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Commentary Allow Private Education Loan Debts to Be Erased in Bankruptcy

ABI Bankruptcy Brief | December 20 2012
 
  

December 27, 2012

 
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  NEWS AND ANALYSIS   

COMMENTARY: ALLOW PRIVATE EDUCATION LOAN DEBTS TO BE ERASED IN BANKRUPTCY

As total student loan debt exceeded $1 trillion in 2012, debt from student loans issued by private for-profit lenders is still not eligible to be discharged under the Bankruptcy Code, according to a commentary by Rep. Steve Cohen (D-Tenn.) in yesterday's edition of U.S. News & World Report. Private for-profit student loans often lack consumer protections and typically have variable interest rates with no caps, exorbitant fees, and hidden charges, according to Cohen. Private lenders do not deserve protection under the Bankruptcy Code because the "undue hardship" provision, first enacted in 1976, was intended to protect the taxpayer dollars that fund federal student loan programs, according to Cohen. "Yet Congress, in 2005, extended this protection to for-profit educational lenders, even though no taxpayer money was at stake," Cohen writes. He introduced H.R. 2028, the "Private Student Loan Bankruptcy Fairness Act," which would allow private education loan debts to once again be erased in bankruptcy just like other types of debts. "By restoring bankruptcy dischargeability, my legislation will ensure that lenders only make prudent loans and will encourage private lenders to work with financially distressed borrowers to modify loan terms," according to Cohen. Read the full commentary.

ANALYSIS: DO OR DIE FOR FOUR RETAILERS

While 2013 will be a tough year for retailers due to the tepid economic recovery, Best Buy, J.C. Penney, RadioShack and Sears face a critical 12 months, the Wall Street Journal reported today. These unlucky retailers are going into the New Year with extra woes: slipping sales, questionable strategies and tight finances. Best Buy Co. has been plagued by the retail phenomenon called "showrooming," where shoppers examine products in its stores but buy online through rivals. J.C. Penney Co. has been trying to shed its image as an old-fashioned department store, but its rapid and radical makeover has left it burning through cash and struggling to attract shoppers. RadioShack Corp.'s bet on mobile phones and tablets has backfired. Sears Holdings Corp.'s sales and profits continue to slide as the department store chain has been shoring up its liquidity by selling itself off in pieces—but some of its remaining assets might be tough to unload at a time when retailing is under pressure. Read more. (Subscription required.)

CONSUMER CONFIDENCE DECREASES IN DECEMBER

Confidence among U.S. consumers declined more than forecast in December as the budget debate in Washington, D.C., soured Americans' outlook on the economy, Bloomberg News reported today. The Conference Board's index of sentiment fell to 65.1 from a revised 71.5 reading the prior month, figures from the New York-based private research group showed today. A drop in consumer expectations for the next six months to a one-year low coincides with mounting concerns about looming tax increases and government budget cuts in 2013 that threaten expansion. At the same time, employment gains, rising home values, and lower gas prices may keep spending, which accounts for about 70 percent of the economy, from foundering. Read more.

SEC GOING HIGH-TECH WITH REAL-TIME TRADE DATA

As computing power and big data have revolutionized stock trading in recent years, the Securities and Exchange Commission is trying to catch up, the Washington Post reported today. This month, the agency is in the final phases of testing software that will stream real-time trade data into its headquarters, helping regulators better grasp the market’s plumbing. The technology should go live in early 2013, at a cost of $2.5 million for the year. The SEC is still coping with the public fallout from the “flash crash” that took place on May 6, 2010, when the stock market plunged nearly 1,000 points in minutes then whipsawed back up. It took the SEC about four months to unwind the billions of orders that took place that day and issue a report of what happened. Although the SEC started collecting the data in June 2010, it could not aggregate them into a single database for analysis until three months later. The incident made the wide gulf in technical prowess between the regulators and the regulated painfully clear, prompting the SEC to explore hiring an outside firm that could gather up-to-the-minute market feeds from the public exchanges. Read more.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: IN RE SPANSION INC. (3D CIR.)

Summarized by Eduardo Glas of McCarter & English, LLP

The Third Circuit ruled that an agreement that settled litigation between Spansion and Apple at the International Trade Commision pursuant to which the debtor agreed not to sue Apple in the future over the use of flash memory products was a license, and its rejection by the debtor pursuant to 11 U.S.C. § 365 permitted Apple to elect to retain its rights as licensee under 11 U.S.C. § 365(n).

