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Big U.S. Banks Get Three-Month Extension for Living Wills

ABI Bankruptcy Brief | April 16 2013
 
  

April 16, 2013

 
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  NEWS AND ANALYSIS   

BIG U.S. BANKS GET THREE-MONTH EXTENSION FOR "LIVING WILLS"

The Federal Reserve and Federal Deposit Insurance Corp. gave large U.S. banks an additional three months to draw up "living wills" to assist regulators in winding them down in case of a future insolvency, Bloomberg News reported yesterday. The agencies also provided new details on what information the living wills should contain, including obstacles that might arise from taking the banks apart safely under the Bankruptcy Code, according to a statement today from the regulators. The documents, originally due July 1, are now due Oct. 1. Institutions with non-bank assets greater than $250 billion had to file their plans last year. Those 11 banks, including JPMorgan Chase & Co., Bank of America Corp. and Goldman Sachs Group Inc., must now provide a second version of the living will, and a group of the next-largest banks must file for the first time. Regulators are looking for more detailed information on "global issues, financial market utility interconnections, and funding and liquidity… to provide analysis to support the strategies and assumptions contained in the firms' resolution plans," according to the statement. Read more.

COMMENTARY: PUBLIC PENSIONS IN BANKRUPTCY COURT

Devastated by the recession, the city of Stockton, Calif., is trying to renegotiate its debts in a bankruptcy case that could set an important precedent on whether courts can forcibly reduce the pensions of government employees, according to a New York Times editorial on Sunday. Even after drastic cuts to city services that have sent the crime rate soaring, the city of 300,000 people about 80 miles east of San Francisco has an annual budget deficit of $26 million. It has laid off a quarter of its police force, which has meant that officers often respond only to crimes in progress. To fix its finances, Stockton is asking the bankruptcy court to restructure debts totaling about $250 million. But the city’s creditors, which include bondholders and insurance companies that have guaranteed some of its bonds, want the city to reduce the $30 million it spends annually on pension benefits for its 2,400 retirees. The California Public Employees’ Retirement System, which manages Stockton’s pensions, argues that the state’s Constitution and court rulings forbid state and local governments from ever lowering the pensions of retirees and current employees. The creditors assert that federal bankruptcy law, which lets judges break contracts, should trump state law. So far, city officials have said they do not intend to trim pensions, though they have reduced health benefits for retirees. Many legal analysts say that the Stockton case could eventually be appealed to the Supreme Court. While a Supreme Court decision would help clarify an important area of the law, a drawn-out court case is the last thing Stockton needs, according to the editorial. The way to get the city back on its feet is for city officials, creditors and retirees to negotiate a fair settlement quickly. Read the full editorial.

AMERICAN DREAM ELUDING THOSE WITH STUDENT DEBT BURDENS

Two-thirds of student loans are held by people under the age of 40, according to the Federal Reserve Bank of New York, blocking millions of them from taking advantage of the most affordable housing market on record, Bloomberg News reported on Saturday. The number of people in that age group who own homes fell by 4.6 percent in the fourth quarter from the third, the biggest drop in records dating to 1982. The issue is being exacerbated by an explosion in the $150 billion private market for student debt, with interest rates for some existing loans surpassing 12 percent. Unlike mortgage-holders, borrowers have little hope of refinancing at lower rates. Interest on some new federal loans is set to double to 6.8 percent in July if Congress does not extend the current rate, as it did last year. Read more.

COMMENTARY: CAN DODD-FRANK FIX MORTGAGE SERVICING IF WE DO NOT KNOW WHAT WENT WRONG?

A new obstacle has arrived for those seeking justice for past wrongdoing in the mortgage-servicing industry and those looking to prevent trouble in the future: federal regulators blocking the release of records they have collected documenting illegal abuses, according to a commentary in the Washington Post on Sunday. A heated exchange broke out at a Senate hearing last week, when Sen. Elizabeth Warren (D-Mass.) asked regulators from the Office of the Comptroller of the Currency (OCC) and the Federal Reserve why they were not sharing the results of their investigations into mortgage-servicing abuses and illegal activities with Congress and the people who were subject to abuses. These investigations began two years ago, after the OCC found that there were "violations of applicable federal and state law" that had "widespread consequences" in the servicer markets at 14 large banks. This Independent Foreclosure Review (IFR) wrapped up suddenly earlier this year, and it is not clear what it found, according to the commentary, although the servicers did manage to spend $2 billion on consultants. According to the latest letter from Warren and Rep. Elijah Cummings (D-Md.), regulators at the Federal Reserve argued that their documents showing illegal behavior are "trade secrets" of mortgage-servicing companies, while the OCC argues that this violates disclosure requirements. Click here to read the full commentary.

RECORD-LOW DEFAULTS MAY NOT BE GOOD NEWS

In December 2008, investors expected a default Armageddon after global "junk" bond yields spiked to over 20 percent, but the last decade has seen the lowest default rate on record in the modern era, according to an analysis by the Wall Street Journal today. The power of central banks and governments lies behind this remarkable turnaround—but it may come with a price. The average annual Moody's default rate since 2003 for single-B rated companies, the largest part of the high-yield market, stands at just 1.6 percent, Deutsche Bank noted. That's the lowest rolling 10-year rate since the market became full-fledged in the early 1980s, and compares with an annual average of 5 percent since 1983. In fact, nine of the past 10 years have seen single-B defaults mostly at below average, with six of them defaults of 1 percent or below—a rate never achieved between 1980 and 2003. The decade falls into two halves: From 2003 to 2007, the credit bubble drove default rates down, but since early 2009, central banks and governments have re-inflated this bubble, pushing down yields and making refinancing possible on easy terms for high-yield companies—despite sharply lower growth and, indeed, a renewed recession in Europe. Read more. (Subscription required.)

LATEST ABI PODCAST EXPLORES THE DEPTHS OF DEEPENING INSOLVENCY

The latest ABI podcast features ABI Resident Scholar Prof. Scott Pryor talking with Prof. Jack Williams and Kathy Phelps, the authors of ABI's publication The Depths of Deepening Insolvency: Damage Exposure for Officers, Directors and Others. Williams and Phelps offer a historical analysis of the “deepening insolvency” principle, its significance in calculating damages in a variety of liability scenarios, and the interplay of the doctrine with the fiduciary duties of company executives. Click here to listen to the podcast.

