is that contrary to what a lot of people may think, just because there is a high poverty rate it doesn't mean that you're going to have low credit quality." Poverty can lead to paltry tax revenues and an increased need for municipal services, making debt repayment a challenge. But the cities with high poverty rates and relatively high credit ratings — Provo, Utah, and Dayton, Ohio, among them — have achieved some combination of a large and diverse tax base, strong finances, stable government and controlled costs, according to Moody's. Cities with a lot of poor people also may have a lot of rich people, and other entities may chip in to pay for the kind of costly social services associated with the poor. But although many cities manage high poverty rates effectively, Moody's noted that poverty does remain a challenge to local governments. Click here to read the full article (subscription required).

COMMENTARY: HOW WOULD THE FED RAISE RATES?

While central bankers at the Jackson Hole symposium on Friday heard a lot of talk from Federal Reserve Chair Janet Yellen about the labor market, over which central bankers have proved to have only limited influence, they heard very little about global asset inflation, over which they could have a lot of influence. Yet the Fed does not appear to be inclined to exercise such influence, according to a Wall Street Journal commentary Tuesday. Yellen said that the time is not yet right to raise short-term interest rates, which would end six years of a near-zero policy and restore something more closely resembling financial normality. Given the risks of a resulting stock market crash or political uproar, it may not happen even next year unless some crisis, internal or external to the Fed, forces Yellen's hand. Meanwhile, savers and investors will continue to be denied a proper return on their investments and multibillion-dollar pension funds will flirt with insolvency, according to the commentary. A question mostly unasked at Jackson Hole is a crucial part of today's when-will-it-happen guessing game: Exactly how will the Fed go about draining liquidity if a burst of inflation urgently presented that necessity? Click here to read the full commentary (subscription required).

WHY PACER REMOVED ACCESS TO CASE ARCHIVES OF FIVE COURTS

PACER is most often the first stop for downloading public court records, which has led some freedom-of-information advocates to criticize the electronic service — and try to create some public archives outside of it. However, on Aug. 10, the database announced the removal of access to certain case files — and not just a handful, but entire categories of documents coming from five courts, according to a Washington Post blog Tuesday. The move affects archived files in Second, Seventh, Eleventh and Federal Circuit Courts of Appeals, as well as the U.S. Bankruptcy Court for the Central District of California. Charles Hall, a spokesperson for the Administrative Office of the U.S. Courts, said that the change was made in preparation for an overhaul of the PACER architecture, including the implementation of the next generation of the Judiciary's Case Management and Electronic Case Files System. However, as a result of the changes, the locally developed legacy case-management systems of some courts are no longer compatible with PACER, according to Hall, although he added that the dockets and documents no longer available through the system could still be obtained directly from the relevant court, and that "all open cases, as well as any new filings, will continue to be available on PACER." But that also means that it is much harder for the public to access historical records — and the lack of forewarning left some legal and technical experts reeling. Click here to read the full article.

NEW TO THE LAW PROFESSION? LAW FIRM RECENTLY ADD NEW ASSOCIATES TO THE RANKS? BE SURE TO PRE-ORDER ABI'S SURVIVAL GUIDE FOR THE NEW LAWYER!

Available now for pre-order in ABI's Bookstore is the Survival Guide for the New Lawyer: What They Didn't Teach You in Law School. The Survival Guide provides real-world guidance on the everyday aspects of practicing law, with a special emphasis on bankruptcy law. Full of anecdotal examples and hard-earned advice, this Guide is perfect for the aspiring lawyer fresh out of law school, or for any firm that wants to give its associates a leg up on the competition. Click here to pre-order, and be sure to log in first to obtain the ABI member discount!

NEW CASE SUMMARY ON VOLO: MERUELO V. REORGANIZED MERUELO MADDUX PROP. INC. (IN RE MERUELO MADDUX PROP. INC.; 9TH CIR.)

Summarized by Elie Herman

The Bankruptcy Appellate Panel vacated the order of the bankruptcy court for abuse of discretion in applying the "reasonableness" standard under § 502(b)(4) to a post-petition claim for administrative expense based on an unpaid severance and unpaid bonus, rather than the "actual and necessary" standard set forth in § 503(b)(1), and the BAP remanded for application of the proper standard.

