Finance and Banking

Mortgage-Relief Plan Is Extended

ABI Bankruptcy Brief | May 30 2013
 
  

May 30, 2013

 
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  NEWS AND ANALYSIS   

MORTGAGE-RELIEF PLAN IS EXTENDED

The Obama administration announced today that its signature consumer-mortgage modification initiative, due to expire at the end of the year, will be extended for two more years, the Wall Street Journal reported today. Senior administration officials said yesterday that, despite a growing housing-market recovery, it did not make sense to dismantle the Home Affordable Modification Program (HAMP) given the real estate bust's lingering damage. About 1.1 million borrowers were still in some stage of foreclosure at the end of April, according to a report released yesterday by CoreLogic, and banks have been completing nearly 52,000 foreclosures a month. Read more. (Subscription required.)

REALTYTRAC: FORECLOSURE SALES TUMBLE IN FIRST QUARTER

Sales of U.S. homes in foreclosure fell in the first quarter, a report from RealtyTrac showed today, the latest data to suggest that the housing market is on the mend, Reuters reported. There were 190,121 properties sold that were in the foreclosure process or already seized by lenders, down 18 percent from the last quarter of 2012 and a 22 percent decrease from the first quarter the year before. That accounted for 21 percent of all home sales, down from 25 percent in the first quarter of 2012. It was also well off the peak of 45 percent seen during the first quarter of 2009 as the housing market was still reeling from its collapse and the global financial crisis. Read more.

U.S. TRUSTEE PROGRAM REPORT SHOWS EFFORTS CONTINUE TO REIN IN EXECUTIVE BONUSES IN BANKRUPTCY

In a self-generated report card, the U.S. Trustee Program said that it has made significant accomplishments in many areas of monitoring the bankruptcy system and expects that its efforts will continue to rein in executive bonuses in bankruptcy, the Wall Street Journal reported yesterday. According to the U.S. Trustee Program, the executive bonus plans that many companies are putting forth for court approval today aren’t true incentives. Instead, trustees argue, the bonus plans set easily achievable goals, making them disguised—and illegal—retention payments. One focus of the program has been to crack down on the bonuses that companies in chapter 11 seek to pay to their executives while other obligations go unpaid—an effort in which trustees have a 66.7 percent success rate, according to a recently filed annual report. The report showed that U.S. Trustees earned better grades for their role objecting to professional fees (94.7 percent success rate), bringing motions to appoint an independent trustee or examiner (90.3 percent), asking that a chapter 11 case be dismissed or converted to a chapter 7 liquidation (97.9 percent) and chapter 11 plan objections (95.3 percent). Read more.

Click here to read the annual report.

DETROIT SURVIVAL DEPENDS ON SPEED OF DESTRUCTION, ACCORDING TO HOMEBUILDER

Homebuilder William Pulte says that the only way to truly save Detroit and get the housing market functioning properly again is to destroy large swaths of the city as quickly as possible, Bloomberg News reported today. Pulte, a scion of the family that created PulteGroup Inc., the largest U.S. homebuilder by revenue, has already knocked down 10 blocks in Detroit’s Southeast section of the city as part of the nonprofit Detroit Blight Authority program, which Pulte co-created with Detroit Mayor David Bing. It’s a preview of the effort he says is needed to get ahead of the metal strippers and arsonists devastating the city’s property values. Housing markets in Detroit and other rustbelt cities such as Cleveland and Buffalo are hampered by decaying, vacant homes, even as sales of existing homes hover around a three-year high nationally. In addition, pilfering of vacant units in urban areas cut the number of U.S. homes with complete plumbing by about 10.4 percent from 2008 to 2011, according to U.S. Census data compiled by Bloomberg, including 66,722 such homes in Detroit alone. Read more.

FITCH: U.S. STATES' RECOVERY TO REMAIN SLOW, STEADY

Fitch Ratings released a report yesterday stating that the economic recovery will continue at a slow pace in fiscal 2014 for most U.S. states, with federal budget deals and health care reforms creating uncertainty in many budgets, Reuters reported yesterday. For most states, the new fiscal year starts July 1 and legislators and governors are putting the final touches on their budgets. Fitch found that the automatic federal spending cuts that began on March 1, known as "sequestration," have had a limited effect on states' economies and finances. According to a report released yesterday by the Economic Policy Institute (EPI), a liberal-leaning think tank, states will lose out on $5.1 billion in grants this federal fiscal year, which ends in September, under sequestration. In recent years, they have received more than $600 billion in federal grants, according to EPI. Read more.

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

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

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

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

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

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

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: THE MAJESTIC STAR CASINO LLC V. BARDEN DEVELOPMENT INC. (IN RE THE MAJESTIC STAR CASION LLC; 3D CIR.)

Summarized by John Eggum of Foran Glennon Palandech Ponzi & Rudloff

The Third Circuit ruled that the debtor lacked standing to challenge the nondebtor parent/shareholder's revocation of an election to S Corp status. Rejecting cases from other circuits, the Third Circuit found that S Corp status is not a property interest. Alternatively, even if S Corp status were a property interest, S Corp status is not an interest of the debtor entity because the right to revoke S Corp status belongs to the shareholder parent.

There are nearly 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: WORKERS’ COMPENSATION BENEFITS IN BANKRUPTCY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post looks at case law and issues surrounding workers’ compensation benefits in bankruptcy.

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

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  CALENDAR OF EVENTS
 

2013

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

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

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


  


September
- ABI Endowment Golf & Tennis Outing
    Sept. 10, 2013 | Maplewood, N.J.
- ABI Endowment Baseball Game
    Sept. 12, 2013 | Baltimore, Md.
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.

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

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


 
 
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Justice Department Probe Turns Up Heat on Banks

ABI Bankruptcy Brief | August 6, 2013
 
  

August 8, 2013

 
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  NEWS AND ANALYSIS   

JUSTICE DEPARTMENT PROBE TURNS UP HEAT ON BANKS

The Justice Department is targeting banks that service a broad range of what it considers questionable financial ventures, including online payday lenders, the Wall Street Journal reported today. The Justice Department is targeting banks that service a broad range of what it considers questionable financial ventures, including online payday lending, that officials worry may harm consumers. The government has issued subpoenas to banks and other companies that handle payments for an array of financial offerings, ramping up an investigation that has been under way for several months, according to Justice Department officials. It's a shift in strategy: Rather than just targeting individual firms, the government is now going after the infrastructure that enables companies to withdraw money from people's bank accounts. The volume of online payday lending -- a term for smaller, short-term loans at high interest rates -- grew to $18.6 billion in 2012, up 10 percent from the previous year, accounting for nearly 40 percent of industrywide payday-loan volume, according to investment bank Stephens Inc. Regulators are also trying tamp down phone and online offers in which marketers try to get people to pay for services that they don't intend to deliver. These can include offerings to erase debt or offerings of work-from-home programs that don't lead to jobs, officials say. Read more. (Subscription required.)

DETROIT RATTLES MUNI MARKET

A fight over bankrupt Detroit's sewer system threatens to reshape the nation's $3.7 trillion municipal-bond market, the Wall Street Journal reported today. The battle pits Detroit Emergency Manager Kevyn Orr against the fund companies, insurers and individuals that hold more than $5 billion of Detroit water and sewer bonds, over a plan to restructure the debt. Orr wants bondholders to sign off on a plan to tear up some outstanding bonds and replace them with new ones that could have different terms. The switch could free up millions of dollars in city revenue, potentially reducing losses for other creditors in the city's more than $18 billion bankruptcy case. Some bondholders say that they don't want that deal, even though Orr says they wouldn't suffer losses on the debt switch. They say tearing up the bonds could set a dangerous precedent that may shock buyers of supposedly safe municipal debt and impair financing for other U.S. states and cities. Read more. (Subscription required.)

For the latest information and analysis about the Detroit case, be sure to visit ABI's dedicated website, http://news.abi.org/Detroit.

COMMENTARY: PENSION REFORM COULD DISRUPT INVESTMENT FUNDS

Detroit's financial woes, exacerbated by underfunded pension liabilities, have brought renewed scrutiny to public pension plans, according to a commentary yesterday on the New York Times DealBook blog. Senator Orrin Hatch (R-Utah) and others have suggested overhauling these plans to shift more responsibility to the private sector. Private insurance companies would assume responsibility for these defined benefit plans, offering annuities to beneficiaries in exchange for employer-paid premiums. Proponents argue that privatization could reduce the risk of municipal bankruptcy and federal bailouts. One downside, according to the commentary, is the possible increase in fees associated with external management of retirement savings; it creates another way for Wall Street to extract wealth from Main Street. Phasing out public pension funds could also cut off an important source of financing for venture capital and private equity. Pension funds like the California Public Employees' Retirement System, or CalPERS, and the Teachers Retirement System of Texas are among the largest and most powerful institutional investors in venture capital and private equity. Read the full commentary.