To order a copy of The Depths of Deepening Insolvency: Damage Exposure for Officers, Directors and Others, click on the banner below:

 

ASM MOBILE WEB APP NOW AVAILABLE FOR SMARTPHONES AND TABLETS!

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

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

Haven’t registered for next week’s Annual Spring Meeting? Hurry, the hotel block at the Gaylord National Resort and Convention Center in National Harbor, Md., is almost sold out! 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 ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CONSUMER CLASS ACTIONS

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

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

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

Affirming the bankruptcy court, the Ninth Circuit Bankruptcy Appellate Panel held that the bankruptcy court did not err in dismissing the debtor's case because the debtor did not establish that he was entitled to relief from automatic dismissal for his failure to file a complete list of creditors and schedule of assets and liabilities within 45 days of the filing of his bankruptcy petition.

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: SECTION 903 - IN CHAPTER 9, DOES FEDERAL LAW TRUMP STATE LAW, OR VICE VERSA?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the fight that is brewing in San Bernardino, Calif., regarding the scope of §903 of the Bankruptcy Code. It stems from the motions filed by the San Bernardino Public Employees Association (SBPEA), the San Bernardino Police Officers Association (SBPOA) and the San Bernardino City Professional Firefighters (SBCPF) in response to the city’s motion to reject collective bargaining agreements with these unions.

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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THURSDAY:

 

 

 

ASM 2013
April 18-21, 2013
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ASM NAB 2013
April 18, 2013
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COMING UP

 

 

 

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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ABI Live Webinar Examining Consumer Class Actions!
May 29, 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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MA 2013
Aug. 8-10, 2013
Register Today!


 
   
  CALENDAR OF EVENTS
 

2013

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

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


  

 

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

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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Fed Governor Put Cap on Big Financial Firms

ABI Bankruptcy Brief | October 11, 2012
 
  

October 11, 2012

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

FED GOVERNOR: PUT CAP ON BIG FINANCIAL FIRMS

A top Federal Reserve official yesterday called on Congress to consider capping the size of the nation's financial firms, marking one of the most high-profile challenges to the way Wall Street does business, The Wall Street Journal reported yesterday. In a Philadelphia speech, Fed governor Daniel Tarullo recommended curbing banks' growth by putting a limit on their nondeposit liabilities, which are sources of funding for operations that go beyond consumer deposits. The idea takes direct aim at the biggest U.S. banks, including J.P. Morgan Chase & Co., Bank of America Corp., Goldman Sachs and Citigroup Inc., all of which rely heavily on such funding. Firms outside of this tier make much greater use of regular deposits. Tarullo, who drives much of bank policy-making at the Fed, is the highest-ranking regulatory official to call for limiting the size of banks. Even though the chance of congressional action depends in part on the outcome of November's election, the concept also fits into a growing chorus from across the political spectrum. Critics have voiced concern that the nation's largest financial institutions are too big to fail and pose too great a risk to the U.S. financial system. Tarullo's suggestion would cap banks' nondeposit liabilities—which are usually some form of debt, such as short-term borrowings—at a fixed percentage of the U.S. economy, a number he didn't specify. He also warned that the Fed should block any merger or acquisition this group of big banks attempts to make. If larger banks continue to expand, Tarullo said in Wednesday's speech, the market perception will increase that certain of them are "too big to fail," meaning that the federal government would rescue them rather than risk rocking the financial system. Click here to read the full article.

U.S. MORTGAGE FRAUD INITIATIVE DATA INCLUDED OLDER CASES

The Obama administration announced that a yearlong crackdown on mortgage fraud netted charges against 530 suspects in the year ending Sept. 30. However, the list included cases filed as many as two years before U.S. Attorney General Eric Holder said the initiative began, Bloomberg News reported today. Holder said at a news conference in Washington, D.C., on Tuesday that the initiative ran from Oct. 1, 2011 to Sept. 30, 2012, and resulted in "285 federal criminal indictments and informations against 530 defendants for allegedly victimizing more than 73,000 American homeowners—and inflicting losses in excess of $1 billion." A sampling of cases incorporated in the data Holder cited shows those numbers includes cases filed as early as 2009. Cases filed before the start of the initiative were included because some type of "law enforcement action" occurred during the yearlong period, according to William Carter, a spokesman for the Federal Bureau of Investigation. Those actions could include indictments, convictions and sentencings, he said. The "Distressed Homeowner Initiative" was spearheaded by the FBI, which began to recognize a sharp increase in fraud aimed at struggling homeowners in the years following the 2008 housing crisis. The information used to compile the results from the initiative came from an FBI survey of the agencies involved in the Mortgage Fraud Working Group. Click here to read the full article.

WHAT TO DO WITH AMERICA'S 14 MILLION VACANT HOMES?

With all the numbers hinting at a housing market recovery, it's a good time to take a look at the challenge of what to do with the millions of homes in America that nobody seems to want, The Wall Street Journal reported on Tuesday. As of the end of June, there are just over 132.7 million housing units in America, and 10.6 percent of them—more than 14 million—are vacant year-round. That number includes everything from holiday homes to places in the temporary purgatory between being rented or sold and new occupants moving in. But at one end of that spectrum are nearly 4 million homes that aren't just sitting unsold or unrented—they're not even on the market. While vacant properties are broadly decreasing in number as more are sold or rented, that final "other" number—places simply not on the market and not being used for anything—has actually increased in the last year. These vacant homes are bad news for all involved, depressing property values around them, falling into disrepair, and often attracting higher crime rates and other social problems. Places where private investors will likely do much of the heavy lifting include areas like Phoenix, where a boom-era oversupply of new homes is gradually being bought up at low prices and turned into rental units. But other towns prone to longer-term decline will need to simply tear buildings down. And for that, land banks—government or nonprofit entities that own, manage and dispose of vacant land—have a role to play. Click here to read the full article.

