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Analysis Foreclosure Wave Averted as Doomsayers Defied

ABI Bankruptcy Brief | November 27 2012
 
  

November 29, 2012

 
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  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
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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
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  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

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

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March 22, 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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  NEWS AND ANALYSIS   

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.

ABI Quick Poll

Credit bidding should not be allowed in a bankruptcy sale.

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
 

2014

July
- Southeast Bankruptcy Workshop
    July 24-27, 2014 | Amelia Island, Fla.
- Mid-Atlantic Bankruptcy Workshop
    July 31-August 2, 2014 | Cambridge, Md.

August
- ABI Endowment Baseball Event
    Aug. 13, 2014 | Baltimore, Md.
- Fourth Hawai'i Bankruptcy Workshop
    Aug. 13-16, 2014 | Maui, Hawai'i

September
- Southwest Bankruptcy Conference
    Sept. 4-6, 2014 | Las Vegas, Nev.
- abiLIVE Webinar: Understanding Make-Whole and No Call Provisions
    Sept. 9, 2014 |
- Golf & Tennis Outing
    Sept. 9, 2014 | Maplewood, N.J.
- CARE Financial Literacy Conference
    Sept. 11-13, 2014 | Dallas, Texas
- ABI Workshop: Lending to Distressed Companies
    Sept. 15, 2014 | Alexandria, Va.
- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
    Sept. 17-18, 2014 | New York, N.Y.

  

 

October
- abiWorkshop: Government Contracting and Bankruptcy
    Oct. 6, 2014 | Alexandria, Va.
- Midwestern Bankruptcy Institute
    Oct. 16-17, 2014 | Kansas City, Mo.
- Views from the Bench
    Oct. 24, 2014 | Washington, D.C.
- Claims-Trading Program
    Oct. 30, 2014 | New York, N.Y.
- International Insolvency & Restructuring Symposium
    Oct. 30-31, 2014 | London

November
- Chicago Consumer Bankruptcy Conference
    Nov. 11, 2014 | Chicago, Ill.
- Detroit Consumer Bankruptcy Conference
    Nov. 11, 2014 | Troy, Mich.

 

 
 
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Analysis How Chapter 11 Saved the U.S. Economy

ABI Bankruptcy Brief | March 26 2013
 
  

March 26, 2013

 
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  NEWS AND ANALYSIS   

ANALYSIS: HOW CHAPTER 11 SAVED THE U.S. ECONOMY

Harvard Business School Prof. Stuart C. Gilson’s recent study of the 2008 financial crisis says that restructuring and chapter 11 played a heroic role in helping the country rebound. In his article in the 2012 Journal of Applied Corporate Finance, Gilson writes that the "amount of debt that needed to be restructured posed a seemingly insurmountable challenge." At one point, "$3.5 trillion of corporate debt was distressed or in default. [Between] 2008 and 2009, $1.8 trillion worth of public company assets entered chapter 11 bankruptcy protection—almost 20 times more than during the prior two years," according to Gilson. A significant portion of the private-equity industry, he says, was "widely believed to be on the verge of extinction." Instead, in a relatively short time, much of the corporate debt that defaulted during the financial crisis has been managed down, mass liquidations have been averted, and corporate profits, balance sheets and values have rebounded with remarkable speed, according to Gilson's analysis. Read more.

REPORT: U.S. STUDENT LOAN WRITE-OFFS HIT $3 BILLION IN FIRST TWO MONTHS OF 2013

An Equifax study showed that U.S. banks wrote off $3 billion of student loan debt in the first two months of 2013, up more than 36 percent from the same period a year ago, Reuters reported yesterday. The credit reporting agency also said that student lending has grown from last year because more people are going back to school and the cost of higher education has risen. "Continued weakness in labor markets is limiting work options once people graduate or quit their programs, leading to a steady rise in delinquencies and loan write-offs," Equifax Chief Economist Amy Crews Cutts said in a statement. U.S. student loan debt reform has become a more pressing issue since the U.S. Consumer Financial Protection Bureau (CFPB) reported in March 2012 that the total surpassed $1 trillion by the end of 2011 and as interest rates on subsidized Stafford loan rates are set to double in July. The cost of earning a 4-year undergraduate degree has gone up by 5.2 percent per year in the last decade, according to the CFPB, forcing more students to take out loans. Read more.

For more information, be sure to register for ABI's "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. Click here for more information.

U.S. CRACKS DOWN ON "FORCED" INSURANCE

A U.S. housing regulator is cracking down on a little-known practice that has hit millions of struggling borrowers with high-price homeowners' insurance policies arranged by banks that benefit from the costly coverage, the Wall Street Journal reported today. The Federal Housing Finance Agency (FHFA), which regulates mortgage giants Fannie Mae and Freddie Mac, plans to file a notice today to ban lucrative fees and commissions paid by insurers to banks on so-called force-placed insurance. Such "forced" policies are imposed on homeowners whose standard property coverage lapses, typically because the borrower stops making payments. Critics say that the fee system has given banks a financial incentive to arrange more expensive homeowners' policies than are necessary. FHFA's move would apply nationwide to all mortgages guaranteed or owned by Fannie and Freddie—about half of the housing market. Read more. (Subscription required.)

COMMENTARY: IS IT ALREADY TIME TO WEAKEN DODD-FRANK?

