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Analysis When Lenders Are Not Paid Back

ABI Bankruptcy Brief | August 20, 2013
 
  

August 20, 2013

 
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ANALYSIS: WHEN LENDERS ARE NOT PAID BACK

Much of the lending done in the U.S. relies on having both collateral and contractual obligations (loan covenants) that together provide the lender with assurance that the funds lent out will be repaid. Rather than putting up physical assets as collateral, governments often instead promise to repay bondholders out of a dedicated stream of income, such as via the tolls collected on a bridge or out of unspecified revenue from future taxes. It is not surprising, then, that a financial crisis involving trillions of dollars of bad loans led to legal conflicts and policy debates about the role of collateral and the sanctity of contracts, according to an analysis in today's New York Times Economix Blog. It seems likely that people owed money by the city of Detroit will get less than promised. One of the many elements in the city's bankruptcy proceedings is the treatment of the holders of general obligation bonds, which constitute $530 million out of the city's $18 billion in total debt. In the past, this type of municipal bond was considered relatively safe in that the borrowing authority was seen as having an implicit commitment to raise taxes as necessary to pay off the obligation. The proposal from Kevyn Orr, Detroit's emergency manager, however, would have these bonds paid back at only 20 cents on the dollar. With Detroit city services already threadbare, and with Orr's bankruptcy proposal foisting losses on retired city workers and current employees through reductions in pensions and other benefits, it seems only fair for bondholders to share in the pain. Bond insurers are likely to file suit, but success by Orr in upending the heretofore accepted view of general obligation bonds could inflict considerable pain on other municipal borrowers, who might well expect to pay higher interest rates to investors nervous that one day other cities might follow Detroit's example. Click here to read the full analysis.

COMMENTARY: NO BANKER LEFT BEHIND

The Detroit bankruptcy case has been cast as a contest between bondholders and pensioners that can be resolved only by shared sacrifice. In principle, there is no problem with that, although in practice, the pensioners' fair share will have to take into account their extreme vulnerability: Public pensions are not federally insured, and many municipal retirees do not receive Social Security. What is problematic is shared sacrifice that does not seem to apply to the big banks that abetted Detroit's descent into bankruptcy, according to a commentary in Friday's New York Times. Just days before its bankruptcy filing last month, Detroit reached its first settlement with creditors. The settlement was with UBS and Bank of America, and although the precise terms will not be nailed down until the bankruptcy judge weighs in, Detroit is set to pay an estimated $250 million to terminate a soured derivatives transaction from 2005 that was supposed to protect Detroit from rising interest payments on a chunk of its variable rate debt. By 2009, both interest rates and the city's credit rating were falling, forcing Detroit to pay the banks some $50 million a year and to pledge roughly $11 million a month in casino-tax revenue as additional collateral. The banks have agreed in a settlement to a discount of as much as 25 percent off what they are owed. But the haircut doesn't mean that the banks will suffer. The banks' 25 percent hit is nothing compared with the city's suggested 90 percent cut to the pensions' unfunded liability — which will result in benefit cuts that would be disastrous in both human and political terms and that the State of Michigan must prevent from happening, according to the commentary. Click here to read the full commentary.

DETROIT SCHOOLS SELL BONDS, FOR A PRICE

Detroit's public-school system sold $92 million in debt today at a substantial yield premium in the largest Michigan municipal-bond sale since Detroit's bankruptcy filing last month, the Wall Street Journal reported today. The Michigan Finance Authority, which sold the debt for Detroit Public Schools, offered the one-year debt at a yield of 4.375%. That compares with 0.18% on a typical triple-A-rated, one-year municipal bond, according to Thomson Reuters Municipal Market Data. The borrowing is backed by a pledge of state aid, a protection cited by some investors who placed orders for the debt. Still, some investors stayed away. Detroit's bankruptcy, filed July 18, has sparked concerns that municipal bonds may not be as safe as many investors once assumed. Kevyn Orr, the city's emergency manager, has proposed imposing cuts on some muni bondholders as the city looks to restructure more than $18 billion in debt. And while Detroit's school district is a separate entity from the city and isn't involved in its bankruptcy, it has still seen its share of financial struggles. It has been under state control, under a separate emergency manager, since 2009, and it has also lost more than 33,000 students, or 40% of its enrollment base, since 2010, according to S&P. Even so, holders of the one-year debt sold today should get paid even if enrollment falls as much as 33%, according to S&P. Click here to read the full article. (Subscription required.)

TRANSUNION: AUTO LOAN DELINQUENCIES REMAIN FLAT DESPITE INCREASE IN LOAN BALANCES

The national auto loan delinquency rate (the percentage of accounts 60 or more days past due) remained relatively flat year-over-year, moving from 0.79% in Q2 2012 to 0.80% in Q2 2013, according to a newswire report today. On a quarter-over-quarter basis, the auto loan delinquency rate experienced an 8-basis-point drop from 0.88% in Q1 2013, according to data provided by TransUnion's Industry Insights Report. Auto loan balances continue to increase, jumping more than 4% between Q2 2012 ($12,875) and Q2 2013 ($13,435). Every state except for Michigan experienced an increase in average auto loan balances during this time frame. While subprime borrower debt increased more than 7% in the last year, delinquency levels for this segment remained about the same, moving from 4.94% in Q2 2012 to 5.02% in Q2 2013. Click here to read the full article.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE SOUTHWEST BANKRUPTCY CONFERENCE ON THURSDAY

The 6th stop for the ABI Golf Tour is on Aug. 22 at the Incline Village Champion course, held in conjunction with ABI's Southwest Bankruptcy Conference. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! A 22-handicapper won the tour event at July's Southeast Bankruptcy Workshop. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: AMERICAN BANK, FSB V. IN RE CORNERSTONE COMMUNITY BANK (IN RE AMERICAN BANK, FSB; 6TH CIR.)