JOBLESS CLAIMS IN U.S. FALL TO FOUR-YEAR LOW

Fewer Americans than forecast filed first-time claims for unemployment benefits last week, which may reflect difficulty adjusting the data for seasonal swings at the start of a new quarter, Bloomberg News reported today. Applications for jobless benefits dropped 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008, Labor Department figures showed today. Economists had forecast 370,000 claims, according to the median estimate in a Bloomberg survey. At the same time, the cooling of the global economy and a lack of clarity on U.S. fiscal policy are acting as hurdles for faster gains in employment. The report "is consistent with a labor market that is gradually getting better," said Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Conn., who had predicted a decline in claims. "Layoffs are at a low level and don't seem to be going anywhere. Hiring is still very muted." Click here to read the full article.

U.S. GROWTH EXPECTED TO BE SLOW INTO 2013

The unemployment rate registered a dramatic 0.5 percentage-point drop over the past two months, but economists don't expect that pace of decline to continue, the Wall Street Journal reported today, citing its latest forecasting survey. "The general trend in the unemployment rate is lower, and this should continue to be true as long as the economy grows along the profile we project," said Joseph LaVorgna at Deutsche Bank. "However, the cumulative five-tenths decline over the past two months appears to be overdone." It is expected that the jobless rate will still be at 7.8 percent by June of next year, matching the September figure released last week. The reason for the stagnation in the job market is expectations for lackluster economic growth during the rest of 2012 and into 2013. Economists say they don't see the U.S. falling back into recession and for the most part believe that the economy will grow above 3 percent in 2013. But about two-thirds of the respondents say the risks remain more to the downside than upside. Click here to read the full article.

WATCH COMMISSION HEARING LIVE NEXT WEEK!

ABI's Commission to Study the Reform of Chapter 11 will hold a public hearing on Wednesday, October 17, at the LSTA Annual Conference in New York. The event will be live webcast beginning at 3:15 p.m. ET at the Commission's website (commission.abi.org).

ABI MEMBERS CAN RECEIVE A DISCOUNT ON THEIR PURCHASE OF A DEBTOR WORLD

A Debtor World, published by Oxford University Press, contains a collection of contributions about the societal implications of private debt from top scholars at the 2008 Debt Symposium sponsored by ABI and hosted by the University of Illinois College of Law. The essays comprising this volume are authored by dozens of leading U.S. and international academics who have written about debt or issues related to debt in a wide range of disciplines including law, sociology, psychology, history, economics and more. The collection explores debt as neither a problem nor a solution but as a phenomenon, and promotes the exchange of knowledge to better comprehend why consumers and businesses decide to borrow money. It explores what happens to businesses and consumers under heavy debt loads, and what legal norms and institutions societies need in order to encourage the efficient use of debt while promoting a greater understanding of the global phenomenon of increased indebtedness and societal dependence. To order your copy and receive an ABI member discount, please click here and enter promo code "31256" when making your purchase. The discount expires 12/31.

ABI IN-DEPTH

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

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

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

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

LATEST CASE SUMMARY ON VOLO: WILLIAMS V. KING (IN RE KING; BAP 8TH CIR.)

Summarized by Lars Fuller of Baker and Hostetler LLP

The Eighth Circuit BAP affirmed an order of the U.S. Bankruptcy Court for the Western District of Missouri denying a motion to reconsider an order awarding sanctions and directing a creditor to dismiss a claim pending in state court as violating the debtor's chapter 7 discharge. The bankruptcy court had first granted a motion for sanctions against the appellants, then denied the appellants' motion to reconsider. The appellants appealed both the order for sanctions and the order denying the motion to reconsider. The BAP indicated that the appeal of the motion for sanctions was likely untimely, but the timeliness was not necessary for disposition, given the affirmation of the bankruptcy court's order on the merits and the timely appeal of the denial of the motion to reconsider.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: LETTING YOUR CREDITORS SUE YOU

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post raises the notion of debtors allowing creditors to sue them, rather than the debtors filing for bankruptcy, as a way to deal with debt.

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 adopt formal loss mitigation procedures to facilitate the negotiation of residential mortgage modifications for consumer debtors.

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

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

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

INSOL INTERNATIONAL

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

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NEXT EVENT

 

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

 

SE 2012
Oct. 16, 2012
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SE 2012
Oct. 18, 2012
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ABI/ST. JOHN'S "BANKRUPTCY AND RACE: IS THERE A RELATION?" SYMPOSIUM
Oct. 19, 2012
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ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING
Oct. 26, 2012
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MEXICO 2012
Nov. 7, 2012
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4TH ANNUAL PROFESSIONAL DEVELOPMENT PROGRAM
Nov. 9, 2012
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SE 2012
Nov. 12, 2012
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SE 2012
Nov. 29 - Dec. 1, 2012
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MT 2012
Dec. 4-8, 2012
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ACBPIKC 2013
Jan. 24-25, 2013
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ACBPIKC 2013
Feb. 17-19, 2013
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  CALENDAR OF EVENTS
 

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

November
- U.S./Mexico Restructuring Symposium
     November 7, 2012 | Mexico City, Mexico
- Professional Development Program
     November 9, 2012 | New York, N.Y.

  

 

- Detroit Consumer Bankruptcy Conference
     November 12, 2012 | Detroit, Mich.
- Winter Leadership Conference
     November 29 - December 1, 2012 | Tucson, Ariz.

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

2013

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

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


 
 
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Analysis Foreclosure Wave Averted as Doomsayers Defied

ABI Bankruptcy Brief | November 27 2012
 
  

November 29, 2012

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

ANALYSIS: FORECLOSURE WAVE AVERTED AS DOOMSAYERS DEFIED

The U.S. has not seen the surge of delinquent homes predicted by market researchers, academics and Wall Street analysts following the settlement of the government's investigation into faulty mortgage practices, Bloomberg News reported today. The flood failed to materialize, even after the five biggest U.S. mortgage servicers reached a $25 billion settlement with federal and state regulators in February. Instead, the number of properties for sale shrank to the fewest in a decade, prices appreciated at the fastest pace since 2005, and the gradual healing of the housing market helped boost consumer confidence and the economy. Banks have stepped up foreclosure alternatives to avoid legal challenges. They are forgiving debt, modifying payment plans and approving short sales that allow homeowners to sell for less than they owe. Read more.