CONSUMERS FIND INVESTORS EAGER TO MAKE "PEER-TO-PEER" LOANS

There has been a growing shift among lenders with many individual investors jumping to fund unsecured, high-interest-rate loans to bring in high yields, the Wall Street Journal reported yesterday. Even some investment funds are getting into the game, snapping up entire loans before individual investors can act. Prosper Loans Marketplace Inc., and a bigger competitor, Lending Club Corp., dominate an obscure corner of the financial-services sector called "peer-to-peer" lending, in which consumers bypass banks altogether to borrow money from other individuals. It is part of a shadow-lending system that has thrived since the 2008 financial crisis caused many banks to tighten their credit standards. With more money chasing the loans, lenders such as Prosper are working hard to come up with enough borrowers to meet the demand. Each month, Prosper mails more than a million preapproved loan applications. In June, the company arranged $27.5 million in loans, a bit short of its goal. In July, it originated $30.3 million. Prosper and Lending Club together originated about $871 million in loans last year, more than double the prior year's total and up tenfold since 2008. Lending Club says it is on track to lend $2 billion this year. 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 attend ABI's recent 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 AUGUST 20: HOW WILL THE NEW U.S. TRUSTEE FEE GUIDELINES IMPACT YOU?

The new U.S. Trustee Fee Guidelines will affect all attorneys and firms who work on larger chapter 11 cases filed on or after Nov. 1. ABI's Ethics & Professional Compensation Committee will present a panel of experts, including Clifford J. White, the director of the U.S. Trustee Program, to discuss 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. Register today to hear government, attorney and academic perspectives speak on this important and timely topic.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE SOUTHWEST BANKRUPTCY CONFERENCE ON AUG. 22

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 Conference. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

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: WASHINGTON GROUP INTERNATIONAL INC. V. THE UNITED STATES OF AMERICA (IN RE WASHINGTON GROUP INTERNATIONAL INC., ET AL.; 9TH CIR.)

Summarized by Joel Newell of Lane & Nach P.C.

In the unpublished ruling, the Ninth Circuit BAP affirmed Bankruptcy Judge Gregg W. Zive's application of the 9th Circuit precedent as set forth in In re Cal. Dep't of Health Svcs. V. Jensen (In re Jensen), 995 F.2d 925 (9th Cir. 1993), denying debtor's motion to enjoin the subsequent litigation.

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: DEBTOR'S BANKRUPTCY APPEAL TOSSED FOR DELAY BY ELEVENTH CIRCUIT

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post looks at a case out of the Eleventh Circuit in which a pro se debtor filed for chapter 7 bankruptcy in 2009 and disclosed that he had nearly $40,000 in student loan obligations. The debtor filed an adversary complaint against the lender and sought a determination that his student loan obligations were dischargeable. The lender served a set of interrogatories on the debtor, which the debtor steadfastly refused to answer (even after being compelled to do so by the court). Ultimately, the court dismissed the debtor's case. On appeal to the district court, the debtor failed to file or serve his initial appellate brief, never requested an extension of time, and had not otherwise appeared in the case. More than five months after the debtor filed his notice of appeal, the district court sua sponte dismissed the appeal for failure to prosecute.

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 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

August
- 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.
- 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.

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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Percentage of Homes in Foreclosure Drops Nationwide

ABI Bankruptcy Brief | January 24 2013
 
  

January 24, 2013

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

PERCENTAGE OF HOMES IN FORECLOSURE DROPS NATIONWIDE

The percentage of homes in foreclosure dropped nationwide last month, although the percentage of borrowers behind on their payments increased slightly, the Los Angeles Times reported today. In a sign of continued recovery in the housing market, about 3.44 percent of mortgages were in some stage of the foreclosure process in December, according to Lender Processing Services Inc., a mortgage and consumer loan processing firm. That represents a nearly 2 percent decline from November and a roughly 18 percent drop-off from a year earlier. The percentage of mortgages that are 30 days or more past due stood at 7.17 percent last month, a 0.74 percent increase from November, LPS reported. Still, that rate declined 9 percent when compared with the same month in 2011. Read more.

COMMENTARY: BANK REFORM TAKES ONE FLAWED STEP FORWARD

While the Financial Accounting Standards Board (FASB) issued a draft of a new rule to change the way banks build reserves against losses on loans, the proposed rule is flawed conceptually and in its application, according to a Wall Street Journal commentary by Eugene A. Ludwig, CEO of the Promontory Financial Group and former Comptroller of the Currencey, and Paul Volcker, former chairman of the Federal Reserve System and namesake of the Volcker Rule included in the Dodd-Frank Act. It is a positive sign, according to the commentary, that the FASB recognizes that its existing rules on the Allocation for Loan and Lease Losses may have worsened the 2008 financial crisis. These rules limited bank reserves to those that are already "incurred." This all but ensures that banks' rainy day funds will be too skinny, particularly in periods when credit markets are under stress. The FASB's draft proposal to reform these rules incorporates what is known as the "Current Expected Credit Loss Model." It is meant to expand reserves to reflect losses that are expected over the life of the loan, and it is a big improvement over the existing regime. But as it stands, the proposal could create risks for the financial system as it could hurt small banks and their customers, according to the commentary. In an effort to ensure that everything is "auditable," the proposal ties the loan-loss reserve to what the accounting profession will decide is an acceptable "model." While the proposal is well-intentioned and makes clear that various models can be used, this model-driven approach is dangerous. Click here to read the full commentary. (Subscription required.)

FINANCIAL CRISIS SUIT SUGGESTS MORGAN STANLEY KNEW OF BAD INVESTMENTS

Hundreds of pages of internal Morgan Stanley documents, released publicly last week in a case against Morgan Stanley brought by a Taiwanese bank, shed much new light on what bankers knew at the height of the housing bubble and what they did with that knowledge, the New York Times DealBook blog reported today. The lawsuit concerns a $500 million collateralized debt obligation called Stack 2006-1, created in the first half of 2006. The documents suggest a pattern of behavior larger than this one deal: People across the bank understood that the American housing market was in trouble. They took advantage of that knowledge to create and then bet against securities and then also to unload garbage investments on unsuspecting buyers. Morgan Stanley is fighting the lawsuit, contending that the buyers were sophisticated clients and could have known what was going on in the subprime market. Read more.

LIBOR SUIT LIST SHOWS BARCLAYS PROBE SPANNED NY TO TOKYO

Barclays Plc senior executives, dozens of traders and the bank’s chief economist were all identified by regulators in a probe into interest-rate rigging that spanned continents, according to documents released in the U.K.’s first Libor-manipulation lawsuit, Bloomberg News reported today. Barclays is being sued by affiliates of Guardian Care Homes Ltd. that claim that an interest-rate swap should be annulled because it is linked to Libor, which Barclays tried to rig. Judge Julian Flaux in London rejected a bid by a group of employees identified in the Libor documents to prevent their names from being published ahead of a trial later this year. Among those identified in connection with the case were former Chief Executive Officers Robert Diamond and John Varley, and Jerry Del Missier, the bank’s former chief operating officer. The list of names, which Judge Flaux in London said had to be turned over to Guardian, was compiled from evidence that Barclays provided in the regulatory probes that led a 290 million-pound fine ($457.5 million) in June. Read more.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: AMR MAKE-WHOLE OPINION VULNERABLE ON APPEAL

The case of the week on the Bloomberg bankruptcy video is the decision by Bankruptcy Judge Sean Lane who concluded that American Airlines is not obliged to pay several hundred million dollars in make-whole premiums even though debt would be repaid before maturity. Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss how Lane's adverse ruling evidently was expected by the debt holders who believe the result may be better on appeal, if the dispute does not become moot in the meantime. Click here to watch.

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!

An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

CURRENT ISSUES FOR FINANCIAL ADVISORS IN BANKRUPTCY CASES AT ABI'S 31ST ANNUAL SPRING MEETING

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

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

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

Register today!

ABI IN-DEPTH

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

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

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

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

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

Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

LATEST CASE SUMMARY ON VOLO: MASSACHUSETTS DEPT. OF UNEMPLOYMENT ASSISTANCE V. OPK BIOTECH LLC (IN RE PBBPC INC.; 1ST CIR.)

Summarized by Hale Yazicioglu, Bartlett Hackett Feinberg P.C.

The First Circuit BAP, adopting the expansive definition of “interest” in § 363(f) of the Bankruptcy Code, held that “interest” in § 363(f) includes all obligations that may flow from ownership of property, including the right to tax the purchaser of the debtor’s assets at the same high rate imposed on the debtor. The First Circuit BAP first evaluated its jurisdiction on appeal and found that the bankruptcy court order approving the stipulation entered into between the parties effectively terminated the litigation, and therefore was a final judgment from which the parties could appeal to the BAP.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: THIRD CIRCUIT REJECTS WAIT-AND-SEE VALUATION APPROACH AND ACCEPTS LIENSTRIPPING IN § 506(a)

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines In re Heritage Highgate, Inc., in which the Third Circuit held that the fair market value of property as of the confirmation date controls whether or not a lien is fully secured. Additionally, the court held that lienstripping is permissible in a chapter 11 reorganization.