A key effort in the Dodd-Frank financial reform act has been to bring transparency and reforms to the complex market of derivatives, but Republicans and Democrats on the House Agriculture Committee on Wednesday approved seven bills that would roll back parts of the Dodd-Frank financial regulations, according to a commentary in Sunday's Washington Post. However, Dodd-Frank's regulation of derivatives is crucially important to alleviate future financial crises and set a proper course for reform, according to the commentary. The bills now headed to the House floor for a vote weaken Title VII of Dodd-Frank, which is the part that regulates derivatives. "Derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal," financier Warren Buffett said. Bill Clinton said that he was wrong to avoid regulating derivatives when he had the chance. These financial instruments played a central role in the financial crisis, culminating in the collapse and bailout of AIG. Since Dodd-Frank, there has been extensive debate about the new rules for derivatives, which range from collateral to price transparency. But there has also been a counter-debate about who has to follow the new rules. Those who fall under "end-user exemptions" are largely able to forgo following the Dodd-Frank rules, and the easiest way to understand the bills passed out of the Agriculture Committee is to note that they seek to expand the scope of those exemptions. One bill would weaken cross-border regulations, allowing U.S. firms that run their derivatives in other countries to avoid following the new derivative rules. In the age of electronic trading and overlapping jurisdictions, this limits the ability of regulators to make sure that prudential standards are set in this country. Read more.

LAWSUIT SHEDS LIGHT ON ALLEGED INFLATION OF LEGAL BILL

The thorny issue of law firm billing is at the heart of a lawsuit involving a fee dispute between a law firm and Adam H. Victor, an energy industry executive, the New York Times DealBook blog reported yesterday. After DLA Piper sued Victor for $675,000 in unpaid legal bills, Victor filed a counterclaim, accusing the law firm of a "sweeping practice of overbilling." Victor's feud with DLA Piper began after he retained the firm in April 2010 to prepare a bankruptcy filing for one of his companies. The lawsuit has brought to light e-mails from DLA Piper’s lawyers about how the bill was running way over budget. Another described a colleague’s approach to the assignment as "churn that bill, baby!" Legal ethics scholars said that it is highly unusual to find documentary evidence of possible churning — the creation of unnecessary work to drive up a client's bill. Read more.

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

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

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

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

Make sure to register today!

ABI IN-DEPTH

TEE OFF ON THE NEW ABI GOLF TOUR!

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

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

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

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

LATEST CASE SUMMARY ON VOLO: NORTH AMERICAN BANKING CO. V. LEONARD (IN RE WEB2B PAYMENT SOLUTIONS INC.; 8TH CIR.)

Summarized by Brendan Gage, U.S. Bankruptcy Court, Eastern & Western Districts of Arkansas

Affirming the bankruptcy court, the Bankruptcy Appellate Panel for the Eighth Circuit held that a creditor loses its possessory lien in deposit accounts when it turns over the account funds to the trustee without requesting a court to adequately protect its lien in the funds.

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: WHAT IS NEXT FOR CREDITORS OF DETROIT?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines the potential next steps for creditors of financially distressed 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.

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.

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April 5, 2013
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April 10, 2013
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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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May 16, 2013
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May 21-24, 2013
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June 7, 2013
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June 13-16, 2013
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July 11-14, 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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Republican Senators Propose Bill To Bring Large Banks Through Bankruptcy

ABI Bankruptcy Brief | December 12, 2013
 
  

December 19, 2013

 
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  NEWS AND ANALYSIS   

REPUBLICAN SENATORS PROPOSE BILL TO BRING LARGE BANKS THROUGH BANKRUPTCY

Two Republican Senators proposed changes to the Bankruptcy Code to help unwind a large, failing financial institution, the latest salvo in an ongoing policy debate over how to avoid future taxpayer bailouts, the Wall Street Journal reported today. Sens. John Cornyn (R-Tex.) and Pat Toomey (R-Pa.) introduced a bill today that provides a new bankruptcy process for large firms, including the creation of a new "bridge" company to keep a failing firm operating and prevent a destabilizing run by all its creditors. Many experts and U.S. officials have said changes to the Bankruptcy Code are needed to allow it to accommodate a large firm's failure without market chaos, and the bill's "bridge" framework resembles a plan the Federal Deposit Insurance Corp. is developing to deal with failing firms. But the Senators' bill also would repeal a section of the 2010 Dodd-Frank financial overhaul: Title II, the part that allows the FDIC to take over a failing firm and unwind it, potentially with temporary taxpayer backing to keep its subsidiaries operating if no other options are available. Title II is only supposed to be used in cases where the firm can't be brought through bankruptcy. That piece of the bill is likely to draw opposition from Democrats who oppose changing the Dodd-Frank law, as well as the White House, which has said it's opposed to changing Dodd-Frank until its rules are largely written and implemented. Read more. (Subscription required.)

Click here to read the press release from Sen. Cornyn's office explaining the bill.

COMMENTARY: BIG BANKS AND THE FAILURE OF BANKRUPTCY

At a meeting of the Federal Deposit Insurance Corp. on Dec. 11, there was a complete and public collapse of the notion that today's large complex financial institutions could actually go bankrupt without causing a great deal of collateral damage, according to an editorial by Prof. Simon Johnson of the M.I.T. Sloan School of Management in the New York Times Economix blog today. In a free and fair discussion before the FDIC's Systemic Resolution Advisory Committee, proponents of bankruptcy as a viable option acknowledged that this would require substantial new legislation, implying a significant component of government support -- or what would reasonably be regarded as a form of "bailout" to a failing company and its stakeholders. As matters currently stand, bankruptcy for a big financial company would imply chaotic disaster for world markets (as happened after Lehman Brothers failed), according to Johnson. It is completely unrealistic to propose "fixing" this problem with legislation that would create a new genre of bailouts. Under current law -- and as a matter of common sense -- the Federal Reserve should take the lead in forcing megabanks to become smaller and simpler, according to the commentary. Under Section 165 of the 2010 Dodd-Frank financial reform legislation, large nonbank financial companies and big banks are required to create and update "the plan of such company for rapid and orderly resolution in the event of material financial distress or failure." The design is that this plan -- known as a "living will" -- should explain how the company could go through bankruptcy. Read the full commentary.