U.S. MORTGAGE-BACKER ROLE GROWS AS FISCAL TALKS DELAY FIX

The federal government's role as the backer of most U.S. home loans is becoming entrenched as fiscal issues divert Congress and the White House from a housing-finance overhaul that would shift more risk to private capital, Bloomberg News reported today. At the core of such an overhaul is the future of Washington, D.C.-based Fannie Mae and McLean, Va.-based Freddie Mac, the government-sponsored enterprises (GSEs) that provide market liquidity by buying home loans and bundling them into securities. As they neared collapse in 2008, the companies were placed into federal conservatorship. "It is vital to the long-term health of our country’s housing and financial markets that our elected leaders seek to bring the conservatorships to a conclusion, and to define the government's role and requirements for housing finance in the future," said Federal Housing Finance Agency acting director Edward J. DeMarco. Housing-finance reform is only “number two or three” on the agenda for Congress, Jim Millstein, the former U.S. Treasury Department chief restructuring officer who now runs advisory firm Millstein & Co., said. "The reality is that a now-four-year-long conservatorship is no longer even threatening to become a nationalization of the mortgage market," said Millstein. "It is becoming the nationalization of the mortgage market." Read more.

DODD-FRANK SWAP-CLEARING RULE GETS CFTC FINAL APPROVAL

Wall Street's largest swap dealers, including Goldman Sachs Group Inc. and JPMorgan Chase & Co., will be required to guarantee trades at clearinghouses starting in March under a rule made final by the top U.S. derivatives regulator, Bloomberg News reported today. The five-member Commodity Futures Trading Commission voted unanimously in a private process yesterday to complete the final determinations, the agency said. The rule, which had been scheduled for a public vote, determines which credit and interest-rate swaps must be guaranteed at clearinghouses owned by LCH.Clearnet Group Ltd., CME Group Inc. and Intercontinental Exchange Inc. "Central clearing lowers the risk of the highly interconnected financial system," CFTC Chairman Gary Gensler said. "It also democratizes the market by eliminating the need for market participants to individually determine counterparty credit risk, as now clearinghouses stand between buyers and sellers." Read more.

FINAL VOLCKER RULE TO BE DELAYED UNTIL 2013

Due to the complexity of the Volcker rule, the challenges of agency coordination and the volume of feedback regulators received, government officials are now pointing to the first quarter of 2013 as a more likely deadline over the year-end goal shared previously by participants like Martin Gruenberg, acting chairman of the Federal Deposit Insurance Corp., CNBC.com reported yesterday. "Our goal is to achieve a strong and consistent rule, although the process is not as easy or simple as any of us would like," said Treasury Undersecretary Mary Miller. Miller noted that regulators had received more than 18,000 comment letters on the proposed rule, but they were making "steady progress" toward its implementation. The rule, part of the Dodd-Frank Act, aims to restrict banks from making certain speculative investments for their own gain — also known as proprietary trading. Such practices came under harsh scrutiny during the financial crisis when banks made big bets based on the direction of the economy, while advising clients otherwise. Read more.

EXPERTS SAY BANKRUPTCY AN UNATTRACTIVE OPTION FOR DETROIT

While Detroit appears to be headed toward chapter 9 bankruptcy as political and legal battles continue to stall fiscal reforms required by the state for the release of millions in critical bond funding, financial and legal experts warn that the city should avoid bankruptcy, the Detroit News reported today. Experts say that Detroit, which would be the biggest city ever to file for bankruptcy protection in American history, should steel itself for a long, costly process involving a litany of unknowns if the state allows it to proceed with a chapter 9 filing. "The way the laws are now, it's a really messy option," said Kenneth Whipple, a retired businessman and member of the city's Financial Advisory Board created by Gov. Rick Snyder to help monitor Detroit's finances. "There aren't any cities as big as Detroit in as complicated a legal structure that have gone that way." The city and state have been at an impasse over the specific reforms Detroit must meet as part of a "milestone agreement" to claim $30 million in state bond funding that is currently being held in escrow. Detroit needs the funds to get through yet another short-term cash crunch, but the Snyder administration seems unwilling to budge. Read more.

LIVE WEBCASTS AVAILABLE TOMORROW FROM ABI'S WINTER LEADERSHIP CONFERENCE!

Not able to attend ABI’s Winter Leadership Conference starting today in Tucson, Ariz.? You will not want to miss two events tomorrow available via live webstream: ABI’s Chapter 11 Commission and a concert by ABI’s Indubitable Equivalents dedicated to Steven Golick.

• At 1:15 p.m. ET (11:15 a.m. MT), ABI's Commission to Study the Reform of Chapter 11 will hold its final public hearing of 2012. Members are encouraged to watch the hearing via a live webstream available at http://commission.abi.org. All materials are part of the Commission's record to be transmitted to Congress following the two-year investigation and report.

• At 11:30 p.m. ET (9:30 pm MT), ABI’s Indubitable Equivalents will perform a concert dedicated to ABI member, leader and band mate, Steven Golick, who has recently undergone successful surgery to remove a brain tumor. Steve will be watching from his home in Toronto. Watch the concert live at www.abiband.com.

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

The Judiciary Committee of the Richmond (Va.) Bar Association invites ABI members to submit nominations to fill a judicial vacancy in the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond. The court is looking to fill the vacancy left by the retirement of Bankruptcy Judge Douglas O. Tice, Jr. Suggestions must be in writing and should be mailed to Virginia H. Grigg, Esq., c/o Richmond Bar Association, P.O. Box 1213, Richmond, Virginia 23218 or hand-delivered to her at the Bar office located at 707 E. Main Street, Suite 1620, Richmond, VA 23219. Nominations must be received by 4:00 p.m. ET on Thursday, December 13, 2012 in order to be considered.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: KEYSER V. WASATCH TOWERS CONDOMINIUM OWNERS ASSOCIATION INC. (IN RE KEYSER; 10TH CIR.)