Summarized by Bryan Robinson of Law Offices of Bryan Robinson

The Sixth Circuit Court of Appeals affirmed the ruling by the district court that, in regards to the competing secured claims by American Bank and Cornerstone Community Bank, in the funds of the insolvent debtor U.S. Insurance Group (USIG), held in an account at Cornerstone, American Bank's interest was superior to Cornerstone's interest and that Cornerstone had no right to the money. The court's decision was based on the Premium Finance Company Act, Tenn. Code Ann. §§ 56-37-101 et seq. (2008), which gave American a senior perfected security interest in the contested funds good against any competing interest claimed by Cornerstone.

There are nearly 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: § 502(b)(2) AND THE COLLECTION OF POST-PETITION INTEREST

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post discusses the Ninth Circuit's decision that a creditor can collect post-petition interest from a nondebtor party even though the Code prohibits a creditor from asserting a claim for "unmatured interest."

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.

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2013

August
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September
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November
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Detroit Chapter 9 Sends Warning to Other Cities Bondholders

ABI Bankruptcy Brief | December 3, 2013
 
  

December 5, 2013

 
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  NEWS AND ANALYSIS   

DETROIT CHAPTER 9 SENDS WARNING TO OTHER CITIES, BONDHOLDERS

Bankruptcy Judge Steven Rhodes' decision on Tuesday to authorize Detroit's chapter 9 bankruptcy serves as a warning for government leaders who are grappling with budget problems, bondholders and unions that are fighting cuts, the Detroit Free Press reported today. Although no one expects a sudden rush of municipal bankruptcy filings, unions fear that chapter 9 may become a more viable option for distressed municipalities after Judge Rhodes ruled that pensions could be cut as a way for Detroit to dig itself out of debt. The ruling comes as pensions, which are straining municipal budgets throughout the country, have become the target of other cities and states that are dealing with chronic debt. As Rhodes was issuing his ruling Tuesday that pensions are fair game for cuts under bankruptcy, state lawmakers in Illinois were passing a bill to overhaul that state's pension system, cutting an estimated $90 billion to $100 billion in pension benefits over three decades. In California, several cities have filed for bankruptcy in recent years with huge pension obligations looming -- but none have targeted pension cuts. "This is going to be a playbook used by other cities," University of Michigan bankruptcy law professor John Pottow said of Detroit's strategy. "It's pretty huge because the courts in California, which has very similar laws, have tried to avoid coming to a decision on it before." Read more.

STUDENT DEBT OWED BY CLASS OF 2012 RISES TO $29,400

U.S. college students are leaving school with higher amounts of debt as they increase borrowing to keep up with rising tuition, Bloomberg News reported yesterday. Graduates of the class of 2012 who took loans for bachelors' degrees owed an average of $29,400. The level of debt represents an average annual increase of 6 percent from the $23,450 incurred by borrowers who graduated in 2008, the last year the federal government reported the data, according to a report released yesterday by The Institute for College Access & Success, an Oakland, California-based nonprofit group. The share of college seniors with debt rose to 71 percent from 68 percent in the four-year period. States with the highest debt were in the Northeast and Midwest, led by Delaware. Read more.

For further analysis of the student debt and bankruptcy issues, be sure to pick up a copy of ABI's Graduating with Debt: Student Loans under the Bankruptcy Code, now available in the ABI Bookstore.

TREASURY SECRETARY: REFORMS MAKING FINANCIAL SYSTEM SAFER

U.S. Treasury Secretary Jacob Lew said that post-crisis efforts to bolster the financial system have made the U.S. economy safer, but added that more work is needed, including international protections that mirror those here, the Wall Street Journal reported today. Lew said that while efforts to implement the 2010 Dodd-Frank law have "taken longer than we hoped," the rules are largely falling into place and are helping to bolster the financial system. He said that more needs to be done, including ensuring that U.S. regulators have resources to enforce the rules and the adoption of robust protections by global counterparts to fortify the international financial system. Lew said that the regulatory efforts have reduced the attractiveness of being a large bank by raising the cost -- part of an effort to ensure no bank remains "too big to fail." He stopped short of declaring victory in saying that the U.S. has ended the chance that any bank is so large it would need a government rescue if it ran into trouble, but added that while he believes the U.S. "will meet that test ... there is no precise point at which you can prove with certainty that we have done enough." He said that the U.S. was prepared to go further if necessary. Read more. (Subscription required.)