SEN. WARREN INTRODUCES BILL TO PROHIBIT COMPANIES FROM RUNNING CREDIT CHECKS ON JOB CANDIDATES

Sen. Elizabeth Warren (D-Mass.) introduced legislation on Tuesday that would prohibit employers from requiring job applicants to disclose their credit history, MassLive.com reported yesterday. Warren said that a person's poor credit history is often the result of medical bills, job loss or divorce and does not reflect his ability to perform a job. "Let people compete for jobs on the merits, not on whether they already have enough money to pay all their bills," Warren said. "Research has shown an individual's credit rating has little to no correlation with his or her ability to succeed in the workplace." But business organizations argue that credit checks are used in a targeted way to guard against things like theft by employees who have financial responsibilities at a company. Jon Hurst, president of the Retailers Association of Massachusetts, said that the association does not want to see tools taken away from an employer during the hiring process. Hurst said that credit reports are a good indicator of risk and of how responsible a person is. A 2012 report by the Society for Human Resource Management found that around half (47 percent) of companies conduct credit checks on some or all prospective employees. The bill, titled the "Equal Employment for All Act," would amend the Fair Credit Reporting Act to prohibit employers from procuring a job applicant's credit report and would forbid employers from denying a person a job based on poor credit history. (The bill includes an exception for jobs requiring national security clearance.) The bill is co-sponsored by Democratic U.S. Sens. Edward Markey of Massachusetts, Richard Blumenthal of Connecticut, Sherrod Brown of Ohio, Patrick Leahy of Vermont, Jeanne Shaheen of New Hampshire and Sheldon Whitehouse of Rhode Island. A similar bill was introduced by Rep. Steve Cohen (D-Tenn.) in 2011, although it did not go anywhere. Sen. Warren, although she is a freshman senator, has significant political clout because of her strong following among progressive activists nationwide. The bill has not gotten any Republican support. Read more.

Click here for the bill text.

NEW MORTGAGES TO GET PRICIER NEXT YEAR

Fannie and Freddie, which currently back about two-thirds of new mortgages, are set to charge higher fees, a move that will affect rates for many new borrowers, the Wall Street Journal reported yesterday. The mortgage giants said on Monday that, at the direction of their regulator, they will charge higher fees on loans to borrowers who don't make large down payments or don't have high credit scores -- a group that represents a large share of home buyers. Such fees are typically passed along to borrowers, resulting in higher mortgage rates. Fannie and Freddie, which currently back about two-thirds of new mortgages, don't directly make mortgages but instead buy them from lenders. The changes are aimed at leveling the playing field between the government-owned companies and private providers of capital, who are mostly out of the mortgage market now. Fannie and Freddie were bailed out by the government during the financial crisis but are now highly profitable. The Federal Housing Finance Agency last week signaled the fee increases but didn't provide details. The agency's move came one day before the Senate voted to confirm Rep. Mel Watt (D-N.C.) as its director. Read more. (Subscription required.)

WATCH KEVIN D. WILLIAMSON DELIVER HIS KEYNOTE AT WLC!

Now available in ABI's Newsroom is the keynote address from Kevin D. Williamson, a roving correspondent for National Review and the author of The End Is Near and It's Going to Be Awesome: How Going Broke Will Leave America Richer, Happier and More Secure. To watch the keynote, please click here: http://news.abi.org/videos

MISS THE ABILIVE WEBINAR LOOKING AT HOW TO HIRE THE RIGHT FINANCIAL ADVISORS? VIDEO NOW AVAILABLE!

Did you miss the abiLIVE webinar, "How to Hire the Right Financial Advisors" sponsored by ABI's Financial Advisors & Investment Banking Committee? In need of CLE before the end of the year? Then visit cle.abi.org to watch a video of the webinar and earn CLE! The program provides attendees with an overview and basic understanding of the different types of financial advisors that may be relevant for in- and out-of-court cases. Topics include:

- The different types of financial advisors available;

- The benefits and limitations for each category of advisor; and

- How to select the right advisor for the job.

Speakers on the webinar include:

- Daniel F. Dooley of MorrisAnderson (Chicago)

- Gregory S. Hays of Hays Financial Consulting LLC (Atlanta)

- Ivan Lehon of Ernst & Young (New York)

- Allen Soong of Deloitte CRG (Los Angeles)

- Teri Stratton of Piper Jaffray & Co. (El Segundo, Calif.)

Click here for more information and to purchase the video.

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

Now available for pre-order in the ABI Bookstore is Best of ABI 2013: The Year in Consumer Bankruptcy. This must-have reference contains the best ABI Journal articles and papers from ABI's top-rated educational seminars selected by ABI Board Member Alane Becket of Becket & Lee LLP (Malvern, Pa.) to cover the most important developments in consumer bankruptcy for 2013. The book delves into such timely topics as the foreclosure crisis, tax issues, the latest on chapter 13, student loans and much more, and it also features relevant case summaries drawn from ABI's Volo site (volo.abi.org). Make sure to log into www.abi.org to get your discounted ABI member pricing. The book will ship in late December. Click here to order.

RENEW YOUR ABI MEMBERSHIP BY DEC. 31 AND SAVE!

