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Credit Card Delinquencies Reach 18-Year Low

ABI Bankruptcy Brief | April 02 2013
 
  

April 2, 2013

 
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  NEWS AND ANALYSIS   

REPORT: CREDIT CARD DELINQUENCIES REACH 18-YEAR LOW

The American Bankers Association reported today that delinquencies on bank-issued credit cards sank to 2.47 percent in the fourth quarter of 2012 – the lowest level since 1994, CNNMoney.com reported today. The percentage of credit card accounts that were 30 days or more overdue during the quarter was roughly half the record high of 5.01 percent set in 2009 and well below the 15-year average of 3.87 percent. It was also down significantly from the previous quarter when 2.75 percent of credit card customers were delinquent on payments. Delinquencies in all three home-related categories – home equity loans, home equity lines of credit and property improvement loans – also fell during the fourth quarter. Read more.

COMMENTARY: PENSIONS NEED TO SHARE FINANCIAL PAIN WHEN CITIES GO BROKE

Stockton, Calif., wants bondholders to pay for its financial woes while leaving retirement benefits intact, but that approach undermines the law's power to rein in runaway pension costs, according to a Reuters commentary on Friday. The housing boom filled Stockton's coffers with tax revenue that officials squandered through poor management, pay raises and downtown renovations, according to the commentary. With the economic bust came $90 million in cuts over three years and, last summer, its chapter 9 filing. Bankruptcy Judge Christopher Klein yesterday approved Stockton's chapter 9 filing petition to move forward. The city's plan to right itself includes a bond-principal haircut that could be the first for a major municipality since the 1930s, according to the commentary. Some bonds could be cut as much as 83 percent, but officials would continue to pay out about $30 million a year to the California Public Employees' Retirement System (CalPERS), which manages the city's pensions. Wells Fargo and other bondholders owed more than $300 million have understandably cried foul. Legally, the securities they own merit the same treatment in bankruptcy as payments to CalPERS, according to the commentary. Central Falls, R.I., which exited bankruptcy last September, showed that a municipality can slash retirement benefits without a political or legal firestorm. Read more.

FORECLOSURE INVENTORY BALLOONED IN FIRST QUARTER OF 2013

RealtyTrac reported yesterday that nearly 1.5 million U.S. properties were actively in the foreclosure process or bank-owned in the first quarter of 2013, up 9 percent from the first quarter of 2012, but still down 32 percent from the peak of 2.2 million in December 2010, UPI.com reported yesterday. Though overall inventories are up, completed foreclosure inventories are still declining. CoreLogic reported yesterday that there were 54,000 completed foreclosures in the U.S. in February 2013, down from 67,000 in February 2012, a year-over-year decrease of 19 percent. On a month-over-month basis, completed foreclosures fell from 58,000 in January 2013 to the February level of 54,000, a decrease of 7 percent. Read more.

COMMENTARIES SHARE CONCERN OF RISK-TAKING BY BIG BANKS

Financial firms can borrow money more cheaply and with less market scrutiny when they have access to government guarantees of deposit insurance, loans from the Federal Reserve and, ultimately, taxpayer support such as what was seen with the Troubled Assets Relief Program in 2008, according to a commentary by Thomas M. Hoenig, the vice chairman of the Federal Deposit Insurance Corp., in Friday's Washington Post. Hoenig said that this safety net was intended to stabilize the financial system by protecting the payments system that transfers money around the country and the world, as well as the essential lending that commercial banks provide. But these protections also assure those who lend to banks that they will be repaid regardless of the condition of the bank. Under such circumstances, creditors give the firms a discount on the cost of the funds they borrow. Things are made more difficult, according to Hoenig, by the fact that the largest financial companies now combine traditional commercial banking with higher-risk activities such as trading so that both their banking and betting activities get access to these government protections and the multibillion-dollar subsidy that comes with them. Using subsidized money to finance the conglomerates’ bets encourages ever-higher levels of debt, risk and interconnectedness not attainable or sustainable in a truly free market, according to Hoenig. Click here to read the full commentary.

A related commentary in today's Wall Street Journal written by former FDIC chair Sheila Bair found that while bank use of risk models is common and not illegal, their use in bolstering a bank's capital ratios can give the public a false sense of security about the stability of the nation's largest financial institutions. Capital ratios (also called capital adequacy ratios) reflect the percentage of a bank's assets that are funded with equity and are a key barometer of the institution's financial strength: They measure the bank's ability to absorb losses and still remain solvent, according to Bair. While this should be a simple measure, it is not, according to Bair, because regulators allow banks to use a process called "risk weighting," which allows them to raise their capital ratios by characterizing the assets they hold as "low risk." For instance, as part of the Federal Reserve's recent stress test, the Bank of America reported to the Federal Reserve that its capital ratio is 11.4 percent. But that was a measure of the bank's common equity as a percentage of the assets it holds as weighted by their risk—which is much less than the value of these assets according to accounting rules. Take out the risk-weighting adjustment, and its capital ratio falls to 7.8 percent. On average, the three big universal banking companies (JPMorgan Chase, Bank of America and Citigroup) risk-weigh their assets at only 55 percent of their total assets. For every trillion dollars in accounting assets, these megabanks calculate their capital ratios as if the assets represented only $550 billion of risk. Read more. (Subscription required.)

ANALYSIS: PACE OF MERGERS SLOWED IN THE FIRST QUARTER 2013 TO THE FEWEST SINCE 2003

Only 8,115 merger deals were announced worldwide in the first quarter of this year, the lowest number since 2003, according to data from Thomson Reuters, the New York Times DealBook blog reported today. While the combined value of $542.8 billion outpaced last year's first quarter by about 10 percent, it is still 26 percent below the level for the period in 2011. Bankers and lawyers have been publicly boasting about a nascent revival in mergers. In March, 97 percent of deal makers surveyed by the Brunswick Group public relations firm said that they expected more deals to be announced in North America this year than in the last year. Many advisers caution against judging 2013 by one quarter; some deals that would otherwise have been announced in the first quarter were moved to fourth quarter 2012 to avoid incurring potentially higher taxes, they said. Read more.

 

FRIDAY! DON’T MISS THE ABI LIVE WEBINAR – "LEGACY LIABILITIES: DEALING WITH ENVIRONMENTAL, PENSION, UNION AND SIMILAR TYPES OF CLAIMS"

A panel of experts has been assembled for a webinar on April 5 from 1-2:15 p.m. ET to discuss environmental and pension liabilities, the statutory schemes under which these liabilities arise and the key players involved. Are non-monetary environmental claims dischargeable? Do post-petition expenditures for environmental cleanup constitute administrative expenses? When can an employer terminate a pension plan in bankruptcy, what is the process and what are the consequences? Learn the answer to these questions and more from the comfort of your own office. Special ABI member rate is available! Register 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

LATEST CASE SUMMARY ON VOLO: SCHOPPE V. COMMISSIONER OF INTERNAL REVENUE (10TH CIR.)

Summarized by Eric Madden of Diamond McCarthy LLP

The Tenth Circuit ruled that the automatic stay under 11 U.S.C. § 362(a)(1) does not apply to a proceeding commenced by the debtor taxpayer's petition filed in tax court, including any appeal from rulings in the underlying proceeding. Adopting the reasoning of the First, Third, Fifth and Eleventh Circuits and rejecting the reasoning of the Ninth Circuit, the Tenth Circuit concluded that a petition filed in tax court is an independent judicial proceeding initiated by the debtor, not the continuation of an administrative proceeding against the debtor.

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: I'M A CREDITOR OF DETROIT...NOW WHAT? (PART 2)

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Previously examining some of the overarching issues that can make a chapter 9 restructuring more challenging for creditors than a chapter 11, a recent blog post takes a closer look at the financial challenges of Detroit.

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!

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.

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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FRIDAY:

 

 

 

BBW 2013
April 5, 2013
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COMING UP

 

 

 

BBW 2013
April 10, 2013
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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
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ASM 2013
June 7, 2013
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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
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  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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February Bankruptcy Filings Decrease 21 Percent from Previous Year Commercial Filings Fall 29 Percent

ABI Bankruptcy Brief | March 5 2013
 
  

March 5, 2013

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

FEBRUARY BANKRUPTCY FILINGS DECREASE 21 PERCENT FROM PREVIOUS YEAR, COMMERCIAL FILINGS FALL 29 PERCENT

Total bankruptcy filings in the United States decreased 21 percent in February over last year, according to data provided by Epiq Systems, Inc. Bankruptcy filings totaled 82,285 in February 2013, down from the February 2012 total of 104,537. Consumer filings declined 21 percent to 78,611 from the February 2012 consumer filing total of 99,378. Total commercial filings in February 2013 decreased to 3,674, representing a 29 percent decline from the 5,159 business filings recorded in February 2012. Total commercial chapter 11 filings also decreased 21 percent, to 609 filings in February from the 756 commercial chapter 11 filings recorded in February 2012.

While bankruptcies were down from a year ago, February’s bankruptcy filings trended upward from January. Total bankruptcy filings for the month of February represented a 5 percent increase over the 78,565 total filings registered in January 2013. The total noncommercial filings for February also represented a 5 percent increase from the January 2013 noncommercial filing total of 74,831. Although the February commercial filing total represented a 2 percent decline from the January 2013 commercial filing total of 3,734, February commercial chapter 11 filings represented a 27 percent increase when compared to the 481 filings the previous month. Read the ABI press release.

STATES, PRIVATE PLAINTIFFS PRESS SUIT AGAINST WALL STREET REFORM LAW

The plaintiffs that are challenging the constitutionality of the Wall Street reform law and the leadership of the Obama administration's new consumer protection agency are fighting to keep alive a suit in Washington, D.C., federal district court, the Legal Times reported on Friday. The private plaintiffs, including advocacy group Competitive Enterprise Institute and Texas-based State National Bank of Big Spring, on Feb. 27 responded to the U.S. Justice Department's effort to end the litigation. The 11 states that have joined the suit include Texas, South Carolina, Oklahoma, Michigan, and Ohio. The attorneys for the private plaintiffs, including O'Melveny & Myers partner Gregory Jacob and C. Boyden Gray, said in their court papers that the plaintiffs have presented sufficient evidence that the Dodd-Frank Wall Street Reform and Consumer Protection Act gave "unchecked and unprecedented powers" to federal agencies, including the newly created Consumer Financial Protection Bureau (CFPB). The states that joined the lawsuit are only challenging the government's ability to liquidate the largest banks, not the composition of the CFPB. Read more.

COMMENTARY: BLEEDING THE BORROWER DRY

Though 15 states have banned predatory, high-interest loans that payday lenders commonly use to pillage low-income borrowers, offshore lenders increasingly get around state laws by issuing predatory loans over the Internet, according to an editorial in yesterday's New York Times. About 12 million borrowers turn to payday lenders each year. A new study by the Pew Charitable Trusts found that only about 14 percent of borrowers can afford to take enough out of their monthly budget to repay the average payday loan. Instead, average borrowers carry a debt for five months, during which time they pay repeated fees to renew the loan. By the fifth month, someone who borrowed $375 will have paid about $520 in interest alone. Many also resort to borrowing from additional payday lenders. Not surprisingly, payday borrowers are more likely than others to default on credit card debt, to file for bankruptcy or to lose their bank accounts because of abuse of overdraft privileges. A bill pending in the Senate known as the Safe Lending Act would require all online lenders to comply with state laws that provide stronger consumer protections than the federal statutes. It would establish once and for all that payday loan borrowers have the right to stop lenders from raiding their bank accounts. State and federal regulators also need to prohibit banks from giving payday lenders access to the automatic payment system in states where predatory, high-interest loans are illegal. Read the full editorial.