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: CALPERS SLAMS SAN BERNARDINO BANKRUPTCY AS "SHAM"

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog discusses CalPERS firing back at the city of San Bernardino and its pendency plan for operating during the Chapter 9 case, calling it “criminal” and a “sham.” Since filing for bankruptcy, the city has stopped making its biweekly payments to CalPERS. As a result, San Bernardino now owes CalPERS approximately $8 million.

For more on the San Bernardino case and chapter 9 issues, make sure to order a copy of ABI's latest publication, Municipalities in Peril: The ABI Guide to Chapter 9, Second Edition, now available for pre-order in ABI's Bookstore.

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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  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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Analysis Better Lending Standards Helping to Reduce Foreclosure Starts

ABI Bankruptcy Brief | February 19 2013
 
  

February 19, 2013

 
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  NEWS AND ANALYSIS   

ANALYSIS: BETTER LENDING STANDARDS HELPING TO REDUCE FORECLOSURE STARTS

While numerous foreclosure prevention efforts at the national, state and local levels, along with rising home values, have helped drop U.S. foreclosure starts to a six-year low in January, the fundamental factor driving the reduction is better lending practices, according to a Forbes.com commentary yesterday. More than 5 percent of still-active loans originated in 2006 were in some stage of foreclosure as of the fourth quarter of 2012 -- the highest foreclosure rate of any year going back to 2000. That was followed by 2007 vintage loans with a 4.75 percent foreclosure rate, 2005 vintage loans with a 3.52 percent foreclosure rate, and 2008 vintage loans with a 2.95 percent foreclosure rate. The only other loan vintage with a foreclosure rate above 2 percent was 2004, with a 2.16 percent foreclosure rate. The foreclosure rate on 2009 vintage loans dropped to 1.11 percent, and the foreclosure rate has steadily decreased on loans originated in the three years since -- all of which have foreclosure rates below 1 percent. Read more.

COMMENTARY: THE SECOND-MORTGAGE SHELL GAME

Though the federal government and 49 state attorneys general reached a $25 billion deal last February with the country's five largest mortgage servicers (Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial), it is now clear that the settlement has not worked as planned, according to a commentary in yesterday's New York Times. Banks have dragged their feet on modifying first mortgages, much less agreeing to forgive part of the principal on homes that are underwater. A lesser-known but equally grave problem is that banks have been given a backdoor mechanism to continue foreclosures at the same pace as before. The problem involves second mortgages, which millions of homeowners took out during the housing bubble. It is estimated that as much as a quarter of all mortgage debt in the U.S. is in the form of second mortgages. Some of these loans were taken out to finance home improvements, others were part of a subprime product known as an "80/20 mortgage," in which 80 percent of the purchase price was covered by a first, adjustable-rate mortgage, and the remainder by a second mortgage, often with a much higher interest rate. The second mortgages have given the banks a loophole: each dollar a bank forgives goes toward fulfilling its obligation under last year’s settlement. But many lenders have made it a point to almost exclusively modify secondary loans while all but ignoring the troubled, primary mortgages, according to the commentary. Read the full commentary.

SHIFTING STRATEGY, PROSECUTORS BUILD NEW CASES AGAINST BIG BANKS

Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks, the New York Times DealBook Blog reported today. In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations. So far, the Justice Department has extracted guilty pleas only from remote subsidiaries of big foreign banks, a move that has inflicted reputational damage but little else. The new strategy first materialized in recent settlements with UBS and the Royal Bank of Scotland, which were accused of manipulating interest rates to bolster profit. As part of a broader deal, the banks' Japanese subsidiaries pleaded guilty to felony wire fraud. Read more.

ANALYSIS: FISCAL TROUBLE AHEAD FOR MOST FUTURE RETIREES

For the first time since the 1930s, a majority of Americans are headed toward a retirement in which they will be financially worse off than their parents, jeopardizing a long era of improved living standards for the nation’s elderly, the Washington Post reported yesterday. The Great Recession and the weak recovery darkened the retirement picture for significant numbers of Americans. The economic downturn exacerbated long-term factors that were already eroding the financial standing of aging Americans: an inexorable rise in health care costs, growing debt among older Americans and a shift in responsibility from employers to workers to plan for retirement. The consequence is that the nation is facing a huge retirement savings deficit -- as much as $6.6 trillion, or about $57,000 per household, according to a U.S. Senate report. Using data on household finances collected by the Federal Reserve, the Center for Retirement Research estimates that 53 percent of American workers 30 and older are on a path that will leave them unprepared for retirement. That marks a sharp deterioration since 2001, when 38 percent of Americans were at risk of declining living standards in old age. In 1989, 30 percent faced that risk. Read more.