WALL STREET TRADE GROUPS SUE CFTC OVER DODD-FRANK RULES

Wall Street's biggest lobbying groups have banded together to sue the Commodity Futures Trading Commission, seeking to curb the overseas reach of its rules and rein in a regulatory barrage by its departing Chairman Gary Gensler, Bloomberg News reported yesterday. The suit, filed yesterday in federal court in Washington, D.C., seeks to overturn guidance that the CFTC approved in July. The trade associations, which represent Goldman Sachs Group Inc., JPMorgan Chase & Co., Deutsche Bank AG and other swap dealers, say that the agency illegally set regulations by issuing guidance documents and staff advisories rather than formal commission-approved rules. The lawsuit focuses on the often arcane way that agencies set policy. Formal agency rules require cost-benefit analysis and votes by commissioners, who are picked by the president and confirmed by the Senate. The guidance document in July, which was approved in a commission vote, lacked economic analysis. The advisories in November lacked both economic analysis and a formal vote. While the groups asked the court to vacate the CFTC policy, the case could have the practical effect of slowing the foreign trading rules. Read more.

ANALYSIS: SMALLER MORTGAGE LENDERS LEAD FIELD

Big banks have been retrenching from the mortgage business recently, leaving smaller players to pick up larger chunks of business, the Wall Street Journal reported today. As of the third quarter, smaller mortgage players held a 60 percent market share of the U.S. origination market, up from 39 percent in 2009, according to industry publication Inside Mortgage Finance. In the third quarter alone, the smaller lenders, defined as those outside the top five, gained about six percentage points of market share, according to data compiled by Paul Miller, an analyst with FBR Capital Markets. The midsize and smaller players have grown despite tightening their underwriting standards, much like larger banks have since the financial crisis. But the smaller banks' capital rules aren't as stringent as those that make mortgages a costly enterprise for the biggest firms. Big banks began pulling out of certain mortgage businesses after new international rules required them to hold more capital for certain assets. Big banks "don't have the same view of the value of those assets relative to the cost of capital today," explained Jim Cutillo, chief executive of Stonegate Mortgage. Read more. (Subscription required.)

LATEST ABI PODCAST EXAMINES RECENT BANK SETTLEMENTS AND "TOO BIG TO JAIL"

In light of recent bank settlements over bad behavior stemming from the financial crisis, ABI Resident Scholar Prof. Kara Bruce talks with Prof. Gregory Gilchrist of the University of Toledo Law School about why more indictments against banks or their employees have not occurred. Gilchrist, who is the author of the forthcoming University of Colorado Law Review article, "The Special Problem of Banks and Crime," discusses recent settlements and the issues surrounding "too big to jail." Click here to listen.

NOW AVAILABLE FOR PRE-ORDER: BEST OF ABI 2013: THE YEAR IN CONSUMER BANKRUPTCY

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ABI LAUNCHES SIXTH ANNUAL WRITING COMPETITION FOR LAW STUDENTS

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NEW CASE SUMMARY ON VOLO: JONES V. U.S. TRUSTEE, EUGENE (9TH CIR.)

Summarized by David Shemano of Peitzman Weg LLP

The Ninth Circuit ruled that fraud that would have served as grounds for denying a chapter 7 discharge if it had been known at the time of the discharge can serve as grounds for the later revocation of that discharge.

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: RISK OF LENDER CONCENTRATION OVERLOOKED IN HOUSING REFORM DEBATE

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A new blog post finds that ignoring the effects of loan seller origination, sourcing and servicing processes in a post-GSE secondary market could generate losses for taxpayers.

For witness testimony and a video of the hearing, please be sure to visit http://commission.abi.org.

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 holder of an unstayed judgment, which is subject to an ongoing appeal, can qualify as a petitioning creditor under § 303(b)(1).

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  CALENDAR OF EVENTS
 

2013

December
-abiLIVE Webinar
    Dec. 11, 2013

January
- Western Consumer Bankruptcy Conference
    Jan. 20, 2014 | Las Vegas, Nev.
- Rocky Mountain Bankruptcy Conference
    Jan. 23-24, 2014 | Denver, Colo.

  


February
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    Feb. 6-8, 2014 | San Juan, P.R.
- VALCON14
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March
- Bankruptcy Battleground West
    March 11, 2014 | Los Angeles, Calif.


 
 
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Teleconference Recording Now Available Experts Examine Detroits Chapter 9 Filing and What Lies Ahead

 

 

 
  

July 25, 2013

 
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  NEWS AND ANALYSIS   

DETROIT

TELECONFERENCE RECORDING NOW AVAILABLE: EXPERTS EXAMINE DETROIT'S CHAPTER 9 FILING AND WHAT LIES AHEAD

ABI held a media teleconference yesterday to examine Detroit's chapter 9 filing and what lies ahead for the bankrupt city. Experts on the teleconference discussed some of the factors that led to Detroit's filing and the early legal issues over the city's eligibility to file. Speakers on the program included Bankruptcy Judge Christopher M. Klein (E.D. Calif.; Sacramento), who is presiding over the chapter 9 case of Stockton, Calif.; Deborah L. Fish of Allard & Fish PC (Detroit); and Patrick Darby of Bradley Arant Boult Cummings LLP (Birmingham, Ala.), who represents Jefferson County, Ala., the largest chapter 9 case prior to Detroit's filing with more than $4 billion of municipal debt. The program was moderated by Prof. Juliet M. Moringiello of Widener University School of Law (Harrisburg, Pa.). To listen to a recording of the media teleconference, please click here.

For more information on municipal distress and chapter 9 bankruptcy, see ABI's Municipalities in Peril: The ABI Guide to Chapter 9, Second Edition, from the ABI Bookstore.