Beginning in January 2014, ABI will institute its first dues increase to the regular dues rate in six years. The $20 increase will ensure that ABI can continue to provide you with the latest and most effective tools available in insolvency information and education. You can lock in 2013 rates, and additional discounts, for up to three years by using a multi-year renewal option (save $75!). You can also save 10 percent on future dues by opting into the automated dues program. To renew your membership and save, please go to renew.abi.org.

ABI LAUNCHES SIXTH ANNUAL WRITING COMPETITION FOR LAW STUDENTS

Law school students are invited to submit a paper between now and March 4, 2014 for ABI's Sixth 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 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.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: BAKER V. TRUSTEE CAGE (IN THE MATTER OF WHITLEY; 5TH CIR.)

Summarized by John Jones of JRJONESLAW PLLC

The Fifth Circuit reversed and remanded an order disgorging two properties transferred from debtor to debtor's counsel and held that while the Bankruptcy Code seeks to protect debtors and their estates from excessive or unnecessary legal fees, §329(b) limits the court to attorney compensation that exceeds the reasonable value of any services.

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: THE SENATE, CHAPTER 14, AND A GENERAL LACK OF SERIOUSNESS

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post examines a proposal to add "chapter 14" to the Bankruptcy Code for systemically important financial institutions.

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

Electricity qualifies as a "good" entitled to administrative expense status under § 503(b)(9).

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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Western Consumer Bankruptcy Conference
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COMING UP

 

 

Rocky Mountain Bankruptcy Conference
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Caribbean Insolvency Symposium
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VALCON2014
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SP14
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  CALENDAR OF EVENTS
 

2014

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

February
- Caribbean Insolvency Symposium
    Feb. 6-8, 2014 | San Juan, P.R.
- VALCON14
    Feb. 26-28, 2014 | Las Vegas, Nev.

  


March
- Bankruptcy Battleground West
    March 11, 2014 | Los Angeles, Calif.
- Alexander L. Paskay Memorial
Bankruptcy Seminar

    March 13-15, 2014 | Tampa, Fla.

April
- Annual Spring Meeting
    April 24-27, 2014 | Washington, D.C.


 
 
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Too-Big-to-Fail Claim Disputed by Bank Groups

ABI Bankruptcy Brief | March 12 2013
 
  

March 12, 2013

 
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  NEWS AND ANALYSIS   

"TOO-BIG-TO FAIL" CLAIM DISPUTED BY BANK GROUPS

Lobbying groups for the largest U.S. banks pushed back against claims that they remain too big to fail, rebutting assertions by lawmakers and regulators that they enjoy a "taxpayer subsidy" because of their size, Bloomberg News reported yesterday. The Dodd-Frank Act, passed by Congress in response to the 2008 credit crisis, greatly diminished the advantage that the biggest lenders held over smaller rivals, five industry groups wrote today in a brief on the issue. "There is substantial evidence that the market recognizes the impact Dodd-Frank has had on investor expectations," the Clearing House, Financial Services Forum, Financial Services Roundtable, Securities Industry and Financial Markets Association and American Bankers Association said in their brief. “Given the sizable costs associated with new regulations, together with the new orderly liquidation framework, any purported TBTF-related funding advantage has clearly been reduced or even eliminated." The financial-industry groups, representing lenders such as JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc., are responding to complaints by lawmakers and regulators including Warren and Dallas Federal Reserve President Richard Fisher that Dodd-Frank did not do enough to rein in big lenders. Read more.

COMMENTARY: HOW TO SHRINK THE "TOO-BIG-TO-FAIL" BANKS

A dozen megabanks today control almost 70 percent of the assets in the U.S. banking industry as the concentration of assets has been in progress for years, but it intensified during the 2008–09 financial crisis, when several failing giants were absorbed by larger, presumably healthier ones, according to a commentary in today's Wall Street Journal. Meanwhile, the mere 0.2 percent of banks deemed "too big to fail" are treated differently from the other 99.8 percent, and differently from other businesses. Implicit government policy has made these institutions exempt from the normal processes of bankruptcy and creative destruction, according to the commentary. Without fear of failure, these banks and their counterparties can take excessive risks. The commentary offers a few steps to level the competitive landscape:

1) Roll back the federal safety net—deposit insurance and the Federal Reserve's discount window—to apply only to traditional commercial banks, and not to the nonbank affiliates of bank holding companies or the parent companies themselves, which the safety net was never intended to protect.

2) Require customers, creditors and counterparties of all nonbank affiliates and the parent holding companies to sign a simple, legally binding, unambiguous disclosure acknowledging and accepting that there is no government guarantee—ever—backstopping their investment. A similar disclaimer would apply to bank deposits outside the FDIC insurance limit and other unsecured debts.

3) Restructure the largest financial holding companies so that every one of their corporate entities is subject to a speedy bankruptcy process and, in the case of banking entities themselves, be of a size that is "too small to save."

Click here to read the full commentary. (Subscription required.)