REPORT: YOUNG ADULTS RETREAT FROM PILING UP DEBT

Young people are racking up larger amounts of student debt than ever before, but fresh data suggest they are becoming warier of other kinds of borrowing: Total debt among young adults dropped in the last decade to the lowest level in 15 years, the Wall Street Journal reported today. A typical young U.S. household—defined as one led by someone under age 35—had $15,000 in total debt in 2010, down from $18,000 in 2001 and the lowest since 1995, according to a recent Pew Research Center report and government data. Total debt includes mortgage loans, credit cards, auto lending, student loans and other consumer borrowing. In addition, fewer young adults carried credit card balances, and 22 percent did not have any debt at all in 2010—the most since government tracking began in 1983. Read more. (Subscription required.)

ANALYSIS: MOST BIG M&A DEALS FACED LEGAL CHALLENGES IN 2012

A study released by Cornerstone Research on Thursday found that it was rare for a merger or acquisition deal in 2012 to escape legal challenges from shareholders, Corporate Counsel reported on Friday. Nearly 96 percent of M&A deals valued at more than $500 million and 93 percent of those valued at more than $100 million engendered suits, according to Cornerstone's report titled, "Shareholder Litigation Involving Mergers and Acquisitions." On average, the report found that deals attracted more than 4.8 suits per transaction, with some filed within hours after an announcement. The average time between announcement of a deal and commencement of a legal challenge was 14 days, the report said. Read more.

DON’T MISS THE ABI LIVE WEBINAR ON APRIL 5 - "LEGACY LIABILITIES: DEALING WITH ENVIRONMENTAL, PENSION, UNION AND SIMILAR TYPES OF CLAIMS"

A panel of experts has been assembled for a webinar on April 5 from 1-2:15 p.m. ET to discuss environmental and pension liabilities, the statutory schemes under which these liabilities arise and the key players involved. Are non-monetary environmental claims dischargeable? Do post-petition expenditures for environmental cleanup constitute administrative expenses? When can an employer terminate a pension plan in bankruptcy, what is the process and what are the consequences? Learn the answer to these questions and more from the comfort of your own office. Special ABI member rate is available! Register here as this webinar is sure to sell out.

ABI'S ANNUAL SPRING MEETING: CONSUMER PROGRAMMING WITH CROSS-OVER APPEAL

With four session tracks looking at issues geared toward chapter 11 restructurings, financial advisors, professional development and consumer bankruptcy, a number of sessions at ABI's Annual Spring Meeting have cross-over appeal for both consumer and business practitioners. Sessions include:

The Appellate Process: This distinguished panel will explore recent issues in appellate practice that are of interest to both consumer and business practitioners, including the ability to bypass intermediary appellate courts and take appeals directly to the circuit courts.

Consumer Class Actions: This panel will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases, which are highlighted by two recent decisions of the Fifth Circuit. Many of the issues discussed during this panel will be useful in business cases as well.

The Individual Conundrum - Chapter 7, 11 or 13?: Deciding on the appropriate chapter for a high net worth individual contemplating a bankruptcy filing can be a daunting task. This panel will explore the considerations that guide the practitioner in advising individual clients in making this decision.

To register for the Annual Spring Meeting and to see the full schedule of program tracks and events, please click here.

ABI IN-DEPTH

MARK YOUR CALENDARS FOR APRIL 10 TO TAKE PART IN ABI’S LIVE WEBINAR "STUDENT LOANS: BANKRUPTCY MAY NOT HAVE THE ANSWERS – BUT DOES CONGRESS?"

Do not miss the "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?" webinar presented by ABI's Consumer Bankruptcy Committee on April 10 from noon-1:15 ET. ABI's panel of experts will provide an overview of the student loan industry, examine the numbers behind and causes of student loan debt, and discuss federal loan programs as well as federal consolidation and forgiveness programs. Faculty on the webinar includes:

  • Prof. Daniel A. Austin of Northeastern University School of Law (Boston)

  • Edward "Ted" M. King of Frost Brown Todd LLC (Louisville, Ky.)

  • Craig Zimmerman of the Law Offices of Craig Zimmerman (Santa Ana, Calif.)

CLE credit will be available for the webinar. This webinar is sure to sell out; register now for the special ABI member rate of $75!

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: PAUL V. ALLRED (IN RE PAUL; 8TH CIR.)

Summarized by Michael Tamburini of Polsinelli Shughart, PC

The BAP affirmed the order of the bankruptcy court concluding that the debtor had abandoned the subject property as his homestead, and therefore was not permitted to claim a homestead exemption on it.

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: ASSIGNMENT OF RENTS: GOVERNMENT BENEFIT CARDS CAN OPEN DOORS TO BANKING SYSTEM

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Cards preloaded with unemployment insurance, child support, food stamps and other government benefits can be viewed as potential bank accounts, waiting to be opened by people with the fewest quality opportunities to connect to the financial mainstream, 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.

ABI Quick Poll

As a result of the RadLAX decision, the right to credit-bid will likely chill bidding at auctions, as potential purchasers may be dissuaded from participating in the bidding process.

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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THURSDAY:

 

 

 

Paskay 2013
March 7-9, 2013
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COMING UP

 

 

 

 

BBW 2013
March 22, 2013
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BBW 2013
April 5, 2013
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BBW 2013
April 10, 2013
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BBW 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
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ASM 2013
June 7, 2013
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ASM 2013
June 13-16, 2013
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  CALENDAR OF EVENTS
 

2013

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
- 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.


 
 
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Analysis Doctors Being Driven into Bankruptcy

ABI Bankruptcy Brief | April 09 2013
 
  

April 9, 2013

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

ANALYSIS: DOCTORS BEING DRIVEN INTO BANKRUPTCY

As many doctors struggle to keep their practices financially sound, some are buckling under money woes and are being pushed into bankruptcy, CNNMoney.com reported yesterday. It is a trend that has accelerated in recent years, industry experts say, with potentially serious consequences for doctors and patients. Some physicians are still able to keep practicing after bankruptcy, but for others, it's a career-ending event. Chapter 11 bankruptcy filings by physician practices have spiked recently, noted Bobby Guy, co-chair of the American Bankruptcy Institute's Health Care Committee, who tracks bankruptcy trends tied to distressed businesses. The weak economy has taken a toll on doctors' revenue, as consumers cut back on office visits and lucrative elective procedures, said Guy. Doctors also blame shrinking insurance reimbursements, changing regulations, and the rising costs of malpractice insurance, drugs and other business necessities for making it harder to keep their practices afloat. Read more.

For more on medical insolvencies, be sure to pick up a copy of ABI’s Health Care Insolvency Manual, Third Edition, of which Mr. Guy is a co-author. Click here for more information.

NEW FEE ON BANKRUPTCY TRADES WILL BOOST COURTS' REVENUE

A new fee tied to trades of bankruptcy claims will bring in hundreds of thousands of dollars in revenue for the nation's bankruptcy courts when it takes effect next month, Dow Jones Daily Bankruptcy Review reported yesterday. Starting May 1, those who trade claims against companies under bankruptcy court protection will have to pay a $25 fee for each transaction they file with the court, according to the Administrative Office of the U.S. Courts. Last year saw 18,632 trades of claims worth more than $41 billion in 500 bankruptcy cases, according to SecondMarket Inc. If the fees had been in effect, bankruptcy courts would have earned $465,800 from those trades. For more information from the AOUSC on the fees, effective May 1, please click here.

REGULATORS CONCERNED ABOUT MUNICIPAL-BOND DEALS

U.S. regulators are probing whether securities firms are circumventing the rules that were implemented in the wake of the financial crisis to protect municipalities against potentially biased investment advice, the Wall Street Journal reported today. At issue is whether banks are attempting to skirt post-crisis rules, including those restricting firms that provide financial advice to municipalities from underwriting certain municipal-bond transactions. Lawmakers and regulators implemented the changes to avoid situations similar to those leading up to the crisis in which some municipalities were steered into risky and complex deals that municipal officials did not fully understand. The 2010 Dodd-Frank law stipulates that banks hired as financial advisers act as fiduciaries, or in their clients' best interests. Regulators have also restricted banks from underwriting municipal-bond transactions if they were initially hired to advise on the deals. Yet the Securities and Exchange Commission is concerned that banks may be mischaracterizing their role in order to preserve their ability to underwrite bonds. The SEC is investigating several municipal contracts entered into by banks, including such banks as Goldman Sachs Group Inc., Piper Jaffray Cos., Robert W. Baird & Co. and Stifel Financial Corp. Read more. (Subscription required.)

INVESTORS PUT UP MILLIONS OF DOLLARS TO FUND LAWSUITS

A new generation of investors is plunging into "litigation finance" opportunities, putting up millions of dollars to fund lawsuits in hopes of collecting when the verdicts come down, the Wall Street Journal reported yesterday. Established financiers are expanding into new areas, including loans to law firms, and are finding clients among the biggest American companies. Law firms themselves are starting to jump on the bandwagon, seeking funding arrangements for clients who need help going after opponents with deeper pockets or who simply want to keep litigation costs off their balance sheets. Critics complain that the trend will enable frivolous lawsuits, and they have argued—including at a congressional hearing last month—that the government should step in to regulate funders of litigation. But as corporate legal budgets shrink, litigation-finance options are proliferating. One of the latest entrants is Gerchen Keller Capital LLC, a Chicago-based team that includes former lawyers from Gibson Dunn & Crutcher LLP and Bartlit Beck Herman Palenchar & Scott LLP. The group has raised more than $100 million and says there is plenty of room for newcomers given the size of the U.S. litigation market, which they put at more than $200 billion, measuring the money spent by plaintiffs and defendants on litigation. Read more. (Subscription required.)

DEMAND RETURNS FOR COMMERCIAL MORTGAGE-BACKED SECURITIES

Growing demand for subordinated commercial-mortgage debt is the latest example of investors seeking new opportunities for yield, the Wall Street Journal reported today. After years of near-zero benchmark interest rates, under which most fixed-income investments offer little return, some investors are becoming more willing to take risks. Despite the risks of subordinated commercial-mortgage debt, Cerberus Capital Management and other hedge funds are being lured by annual returns that typically top 20 percent for the least-safe portions of commercial mortgage-backed securities (CMBS). Cerberus is the latest large hedge fund to expand into this emerging hot market, which is raising concerns that lenders may make loans on properties with weak credit profiles to produce volume—a phenomenon that spun out of control in the mortgage markets during the years leading up to the financial crisis. The firm aims to launch the "Cerberus CMBS Opportunities Fund," which plans to both buy up and short commercial mortgage debt. Read more. (Subscription required.)

SENATE FINANCE COMMITTEE CHAIR MOVES TO RESHAPE TAX CODE

Last month, Senate Finance Committee Chairman Max Baucus (D-Mont.) summoned members of the committee to a closed-door meeting to discuss the first full-scale rewrite of the 5,600-page U.S. tax code in more than 25 years, the Washington Post reported yesterday. Baucus agrees with Sen. Orrin G. Hatch (R-Utah), the ranking Republican on the panel, that the committee should aim to produce a tax-reform plan by August, when Congress will once again need a deal to justify raising the legal limit on the $16.8 trillion in federal debt. Privately, senior Democrats dismiss Baucus's activities, saying that tax reform will not happen unless President Obama strikes a broad deal with Republicans that includes $600 billion more in taxes over the next decade. But Republicans are unlikely to agree to higher revenue without a tax code rewrite; aides said House Ways and Means Committee Chairman Dave Camp (R-Mich.) is pressing GOP leaders to demand tax reform in exchange for supporting a higher federal debt limit. Read more.