There are more than 1,400 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: HOW THE MOMENTIVE RULING HAS SHAKEN UP DEBT MARKETS

A recent post discusses Tuesday's ruling in the Momentive Performance Materials Inc. case, and how it has rattled the distressed-investing world.

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

SARE cases should not be allowed in chapter 11.

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

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  CALENDAR OF EVENTS
 

2014

September
- Southwest Bankruptcy Conference
    Sept. 4-6, 2014 | Las Vegas, Nev.
- abiLIVE Webinar: Understanding Make-Whole and No Call Provisions
    Sept. 9, 2014 |
- Golf & Tennis Outing
    Sept. 9, 2014 | Maplewood, N.J.
- CARE Financial Literacy Conference
    Sept. 11-13, 2014 | Dallas, Texas
- ABI Workshop: Lending to Distressed Companies
    Sept. 15, 2014 | Alexandria, Va.
- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
    Sept. 17-18, 2014 | New York, N.Y.

October
- abiWorkshop: Government Contracting and Bankruptcy
    Oct. 6, 2014 | Alexandria, Va.
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- Views from the Bench
    Oct. 24, 2014 | Washington, D.C.
- Claims-Trading Program
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November
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- Detroit Consumer Bankruptcy Conference
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Report Bankruptcy Bidder Protections Climbed in 2012

ABI Bankruptcy Brief | May 30 2013
 
  

June 4, 2013

 
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  NEWS AND ANALYSIS   

REPORT: BANKRUPTCY BIDDER PROTECTIONS CLIMBED IN 2012

A report from Morgan Joseph TriArtisan LLC, an investment bank that focuses on the middle market, found that bankruptcy bidder protections hit their highest level in recent years, the Wall Street Journal Bankruptcy Beat blog reported today. The report found that the average amount of bidder protections a company offered its lead bidder last year was 4.4 percent of the purchase price, while average bidder protections between 2008 and 2011 hovered between 3.5 and 3.7 percent. (They were a low 2.6 percent in 2007, before the economic downturn hit.) Bidder protections include the break-up fee that a company pays its stalking-horse bidder, as well as expense reimbursements, which cover the legal and due-diligence fees a stalking horse incurs as it puts its bid together. The average break-up fee last year was 3.7 percent of the purchase price compared to 2.5-2.9 percent in prior years, while the average expense reimbursement was 2.3 percent versus a past range of 0.4-1.6 percent. Read the full report.

COMMENTARY: A BETTER WAY TO END "TOO BIG TO FAIL"

Big banks and their defenders insist that the changes proposed in the Terminating Bailouts for Taxpayer Fairness Act—which would require them to boost the value of their stock and other equity to 15 percent of the value of their total assets—are unnecessary and would have dangerous consequences for the U.S. economy and our financial competitiveness, according to a commentary by Prof. David Skeel in today's Wall Street Journal. Both of these claims are wrong, according to Skeel, but in making them, the banks have accidentally pointed the way to a far more promising strategy for finally ending "too big to fail." Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) introduced the Terminating Bailouts for Taxpayer Fairness Act on April 24, which would require U.S. financial institutions with more than $500 billion in assets to substantially increase their "equity capital." The banks further insist that Brown-Vitter would force them to cut back their lending to businesses just as the U.S. economic recovery is getting underway, and to shed assets to create the required 15 percent capital buffer. But as Bank of England's Robert Jenkins has argued, it is a widely held myth that banks reduce lending simply because capital obligations are increased. Still, according to Skeel, the giant banks' concerns do suggest a friendly amendment to Brown-Vitter: Rather than force them to fit the same 15 percent capital mode, why not let them choose either to comply with Brown-Vitter's capital requirements, or to downsize to a specific maximize size within five years of the enactment of the legislation? Read the full commentary. (Subscription required.)