Summarized by Brendan Gage of St. John's University School of Law

Affirming the Bankruptcy Appellate Panel, the Tenth Circuit dismissed an appeal by debtor Steven Keyser for lack of jurisdiction because his notice of appeal was untimely under Fed. R. Bankr. P. 8002(a).

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: COURT DECISION SPELLS WIN FOR VITRO BONDHOLDERS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines a U.S. appellate court decision yesterday that upheld a bankruptcy court decision to reject Mexican glassmaker's Vitro SAB’s controversial bankruptcy plan. The decision represented a win for bondholders that have been sparring with the company for years over its debt restructuring plan.

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.

LATEST BLOOMBERG LAW VIDEO: BILL ON BANKRUPTCY- PATRIOT COAL CASE KICKED FROM MANHATTAN TO ST. LOUIS

The decision sending the Patriot Coal Corp. reorganization to St. Louis will focus debate on the near impossibility of convincing a judge in New York or Delaware to send a bankruptcy somewhere else, as Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss on their new video. Click here to watch.

ABI Quick Poll

Despite the "free and clear" language of Sect. 363(f), purchasers of assets in 363 sales may still be liable for injuries to unidentifiable future claimants. (In re Grumman Olson Indus, S.D.N.Y.).

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

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:

LIVE WEBCASTS AVAILABLE TOMORROW FROM ABI'S WINTER LEADERSHIP CONFERENCE:

• ABI's Commission to Study the Reform of Chapter 11 public hearing at 1:15 p.m. ET (11:15 a.m. MT).
Click here to access.

• ABI’s Indubitable Equivalents concert dedicated to ABI member, leader and band mate, Steven Golick at 11:30 p.m. ET (9:30 pm MT).
Click here to access.

 

COMING UP:

 

 

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

 

 

WCBC 2013
Jan. 21, 2013
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ACBPIKC 2013
Jan. 24-25, 2013
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ACBPIKC 2013
Feb. 7-9, 2013
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ACBPIKC 2013
Feb. 17-19, 2013
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ACBPIKC 2013
Feb. 20-22, 2013
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BBW 2013
March 22, 2013
Register Today!

 
   
  CALENDAR OF EVENTS
 

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

2013

January
- Western Consumer Bankruptcy Conference
     January 21, 2013 | Las Vegas, Nev.
- Rocky Mountain Bankruptcy Conference
     January 24-25, 2013 | Denver, Colo.

February
- Caribbean Insolvency Symposium
     February 7-9, 2013 | Miami, Fla.


  


- Kansas City Advanced Consumer Bankruptcy Practice Institute
     February 17-19, 2013 | Kansas City, Mo.
- VALCON 2013
     February 20-22, 2013 | Las Vegas, Nev.

March
- Bankruptcy Battleground West
     March 22, 2012 | Los Angeles, Calif.


 
 
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Analysis Corporate Pension Gap Is Soaring

ABI Bankruptcy Brief | February 26 2013
 
  

February 26, 2013

 
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  NEWS AND ANALYSIS   

ANALYSIS: CORPORATE PENSION GAP IS SOARING

Big companies have disclosed widening pension gaps this earnings season, extending the deficit to a near record between what companies expect to owe retirees and what they have on hand to pay them, the Wall Street Journal reported today. During the current earnings season, companies including UPS, Boeing Co., Ford Motor Co. and Goodyear Tire & Rubber Co. have disclosed growing pension-fund deficits, even though they have plowed billions of dollars into their plans and strong stock markets have boosted their investment returns. Across America's business landscape, the gap between the amount that companies expect to owe retirees and what they have on hand to pay them was an estimated $347 billion at the end of 2012. That is better than the $386 billion gap recorded at the end of 2011, but the two years represent the worst deficits ever, according to J.P. Morgan Asset Management. The firm estimates that companies now hold only $81 of every $100 promised to pensioners. Read more. (Subscription required.)

For further analysis of the pension gap currently facing companies, as well as an in-depth look at liability issues in bankruptcies, be sure to register for the ABI Live Webinar on April 5 examining the issues tied to legacy liabilities.

COMMENTARY: LIQUIDATION AUTHORITY AND THE BANKRUPTCY CLAUSE

The litigation against the Dodd-Frank Act's orderly liquidation authority continues, with an amended complaint filed last week, adding a few more states to the mix, and the deadlines with regard to the government’s motion to dismiss reset accordingly, according to a commentary yesterday by Prof. Stephen Lubben in the New York Times DealBook blog. The revised complaint continues to assert that the authority "constitutes an exercise of Congress's power under the Bankruptcy Clause." The Bankruptcy Code, according to Lubben, is all about providing the debtor with options. Today, an individual debtor can file under as many as four distinct chapters. During the New Deal era, the bankruptcy laws included Section 77 for railroads, Chapters X and XI for other corporations, and liquidation, reorganization and composition proceedings for individuals. At the time, Congress created the FDIC and vested it with authority over bank insolvencies – probably under the Bankruptcy Clause, whether or not the banking lawyers know it. In chapter 11 alone, the debtor is given broad flexibility to shape a plan that fits the debtor's particular needs. There is no requirement that all debtors follow any specific path. The orderly liquidation authority litigation proceeds from the faulty notion that chapter 11 provides a one-size-fits-all solution, whereas it is clear that one reason chapter 11 and its predecessors have been so successful rests in the flexible nature of the proceedings. Read more.

SURVEY: AMERICANS ANXIOUS ABOUT RETIREMENT

Even as the economy slowly improves, the vast majority of Americans remain deeply worried about their ability to achieve a secure retirement, according to a new survey, the Washington Post reported today. The poll, released today by the National Institute on Retirement Security (NIRS), found that 55 percent of Americans are "very concerned" that the current economic conditions are harming their retirement prospects. An additional 30 percent reported being "somewhat concerned" about their ability to retire. As aging Americans are increasingly burdened by debt, spiraling health care costs and diminishing pension coverage, an increasing number of researchers argue that a long era of improved living standards for the elderly is now in jeopardy. The Senate's Health, Education, Labor and Pension Committee says that the nation faces a $6.6 trillion retirement-savings deficit. Meanwhile, a retirement security index developed by Boston College’s Center on Retirement Research, as well as economists at the New School, have found that a majority of Americans are at risk of being financially worse off than their parents in retirement. Read more.

