Court Administration

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.

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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.
- Midwestern Bankruptcy Institute
    Oct. 16-17, 2014 | Kansas City, Mo.

  

 

- Views from the Bench
    Oct. 24, 2014 | Washington, D.C.
- Claims-Trading Program
    Oct. 30, 2014 | New York, N.Y.
- International Insolvency & Restructuring Symposium
    Oct. 30-31, 2014 | London

November
- Complex Financial Restructuring Program
    Nov. 6, 2014 | Philadelphia
- Corporate Restructuring Competition
    Nov. 6-7, 2014 | Philadelphia
- Chicago Consumer Bankruptcy Conference
    Nov. 11, 2014 | Chicago, Ill.
- Detroit Consumer Bankruptcy Conference
    Nov. 11, 2014 | Troy, Mich.
- Mid-Level Professional Development Program
    Nov. 12, 2014 | Chicago

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

 

 
 
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States Shift Foreclosure-Suit Funds

ABI Bankruptcy Brief | October 18, 2012
 
  

October 18, 2012

 
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  NEWS AND ANALYSIS   

STATES SHIFT FORECLOSURE-SUIT FUNDS

When states received $2.5 billion from big banks in a mortgage-foreclosure settlement earlier this year, the expectation was that most of it would be used to aid distressed homeowners, but a new report claims that less than half of the money has been designated for that cause so far, the Wall Street Journal reported today. States used much of the settlement money to help close budget gaps, says a report scheduled for release Thursday. In March, 49 states reached a $25 billion settlement with five of the nation's largest mortgage lenders over charges that they had improperly processed foreclosures. The agreement allowed the banks—Ally Financial Inc., Bank of America Corp., Citibank Inc., JPMorgan Chase & Co. and Wells Fargo & Co.—to pay $20 billion of the settlement in the form of relief to distressed homeowners. The states received $2.5 billion of the total. Only about $1 billion of the state funds have been designated for some type of homeowner aid, while $1 billion will go toward state general funds. States haven't decided how to spend the remaining $500 million, according to the report by Enterprise Community Partners, a housing nonprofit. Only 14 states plan to spend their entire allotment on housing relief, according to the report. Read more. (Subscription required.)

DUELING REPORTS LEAVE CONGRESS CONTINUING TO FIGHT OVER "TOO BIG TO FAIL"

Republican and Democratic leaders on the House Financial Services Committee are continuing their battle over the Dodd-Frank financial reform law in a pair of competing reports, The Hill reported yesterday. Nearly two and half years after the Wall Street overhaul was signed into law, the two parties remain entrenched on one of its fundamental questions: Does the law end the problem of firms being "too big to fail" and requiring bailouts? Rep. Barney Frank (D-Mass.), a key author of the law and top Democrat on the committee, on Monday released a report intended to rebut GOP arguments that Dodd-Frank codifies "too big to fail" and explicitly identifies banks as such. “The Wall Street Reform and Consumer Protection Act clearly establishes a framework that allows large financial firms to fail while preventing catastrophic harm to the broader economy," according to the report, compiled by Democratic committee staff. Just two days later, Committee Chairman Spencer Bachus (R-Ala.) fired back with a report of his own. While shorter, this report contended that the law actually codified essential firms that the government would have to bail out. One provision of the law allows regulators to identify banks and other institutions as "systemically significant." Republicans contend that this label hands out an advantage to the singled-out firms and that the government has effectively identified them as "too big to fail." But the Democrats contend in their study that this designation comes with increased regulation and oversight, as well as a requirement that the institutions establish "living wills" that would detail how they could be unraveled if they were on the brink of collapse. Read more.

COMMENTARY: WHY THE FDIC'S APPROACH TO FINANCIAL FAILURES MAKES SENSE

The FDIC's single receivership approach offers a better way to avoid an uncoordinated and destabilizing series of insolvencies for systemically important financial institutions, according to a commentary in yesterday's New York Times DealBook blog by Michael H. Krimminger, the former general counsel of the Federal Deposit Insurance Corp. The agency proposes, if it is appointed and where possible, to close the financial holding company, but keep the viable subsidiaries operating. Subsidiaries that are not viable would be closed and gradually wound down to prevent a sudden collapse, as occurred in the case of Lehman, according to Krimminger. The holding company would be restructured into a bridge entity that can continue to provide financing to viable subsidiaries. Access to funding is critical to continued operations. Dodd-Frank provides for this financing from an "orderly liquidation fund," and it must be paid back from the sale of the subsidiaries or from assessments from the industry. The shareholders and creditors of the holding company – which owned the subsidiaries – bear the losses for the failure as no losses can be borne by taxpayers, according to Krimminger's commentary. Read more.

