Court Administration

ANALYSIS: FINANCIAL REFORM BATTLE CONTINUES OVER DODD-FRANK LAW

The fate of financial reform may be decided in the coming year as congressional leaders on both sides of the aisle attempt to modify the Dodd-Frank Act, the Washington Post reported today. In the two years since Congress passed the far-reaching regulatory overhaul, lawmakers have railed against the law for either not going far enough to reform Wall Street or being too burdensome to the industry. Republicans have sought to dismantle Dodd-Frank through a series of failed bills, placing Democrats on the defensive despite their own misgivings about the law. GOP leaders tucked language into the failed “fiscal cliff” bill that would have cut automatic funding to the Consumer Financial Protection Bureau and stripped regulators of the power to unwind "too-big-to-fail" institutions. Meanwhile, the Senate unanimously passed a bill on Dec. 28 that would direct the Government Accountability Office to examine the economic benefits large banks receive for being "too big to fail." The bill, sponsored by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), asks the agency to study whether institutions with more than $500 billion in assets enjoy favorable pricing on their debt because of perceptions that the government will always step in to prevent their collapse. It is unclear whether the House will take up the bill in the next session, but advocates of reform are encouraged by the bipartisan support in the Senate. Read more.

MORTGAGE-FEE PLAN FACES PUSHBACK

The federal regulator of Fannie Mae and Freddie Mac is running into opposition from lawmakers, state attorneys general and consumer advocates over a proposal to raise fees on loans in five states where foreclosures take the longest, the Wall Street Journal reported today. Officials in the states—New York, New Jersey, Illinois, Connecticut and Florida—say that the proposal by the Federal Housing Finance Agency (FHFA) would unfairly punish them for taking steps to protect borrowers from wrongful foreclosures. The five states are "judicial" states where lenders must seek court approval before a foreclosure can be completed. This can make the foreclosure process take longer, and the FHFA says that the delays cause Fannie Mae and Freddie Mac to lose more money on foreclosures in those states. Read more. (Subscription required.)

ANALYSIS: RISK SEEN IN SOME MORTGAGE BONDS

After a surge in bonds backed by mortgages on commercial properties, some investors are finding cracks in the foundations, the Wall Street Journal reported today. Investors flocked to these bonds, which are made up of pools of loans linked to properties such as shopping malls and hotels, because of the relatively high yields they offered. But that demand has sent prices soaring, and yields tumbling to record lows. As well, some investors remain worried that defaults on these loans remain at historically high rates. In November, 9.71 percent of commercial-mortgage loans tied to these securities were at least 30 days delinquent, according to data provider Trepp. Delinquency rates were below 1 percent in October 2008. Nevertheless, investors are buying both older bonds, which were issued when underwriting standards were looser, as well as new ones. Sales of such bonds rose 46 percent to $44 billion in 2012, according to data provider Commercial Mortgage Alert. Richard Hill, a strategist at RBS Securities in Stamford, Conn., forecasts sales will rise to $65 billion in 2013, the highest since the record high of $228 billion in 2007. Read more. (Subscription required.)

ABA: CONSUMERS PAYING DOWN DEBT DESPITE OBSTACLES

The American Bankers Association said today that consumers continued to pay down debt in the third quarter of 2012, but slow job growth and the expiration of a tax cut could mean it will become more difficult to repay loans, Reuters reported. The composite ratio's delinquency rate fell to 2.16 percent of all accounts in the third quarter from 2.24 percent in the second quarter, the ABA said. Bank card delinquencies, which are not part of the composite, fell to 2.75 percent during the quarter, the lowest level since 1994, the group said. Read more.

COMMENTARY: WHAT IS INSIDE AMERICA'S BANKS?