COMMENTARY: FACING UP TO AMERICA'S PENSION WOES

While Michigan Circuit Judge Rosemarie Aquilina's rulings to stop Detroit's chapter 9 did not stand before a state court of appeals panel and the federal bankruptcy judge assigned to the case, Judge Aquilina did correctly identify public pension promises as the key issue in the case, according to a commentary by Prof. David Skeel of the University of Pennsylvania Law School in the Wall Street Journal today. As recently as three years ago, the conventional wisdom held that public-pension promises, no matter how extravagant, are sacrosanct even if a city files for chapter 9 protection. The first hint that this thinking might be impractical came after Vallejo, Calif., filed for bankruptcy in 2008, according to Skeel. Vallejo successfully restructured its collective-bargaining agreements, and, as then-City Manager Robert Stout reported, the city believed that chapter 9 gave Vallejo the legal authority to alter its pensions as well. But CalPERS, which administers California's state and local pensions, threatened litigation. The city concluded that any reduced pension costs wouldn't be great enough to offset the legal costs, so it backed off. Since Vallejo, the pension question has become increasingly hard to avoid. When Central Falls, R.I., filed for bankruptcy in 2011, the small town made it clear that significant pension cuts were its only hope for recovery. In the end, Central Falls reduced its pension costs by 50 percent. The status of pension obligations is also at issue in the bankruptcies of the California cities of Stockton and San Bernardino, so it is possible that Detroit Bankruptcy Judge Steven Rhodes will have the benefit of previous rulings on the issue when he rules on the Detroit case. Emergency manager Kevyn Orr has signaled that every constituency needs to sacrifice, and Detroit's public workers to this point aren't yielding an inch. If Detroit can make at least modest adjustments to its pensions, and restructure its other obligations as well, Skeel says that the city and other municipalities in dire financial straits may have a fighting chance. Read more. (Subscription required.)

ANALYSIS: PENSION BONDS RAISE RED FLAGS ON MUNIS

Of the $18 billion pile of liabilities Detroit faces in its bankruptcy proceedings, $1.4 billion of it consists of bonds issued in 2005 and 2006 to shore up the city's pension systems, the Wall Street Journal reported today. The fact that Detroit -- or any municipality -- issued these bonds could have been a red flag to investors that there was potential trouble brewing ahead. With Detroit's Chapter 9 bankruptcy filing, the city's retirees could see their pensions slashed, officials have warned. And Detroit says its pensions are still underfunded by another $3.5 billion. Some of the other municipalities that have issued similar pension bonds in recent years are among the most problematic: Stockton, Calif., which filed for bankruptcy last year; Puerto Rico, which has struggled through a prolonged recession and was recently downgraded to near junk; and Illinois, which was charged with securities fraud for misleading investors about how it funds its pensions. In fact, Illinois holds the record for the largest pension bond deal ever, selling $10 billion in bonds in 2003, according to Thomson Reuters. If successful, a municipality that sells pension bonds can save money on its pension costs. But if returns on the pension investments are lower than expected, the municipality can actually lose money. In December, credit-rating firm Moody's Investors Service went so far as to say that pension bonds "rarely improve the credit quality of the state or the local government that issues them." Read more. (Subscription required.)

EDITORIAL: THE STUDENT LOAN DEBACLE

Over the last decade, Congress sensibly replaced a system of variable-rate loans with fixed rates that allowed families to know what their loans would cost, according to a New York Times editorial yesterday. It set the rate on both subsidized and unsubsidized loans at 6.8 percent, but later ordered the rate on subsidized loans -- two-thirds of which go to families with incomes under $50,000 -- to gradually decline by half. The refusal, according to the editorial, of Republicans in both houses to renew the lower rate means that students who start college this fall and finish in four years will be saddled, on average, with an extra $4,000 in debt. An analysis by the Congressional Budget Office estimated that the new, higher rate would earn the government about $184 billion over the next decade after taking into account program costs, including potential defaults. The editorial advocates that in the long term, the loan program needs to be restructured so that the loans are closely linked to the government's actual cost of borrowing, which could reduce rates for students. Read more.

HOUSE FINANCIAL SERVICES COMMITTEE APPROVES HOUSING FINANCE BILL

The House Financial Services Committee approved a Republican housing bill that would liquidate U.S.-owned financiers Fannie Mae and Freddie Mac and limit government mortgage guarantees, Bloomberg News reported yesterday. The bill, offered by House Financial Services Chair Jeb Hensarling (R-Texas), was passed on a mostly party-line vote of 30-27. Hensarling's legislation would eliminate Washington-based Fannie Mae and Freddie Mac within five years and replace them with a National Mortgage Market Utility to securitize mortgages. Unlike a similar bill in the Senate, the House measure would not include U.S. backing for securitized loans, though it would let the Federal Housing Administration play an expanded guarantee role in the event of an economic crisis. Hensarling said that he is eager to bring his measure to a vote on the House floor and will meet with House Republican leaders next week. Read more.