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'S INDUBITABLE EQUIVALENTS: TELL US A TUNE AND WE'LL SING YOU THAT SONG!

ABI's Indubitable Equivalents need your help: Tell us your favorite Rock and Roll tune - that elusive classic that takes you back, makes your feet tap, your head bang, and your horns come out! If we pick your song, you get widespread promotion by the band and you'll receive a free CD of IE’s greatest hits!

To enter, log onto www.abiband.com or “like” the Band’s Facebook page.

The fine print: No purchase necessary. You can enter as many times as you want. Multiple winners will be selected. Winners will be announced on the IE website and on Facebook. Entry deadline: January 31.

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

  

 

NEXT EVENT:

 

 

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

 

 

COMING UP:

 

 

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

 

 

 

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

 

 

 

Paskay 2013
March 7-9, 2013
Register Today!

 

 

 

BBW 2013
March 22, 2013
Register Today!

 

 

"Nuts and Bolts" Program at ASM- A Must for Junior Professionals or Those New to Bankruptcy Practice
April 18, 2013
Register Today!

 

 

ASM 2013
April 18-21, 2013
Register Today!

 
   
  CALENDAR OF EVENTS
 

2013

February
- Caribbean Insolvency Symposium
     February 7-9, 2013 | Miami, Fla.
- ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions
     February 19, 2013
- VALCON 2013
     February 20-22, 2013 | Las Vegas, Nev.


  

 

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

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


 
 
ABI BookstoreABI Endowment Fund ABI Endowment Fund
 

Restructuring Experts Recession Did Not Improve Corporate Governance

ABI Bankruptcy Brief | February 5 2013
 
  

February 12, 2013

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

RESTRUCTURING EXPERTS: RECESSION DID NOT IMPROVE CORPORATE GOVERNANCE

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

PRIVATE EQUITY BRACING FOR BUYOUT-BOOM SHAKEOUT

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

REPORT: SEC'S REVOLVING DOOR HURTS ITS EFFECTIVENESS

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

SPECULATIVE BETS PROVE RISKY AS SAVERS CHASE PAYOFF

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

COMMENTARY: QUIETLY KILLING A CONSUMER WATCHDOG

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

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

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

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

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

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

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

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

Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

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

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

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

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

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

ABI IN-DEPTH

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

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

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!

An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

LATEST CASE SUMMARY ON VOLO: LEAVITT V. FINNEY (IN RE FINNEY; 9TH CIR.)

Summarized by David Hercher of Miller Nash LLP

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

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

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

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

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

  

 

NEXT EVENT:

 

 

 

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

 

 

 

COMING UP:

 

 

 

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

 

 

 

 

9th Annual Wharton Restructuring and Distressed Investing Conference
Feb. 22, 2013
Register Today!

 

 

 

 

 

Paskay 2013
March 7-9, 2013
Register Today!

 

 

 

 

 

BBW 2013
March 22, 2013
Register Today!

 

 

 

 

 

"Nuts and Bolts" Program at ASM- A Must for Junior Professionals or Those New to Bankruptcy Practice
April 18, 2013
Register Today!

 

 

 

 

 

ASM 2013
April 18-21, 2013
Enter code "LOVEASM50" at checkout to save $50 on a new registration this week!
Register Today!

 

 

 

 

 

ASM 2013
May 16, 2013
Register Today!

 

 

 

 

ASM 2013
May 21-24, 2013
Register Today!

 

 

 

 

ASM 2013
June 7, 2013
Register Today!


 
   
  CALENDAR OF EVENTS
 

2013

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

     February 22, 2013 | Philadelphia, Pa.

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


  

April
- "Nuts and Bolts" Program at ASM
     April 18, 2013 | National Harbor, Md.
- Annual Spring Meeting
     April 18-21, 2013 | National Harbor, Md.

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

June
- Memphis Consumer Bankruptcy Conference
     June 7, 2013 | Memphis, Tenn.


 
 
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Listen to ABIs Teleconference Exploring Chapter 9 Trends Municipal Finance Predictions for 2013

ABI Bankruptcy Brief | January 22 2013
 
  

January 22, 2013

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

LISTEN TO ABI’S TELECONFERENCE EXPLORING CHAPTER 9 TRENDS, MUNICIPAL FINANCE PREDICTIONS FOR 2013

ABI held a media teleconference today featuring experts explaining the history of chapter 9 bankruptcy, lessons learned from chapter 9 cases in 2012 and what the financial landscape for municipalities looks like in 2013. Speakers on the teleconference include:

• Hon. Christopher M. Klein is the Chief Bankruptcy Judge for the Eastern District of California (Sacramento) and presides over the chapter 9 case of Stockton, Calif., the largest city to file.

Juliet M. Moringiello of Widener University School of Law (Harrisburg, Pa.) is a former ABI Resident Scholar (Spring 2010 semester).

Patrick Darby of Bradley Arant Boult Cummings LLP (Birmingham, Ala.) is a co-author of ABI’s recently released Second Edition of Municipalities in Peril: The ABI Guide to Chapter 9.

Natalie Cohen of Wells Fargo Securities, LLC (New York) is well-known for her studies and articles about municipal credit risk and bond defaults.

• ABI Resident Scholar Prof. C. Scott Pryor of the Regent University School of Law (Virginia Beach, Va.) is the moderator for the program.

Click here to listen to a full replay of the teleconference.

For further insight and analysis of chapter 9 bankruptcy, order the Second Edition of Municipalities in Peril: The ABI Guide to Chapter 9. Click here to purchase.

WITH TAX ADVANTAGES LOOKING SHAKY, PRIVATE EQUITY SEEKS A NEW PATH

As the government grapples with the country's fiscal woes, the private-equity industry is grudgingly facing a new reality: Its long-held tax advantages are likely to disappear, according to a report yesterday in the New York Times DealBook blog. For years, private equity has quashed efforts to raise taxes on so-called carried-interest income, the profits partners receive as part of their compensation. Those earnings are considered capital gains, so they are taxed at a much lower rate than ordinary income. While few concede defeat publicly, the industry is rethinking its endgame. Rather than trying to stop the changes outright, lawyers and executives behind the scenes are trying to minimize the hit if it happens. In the current budget debate, tax deductions for home mortgage interest and charitable donations are on the table, along with potential cuts to Social Security and Medicare. Read more.

COMMENTARY: TAKEAWAYS FROM ZELL'S TRIBUNE FIASCO

As Tribune Co. emerges from its four-year bankruptcy tour, the deal that put it there is widely recognized as a fiasco that consumed billions of dollars, claimed thousands of jobs and degraded one of Chicago's most important institutions, according to a commentary in Crain's Chicago Business on Saturday. However, some lessons can be drawn from Sam Zell's $8.2 billion leveraged buyout in 2007 and its aftermath. Deference can be deadly, according to the commentary, as the crisis that sent Tribune directors scrambling to find a savior did not appear overnight. The company's stock had been dead in the water for years as the Internet eroded its business model. A more-engaged board would have acted sooner to scare up shareholder returns and prepare the company for a digital future. Wall Street worshiped Zell, whose real estate deals triggered geysers of banking fees. The multibillionaire's Tribune bid looked like another bonanza to Bank of America Corp., JPMorgan Chase & Co., Citigroup Inc. and Merrill Lynch. But loan losses ran into the billions when Tribune tumbled into a bankruptcy reorganization that left lenders with equity stakes in a company worth far less than the amount they advanced to fund the deal. The central conceit of Zell's takeover was that a real estate magnate with no experience in newspapers or television could solve problems confounding career media executives. But Zell's plan was pretty much the same as Tribune's: hoping things get better soon. Neither he nor the radio executives he installed to run Tribune understood the forces reshaping the media industry. Read the full commentary.

NEW SECURITIES LAWS AIM TO HELP START-UPS RAISE CAPITAL

New U.S. securities laws intended to help startup companies raise money are poised to benefit real estate investors as well, allowing individuals to buy stakes in offices and other commercial buildings once off limits to them, Bloomberg News reported today. The Jumpstart Our Business Startups Act will ease restrictions on investments in closely held companies, including those set up to own commercial property, by people making less than $200,000 a year and with a net worth of less than $1 million. Before the law’s passage, such firms could market and sell shares to individuals who exceed those levels, known as accredited investors. The law, which changed parts of the Securities Act of 1933, will allow non-accredited investors to put $2,000 a year or 5 percent of their income or net worth -- whatever amount is greatest -- into closely held ventures. While the law went into effect in April 2012, property investors are not able to take advantage of it yet because proposed investor-safeguard rules are still being worked on by the SEC. The commission missed its own end-of-the-year deadline for drafting the regulations. Read more.

PROFILE: TREASURY SECRETARY NOMINEE VALUES SOCIAL SAFETY NET, COMPROMISE

While Treasury Secretary nominee Jack Lew's history aggressively advocates on behalf of programs that protect the poor, he has also been willing to make unpopular compromises out of a belief that the nation must have its financial books in order, according to a profile in today's Washington Post. Some conservatives say he has a blind obsession with providing government benefits, without care for the nation's overall finances. Some liberals say he has too often forfeited his principles in search of bipartisan deals. No senators other than Jeff Sessions (R-Ala.) and Bernard Sanders (I-Vt.) have come out against Lew's nomination to date, and prospects are favorable for Lew being confirmed by the Senate. Read more.