ANALYSIS: AS ASBESTOS CLAIMS RISE, SO DO WORRIES ABOUT FRAUD

With dozens of asbestos-related manufacturers forced into bankruptcy, a burgeoning swath of the legal action has shifted out of the courtroom and into a world of trusts that evaluate claims and authorize payouts with little outside scrutiny, according to an analysis yesterday in the Wall Street Journal. Fraud allegations have periodically dogged the trusts, and even though the worst asbestos-related diseases are finally starting to taper off, there is growing concern that the trusts will run out of money before America runs out of asbestos victims. Three decades after Manville Corp. collapsed under an avalanche of asbestos litigation, personal-injury claims in the case continue to pile up at a rate of 85 per day. By last March, a Manville bankruptcy trust had already paid out nearly $4.3 billion. "Right now there are a lot of suggestions that fraud and abuse are present," says House Judiciary Chairman Bob Goodlatte, a Republican from Virginia, who has scheduled a hearing Wednesday on a bill requiring trusts to publish detailed claims reports to help ensure that money goes only to legitimate victims. In recent months, judges across the country who handle asbestos cases involving still-viable companies have granted defense requests to subpoena bankruptcy trusts to sniff out potentially false and conflicting evidence. Many defendants believe such data could help expose fraudulent or inflated claims that could potentially save them hundreds of millions of dollars in jury verdicts. Read more. (Subscription required.)

Click here to review the bill text of H.R. 982, the "Furthering Asbestos Claim Transparency (FACT) Act of 2013" introduced by Rep. Blake Farenthold (R-Texas), which will be examined tomorrow at a hearing before the House Judiciary Subcommittee on Regulatory Reform, Commercial and Antitrust Law at 2:30 p.m. ET.

COMMENTARY: ENTERPRISE VALUE TAX PROPOSAL WOULD HIT FIRMS THAT HAVE NOTHING TO DO WITH "CARRIED INTEREST"

The Enterprise Value Tax (EVT) has been inserted into congressional proposals to "fix" carried interest, but the legislation would claw back significantly more money than investment managers and other financial professionals have ever saved by taking legal, proper and open advantage of the carried-interest tax treatment, according to a commentary in today's Wall Street Journal. Under current law, entrepreneurs of all types who sell their companies are taxed on the profits at the capital-gains rate. The EVT seeks to change this, but only for the sale of certain businesses—namely investment-service partnerships, the sale of which would now be taxed as regular income. The EVT is designed to claw back entrepreneurs' supposedly ill-gotten carried-interest gains from the past. Worse, the commentary says that the proposed new tax would mostly affect people who do not currently benefit much, if at all, from the tax treatment of carried interest. The savings afforded to carried interest have benefited only a small subset of investment managers who have substantial performance-fee earnings in the form of long-term capital gains. That category does not include many hedge funds, whose gains are mostly short-term, or traditional money managers, who do not center their businesses around performance fees. The EVT would raise the bulk of its revenue from investment-services partnerships that have little or no carried-interest earnings, or whose carried interest is already taxed at the same rate as ordinary income because the performance fee results from ordinary income or short-term capital gains. Read the full commentary. (Subscription required.)

For insight, the Cato Institute released an analysis last year on the dangers of the proposed enterprise value tax. Click here to read the analysis.

REPORT: APPEALS COURT ACTIVITY RISES, BANKRUPTCY COURTS AND DISTRICT COURTS SEE DROP-OFF IN CASELOADS IN FY2012

Appeals court activity increased in fiscal year 2012 (12-month period ending Sept. 30, 2012) as filings dropped in bankruptcy courts and district courts, according to the "Judicial Business of the U.S. Courts" report released today by the Administrative Office of the U.S. Courts. The regional U.S. courts of appeals reported that filings rose 4 percent to 57,501. In the U.S. district courts, total filings fell 5 percent to 372,563 as civil case filings decreased 4 percent to 278,442 and criminal defendant filings declined 9 percent to 94,121. Petitions filed in the U.S. bankruptcy courts dropped 14 percent to 1,261,140. To read the report and review the caseload totals, please click here.

SMU DEDMAN SCHOOL OF LAW TAKES TOP HONORS AT 21st ANNUAL DUBERSTEIN MOOT COURT COMPETITION

Students from Southern Methodist University Dedman School of Law prevailed over a record 60 other student teams to win first place at the 21st Annual Conrad B. Duberstein National Bankruptcy Moot Court Competition, held March 9-11 in New York. The competition is co-sponsored by the American Bankruptcy Institute and St. John’s University School of Law. Florida Coastal School of Law took second place in the competition, while the University of Florida Frederic G. Levin College of Law and a team from Stetson University College of Law shared the honors for third place. The University of Miami School of Law won the award for the Best Brief of the competition, and Nicholas Andrews of Mississippi College School of Law took the honor of Best Advocate. Nearly 1,000 members of the New York-area insolvency community attended the final-night awards dinner at Pier 60 on the Manhattan waterfront. For more information on ABI's Conrad B. Duberstein National Bankruptcy Moot Court Competition, please go to http://www.stjohns.edu/academics/graduate/law/academics/llm/duberstein.

LATEST ABI PODCAST EXAMINES THE EFFECTIVENESS OF CHAPTER 11 FOR CHURCH FINANCIAL DISTRESS

The latest ABI Podcast features ABI Resident Scholar Scott Pryor speaking with Prof. Pamela Foohey of the University of Illinois College of Law discussing her recent paper examining church reorganizations that filed for chapter 11 protection, titled "Bankrupting the Faith." Foohey discusses her empirical study looking at church bankruptcies from 2006-11 to draw out the characteristics of the filings and case outcomes to see if bankruptcy is an effective solution to the institution's financial problems. Click here to listen.

To read Prof. Foohey's study, please click here.

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:

Corrine 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!

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

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: COOK V. BACA (10TH CIR.)

Summarized by Steven T. Mulligan of Bieging Shapiro & Barber LLP

The court affirmed the dismissal of the pro se appellant's complaint in part and remanded with instructions to modify a portion of the dismissal from a dismissal with prejudice to one without prejudice for lack of subject-matter jurisdiction. The court found that the appellant lacked the standing to argue that a violation of the automatic stay had occurred because the BAP had already found that such claims belong to the bankruptcy estate, so the appellant lacked standing to bring such arguments.