LEGISLATION AIMS TO ENSURE MEDICAL-DEBT ACCURACY IN CREDIT REPORTS

Rep. Gary Miller (R-Calif.) on May 24 introduced legislation to give consumers more time to ensure that only accurate medical debt is reported to credit bureaus, according to a press release from Miller's office. H.R. 2211, the "Accuracy in Reporting Medical Debt Act," aims to ensure that consumers have ample time to resolve medical billing questions and potential errors before medical debt can be reported to the credit bureaus. The Accuracy in Reporting Medical Debt Act would delay the ability of a debt collector to report medical debt to a credit bureau if the consumer notifies the debt collector that:

• the consumer is continuing to work with an insurance company;

• the consumer did not know that the debt existed; or

• the consumer has applied for financial assistance.

To read the full copy of H.R. 2211, please click here.

COMMENTARY: SHADES OF 2007 BORROWING

American investors have taken out more margin loans than ever before, indicating that speculative investing has grown among retail investors, reaching levels that in the past indicated that the market was getting to unsustainable levels and might be in for a fall, according to a commentary in Saturday's New York Times. The amount owed on loans secured by investments rose to $384 billion at the end of April, according to data compiled by the Financial Industry Regulatory Authority (FINRA). It was the first time the total had surpassed the 2007 peak of $381 billion, a peak that was followed by the Great Recession and credit crisis. The latest total of borrowing amounts to about 2.4 percent of GDP, a level that in the past was a danger signal. Rising margin debt was once seen as a primary indicator of financial speculation, and the Federal Reserve controlled the amount that could be borrowed by each investor as a way to dampen excess enthusiasm when markets grew frothy. But the last time the Fed adjusted the margin rules was in 1974, when it reduced the down payment required for stocks to 50 percent of the purchase price from 65 percent. That came about during a severe bear market. Read more.

ABI WEBSITE (ABI.ORG) WILL BE DOWN THIS WEEKEND FOR SCHEDULED MAINTENANCE

From 10 p.m. ET on Friday, June 7, through Sunday evening, June 9, the ABI homepage (abi.org) will be down for scheduled maintenance. During this period, members will not be able to access certain features, including registering for conferences, printing and viewing CLE certificates, and purchasing publications. Other ABI sites, like Search.abi.org, Volo.abi.org, Journal.abi.org, law.abi.org, blogs.abi.org and news.abi.org, will be operational during this time, but users may experience limited functionality. ABI intends to limit this downtime as much as possible. If you have any questions, please email support@abiworld.org.

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!

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 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 IN-DEPTH

NEW CASE SUMMARY ON VOLO: FADEL V. DCB UNITED LLC (IN RE FADEL; 9TH CIR.)

Summarized by Mark Hudson of Schian Walker PLC

The Ninth Circuit BAP affirmed the bankruptcy court's granting of relief from the automatic stay to permit a purchaser at a foreclosure sale to pursue a forcible detainer action against the debtor in state court and denying motion for reconsideration.

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: FURTHER EXAMINATION 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 blog post provides further examination of the Supreme Court's ruling on May 13 in the case of Bullock v. BankChampaign, N.A.

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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FRIDAY:

 

 

Memphis 2013
June 7, 2013
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COMING UP

 

 

 

CSBW 2013
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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NE 2013
July 11-14, 2013
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SEBW 2013
July 18-21, 2013
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MA 2013
Aug. 8-10, 2013
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SW 2013
Aug. 22-24, 2013
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NYIC Golf Tournament 2013
Sept. 10, 2013
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Endowment Baseball 2013
Sept. 12, 2013
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VFB2013
Sept. 27, 2013
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MW2013
Oct. 4, 2013
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Endowment Football 2013
Oct. 6, 2013
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Detroit
Nov. 11, 2013
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40-Hour Mediation Program
Dec. 8-12, 2013
Register Today!


 
   
  CALENDAR OF EVENTS
 

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.
- 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.

November
- 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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Restructuring Experts Recession Did Not Improve Corporate Governance

ABI Bankruptcy Brief | February 5 2013
 
  

February 12, 2013

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

RESTRUCTURING EXPERTS: RECESSION DID NOT IMPROVE CORPORATE GOVERNANCE

The Great Recession taught businesses some valuable lessons, but a recent survey found that restructuring experts do not think companies learned enough about changing their corporate governance practices, the Wall Street Journal reported today. In its 2013 Outlook Survey of restructuring experts, advisory firm AlixPartners said that slightly less than half of the 98 professionals questioned believe corporate governance is better now than it was before the recession. Corporate governance breakdowns have indeed been a major factor in several bankruptcies of the past few years, including the collapse of MF Global Holdings Ltd. and the massive fraud at Peregrine Financial Group Inc. Despite those events, more than two-thirds of the restructuring professionals who think corporate governance is worse said that it was because of liquidity oversight. When asked which sectors might face increases in distressed situations, the restructuring gurus picked industries facing scrutiny in Washington, D.C. Forty-one percent of those surveyed picked health care, up from just 20 percent last year. The restructuring experts also expect an uptick in distressed situations at energy companies, along with aerospace and defense. Read more. (Subscription required.)