CURRENT ISSUES FOR FINANCIAL ADVISORS IN BANKRUPTCY CASES AT ABI'S 31ST ANNUAL SPRING MEETING

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

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

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

Register today!

ABI IN-DEPTH

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

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

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

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

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

Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

LATEST CASE SUMMARY ON VOLO: MASSACHUSETTS DEPT. OF UNEMPLOYMENT ASSISTANCE V. OPK BIOTECH LLC (IN RE PBBPC INC.; 1ST CIR.)

Summarized by Hale Yazicioglu, Bartlett Hackett Feinberg P.C.

The First Circuit BAP, adopting the expansive definition of “interest” in § 363(f) of the Bankruptcy Code, held that “interest” in § 363(f) includes all obligations that may flow from ownership of property, including the right to tax the purchaser of the debtor’s assets at the same high rate imposed on the debtor. The First Circuit BAP first evaluated its jurisdiction on appeal and found that the bankruptcy court order approving the stipulation entered into between the parties effectively terminated the litigation, and therefore was a final judgment from which the parties could appeal to the BAP.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: TAX REFUNDS IN BANKRUPTCY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new post examines issues surrounding tax refunds and bankruptcy filings.

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'S INDUBITABLE EQUIVALENTS: TELL US A TUNE AND WE'LL SING YOU THAT SONG!

ABI's Indubitable Equivalents need your help: Tell us your favorite Rock and Roll tune - that elusive classic that takes you back, makes your feet tap, your head bang, and your horns come out! If we pick your song, you get widespread promotion by the band and you'll receive a free CD of IE’s greatest hits!

To enter, log onto www.abiband.com or “like” the Band’s Facebook page.

The fine print: No purchase necessary. You can enter as many times as you want. Multiple winners will be selected. Winners will be announced on the IE website and on Facebook. Entry deadline: January 31.

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

  

 

THURSDAY:

 

 

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

 

 

COMING UP:

 

 

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

 

 

 

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

 

 

 

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

 

 

 

Paskay 2013
March 7-9, 2013
Register Today!

 

 

 

BBW 2013
March 22, 2013
Register Today!

 

 

 

ASM 2013
April 18-21, 2013
Register Today!

 
   
  CALENDAR OF EVENTS
 

2013

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

February
- Caribbean Insolvency Symposium
     February 7-9, 2013 | Miami, Fla.
- ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions
     February 19, 2013
- VALCON 2013
     February 20-22, 2013 | Las Vegas, Nev.


  

 

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

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


 
 
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Survey U.S. Cities Still Face Fiscal Strain

ABI Bankruptcy Brief | September 18, 2012
 
  

September 18, 2012

 
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  NEWS AND ANALYSIS   

SURVEY: U.S. CITIES STILL FACE FISCAL STRAIN

A survey released on Thursday by the National League of Cities showed that America's cities are projecting a sixth straight year of revenue declines in 2012, although more financial officers feel that their municipalities are now better able to meet their fiscal needs, the Wall Street Journal reported on Friday. The survey, which included responses from 324 cities, also found that reserves are expected to fall as cities use the extra cash to weather the economic downturn. If projections hold, cities would have drawn down their reserves by nearly 50 percent since 2007. Employee and retiree health care costs and pensions were identified as having the largest negative impact on city finances, and looking ahead, underfunded pension and health care liabilities will persist as a challenge. Urban economies will also face declining or slow growth in future property taxes, given that the real estate market continues to sputter. Read more. (Subscription required.)

COMMENTARY: DESPITE LOW FED RATES, BANK BOND YIELDS ON MORTGAGE RATES CONTINUE TO INCREASE

While a 30-year mortgage with 2.8 percent interest could already exist, something in the banking system is holding it back, even though few experts agree on what that "something" is, according to a commentary today in the New York Times DealBook blog. Right now, borrowers are paying around 3.55 percent for a 30-year fixed rate mortgage that qualifies for a government guarantee of repayment. That's down from 4.1 percent a year ago, and 5.06 percent three years ago. Mortgage rates have declined as the Federal Reserve has bought trillions of dollars of bonds, a policy that aims to stimulate the economy. Last week, the Fed said that it would make new purchases, focusing on bonds backed by mortgages. While banks make mortgages, they have sold most of them into the bond market since the 2008 crisis, attaching a government guarantee of repayment in the process. The metric effectively encapsulates the size of the gain that banks make on those sales. In September 2011, banks were making mortgages with an interest rate of 4.1 percent. They were then selling those mortgages into the market via bonds that were trading with an interest rate, or yield, of 3.36 percent, according to a Bloomberg index. Bond yields have fallen a lot more than the mortgage rates banks are charging borrowers. Banks are not fully passing on the low rates in the bond market to borrowers, according to the commentary, but are instead taking bigger gains, thereby increasing the size of their cut. Read the full commentary.

REPORT: FED RESEARCHERS SAY CONSUMER DOUBT WORSENED UNEMPLOYMENT

A Federal Reserve study said that the U.S. unemployment rate would be around 7 percent instead of the current 8 to 9 percent if not for the current level of doubt among consumers about economic issues including fiscal policy, Bloomberg News reported today. "Uncertainty has pushed up the U.S. unemployment rate by between one and two percentage points since the start of the financial crisis in 2008," Sylvain Leduc and Zheng Liu, research advisers at the San Francisco Fed, wrote in a paper released today. The Federal Open Market Committee on Sept. 13 announced that it will hold interest rates at near zero until at least mid-2015 and purchase $40 billion a month in mortgage debt until the labor market improves. The unemployment rate has exceeded 8 percent for 43 months, Labor Department figures showed Sept. 7. Consumers' doubts about the economy may have put a greater drag on the economy over the past few years, compared to previous recessions, because policymakers had never run out of room to lower the federal funds rate until 2008, Leduc and Liu said. Doubt played "essentially no role" during the 1981-82 recession and its subsequent recovery, when the Fed’s benchmark interest rate was much higher, the authors’ analysis showed. Read more.

COMMENTARY: “TREASURY” MOTORS

The Obama Administration is refusing GM's stock buyback because the automaker's shares are trading at around $24 – no mere tumble from the November 2010 IPO price of $33. Selling at that point would mean that the government would lose $15 billion, according to a Wall Street Journal editorial today. GM executives are requesting that Treasury offload at least some of its 500 million shares, or 26.5 percent of the company. The company is anxious to shed its “Government Motors” stigma as well as compensation ceilings that make it difficult to recruit talent. However, GM's share price needs to hit $53 for the U.S. to break even. Read more. (Subscription required.)

ABI IN-DEPTH

ABI MEMBERS WELCOME TO ATTEND ACB'S FREE HALF-DAY "BANKRUPTCY: BACK TO THE FUTURE" PROGRAM IN SEPTEMBER

The American College of Bankruptcy invites you to attend a free half-day program on Sept. 28 in Chicago for a discussion of many of the challenging topics facing current bankruptcy and reorganization professionals. Topics to be addressed include recent decisions of the U.S. Supreme Court and Court of Appeals, important work of the Advisory Committee on Bankruptcy Rules, and developments in the field of bankruptcy ethics. The nation’s leading judges, academics and bankruptcy professionals are among the speakers for the program. While there is no cost to attend, seating is limited, so early reservation is suggested. For more information and to register, please click here.

LATEST CASE SUMMARY ON VOLO: FDIC V. AMTRUST FINANCIAL CORP. (IN RE AM TRUST FINANCIAL CORP.; 6TH CIR.)

Summarized by Tony Bisconti of Bienert, Miller & Katzman

In affirming the district court, the Sixth Circuit Court of Appeals found that language in a stipulated cease-and-desist order requiring a parent corporation to "ensure" that its subsidiary, a bank, maintain certain ratios was ambiguous, and it was also ambiguous with respect to the entity it supposedly obligated (whether it was the parent, the board of the parent or the subsidiary). The Sixth Circuit further found that based on a totality of the evidence considered, the district court did not commit error in determining that the cease-and-desist order was not intended to be a commitment of the parent corporation to maintain the capital of the subsidiary bank entitling the FDIC to payment under 11 U.S.C. §365(o).

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: NINTH CIRCUIT HOLDS THAT NON-DISCHARGEABILITY ACTIONS ARE NOT SUBJECT TO ARBITRATION

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines a recent ruling by the Ninth Circuit Court of Appeals rejecting two creditors' creative contention that the debtor’s debt to them should be denied a discharge under §523 for fraud in connection with a contract containing an arbitration clause resolved through arbitration proceedings. In Matter of Eber, 2012 WL 2690744 (9th Cir. 2012), the creditors and the debtor entered into an agreement relating to the construction and operation of the debtor’s beauty salon in Las Vegas. The agreement required that all disputes arising under the agreement would be arbitrated in New York. After disputes arose, the creditors commenced an arbitration proceeding against the debtor asserting claims for breach of contract, fraud and breach of fiduciary duty.

