Professional Compensation/Fees

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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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.

JUSTICE DEPARTMENT ISSUES NEW ATTORNEY FEE GUIDELINES IN LARGE CHAPTER 11 CASES

The Department of Justice today announced new guidelines for the payment of attorneys’ fees and expenses in large chapter 11 cases in order to enhance disclosure and transparency in the compensation process and to help ensure that attorneys’ fees and expenses are based on actual market rates charged to other clients. The guidelines were originally issued in 1996 and are being updated in phases; the first phase, announced today, governs the USTP’s review of fees and expenses requested by attorneys in chapter 11 cases with $50 million or more in assets and $50 million or more in liabilities. Although the guidelines are not subject to the notice and comment process of the Administrative Procedure Act, the USTP nevertheless modified earlier drafts of the guidelines after two public comment periods and a public meeting. The new guidelines require a showing that the rates charged reflect market rates outside of bankruptcy. The guidelines also provide for the:

• use of budgets and staffing plans;
• disclosure of rate increases that occur during the representation;
• use of rates that are based on the attorney’s home office location;
• submission of billing records in an open, searchable electronic format;
• use of independent fee committees and fee examiners; and
• use of model forms and templates for applications for compensation and expenses.

The updated guidelines apply to attorneys’ fees and expenses in cases filed on or after Nov. 1, 2013, that meet the large-case threshold. Until the USTP adopts additional superseding guidelines over the next phases of revisions, the 1996 guidelines will continue in effect for the review of fee applications filed in larger chapter 11 cases by professionals who are not attorneys, as well as in all chapter 11 cases below the large-case threshold and in cases under other chapters of the Bankruptcy Code. Click here to read the guidelines.

FORMER ENERGY SECRETARY: EXPECT MORE GREEN ENERGY BANKRUPTCIES

Former Energy Secretary Steven Chu told the San Francisco Chronicle in an interview that more green energy companies that received government-backed loan guarantees will go bankrupt. “We’re going to have a few more bankruptcies,” Chu told the Chronicle when asked about the controversial Energy Department loan program. “Sometimes it’ll be like Solyndra where you get 3 cents on the dollar. Others, it’ll be 80 cents, or something like that.” The Energy Department’s green loan program came under fire after the high-profile bankruptcy of the solar company Solyndra in August 2011. The company received a $535 million loan guarantee, and the DOE has yet to recover any of those funds. However, Chu defended the loan program, saying that it was more successful than Wall Street. “This is not widely appreciated, but Congress, with the renewable energy loan program and the advanced [vehicle] manufacturing [program], they appropriated enough for $10 billion in losses,” Chu said. “We’re not going to get to $10 billion. We might get to $2 billion.” Solyndra was not the only green energy firm to go under. Beacon Power filed for bankruptcy in October 2011 after getting a $43 million loan guarantee from the DOE, as well as $29 million more from the federal government and the state of Pennsylvania. Abound Solar also went bankrupt, drawing down on $70 million of a $400 million federal loan. The DOE cut the company off in September 2011 after the Solyndra scandal took off. Read more. (Registration required.)

SEC REVIEWING GUILT-FREE SETTLEMENT POLICY

Mary Jo White, head of the Securities and Exchange Commission (SEC), is "actively reviewing" its policy of not requiring bad actors to admit guilt when settling charges, The Hill reported yesterday. White said yesterday that she was reviewing the agency's policy of allowing banks and others facing SEC charges of wrongdoing to settle those claims without admitting to any guilt, to ensure that the watchdog is "making full appropriate use of its leverage." SEC officials have defended the culpability-free policy in the past, but the agency has come under fire from members of both parties, who argue that putting charges to bed without getting any acknowledgment of wrongdoing is coming up short. In May, Sen. Elizabeth Warren (D-Mass.) wrote letters to several financial regulators, asking them to justify pursuing such settlements, as well as their resistance to taking banks to trial. Read more.

ANALYSIS: SOME BANKS HELPING TO DEFRAUD OLDER CONSUMERS

Federal authorities are concerned with the alarming frequency that reputable banks are involved in schemes that are defrauding older Americans of their money, the New York Times reported today. Despite spotting suspicious activity, Zions Bank and another regional bank that has drawn scrutiny, First Bank of Delaware, served as gateways between dubious Internet merchants and their marks — and made money for themselves in the process, according to newly unsealed court documents reviewed by the New York Times. Last November, First Delaware reached a $15 million settlement with the Justice Department after the bank was accused of allowing merchants to illegally debit accounts more than two million times and siphon more than $100 million. The problems at Zions and First Delaware, where the banks became financial conduits and quiet enablers for questionable businesses, extend well beyond those two institutions, federal authorities say. In all, Zions in effect let roughly $39 million be withdrawn from hundreds of thousands of accounts from 2007 to 2009. Indeed, banks across the country, from some of the largest to smaller regional players, help facilitate billions of dollars of fraud each year, according to interviews with consumer lawyers and state and federal prosecutors. Read more.