TREASURY TO SELL $158 MILLION TARP STAKE IN NINE BANKS

The Treasury Department has begun an auction for its Troubled Asset Relief Program (TARP) stake in nine more banks, American Banker reported today. The Treasury yesterday began a Dutch auction for the shares, which it expects to close on Thursday evening to sell approximately $158 million and represents its full TARP holdings in nine banks. The single largest stake the Treasury plans to auction is its $73 million holding in Old Second Bancorp in Aurora, Ill., the parent company of the $1.9 billion-asset Old Second National Bank. The Treasury has held a number of auctions over the past year as part of its effort to wind down the TARP program, and to date, it has sold stakes in nearly 100 banks. A little more than 200 banks remain in the program, and its plan is to sell its stakes in roughly two-thirds of them. Read more.

In related news, the House Oversight and Government Reform Committee held a hearing today titled "Bailout Rewards: The Treasury Department's Continued Approval of Excessive Pay for Executives at Taxpayer-Funded Companies." For more information and to read the prepared witness testimony from Christy Romero, the Special Inspector General for TARP, and Patricia Geoghegan, the Acting Special Master for TARP Executive Compensation, please click here.

ANALYSIS: DETROIT'S RACE FOR MAYOR OFFERS UNCERTAIN PRIZE

As Michigan Governor Rick Snyder (R) moves closer to taking control of the state's largest city, contestants are lining up to fight for what could turn into a largely powerless job: mayor of Detroit, according to a Wall Street Journal analysis yesterday. Mike Duggan, a former prosecutor who later led a turnaround at one of Detroit's largest hospitals, is expected to announce his candidacy today. Duggan will likely face Wayne County Sheriff Benny Napoleon, a lifelong Detroiter who worked in the city's police department for years before becoming chief in 1998, a post he held for three years. In 2009, he was elected sheriff for Wayne County, which includes Detroit. Napoleon, a Democrat, said in an interview that while his administration would address the city's economic crisis, blight and struggling public schools, "none of it means very much if we can't get a handle on the violence." A poll Duggan's campaign commissioned showed Napoleon to have the greatest name recognition among the challengers, and Napoleon and Duggan to be the leading potential candidates, well ahead of the current mayor, Dave Bing. Bing, for his part, said last week that he has not decided whether to seek re-election. The potential candidates are vying for a post that may have no real power if Republican Gov. Rick Snyder puts an emergency manager in charge of Detroit's government in an effort to avert what could be the biggest municipal bankruptcy in U.S. history. Read more. (Subscription required.)

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: CLINTON GROWERS V. PILGRIM'S PRIDE CORP. (IN RE PILGRIM'S PRIDE CORP.; 5TH CIR.)

Summarized by John Jones of JRJONESLAW PLLC

The Fifth Circuit affirmed the bankruptcy court's grant of summary judgment for Pilgrim's Pride Corporation (PPC) on the ground that written contracts between PPC and Clinton Growers had barred the alleged oral promises of a contract for the long haul and the promissory estoppel claim under the "contract bar" doctrine. The Fifth Circuit held that promissory estoppel applies only when the elements of a contract cannot be shown to exist. Under the "contract bar" doctrine, a party alleging promissory estoppel can succeed only by showing that the written contract does not cover the subject matter underlying the promissory estoppel claim.

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: SAN BERNARDINO AND CALPERS CONTINUE BATTLE OVER CITY'S DEBTOR ELIGIBILITY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. While the city of San Bernardino, Calif., filed its chapter 9 petition on August 1, 2012, the city and the California Public Employees’ Retirement System (CalPERS) continue to be at odds, according to a recent blog post. Prior to a status conference scheduled for February 12, CalPERS filed a report contending that the city's condition had "deteriorated" since the December status conference held at the bankruptcy court. CalPERS argued that there has been a "mass exodus" of key personnel that "were critical to the city's restructuring efforts and instrumental in developing and maintaining the city's relationship with CalPERS and other key creditor constituencies." In addition, CalPERS accused the city of not being "transparent" in its dealings with creditors.

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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Join our networks to expand yours.

  

 

NEXT WEEK:

 

 

 

Paskay 2013
March 7-9, 2013
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COMING UP

 

 

 

 

BBW 2013
March 22, 2013
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NEW WEBINAR!

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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Critics Question Why Big Banks Execs Do Not Face Money Laundering Charges

ABI Bankruptcy Brief | December 20 2012
 
  

December 20, 2012

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

CRITICS QUESTION WHY BIG BANKS, EXECS DO NOT FACE MONEY LAUNDERING CHARGES

A few former federal prosecutors are critical of the Justice Department's record $1.9 billion settlement against British bank HSBC last week, saying that it was only the latest case of the government stopping short of bringing criminal money laundering charges against a big bank or its executives, the Associated Press reported yesterday. While some prosecutors heralded the settlement as a powerful blow to a dysfunctional institution accused of laundering money for Iran, Libya and Mexico’s murderous drug cartels, others called the action “too big to jail.” Sen. Jeff Merkley (D-Ore.) wrote a letter to U.S. Attorney Eric Holder after the HSBC settlement, saying that the government "appears to have firmly set the precedent that no bank, bank employee, or bank executive can be prosecuted even for serious criminal actions if that bank is a large, systemically important financial institution." Read more.

COMMENTARY: LAST-DITCH ATTEMPT TO DERAIL VOLCKER RULE

In an attempt to prevent implementation of the Volcker Rule, representatives of megabanks are asserting that the Volcker Rule violates the international trade obligations of the United States and would offend other member nations of the Group of 20, according to a commentary in today's New York Times DealBook blog. The Volcker Rule is almost finished winding its way through the regulatory process, and a version should be implemented soon. But in a last-ditch attempt to block it, the U.S. Chamber of Commerce has sent a letter to the United States Trade Representative asserting that the Volcker Rule creates a discord in G20 and invites foreign governments to retaliate at a time when we need those same regulators in foreign countries to support initiatives to liberalize trade in financial services. According to the commentary, there is no violation because there is no provision in any trade agreement that says U.S. banking regulators cannot protect our financial system by engaging in prudent regulation. Read more.