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

ABI Quick Poll

Bankruptcy courts should have unfettered discretion in adjusting fee applications, even when no party-in-interest has raised objections.

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

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

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

INSOL INTERNATIONAL

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

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Join our networks to expand yours.

  

 

TOMORROW:

NYU 2012
Sept. 19-20, 2012
Register Today!

COMING UP:

"WHEN IS AN INDIVIDUAL CHAPTER 11 THE BEST FIT?" LIVE WEBINAR
Sept. 27, 2012
Register Today!

 

NABMW 2012
Oct. 4, 2012
Register Today!

 

SE 2012
Oct. 5, 2012
Register Today!

 

SE 2012
Oct. 5, 2012
Register Today!

 

SE 2012
Oct. 8, 2012
Register Today!

 

ABI YOUNG AND NEW MEMBERS COMMITTEE “TRENDING ISSUES: EXAMINERS AND SELECT PLAN CONFIRMATION ISSUES” WEBINAR
Oct. 15, 2012
Register Today!

 

SE 2012
Oct. 18, 2012
Register Today!

 

MEXICO 2012
Nov. 7, 2012
Register Today!

 

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

 

SE 2012
Nov. 12, 2012
Register Today!

 

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

 

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

 

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

 
   
  CALENDAR OF EVENTS
 

September
- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
     September 19-20, 2012 | New York, N.Y.
- "When Is an Individual Chapter 11 the Best Fit?" Live Webinar
     September 27, 2012
- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program
     September 28, 2012 | Chicago, Ill.

October
- Nuts & Bolts for Young and New Practitioners - KC
     October 4, 2012 | Kansas City, Mo.
- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum
     October 5, 2012 | Kansas City, Mo.
- Bankruptcy 2012: Views from the Bench
     October 5, 2012 | Washington, D.C.
- Chicago Consumer Bankruptcy Conference
     October 8, 2012 | Chicago, Ill.
- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar
October 15, 2012
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy

  

 

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

February
- Kansas City Advanced Consumer Bankruptcy Practice Institute
     February 17-19, 2013 | Kansas City, Mo.


 
 
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Report Student Borrowers Retreat from Home Buying

ABI Bankruptcy Brief | April 18 2013
 
  

April 18, 2013

 
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  NEWS AND ANALYSIS   

REPORT: STUDENT BORROWERS RETREAT FROM HOME BUYING

The Federal Reserve Bank of New York issued a report yesterday saying that Americans who borrowed to pay for school are now less likely to have a home mortgage at age 30 than those who never had student debt, a reversal of past trends, the Wall Street Journal reported today. As of late last year, roughly 22 percent of 30-year-olds with a history of student debt—either currently or in the past—owed money on a mortgage, the Fed said. That compares with 24 percent of 30-year-olds who never took out student loans. Similarly, young people with a history of student debt are less likely to have a car loan than those who did not have student loans, the report said. This marks a significant turnabout from recent history. For most of the past decade, student borrowers were much more likely to own a home or car, relative to those without student loans, because they typically were college graduates with higher incomes. But now, student debt could be among the factors holding them back, at least temporarily, the Fed report suggests. The report shows that credit scores for student borrowers have fallen sharply since the recession, likely due to higher average student-debt levels and a rise in delinquencies. Read more. (Subscription required.)

MORTGAGE RELIEF CHECKS GO OUT, ONLY TO BOUNCE

Many struggling homeowners received checks stemming from a $3.6 billion settlement with the nation’s largest banks over wrongful evictions and other abuses, only to find that the checks were bouncing, the New York Times DealBook Blog reported yesterday. It is unclear how many of the 1.4 million homeowners who were mailed the first round of payments covered under the foreclosure settlement have had problems with their checks. But housing advocates from California to New York and even regulators say that in recent days frustrated homeowners have bombarded them with complaints and questions. The mishap is just the latest setback to troubled homeowners. It took more than two years to resolve a federal investigation into foreclosure abuses, and even after the settlement was reached in January, the checks were delayed for weeks. Read more.

RISING BANK PROFITS TEMPT A PUSH FOR TOUGHER RULES

Banks have been reporting steady growth in earnings since the financial crisis, but their ballooning bottom lines could embolden lawmakers and regulators who want to introduce additional measures to overhaul the banking system, the New York Times DealBook blog reported yesterday. After the financial crisis, many officials involved in the regulatory revamping feared that tougher rules, like caps on bank assets, could destabilize the financial system and harm economic growth. It is a view that prominent bankers and lobbyists have also voiced. Despite industry opposition to the new rules, the buoyant bank profits could add to the ammunition that influential figures in Washington, D.C., are using to advocate for more radical ideas to overhaul the banks. "I hope the regulators move forward with tougher regulations," said Sheila C. Bair, a former chairwoman of the Federal Deposit Insurance Corp. and now a senior adviser at the Pew Charitable Trusts. "This wouldn’t endanger the economic recovery." Read more.

SEC TO MOVE PAST FINANCIAL CRISIS CASES UNDER CHAIRMAN WHITE

Mary Jo White, the first former prosecutor to serve as chairman of the U.S. Securities and Exchange Commission, has pledged to run a "bold and unrelenting" enforcement program at the agency charged with regulating Wall Street, Bloomberg News reported today. With financial crisis cases mostly done and some of the biggest insider-trading cases in history closed, White will have to chart a course into new areas to keep that pledge. White, who was sworn in last week, has already provided a few signals about what that cause might be. During her Senate confirmation hearing, she said that she intends to focus on high-frequency and automated trading. She has also raised questions about a drop in the number of accounting fraud cases the agency has brought in recent years. Read more.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: EASTERBROOK TURNS THE TIDE ON STUDENT LOANS

Why and when U.S.-managed hedge funds can go bankrupt in the Caribbean, but not in the U.S., is the first item discussed on the new bankruptcy video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. The video ends with discussion of an opinion by U.S. Circuit Judge Frank Easterbrook, who's turning the tide against recent decisions that have left former students virtually incapable of shedding education loans in bankruptcy. Click here to watch the video.

Attending ASM? Don't miss Bloomberg's Bill Rochelle moderating the "BK 360 Revisited: ABI Past-Presidents Panel" session at lunch on Saturday from 12:30-2 p.m. ET.

 

ATTENDING ABI'S ANNUAL SPRING MEETING? MAKE SURE TO DOWNLOAD THE MOBILE APP FOR SMARTPHONES AND TABLETS!

The official Annual Spring Meeting mobile web app, sponsored by Diamond McCarthy LLP, is now available for iOS, Android and Blackberry devices! Utilize the app during ASM this week to view your personal schedule, browse what programs are taking place or search for information related to the meeting. The mobile web app stores the schedule data locally on your phone for offline access, too.

To take advantage of the ASM web app, bookmark the following address on your device’s browser: http://31stannualspringmeeting2013.sched.org/mobile

LIVE WEBSTREAMS OF THE GREAT DEBATES AND ABI'S CHAPTER 11 REFORM COMMISSION HEARING AVAILABLE TOMORROW FROM THE ANNUAL SPRING MEETING!

17TH ANNUAL GREAT DEBATES

Starting at 8:30 a.m. EST, the 17th Annual Great Debates will be streamed live at the following address: http://www.abiworld.org/debate13/

There will be three debates moderated by Jeffrey N. Pomerantz, ABI VP-Education, of Pachulski Stang Ziehl & Jones LLP (Los Angeles):

I. Past Presidents’ Debate
Resolved: The Bankruptcy Code should be revised to eliminate a debtor in possession's and trustee's ability to recover preferential transfers.

Pro: John D. Penn
Haynes and Boone LLP; Fort Worth

Con: Andrew W. Caine
Pachulski Stang Ziehl & Jones LLP; Los Angeles

II. Judicial Debate
Resolved: A claim against the debtor’s estate, transferred to a third party, should be treated the same as if in the hands of the original holder.

Pro: Hon. Arthur J. Gonzalez
New York University School of Law; New York

Con: Hon. Kevin J. Carey
U.S. Bankruptcy Court (D. Del.); Wilmington

III. Consumer Debate
Resolved: An attorney in a consumer case should be able to limit the scope of her employment.

Pro: Brian Michael Shockley
Clark & Washington, PC; Atlanta

Con: Pamela J. Griffith
Office of the U.S. Trustee; Washington, D.C.

ABI's CHAPTER 11 REFORM COMMMISSION HEARING AT 1 P.M. EST

There will also be a live webstream available on the ABI Chapter 11 Reform Commission's site (http://commission.abi.org) of the hearing tomorrow starting at 1 p.m. EST. Prepared witness testimony will also be linked to the site at that time.