TOMORROW! DON’T MISS ABI’S LIVE WEBINAR, "STUDENT LOANS: BANKRUPTCY MAY NOT HAVE THE ANSWERS – BUT DOES CONGRESS?"

ABI's Consumer Bankruptcy Committee tomorrow presents the "Student Loans: Bankruptcy May Not Have the Answers – But Does Congress?" webinar from noon-1:15 ET. A panel of experts will provide an overview of the student loan industry, examine the numbers behind and causes of student loan debt, and discuss federal loan programs as well as federal consolidation and forgiveness programs. Faculty on the webinar includes:

• Prof. Daniel A. Austin of Northeastern University School of Law (Boston)

Edward "Ted" M. King of Frost Brown Todd LLC (Louisville, Ky.)

Craig Zimmerman of the Law Offices of Craig Zimmerman (Santa Ana, Calif.)

CLE credit will be available for the webinar. Register now for the special ABI member rate of $75!

 

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

LATEST CASE SUMMARY ON VOLO: COMMODITY FUTURES TRADING COMMISSION V. WALSH (2D CIR.)

Summarized by Carrie Hardman of Winston & Strawn LLP

The Second Circuit held that (1) securities fraud victims may be considered "similarly situated" for purposes of pro rata distributions when they are similarly situated in relationship to the fraud, losses, fraudsters and nature of their investments in a uniform Ponzi scheme; (2) absent further disparate treatment of the victim-investors, for purposes of distribution, there is no difference between victims that invested in a regulated entity versus a related non-regulated entity, as the protections afforded by regulation were designed not for the victim investors' benefit, but for the benefit of others; and (3) Till v. SCS Credit Corp., 541 U.S. 465, 477 (2004), does not apply in the securities fraud context, and no statutory provision exists to require the receiver to adjust distributions on account of inflation.

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: EXPLORING WHEN CONSUMERS SHOULD FILE FOR CHAPTER 11 VS. CHAPTER 13

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post explores situations in which a consumer should consider filing for chapter 11 protection rather than chapter 13.

Want to explore further perspectives on consumer filing choices? Be sure to register for ABI's Annual Spring Meeting, which will feature a session on the Consumer Bankruptcy Track titled "The Individual Conundrum—Chapter 7, 11 or 13?" For more information or to register, be sure to click here.

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

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.

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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TOMORROW:

 

 

 

BBW 2013
April 10, 2013
Register Today!

 

 

 

 

COMING UP

 


 

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
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ASM 2013
June 7, 2013
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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!

 

 

 

 

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


 
   
  CALENDAR OF EVENTS
 

2013

April
- 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.

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


 
 
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Academics Want Congress to Give Chapter 14 a Chance

ABI Bankruptcy Brief | September 20, 2012
 
  

September 20, 2012

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

ACADEMICS WANT CONGRESS TO GIVE CHAPTER 14 A CHANCE

Members of Stanford University's Hoover Institution's "resolution project" say that the environment is right to revisit their proposed modification of the Bankruptcy Code that adds a section, dubbed "Chapter 14," to address large financial institutions, Dow Jones Newswires reported yesterday. When the official debate on Capitol Hill ended in July 2010 with the passage of the Dodd-Frank financial reform, it looked as though the Hoover Institution had lost its battle to keep the job of unwinding a failing financial institution out of the hands of government. Their proposal, presented at a Senate Banking Committee hearing, never gained traction, and Dodd-Frank's Title II tasks the Federal Deposit Insurance Corp. with intervening should the collapse of a financial institution threaten the economy. However, the academics now argue in a new book, Bankruptcy Not Bailout: A Special Chapter 14, that their proposal still has a chance at becoming law. The book's authors also have an unlikely supporter: the FDIC. "The FDIC would support improvements to the Bankruptcy Code that would better allow for the failure of a large complex financial institution without broad systemic disruption," said Andrew Gray, a spokesman for the FDIC, characterizing Title II as a last resort. "Constructive efforts to improve the bankruptcy law and reduce the likelihood that Title II would be necessary are positive." Acknowledging that the repeal of all or part of Dodd-Frank is unlikely, the authors argue that Dodd-Frank and chapter 14 could coexist, providing the government and companies with another option. Read more.

REGULATORS TRY TO BEAT THE CLOCK IN RATE PROBE

U.S. prosecutors are seeking more time to complete their investigation of alleged interest-rate fixing, while banks ensnared in the probe are trying to turn the clock to their advantage as they battle lawsuits claiming damages from rate-rigging, the Wall Street Journal reported today. The Justice Department recently asked several banks to sign "tolling" agreements, in which the companies promise they will not challenge any enforcement action on the grounds that the alleged wrongdoing occurred beyond the statute of limitations. The requests were sent to all the major banks under investigation including Citigroup Inc., Deutsche Bank AG, JPMorgan Chase & Co., Royal Bank of Scotland Group PLC and UBS AG. Read more. (Subscription required.)

ANALYSIS: CRIMINAL AND CIVIL MORTGAGE-FRAUD CASES HAVE EXPLODED SINCE HOUSING CRISIS

The problem of mortgage scams involving attorneys is growing, according to experts, the Wall Street Journal reported today. Joseph Dunn, executive director of the State Bar of California, said that more than 100 lawyers in California have been disbarred or otherwise disciplined, while about 200 others are facing charges or are under investigation. The California Bar has received more than 11,000 mortgage-related complaints about lawyers since early 2009. John Berry, director of the legal division of the Florida Bar, calls the involvement of attorneys in alleged mortgage scams "one of the most difficult issues we have had to deal with." In a national database of 25,000 homeowner complaints regarding suspected mortgage-related frauds, more than a quarter relate to activities by lawyers or law firms, said Yolanda McGill, a senior counsel at the nonprofit Washington-based Lawyers' Committee for Civil Rights under Law, which began collecting the complaints in 2010. The committee has filed eight lawsuits against parties for allegedly cheating homeowners with false promises of help with their mortgages. Read more. (Subscription required.)

REPORT: PAY GAPS WIDENING AMONG PARTNERS

According to a new survey conducted by legal search consultant Major, Lindsey & Africa and Am Law Daily affiliate ALM Legal Intelligence, partners at Am Law 200, NLJ 350, and American Lawyer Global 100 firms saw their annual compensation rise, on average, 6.4 percent to $681,000 over the past two years. The jump was apparently driven, at least in part, by an uptick in the average rate those partners are billing, from $555 per hour in 2010 to $585 today. The survey, which drew 2,228 responses from attorneys at the firms in question, shows that not all partners have benefited equally from the increase. On average, equity partners are better compensated than their non-equity counterparts, male partners make more than their female colleagues, corporate partners earn more than litigators, and partners in open compensation systems are paid better than those in closed compensation systems. Read more.

FORMER GM CEO: TIME FOR "GOVERNMENT MOTORS" TO HIT THE ROAD

Until the government sells its shares of GM, the company won't be master of its own destiny and will remain wrongly tagged a failure, according to a commentary in today's Wall Street Journal by former GM CEO Ed Whitacre. The government has been an active participant in GM's management for more than three years, according to Whitacre, and it is time for Treasury to step out of the way so that GM can fully focus on what it does best: designing, building and selling the world's best vehicles. The government's authority over GM today is not concentrated in the 500 million shares it still owns, which amount to a hefty but not controlling 26.5 percent ownership stake, according to Whitacre. Rather, the government's power comes from the management apparatus of TARP, the Troubled Asset Relief Program, from which the $50 billion bailout originally came. The result: GM spends an awful lot of time checking in with the people who administer TARP over everything from hiring to executive compensation and management. Read more. (Subscription required.)

HIGH-SPEED TRADING IN THE CONGRESSIONAL SPOTLIGHT

An insider of the secretive world of high-frequency trading is set to attack that industry today on Capitol Hill, giving lawmakers a potential road map to address practices that critics say can put ordinary investors at a disadvantage and the financial system at risk, the Wall Street Journal reported today. Since rapid-fire trading firms now provide many of the buy-and-sell orders that support the market, investors are at the mercy of automated systems that can run amok during volatile times, according to Dave Lauer, who last year quit his job as a trader for an elite Chicago high-frequency trading outfit. Lauer is part of a growing chorus of industry insiders blowing the whistle on approved trading techniques that they say are designed by the traders who derive the most benefit. Lauer is now a consultant on market-structure issues for Better Markets, a Washington, D.C., advocacy group funded by a hedge fund. He testified today before the Senate Banking committee about how he came to believe that high-speed trading has made the market less fair for many investors. One way sophisticated firms get an edge over other investors is the use of complex order types, which are commands that traders use to tell exchanges how to handle their buy-and-sell orders, according to Lauer's testimony. Regulators are looking into whether exchanges, in a rush to gain the business of high-frequency firms, have provided advantages to some sophisticated trading firms that allow them to trade profitably at the expense of other investors. High-frequency trading accounts for some two-thirds of all trading volume, experts say. Read more. (Subscription required.)

Click here for prepared testimony from today's Senate Banking Committee hearing.

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A FELLOW COLLEAGUE AND ABI MEMBER

Our friend Steven Golick (Osler Hoskin & Harcourt LLP, Toronto) is facing a medical crisis. He has been diagnosed with a serious brain tumor, requiring complex surgery and treatment. Steven’s spirits are very strong and he and his family remain optimistic, but he can use our support. A prominent international restructuring attorney and an ABI member since 1994, Steven is also a founding member of the ABI house band, the Indubitable Equivalents. Because the band is important to Steven, his fellow band-mates have organized a new Blog site for Steven's friends and colleagues to show their love and support at this critical time. Please click on this link to enter and share your thoughts, and post as often as you'd like.

ABI IN-DEPTH

ABI LAUNCHES FIFTH ANNUAL WRITING COMPETITION FOR LAW STUDENTS; PARTICIPANTS RECEIVE ONE-YEAR ABI MEMBERSHIP

Law school students are encouraged to submit a paper now through March 1, 2013, for ABI’s Fifth Annual Bankruptcy Law Student Writing Competition. ABI will extend a complimentary one-year membership to all students who participate in this year's competition. Eligible submissions should focus on current issues regarding bankruptcy jurisdiction, bankruptcy litigation, or evidence issues in bankruptcy cases or proceedings.

The first-place winner, sponsored by Invotex Group, Inc., will receive a cash prize of $2,000 and publication of his or her paper in the prestigious ABI Journal. The second-place winner, sponsored by Jenner & Block LLP, will receive a cash prize of $1,250 and publication of his or her paper in an ABI committee newsletter. The third-place winner, sponsored by Thompson & Knight LLP, will receive a cash prize of $750 plus publication of his or her paper in an ABI committee newsletter. For competition participation and submission guidelines, please visit http://papers.abi.org.

LATEST CASE SUMMARY ON VOLO: STATE OF NEVADA V. MORTGAGE ELECTRONIC REGISTRATION SYSTEM INC. (9TH CIR.)

Summarized by Richard Corbi of Lowenstein Sandler PC

Because the defendants had no "obligation" to record assignments or other documents relating to securing property, the prosecution failed to state a claim of liability under Nevada False Claims Act section 357.040(1)(g).