FITCH: BELOW-AVERAGE U.S. HIGH YIELD DEFAULT RATE TO PERSIST INTO 2013

Fitch Ratings is projecting a U.S. high yield par default rate of 2 percent in 2013, in line with 2012 activity, Reuters reported today. However, a bankruptcy filing by Energy Future Holdings, given its large size ($16 billion), has the potential to drive up the rate an additional 1.5 percent. The leading support for another below-average default year is Fitch's expectation of modestly higher U.S. GDP growth of 2.3 percent in 2013 combined with relatively good corporate fundamentals and the Federal Reserve's commitment to loose monetary policy. While the default rate is projected to remain low in 2013, it is important to note that the positive high yield rating drift of 2010 and 2011 reversed direction over the course of 2012 and the 'CCC' or lower pool expanded for the first time since 2009 - now $228 billion in size versus $197 billion at the beginning of the year. Read more.

NEW YORK FED: PROGRESS BEING MADE IN IMPROVING TRI-PARTY REPO SECTOR

The Federal Reserve Bank of New York reported today that progress was being made in reducing the risk created by a key market where dealers go to finance trading positions, the Wall Street Journal reported today. The bank said that JPMorgan and the Bank of New York Mellon have both made key changes that will reduce the amount of intraday credit in the tri-party repo market, the New York Fed said. The tri-party repo market allows bond dealers to borrow and lend securities. The New York Fed has been pressuring market participants to reform their market sector as part of a bid to strengthen the overall state of the financial system. Read more.

UPDATED EDITION OF MUNICIPALITIES IN PERIL: THE ABI GUIDE TO CHAPTER 9 NOW AVAILABLE FOR PRE-ORDER!

The second edition of Municipalities in Peril: The ABI Guide to Chapter 9 has been revised and updated to include coverage of the latest cases and offers insight into pending actions in such larger urban settings as Detroit. Including a convenient summary of all relevant state statutes, this Guide is a must-have for bankruptcy professionals entering this burgeoning practice area, as well as for municipal finance personnel and counsel seeking detailed information about the fundamental issues of governance, credit and debt adjustment that uniquely surround municipal debt cases. Member price is $35 (Please log in to obtain the member price.) Orders will ship in mid-January. Click here to pre-order.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: STATE OF MONTANA V. BLIXSETH (IN RE BLIXSETH; 9TH CIR.)

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

The majority opinion ruled that by using the "context-specific" analysis based on the Nevada Statutes the involuntary bankruptcy case is viewed in the same context as a creditor seeking a charging order pursuant to the Nevada Statutes. The majority further held that Blixseth’s interests in the Nevada entities were created and exist under the Nevada Statutes; therefore, his creditor’s remedies are limited by Nevada state law, that is sufficient reason to deem Blixseth’s interests to be located in Nevada.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: THE COMMUNITY REINVESTMENT ACT AND THE HOUSING BUBBLE

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog discusses a recently released research paper examining the role of the Community Reinvestment Act and the housing bubble.

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

  

 

NEXT EVENT:

 

 

WCBC 2013
Jan. 21, 2013
Register Today!

 

 

COMING UP:

 

 

ACBPIKC 2013
Jan. 24-25, 2013
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ACBPIKC 2013
Feb. 7-9, 2013
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ACBPIKC 2013
Feb. 17-19, 2013
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ACBPIKC 2013
Feb. 20-22, 2013
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Paskay 2013
March 7-9, 2013
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BBW 2013
March 22, 2013
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ASM 2013
April 18-21, 2013
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  CALENDAR OF EVENTS
 

2013

January
- Western Consumer Bankruptcy Conference
     January 21, 2013 | Las Vegas, Nev.
- Rocky Mountain Bankruptcy Conference
     January 24-25, 2013 | Denver, Colo.

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


  

- VALCON 2013
     February 20-22, 2013 | Las Vegas, Nev.

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

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


 
 
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Republicans Release Report Assessing Dodd-Frank

ABI Bankruptcy Brief | July 22, 2014
 
  

July 22, 2014

 
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DODD-FRANK

REPUBLICANS RELEASE REPORT ASSESSING DODD-FRANK

On yesterday's four-year anniversary of the Dodd-Frank Act, congressional Republicans fired out at the controversial legislation in a 100-page report, saying that the Act's purported purpose to end the government's "too big to fail" policy has itself failed, DSnews reported yesterday. The House Financial Services Committee yesterday released "Failing to End 'Too Big to Fail:' An Assessment of the Dodd-Frank Act Four Years Later," which asserts that the Act perpetuates a dangerous policy of bailing out lenders that fleece American taxpayers, under the presumption that not bailing them out would make matters far worse. GOP leaders say that Dodd-Frank was supposed to put an end to this policy, but instead makes sure that it continues. "In no way, shape or form does the Dodd-Frank Act end 'too big to fail,'" said Committee Chairman Jeb Hensarling (R-Texas). "Instead, Dodd-Frank actually enshrines 'too big to fail' into law." Moreover, Republicans charge, regulatory requirements imposed under Dodd-Frank create compliance burdens that distort the free market by making it harder for small-to-medium-sized financial institutions to compete with larger firms, further entrenching "too big to fail." While Republicans on the Financial Services Committee plan to introduce legislation "to repeal Dodd-Frank's bailout fund and take other steps to end 'too big to fail' once and for all," according to Hensarling, one of Dodd-Frank's architects, former Massachusetts Representative and FSC Chairman Barney Frank, will testify at a congressional hearing on Wednesday to assess the impact of the Dodd-Frank Act four years later. Click here to read the full article.

Click here to access the report.

COMMENTARY: DOES DODD-FRANK WORK?