Witnesses set to testify at the hearing include:

Panel I:

Wilbur L. Ross of WL Ross & Co. (New York)

Panel II (Bankruptcy Judges’ Panel):

Hon. Dennis R. Dow (W.D. Mo.)
Hon. Barbara J. Houser (N.D. Texas)
Hon. Pamela Pepper (W.D. Wis.)

Panel III:

Holly Felder Etlin of AlixPartners LLC (New York)
Daniel F. Dooley of MorrisAnderson (Chicago)
John M. Haggerty of Argus Management (Grafton, Mass.)


ABI IN-DEPTH

NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CONSUMER CLASS ACTIONS

Class action lawsuits in chapter 13 cases are becoming more prevalent. Are you wondering whether your client's claims would be better pursued in a class action? If your client is a defendant in a consumer class action, do you know what your client's best defenses are against class certification? ABI's panel of experts on May 29 from 1-2:15 p.m. ET will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases by highlighting two recent appeals court decisions. Special ABI member rate available! Click here to register.

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

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

LATEST CASE SUMMARY ON VOLO: THOMAS V. BENDER (IN RE THOMAS; 11TH CIR.)

Summarized by Melissa Youngman of McCalla Raymer LLC

The Eleventh Circuit found no reversible error in the lower court's holding that proceeds from a post-petition real estate deal arising from a pre-petition option contract constituted property of the debtor's bankruptcy estate, pursuant to 11 U.S.C. § 541.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SMALL BANKS WOULD BENEFIT FROM BIG-BANK BREAKUPS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Taking on the size of firms that put our financial system at risk is the only way to eliminate unfair competitive advantages, unleash free markets and allow community banks to thrive, according to a recent blog post.

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.

TEE OFF ON THE NEW ABI GOLF TOUR!

ABI offers conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour, which kicked off this morning at ABI’s Annual Spring Meeting, is designed to enhance the golfing experience for serious golfers while still offering a fun networking opportunity for players of any ability. As opposed to the format used at ABI’s regular conference events, Tour participants will "play their own ball." They will be grouped on the golf course separately from other conference golf participants and will typically play ahead of the other participants, expediting Tour play. Tour participants will be randomly grouped in foursomes, unless otherwise requested of the Commissioner in advance of each tournament. Prizes will be awarded for each individual Tour event, which are sponsored by Great American Group. The grand prize is the "Great American Cup," also sponsored by Great American Group, which will be awarded to the top player at the end of the Tour season. Registration is free. Click here for more information and a list of 2013 ABI Golf Tour event venues.

ABI Quick Poll

The scope of protection of "financial contracts" in bankruptcy should be rolled back to what it was before BAPCPA expanded it in 2005.

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

INSOL INTERNATIONAL

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

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Join our networks to expand yours.

  

 

TOMORROW:

 

LIVE WEBSTREAMS FROM ABI'S 31ST ANNUAL SPRING MEETING:

 

17TH ANNUAL GREAT DEBATES
Start Time: 8:30 A.M. EST

 

HEARING OF ABI'S COMMISSION TO STUDY THE REFORM OF CHAPTER 11
Start Time: 1 P.M. EST.

 

 

 

COMING UP

 

 

NYCBC 2013
May 15, 2013
Register Today!

 

 

 

 

ASM 2013
May 16, 2013
Register Today!

 

 

 

 

ASM 2013
May 21-24, 2013
Register Today!

 

 

 

ASM 2013
May 29, 2013
Register Today!

 

 

 

 

ASM 2013
June 7, 2013
Register Today!

 

 

 

 

 

ASM 2013
June 13-16, 2013
Register Today!

 

 

 

 

INSOL’s Latin American Regional Seminar in São Paulo, Brazil
June 13, 2013
Register Today!

 

 

 

 

NE 2013
July 11-14, 2013
Register Today!

 

 

 

 

 

ASM 2013
July 18-21, 2013
Register Today!

 

 

 

 

MA 2013
Aug. 8-10, 2013
Register Today!


 
   
  CALENDAR OF EVENTS
 

2013

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

June
- Memphis Consumer Bankruptcy Conference
     June 7, 2013 | Memphis, Tenn.
- Central States Bankruptcy Workshop
     June 13-16, 2013 | Grand Traverse, Mich.
- INSOL’s Latin American Regional Seminar
     June 13, 2013 | São Paulo, Brazil


  

 

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

August
- Mid-Atlantic Bankruptcy Workshop
    August 8-10, 2013 | Hershey, Pa.


 
 
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Fannie Mae Regulator Restricts New Purchases to Qualified Mortgages

ABI Bankruptcy Brief | May 7 2013
 
  

May 7, 2013

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

FANNIE MAE REGULATOR RESTRICTS NEW PURCHASES TO QUALIFIED MORTGAGES

Fannie Mae and Freddie Mac are being asked by their regulator to limit purchases to loans meeting qualified-mortgage requirements and those exempt from Dodd-Frank Act ability-to-repay rules, Bloomberg News reported yesterday. The change announced yesterday by the Federal Housing Finance Agency means that beginning Jan. 10 next year, the U.S.-owned companies will not purchase interest-only mortgages, loans with 40-year terms or those with points and fees exceeding thresholds set by the Consumer Financial Protection Bureau. The government-sponsored enterprises will continue to buy loans that meet their own underwriting and delivery eligibility standards, FHFA said. Most loans purchased by Fannie Mae and Freddie Mac already meet qualified mortgage standards. Read more.

DEBT-REPAIR FIRM CHARGED IN FIRST CFPB CRIMINAL REFERRAL

In the first criminal referral from the Consumer Financial Protection Bureau, a debt-settlement company was accused by the U.S. of defrauding more than 1,200 people struggling with credit card debt, Bloomberg News reported today. U.S. Attorney Preet Bharara’s office today announced the unsealing of an indictment against New York-based Mission Settlement Agency, its manager, Michael Levitis, and three employees. Prosecutors allege that the defendants “systematically exploited and defrauded” people across the country. The case against Mission is the first criminal referral from the CFPB, according to the U.S. attorney’s office. In December, a Florida debt-relief company, Payday Loan Debt Solution Inc., was ordered to pay as much as $100,000 in refunds to customers under the first joint enforcement action between the agency and states. Mission and its employees lied about its fees, taking thousands of dollars from funds that its customers had set aside because they believed the money would be used to pay creditors, according to the indictment. For the majority of customers, Mission did little or no work and failed to reduce debt, prosecutors said. Read more.

INTERNET SALES TAX BILL FACES TOUGH SELL IN HOUSE

Traditional retailers and cash-strapped states face a tough sell in the House as they lobby Congress to limit tax-free shopping on the Internet, the Associated Press reported yesterday. The Senate voted 69-27 yesterday to pass a bill that empowers states to collect sales taxes from Internet purchases. Under the bill, states could require out-of-state retailers to collect sales taxes when they sell products over the Internet, in catalogs, and through radio and TV ads. The sales taxes would be sent to the states where the shoppers live. Current law says that states can only require retailers to collect sales taxes if the merchant has a physical presence in the state. The bill got bipartisan support in the Senate but faces opposition in the House, where some lawmakers regard it as a tax increase and anti-consumer. Read more.

COLLEGES CUTTING PRICES BY PROVIDING MORE FINANCIAL AID

Private U.S. colleges, worried that they could be pricing themselves out of the market after years of tuition increases, are offering record financial assistance to keep classrooms full, the Wall Street Journal reported yesterday. The average "tuition discount rate"—the reduction off list price afforded by grants and scholarships given by these schools—hit an all-time high of 45 percent last fall for incoming freshmen, according to a survey being released Monday by the National Association of College and University Business Officers. It is likely that some private colleges will be forced to be even more generous with discounts this fall. As of the May 1 deadline for many high-school seniors to commit for their freshman year of college, early reports suggest some non-top-tier schools fell 10-20 percent short of enrollment targets, said Jim Scannell, president of Scannell & Kurz, a consulting firm in Pittsford, N.Y., that works with colleges on pricing and financial-aid strategies. The jump in aid shows that many colleges are losing pricing power as more families focus on cost and value. Read more. (Subscription required.)

LISTEN TO THE MEDIA TELECONFERENCE EXAMINING ABI’S ETHICS TASK FORCE REPORT!

ABI held a media teleconference on May 3 that examined the recommendations contained in the ABI Ethics Task Force’s final report. Experts included Task Force reporters Profs. Nancy B. Rapoport of the UNLV William S. Boyd School of Law (Las Vegas) and Lois R. Lupica of the University of Maine School of Law (Portland, Maine), as well as Task Force member Edward T. Gavin of Gavin/Solmonese LLC (Wilmington, Del.). To listen to the teleconference, please click here.

For a copy of the report, please click here.

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

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

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

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

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

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

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: FISHER ISLAND LTD. V. FISHER ISLAND INVESTMENTS, INC. (11TH CIR.)

Summarized by Kathleen DiSanto of Jennis & Bowen, P.L.