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: PROBLEMS AT FHA TOO BIG FOR CONGRESS TO IGNORE

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post found that reform efforts could result in a much smaller scope of permissible lending at the FHA, with a renewed focus on its traditional core of low-income customers, higher credit score requirements and increased down payments.

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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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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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

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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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.

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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
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SE 2012
Oct. 5, 2012
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SE 2012
Oct. 5, 2012
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SE 2012
Oct. 8, 2012
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ABI YOUNG AND NEW MEMBERS COMMITTEE “TRENDING ISSUES: EXAMINERS AND SELECT PLAN CONFIRMATION ISSUES” WEBINAR
Oct. 15, 2012
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SE 2012
Oct. 16, 2012
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SE 2012
Oct. 18, 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
Feb. 17-19, 2013
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  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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Judges Ruling on Dodd-Frank Act Beefs Up Protection for Whistleblowers

ABI Bankruptcy Brief | July 10, 2012
 
  

July 10, 2012

 
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  NEWS AND ANALYSIS   

JUDGE'S RULING ON DODD-FRANK ACT BEEFS UP PROTECTION FOR WHISTLEBLOWERS

U.S. District Judge J. Paul Oetken bolstered protection for corporate whistleblowers yesterday by ruling the Dodd-Frank law gave retroactive protection to employees of subsidiaries, not just people who work directly for the parent companies, Reuters reported yesterday. The decision concerned the Sarbanes-Oxley Act of 2002, adopted in the wake of Enron Corp's collapse the prior year, which helped protect employees of publicly-traded companies against retaliation for whistleblowing. Dodd-Frank amended that law in July 2010, as part of a series of financial reforms, to show that employees of subsidiaries should also be protected from any reprisals by their companies. Judge Oetken yesterday said that the Dodd-Frank amendments should apply retroactively to cases that predated Dodd-Frank, being "a clarification of Congress's intent" concerning whistleblowers. Read more.

In related news, the House Financial Services Capital Markets and Government Sponsored Enterprises held a hearing today titled "The Impact of Dodd-Frank on Customers, Credit, and Job Creators." To view the witness list and prepared witness testimony, please click here.

The House Financial Services Financial Institutions and Consumer Credit Subcommittee will hold a hearing tomorrow at 10 a.m. ET titled "The Impact of Dodd-Frank’s Home Mortgage Reforms: Consumer and Market Perspectives." Click here for more information.

CONSUMER BORROWING INCREASED IN MAY, PROPELLED BY CREDIT CARD BORROWING

Consumer borrowing rose by $17.1 billion in May from April, the Federal Reserve said yesterday, according to the Associated Press. The gain drove total borrowing to a seasonally adjusted $2.57 trillion, nearly matching the all-time high reached in July 2008. Borrowing has increased steadily over the past two years, but most of the gains have been driven by auto and student loans, which rose to a record level of $1.7 trillion in May. Consumers cut back sharply on credit card debt during the recession and immediately after, but that changed in May when the measure of credit card debt jumped by $8 billion. Still, the level of debt for that category increased to only $870 billion, or 2.2 percent above the post-recession low hit in April 2011. The category had totaled more than $1 trillion before and shortly after the recession began. Read more.

ANALYSIS: PRICE OF USING CREDIT CARDS MAY RISE

Merchants may soon begin imposing a surcharge each time a customer pays with a credit card, a practice Visa Inc. and MasterCard Inc. currently prohibit, the Wall Street Journal reported today. Retailers have long pushed for the right to charge extra to customers who pay with plastic versus cash, saying that the practice would help defray their costs for accepting credit and debit cards. Merchants pay transaction fees on each card swipe. But Visa and MasterCard, which operate the world's largest card-payment networks, ban the practice in the U.S. as part of rules they require retailers to follow to accept their cards. That ban is expected to be eliminated or altered, though, under a potential settlement of long-standing lawsuits retailers have brought against the card networks and numerous banks that issue their cards. Read more. (Subscription required.)

COMMENTARY: COMMERCIAL MORTGAGES SHOW DEPTH OF BAD LOAN SECURITIZATIONS

The first of the commercial real estate mortgages that were securitized in 2007 have started to come due, and it is becoming clear just how bad many of the loans were, according to a commentary in Friday's New York Times. The time when investors were most eager to buy, according to the commentary, turns out to have been the worst time to do so. Commercial mortgages — unlike residential ones — are seldom issued for periods of longer than 10 years, and often for as little as five. Many require no principal repayments during that period but call for the entire amount to be repaid in a balloon payment at the end of the loan. "Only 28 percent of the loans from 2007 due to mature in 2012 managed to pay off in full," said Manus Clancy, the senior managing director at Trepp L.L.C., which monitors the commercial mortgage market. Other loans in those securitizations were for seven or 10 years, so new waves of losses may arrive in 2014 and again in 2017. Read more.

CFTC SUES PEREGRINE FINANCIAL GROUP

Federal regulators sued Peregrine Financial Group Inc. and CEO Russell Wasendorf Sr. today, alleging fraud, customer funds violations and making false statements, and the FBI began an investigation of the brokerage, the Wall Street Journal reported today. The complaint from the Commodity Futures Trading Commission comes a day after the National Futures Association, the futures industry's self-regulatory body, said that it had taken an emergency enforcement action against broker PFGBest's parent company, Peregrine Financial Group. Regulators have shut down almost all operations of futures broker PFGBest after the firm froze client accounts yesterday. Read more. (Subscription required.)