REGULATOR PROBES "DARK POOL" INVESTING

The Financial Industry Regulatory Authority (FINRA) in late 2012 sent examination letters to about 15 dark-pool operators seeking information such as how the trading systems handle customer orders, what they disclose to clients and whether affiliates of the pool operators have access to client trading information, the Wall Street Journal reported on Saturday. In dark-pool investing, investors post buy-and-sell orders away from the public market. Most of the letters have been returned, and the regulator is evaluating the responses, said John Malitzis, executive vice president of market regulation at FINRA. Unlike stock exchanges, which are regulated by the Securities and Exchange Commission, the trading venues in dark pools are not required to regularly tell market regulators details about how they handle orders. Dark pools have become controversial as their share of stock trading has increased. One area of concern is whether certain dark-pool clients get more information than other investors about how the venues operate, giving them an edge, said Malitzis. "We asked a lot of questions about disclosure," he said. "We're trying to get a sense of what firms are doing and how they're doing it." Read more. (Subscription required.)

LIVE STREAM AVAILABLE FOR THURSDAY'S CHAPTER 11 COMMISSION HEARING AT VALCON 2013

For those not able to attend the VALCON 2013 conference starting tomorrow in Las Vegas, there will be a live webstream of Thursday's Chapter 11 Commission field hearing looking at valuation issues. The hearing will take place from 2-4 p.m. PT (5-7 p.m. ET) and will be streamed live at http://commission.abi.org.

JUST ADDED FOR APRIL! ABI 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!

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

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

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

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

Click here to register today!

ABI IN-DEPTH

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

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

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

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

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

LATEST CASE SUMMARY ON VOLO: BLACK V. BONNIE SPRINGS FAMILY LTD. PARTNERSHIP (IN RE BLACK; 9TH CIR.)

Summarized by Tom Phinney of Parkinson Phinney

The Ninth Circuit BAP affirmed the summary judgment in favor of the creditor, which excepted debts from discharge under § 523(a)(6) based on the preclusive effect of a Nevada state court judgment for abuse of process, nuisance and "oppression."

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: S CORPORATION MAY NOT PAY SHAREHOLDERS' POST-PETITION TAX OBLIGATIONS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Finding that it would violate the absolute priority rule, the U.S. Bankruptcy Court for the Western District of North Carolina in In re Carolina Internet Ltd. held that an insolvent S corporation may not pay post-petition taxes on behalf of its shareholders because a corporation’s creditors have priority over its shareholders, according to a recent blog post.

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

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ACBPIKC 2013
Feb. 20-22, 2013
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Feb. 22, 2013
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March 7-9, 2013
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"Nuts and Bolts" Program at ASM- A Must for Junior Professionals or Those New to Bankruptcy Practice
April 18, 2013
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May 15, 2013
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June 13-16, 2013
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  CALENDAR OF EVENTS
 

2013

February
- VALCON 2013
     February 20-22, 2013 | Las Vegas, Nev.
- 9th Annual Wharton
Restructuring and Distressed Investing Conference

     February 22, 2013 | Philadelphia, Pa.

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

April
- 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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Commentary Housing Prices Stabilizing Where Lenders Can Enforce Contracts

ABI Bankruptcy Brief | January 10 2013
 
  