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: SECOND CIRCUIT SUMMARILY REVERSES CLAIMS-TRADING DECISION

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines a ruling by the U.S. Court of Appeals for the Second Circuit in Longacre Master Fund v. ATS Automation Tooling Systems. The Second Circuit summarily reversed a district court decision that will likely strengthen the hand of specialized firms that look to buy claims in large chapter 11 cases, according to the 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.

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.

Have a Twitter, Facebook or LinkedIn Account?

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NEXT WEEK:

"WHEN IS AN INDIVIDUAL CHAPTER 11 THE BEST FIT?" LIVE WEBINAR
Sept. 27, 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. 16, 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
- "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
- ABI/Bloomberg Distressed Lending Conference
October 16, 2012 | New York, N.Y..
- 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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Senate Deadlocks on Student Loans

ABI Bankruptcy Brief | June 6 2013
 
  

June 6, 2013

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

SENATE DEADLOCKS ON STUDENT LOANS

In what is becoming an annual June ritual, the Senate deadlocked today over federal student loan interest rates, with no consensus in sight on how to prevent rates on certain loans from doubling for about 7 million borrowers on July 1, the Washington Post reported today. Amid a swirl of competing proposals from lawmakers and the White House, preliminary votes showed that no Senate bills have the 60 votes needed to overcome a filibuster in the Democratic-led chamber. A Republican bill to peg rates on a variety of loans to the yield on the government’s 10-year Treasury bill, plus 3 percentage points, was blocked today on a 40 to 57 vote. A Democratic bill to freeze for two years the current 3.4 percent rate for subsidized loans to students in financial need also was thwarted. A procedural vote on the bill was 51 to 46, nine short of the 60 needed. The votes were largely symbolic measures expected to fail short of an agreement. Read more.

SEC PROPOSES CHANGES TO MONEY-MARKET FUND RULES

The portion of the money-market fund industry that suffered extreme disruptions during the financial crisis would be revamped under a plan proposed yesterday by federal regulators, who have been struggling to address the industry’s vulnerabilities for years, the Washington Post reported today. The nearly $3 trillion industry has fiercely opposed major changes to money-market funds, but regulators have persisted, citing the losses and panic they sparked during the crisis. These mutual funds have been popular with investors because they have been perceived to be as reliable as savings accounts. But that perception was shattered in September 2008, when a major money-market fund “broke the buck,” meaning its value fell below $1 a share. A run on money-market funds ensued, with investors withdrawing $300 billion in a week. The government intervened and temporarily guaranteed that investors would be repaid. The SEC said that its plan is designed to avoid a repeat of the meltdown. The agency offered two alternatives focused solely on “prime” funds, which invest in short-term corporate debt. The options could be adopted separately or in combination, depending on the public feedback the SEC receives during the next three months. A plan could be finalized this year, experts tracking the issue said. Read more.

INVESTORS RETURN TO RISKY "SYNTHETIC CDOS"

Investors are once again clamoring for a risky investment blamed for helping unleash the financial crisis: synthetic collateralized debt obligations (CDOs), the Wall Street Journal reported today. In a sign of how hard Wall Street is trying to satisfy voracious demand for higher returns amid rock-bottom interest rates, JPMorgan Chase & Co. and Morgan Stanley bankers in London are moving to assemble the synthetic CDOs. Basic CDOs pool bonds and offer investors a slice of the pool. Synthetic CDOs pool insurance-like derivative contracts on the bonds, rather than the bonds themselves. Like their crisis-era predecessors, the new CDOs would be sliced up into different levels of risk and returns. Investors who want a chance at the highest returns would have to buy the riskiest slice. While spreading risk in some ways, synthetic CDOs also can multiply the financial damage if companies fall behind on their debt payments. During the financial crisis, CDOs pegged to soured mortgage loans caused losses to careen around the world. Some details of the deals being worked on at J.P. Morgan and Morgan Stanley aren't clear, including the size of the CDOs and which investment firms have expressed an interest in buying slices of them. Read more. (Subscription required.)

REGULATORS INVESTIGATING "DARK POOL" STOCK TRADING

The Financial Industry Regulatory Authority (Finra), Wall Street's self-regulatory body, last month sent 15 examination letters to operators of "dark pools"—lightly regulated, off-exchange trading venues that have been a rising concern for regulators and some investors as more activity shifts away from exchanges, the Wall Street Journal reported today. Finra is seeking details about how the increasingly popular venues operate, what they disclose to clients and whether they adequately police trades. It could bring enforcement actions against dark-pool operators or issue recommendations for tighter oversight, depending on the answers it receives and additional examinations, said John Malitzis, executive vice president of market regulation at Finra. The letters are a follow-up to an initial round of questions the regulator circulated last fall. "We want to understand whether [dark pools] are disclosing to their customers how their orders work [and] whether customers are informed who their orders will interact with," Malitzis said in an interview. "A big part of this is to get an understanding of practices that may or may not be problematic." Read more. (Subscription required.)

U.S. HOUSEHOLD WORTH TOPS PRE-RECESSION PEAK FOR FIRST TIME

Household wealth in the U.S. jumped to a record in the first quarter, exceeding its pre-recession peak for the first time, bolstered by gains in the stock and housing markets that are helping Americans mend finances, Bloomberg News reported today. Net worth for households and nonprofit groups increased by $3 trillion from January through March, or 4.5 percent from the previous three months, to $70.3 trillion, the Federal Reserve said today in its financial accounts report, previously known as the flow-of-funds survey. Household wealth eclipsed its pre-recession level as gains in the stock and housing markets are helping Americans withstand an increase in the payroll tax this year. Household net worth is $2.29 trillion above its pre-recession peak of $68.1 trillion reached in the third quarter of 2007. It was at $67.3 trillion in the last three months of 2012. Read more.

REPORT: ENTITLEMENT CHANGES TO PUT SENIORS AT FINANCIAL RISK

The Economic Policy Institute reported that nearly half of the nation’s elderly population is “economically vulnerable” and would be particularly hard hit by even modest changes in the Social Security and Medicare programs being considered to slow the growth of the nation’s long-term debt, the Washington Post reported today. The report said that 48 percent of the elderly population earns less than double the supplemental poverty threshold, putting those seniors at financial risk if their income is cut even slightly. Older blacks and Hispanics are especially vulnerable, the report said, as the vast majority of them live on the financial edge. Read more.

LIVE WEBCAST AVAILABLE FOR ABI'S CHAPTER 11 REFORM COMMISSION HEARING TOMORROW LOOKING AT USE OF EXAMINERS, LABOR ISSUES AND PROBLEMS IN RESTRUCTURING TODAY'S COMPANIES

ABI’s Commission to Study the Reform of Chapter 11 will hold its seventh public hearing of 2013 on Friday from 3-5 p.m. CT (4-6 p.m. ET) at the Association of Insolvency & Restructuring Advisors (AIRA) 29th Annual Bankruptcy Restructuring Conference at the Westin Chicago River North; Chicago, Ill. The hearing will feature witness testimony from two leading scholars on the use of examiners in bankruptcy and labor issues including § 1113 and 1114. A panel of experts from the AIRA will also identify current problems faced by financial advisors. To view the witness list and watch a live webcast of the hearing tomorrow, please visit http://commission.abi.org.

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

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

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

Utilizing a case study, ABI's panel of experts on July 15 will explore issues surrounding a lender’s decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel will also walk attendees through the necessary mathematical analyses used to analyze these issues. The webinar will take place 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 NEXT WEEK

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

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

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

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

NEW CASE SUMMARY ON VOLO: STEINBERG V. BANK OF AMERICA N.A. (IN RE STEINBERG; 10TH CIR.)

Summarized by Andrew Johnson of Onsager, Staelin & Guyerson

The Tenth Circuit Bankruptcy Appellate Panel reversed the bankruptcy court's order granting relief from stay to Bank of America to foreclose on the debtor's house because the bankruptcy court failed to conduct an evidentiary hearing on whether Bank of America was in possession of the note secured by debtor's residence, or if Bank of America had some other legal basis to enforce the note. The court rejected Bank of America's argument that a debtor's failure to schedule a debt as disputed estops the debtor from challenging relief from stay.

There are more than 900 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: FURTHER EXAMINATION OF GE AND CITI'S SETTLEMENTS WITH FHFA

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new blog post takes a closer look at the reason behind GE and Citi's recent settlements with the Federal Housing Finance Agency (FHFA).

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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CSBW 2013
June 13-16, 2013
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June 14, 2013
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INSOL’s Latin American Regional Seminar in São Paulo, Brazil
June 13, 2013
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NE 2013
July 11-14, 2013
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abiLIVEJuly
July 15, 2013
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July 18-21, 2013
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MA 2013
Aug. 8-10, 2013
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Aug. 22-24, 2013
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Sept. 10, 2013
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  CALENDAR OF EVENTS
 

2013

June
- 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.
- abiLIVE Webinar
     July 11-14, 2013 | Newport, R.I.
- Southeast Bankruptcy Workshop
     July 18-21, 2013 | Amelia Island, Fla.

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

September
- ABI Endowment Golf & Tennis Outing
    Sept. 10, 2013 | Maplewood, N.J.


  



- ABI Endowment Baseball Game
    Sept. 12, 2013 | Baltimore, Md.
- Bankruptcy 2013: Views from the Bench
    Sept. 27, 2013 | Washington, D.C.

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

November
- Detroit Consumer Bankruptcy Conference
   Nov. 11, 2013 | Detroit, Mich.

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


 
 
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Commentary The Lessons of Lehman Are We Ready for the Next Meltdown

ABI Bankruptcy Brief | September 3, 2013
 
  

September 3, 2013

 
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  NEWS AND ANALYSIS   

COMMENTARY: THE LESSONS OF LEHMAN: ARE WE READY FOR THE NEXT MELTDOWN?

It's been five years since Lehman Brothers failed, setting off a chain of unanticipated consequences that came perilously close to melting down the world's financial system. Had the Federal Reserve, other central banks and the U.S. government not intervened and thrown trillions of dollars at the crisis to keep financial markets afloat, we would be talking about Great Depression II. The true lesson to take from Lehman is that a simple move that was praised by free-market types at the time — letting Lehman fail — set off unanticipated consequences that brought the financial world to its knees within days. It was an object lesson about how things that seem simple on the surface can come back to bite you in unanticipated places in unanticipated ways, according to an editorial in Friday's Washington Post. When Lehman went under, the Reserve Fund, a big money-market fund, had to take losses because it owned Lehman paper, and some hedge funds that used Lehman's London office as their "prime broker" found their assets frozen as a result of its bankruptcy. That triggered a mad scramble in the U.S. as hedge funds pulled their accounts out of Goldman Sachs and Morgan Stanley, neither of which had full access to the array of Fed lending programs that commercial banks did. Both firms would have gone under — inflicting catastrophic pain on the financial system by setting off a worldwide cascade of failures — had the Fed not made Goldman and Morgan Stanley bank holding companies and given them access to unlimited cash to meet customer withdrawals. These two Lehman side effects, which many people have forgotten, typify the problems of dealing with financial crises. We've forced giant, too-big-to-be-allowed-to-fail financial institutions to beef up their capital relative to their assets, which is a good thing. However, we've gravely weakened the ability of the Federal Reserve by taking away key powers that it had used to stabilize things. This problem, combined with the unhappy fact that much of the rest of the federal government is dysfunctional, will cost us dearly when the next financial crisis hits, according to the editorial. And there always is a next one. Click here to read the full commentary.