COMMENTARY: TREASURY'S FANNIE MAE HEIST

The federal government currently is seizing the substantial profits of government-chartered mortgage firms Fannie Mae and Freddie Mac, taking for itself the property and potential gains of private investors that the government induced to help prop up these companies, according to a commentary yesterday by former U.S. Solicitor General Theodore Olson in the Wall Street Journal. Earlier this month Olson filed a lawsuit to stop this seizing of profits, now known as Perry Capital v. Lew, and other lawsuits challenging the government's authority to demolish private investment are stacking up. When the nationwide mortgage crisis first took hold in 2007 and 2008, Fannie and Freddie shored up their balance sheets with some $33 billion in private capital, much of it from community banks, which had been encouraged by federal regulators to invest in the companies. As the crisis deepened, the government determined that Fannie and Freddie also needed substantial assistance from taxpayers. Congress passed the Housing and Economic Recovery Act of 2008, and under that law the government ultimately plowed $187 billion into the companies. Taxpayers should get their investment back, but once they do, according to Olson, so should the private investors who first came to Fannie and Freddie's aid. Read more. (Subscription required.)

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

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

ABILIVE WEBINAR ON SEPT. 24 TO EXAMINE THE COMPLEX REQUIREMENTS AND ETHICAL DUTIES OF REPRESENTING CONSUMER DEBTORS

The abiLIVE webinar on Sept. 24 will feature a panel of experts discussing the ethical and compensation issues that can arise while representing chapter 7 and 13 debtors as well as individual chapter 11 debtors. Topics covered include client fraud and an attorney's duty to verify client information, attorney fee structures, and complex issues in individual chapter 11 cases. The panel includes perspectives from the attorneys and trustees, as well as the academic reporter for the ABI Ethics Task Force. Click here to register.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE MID-ATLANTIC BANKRUPTCY WORKSHOP IN AUGUST

The 5th stop for the ABI Golf Tour is the Hershey Country Club, in conjunction with the Mid-Atlantic Bankruptcy Workshop. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! A 22-handicapper won the tour event last week at Amelia Island, Fla.! There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NORTON JUDICIAL EXCELLENCE AWARD NOMINATIONS OPEN UNTIL JULY 29

Nominations are now open for the 8th Annual Judge William L. Norton Judicial Excellence Award, to be presented during the ABI luncheon at the annual meeting of the National Conference of Bankruptcy Judges on Nov. 1, 2013. The award is presented by ABI and Thomson Reuters each year to the current or retired bankruptcy judge whose career embodies the same continued dedication and outstanding contributions to the insolvency community as the award’s namesake, Judge Norton. Nominations are considered by a committee made up of representatives from the Norton treatise and past ABI presidents. Nomination forms, which must be submitted by July 29, are available from Clay Mattson at Thomson Reuters (clay.mattson@thomsonreuters.com).

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: MORT RANTA V. GORMAN (4TH CIR.)

Summarized by John Bollinger of the Boleman Law Firm, PC

Holding that "for both above-median income and below-median income debtors, Social Security income is excluded from the calculation of 'projected disposable income' under § 1325(b)(2)," the Fourth Circuit Court of Appeals vacated the order of the district court and remanded the case to the district court with instructions to remand to the bankruptcy court for further proceedings consistent with the opinion.

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: TIME TO DUST OFF THE OLD "GOOD BANK-BAD BANK" PLAN

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post said that governments need to consider the advantages of a good bank-bad bank restructuring as loan assets currently have determinable and probably higher values than earlier in the financial crisis.

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

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  CALENDAR OF EVENTS
 

2013

August
- Mid-Atlantic Bankruptcy Workshop
    August 8-10, 2013 | Hershey, Pa.
- abiLIVE Webinar: How Will the New U.S. Trustee Fee Guidelines Impact You?
     August 20, 2013
- Southwest Bankruptcy Conference
    August 22-24, 2013 | Incline Village, Nev.

September
- ABI Endowment Golf & Tennis Outing
    Sept. 10, 2013 | Maplewood, N.J.
- ABI Endowment Baseball Game
    Sept. 12, 2013 | Baltimore, Md.
- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
    Sept. 18-19, 2013 | New York
- abiLIVE Webinar: Complex Requirements and Ethical Duties of Representing Consumer Debtors
     Sept. 24, 2013
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.

 

  

 

October
- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum
    Oct. 4, 2013 | Kansas City, Mo.
- ABI Endowment Football Game
    Oct. 6, 2013 | Miami, Fla.
- 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.
- Austin Advanced Consumer Bankruptcy Practice Institute
   Nov. 10-12, 2013 | Austin, Texas
- Detroit Consumer Bankruptcy Conference
   Nov. 11, 2013 | Detroit, Mich.

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

 

 
 
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Commentary Schwab Case Casts Spotlight on Securities Arbitration

ABI Bankruptcy Brief | September 5, 2013
 
  

September 5, 2013

 
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  NEWS AND ANALYSIS   

COMMENTARY: SCHWAB CASE CASTS SPOTLIGHT ON SECURITIES ARBITRATION AND ITS FLAWS

A skirmish between the Financial Industry Regulatory Authority (FINRA) and brokerage firm Charles Schwab & Company has brought unwelcome attention to the investor arbitration process and its flaws, according to a commentary in yesterday’s New York Times DealBook Blog. The dispute started in 2011, when Schwab added a clause to its customer agreement requiring customers not to pursue or participate in class-action suits against the company. This removed an option allowing groups of investors to sue a firm, established by the Supreme Court’s 1987 ruling in Shearson v. McMahon. FINRA objected, filing a disciplinary action against Schwab last year to force the removal of the clause, and a final resolution on the matter will be heard before an adjudicatory panel next Wednesday. But the dispute has roused state securities regulators, investor advocates, and Democratic members of Congress, all demanding that the clause be done away with, no matter how the ruling goes. One investor advocate, F. Paul Bland Jr. of Public Justice, says that "If Schwab succeeds, investor protection will be enormously damaged." Click here to read the full commentary.