January 10, 2013

 
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  NEWS AND ANALYSIS   

COMMENTARY: HOUSING PRICES STABILIZING WHERE LENDERS CAN ENFORCE CONTRACTS

Data from Case-Shiller, Lender Processing Services and other housing trackers suggest that the housing rebound is strongest in states where lenders can enforce contracts, according to an editorial in yesterday's Wall Street Journal. The editorial refers to the difference between "nonjudicial" states that have streamlined foreclosure procedures and the 23 "judicial" states that force lenders to go to court to enforce mortgage contracts. Prices are stabilizing in the former but still faltering in much of the latter. Housing markets cannot clear until lenders can foreclose on delinquent borrowers and prices fall far enough to attract buyers who can afford the mortgage payments, according to the editorial. Politicians and housing lobbyists decry nonjudicial foreclosure as unfair to borrowers, but every homeowner in any state has the right to challenge a foreclosure in court, regardless of whether they live in a nonjudicial state. The main difference is that in a judicial state the lender has to file a lawsuit to initiate a foreclosure, which can take months or years to settle depending on the state. Lender Processing Services estimates that the foreclosure inventory in judicial states is more than triple that of nonjudicial states. The Mortgage Bankers Association's latest National Delinquency Survey, which ended September 30, showed that of the top five states with the highest share of loans in foreclosure, four were judicial: Florida (13.04 percent), New Jersey (8.87 percent), Illinois (6.83 percent) and New York (6.46 percent). Read the full editorial. (Subscription required.)

ANALYSIS: SHORT SALES IN CALIFORNIA SURPASS SALES OF FORECLOSED HOMES

Real estate research firm DataQuick is reporting that short sales in California in recent months have surpassed sales of foreclosed homes for the first time since the start of the housing crash in 2007, the Los Angeles Times reported yesterday. The transactions now represent about a quarter of the market, a surge driven by rising home prices, government crackdowns on foreclosures and banks' increasing capacity to process the deals. Lenders have revamped short sale departments, streamlining paperwork, creating new software systems and enlisting newly formed companies as liaisons with borrowers. Some institutions are even paying homeowners sizable sums to move, similar to "cash for keys" arrangements used as an alternative to eviction in foreclosures. Bank of America pays up to $30,000 in relocation assistance for certain successful short sales. JPMorgan Chase will pay up to $35,000. Wells Fargo offers similar aid, though it declined to specify an amount. Read more.

LENDER REVIEW OF BORROWERS TIGHTENED UNDER CFPB'S NEW MORTGAGE RULES

The U.S. Consumer Financial Protection Bureau issued a rule today that for the first time forces lenders to verify borrowers’ ability to repay mortgages by confirming income and assets, Bloomberg News reported. The rule, mandated by Congress in response to lax underwriting standards before the 2008 financial crisis, will also offer some legal protection for lenders who follow guidelines for qualified mortgages. The measure also insulates issuers of qualified mortgages at prime interest rates from future lawsuits. The qualified-mortgage rule will apply to home loans in the underwriting phase, whether made by banks such as Bank of America Corp. and/or non-depository originators. The rule on repayment ability is the first in a series of rules that the CFPB will issue that will shape the post-crisis mortgage market. The bureau will unveil rules on mortgage servicing at a Jan. 17 hearing in Atlanta. Read more.

CONSUMER DEBT INCREASES ON MORE CAR, SCHOOL LOANS

The Federal Reserve issued a report on Tuesday showing that consumers increased their borrowing in November by $16 billion from October to a seasonally adjusted record of $2.77 trillion, the Associated Press reported yesterday. Borrowing that covers autos and student loans increased $15.2 billion. A category that measures credit card debt rose just $817 million. The sharp difference in the borrowing gains illustrates a broader trend that began during the Great Recession. Four years ago, Americans carried $1.03 trillion in credit card debt, an all-time high. In November, that figure was 16.5 percent lower. At the same time, student loan debt has increased dramatically. The category that includes auto and student loans is 22.8 percent higher than in July 2008. Read more.

LATEST BLOOMBERG "BILL ON BANKRUPTCY" VIDEO: FEE AGREEMENT PUTS LAW FIRM IN TRUSTEE'S SIGHTS

Law firm Kaye Scholer LLP and financial advisor Capstone Advisory Group LLC are in the sights of a U.S. Trustee aiming to claw back $12 million for an undisclosed agreement to share fees awarded in the now-completed bankruptcy of GSC Group Inc. In their latest video, Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle pose the question of whether the dispute involves a serious ethical lapse or a hypertechnical reading of an ambiguous statute. Click here to view.

CHAPTER 9s, NONPROFITS AND OTHER NONTRADITIONAL RESTRUCTURING PROCESSES AMONG TOPICS TO BE DISCUSSED AT ABI'S 31ST ANNUAL SPRING MEETING

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

• 17th Annual Great Debates on Hot Business and Consumer Topics
• Mediation: The Rational Alternative
• 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
• Law Firm Bankruptcies
• How to Be a Successful Expert
• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors
• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes
• And much more!