Though the nation's political leaders and bankers have made efforts over the past four years to save the financial industry, clean up the banks, and reform regulation in order to restore trust and confidence in the American financial system, more work is still needed, according to a commentary in the latest edition of the Atlantic Monthly. Banks today are bigger and more opaque than ever, and they continue to behave in many of the same ways they did before the 2008 crash, according to the commentary. According to Gallup, back in the late 1970s, three out of five Americans said that they trusted big banks “a great deal” or “quite a lot.” Since the financial crisis of 2008, trust has evaporated as fewer than one in four respondents in June 2012 told Gallup that they had faith in big banks—a record low. A recent survey by Barclays Capital found that more than half of institutional investors did not trust how banks measure the riskiness of their assets. When hedge-fund managers were asked how trustworthy they find “risk weightings”—the numbers that banks use to calculate how much capital they should set aside as a safety cushion in case of a business downturn—about 60 percent of those managers answered 1 or 2 on a five-point scale, with 1 being “not trustworthy at all.” None of them gave banks a 5. At the heart of the problem is a worry about the accuracy of banks’ financial statements. Accounting rules have proliferated as banks, and the assets and liabilities they contain, have become more complex. Yet the rules have not kept pace with changes in the financial system, according to the commentary. Read the full commentary.

OUTLOOK FOR 2013 RESTRUCTURINGS, PROVIDED BY BLOOMBERG BRIEF

Read what leading restructuring professionals are saying about the coming activity predicted for the retail, real estate, financial services and energy industries this year. Also explore a comprehensive 2012 bankruptcy year-in-review with charts, tables and data. The report is provided as an exclusive to ABI members by our partners at Bloomberg Brief. To download your copy of the “Bloomberg Brief Bankruptcy & Restructuring 2012 Review & 2013 Outlook” report, please click here.

For more on the 2013 bankruptcy outlook, be sure to watch Bloomberg Law Bankruptcy Columnist Bill Rochelle’s latest video post.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: VIEIRA V. ANDERSON (IN RE BEACH FIRST NATIONAL BANCSHARES INC.; 4TH CIR.)

Summarized by Jennifer Lyday of Womble Carlyle Sandridge & Rice, LLP

The Court of Appeals for the Fourth Circuit affirmed the district court's judgment, which dismissed the trustee's complaint for negligence and breach of fiduciary duty against the former officers and directors of a now bankrupt bank because the trustee did not have standing to bring the derivative claims under FIRREA as the right to pursue such claims belongs to the FDIC, regardless of whether the FDIC wishes to pursue the claims.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: COULD 2013 SEE LEHMAN BEING PUT BACK TOGETHER AGAIN?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog features experts offering their predictions for 2013, including the possible reconstitution of Lehman Brothers.

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

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.

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
- Annual Spring Meeting
     April 18-21, 2013 | National Harbor, Md.

ABI MEDIA TELECONFERENCE EXAMINES LESSONS LEARNED FROM LEHMAN’S CHAPTER 11

ABI held a media teleconference today looking at the Lehman chapter 11 filing, the lessons learned from it five years later and what the future holds for distressed large financial institutions. An audio archive of the teleconference will be posted soon on ABI.org, and its availability will be announced via social media (Twitter: twitter.abi.org; Facebook: facebook.abi.org). Key figures in the case who spoke on today's teleconference included:

- Bankruptcy Judge James Peck (S.D.N.Y.; New York) presided over the Lehman Brothers chapter 11 case.
- Harvey Miller of Weil, Gotshal & Manges LLP (New York) was the lead debtor attorney for Lehman Brothers.
- Dennis Dunne of Milbank, Tweed, Hadley & McCloy (New York) represented unsecured creditors in the Lehman case.
- Bryan Marsal of Alvarez and Marsal (New York) served as Lehman's Chief Executive Officer after it filed for chapter 11 until 2012.
- Chris Kiplock of Hughes Hubbard & Reed LLP (New York) worked with the team of attorneys representing trustee James W. Giddens in liquidating Lehman Brothers.

The moderator for the program was ABI Fall Resident Scholar Kara Bruce of Toledo University School of Law. Be sure to check ABI's feeds on Twitter or Facebook for the availability of the teleconference audio archive!