LATEST ABI PODCAST LOOKS AT ISSUES SURROUNDING CHIEF RESTRUCTURING OFFICERS

ABI Deputy Executive Director Amy Quackenboss talks with Christopher A. Ward and Melissa Hager, co-authors of a recent ABI publication, The Chief Restructuring Officer's Guide to Bankruptcy. Ward and Hager discuss the book and issues surrounding chief restructuring officers in bankruptcy proceedings. Click here to listen to the podcast.

To purchase The Chief Restructuring Officer's Guide to Bankruptcy from the ABI Bookstore, please click here.

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

Utilizing a case study, ABI's panel of experts on July 15 will explore issues surrounding a lender’s decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel will also walk attendees through the necessary mathematical analyses used to analyze these issues. The webinar will take place from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS CENTRAL STATES BANKRUPTCY WORKSHOP ON THURSDAY

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

ABI IN-DEPTH

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

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

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

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

NEW CASE SUMMARY ON VOLO: GODDARD V. HELDT (IN RE A. HELDT; 10TH CIR.)

Summarized by Lars Fuller of Baker & Hostetler LLP

The Tenth Circuit affirmed the rulings of the district and bankruptcy courts in dismissing a chapter 7 trustee's claim to avoid as fraudulent the debtors’ transfer of title to their sister in the mother's residence. The Tenth Circuit affirmed the lower court’s findings that the debtor's quitclaim to the sister of title had incidental value to the estate and thus was not avoidable as a fraudulent transfer.

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

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

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

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

ABI Quick Poll

Law firms should provide support for law student-staffed bankruptcy clinics for consumer debtors.

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

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

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

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

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

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

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

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

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

COMMENTARY: THE INTANGIBLE COSTS OF BANKRUPTCIES

While most experts examine direct costs, such as filing fees, professionals fees and court fees, there are indirect costs of a company’s financial distress, which are more abstract, like lost revenue, lost opportunities and lost good will, according to a commentary by Prof. Stephen Lubben in the New York Times DealBook blog on Monday. Some of these costs may be of concern to the company’s stakeholders, but not to policy makers if, for example, financial distress simply results in the shifting of sales from the distressed firm to a competitor firm – unless the competitor is abroad, according to Lubben. If most of the cost is incurred long before bankruptcy, according to Lubben, then we may need to reform the chapter 11 portion of the bankruptcy code in a way that will allow those costs to be cut sooner. Read the full commentary.

ANALYSIS: BURDENED BY OLD MORTGAGES, BANKS ARE SLOW TO LEND NOW

While the average rate on a 30-year fixed-rate mortgage hit 3.53 percent last week, thousands of would-be homeowners are being locked out of the market because lenders, facing a hard-line stance from Fannie Mae and Freddie Mac, have grown wary of making new loans, the Wall Street Journal reported yesterday. The two mortgage giants have been forcing banks to take back an increasing number of loans that the banks made during the boom years and sold to Fannie and Freddie. To protect themselves from such demands in the future, banks are ratcheting up credit and documentation standards for new mortgages. This play-it-safe stance by banks threatens to undercut the Federal Reserve's latest effort to push down mortgage rates by buying up mortgage-backed securities. Even if rates keep falling, many people will find it much harder to take advantage. Read more. (Subscription required.)

REPORT: CONSUMER CREDIT DELINQUENCIES NEAR 6-YEAR LOW

The American Bankers Association (ABA) said that U.S. consumer-loan delinquencies dropped to their lowest level in nearly six years during the second quarter of 2012, Bloomberg News reported today. Delinquencies across eight loan categories fell a total of 11 basis points to 2.24 percent of all accounts in the second quarter, the best showing since the fourth quarter of 2006, when the rate was 2.23 percent. The rate has now been below the 15-year average of 2.40 percent for two consecutive quarters, the ABA said in its Consumer Credit Delinquency Bulletin. Delinquencies on bank card debt fell from 3.08 percent of all accounts in the first quarter to an 11-year low of 2.93 percent, well below the 15-year average of 3.91 percent. Read more.