LATEST ABI PODCAST FEATURES EXPERT DISCUSSING WHAT TO EXPECT FROM STOCKTON'S CHAPTER 9 FILING

The latest podcast features ABI Executive Director Samuel J. Gerdano speaking with Lynnette R. Warman, a partner at Hunton & Williams LLP (Dallas) and ABI Vice President—Publications, about Stockton, Calif.'s recent chapter 9 filing. Warman has been following Stockton's financial distress and she discusses what can be expected for the city and its creditors in the first year of the chapter 9 filing. Click here to listen.

ABI IN-DEPTH

“SUBJECTING BUSINESS PROJECTIONS TO SCRUTINY IN VALUATION DISPUTES” WEBINAR TO BE HELD ON JULY 30!

Reassembling the speakers from the highest-rated panel at the New York City Bankruptcy Conference this year, ABI will be holding a live webinar on July 30 at 11 a.m. ET titled, "Subjecting Business Projections to Scrutiny in Valuation Disputes." Panelists include:

  • Moderator David Pauker of Goldin Associates, LLC (New York)
  • Martin J. Bienenstock of Proskauer (New York)
  • David M. Hillman of Schulte Roth & Zabel LLP (New York)
  • Bankruptcy Judge Robert E. Gerber (S.D.N.Y.)

The panel will address:

  • How much deference should management projections be accorded?
  • How do you determine whether projections are unrealistically optimistic or pessimistic?
  • What is the relevance of "market consensus?"
  • How do management’s incentives impact projections?

The webinar is available to ABI members for $75 and is approved for 1.0 CLE hours in Calif., Ga., Hawaii, Ill., N.Y. (approved jurisdiction policy) S.C. and Texas. CLE approval is pending in Del., Fla., Pa. and Tenn. To register, please click here.

LATEST CASE SUMMARY ON VOLO: SUNBEAM PRODUCTS, INC. V. CHICAGO AMERICAN MANUFACTURING, LLC (7TH CIR.)

Summarized by Jonathan Brand of Lakelaw

The Seventh Circuit was not persuaded by Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985), holding that when an intellectual-property license is rejected in bankruptcy, the licensee does not lose the ability to use any licensed copyrights, trademarks and patents. The court reasoned that, outside of bankruptcy, a licensor's breach does not terminate a licensee's right to use intellectual property. The same is true under §365(g). When a contract is rejected in the context of a bankruptcy, a breach is established, but the other party's rights remain in place. Therefore, Chicago American Manufacturing had the right to continue to perform under the pre-petition contract for the production of fans with the trademark of Lakewood Engineering & Manufacturing Co.

More than 550 appellate opinions are summarized on Volo typically within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: DREIER BANKRUPTCY DEMONSTRATES THE ENDLESS SCOPE OF CLAWBACK CLAIMS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the Dreier, LLP bankruptcy and the important role that clawback claims are playing in the case.

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

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

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

IS YOUR ABI MEMBERSHIP PROFILE CURRENT?

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

INSOL INTERNATIONAL

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

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THIS THURSDAY!

 

NE 2012
July 12-15, 2012
Last Chance to Register


COMING UP

 

SE 2012
July 25-28, 2012
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MA 2012
August 2-4, 2012
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SE 2012
Sept. 13-14, 2012
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SW 2012
Sept. 13-15, 2012
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NYU 2012
Sept. 19-20, 2012
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NABMW 2012
Oct. 4, 2012
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SE 2012
Oct. 5, 2012
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SE 2012
Oct. 5, 2012
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SE 2012
Oct. 8, 2012
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SE 2012
Oct. 18, 2012
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  CALENDAR OF EVENTS
 

July
- Northeast Bankruptcy Conference and Northeast Consumer Forum
     July 12-15, 2012 | Bretton Woods, N.H.
- Southeast Bankruptcy Workshop
     July 25-28, 2012 | Amelia Island, Fla.
-Valuation Webinar, July 30 at 11 a.m. ET

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

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


  

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

 
 
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ABI Media Teleconference Examines Lessons Learned from Lehmans Chapter 11

ABI Bankruptcy Brief | September 12, 2013
 
  

September 12, 2013

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

ABI MEDIA TELECONFERENCE EXAMINES LESSONS LEARNED FROM LEHMAN’S CHAPTER 11

ABI held a media teleconference today looking at the Lehman chapter 11 filing, the lessons learned from it five years later and what the future holds for distressed large financial institutions. An audio archive of the teleconference will be posted soon on ABI.org, and its availability will be announced via social media (Twitter: twitter.abi.org; Facebook: facebook.abi.org). Key figures in the case who spoke on today's teleconference included:

- Bankruptcy Judge James Peck (S.D.N.Y.; New York) presided over the Lehman Brothers chapter 11 case.
- Harvey Miller of Weil, Gotshal & Manges LLP (New York) was the lead debtor attorney for Lehman Brothers.
- Dennis Dunne of Milbank, Tweed, Hadley & McCloy (New York) represented unsecured creditors in the Lehman case.
- Bryan Marsal of Alvarez and Marsal (New York) served as Lehman's Chief Executive Officer after it filed for chapter 11 until 2012.
- Chris Kiplock of Hughes Hubbard & Reed LLP (New York) worked with the team of attorneys representing trustee James W. Giddens in liquidating Lehman Brothers.

The moderator for the program was ABI Fall Resident Scholar Kara Bruce of Toledo University School of Law. Be sure to check ABI's feeds on Twitter or Facebook for the availability of the teleconference audio archive!