COMMENTARY: YOUR CITY MIGHT BE THE NEXT DETROIT...BUT THAT’S NOT ALL BAD

Detroit’s bankruptcy has sent shivers through cities all around America. That is both understandable and may not be all bad, says Benjamin R. Barber, author of the forthcoming book If Mayors Ruled the World, in a commentary in yesterday’s Wall Street Journal. Detroit’s problems are shared by many cities. Barber says that "cities have become gargantuan unfunded mandates where much of the nation’s productivity, innovation and prosperity are generated without adequate support from the outside." He believes that federal government spending still skews towards rural areas, "even though cities represent over three quarters of the American population and the absolute electoral majority." But the problems that Detroit faces, though shared by other cities, are not insurmountable. Barber’s prescriptions:

  • Declining manufacturing base: Outsourcing of jobs is a national problem, Barber says, but "cities have proven more resilient than nations, finding ways to transition from the old to the new economy."
  • A redefinition of city limits: Maps conceived in the 19th century don’t reflect today’s realities, Barber notes. Detroit has lost two-thirds of its population, but the 10 surrounding counties have grown by more than 5.3 million, along with 2 million jobs.
  • Pensions: Many cities have bigger pension costs than Detroit’s, but the answer, Barber thinks, is for residents to shoulder more of the costs of services they enjoy, and to stop putting pension obligations behind obligations to bondholders.
"Detroit’s fate may in time be Miami’s, Atlanta’s and San Diego’s," Barber says. "But that’s fine." Cities face many challenges, but they are here to stay. After all, Barber notes, "London, Rome, Alexandria and Boston are much older than England, Italy, Egypt and the United States." Click here to read the full commentary (subscription required).

DETROIT DEFENDS CONTESTED SWAPS DEAL AS KEY TO CITY’S SURVIVAL

Detroit emergency manager Kevyn Orr has asked Steven Rhodes, the federal judge overseeing its bankruptcy case, to allow a swaps deal completed with Merrill Lynch and UBS AG just prior to the filing of their chapter 9 case, according to a report from Reuters yesterday. Creditors, led by bond insurer Syncora Guarantee have objected to the deal, which would give the city unfettered access to casino tax revenue, arguing that it favors the swap counterparties over other creditors and eliminates the possibility of including the revenue — some $180 million a year — as a potential source for paying Detroit’s obligations. In a sworn deposition, Orr’s top outside financial consultant, Kenneth Buckfire, said he believed the city was in a "life and death" predicament at the time the swaps deal went through. Read more.

A BANKING BANKRUPTCY THAT TAKES A DIFFERENT PATH

When bank holding companies file for bankruptcy — usually after the Federal Deposit Insurance Corporation has taken away its banking subsidiary — the only thing left to do is marshal any assets, including a typically large tax refund, pay out the results to creditors, and liquidate. But a small Wisconsin bank holding company, Anchor BanCorp Wisconsin, plans to use chapter 11 to recapitalize rather than liquidate, according to a story by Stephen Lubben in today’s New York Times DealBook blog. The company had received more than $100 million from the federal Troubled Asset Relief Program during the financial crisis, but it still faced the prospect of losing its bank. Filing for chapter 11 will allow it to pay off more than $180 million in debt owed to other banks for just $49 million. It will also allow the company to convert the United States Treasury’s preferred stock — received as part of the TARP bailout — into a small equity stake, worth about $6 million, the holding company. Most important, according to Lubben, "Anchor said it would cancel its existing shares and sell the remaining new equity to investors, leading to the recapitalization of the holding company." Although federal regulators still need to sign off on the plan, the bankruptcy judge has approved it. This speedy trip through bankruptcy, Lubben says, was the result of a prepackaged bankruptcy case that "included the creditors voting on the plan before the bankruptcy filing." It may well "provide another template for use of chapter 11 in connection with other financial institutions," Lubben concludes. Read more.

ANALYSIS: HOSPITALS, DEBT COLLECTORS RUSH TO CREATE STANDARDS FOR COLLECTING PATIENT DEBT

Facing pressure from both the Congress and the IRS that would severely limit the ability to collect patient medical debt, The Healthcare Financial Management Association (HFMA), which comprises hospital and other healthcare financial professionals, last December joined forces with ACA International, the leading organization of debt collection professionals, to develop guidelines for dealing with patient medical debt, according to a post yesterday on Forbes.com. The stated purpose of the task force guidelines "is intended to identify a standardized process for resolving the patient portion of medical bills that should be adhered to and to provide a framework for educating patients about the patient balance resolution process," according to the task force’s recommendations. The new guidelines outline a proposed timeline for payment of patient debts. Once a bill "drops," patients would have 120 days before a health-care company would take "extraordinary collection action." The guidelines also propose removing medical debt from credit reports within 45 days, a key component of the Medical Debt Responsibility Act currently before Congress. Click here to read the full analysis.