ABI will host a media call on Sept. 12 at 2:00 p.m. ET on lessons learned at the Lehman anniversary, featuring guests Bankruptcy Judge James M. Peck (S.D.N.Y.; New York) and Harvey R. Miller (Weil, Gotshal & Manges LLP; New York). Contact (703) 739-0800 for more information.

ANALYSIS: BIG DREAMS, BUT LITTLE CONSENSUS, FOR A NEW DETROIT

There are 78,000 abandoned buildings in Detroit standing in various levels of decay. Services have fallen into dysfunction, and debts are piling ever higher. Yet for all the misery, Detroit's bankruptcy gives an American city a rare chance to reshape itself from top to bottom, according to an analysis in the New York Times yesterday. But reinventing a city so devastated is hardly a sure thing, and the questions about how to proceed loom as large as the answers: Should its areas of nearly vacant blocks be transformed into urban farms, parks and even ponds made from storm water? Could its old automobile manufacturing economy be shifted into one centering on technology, bioscience and international trade? Should Detroit, which lost a million residents over the last 60 years, pin its sharpest hopes on luring more young people here, counting on an influx of artists and entrepreneurs? Some have long been searching for solutions to the hollowing out of Detroit, a city that measures six times the landmass of Manhattan but is now home to only 700,000 people, down from 1.8 million at its peak. No single economic answer will be enough to rescue Detroit on its own, experts say. Instead, leaders have their hopes set on a range of fields, many of which have already found some success here. They have pushed for new medical and science-related businesses near the city's universities and new technology companies and start-ups in the city's downtown. And some are pondering prospects for expanding international trade, given plans for a new bridge to Canada. Click here to read the full analysis.

COMMENTARY: THE NATION'S FUTURE DEPENDS ON ITS CITIES

The residents of Minneapolis-St. Paul suffer, collectively, from a serious insecurity complex. They're always talking about how no one knows anything about their "twin" cities on the upper Mississippi River. Yet the Twin Cities' identity crisis has also proven to be one of their greatest economic strengths. One can't quite put one's finger on exactly what's there because, well, there's an awful lot there. Diversity, in a word, is the secret sauce that creates urban success, according to a commentary in last week's National Journal. Detroit, of course, never suffered from an identity crisis. Everyone always knew what the Motor City stood for: the Big Three automakers. But a lack of diversity was one of Detroit's biggest problems, contributing to its bankruptcy filing. What also sank Detroit, according to the commentary, was that its leaders failed to connect with the sprawl around it and turn the suburbs into part of a unified economic base. In the Detroit area, the city and its suburbs became virtual enemies. Ironically, given the nature of our high-tech, super-connected age, the future will look increasingly like the city-states that ruled the world for millennia. The future, in other words, is going medieval. The rise of the city-state has been a long-term trend, but it's gaining speed. Today, the 388 metro areas in the United States make up 84 percent of the nation's population and 91 percent of its gross domestic product. Urban centers are estimated to generate 80 percent of economic growth in the world, and the percentage may be growing because of the way well-built urban areas with good infrastructure can better apply resources and make more efficient use of tight public funds. Read the full commentary (subscription required).

ANALYSIS: CAN KODAK REINVENT ITSELF AFTER BANKRUPTCY?

Eastman Kodak Co. scientists are tinkering with a new technique, called Stream Inkjet Technology, to improve printing performance, and are working on further perfecting SquareSpot laser-writing technology and potentially toward breakthroughs in spatial atomic layer deposition. The hope is that these kinds of technologies can save a 121-year-old company emerging from 20 months of bankruptcy this week, according to an analysis in Sunday's Rochester (N.Y.) Democrat and Chronicle. The question of whether Kodak can succeed will take years to answer. But sink or swim, the company is now officially entering its next era with a much smaller workforce, dramatically cut costs and a narrower focus on a specific set of markets and offerings. Kodak has bet its immediate survival in part on commercial printing. But for tomorrow, it has its atomic layer research and other similar technology, bonding microscopically thin materials to surfaces. If all of Kodak's plans pan out, it will stop a slide in revenues that dates back to 2005 — the last year Kodak grew. Kodak projections have it bottoming out this year with sales of $2.5 billion, and then slowly growing to $3.2 billion in 2017. However, the company has a lengthy history of promising that it's finally turned the corner and that starting next year, things are going to be better. Kodak has argued that bankruptcy gave it the ability to essentially catch its breath and unload a variety of costs — including retiree health care coverage and some pensions — and that it is ready to soar. Now comes the challenge of taking that revamped and slimmed-down Kodak and making it into something the old Kodak has not been for years: consistently profitable. Click here to read the full analysis.

NEW LIFELINE FOR HOME BUYERS

The Obama administration wants to create a mortgage market that is more forgiving to borrowers who lost their homes due to the recession, an effort that could widen the pool of potential homeowners, according to an article in the Wall Street Journal yesterday. A recent rule change lets certain borrowers who have gone through a foreclosure, bankruptcy or other adverse event — but who have repaired their credit — become eligible to receive a new mortgage backed by the Federal Housing Administration after waiting as little as one year. Previously, they had to wait at least three years before they could qualify for a new government-backed loan. To be eligible for the new FHA loans, borrowers must show that their foreclosure or bankruptcy was caused by a job loss or reduction in income that was beyond their control. Borrowers also must prove that their incomes have had a "full recovery" and complete housing counseling before getting a new mortgage. But it isn't clear whether banks will be eager to offer loans with the new terms at a time when they are facing a wave of lawsuits and investigations related to other government-backed loans. In addition, over the past four years, banks have had to buy back tens of billions of defaulted loans as Fannie, Freddie and the FHA faced mounting losses. Because of uncertainties about these "put-backs," lenders have imposed more conservative standards than what the federal entities require. The FHA says it has a separate effort under way to provide greater clarity about when banks could face put-backs. However, lenders say those changes haven't been specific enough to change their lending posture. Click here to read the full article.

EQUIFAX: AUTO, STUDENT LENDING EACH RISE MORE THAN 10%

Student and auto lending surged in the 12-month period ended in July, according to an Equifax report released Thursday, American Banker reported Friday. The total balance on federal and private student loans increased to $884.2 billion in July 2013, up 11.3% from a year earlier, according to the Atlanta credit bureau's National Consumer Credit Trends Report. However, Americans also took out fewer student loans in the first half of the year. The total number of loans originated between January and May fell 9.3% to 4.2 million. Auto loans rose 10.9% to $826.8 billion in July from a year earlier. Meanwhile, bank credit card balances rose for the first time in five years to $536.6 billion, a scant 0.6%. New credit opened between January and May rose 6% to $77.7 billion — the highest level since 2008. "In all other segments, consumers are reducing their debt burdens," Equifax Chief Economist Amy Crews Cutts said. Total balances on first mortgages, home-equity installments and home-equity revolving all fell, and severely delinquent balances for each loan type were at five-year lows. Click here to read the full article.

PROPOSED AMENDMENTS PUBLISHED FOR PUBLIC COMMENT

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

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

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

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

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

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

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

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

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: IN RE TOWNE (3D CIR.)

Summarized by Terry Hall of Faegre Baker Daniels LLP

In an opinion marked "Not Precedential," the Third Circuit Court of Appeals affirmed the bankruptcy and district courts' holdings that the law firm hired as special counsel to the chapter 11 debtors was not entitled to payment of its fees and expenses from the secured creditor's collateral sale proceeds under § 506(c) following a sale conducted by a chapter 7 trustee after conversion of the case because (a) the law firm's efforts were not necessary to preserve or dispose of the collateral and there was no direct benefit to secured creditor, (b) the secured creditor was not estopped from refusing payment from the proceeds, and (c) conduct by the secured creditor, either lawful or unlawful, is not relevant to the analysis under § 506(c).

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

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

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post discusses the Fed's preparation of a proposal to toughen Regulation W, which governs how banks do business with their subsidiaries and affiliates.

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

ABI Quick Poll

Success fees for financial advisors should be prohibited.

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

INSOL INTERNATIONAL

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

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  CALENDAR OF EVENTS
 

2013

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

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


  


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

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


 
 
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Report Sharp Drop in U.S. Homes Lost to Foreclosure in February

ABI Bankruptcy Brief | March 14 2013
 
  

March 14, 2013

 
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  NEWS AND ANALYSIS   

REPORT: SHARP DROP IN U.S. HOMES LOST TO FORECLOSURE IN FEBRUARY

Though the nation's foreclosure woes persist, new data from RealtyTrac Inc. show they are easing amid a resurgent housing market, rising home prices and efforts by some states to buy homeowners more time to avoid losing their homes, the Associated Press reported today. The number of U.S. homes repossessed by lenders last month fell 11 percent from January and declined 29 percent from February last year, tumbling to the lowest level since September 2007, RealtyTrac said today. Some states continued to see sharp increases in homes lost to foreclosure last month, including Washington, Wisconsin and Iowa. But home repossessions declined both on an annual and monthly basis in a majority of states, including past foreclosure hotbeds such as California, Georgia and Arizona. All told, 45,038 U.S. homes completed the foreclosure process in February, less than half of the 102,000 homes lost to foreclosure in March 2010, when home repossessions peaked, according to the firm's records, which go back to January 2005. Read more.

COMMENTARY: FANNIE, FREDDIE AND THE GOVERNMENT'S HOUSE OF CARDS

The nascent housing price recovery is restoring health to Fannie Mae and Freddie Mac, the two government-sponsored enterprises that contributed so much to the crash of 2008, according to a commentary in today's Wall Street Journal. Both had earnings in 2012 and thus will not need money from the U.S. Treasury to cover operating losses, which is in contrast to the preceding three years when they cost the taxpayers over $180 billion. When Fannie and Freddie were losing money, Congress had a strong incentive to privatize or liquidate them, according to the commentary. The Obama administration proposed three options, the third of which was to restore them to the public-private status that fueled their rapid expansion in the late 1990s and early 2000s—and contributed to their downfall. Now that these GSEs promise to become cash cows able to palliate the government's budgetary distress, the government's talk about "resolving" them is more subdued, according to the commentary. The latest monthly Federal Reserve survey reported that "home prices rose amid falling inventories across much of the country." The GSEs' business in mortgage-backed securities is thriving, with Fannie having issued $865.5 billion of these instruments in 2012. The disturbing thing about this rosy scenario is that the entire home mortgage industry—not only Fannie and Freddie—has been effectively nationalized, according to the commentary. Read more. (Subscription required.)

ANALYSIS: AFTER FINANCIAL CRISIS, PROSECUTORS NAVIGATE TRICKY WATERS

Despite the recent political finger-pointing, the fact remains that few executives have been held responsible for when their companies engaged in misconduct, the New York Times DealBook blog reported yesterday. Despite the fear of charging a large bank with a crime, the Justice Department has tried to show its mettle recently in cases involving the manipulation of the London interbank offered rate (Libor). Its solution to the problem has involved having foreign subsidiaries of global banks plead guilty to a charge, rather than the whole entity. At a Senate Banking Committee hearing, Treasury Undersecretary David S. Cohen acknowledged that regulators had not aggressively pursued the individuals "who are responsible for the conduct that has resulted in fines and penalties against the institution itself." Although a few lower-level traders have been charged, the settlements involving large banks over Libor manipulation have not involved any real costs to senior executives, and HSBC’s money-laundering case involved neither a corporate guilty plea nor any direct action against the individuals responsible for long-running practices. Read more.