Affirming the district court, the Eleventh Circuit Court of Appeals held that the district court properly dismissed an appeal from the bankruptcy court for lack of standing. The district court affirmed the bankruptcy court’s order requiring six creditors who filed involuntary bankruptcy petitions to post a $100,000 bond in accordance with Section 303(e) of the Bankruptcy Code. Fisher Island Limited, a non-debtor third party, sought an extension of time to appeal the district court’s order affirming the bankruptcy court’s order on the bond requirement and filed an untimely notice of appeal. The district court denied Fisher Island Limited’s motion for extension and dismissed the appeal based on a lack of standing.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: INSURANCE COVERAGE FOR PONZI SCHEME LOSSES?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines whether it would be possible to provide insurance against losses from investing in a Ponzi scheme.

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

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NEXT WEEK:

 

 

NYCBC Endowment 2013
May 15, 2013
Register Today!

 

 

NYCBC 2013
May 16, 2013
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COMING UP

 

 

LSS 2013
May 21-24, 2013
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CCA Webinar 2013
May 29, 2013
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Memphis 2013
June 7, 2013
Register Today!

 

 

CSBW 2013
June 13-16, 2013
Register Today!

 

 

Golf Tournament 2013
June 14, 2013
Register Today!

 

 

INSOL’s Latin American Regional Seminar in São Paulo, Brazil
June 13, 2013
Register Today!

 

 

NE 2013
July 11-14, 2013
Register Today!

 

 

SEBW 2013
July 18-21, 2013
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MA 2013
Aug. 8-10, 2013
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SW 2013
Aug. 22-24, 2013
Register Today!

 

 

NYIC Golf Tournament 2013
Sept. 10, 2013
Register Today!

 

 

Endowment Baseball 2013
Sept. 12, 2013
Register Today!


 
   
  CALENDAR OF EVENTS
 

2013

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

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


  

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

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

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


 
 
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Commentary- Too Big to Fail Then Get a Living Will

ABI Bankruptcy Brief | June 28, 2012
 
  
June 28, 2012
 
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  NEWS AND ANALYSIS   

COMMENTARY: TOO BIG TO FAIL? THEN GET A LIVING WILL

JPMorgan CEO Jamie Dimon's congressional testimony on trading losses has again stirred debate on the notion of "too-big-to-fail" banks, according to a Bloomberg News commentary yesterday by John C. Dugan, the former Comptroller of the Currency, and T. Timothy Ryan Jr., president and CEO of the Securities Industry and Financial Markets Association. JPMorgan Chase & Co.'s losses were buffered by a strong balance sheet and sufficient capital levels to avoid putting the bank at risk. However, opponents of the Dodd-Frank financial reform's resolution process have used this to resurrect their belief that "too big to fail" has not been eliminated, but instead been codified into law. As former bank regulators who both sat on the Federal Deposit Insurance Corp. board, Dugan and Ryan disagree that this step has taken place. The FDIC recently proposed a way of reorganizing a large financial institution under Dodd-Frank that would avoid runs by short-term depositors and creditors and prevent messy defaults on swaps and other derivatives. More important, the FDIC's proposal would also avoid taxpayer losses, which Dodd-Frank flatly prohibits. Instead, losses would be borne by shareholders and long-term creditors of the failed holding company. Long-term creditors would swap their debt for equity to recapitalize the company. The process would be functionally identical to a chapter 11 reorganization, according to the commentary, with two critical exceptions: It could be done much faster, and, if necessary, the Treasury Department could provide temporary loans (backed by collateral) to the reorganized company until market funding returns. Read the full commentary.

ANALYSIS: BREAKING UP BIG BANKS HARD TO DO AS MARKET FORCES FAIL

Politicians and regulators have resisted calls from some investors to split up conglomerates that were assembled over two decades by executives such as former Citigroup CEO Sanford "Sandy" Weill and former Bank of America CEO Ken Lewis, Bloomberg News reported yesterday. While these universal banks offered customers everything from checking accounts and insurance to derivatives trading and merger advice, the 2008 financial crisis and subsequent performance of the companies is calling that approach into question. Some investors, tired of unpredictable losses, costly regulation and legal headaches, have abandoned the banks in favor of more focused lenders such as Wells Fargo & Co. and U.S. Bancorp. Bank of America has traded below book value since 2009, while New York-based Citigroup has done so since 2010, according to data compiled by Bloomberg. "It is not clear why a bank needs to do lots of activities in financial services that aren't banking," said Ken Fisher, CEO and founder of Woodside, Calif.-based Fisher Investments, which manages about $44 billion in investments. "The universal bank model is broken," said David Trone, an analyst at JMP Securities LLC. Read more.

CALIFORNIA FORECLOSURE-PREVENTION MEASURE NEARS FINAL PASSAGE

A foreclosure-prevention measure is one step away from final passage in the California Legislature, the Los Angeles Times reported yesterday. A two-house conference committee yesterday, on a partisan 4-1 vote, sent identical measures to the floors of the California Assembly and Senate with final votes scheduled for Monday. The bills, S.B. 900 and A.B. 278, are the most controversial elements of a Homeowner Bill of Rights legislative package sponsored by California Atty. Gen. Kamala D. Harris. The bills aim to protect homeowners in two ways:

  • They ban "dual tracking," when mortgage loan servicers allow borrowers to open an application for loan modification to lower their payments while at the same time the foreclosure process continues to move forward. Servicers would be required to provide homeowners with "a single point of contact" so that they will not suffer from bureaucratic runarounds.

  • They give owner-occupier, first-mortgage holders a right to sue financial institutions, under limited conditions, if the lenders have willfully, intentionally or recklessly violated the law.

Bankers, the state Chamber of Commerce and the securities industry oppose the bills, saying that they are overly complicated, lack legal clarity and could spur many unnecessary lawsuits. The bills would take effect on Jan. 1 if approved, as expected, by Democratic majorities in both houses. Gov. Jerry Brown (D) has not indicated whether he would sign the measures, though sponsors have said they do not expect a veto. Read more.

ANALYSIS: SOME STUDENT LOANS TO BECOME MORE EXPENSIVE DESPITE DEAL

College students are still facing a roughly $20 billion increase in the cost of their federal loans, despite a much-heralded deal by Congress to contain the expense of higher education, according to a Washington Post analysis yesterday. Starting Sunday, students hoping to earn the graduate degrees that have become mandatory for many white-collar jobs will become responsible for paying the interest on their federal loans while they are in school and immediately after they graduate, meaning that they will have to pay an extra $18 billion out of pocket over the next decade. Meanwhile, the government will no longer cover the interest on undergraduate loans during the six months after students finish school. That is expected to cost those borrowers more than $2 billion. Much of the recent debate about the nation's soaring student debt burden has centered on how to prevent the interest rate on new federally subsidized undergraduate loans from doubling to 6.8 percent on Sunday. This week, Senate leaders announced that they had finally reached a compromise on how to pay the estimated $6 billion cost of freezing the rate for one year. Congress is expected to approve the deal by Friday. Read more.

FIRMS RESIST NEW PAY-EQUITY RULES

As the final shareholder votes on executive pay round out this year's proxy season, companies are fighting another rule that could force them to disclose the gap between what they pay their CEOs and their median pay for employees, the Wall Street Journal reported yesterday. The rule's supporters - a group that includes labor unions, institutional shareholders and left-leaning activists - say that it would force companies to consider rank-and-file workers during boardroom discussions over CEO pay and could put the brakes on executive compensation, which has been rising faster than inflation and the average worker's pay. The so-called internal pay equity provision, passed as part of the July 2010 Dodd-Frank package of financial reforms, is intended to expose the income disparity within public companies and help investors better evaluate the firms. Read more. (Subscription required.)

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: LEVESQUE V. SHAPIRO (IN RE LEVESQUE; 9TH CIR.)

Summarized by Emil Khatchatourian of the U.S. Bankruptcy Court for the Eastern District of California

The Ninth Circuit Bankruptcy Appellate Panel held that the chapter 7 trustee had standing to appear with respect to the debtors' motion to reopen their chapter 7 case and motion to convert the chapter 7 case to one under chapter 11, and that the bankruptcy court did not abuse its discretion in denying the debtors' motion to convert.

More than 500 appellate opinions are summarized on Volo typically within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: FSB REPORTS REGULATOR REFORM IS ADVANCING, BUT SLOWLY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post looks at a June 19 report by the Financial Stability Board (FSB) on the steps FSB member nations have taken to implement financial reforms designed to improve the stability of the global financial system. The FSB concluded that its member nations have made significant progress in implementing globally agreed upon financial reforms, but large strides are still necessary to protect the global economy against future financial crises.

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

ABI Quick Poll
The full-payment rule in section 1325's "hanging paragraph" for new car PMSIs should be repealed to level the playing field between car lenders and other partially and fully unsecured creditors.

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

IS YOUR ABI MEMBERSHIP PROFILE CURRENT?

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

INSOL INTERNATIONAL

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

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NEXT EVENT

 

NE 2012
July 12-15, 2012
Register Today


COMING UP

 

SE 2012
July 25-28, 2012
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MA 2012
August 2-4, 2012
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SE 2012
Sept. 13-14, 2012
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SW 2012
Sept. 13-15, 2012
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NYU 2012
Sept. 19-20, 2012
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NABMW 2012
Oct. 4, 2012
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SE 2012
Oct. 5, 2012
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SE 2012
Oct. 5, 2012
Register Today!