ANALYSIS: VOLCKER RULE TO CURB BANK TRADING PROVES HARD TO WRITE

Three years after first proposing that banks be prevented from making market bets with their own money, Paul Volcker's rule remains unfinished, the Wall Street Journal reported yesterday. The Volcker rule, a centerpiece of the sweeping overhaul of financial regulation known as Dodd-Frank, is an attempt to protect the financial system from risk. The rule looks to prohibit banks from making investment bets with their own money, but it has proved difficult to apply. Five years after cratering financial firms ignited a global crisis, and three years after Dodd-Frank outlined the Volcker rule as a central part of the government response, the rule languishes unfinished and unenforced, mired in policy tangles and infighting among five separate agencies whose job is to produce the fine print. Read more. (Subscription required.)

COMMENTARY: FIVE YEARS LATER, FINANCIAL LESSONS NOT LEARNED

Sunday marks the fifth anniversary of the fateful day that investment bank Lehman Brothers filed for bankruptcy, signaling the start of a frightening financial meltdown, but we are still missing some of the lessons drawn out by the crisis, according to a commentary in yesterday's Wall Street Journal by Prof. Alan Blinder of Princeton University. Years of disgraceful financial shenanigans in the 2000s, some illegal but many just immoral, brought on the Great Recession with virtually no help from any co-conspirators, according to Blinder. Congress and President Obama reacted comparatively weakly with the Dodd-Frank Act of 2010, which Blinder said certainly did not seek to remake the U.S. financial system. A supporter of Dodd-Frank, Blinder has found that the law now seems to be withering on the regulatory vine. Far from being tamed, the financial beast has gotten its mojo back, according to Blinder. Read the full commentary. (Subscription required.)

ANALYSIS: SEC TRIES TO REBUILD ITS REPUTATION

The Securities and Exchange Commission is ending its push to punish financial-crisis misconduct in the same way it started -- with a new chairman vowing that Wall Street's top cop will be tougher in the future, according to a Wall Street Journal analysis today. In 2009, at the depths of the recession, Mary Schapiro took the reins at the SEC, promising to "move aggressively to reinvigorate enforcement" at the agency. She created teams to target various types of alleged misconduct, including one focused on the complicated mortgage bonds that helped set off a global financial panic. The agency has filed civil charges against 138 firms and individuals for alleged misconduct just before or during the crisis, according to the analysis, and it received $2.7 billion in fines, repayment of ill-gotten gains and other penalties. But some of the SEC's highest-profile probes of top Wall Street executives have stalled and are being dropped. In April, former federal prosecutor Mary Jo White took the reins as SEC chairman with a simple enforcement motto: "You have to be tough." She tossed out the SEC enforcement policy that allowed almost all defendants to settle cases without admitting wrongdoing. In August, hedge-fund manager Philip Falcone became the first example of this new approach when he and his firm, Harbinger Capital Partners LLC, admitted to manipulating bond prices and improperly borrowing money from a fund. The policy shift comes as the SEC turns the page on its financial crisis work. New investigations into misconduct linked to the meltdown have slowed to a trickle, and a statute-of-limitations deadline is looming for many cases, which will generally restrict the sanctions that the SEC can enforce for misconduct that is more than five years old. Read more. (Subscription required.)

U.S. FORECLOSURE FILINGS DROP 34 PERCENT AS PROPERTY PRICES RISE

RealtyTrac issued a report showing that foreclosure filings fell 34 percent in the U.S. last month as first-time defaults dropped to the lowest level in almost eight years and rising home prices made it easier for distressed owners to sell, Bloomberg News reported today. Default, auction and repossession filings totaled 128,560 in August, with one in 1,019 U.S. households receiving a notice, the Irvine, Calif.-based data seller said today in a report. It was the 35th consecutive month in which total notices declined on an annual basis, with foreclosure starts plunging 44 percent, RealtyTrac said. Increasing buyer demand and climbing property values are helping some troubled borrowers refinance or sell rather than lose their homes to foreclosure. The S&P/Case-Shiller index of property values in 20 cities rose 12.1 percent in June from a year earlier. Last month, foreclosure starts totaled 55,775, the lowest level since December 2005, and fell on a year-over-year basis in 38 states, RealtyTrac said. Read more.