PRIVATE EQUITY BRACING FOR BUYOUT-BOOM SHAKEOUT

The private-equity industry, comprised of nearly 4,500 firms with $3 trillion in assets, is bracing for a shakeout that has been brewing since the collapse of credit markets choked off a record leveraged-buyout binge, Bloomberg News reported today. Firms that attracted an unprecedented $702 billion from investors from 2006 to 2008 must replenish their coffers for future deals and avoid a reduction in fee income when the investment periods on those older funds run out, typically after five years. As many as 708 firms face such deadlines through 2015, according to London-based researcher Preqin Ltd. Many firms are suffering from below-average profits on their boom-period funds, and top executives from Carlyle Group LP co-founder David Rubenstein to Blackstone Group LP President Tony James say that future returns will be far more modest than those investors got used to in the past. As investors gravitate to the best-performing managers and cut loose others, 10 to 25 percent of the firms may find themselves without fresh money. Read more.

REPORT: SEC'S REVOLVING DOOR HURTS ITS EFFECTIVENESS

The Project on Government Oversight, a nonprofit watchdog group long critical of the SEC's revolving door, released a study yesterday highlighting a pattern of SEC alumni going to bat for Wall Street firms, the New York Times DealBook blog reported yesterday. The report, similarly skeptical of Wall Street lawyers joining the SEC, cites recent enforcement cases and scuttled money market regulations to underscore its concerns. "Former employees of the Securities and Exchange Commission routinely help corporations try to influence SEC rule-making, counter the agency's investigations of suspected wrongdoing, soften the blow of SEC enforcement actions, block shareholder proposals and win exemptions from federal law," the report says. Read more.

SPECULATIVE BETS PROVE RISKY AS SAVERS CHASE PAYOFF

Regulators across the country are confronting a wave of investor fraud that is saddling retirement savers with steep losses on complex products that until a few years ago were pitched only to the most sophisticated investors, the New York Times reported yesterday. The victims are among the millions of Americans whose mutual funds and stock portfolios plummeted in the wake of the financial crisis, and who started searching for ways to make better returns than those being offered by bank deposits and government bonds with minuscule interest rates. Tens of thousands of them put money into speculative bets promoted by aggressive financial advisers. The investments include private loans to young companies like television production firms and shares in bundles of commercial real estate properties. Those alternative investments have now had time to go sour in big numbers, state and federal securities regulators say, and are making up a majority of complaints and prosecutions. "Since the crisis, we've seen more and more people reaching out into different types of exotic investments that are a big concern to us," said William F. Galvin, the Massachusetts secretary of the commonwealth. Last Wednesday, Galvin's office ordered one of the nation's largest brokerage firms, LPL Financial, to pay $2.5 million for improperly selling the real estate bundles, known as nontraded REITs, or real estate investment trusts, to hundreds of state residents from 2006-09, in some cases overloading clients' accounts with them. Read more.