REGULATORS PROPOSE CAPITAL RULES FOR DERIVATIVES TRADING

Federal authorities moved a step closer to overhauling the derivatives market yesterday, as regulators proposed tougher standards for the nation's biggest banks, the New York Times DealBook blog reported. Firms like Goldman Sachs and JPMorgan Chase would have to bolster their capital cushion and post additional collateral for certain derivatives trades. The Securities and Exchange Commission proposed the crackdown as part of a broader effort to rein in the opaque derivatives business, a main player in the financial crisis. "These rules are intended to make the financial system safer, and the derivative markets fairer, more efficient, and more transparent," SEC chair Mary L. Schapiro said. Schapiro and the agency's commissioners voted unanimously, 5-0, to advance the plan. It now enters a 60-day public comment period, after which the SEC and other federal regulators must finalize the rules. Read more.

ABI IN-DEPTH

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

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

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

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

LATEST CASE SUMMARY ON VOLO: IN RE GLEASON (11TH CIR.)

Summarized by Michael Pugh of Thompson, O'Brien, Kemp & Nasuti, PC

The U.S. Court of Appeals for the Eleventh Circuit affirmed the order entered by the bankruptcy court and upheld on appeal by the U.S. District Court for the Southern District of Florida that suspended an attorney who practiced bankruptcy law from practice before the bankruptcy court for 60 days. The Court of Appeals ruled that the sanctions order did not violate the attorney's First Amendment right to free speech or Fifth Amendment right to due process, and that the bankruptcy court did not clearly err in determining that the attorney's actions amounted to bad faith that warranted the imposition of sanctions.

There are more than 650 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: AIDING AND ABETTING CLAIMS IN PONZI CASES ARE STILL ALIVE AND WELL

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines how aiding and abetting claims against banks in Ponzi scheme cases continue to gain traction in the case law.

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

Section 523(a)(8) should be amended to allow private student loans to be discharged in bankruptcy.

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Oct. 19, 2012
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  CALENDAR OF EVENTS
 

October
- ABI/St. John's "Bankruptcy and Race: Is There a Relation?" Symposium
     October 19, 2012 | Queens, N.Y.
- ABI Program at NCBJ's Annual Conference
     October 26, 2012 | San Diego, Calif.
- ABI Endowment Event at Peter Max Gallery
     October 29, 2012 | New York, N.Y.

November
- U.S./Mexico Restructuring Symposium
     November 7, 2012 | Mexico City, Mexico
- Professional Development Program
     November 9, 2012 | New York, N.Y.
- Detroit Consumer Bankruptcy Conference
     November 12, 2012 | Detroit, Mich.
- Winter Leadership Conference
     November 29 - December 1, 2012 | Tucson, Ariz.

  

 

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

2013

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

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


 
 
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Supreme Court Grants Cert in Ninth Circuit Case on Jurisdiction by Consent

ABI Bankruptcy Brief | June 25 2013
 
  

June 25, 2013

 
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  NEWS AND ANALYSIS   

SUPREME COURT GRANTS CERT IN NINTH CIRCUIT CASE ON JURISDICTION BY CONSENT

The Supreme Court yesterday granted certiorari in Executive Benefits Ins. Agency v. Arkison (In re Bellingham Insurance Agency) about the scope of the bankruptcy court's powers in the wake of the Court's ruling in Stern v. Marshall. In a Ninth Circuit case that drew attention after Stern was decided, a fraudulent transfer defendant argued the bankruptcy court lacked jurisdiction to enter judgment against it. The Ninth Circuit agreed that the bankruptcy court could not enter a final judgment in a fraudulent transfer action but held that the defendant had consented to the bankruptcy court's jurisdiction through its litigation conduct. The Supreme Court will decide whether parties can consent to bankruptcy court jurisdiction. They will also have to rule on a statutory issue about a gap Stern created in the jurisdictional framework. A potential outcome is that bankruptcy courts will lose the power to hear any fraudulent transfer actions. To read the petition for a writ of certiorari, please click here.