ANALYSIS: VOLCKER RULE TO CURB BANK TRADING PROVES HARD TO WRITE

Three years after first proposing that banks be prevented from making market bets with their own money, Paul Volcker's rule remains unfinished, the Wall Street Journal reported yesterday. The Volcker rule, a centerpiece of the sweeping overhaul of financial regulation known as Dodd-Frank, is an attempt to protect the financial system from risk. The rule looks to prohibit banks from making investment bets with their own money, but it has proved difficult to apply. Five years after cratering financial firms ignited a global crisis, and three years after Dodd-Frank outlined the Volcker rule as a central part of the government response, the rule languishes unfinished and unenforced, mired in policy tangles and infighting among five separate agencies whose job is to produce the fine print. Read more. (Subscription required.)

COMMENTARY: FIVE YEARS LATER, FINANCIAL LESSONS NOT LEARNED

Sunday marks the fifth anniversary of the fateful day that investment bank Lehman Brothers filed for bankruptcy, signaling the start of a frightening financial meltdown, but we are still missing some of the lessons drawn out by the crisis, according to a commentary in yesterday's Wall Street Journal by Prof. Alan Blinder of Princeton University. Years of disgraceful financial shenanigans in the 2000s, some illegal but many just immoral, brought on the Great Recession with virtually no help from any co-conspirators, according to Blinder. Congress and President Obama reacted comparatively weakly with the Dodd-Frank Act of 2010, which Blinder said certainly did not seek to remake the U.S. financial system. A supporter of Dodd-Frank, Blinder has found that the law now seems to be withering on the regulatory vine. Far from being tamed, the financial beast has gotten its mojo back, according to Blinder. Read the full commentary. (Subscription required.)

ANALYSIS: SEC TRIES TO REBUILD ITS REPUTATION

The Securities and Exchange Commission is ending its push to punish financial-crisis misconduct in the same way it started -- with a new chairman vowing that Wall Street's top cop will be tougher in the future, according to a Wall Street Journal analysis today. In 2009, at the depths of the recession, Mary Schapiro took the reins at the SEC, promising to "move aggressively to reinvigorate enforcement" at the agency. She created teams to target various types of alleged misconduct, including one focused on the complicated mortgage bonds that helped set off a global financial panic. The agency has filed civil charges against 138 firms and individuals for alleged misconduct just before or during the crisis, according to the analysis, and it received $2.7 billion in fines, repayment of ill-gotten gains and other penalties. But some of the SEC's highest-profile probes of top Wall Street executives have stalled and are being dropped. In April, former federal prosecutor Mary Jo White took the reins as SEC chairman with a simple enforcement motto: "You have to be tough." She tossed out the SEC enforcement policy that allowed almost all defendants to settle cases without admitting wrongdoing. In August, hedge-fund manager Philip Falcone became the first example of this new approach when he and his firm, Harbinger Capital Partners LLC, admitted to manipulating bond prices and improperly borrowing money from a fund. The policy shift comes as the SEC turns the page on its financial crisis work. New investigations into misconduct linked to the meltdown have slowed to a trickle, and a statute-of-limitations deadline is looming for many cases, which will generally restrict the sanctions that the SEC can enforce for misconduct that is more than five years old. Read more. (Subscription required.)

U.S. FORECLOSURE FILINGS DROP 34 PERCENT AS PROPERTY PRICES RISE

RealtyTrac issued a report showing that foreclosure filings fell 34 percent in the U.S. last month as first-time defaults dropped to the lowest level in almost eight years and rising home prices made it easier for distressed owners to sell, Bloomberg News reported today. Default, auction and repossession filings totaled 128,560 in August, with one in 1,019 U.S. households receiving a notice, the Irvine, Calif.-based data seller said today in a report. It was the 35th consecutive month in which total notices declined on an annual basis, with foreclosure starts plunging 44 percent, RealtyTrac said. Increasing buyer demand and climbing property values are helping some troubled borrowers refinance or sell rather than lose their homes to foreclosure. The S&P/Case-Shiller index of property values in 20 cities rose 12.1 percent in June from a year earlier. Last month, foreclosure starts totaled 55,775, the lowest level since December 2005, and fell on a year-over-year basis in 38 states, RealtyTrac said. Read more.

LATEST ABI PODCAST EXPLORES BANKRUPTCY'S CORPORATE TAX IMPLICATIONS

ABI Resident Scholar Prof. Kara Bruce speaks with Prof. Diane Lourdes Dick of Seattle University School of Law about how companies in chapter 11, such as Solyndra and WaMu, preserve valuable tax attributes through holding companies. Prof. Dick discusses her current research looking into how stakeholders of financially distressed firms exploit various loopholes in chapter 11 to transfer value outside of bankruptcy's distributional norms. Click here to listen to the podcast.

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 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: MORRIS AVIATION LLC V. DIAMOND AIRCRAFT INDUSTRIES INC. (6TH CIR.)

Summarized by Mike Debbeler of Graydon Head & Ritchey LLP

The Sixth Circuit ruled that the airplane manufacturer's opinion of the "quality and reliability" of components was not a fraudulent or negligent misrepresentation where the component manufacturer filed bankruptcy and voided warranties on components shortly after plaintiff purchased the airplane from the manufacturer. The airplane manufacturer's mere opinion as to component manufacturer's financial health did not form the basis of a misrepresentation claim.

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: HOW HAS THE FINANCIAL SECTOR CHANGED SINCE THE LEHMAN FILING?

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post explores how the financial sector has changed since the Lehman Brothers chapter 11 filing on Sept. 15, 2008.

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.

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

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


  


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

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


 
 
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