SUBPRIME SECURITIES GAIN 30 PERCENT AS GOLDMAN, CERBERUS TARGET MARKET

U.S. home-loan securities without government backing, the kind of debt that sparked the worst financial crisis since the Great Depression, shrank last quarter to less than $1 trillion for the first time in eight years, leaving fewer bonds to meet soaring demand as housing recovers, Bloomberg News reported today. The non-agency mortgage bond market has contracted from $2.3 trillion in mid-2007, when a property bubble fueled by shoddy loans burst, according to Federal Reserve data. It’s fallen to about $970 billion after record homeowner defaults, borrower refinancing and limited sales of new debt. Growing interest in a diminishing asset has bolstered a rally that has pushed returns on subprime-backed securities to almost 30 percent this year. Cerberus Capital Management LP and Goldman Sachs Group Inc. are among firms that have raised money for new funds targeting the bonds, as investors speculate on the real estate recovery or seek to earn higher returns as the Fed pushes yields on safer debt to record lows. Read more.

COMMENTARY: WHY DODD-FRANK RULES KEEP LOSING IN COURT

Since the mid-2000s, regulations of the Securities and Exchange Commission have been challenged six times in the federal court of appeals in Washington, D.C., and the SEC lost every time, according to a commentary in the Wall Street Journal today. Some former SEC staffers and investor advocates try to blame the judges of the U.S. Court of Appeals for the D.C. Circuit, saying that they favor Wall Street. The "blame-the-appellate-judges" theory suffered its latest setback last Friday, when a judge appointed by President Obama, in the district court in Washington, D.C., struck down the controversial rule of the Commodity Futures Trading Commission (CFTC) that placed new "position limits" on the amounts of commodities investors can hold. Financial regulators should be particularly attentive to the financial consequences of their actions when adopting regulations, the commentary said. Other agencies have conducted sophisticated cost-benefit analyses for decades, and these are reviewed (and sometimes rejected) by a special White House office of regulation. As an independent agency, the SEC is exempt from that external expert review. Its rules have suffered as a result, according to the commentary. Read the full commentary.

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A COLLEAGUE AND ABI LEADER

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 share your thoughts with many others, and post as often as you'd like.

ABI IN-DEPTH

SEE THE N.L. EAST DIVISION CHAMPION WASHINGTON NATIONALS IN THE PLAYOFFS: ABI HAS YOUR TICKET FOR OCTOBER 10!

Don't miss playoff baseball in Washington, D.C.! Only 20 tickets are available to the ABI Endowment's special event at the Nationals first home playoff game to be played on Oct. 10. For $400, you will receive a game ticket to a luxury suite, food and open bar.Click here to register!

Sponsorships Are also Available!
Stand out from the crowd and sponsor this historic playoff event! Bring a client; tickets included with your sponsorship. All sponsorships are tax deductible. Click here for details.

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

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

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

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

LATEST CASE SUMMARY ON VOLO: SUHAR V. BRUNO (IN RE NEAL; 6TH CIR.)

Summarized by Robert Miller of the U.S. Bankruptcy Court for the Middle District of North Carolina

The Sixth Circuit found that the debtor's assumption of the marital credit card debt of the debtor and the defendant, as part of a separation agreement, should not impact whether the debtor received reasonably equivalent value for transfers to the defendant in the separation agreement. The Sixth Circuit also followed recent precedent holding that a separation decree under Ohio law neither adjudicates reasonably equivalent value nor has a preclusive effect in a subsequent bankruptcy proceeding to determine whether reasonably equivalent value was transferred as part of the separation agreement.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: STOCKTON'S CREDITORS CHALLENGE CITY'S ELIGIBILITY TO FILE FOR CHAPTER 9

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the court challenge from Stockton, Calif.'s creditors about the city's eligibility to file for chapter 9 protection.

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

ABI Quick Poll

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

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

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

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

October
- Chicago Consumer Bankruptcy Conference
     October 8, 2012 | Chicago, Ill.
- ABI Endowment Event: Nationals Playoff Game
     October 10, 2012 | Washington, D.C.
- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar
October 15, 2012
- ABI/Bloomberg Distressed Lending Conference
October 16, 2012 | New York, N.Y..
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy
- ABI/St. John's "Bankruptcy and Race: Is There a Relation?" Symposium
     October 19, 2012 | Queens, N.Y.
- ABI Program at NCBJ's Annual Conference
     October 26, 2012 | San Diego, Calif.

November
- U.S./Mexico Restructuring Symposium
     November 7, 2012 | Mexico City, Mexico
- Professional Development Program
     November 9, 2012 | New York, N.Y.
- Detroit Consumer Bankruptcy Conference
     November 12, 2012 | Detroit, Mich.
- Winter Leadership Conference
     November 29 - December 1, 2012 | Tucson, Ariz.

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

2013

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