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

Register today!

ABI IN-DEPTH

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

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

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

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

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

Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

LATEST CASE SUMMARY ON VOLO: ELLIOT V. SUTTON (IN RE ELLIOTT; 5TH CIR.)

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

Affirming the judgment of the District Court for the Western District of Louisiana, the Fifth Circuit held that a bankruptcy court may sua sponte convert a debtor’s chapter 13 case to a case under chapter 7 even when the debtor opposes conversion and moves to dismiss the case pursuant to § 1307(b).

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: EXAMINING CALPERS’ LOSS IN THE SAN BERNARDINO CHAPTER 9 CASE

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new post examines the decision of a bankruptcy judge to deny the motion of the California Public Employees’ Retirement System (CALPERS) that it filed in the bankruptcy proceedings of the city of San Bernardino to have the automatic stay lifted with respect to overdue pension payments. Bankruptcy Judge Meredith Jury based her denial partly on the city’s representations that forcing the payment of outstanding CALPERS obligations at this time would be a “death knell” for the city.

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

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NEXT EVENT:

 

 

WCBC 2013
Jan. 21, 2013
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COMING UP:

 

 

ACBPIKC 2013
Jan. 24-25, 2013
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ACBPIKC 2013
Feb. 7-9, 2013
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ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions
Feb. 19, 2013
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ACBPIKC 2013
Feb. 20-22, 2013
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Paskay 2013
March 7-9, 2013
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BBW 2013
March 22, 2013
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ASM 2013
April 18-21, 2013
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  CALENDAR OF EVENTS
 

2013

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

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


  

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

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

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


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

ABI Bankruptcy Brief | January 22 2013
 
  

January 22, 2013

 
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  NEWS AND ANALYSIS   

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

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

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

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

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

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

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

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

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

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

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

COMMENTARY: TAKEAWAYS FROM ZELL'S TRIBUNE FIASCO

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

NEW SECURITIES LAWS AIM TO HELP START-UPS RAISE CAPITAL

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

PROFILE: TREASURY SECRETARY NOMINEE VALUES SOCIAL SAFETY NET, COMPROMISE

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

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

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

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

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

Register today!

ABI IN-DEPTH

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

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

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

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

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

Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

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

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

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

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

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

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

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

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

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

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

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

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THURSDAY:

 

 

ACBPIKC 2013
Jan. 24-25, 2013
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COMING UP:

 

 

ACBPIKC 2013
Feb. 7-9, 2013
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ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions
Feb. 19, 2013
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ACBPIKC 2013
Feb. 20-22, 2013
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Paskay 2013
March 7-9, 2013
Register Today!

 

 

 

BBW 2013
March 22, 2013
Register Today!

 

 

 

ASM 2013
April 18-21, 2013
Register Today!

 
   
  CALENDAR OF EVENTS
 

2013

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

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


  

 

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

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


 
 
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Changes in Mortgage Servicing Practices Take Effect Today

ABI Bankruptcy Brief | September 27, 2012
 
  

October 2, 2012

 
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  NEWS AND ANALYSIS   

CHANGES IN MORTGAGE SERVICING PRACTICES TAKE EFFECT TODAY

A significant element of the government’s historic settlement with big banks over foreclosure abuses takes effect today, when firms face a deadline for carrying out more than 300 changes in the way they service mortgages and treat struggling homeowners, the Washington Post reported today. Much of the attention surrounding this year’s $25 billion government settlement has focused on the banks' agreement to reduce the loan balances of some borrowers and undertake more refinancings for thousands of Americans. Although the new standards have not received as much attention, they are crucial for fixing a broken mortgage system, government officials said. The standards forbid the pervasive practice of "robo-signing," and mortgage servicers can no longer foreclose on a borrower while simultaneously negotiating a loan modification, a practice known as "dual tracking." They must provide customers with a single point of contact, rather than shuffling them around to different employees with each call. Read more.