LATE AUTO LOAN PAYMENTS EDGED HIGHER IN 1Q 2013

Banks are increasingly extending auto loan financing to borrowers with less-than-sterling credit, a trend that's contributing to a higher rate of missed loan payments, the Associated Press reported today. The rate of U.S. auto-loan payments late by 60 days or more rose to 0.88 percent in the first three months of the year, credit reporting agency TransUnion said today. That's up from 0.82 percent in the first quarter last year, but down from 1 percent in the last three months of 2012, the firm said. Among subprime borrowers, or those whom lenders deem to be higher credit risks because of their track record of managing debt, the delinquency rate jumped to 5.5 percent in the first quarter from 5.09 percent a year earlier. Read more.

ANALYSIS: HIGH-END HOME LOANS STAGE A COMEBACK

Despite a recent sharp rise in mortgage rates, "jumbo" loans are becoming easier to get, according to a Wall Street Journal analysis on Saturday. Lenders originated $54 billion in such mortgages in the first quarter of 2013, according to Inside Mortgage Finance, an industry newsletter, up from $47 billion during the same period a year earlier. Higher loan volume isn't the only sign of a turnaround. The difference in the rate for a government-backed "conforming" mortgage and a jumbo loan is the narrowest it has been since 2007. Many jumbo lenders also have increased the amount of a home's value they will finance, and some are becoming more flexible in evaluating borrowers with strong credit. Read more. (Subscription required.)

COMMENTARY: HOW SAM ZELL IS SINKING TRIBUNE A SECOND TIME AROUND

Sam Zell is gone from the Tribune Co., but his toxic financial legacy lives on, according to a commentary in Friday's Washington Post. Not only did his debt-fueled purchase of one of the nation’s biggest media companies help precipitate its bankruptcy, costing creditors billions of dollars and wiping out thousands of jobs, but he also left a nasty tax mess behind for Tribune, which exited chapter 11 proceedings on Dec. 31. The Internal Revenue Service has challenged the tax-avoiding way that Zell had Tribune unload Newsday, a Long Island, N.Y., newspaper, and it seems almost certain to challenge the way that Tribune unloaded the Chicago Cubs. By the time the final papers are shuffled, the IRS and local tax authorities will likely seek considerably more than half a billion dollars in taxes, penalties and interest from Tribune from the sales of the Cubs and Newsday. Read more.

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

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

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

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

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

The next stop for the ABI Golf Tour is the famed Newport National course in Newport, R.I., in conjunction with the Northeast Bankruptcy Conference on July 12. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour.

ABI IN-DEPTH

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

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

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

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

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

Summarized by James Portman Webster of the James Portman Webster Law Office PLC

The Ninth Circuit affirmed the Bankruptcy Appellate Panel and bankruptcy court's ruling that a state court contempt ruling can be used as evidence that a debt results from a willful and malicious injury and is, therefore, nondischargeable under 11 U.S.C. § 523(a)(6).

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 ANALYSIS OF IN RE BELLINGHAM INSURANCE AGENCY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post takes a closer look at the questions raised by the Supreme Court yesterday when it granted certiorari in Executive Benefits Insurance Agency v. Arkison (In re Bellingham Insurance Agency).

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

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July 11-14, 2013
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  CALENDAR OF EVENTS
 

2013

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

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

September
- ABI Endowment Golf & Tennis Outing
    Sept. 10, 2013 | Maplewood, N.J.
- ABI Endowment Baseball Game
    Sept. 12, 2013 | Baltimore, Md.
- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
    Sept. 18-19, 2013 | New York
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.


  


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

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

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


 
 
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Foreclosure Starts Down on Annual Basis in October

ABI Bankruptcy Brief | November 15 2012
 
  

November 15, 2012

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

FORECLOSURE STARTS DOWN ON ANNUAL BASIS IN OCTOBER

U.S. homes are entering the foreclosure process at a slower pace than a year ago, and fewer properties are being repossessed by lenders, the Associated Press reported today. Between January and October, 971,533 homes were placed on the path to foreclosure, down 8 percent from the same period last year, foreclosure listing firm RealtyTrac Inc. said today. At the other end of the foreclosure process, banks repossessed 559,063 homes through the end of last month, a decline of nearly 19 percent from a year earlier. That puts lenders on pace to complete 650,000 foreclosures this year, down from 800,000 in 2011, the firm said. The data, however, also shows that there are signs at the state level that more homes could end up in foreclosure in the coming months. The trend is most evident in judicial-process states such as New York, Florida and New Jersey. Fourteen states saw an annual increase in foreclosure activity, which RealtyTrac measures as the number of homes receiving a default notice, scheduled for auction or repossessed by the bank. Read more.