COMMENTARY: QUIETLY KILLING A CONSUMER WATCHDOG

Having failed to block the creation of the Consumer Financial Protection Bureau (CFPB) in the 2010 Dodd-Frank financial reform bill, Senate Republicans are now trying to take away its power by filibuster, and they may well succeed, according to a New York Times editorial today. Under the Dodd-Frank law, most of the CFPB's regulatory powers -- particularly its authority over nonbanks like finance companies, debt collectors, payday lenders and credit agencies -- can be exercised only by a director. Knowing that, Republicans used a filibuster to prevent President Obama's nominee for director, Richard Cordray, from reaching a vote in 2011. Obama then gave Cordray a recess appointment, but a federal appeals court recently ruled in another case that the Senate was not in recess at that time because of the Republicans' tactics. That opinion, if upheld by the Supreme Court, is likely to apply to Cordray as well, which could invalidate the rules the bureau has already enacted. The president has renominated Cordray, but Republicans have made it clear that they will continue to filibuster to block his confirmation. Earlier this month, 43 Senate Republicans wrote a letter to the president vowing to block any nominee until "key structural changes" are made, including a bipartisan commission to run the bureau instead of one director, and congressional control of its appropriations. Other bank regulators, like the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, are not subject to the appropriations process, as a shield against political interference. Congress does, however, control the budgets of the Securities and Exchange Commission and the Commodity Futures Trading Commission, and House Republicans have voted to strip those agencies of money needed to regulate derivatives and curb abuses. Read the full editorial.

ANALYSIS: S&P'S TOXIC AAA RATINGS OF MORTGAGE DEBT HAD FAR-REACHING EFFECTS

Institutions throughout the financial services industry felt the effects of the damages inflicted when S&P allegedly inflated rankings of mortgage debt that contributed to the biggest financial crisis since the Great Depression, according to a Bloomberg News analysis yesterday. As a result, the Justice Department sued New York-based S&P and parent McGraw-Hill Cos. last week. The world's leading financial institutions suffered more than $2.1 trillion of writedowns and losses after soaring U.S. mortgage defaults caused the credit crunch. Some of the biggest losers were banks, including Citigroup and Bank of America Corp., which created and purchased collateralized debt obligations. Many of these investments -- created by packaging mortgage-backed bonds, derivatives and other CDOs and dividing them into new securities with varying degrees of risk -- imploded within a year after they were sold, even though they had pristine credit ratings. Smaller financial institutions were also ruined by mortgage-backed debt. Western Federal Corporate Credit Union failed after its executives employed an improperly "aggressive investment strategy" that had no limits on highly rated mortgage bonds, according to a regulatory report on its collapse. Read more.

ABI LIVE WEBINAR: REVISITING RADLAX AND HALL – NEW LEGAL AND PRACTICAL IMPACT OF THE DECISIONS

See why this was the top-rated panel at the ABI Winter Leadership Conference last month! Join the expert panel on Feb. 19 from 12:00-1:15pm EST as they summarize and discuss the legal impact and practical implications of the Supreme Court’s 2012 decisions in Radlax and Hall. Participants include:

Susan M. Freeman of Lewis and Roca LLP (Phoenix)

Adam A. Lewis of Morrison & Foerster LLP (San Francisco)

• Prof. Charles J. Tabb of the University of Illinois College of Law (Champaign, Ill.)

Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

POWER TO VETO BANKRUPTCY SALES AMONG ISSUES TO BE EXAMINED AT ABI'S 31ST ANNUAL SPRING MEETING

The 2013 Annual Spring Meeting, to be held April 18-21, 2013, at the Gaylord National Resort and Convention Center in National Harbor, Md., 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?
- Real Estate Issues in Health Care Restructurings
- Law Firm Bankruptcies
- 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!

Enter code "LOVEASM50" at checkout to save $50 on a new registration this week! Click here to register today!

ABI IN-DEPTH

DON'T MISS THE 9TH ANNUAL WHARTON RESTRUCTURING AND DISTRESSED INVESTING CONFERENCE ON FEB. 22!

The University of Pennsylvania's Wharton School of Business will be holding the 9th Annual Wharton Restructuring and Distressed Investing Conference on Feb. 22 at the Hyatt at The Bellevue in Philadelphia. The theme of this year's conference is “Health of Nations: Distress, Recovery or Revival?” It will offer a unique opportunity to hear from a distinguished gathering of keynote speakers and panelists in their discussion of the current economic climate and issues of debt, investing, and restructuring across the globe. To register, please click here.

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: LEAVITT V. FINNEY (IN RE FINNEY; 9TH CIR.)

Summarized by David Hercher of Miller Nash LLP

The Ninth Circuit ruled that because the chapter 13 debtor received a chapter 7 discharge in a prior case commenced during the four-year period before the current petition date, she was not entitled to a discharge in the current chapter 13 case, even though the first case was commenced under chapter 13 and converted to chapter 7 before discharge.