U.S. CREDIT CARD LENDERS SHUN ADD-ONS AS CFPB CRACKS DOWN

JPMorgan Chase & Co., Bank of America Corp. and American Express Co. are among credit card lenders retreating from a $2.4 billion market as regulators seek curbs on deceptive marketing of products including debt cancellation, Bloomberg News reported today. Scrutiny from the Consumer Financial Protection Bureau (CFPB) has led to fines against banks including Capital One Financial Corp. and Discover Financial Services, prompting them to curtail sales of so-called add-ons that offer to help customers pay credit card bills if they get sick or lose their jobs, or help monitor their credit. American Express, the biggest U.S. credit-card issuer by purchases, said yesterday that it will pay $112.5 million to settle claims that it violated consumer safeguards from marketing to collections in products sold to about 250,000 customers. That case did not involve add-on products. The crackdown is CFPB Director Richard Cordray's first enforcement campaign after the Dodd-Frank Act consolidated regulation of retail financial products under one federal agency. With U.S. banks already complaining that regulation has squeezed revenue, the bureau is considering new limits on payday lending and fees for checking overdrafts, and has proposed an overhaul of mortgage practices. Read more.

COMMENTARY: MONEY MARKET MUTUAL FUNDS AND MORAL HAZARD

The wrangling over money-market mutual funds is a vivid illustration of some of the hidden costs of bailouts — in this case, the government rescue of the $2.6 trillion money-market mutual fund industry in 2008 that was so successful it took away any sense of urgency for major reform, according to a commentary in Friday’s Washington Post. Last month, SEC Chair Mary Schapiro canceled plans to move forward on a reform proposal for regulating the mutual fund industry after concluding she did not have the votes for passage of the proposal. SEC Commissioner Luis A. Aguilar had indicated he would oppose her proposal, favoring a more overarching approach to overseeing the cash-management industry. To step up pressure on the SEC, Treasury Secretary Timothy Geithner’s letter to the Financial Stability Oversight Council (FSOC), created by the Dodd-Frank Act, advocated for regulators to step up oversight of money-market mutual funds. Read the full commentary.

CALIFORNIA DAIRIES GOING BROKE DUE TO FEED, MILK PRICES

Across California, the nation's largest dairy state, dozens of dairy operators large and small have filed for bankruptcy in recent months, and many teeter on the edge of insolvency, the Associated Press reported on Saturday. Others have sold their herds or sent them to slaughter and given up on the business. Experts say California dairymen face a double hit to their operations: exorbitant feed costs and lower milk prices. The Midwest drought has led to corn and soybean costs increasing by more than 50 percent this summer, stressing dairymen from Wisconsin and Minnesota to Missouri. But in California, milk prices have also lagged behind those in the rest of the nation, exacerbating the crisis. And while milk revenues in California have soared to over $7.5 billion in 2011, making milk the top agricultural commodity, higher revenues mean little, farmers say, because it costs so much more to produce the milk. Read more.

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!

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 either Oct. 9 or 10 (depending on Major League Baseball scheduling). 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 sgerdano@abiworld.org.

LATEST CASE SUMMARY ON VOLO: MATOS V. RIVERA (IN RE MATOS; 1ST CIR.)

Summarized by Guy Moss of Riemer & Braunstein LLP

As a threshold matter, the First Circuit BAP ruled that all tax refunds received by a chapter 13 debtor are property of the estate whether pursuant to 11 U.S.C. § 541(a) to the extent that they are rooted in pre-petition earnings, or 1306 to the extent that they relate to earnings from services performed by the debtor post-petition. Reversing the rulings of the bankruptcy court, the BAP next determined that an objection to the debtor's claimed exemption in the refund (defined below) did not lie because (1) the refund was property of the estate, (2) the exemption was valid on its face, and (3) the trial court incorrectly considered an alleged infirmity in plan confirmation, i.e., whether the refunds had to be devoted entirely to a plan pursuant to 11 U.S.C. §§ 1322(a)(1) and 1325(b)(1)(B), to determine the validity of an exemption. Rather, consideration of that issue arises only if and when there is an objection to the plan. The BAP reserved comment on whether such an objection to an exemption is a necessary "placeholder" to preserve the objecting party's ability to object to plan confirmation on the ground that not all future earnings and income are being devoted to plan payments.

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: PILGRIM'S PRIDE OPINION ALLOWS ENHANCEMENTS IN BANKRUPTCY, OFFERS COMPREHENSIVE OVERVIEW OF BANKRUPTCY FEES

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines the Fifth Circuit's ruling in Matter of Pilgrim's Pride Corp., No. 11-10774 (5th Cir. 8/10/12), to allow a $1 million fee enhancement to a chief restructuring officer who achieved results described as "rare and exceptional." The court rejected the argument that a recent Supreme Court opinion on fee-shifting precluded enhancements, and in the process set forth a comprehensive framework for allowance of professional fees in bankruptcy.