To see the percentage of loans in foreclosure by state (judicial v. non-judicial) for 3Q 2012, please visit ABI's Chart of the Day page.

MAJOR RETAILERS SELLING FINANCIAL PRODUCTS, CHALLENGING BANK OFFERINGS

As the nation's largest banks remain stingy with credit offerings following the financial downturn, major retailers are stepping in to fill the void, the New York Times reported today. Customers can now withdraw cash at an ATM with a prepaid card from Walmart, take out a loan at Home Depot for a kitchen renovation or kick-start a new venture with a small-business loan from Sam’s Club. This year, Walmart even started to test selling a life insurance policy. Consumer advocates are torn about the growth of this shadow banking industry. Financial products are making it into the hands of people who might not otherwise qualify for them, but these products are not always subject to the same regulations as bank products are. And to turn a profit, retailers generally have to charge more to people with poor credit or none at all. Read more.

SEC REPORT FINDS FAULTS WITH CREDIT RATERS

The Securities and Exchange Commission (SEC) said in a report today that the credit-ratings industry remains plagued by failures in meeting its own standards, weak oversight and poor documentation of its rating decisions, despite years of heightened scrutiny after the financial crisis, the Wall Street Journal reported. In its second annual report on the nine credit-rating firms registered with the agency, the SEC said that Standard & Poor's Ratings Services, Moody's Investors Service and Fitch Ratings still do not always follow their own standards for rating deals. The firms are required by the SEC to disclose and follow their methodologies for assigning ratings to securities so that investors know how those deals are being judged. The Dodd-Frank financial overhaul legislation required the SEC to conduct annual examinations of the registered rating firms, and deliver a report on its findings. Read more. (Subscription required.)

Click here to read the SEC's report.

REGULATORS SEEK CHANGES IN HOW MONEY-MARKET FUNDS OPERATE

The government on Tuesday inched closer to tightening its oversight of the $2.6 trillion money-market industry when a panel of top financial regulators put forward options for addressing the industry’s vulnerabilities, the Washington Post reported yesterday. The industry immediately expressed frustration with the proposal, saying that it resembles a plan that failed to gain support from the Securities and Exchange Commission. That plan, vigorously opposed by the industry, stalled when three of the SEC’s five commissioners said they would reject it. Under the recommendations put forward on Tuesday by the Financial Stability Oversight Council, the funds would have to set aside reserves as a buffer for times of crisis, restrict how quickly investors can redeem their money, or allow the value of a fund’s shares to fluctuate. Currently, one share of a money market fund is generally valued at $1. The funds have been popular with investors because they seem as stable and reliable as a bank account. But unlike bank accounts, they are not federally insured, and that image of security was shattered during the 2008 financial crisis when the Reserve Primary Fund, the nation’s first money-market fund, "broke the buck" because its value fell below $1 a share. 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.

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: STOEBNER V. SAN DIEGO GAS & ELECTRIC CO. (IN RE LGI ENERGY SOLUTIONS INC.; 8TH CIR.)

Summarized by Eric Lockridge of Kean Miller LLP

The Eighth Circuit ruled that where the debtor acted as a payment intermediary between a utility and a customer and the contract between the debtor and customer required the debtor to remit funds to the utility, the contract created a trust obligation in favor of the utility. Consquently, for purposes of § 547, the utility was a creditor of the debtor because the creditor (1) had unsecured claims for breach of trust and (2) was an intended beneficiary. Further, for purposes of calculating subsequent new value, the issue was not the subsequent services provided by the utility to the customer, but the subsequent payments from the customer to the debtor.

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: BOFA VS. MBIA AND THE FUTURE OF PRIVATE LABEL SECURITIZATION

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the ongoing litigation between BofA and MBIA and its effect on the future of mortgage-backed securities.

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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Nov. 29 - Dec. 1, 2012
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Dec. 4-8, 2012
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Jan. 21, 2013
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Jan. 24-25, 2013
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Feb. 7-9, 2013
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Feb. 17-19, 2013
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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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