JOBLESS CLAIMS AT FIVE-YEAR LOW

A measure of jobless claims widely followed by economists fell to a five-year low, the latest sign that the labor market is slowly improving, the Wall Street Journal reported today. The four-week moving average of jobless claims, which smooths out weekly volatility in new unemployment claims, sank to 346,750, the lowest level since March 2008, the Labor Department said today. Meanwhile, the weekly number of U.S. workers filing new applications for benefits fell more than economists forecast, declining by 10,000 to a seasonally adjusted 332,000 for the week ended March 9. The Labor Department reported last week that employers added 236,000 jobs in February while the unemployment rate moved down to a four-year low of 7.7 percent. Read more. (Subscription required.)

CONSUMER SPENDING INCREASED IN FEBRUARY

The Commerce Department reported yesterday that retail sales rose 1.1 percent in February from the prior month, seasonally adjusted, thanks in large part to robust gains for cars and building materials and at Internet stores, the Los Angeles Times reported today. Consumers did feel the pinch from higher fuel prices; sales at gasoline stations jumped 5 percent last month from January. After excluding consumer spending for gas and cars, so-called core retail sales increased 0.4 percent in February, and this measure was revised up to 0.3 percent for January from the previously estimated 0.1 percent. Car and home sales are benefiting from pent-up demand as well as low interest rates, and that is supporting business at other retailers. Sales at building material and garden supply stores rose 1.1 percent in February from the prior month. Read more.

For more on consumer spending, be sure to visit yesterday’s post on ABI’s Chart of the Day.

IPHONE AND IPAD USERS: THE ABI JOURNAL APP IS AVAILABLE NOW!

The wait is over! With the new ABI Journal iPad app, sponsored by KCC, each new issue will be sent automatically to your device, ready to read at your convenience. Download the app for free from the Apple iTunes store (link below) to your iPad and/or iPhone. Once it's installed, open the app and you will be prompted to log in (see below). (You only have to provide this information once, then the app will recognize you each time you open it.)

Each available issue will show up automatically in the onscreen library. Simply download the issue you wish to read and access it anytime, even when you're not connected to the Internet. With the app, you can:

• take notes or leave comments
• share individual pages to social media
• bookmark favorite pages
• search for key phrases in all online issues

Unlock the power of this terrific new app* today. Download the app here.

USERNAME: Your email address (it must be the one that ABI has on file for you)
PASSWORD: abijournal

*The app is not available for Android devices at this time.
Go to journal.abi.org to access ABI Journal archives, submission guidelines and more!

LATEST BLOOMBERG "BILL ON BANKRUPTCY" VIDEO: HOW PURCHASERS OF AMR STOCK MADE A KILLING

Someone who bought stock in American Airlines last year already made a killing. Stock that could have been bought in November for less than 40 cents a share is now trading above $4, for reasons explained on the video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. Click here to watch.

DON'T MISS ABC'S FREE EVENT, "THE AUTO BANKRUPTCIES: CHECKING THE REARVIEW MIRROR," ON MARCH 22!

ABI members are encouraged to register for the American College of Bankruptcy's "The Auto Bankruptcies: Checking the Rearview Mirror" on March 22 at Boston College Law School in Newton, Mass. The afternoon event will feature key players looking back at the events that led to GM and Chrysler being placed into bankruptcy and the lessons that have been learned from the cases. Panelists include:

Corinne Ball of Jones Day (New York), who served as lead bankruptcy counsel to Chrysler.

Matthew A. Feldman of Willkie Farr and Gallagher LLP (New York), who served as chief legal advisor to the Obama administration's Task Force on the Auto Industry.

• Hon. Arthur J. Gonzalez, a Senior Fellow at New York University School of Law and formerly the Chief Bankruptcy Judge for the U.S. Bankruptcy Court for the Southern District of New York, who presided over the Chrysler chapter 11 proceedings.

Harvey R. Miller of Weil, Gotshal & Manges LLP (New York), who served as lead bankruptcy counsel to GM.

The moderator will be Mark N. Berman of Nixon Peabody LLP (New York).

Registration for the afternoon event is free, so be sure to sign up today before it reaches capacity!

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

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: VASSALLE V. MIDLAND FUNDING LLC (6TH CIR.)

Summarized by Jim Morgan of the Enterprise Law Group

The Sixth Circuit Court of Appeals reversed the decision of the U.S. District Court for the Northern District of Ohio approving a class action settlement and certifying a nationwide class. The Sixth Circuit found that the settlement was not fair or reasonable because it provided preferential treatment to the class representatives and only perfunctory relief to the unnamed class members. The Sixth Circuit further held that class certification was inappropriate because the class representatives were inadequate and that a class action was not a superior method of resolving the controversy.

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: BIG BANKS SHOULD BREAK UP VOLUNTARILY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post said that megabanks may be able to fight off regulatory forces demanding their corporate downsizing, but a voluntary break up may be the only way to sway public opinion their way.

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

As a result of the RadLAX decision, the right to credit-bid will likely chill bidding at auctions, as potential purchasers may be dissuaded from participating in the bidding process.

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

March
- Bankruptcy Battleground West
     March 22, 2013 | Los Angeles, Calif.

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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Analysis Critics of Detroits Bankruptcy Havent Offered Up Alternatives

ABI Bankruptcy Brief | August 22, 2013
 
  

August 22, 2013

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

ANALYSIS: CRITICS OF DETROIT'S BANKRUPTCY HAVEN'T OFFERED UP ALTERNATIVES

Objections to Detroit’s historic chapter 9 bankruptcy have been coming from the usual suspects. But none of them offers to change the fundamental reality facing America’s poorest major city, according to an analysis in The Detroit News on Tuesday. They can’t. Detroit’s government is insolvent and managerially spent, facts unaltered by complaints that Emergency Manager Kevyn Orr and his team failed to bargain in good faith. One month into the largest municipal bankruptcy in American history, it is clear that this won’t be a quick-rinse job akin to the General Motors Corp. or Chrysler LLC bankruptcies — but it is moving along nonetheless. The precedent-setting legal fight’s outcome could have a profound impact on unions, pension funds and the municipal finance market. The stakes are enormous, and financial creditors, unions, pension funds, retirees and ordinary citizens are objecting to Detroit’s bankruptcy filing because there are few opportunities otherwise to do so. Should U.S. Bankruptcy Judge Steven Rhodes accept the objections following an eligibility trial scheduled to begin Oct. 23, Orr, the city and their sponsors in Lansing would be back at square one with no Plan B. But experts say that Detroit’s case is progressing relatively rapidly. "For a case of this size — think about how complex it is — it’s moving quickly," says Douglas Bernstein, managing partner of Plunkett Cooney’s banking, bankruptcy and creditors’ rights practice group in Bloomfield Hills, Mich. Judge Rhodes is "way quicker than any of the others" in Alabama, California and Rhode Island, "and he’s got the biggest case of them all," Bernstein said. Click here to read the full analysis.

INVESTORS ARE SELLING MUNICIPAL BONDS AGAIN

Municipal bonds usually don’t get much attention unless something’s wrong, but they’re getting attention now, the Associated Press reported today. Investors have been running away from bonds issued by state and local governments for several months, even though they offer tax-free income. The worries began when interest rates started to rise in the spring and heightened after Detroit became the biggest city in the country ever to file for bankruptcy. The selloff is reminiscent of one that smacked municipal bonds in late 2010 and early 2011, following a prediction that a wave of defaults would hit the market. But now, like then, managers of municipal-bond mutual funds say that the worries have created a buying opportunity. Investors who bought in late 2010 did well: The average intermediate-term municipal bond fund returned 9 percent in 2011. Managers say such big gains aren’t likely this year, but long-term municipal bonds can offer tax-free yields of 5 percent and have the potential to increase in price if interest rates don’t take off, says John Miller, co-head of global fixed income for Nuveen Investments. Nearly every municipal bond mutual fund has lost money over the last three months. For a rebound in the municipal bond market to happen, it needs to snap out of the self-feeding selling cycle that has overtaken it. Click here to read the full article.

BANKRUPTCY, EVEN FOR DETROIT, COMES WITH A COST

As if Detroit doesn’t have enough money problems, now the cash-strapped city faces a huge bill from its bankruptcy lawyers — which, according to a Marketplace.org report today, begs the question: Is bankruptcy worth it? For example, Lehman Brothers’s bankruptcy fees topped $2 billion. "It can get very expensive," says Prof. David Skeel of the University of Pennsylvania. He says plenty of bankruptcies cost millions of dollars these days. One reason is that no one wants to speak up. "Nobody that’s in the case wants to rat on somebody else and say, ‘Your fees are way too high,’" he says. Over the past 10 years, Skeel says more companies have decided to fold rather than deal with bankruptcy costs. But there’s also more oversight now, especially since the Department of Justice updated its fee guidelines to make bankruptcy fees more transparent. "I’ll call up the professional and say, ‘Tell me why you made this choice,’" says Prof. Nancy Rapoport of the University of Nevada, Las Vegas, who has been a fee examiner. "Sometimes it’s a great choice. Sometimes we talk about a reduction in fees." Oversight, she says, is essential. "If reasonable fees aren’t being charged, then something is wrong with the system," she says. Click here to read the full article.

In related news, ABI held a webinar on Tuesday about the new U.S. Trustee Fee Guidelines, which will affect all attorneys and firms who work on larger chapter 11 cases filed on or after Nov. 1. Presented by ABI’s Ethics & Professional Compensation Committee, a panel of experts, including Clifford J. White, the director of the U.S. Trustee Program, discussed some of the ways that 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. Click here to download a recording of the webinar.

CREDIT CARD DEBT IS FALLING, BUT STILL VERY HIGH

Consumer credit card debt in the U.S. has been edging down in recent years after peaking in July 2008 at $1 trillion (about the size of Mexico's annual GDP), IB Times reported yesterday. According to data from the Federal Reserve, as of July 2013 the average indebted household in the U.S. carries average credit card debt of $15,325, although that figure is somewhat skewed by a small number of extraordinarily debt-stricken families and couples. But that average credit card balance pales in comparison with average mortgage debt ($147,924) and average student loan debt ($32,041). On the whole, American consumers currently owe an aggregate of $856.5 billion in credit card debt. This figure has been falling since the height of the global financial crisis — not just because some debtors are paying off their balances, but also due to rising defaults as credit card companies and banks simply wrote off seriously delinquent debts, a phenomenon that coincided with soaring unemployment and personal bankruptcies. Thus, credit card balances are falling for both good and bad reasons. "Overall, consumers have been much more cautious about spending on credit since the recession; they discovered what overleveraging can do when the economy is struggling," said Leslie Levesque, U.S. economist at IHS Global Insight. Click here to read the full article.

BILL ON BANKRUPTCY VIDEO: AFSCME SAYS BANKRUPTCY LAW UNCONSTITUTIONAL

The AFSCME labor union is opposing the Detroit bankruptcy by contending that the entire municipal bankruptcy scheme violates the U.S. Constitution, as Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss in their new video. Again this week, Rochelle and Pacchia cover the American Airlines bankruptcy, this time focusing on whether parent AMR Corp. can persuade the bankruptcy judge to approve the reorganization plan before there's resolution to the government's antitrust suit. Rochelle also mentions the newest statistics showing no increase in business for bankruptcy professionals. The video ends with discussion of an important new decision from the U.S. Eleventh Circuit Court of Appeals in Atlanta adopting a new theory for taking assets outside of a bankrupt estate. Click here to watch the video.

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

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

ABI IN-DEPTH

ABI’S VOLO PROJECT POSTS 1,000TH CIRCUIT COURT OPINION: PATRIOT COAL CORP. V. PEABODY HOLDING CO. (IN RE PATRIOT COAL CORP.; 8TH CIR.)