LATEST ABI PODCAST EXPLORES BANKRUPTCY'S CORPORATE TAX IMPLICATIONS

ABI Resident Scholar Prof. Kara Bruce speaks with Prof. Diane Lourdes Dick of Seattle University School of Law about how companies in chapter 11, such as Solyndra and WaMu, preserve valuable tax attributes through holding companies. Prof. Dick discusses her current research looking into how stakeholders of financially distressed firms exploit various loopholes in chapter 11 to transfer value outside of bankruptcy's distributional norms. Click here to listen to the podcast.

NEW ABILIVE WEBINAR OCT. 3: THE INTERSECTION OF INTELLECTUAL PROPERTY AND BANKRUPTCY: KODAK, NORTEL AND OTHER CASES

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

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

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

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

The 7th and final stop for the 2013 ABI Golf Tour is on Dec. 5 at the Trump National Golf Club, held in conjunction with ABI’s Winter Leadership Conference. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores from the seven ABI events. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! A 22-handicapper won the tour event at July’s Southeast Bankruptcy Workshop. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: MORRIS AVIATION LLC V. DIAMOND AIRCRAFT INDUSTRIES INC. (6TH CIR.)

Summarized by Mike Debbeler of Graydon Head & Ritchey LLP

The Sixth Circuit ruled that the airplane manufacturer's opinion of the "quality and reliability" of components was not a fraudulent or negligent misrepresentation where the component manufacturer filed bankruptcy and voided warranties on components shortly after plaintiff purchased the airplane from the manufacturer. The airplane manufacturer's mere opinion as to component manufacturer's financial health did not form the basis of a misrepresentation claim.

There are more than 1,000 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: HOW HAS THE FINANCIAL SECTOR CHANGED SINCE THE LEHMAN FILING?

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post explores how the financial sector has changed since the Lehman Brothers chapter 11 filing on Sept. 15, 2008.

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

ABI Quick Poll

Success fees for financial advisors should be prohibited.

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

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

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

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

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

PBGC SAYS PENSION DEFICIT WIDENS TO RECORD $34 BILLION

The Pension Benefit Guaranty Corp. (PBGC) said that its deficit increased to $34 billion by the end of the most recent fiscal year, its largest ever, Dow Jones Daily Bankruptcy Review reported yesterday. As a result of plan failures, the PBGC said last week that its obligations totaled $119 billion by the end of fiscal 2012, while it has $85 billion in assets on hand to cover them. PBGC Director Joshua Gotbaum said that the agency continues its work to preserve pensions but "continuing financial deficits will ultimately threaten its ability to pay benefits." Read more. (Subscription required.)

BANKS SAY THEY HAVE GIVEN $26 BILLION IN HOMEOWNER RELIEF TO DATE

The nation's biggest banks provided more than $26 billion in relief to struggling homeowners between March 1 and Sept. 30, as part of a settlement earlier this year with state and federal officials over widespread foreclosure abuses, the Washington Post reported today. Joseph A. Smith Jr., the former North Carolina banking commissioner hired by the government to ensure the banks follow through on their promises, reported that more than 300,000 homeowners have benefitted so far, for an average of roughly $84,385 per borrower. The aid undertaken by the five banks involved in the settlement — Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial and Citigroup — has taken various forms, from lowering loan balances to completing growing numbers of short sales to helping refinance many homeowners into mortgages with much lower interest rates. Each bank is responsible for providing a set amount of aid under the terms of the settlement, but different kinds of relief receive different amounts of credit. In general, banks received more credit for providing aid during the first year of the settlement and for activities such as reducing principal on loans and refinancing mortgages. Read more.

In related news, big banks are giving billions of dollars to distressed California homeowners through a landmark mortgage settlement — but mostly to get people out of their homes rather than help them stay, the Los Angeles Times reported today. Short sales should be reserved for homeowners who couldn't afford to live in a home even with a lower principal or for people who need to move, said UC Irvine law professor Katherine Porter, who was appointed by the state attorney general's office to monitor the deal. The preponderance of short sales in California may change, Porter said, as banks begin delivering other types of mandated relief, namely principal reduction. In California, the three biggest mortgage servicers — Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. — promised to contribute $12 billion worth of homeowner aid. Bank of America is on the hook for the biggest portion of that agreement, $8 billion. Read more.