PROPOSED AMENDMENTS PUBLISHED FOR PUBLIC COMMENT

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

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

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

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

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

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

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

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

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: DANIELSON V. FLORES (IN RE FLORES) (9TH CIR.)

Summarized by Kevin M. Baum of Katten Muchin Rosenman LLP

Affirming the Bankruptcy Court, the Ninth Circuit, sitting en banc, held that a Bankruptcy Court may confirm a chapter 13 plan of reorganization under § 1325(b)(1)(B) only if the plan’s duration is at least as long as the applicable commitment period under section 1325(b)(4), without regard to whether the debtor has positive, zero, or negative projected disposable income. In reaching its decision, the court expressly overruled the portion of its previous decision in Maney v. Kagenveama (In re Kagenveama), 541 F.3d 868, 875 (9th Cir. 2008) in which the Ninth Circuit had previously held that § 1325(b)(1)(B) does not impose a minimum duration for a Chapter 13 bankruptcy plan if the debtor has no "projected disposable income," as such term is defined in the Bankruptcy Code.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: COMING RULES COULD CUT OFF BANKS FROM AFFILIATES

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post reported that Dance New Amsterdam, a financially troubled nonprofit dance education and performance center in New York, had staved off, at least temporarily, a shutdown by raising $50,000 it owed.

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

ABI Quick Poll

Success fees for financial advisors should be prohibited.

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

INSOL INTERNATIONAL

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

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  CALENDAR OF EVENTS
 

2013

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

October
- 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


 
 
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Reverse-Mortgage Rule on Surviving Spouse Tossed by Judge

ABI Bankruptcy Brief | October 1, 2013
 
  

October 1, 2013

 
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  NEWS AND ANALYSIS   

REVERSE-MORTGAGE RULE ON SURVIVING SPOUSE TOSSED BY JUDGE

A rule of the U.S. Department of Housing and Urban Development governing repayments of reverse mortgages by surviving spouses conflicts with federal law, a U.S. District Judge has ruled, Bloomberg News reported yesterday. HUD erred "when it insured the reverse mortgages of plaintiffs' spouses pursuant to regulation, which permitted their loan obligations to come due upon their death regardless of whether their spouses were still alive," U.S. District Judge Ellen Huvelle said yesterday. The widowers who sued HUD cited a federal law that defers an obligation to pay off such loans until the homeowner's death and defines "homeowner" to include the surviving spouse. HUD rules make it more likely that a surviving spouse will end up in foreclosure, according to the suit, which was filed in 2011. The language HUD used when implementing the law states that the loan comes due "if a mortgagor dies and the property is not the principal residence of at least one surviving mortgagor." Read more.

COMMENTARY: OBAMA'S DETROIT BAILOUT

The White House announced on Friday a $320 million aid package for the bankrupt city of Detroit because of "exceptional" circumstances. According to an editorial in today's Wall Street Journal, the action creates a slippery slope, because other struggling cities will also want a financial infusion. The federal funds, which were cobbled together from programs including TARP and the Federal Emergency Management Agency, are supposedly intended to encourage private investment. The aid includes $150 million to remove blight and spur redevelopment; $30 million for public safety and to hire 150 firefighters; and $140 million to improve transportation. The administration is also offering its technical expertise to help overhaul the city's dysfunctional computer systems. Foundations such as Kresge, Ford, Knight and Skillman have already poured more than $70 million this year into initiatives to rebuild Detroit. Kresge alone has committed $35 million for the city's new street-car system and $150 million over five years to implement the Detroit Future City plan to revive downtrodden neighborhoods. Two weeks ago, NCB Capital Impact and Kresge announced a $30.25 million fund to support development along the street-car line. Read the full editorial. (Subscription required.)

CLOCK STARTS ON SEC'S CEO PAY DISCLOSURE RULE

The Securities and Exchange Commission is set to publish a rule requiring companies to disclose how much they pay their top executives, and has started the clock on a two-month comment period for the contentious proposal, The Hill reported yesterday. Unveiled earlier this month, the draft rule is required under the Dodd-Frank Wall Street reform law. The statute calls for regulations forcing companies to reveal the median income of rank-and-file employees and the salaries of chief executives. Firms would also be required to calculate the pay ratio reflecting the difference between the two figures. Proponents of the rule argue it would help shame companies that heap exorbitant salaries on their top officers and give lower-level employees more leverage to negotiate for higher pay. But business groups and banks warn that the cost of complying with the new regulations would be overly burdensome, with some estimates placing the price tag at $100 million for a single multinational firm. To allay those concerns, the draft regulations call for a flexible approach to calculating the figures, with firms able to choose from a series of alternative compliance options. Read more.

Click here to view the draft regulations.