ABI now hosts more than 1,000 circuit court opinion summaries on its circuit court first-responder site, volo.abi.org. Appellate opinions are summarized within 24 hours of being issued and are then posted by a team of editors, led by Scott F. Gautier (Peitzman Weg LLP; Los Angeles). Opinion summaries also include links to the full text of each opinion.

Reversing the decision of the bankruptcy court, in Patriot Coal Corp. v. Peabody Holding Co. (In re Patriot Coal Corp.), Case No. 13-6031 (B.A.P. 8th Cir. Aug. 21, 2013), the Eighth Circuit Bankruptcy Appellate Panel held that Peabody Holding must continue to pay health care benefits for certain retired miners and dependents who worked for Heritage Coal Co., a Peabody subsidiary that was transferred to Patriot Coal in 2007.

Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: TAX REFORM PROPOSAL BACKS CREDIT UNIONS INTO A CORNER

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post explains how credit unions’ advocating to keep their tax-exempt status alive merely pass tax increases along to American businesses.

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

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


 
 
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More Homeowners Emerge from Underwater Status

ABI Bankruptcy Brief | March 19 2013
 
  

March 19, 2013

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

ANALYSIS: MORE HOMEOWNERS EMERGE FROM "UNDERWATER" STATUS

Rising home values have lifted more borrowers out of the hole of owing more than their properties are worth, an encouraging sign for an economy still closely tied to the health of the housing market, the Wall Street Journal reported today. The number of "underwater" homeowners in the fourth quarter of 2012 declined by 1.7 million from a year earlier, meaning 1.7 million U.S. households have regained home equity, according to data released Tuesday by CoreLogic, a research company. Overall, the company said 21.5 percent of households with a mortgage were underwater at the end of 2012, down from 25.2 percent at the end of 2011. While the trends are encouraging, some newly above-water households are just barely at breakeven and therefore are a long way off from being able to change their finances in any significant way. And the overall ranks of those underwater remain large, at about 10.4 million, down from 12.1 million at the end of 2011, according to CoreLogic. Read more. (Subscription required.)

To see a state-by-state analysis of CoreLogic's 4Q 2012 data, be sure to check out ABI's Chart of the Day site.

FANNIE MAE SEES WAY TO REPAY BILLIONS TO U.S. TREASURY

The rebounding housing market has helped return Fannie Mae to profitability and now might allow the government-controlled mortgage-finance company to repay as much as $61.5 billion in rescue funds to the U.S. Treasury, the Wall Street Journal reported. The potential payment would be the upshot of an accounting move whereby the company would reclaim certain tax benefits that were written down shortly after the company was placed under federal control in 2008. The potential move was disclosed last week in a regulatory filing in which the company said that it would delay the release of its annual report, due yesterday, as it tries to reach a resolution with its accountants and regulator over the timing of the accounting move. The debate about when Fannie should be allowed to reclaim the deferred-tax assets comes as Fannie and its smaller sibling, Freddie Mac, are likely to show large profits in the coming quarters as the housing market gradually recovers from its prolonged bust. The potential payment also has political implications as lawmakers and regulators wrangle over the fate of the firms, which were placed into a federal conservatorship amid soaring losses. The Obama administration has publicly said that the two companies eventually would be wound down and has blocked them from retaining profits, but has done little to de-emphasize their role in the mortgage market. Read more. (Subscription required.)

CFPB ISSUES PROPOSAL TO SUPERVISE STUDENT LOAN SERVICERS

The Consumer Financial Protection Bureau on Friday issued a proposal to supervise nonbank servicers of private and federal student loans that qualify as "larger participants" in the student loan servicing market, according to an analysis yesterday by Ballard Spahr LLP. The proposal represents an attempt by the CFPB to significantly expand its supervisory authority over student loan servicers. Because it already has supervisory authority over larger banks and nonbank private student lenders, the CFPB believes it should oversee student loan servicing by those entities. The CFPB's current authority to supervise nonbank private student lenders, however, does not allow it to supervise the nonbank student loan servicers that do not offer or provide private student loans. The proposal would allow the CFPB to supervise servicing of private and federal student loans by such nonbank servicers. Comments on the proposal will be due 60 days after its publication in the Federal Register. Click here to read the proposal.

OBAMA CUTS STUDENT-DEBT COLLECTOR COMMISSIONS TO AID BORROWERS

President Barack Obama's administration slashed the commissions paid to private collection companies that chase overdue student loans, reducing an incentive to squeeze borrowers, Bloomberg News reported today. Previously, the U.S. Education Department paid a commission as high as 16 percent of the entire loan amount only if collectors convinced defaulted borrowers to make stiff monthly payments. Starting this month, the fee dropped to as low as 11 percent, regardless of payment size. With $77.4 billion worth of student loans in default, the federal government turns to an army of private collectors to pursue borrowers. These companies, which receive about $1 billion annually in commissions, have sparked growing complaints that they insist on high payments, even when borrowers qualify for leniency. Under the new schedule, collectors will no longer have an incentive to avoid offering affordable payments tied to borrowers' incomes. Read more.

PLASTIC-SHY YOUNG IN U.S. SPUR MOVE TO USE NEW CREDIT DATA

Thirty-nine percent of undergraduate students between the ages of 18 and 24 owned a credit card in 2012, down from 49 percent in 2010, a Sallie Mae and Ipsos Public Affairs survey found, Bloomberg News reported today. And young adults who do have credit cards are carrying smaller balances: A median of $1,600 in 2010 compared with $2,500 in 2001 for under-35 households, according to Federal Reserve data. The trend, rooted in stricter lending rules and weaker job outlooks for young Americans since the 2008-09 recession, has implications for the strength of the economy. Fewer are building the traditional credit histories that would help them obtain financing for the purchases of homes and cars, which is critical to economic growth. Credit bureaus and the lending industry are stepping up their search for new ways to bolster credit files, and young people who do not pay credit card bills often do pay mobile phone bills. As reporting agencies gather data from telephone, rent and other payments, some scoring models incorporate this information to help assess candidates' creditworthiness. Read more.

ANALYSIS: WORKERS SAVING TOO LITTLE TO RETIRE

Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement, the Wall Street Journal reported today. New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last. Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49 percent reported having so little money saved in 2008. The survey also found that 28 percent of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study's 23-year history. Read more. (Subscription required.)

NUMBER OF CASES FILED BY SEC SLOWS

The Securities and Exchange Commission is filing significantly fewer civil fraud cases this year as its efforts to punish misconduct related to the financial crisis start to ebb, the Wall Street Journal reported yesterday. The agency is likely to fall short this fiscal year of its record-breaking number of enforcement actions in the previous two years. The expected drop in the numbers could be a headache for Mary Jo White, the former prosecutor nominated by President Barack Obama to be SEC chairman. A Senate panel is set to approve White's appointment today, the last step before the full Senate votes on it. White last week told a Senate hearing that she would strengthen the SEC's enforcement function to ensure that "all wrongdoers … will be aggressively and successfully called to account." The slowdown in enforcement actions reflects changes in the economic cycle, according to SEC officials. "We're at a point of inflection in our enforcement program," George Canellos, acting SEC enforcement head, said last month. Market meltdowns on the scale of the 2008 crisis, when companies implode and trillions of dollars are wiped off asset values, tend to expose major frauds and produce big cases, Canellos said. "We're now in a different era," he added. Read more. (Subscription required.)

NEW ABI BOOK EXPLORES THE DEPTHS OF DEEPENING INSOLVNECY

Any company executive juggling the competing demands of the troubled firm and its obligations to investors, as well as litigators practicing on either side of the insolvency aisle, will be interested in ABI’s latest publication, The Depths of Deepening Insolvency: Damage Exposure for Officers, Directors and Others. Authors Kathy Bazoian Phelps (Diamond McCarthy LLP) and Prof. Jack F. Williams (Mesirow Financial) wrote the book from both the plaintiffs' and defendants' perspectives to offer a deep analysis of the legal principle known as "deepening insolvency." The book also provides potential defenses that may be asserted to deepening insolvency allegations, as well as a state-by-state list of significant case law on this issue. To find out more about the book or to pre-order your copy, please click here. (Make sure to log in using your ABI member credentials to obtain the ABI member discount.)

DON'T MISS ACB'S FREE EVENT, "THE AUTO BANKRUPTCIES: CHECKING THE REARVIEW MIRROR," ON MARCH 22!

ABI members are encouraged to register for the American College of Bankruptcy's "The Auto Bankruptcies: Checking the Rearview Mirror" on March 22 at Boston College Law School in Newton, Mass. The afternoon event will feature key players looking back at the events that led to GM and Chrysler being placed into bankruptcy and the lessons that have been learned from the cases. Panelists include:

Corinne Ball of Jones Day (New York), who served as lead bankruptcy counsel to Chrysler.

Matthew A. Feldman of Willkie Farr and Gallagher LLP (New York), who served as chief legal advisor to the Obama administration's Task Force on the Auto Industry.

• Hon. Arthur J. Gonzalez, a Senior Fellow at New York University School of Law and formerly the Chief Bankruptcy Judge for the U.S. Bankruptcy Court for the Southern District of New York, who presided over the Chrysler chapter 11 proceedings.

Harvey R. Miller of Weil, Gotshal & Manges LLP (New York), who served as lead bankruptcy counsel to GM.

The moderator will be Mark N. Berman of Nixon Peabody LLP (New York).

Registration for the afternoon event is free, so be sure to sign up today before it reaches capacity!

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 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 in the regular ABI 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 randomly be 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, and 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: GORDON V. PAPPALARDO (IN RE GORDON; 1ST CIR.)

Summarized by Jennifer L. Saffer of J.L. Saffer, P.C.

In this appeal by a debtor in her chapter 13 case, the Bankruptcy Appellate Panel (BAP) for the First Circuit affirmed, after de novo review, the bankruptcy court’s order sustaining the chapter 13 trustee’s objection to the debtor's claimed exemption in a scheduled remainder interest in real estate. Affirming the decision of the bankruptcy court, the BAP determined that the property claimed as exempt was not "owned" by the debtor as required by and within the meaning of Mass. Gen. Laws ch. 188, § 3(a); the debtor had elected Massachusetts exemption rules rather than the federal, as was her option under 11 U.S.C. § 522(b).

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: CONGRESS, NOT FHFA, SHOULD BE REFORMING THE GSEs

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post found that while there is an emerging bipartisan consensus on the way forward for the secondary mortgage market, Congress has punted on what should be done with Fannie Mae and Freddie Mac, and the (Federal Housing Finance Agency) FHFA is taking significant steps without hearings or public discussion.

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.

  

 

FRIDAY:

 

 

BBW 2013
March 22, 2013
Register Today!

 

 

 

 

 

COMING UP

 

 

 

BBW 2013
April 5, 2013
Register Today!

 

 

 

 

 

BBW 2013
April 10, 2013
Register Today!

 

 

 

 

ASM NAB 2013
April 18, 2013
Register Today!

 

 

 

 

 

ASM 2013
April 18-21, 2013
Register Today!

 

 

 

 

 

NYCBC 2013
May 15, 2013
Register Today!

 

 

 

 

 

ASM 2013
May 16, 2013
Register Today!

 

 

 

 

ASM 2013
May 21-24, 2013
Register Today!

 

 

 

 

ASM 2013
June 7, 2013
Register Today!

 

 

 

 

 

ASM 2013
June 13-16, 2013
Register Today!