COMMENTARY: WHEN WILL FANNIE AND FREDDIE PAY TAXPAYERS BACK?

Fannie Mae and Freddie Mac owe American taxpayers nearly $140 billion — and there seems to be no plan on any front to pay it back, according to a commentary in yesterday's New York Times. In the midst of the housing crisis and the Great Recession in 2008, Congress agreed to spend $600 billion in public money to rescue major American banks, insurers, automakers and, yes, the GSE's — fearing an even deeper and longer recession if these companies failed. Since then, most of these bailed-out firms have paid taxpayers back, but not Fannie or Freddie. Even more remarkable than their $140 billion public debt (the money lent to the agencies minus dividends paid) is that there seems to be no active plan to reimburse taxpayers. Read more.

SHADOW BANKING GROWS TO $67 TRILLION INDUSTRY, REGULATORS SAY

The shadow banking industry has grown to about $67 trillion, $6 trillion bigger than previously thought, leading global regulators to seek more oversight of financial transactions that fall outside traditional oversight, Bloomberg news reported on Sunday. The size of the shadow banking system, which includes the activities of money market funds, monoline insurers and off-balance sheet investment vehicles, "can create systemic risks" and "amplify market reactions when market liquidity is scarce," the Financial Stability Board said in a report, which utilized more data than last year’s probe into the sector. While watchdogs have reined in excessive risk-taking by banks in the wake of the collapse of Lehman Brothers Holdings Inc. in 2008, they are concerned that lenders might use shadow banking to evade the clampdown. Read more.

ANALYSIS: MIXED RESULTS FOR SEC IN FINANCIAL CRISIS CASES

Last week was a study in contrasts in how the Securities and Exchange Commission has been able to pursue cases from the financial crisis, according to an analysis yesterday in the New York Times DealBook blog. The regulator has been successful in extracting large settlements from banks that were at the heart of the meltdown in the mortgage market, but it has not done as well in proving any significant wrongdoing by individuals. The SEC announced settlements on Friday with JPMorgan Chase and Credit Suisse over their dealings in residential mortgage-backed securities. JPMorgan will pay $296.9 million and Credit Suisse $120 million in disgorgement and penalties. But it had a much worse week in dealing with individuals accused of securities fraud as a federal jury in New York on Nov.12 largely absolved Bruce Bent Sr. and his son, Bruce Bent II, for statements they made about the money market fund they oversaw, the Reserve Primary Fund. That collapsed at the height of the financial crisis in September 2008. 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 [email protected] 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.

LATEST ABI PODCAST EXAMINES BANKRUPTCY'S EFFECTS ON MANUFACTURING SUPPLY CHAINS

ABI’s latest podcast features ABI Resident Scholar Prof. Susan Hauser speaking with the authors of Interrupted! Understanding Bankruptcy's Effects on Manufacturing Supply Chains. John T. Gregg, Deborah L. Thorne and Patrick E. Mears of Barnes & Thornburg LLP discuss the book and the issues that arise when suppliers are unable to make deliveries of promised parts due to financial problems. Click here to listen to the podcast.

To purchase Interrupted! Understanding Bankruptcy's Effects on Manufacturing Supply Chains, please make sure to visit the ABI Book Store at http://bookstore.abi.org.

RICHMOND BAR CALLING FOR NOMINATIONS TO FILL JUDICIAL VACANCY; SUBMISSIONS MUST BE RECEIVED BY DEC. 13

The Judiciary Committee of the Richmond (Va.) Bar Association invites ABI members to submit nominations to fill a judicial vacancy in the U.S. Bankruptcy Court for the Eastern District of Virginia. The court is looking to fill the vacancy left by the retirement of Bankruptcy Judge Douglas O. Tice, Jr.