COMMENTARY: TOO BIG TO BAIL APPEARS TO TAKE HOLD FOR BANKS

While there are currently many experts who share the view that taxpayers would have to bail out the world's largest banks if another financial crisis hit, that view may be flawed, at least judging by the behavior of the bond market and the behind-the-scenes work of policymakers, according to an analysis in today's Wall Street Journal. Five years after the painful discovery that some firms were "too big to fail," regulators and banks remain incapable of coping with teetering financial behemoths. Any hope of avoiding a repeat of the messy actions of 2008 rests on two premises: that there is a credible plan to take over a failing financial firm and that market participants understand that losses will fall on them and not taxpayers. In short, according to the commentary, investors have to believe that banks are "too big to bail." On the first point, the Federal Deposit Insurance Corp. believes it has a plan ready to go when the next big bank gets close to failure. The FDIC would take over the bank's holding company while trying to keep alive its operating subsidiaries -- the units that run its branches and its trading and wealth-management operations, etc. This variation on the "bad bank/good bank" split should have the advantage of staving off a potential run on the institution. Shareholders would be wiped out, creditors -- even those holding senior debt -- would sustain losses, and top executives probably would be fired. Read more. (Subscription required.)

NEWEST TITLE IN ABI'S BOOKSTORE EXAMINES ISSUES SURROUNDING STUDENT LOANS AND BANKRUPTCY

ABI's newest publication, Graduating with Debt: Student Loans under the Bankruptcy Code, tackles issues surrounding bankruptcy and student loan debt. Student loan debt in the U.S. exceeds $1.1 trillion -- more than any other type of consumer debt except for mortgage loans -- while new education lending continues at an explosive pace. Profs. Daniel A. Austin of Northeastern University (Boston) and Susan E. Hauser of North Carolina Central University School of Law (Durham, N.C.) authored the book with both borrowers and creditors in mind to introduce readers to the basics of student loan debt, including different types of loans and loan-forgiveness programs, delinquency and default, and administrative and nonjudicial remedies for borrowers having trouble repaying their loans. Graduating with Debt covers Bankruptcy Code provisions governing student loans, relevant case law and judicial precedent in all federal circuits, local practices and policies, partial discharge of student loan debt, and specialized treatment of student loan debt in chapter 13. The soft-cover, 250-page book also includes extensive appendices replete with sample pleading and discovery forms. To receive special ABI member pricing, be sure to log in to the ABI Bookstore when pre-ordering.

TOMORROW! ABI'S UNSECURED TRADE CREDITORS COMMITTEE INVITES YOU TO A DISCUSSION ABOUT CLAIM-TRANSFER TRANSACTIONS

Members are encouraged to join ABI's Unsecured Trade Creditors' Committee in a discussion tomorrow at 4 p.m. ET about considerations that arise out of claim-transfer transactions. Bankruptcy claim transfers are an active part of the bankruptcy process in today's marketplace, and for this reason, the Judicial Conference of the United States imposed a new fee on each transfer, effective May 1, 2013. The moderator for the call, Neil B. Glassman of Bayard, P.A. (Wilmington, Del.), will lead a discussion focusing on the steps in a claim-sale transaction, standard provisions in the transaction documents, developments in the industry, and tricks and traps creditors' counsel can avoid. If you would like to participate on the free committee call, please contact Martha Cannon at mcannon@abiworld.org.

THURSDAY! ABILIVE WEBINAR LOOKS AT 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.

ABI LAW REVIEW/ST. JOHN'S SYMPOSIUM ON FRIDAY TO EXAMINE HEDGE FUNDS IN BANKRUPTCY- FREE PROGRAM!

ABI Law Review and St. John's School of Law Center for Bankruptcy Studies invite members to attend the Fall 2013 "Hedge Funds in Bankruptcy" Symposium on Oct. 4 The free program will be held at St. John's School of Law in Queens, N.Y., from 9 a.m. to 2:30 p.m. ET. Distinguished scholars and professionals in the hedge fund and bankruptcy fields will discuss the growing role that hedge funds now play in the bankruptcy process and to assess the desirability of maintaining, expanding, limiting, or otherwise changing this role by means of changes in bankruptcy law, policy or practice. While there is no fee to attend the symposium, advance registration is required. To register, please complete and submit the online registration form.

FIRST ABI WORKSHOP PROGRAM LOOKS AT RISKY TIMES FOR SECURED LENDERS AND SERVICERS! 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.

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: HOPE V. ACORN FINANCIAL INC. (11TH CIR.)

Summarized by Paul Avron of Berger Singerman PA

A chapter 13 trustee who, depsite having actual knowledge that a secured creditor's lien was unperfected as of the date the debtor filed the bankruptcy case, and who affirmatively recommended confirmation of the debtor's chapter 13 plan which treated the creditor as secured, is bound by the order confirming the plan and cannot thereafter bring suit against the creditor to avoid its lien.

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: FORECLOSURE CRISIS UPDATE

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post examines the trends and developments that have emerged over the course of the past six years since the foreclosure crisis began.

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.

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THIS WEEK:

 

 

MW2013
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MW2013
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COMING UP

 

 

 

Mid-Level PDP 2013
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Detroit
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Detroit
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CFRP13
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CFRP13
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CRC13
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ACBPIA13
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Detroit
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Delaware
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WLC
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40-Hour Mediation Program
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Western Consumer Bankruptcy Conference
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19th Annual Rocky Mountain Bankruptcy Conference and Rocky Mountain Consumer Workshop
Jan. 23-24, 2014

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  CALENDAR OF EVENTS
 

2013

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
- 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.
- 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

January
- Western Consumer Bankruptcy Conference
    Jan. 20, 2014 | Las Vegas, Nev.
- Rocky Mountain Bankruptcy Conference
    Jan. 23-24, 2014 | Denver, Colo.


 
 
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