There are more than 750 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: CASE FOCUSES ON A COMMERCIAL LANDLORD'S CLAIM FOR INDEMNIFICATION

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the case of In re Mervyn's Holdings, LLC, in which the U.S. Bankruptcy Court for the District of Delaware held that a claim arising from an indemnification provision, in a non-residential commercial lease, which was rejected post-petition, was entitled to administrative priority pursuant to § 365(d)(3) of the Bankruptcy Code.

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

After Stern, bankruptcy courts do not have the constitutional authority to enter final judgments on fraudulent conveyance claims.

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

INSOL INTERNATIONAL

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

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NEXT EVENT:

 

 

 

ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions
Feb. 19, 2013
Register Today!

 

 

 

COMING UP:

 

 

 

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

 

 

 

 

9th Annual Wharton Restructuring and Distressed Investing Conference
Feb. 22, 2013
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Paskay 2013
March 7-9, 2013
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BBW 2013
March 22, 2013
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"Nuts and Bolts" Program at ASM- A Must for Junior Professionals or Those New to Bankruptcy Practice
April 18, 2013
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ASM 2013
April 18-21, 2013
Enter code "LOVEASM50" at checkout to save $50 on a new registration this week!
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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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  CALENDAR OF EVENTS
 

2013

February
- ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions
     February 19, 2013
- VALCON 2013
     February 20-22, 2013 | Las Vegas, Nev.
- 9th Annual Wharton
Restructuring and Distressed Investing Conference

     February 22, 2013 | Philadelphia, Pa.

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


  

April
- "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.
- 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.


 
 
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State Bankruptcy Debate Returns

ABI Bankruptcy Brief | November 6 2012
 
  

November 13, 2012

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

STATE BANKRUPTCY DEBATE RETURNS

Nearly two years after a "fierce" debate that "fizzled as quickly as it started," University of Pennsylvania law professor David Skeel is arguing that the idea of giving states a way to file for bankruptcy remains relevant and necessary, the Wall Street Journal reported yesterday. In addition to corporations and consumers, the Bankruptcy Code allows municipalities to seek chapter 9 protection. But there is currently no chapter set aside for states that find themselves teetering on the brink of insolvency, nor have states needed one. Yet with major budget deficits, underfunded pensions and declining tax revenues, some say that states should have a legal framework within which to restructure. Skeel advocated the idea of state bankruptcy in The Weekly Standard, as well as in the pages of the Wall Street Journal between November 2010 and January 2011, and the view picked up steam once Newt Gingrich and Jeb Bush added their voices. "Creditors of states have a great deal [of difficulty] collecting from the state," Skeel said recently in resurrecting the idea of state bankruptcy. "It's really hard to get a state to pay you because of sovereign immunity." Read more. (Subscription required.)

REGULATOR FACES ANOTHER LAWSUIT OVER DODD-FRANK

The Obama administration's new rules for Wall Street suffered another setback this week as the financial industry leveled a lawsuit challenging a crucial piece of the regulatory overhaul, the New York Times DealBook blog reported on Friday. The CME Group, a giant Chicago exchange, sued its regulator last Thursday over a new rule that aims to shed light on the murky derivatives trading industry. The regulator, the Commodity Futures Trading Commission, drafted the rule in January under guidance from the Dodd-Frank Act. The case is part of the financial industry's broader legal assault on Dodd-Frank. As regulators hash out the final details of some 400 rules, Wall Street has shifted the fight from backroom lobbying to the courtroom. The trading commission has already been sued twice over Dodd-Frank rules, and Wall Street plans to turn up the heat on the Obama administration next year with a bevy of other legal challenges. Read more.

ANALYSIS: CHILD'S EDUCATION, PARENTS' CRUSHING LOANS

There are record numbers of student borrowers in financial distress, but millions of parents who have taken out loans to pay for their children's college education make up a less-visible generation in debt, the New York Times reported yesterday. For the most part, these parents did well enough through midlife to take on sizable loans, but some have since fallen on tough times because of the recession, health problems, job loss or lives that took a sudden hard turn. In the first three months of this year, the number of student loan borrowers aged 60 and older was 2.2 million, a figure that has tripled since 2005. That makes them the fastest-growing age group for college debt. All told, those borrowers owe $43 billion, up from $8 billion seven years ago, according to the Federal Reserve Bank of New York. Read more.