 

 

SE 2012
Oct. 8, 2012
Register Today!

 

 

SE 2012
Oct. 18, 2012
Register Today!

 
   
  CALENDAR OF EVENTS
 

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 12-15, 2012 | Bretton Woods, N.H.
- Southeast Bankruptcy Workshop
     July 25-28, 2012 | Amelia Island, Fla.

August
- Mid-Atlantic Bankruptcy Workshop
     August 2-4, 2012 | Cambridge, Md.

September
- Complex Financial Restructuring Program
     September 13-14, 2012 | Las Vegas, Nev.
- Southwest Bankruptcy Conference
     September 13-15, 2012 | Las Vegas, Nev.
- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
     September 19-20, 2012 | New York, N.Y.


  

October
- Nuts & Bolts for Young and New Practitioners - KC
     October 4, 2012 | Kansas City, Mo.
- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum
     October 5, 2012 | Kansas City, Mo.
- Bankruptcy 2012: Views from the Bench
     October 5, 2012 | Washington, D.C.
- Chicago Consumer Bankruptcy Conference
     October 8, 2012 | Chicago, Ill.
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy

 
 
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Housing Program Seeks to Cut Monthly Payments for Distressed Borrowers

ABI Bankruptcy Brief | March 28 2013
 
  

March 28, 2013

 
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  NEWS AND ANALYSIS   

HOUSING PROGRAM SEEKS TO CUT MONTHLY PAYMENTS FOR DISTRESSED BORROWERS

Federal housing regulators took a significant step yesterday toward helping borrowers who are falling behind on their mortgage payments — a move that will help more people but will also introduce new risks that some homeowners could deliberately stop paying in order to become eligible for assistance, the Washington Post reported today. The Federal Housing Finance Agency, which oversees mortgage finance giants Fannie Mae and Freddie Mac, announced that borrowers who are more than 90 days late on their mortgages become automatically eligible for a modification to the terms of the home loan. In the past, to be eligible for a mortgage modification, borrowers had to provide documentation that they had a financial hardship. They will no longer be required to do so — though providing such documentation will make borrowers eligible for more substantial monthly savings. "This new option gives delinquent borrowers another path to avoid foreclosure," said Edward DeMarco, the acting director of FHFA. "We will still encourage such borrowers to provide documentation to support other modification options that would likely result in additional borrower savings." The program is only available to loans owned or guaranteed by Fannie and Freddie, which have been government-backed and controlled since late 2008. The relief would come in the form of a reduced interest rate, extended timeline for payments, or other measures. The goal is to reduce monthly payments. Read more.

S&P SEEKS TO MERGE STATE SUITS INTO ONE FEDERAL CASE

While 17 lawsuits have been filed against Standard & Poor's Ratings Services by state attorneys general who claim that the firm churned out shoddy ratings before or after the financial crisis, S&P wants to move the cases into a federal court—and shrink the total number of cases to one, the Wall Street Journal reported today. Winning the fight to merge the cases into a single lawsuit in federal court could help S&P limit its legal exposure by streamlining the potential damage claims against the rating firm, a unit of McGraw-Hill Cos. In recent court filings from Connecticut to Colorado, lawyers for S&P contend that the 17 state-court suits should be removed from those courts because rating firms are regulated under U.S. securities laws. "Congress has expressly found credit ratings and the management of potential conflicts of interest related to them to be 'of national importance,' " S&P said in a filing on Monday in an Iowa district court. In addition, S&P contends that it should only have to defend itself against only one merged case. Read more. (Subscription required.)

ANALYSIS: "TOO BIG TO FAIL" FEARS RISE AS BANKS BULK UP

Nearly three years after Congress passed the most far-reaching new regulations on Wall Street since the Great Depression, worries have resurfaced that the biggest U.S. banks have only grown in size and remain bailout candidates because they are “too big to fail,” the Washington Times reported on Tuesday. The latest fears cropped up as a result of statements by Attorney General Eric H. Holder Jr., who raised hairs on Capitol Hill last month when he testified that the Justice Department has not indicted any of the major U.S. banks or their top officers in cases of financial crimes in the wake of the 2008 global financial crisis because there has been concern that doing so might hurt the economy or destabilize financial markets. "I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them when we are hit with indications that if you do prosecute, if you do bring a criminal charge, it will have a negative impact on the national economy, perhaps even the world economy," he told the Senate Judiciary Committee. Though Holder's testimony did not initially get much publicity, his comments soon provoked outrage across a broad spectrum of legislators, from conservatives such as House Financial Services Committee Chairman Jeb Hensarling (R-Texas) to liberals such as Sen. Sherrod Brown (D-Ohio). Key legislators have since written Holder to demand an elaboration of his statement, which on its face amounts to an admission that the 2010 Dodd-Frank Wall Street reform law signed by President Obama did not accomplish one of its major goals: ensuring that the government would never again have to worry about “too-big-to-fail” banks. Read more.

SCHEDULED BANKRUPTCY COST INCREASES SET TO TAKE EFFECT ON APRIL 1

Certain dollar amounts in title 11 and title 28 of the U.S. Code will be increased for cases commencing after April 1, 2013. Seven Official Bankruptcy Forms (1, 6C, 6E, 7, 10, 22A and 22C) and two Director's Forms (200 and 283) will also be amended to reflect these adjusted dollar amounts. For a list of the sections in title 11 and 28 of the Bankruptcy Code affected by the increases, please click here.

Looking for more information? ABI’s Interactive Code and Rules (http://law.abi.org) is always up to date!

TRANSCRIPT NOW AVAILABLE FROM THE CHAPTER 11 COMMISSION'S HEARING ON LABOR AND BENEFITS ISSUES

The March 14 hearing of the ABI Commission to Study the Reform of Chapter 11 brought together two panels of top experts on labor and benefits issues. What were some of the topics discussed during the proceedings? Read the transcript here.

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

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

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

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

Make sure to register today!

ABI IN-DEPTH

TEE OFF ON THE NEW ABI GOLF TOUR!

Starting with the Annual Spring Meeting, ABI will offer conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour is designed to enhance the golfing experience for serious golfers, while still offering a fun networking opportunity for players of any ability. As opposed to the format used at ABI’s regular conference events, Tour participants will "play their own ball." They will be grouped on the golf course separately from other conference golf participants and will typically play ahead of the other participants, expediting Tour play. Tour participants will be randomly grouped in foursomes, unless otherwise requested of the Commissioner in advance of each tournament. Prizes will be awarded for each individual Tour event, which are sponsored by Great American Group. The grand prize is the "Great American Cup," also sponsored by Great American Group, which will be awarded to the top player at the end of the Tour season. Registration is free. Click here for more information and a list of 2013 ABI Golf Tour event venues.

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!

An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

LATEST CASE SUMMARY ON VOLO: SEAVER V. KLEIN-SWANSON (IN RE KLEIN-SWANSON; 8TH CIR.)

Summarized by Omid Moezzi from the Office of Nancy Curry, Chapter 13 Trustee

The Eighth Circuit reversed the bankruptcy court's ruling in favor of the chapter 7 trustee, stating that (1) there was no transfer of funds under § 549 or 550 to the debtor, (2) the trustee failed to show how the estate acquired an interest in the funds received by the debtor post-petition, and (3) since the trustee is no longer a prevailing party, the award of costs under Rule 7054(b) is not appropriate.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: HOUSE OVERDRAFT BILL COULD HURT CONSUMERS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post took the position that H.R. 1261, the "Overdraft Protection Act of 2013" recently introduced by Rep. Carolyn Maloney (D-N.Y.), will penalize the very customers the bill is trying to protect. Limiting the number of overdraft fees that financial institutions can charge an individual to one per month and six per year, as the bill seeks to do, could cause some consumers to miss a monthly mortgage or auto loan payment, have their utilities turned off or have their insurance cancelled when checks begin to bounce, according to the post.

Click here to view the text of the bill.

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

ABI Quick Poll

Who will win the NCAA basketball tournament?

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

  

 

NEXT WEEK:

 

 

 

BBW 2013
April 5, 2013
Register Today!

 

 

 

 

COMING UP

 

 

 

BBW 2013
April 10, 2013
Register Today!

 

 

 

 

ASM NAB 2013
April 18, 2013
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ASM 2013
April 18-21, 2013
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NYCBC 2013
May 15, 2013
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ASM 2013
May 16, 2013
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ASM 2013
May 21-24, 2013
Register Today!

 

 

 

 

ASM 2013
June 7, 2013
Register Today!

 

 

 

 

 

ASM 2013
June 13-16, 2013
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NE 2013
July 11-14, 2013
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ASM 2013
July 18-21, 2013
Register Today!


 
   
  CALENDAR OF EVENTS
 

2013

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

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


  

 

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

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


 
 
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