Suggestions must be in writing and should be mailed to Virginia H. Grigg, Esq., c/o Richmond Bar Association, P.O. Box 1213, Richmond, Virginia 23218 or hand-delivered to her at the Bar office located at 707 E. Main Street, Suite 1620, Richmond, VA 23219. Nominations must be received by 4:00 p.m. ET on Thursday, December 13, 2012, in order to be considered.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: HAWKS HOLDINGS LLC V. KALINOWSKI (IN RE KALINOWSKI; 10TH CIR.)

Summarized by Steven T. Mulligan of Bieging Shapiro & Barber LLP

The 10th Circuit ruled that since debtor was the de facto manager of an LLC, he stood in a fiduciary relationship to the creditor of that LLC under a New Mexico statute that created a technical trust. Since the debtor’s participation in the mismanagement of funds paid to the LLC for the construction of homes constituted defalcation, the debt was thus excepted from discharge.

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: NINTH CIRCUIT RULES POST-PETITION PAYMENTS RECEIVED BY DEBTOR ARE NOT PROCEEDS OF "PAYMENTS TO BECOME DUE"

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines a recent decision by the Ninth Circuit in LID Acquisition LLC v. Lake at Las Vegas Joint Venture, LLC (In re Lake at Las Vegas Joint Venture, LLC) affirmed the lower courts' rulings that, pursuant to §552(a) of the Bankruptcy Code, a pre-petition security agreement that gives a lender a security interest in "payments" or "future payments" does not give a lender a security interest in post-petition payments.

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.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

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.

BANKRUPTCY CASES TO BE CONSIDERED BY SUPREME COURT PREVIEWED IN NEW "BANKRUPTCY IN DEPTH" VIDEO

ABI's next "Bankruptcy In Depth" video features ABI Resident Scholar Kara Bruce talking with Eric Brunstad of Dechert LLP (Hartford, Conn.) to preview the bankruptcy cases that the Supreme Court will consider during its 2013 term. Brunstad, who has argued many cases before the Court and is an expert in bankruptcy appellate practice, discusses in depth Law v. Siegel, which questions whether the court may use its general equitable authority under §105 of the Bankruptcy Code to surcharge a debtor's exempt assets, and Executive Benefits Insurance Agency v. Arkison (In re Bellingham), which will address the bankruptcy court's authority to adjudicate Article III matters. He also provides a candid view of what it is like to argue a case before the Court and an in-depth analysis of the issues involved with the upcoming cases. Click here to watch a preview of the forthcoming ABI "Bankruptcy In Depth" video.

FEDERAL JUDICIARY BUDGET INCREASES IN LAST-MINUTE BUDGET DEAL

The budget deal Congress approved yesterday to reopen the government and raise the debt ceiling provides $51 million in additional funding to the judiciary and to federal defenders, the Legal Times reported today. Federal court officials and members of the Senate Judiciary Committee greeted the increase as good news, although it is small when compared to $350 million in budget cuts earlier this year as part of sequestration. The extra funding would primarily go to pay the backlog of attorney fees under the Criminal Justice Act, which funds court-appointed private counsel. Payments were suspended in mid-September, when funding ran out two weeks before the end of the fiscal year. The bill also includes $4.8 billion for judiciary salaries and expenses. That amounts to a $25 million annual increase over FY2013, court officials said. The legislation gives judiciary officials the ability to float those funds among accounts to respond to the most urgent budget needs as they arise. Overall, the judiciary budget would rise from about $6.65 billion to about $6.7 billion. Read more.

PROPERTY TAXES, SKIPPED PENSION PAYMENTS BOOST DETROIT'S CASHFLOW

A report released yesterday showed that Detroit's revenue dropped by 9 percent in the first quarter of fiscal 2014 compared with the same period in fiscal 2013, but an influx of property taxes and skipped pension contributions boosted the city's cashflow, Reuters reported yesterday. In his quarterly report to Michigan officials, Kevyn Orr, Detroit's state-appointed emergency manager, said the city ended the quarter on Sept. 30 with a cash balance of $128.5 million that exceeded projections by $56.7 million. However, Orr said that Detroit's financial condition "continues to be dire" as it works its way through bankruptcy court, where its eligibility to remain there will be the subject of a trial next week. City revenue for the quarter, including property, income and gambling taxes, totaled $220.2 million, a drop of about $22 million from fiscal 2013's first quarter. Expenses also fell by about $11 million as the city's headcount dropped to approximately 9,322 workers at the quarter's end from 10,325 in the same period last year, according to the report. Read more.