 

 

 

 

 

NE 2013
July 11-14, 2013
Register Today!

 

 

 

 

 

ASM 2013
July 18-21, 2013
Register Today!


 
   
  CALENDAR OF EVENTS
 

2013

March
- Bankruptcy Battleground West
     March 22, 2013 | Los Angeles, Calif.
- ACB's Free Event, "The Auto Bankruptcies: Checking the Rearview Mirror" Program
     March 22, 2013 | Newton, Mass.

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.


 
 
ABI BookstoreABI Endowment Fund ABI Endowment Fund
 

More Homeowners Emerge from Underwater Status

ABI Bankruptcy Brief | March 19 2013
 
  

March 19, 2013

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

ANALYSIS: MORE HOMEOWNERS EMERGE FROM "UNDERWATER" STATUS

Rising home values have lifted more borrowers out of the hole of owing more than their properties are worth, an encouraging sign for an economy still closely tied to the health of the housing market, the Wall Street Journal reported today. The number of "underwater" homeowners in the fourth quarter of 2012 declined by 1.7 million from a year earlier, meaning 1.7 million U.S. households have regained home equity, according to data released Tuesday by CoreLogic, a research company. Overall, the company said 21.5 percent of households with a mortgage were underwater at the end of 2012, down from 25.2 percent at the end of 2011. While the trends are encouraging, some newly above-water households are just barely at breakeven and therefore are a long way off from being able to change their finances in any significant way. And the overall ranks of those underwater remain large, at about 10.4 million, down from 12.1 million at the end of 2011, according to CoreLogic. Read more. (Subscription required.)

To see a state-by-state analysis of CoreLogic's 4Q 2012 data, be sure to check out ABI's Chart of the Day site.

FANNIE MAE SEES WAY TO REPAY BILLIONS TO U.S. TREASURY

The rebounding housing market has helped return Fannie Mae to profitability and now might allow the government-controlled mortgage-finance company to repay as much as $61.5 billion in rescue funds to the U.S. Treasury, the Wall Street Journal reported. The potential payment would be the upshot of an accounting move whereby the company would reclaim certain tax benefits that were written down shortly after the company was placed under federal control in 2008. The potential move was disclosed last week in a regulatory filing in which the company said that it would delay the release of its annual report, due yesterday, as it tries to reach a resolution with its accountants and regulator over the timing of the accounting move. The debate about when Fannie should be allowed to reclaim the deferred-tax assets comes as Fannie and its smaller sibling, Freddie Mac, are likely to show large profits in the coming quarters as the housing market gradually recovers from its prolonged bust. The potential payment also has political implications as lawmakers and regulators wrangle over the fate of the firms, which were placed into a federal conservatorship amid soaring losses. The Obama administration has publicly said that the two companies eventually would be wound down and has blocked them from retaining profits, but has done little to de-emphasize their role in the mortgage market. Read more. (Subscription required.)

CFPB ISSUES PROPOSAL TO SUPERVISE STUDENT LOAN SERVICERS

The Consumer Financial Protection Bureau on Friday issued a proposal to supervise nonbank servicers of private and federal student loans that qualify as "larger participants" in the student loan servicing market, according to an analysis yesterday by Ballard Spahr LLP. The proposal represents an attempt by the CFPB to significantly expand its supervisory authority over student loan servicers. Because it already has supervisory authority over larger banks and nonbank private student lenders, the CFPB believes it should oversee student loan servicing by those entities. The CFPB's current authority to supervise nonbank private student lenders, however, does not allow it to supervise the nonbank student loan servicers that do not offer or provide private student loans. The proposal would allow the CFPB to supervise servicing of private and federal student loans by such nonbank servicers. Comments on the proposal will be due 60 days after its publication in the Federal Register. Click here to read the proposal.

OBAMA CUTS STUDENT-DEBT COLLECTOR COMMISSIONS TO AID BORROWERS

President Barack Obama's administration slashed the commissions paid to private collection companies that chase overdue student loans, reducing an incentive to squeeze borrowers, Bloomberg News reported today. Previously, the U.S. Education Department paid a commission as high as 16 percent of the entire loan amount only if collectors convinced defaulted borrowers to make stiff monthly payments. Starting this month, the fee dropped to as low as 11 percent, regardless of payment size. With $77.4 billion worth of student loans in default, the federal government turns to an army of private collectors to pursue borrowers. These companies, which receive about $1 billion annually in commissions, have sparked growing complaints that they insist on high payments, even when borrowers qualify for leniency. Under the new schedule, collectors will no longer have an incentive to avoid offering affordable payments tied to borrowers' incomes. Read more.

PLASTIC-SHY YOUNG IN U.S. SPUR MOVE TO USE NEW CREDIT DATA

Thirty-nine percent of undergraduate students between the ages of 18 and 24 owned a credit card in 2012, down from 49 percent in 2010, a Sallie Mae and Ipsos Public Affairs survey found, Bloomberg News reported today. And young adults who do have credit cards are carrying smaller balances: A median of $1,600 in 2010 compared with $2,500 in 2001 for under-35 households, according to Federal Reserve data. The trend, rooted in stricter lending rules and weaker job outlooks for young Americans since the 2008-09 recession, has implications for the strength of the economy. Fewer are building the traditional credit histories that would help them obtain financing for the purchases of homes and cars, which is critical to economic growth. Credit bureaus and the lending industry are stepping up their search for new ways to bolster credit files, and young people who do not pay credit card bills often do pay mobile phone bills. As reporting agencies gather data from telephone, rent and other payments, some scoring models incorporate this information to help assess candidates' creditworthiness. Read more.

ANALYSIS: WORKERS SAVING TOO LITTLE TO RETIRE

Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement, the Wall Street Journal reported today. New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last. Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49 percent reported having so little money saved in 2008. The survey also found that 28 percent of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study's 23-year history. Read more. (Subscription required.)

NUMBER OF CASES FILED BY SEC SLOWS

The Securities and Exchange Commission is filing significantly fewer civil fraud cases this year as its efforts to punish misconduct related to the financial crisis start to ebb, the Wall Street Journal reported yesterday. The agency is likely to fall short this fiscal year of its record-breaking number of enforcement actions in the previous two years. The expected drop in the numbers could be a headache for Mary Jo White, the former prosecutor nominated by President Barack Obama to be SEC chairman. A Senate panel is set to approve White's appointment today, the last step before the full Senate votes on it. White last week told a Senate hearing that she would strengthen the SEC's enforcement function to ensure that "all wrongdoers … will be aggressively and successfully called to account." The slowdown in enforcement actions reflects changes in the economic cycle, according to SEC officials. "We're at a point of inflection in our enforcement program," George Canellos, acting SEC enforcement head, said last month. Market meltdowns on the scale of the 2008 crisis, when companies implode and trillions of dollars are wiped off asset values, tend to expose major frauds and produce big cases, Canellos said. "We're now in a different era," he added. Read more. (Subscription required.)

NEW ABI BOOK EXPLORES THE DEPTHS OF DEEPENING INSOLVNECY

Any company executive juggling the competing demands of the troubled firm and its obligations to investors, as well as litigators practicing on either side of the insolvency aisle, will be interested in ABI’s latest publication, The Depths of Deepening Insolvency: Damage Exposure for Officers, Directors and Others. Authors Kathy Bazoian Phelps (Diamond McCarthy LLP) and Prof. Jack F. Williams (Mesirow Financial) wrote the book from both the plaintiffs' and defendants' perspectives to offer a deep analysis of the legal principle known as "deepening insolvency." The book also provides potential defenses that may be asserted to deepening insolvency allegations, as well as a state-by-state list of significant case law on this issue. To find out more about the book or to pre-order your copy, please click here. (Make sure to log in using your ABI member credentials to obtain the ABI member discount.)

DON'T MISS ACB'S FREE EVENT, "THE AUTO BANKRUPTCIES: CHECKING THE REARVIEW MIRROR," ON MARCH 22!

ABI members are encouraged to register for the American College of Bankruptcy's "The Auto Bankruptcies: Checking the Rearview Mirror" on March 22 at Boston College Law School in Newton, Mass. The afternoon event will feature key players looking back at the events that led to GM and Chrysler being placed into bankruptcy and the lessons that have been learned from the cases. Panelists include:

Corinne Ball of Jones Day (New York), who served as lead bankruptcy counsel to Chrysler.

Matthew A. Feldman of Willkie Farr and Gallagher LLP (New York), who served as chief legal advisor to the Obama administration's Task Force on the Auto Industry.

• Hon. Arthur J. Gonzalez, a Senior Fellow at New York University School of Law and formerly the Chief Bankruptcy Judge for the U.S. Bankruptcy Court for the Southern District of New York, who presided over the Chrysler chapter 11 proceedings.

Harvey R. Miller of Weil, Gotshal & Manges LLP (New York), who served as lead bankruptcy counsel to GM.

The moderator will be Mark N. Berman of Nixon Peabody LLP (New York).

Registration for the afternoon event is free, so be sure to sign up today before it reaches capacity!

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 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 in the regular ABI 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 randomly be 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, and 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: GORDON V. PAPPALARDO (IN RE GORDON; 1ST CIR.)

Summarized by Jennifer L. Saffer of J.L. Saffer, P.C.

In this appeal by a debtor in her chapter 13 case, the Bankruptcy Appellate Panel (BAP) for the First Circuit affirmed, after de novo review, the bankruptcy court’s order sustaining the chapter 13 trustee’s objection to the debtor's claimed exemption in a scheduled remainder interest in real estate. Affirming the decision of the bankruptcy court, the BAP determined that the property claimed as exempt was not "owned" by the debtor as required by and within the meaning of Mass. Gen. Laws ch. 188, § 3(a); the debtor had elected Massachusetts exemption rules rather than the federal, as was her option under 11 U.S.C. § 522(b).

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: CONGRESS, NOT FHFA, SHOULD BE REFORMING THE GSEs

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post found that while there is an emerging bipartisan consensus on the way forward for the secondary mortgage market, Congress has punted on what should be done with Fannie Mae and Freddie Mac, and the (Federal Housing Finance Agency) FHFA is taking significant steps without hearings or public discussion.

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.

  

 

FRIDAY:

 

 

BBW 2013
March 22, 2013
Register Today!

 

 

 

 

 

COMING UP

 

 

 

BBW 2013
April 5, 2013
Register Today!

 

 

 

 

 

BBW 2013
April 10, 2013
Register Today!

 

 

 

 

ASM NAB 2013
April 18, 2013
Register Today!

 

 

 

 

 

ASM 2013
April 18-21, 2013
Register Today!

 

 

 

 

 

NYCBC 2013
May 15, 2013
Register Today!

 

 

 

 

 

ASM 2013
May 16, 2013
Register Today!

 

 

 

 

ASM 2013
May 21-24, 2013
Register Today!

 

 

 

 

ASM 2013
June 7, 2013
Register Today!

 

 

 

 

 

ASM 2013
June 13-16, 2013
Register Today!

 

 

 

 

 

NE 2013
July 11-14, 2013
Register Today!

 

 

 

 

 

ASM 2013
July 18-21, 2013
Register Today!


 
   
  CALENDAR OF EVENTS
 

2013

March
- Bankruptcy Battleground West
     March 22, 2013 | Los Angeles, Calif.
- ACB's Free Event, "The Auto Bankruptcies: Checking the Rearview Mirror" Program
     March 22, 2013 | Newton, Mass.

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.


 
 
ABI BookstoreABI Endowment Fund ABI Endowment Fund
 

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