TWO MILLION COULD LOSE UNEMPLOYMENT BENEFITS UNLESS CONGRESS EXTENDS PROGRAM

More than 2 million Americans stand to lose their jobless benefits unless Congress reauthorizes federal emergency unemployment help before the end of the year, the Washington Post reported today. The people in danger of having their unemployment checks cut off are among those who have benefited least from the slowly improving job market: Americans who have been out of work longer than six months. These workers have exhausted their state unemployment insurance, leaving them reliant on the federal program. In addition to those at risk of abruptly losing their benefits in December, 1 million people would have their checks curtailed by April if the program is not renewed, according to lawmakers and advocates pushing for an extension. Read more.

ANALYSIS: DEEP DISCOUNTS ON FORECLOSED HOMES DISAPPEARING

A market analysis by Zillow found that the average national discount on a foreclosure in September has fallen to only about 8 percent below market value, the Washington Post reported today. That is a significant change from the 24 percent average markdown reported in 2009 during the depths of the housing bust, and another signal that the country's housing market is inching toward recovery. "There’s no such thing as a fire sale on a foreclosure right now," said Marc Joseph, a real estate agent in Fort Myers, Fla. "We’re getting back to that point where if something good hits the markets, we’re getting multiple offers again." According to Zillow, the deepest discounts can be found on foreclosures in the Pittsburgh area, at 27 percent. Cleveland, Cincinnati and Baltimore have average markdowns on foreclosures topping 20 percent. But in many hard-hit markets, particularly ones where home prices fell sharply and investors and buyers have swooped in to buy up foreclosures, discounts have all but vanished. Zillow found that in Las Vegas and Phoenix, there is "no discernible difference" between foreclosure and non-foreclosure sales. Read more.

OPEN PUBLIC HEARING ON CHAPTER 11 REFORM AT ABI'S WINTER LEADERSHIP CONFERENCE

ABI's Commission to Study the Reform of Chapter 11 will hold a public hearing on Friday, Nov. 30, at 11:15 a.m. (MT) during the Winter Leadership Conference in Tucson, Ariz., at the JW Marriott Starr Pass Resort. Members are welcome to provide testimony on their suggestions for ways to improve the operation of chapter 11. The hearing is the fifth in a series of public field hearings. Statements and video from all the recent hearings can be found at the Commission website at http://commission.abi.org.

Interested members should contact Sam Gerdano at sgerdano@abiworld.org for more details about in-person testimony. Those interested may also file written statements of any length for consideration by the Commission. All materials will be part of the Commission's record to be transmitted to Congress following the two-year investigation and report. Please consider this great opportunity to become part of the legal reform of the Bankruptcy Code.

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/.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: OVERSTREET V. JOINT FACILITIES MANAGEMENT, LLC (IN RE CRESCENT RESOURCE LLC; 5TH CIR.)

Summarized by Eric Lockridge of Kean Miller LLP

The Fifth Circuit ruled that an untimely Rule 59(e) motion to alter or amend a district court's judgment affirming a bankruptcy court's dismissal order does not extend the 30-day deadline to file a notice of appeal of the district court's judgment.

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: DEWEY LEBOEUF AVOIDS LITIGATION MORASS OF MOST LAW FIRM BANKRUPTCY CASES

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines how the settlement in the Dewey LeBoeuf case has helped the firm avoid the failures that typically produce lengthy and litigious bankruptcy cases. For more on issues related to large firm bankruptcies, listen to a recent ABI podcast here.

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, S.D.N.Y.).

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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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
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ACBPIKC 2013
Feb. 20-22, 2013
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  CALENDAR OF EVENTS
 

November
- 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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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?

Join our networks to expand yours.

  

 

TOMORROW:

 

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

 

MONDAY:

 

SE 2012
Nov. 12, 2012
Register Today!

 

 

COMING UP:

 

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

 

 

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

 

 

WCBC 2013
Jan. 21, 2013
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!

 

 

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.


 
 
ABI BookstoreABI Endowment Fund ABI Endowment Fund
 

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