LATEST SETTLEMENT REPORT FINDS BANKS GIVING TIMELY MORTGAGE RELIEF

The $25 billion national mortgage settlement, intended to help homeowners affected by the housing crisis, appears to be running ahead of schedule, according to a new report by the monitor of the program, the New York Times reported today. However, the number of households helped by the settlement has fallen short of the original predictions, and critics complained that too much relief was given to people who gave up their homes in short sales and not enough to help people retain their homes. Early last year, five banks signed on to the settlement over their use of mass-produced, faulty documents to evict homeowners. As of Dec. 31, they had provided $38.7 billion in relief in raw dollar terms, the report said. But because not every type of relief is counted the same way under the settlement's terms, they had fulfilled only about 80 percent of their total obligation. Prior to yesterday, banks had self-reported their progress in raw dollar terms. The new report is the first in which the monitor, Joseph A. Smith Jr., has disclosed the amount of credit they have earned toward the settlement obligation. The report credited them $4.1 billion for principal reduction on primary mortgages, $2.2 billion for principal reductions in second mortgages, and $5.4 billion in short sales or deeds in lieu of foreclosure, in which the homeowner is allowed to sell the house for less than what is owed or simply hand it over to the bank. It also credited $2.6 billion for allowing people who owed more on their mortgage than their home was worth to refinance at lower interest rates. Read more.

FANNIE MAE SURVIVAL IS BACK ON THE TABLE FOR POLICYMAKERS

The consensus in Washington, D.C., that Fannie Mae and Freddie Mac should be dismantled is weakening amid opposition from hedge funds, regional banks and others who could benefit if the companies survive in some form, Bloomberg News reported yesterday. President Barack Obama and lawmakers from both parties have called for the two mortgage-finance companies to be replaced by a new U.S. housing system. While the official position hasn't changed, a bipartisan group of U.S. senators writing legislation is grappling with how to ensure that changes to Fannie Mae and Freddie Mac don't disrupt the recovering housing market. Some Democrats said that they are leery of engineering a switch that would liquidate the government-sponsored enterprises (GSEs), leaving it to private entities to risk their own capital on home loans. Since they nearly collapsed during the 2008 credit crisis, the two companies have drawn $187.5 billion from taxpayers and have been considered too politically toxic to be preserved. While the U.S. holds controlling stakes, the outcome will affect private investors including hedge funds Perry Capital and Paulson and Co., which have accumulated preferred shares and have spent months lobbying for Fannie Mae and Freddie Mac to be recapitalized. The hedge funds gained little traction in early meetings with senators such as Bob Corker (R-Tenn.), who publicly rejected their pleas in the spring. As the legislative process advances and involves a wider group of lawmakers, some are listening to the argument that an entirely new system could risk instability in the market. Read more.

FED WEIGHS SURCHARGE ON BANKS' PHYSICAL COMMODITY BUSINESSES

Federal Reserve officials are considering imposing a new capital surcharge on Wall Street banks that own oil pipelines, metals warehouses and other lucrative physical-commodities assets, the Wall Street Journal reported today. Such an approach could encourage banks to pare back their involvement in physical commodities, which has increasingly raised concerns among regulators and lawmakers. While no decision has been made, imposing a surcharge would allow the Fed to sidestep a legal jam caused by existing laws that set Goldman Sachs Group Inc. and Morgan Stanley apart from peers and give the former investment banks broad leeway to own commodities. The Fed has been considering scaling back the ability of banks to own such assets amid concerns that commodities ownership has expanded beyond what regulators originally envisioned. To avoid a regulatory situation where only some banks can own commodities, the Fed is considering a surcharge that would ensure that all banks hold more capital to account for potential risks posed by the assets they own or lease. Read more. (Subscription required.)

ABI LAUNCHES SIXTH ANNUAL WRITING COMPETITION FOR LAW STUDENTS

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.