Ralph Nader has written a new book entitled, Unstoppable: The Emerging Left-Right Alliance to Dismantle the Corporate State. If one spends any time looking into the current state of affairs with the Dodd-Frank Act, one would have to say that he has a point, according to an Op-Ed in today's New York Times. There are many aspects of the law on which Democrats and Republicans disagree, but there is one area in which the two sides are largely in agreement: "Too Big to Fail" is still with us. Dodd-Frank was supposed to end "Too Big to Fail," the catchphrase for a financial institution whose collapse has the potential to bring down the entire financial system. That prospect is why, less than a month after the bankruptcy of Lehman Brothers, the government handed billions of dollars to the big banks to help stabilize them. In some ways, eliminating the possibility of future bank bailouts was the whole point of Dodd-Frank. Partly this was for populist reasons: Americans were outraged that the banks were bailed out, while the country got the worst of the Great Recession. But it was also just good public policy, according to the commentary. The Treasury Department insists that the days of "Too Big to Fail" are over. But the markets don't believe it, and neither do most people who pay attention to Dodd-Frank, according to the commentary. Click here to read the full commentary.

COMMENTARY: THE BENEFITS OF FAILURE

Four years ago, Dodd-Frank was enacted on the theory that some banks are too big to fail and that regulators have the wisdom to identify those that are. Today, the company that disproved that theory is back in the news, according to a commentary in today's Wall Street Journal. For most of the big banks that were bailed out during the crisis of 2008, the arguments can never be completely resolved over whether federal assistance was necessary, because taxpayers were not allowed to run the counter-experiment in which the big banks and their regulators were allowed to suffer the consequences of their decisions. However, in late 2008 commercial lender CIT Group Inc. received $2.3 billion in aid from the Treasury's Troubled Asset Relief Program (TARP), although it wasn't enough to save the firm from the risky bets it had made during the credit bubble. The company had more than $50 billion in assets, which under Dodd-Frank meant that its failure could be catastrophic. CIT was allowed to fail, however, and filed for chapter 11 bankruptcy protection in late 2009. The parent company soon emerged from bankruptcy and has been operating ever since. CIT today posted a 34 percent increase in its second-quarter profits and announced a deal to buy OneWest Bank, which operates 73 retail branches in Southern California that have $23 billion in assets. Unfortunately, this happy ending brings a new threat to taxpayers, thanks to Dodd-Frank, according to the commentary. The law says that a bank holding company with over $50 billion in assets is automatically considered "systemically important" and that the new acquisition will once again push CIT Group above that threshold — the same threshold that CIT proved to be bogus as a measurement of systemic risk. Click here to read the full commentary.

ANALYSIS: AT THREE YEARS OLD, CFPB HITS ITS STRIDE

Lawyers who practice before the Consumer Financial Protection Bureau, which turned three years old yesterday, agree on one thing: "It's been good for law firms," said Ballard Spahr partner Alan Kaplinsky. Lawyers say that the CFPB, the agency created by the Dodd-Frank Act, has hit its stride since the confirmation of director Richard Cordray last July, bringing a series of big-ticket enforcement actions, according to an analysis in The National Law Journal today. "The bureau is starting to mature a bit as an organization, to get its sense of identity and purpose," said David Bizar, who co-chairs the consumer financial services litigation practice group at Seyfarth Shaw. Agency lawyers have filed at least 20 enforcement actions in the past year (compared with two in the CFPB's first year), racking up a series of major settlements. In all, the CFPB in its first three years has helped refund more than $3.8 billion to consumers, Cordray told the Senate Committee on Banking, Housing and Urban Affairs last month. Still, some lawyers complain that the CFPB has been overzealous when it comes to enforcement. Another criticism is that the CFPB has put enforcement ahead of regulation. "They have been picking their targets and hitting them hard, trying to get the rest of the industry to take notice and make changes," Bizar said. "They're often getting out front on enforcement first, and then trying to follow up with regulation." In recent months, the CFPB has moved against payday lenders, debt collectors and auto financers — businesses that were not previously subject to federal oversight and where the rules of the road are less clear. On the rulemaking front, the CFPB has moved more cautiously. Click here to read the full analysis. (Subscription required.)

U.S. ECONOMY IS LUMBERING, NOT SOARING

The overriding market thesis is that the economy is getting better, the jobs market is getting better, corporate earnings are getting better, the proverbial morning in America is just around the corner, and even with stocks around record levels, even with chaos overseas, now is still the time to buy. There's only one problem with that thesis: It's starting to look like 2014 is going to be another disappointing year for the U.S. economy, according to the Wall Street Journal's MoneyBeat blog yesterday. The latest reading of the Chicago Fed's National Activity Index, which slipped in June, is the latest evidence of that. Even though it's a second-tier, or maybe even third-tier, data series, it's one that provides a good indication of the economic state of affairs, and it shows that despite fits and starts, despite grand predictions, the U.S. economy is still struggling to shake off the aftereffects of the recession. The index's June reading slipped to 0.12 from 0.16 in May. The three-month moving average fell to 0.13 from 0.28. While that is the moving average's fourth consecutive reading above zero, it remains below the critical threshold of 0.70, a level that indicates a sustained period of increasing inflation. At no point in the past two years, in fact, has the index moved into that range. Click here to read the full article.

NEW CASE SUMMARY ON VOLO: SPRADLIN V. RICHARD(6TH CIR.)

Summarized by Jason Stitt of Keating Muething & Klekamp PLL

The Sixth Circuit affirmed the district court's affirmation of the bankruptcy court's award of sanctions, and vacated the district court's reversal of the bankruptcy court's motion to extend time and deny the plaintiff's motion to dismiss the defendant's cross-appeal. The Sixth Circuit concluded that the defendant's motion to extend time to designate record for appeal, and the plaintiffs' motion to dismiss the defendant's cross-appeal, were moot by virtue of the bankruptcy court's lack of subject-matter jurisdiction over the defendant's cross-claims, and therefore the district court lacked, and the Sixth Circuit also lacked, jurisdiction over those issues.

There are more than 1,300 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 CAN FIX DODD-FRANK

A recent blog post proposes that Congress can fix Dodd-Frank's pursuit of financial stability at the expense of economic growth by amending the law so that regulators are required to balance both goals.

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

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