RISKY TIMES FOR SECURED LENDERS AND SERVICERS TO BE FOCUS OF FIRST ABI WORKSHOP PROGRAM- ATTEND IN PERSON OR VIA LIVE WEBSTREAM!

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

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

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

EXPERTS TO EXAMINE STUDENT LENDING AND BANKRUPTCY AT ABI WORKSHOP PROGRAM ON NOV. 15

Experts will tackle the hot topic of student lending issues in bankruptcy on the abiWorkshops series' new program, "You Can't Discharge Student Loans in Bankruptcy - Or Can You?" The program will be held on Nov. 15 from 9 a.m. to 3 p.m. ET in the ABI Headquarters Conference Center in Alexandria, Va. The abiWorkshops series provides attendees two great ways of participating: You can register to attend in person at the ABI Conference Center, or you can participate via a live webstream! Topics that will be covered on the Nov. 15 program include:

- Student Lending Today: Who Borrows, How Much, Delinquency & Default Trends
- Repayment Options: Income Based Repayment and New Lender/Servicer Programs
- Litigation under Sect. 523(a)(8): What Proofs Are Needed? Evidence Demonstration

For more information or to register for the "You Can't Discharge Student Loans in Bankruptcy - Or Can You?" abiWorkshop on Nov. 15, please click here.

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

The 7th and final stop for the 2013 ABI Golf Tour is on Dec. 5 at the Trump National Golf Club, held in conjunction with ABI’s Winter Leadership Conference. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores from the seven ABI events. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! A 22-handicapper won the tour event at July’s Southeast Bankruptcy Workshop. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

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

Summarized by Hilda Montes de Oca of the U.S. Bankruptcy Court for the Central District of California

Applying California partnership law, the Ninth Circuit Bankruptcy Appellate Panel reversed the bankruptcy court because it erred when it decided that a partnership existed between the debtor defendant and plaintiff creditor based upon the terms of a loan agreement. As there was no partnership, the debtor owed no fiduciary obligations to the creditor. The BAP further found that the bankruptcy court used the wrong mens rea standard for defalcation. As a result, the bankruptcy court erred in determining that debtor's debt to creditor was excepted from discharge as a defalcation by a fiduciary pursuant to § 523(a)(4).

There are more than 1,000 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: OCC'S COMMERCIAL REAL ESTATE LENDING HANDBOOK MISSES THE MARK ON POTENTIAL LEGAL ISSUES

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post finds the new version of the Office of the Comptroller of the Currency's (OCC) Commercial Real Estate Lending Handbook to be lacking in addressing potential legal issues associated with risks in commercial real estate lending.

The abiWorkshops series' inaugural program, "Risky Times for Secured Lenders and Servicers," on Nov. 6 will cover potential legal issues associated with commercial lending. Attend in person or via live webstream.

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

Does the bankruptcy court's Section 105 power enable it to surcharge the debtor's exempt property?

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.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

October
- International Insolvency & Restructuring Symposium
    Oct. 25, 2013 | Berlin, Germany

November
- abiWorkshop: "Risky Times for Secured Lenders and Servicers"
   Nov. 6, 2013 | Alexandria, Va.
- Complex Financial Restructuring Program
   Nov. 7, 2013 | Philadelphia, Pa.
- Corporate Restructuring Competition
   Nov. 7-8, 2013 | Philadelphia, Pa.
- Detroit Consumer Bankruptcy Conference
   Nov. 11, 2013 | Detroit, Mich.
-abiWorkshop: "You Can't Discharge Student Loans in Bankruptcy - Or Can You?"
   Nov. 15, 2013 | Alexandria, Va.

- Delaware Views from the Bench
   Nov. 25, 2013 | Wilmington, Del.

December
- Winter Leadership Conference
    Dec. 5-7, 2013 | Rancho Palos Verdes, Calif.
January
- Western Consumer Bankruptcy Conference
    Jan. 20, 2014 | Las Vegas, Nev.
- Rocky Mountain Bankruptcy Conference
    Jan. 23-24, 2014 | Denver, Colo.