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

ABI Quick Poll

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

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

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

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

INSOL INTERNATIONAL

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

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THIS WEEK:

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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COMING UP:

 

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
Register Today!

 

SE 2012
Oct. 16, 2012
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SE 2012
Oct. 18, 2012
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ABI/ST. JOHN'S "BANKRUPTCY AND RACE: IS THERE A RELATION?" SYMPOSIUM
Oct. 19, 2012
Register Today!

 

ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING
Oct. 26, 2012
Register Today!

 

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
Register Today!

 
   
  CALENDAR OF EVENTS
 

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
- 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.


 
 
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Report Average Credit Card Debt Late Payments Fall in First Quarter

ABI Bankruptcy Brief | May 21 2013
 
  

May 21, 2013

 
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  NEWS AND ANALYSIS   

REPORT: AVERAGE CREDIT CARD DEBT, LATE PAYMENTS FALL IN FIRST QUARTER

Credit reporting agency TransUnion said that the rate of credit card payments at least 90 days overdue fell to 0.69 percent in the first quarter from 0.85 percent a year earlier — a drop of nearly 19 percent, the Associated Press reported today. The January-March card delinquency rate was also down from 0.73 in the October-December quarter, when many consumers ramped up credit use to finance holiday season purchases. Average credit card debt per borrower fell 1.7 percent to $4,878 in the first quarter from $4,962 in the same period last year, TransUnion said. On a quarterly basis, it declined 4.8 percent from $5,122 in the fourth quarter. TransUnion, however, has forecast that average credit card debt will rise by roughly 8 percent to $5,446 by the end of this year — the highest level in four years. Read more.

EDITORIAL: DERIVATIVES REFORM ON THE ROPES

New rules to regulate derivatives, adopted last week by the Commodity Futures Trading Commission, are a victory for Wall Street and a setback for financial reform, according to a New York Times editorial yesterday. The regulations, required under the Dodd-Frank reform law, are intended to impose transparency and competition on the notoriously opaque multitrillion-dollar market for derivatives, which is dominated by five banks: JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley. In the run-up to the financial crisis — and since — the lack of transparency and competition has fostered recklessness and instability, according to the editorial. Under the Dodd-Frank law, derivatives are supposed to be traded on “swap execution facilities,” which are to operate much like the exchanges that exist for equities and futures. Even as the new rules shift much of the trading to those facilities, the editorial says that they will also preserve the ability of the banks to maintain their old practices. For instance, the commission’s initial proposal called for hedge funds, asset managers and corporations to contact at least five banks when seeking prices for a derivatives contract. In a major concession to the banks, that number was lowered to two in the final rule. Read the full editorial.

REGULATORS TO VOTE ON OVERSIGHT OF NONBANK FINANCIAL INSTITUTIONS

Treasury Secretary Jacob Lew told the Senate Banking Committee that U.S. regulators will soon vote on which large nonbank financial firms will face much stricter government oversight as policymakers seek to reduce risks posed by Wall Street to the broader economy, the Wall Street Journal reported today. Lew appeared before the Senate Banking Committee to discuss the work of federal regulators to implement the 2010 Dodd-Frank financial-overhaul law and limit potential risks to the financial system. The Financial Stability Oversight Council, comprised of Treasury officials and other regulators, have struggled in deciding which large, complex financial firms should be subject to higher capital and other rules because of the potential risks they pose to the financial system. "The Council discussed its ongoing analysis at its most recent meeting on April 25, and it expects to vote on proposed designations of an initial set of nonbank financial companies in the near term," Lew said. While federal officials have declined to say publicly which firms are being considered for a "systemic" designation, at least three companies have reached the final of three stages in the review process. Prudential Financial Inc., American International Group Inc. and the GE Capital unit of General Electric Co. have advanced to the third stage, though regulators are considering a number of firms that could ultimately be subject to the enhanced oversight. "Yields and volatility in fixed-income markets are very low by historical standards, which may be providing incentives for market participants to 'reach for yield' by investing in lower-grade credit," Lew said in prepared remarks. Read more. (Subscription required.)

Click here to read Lew's prepared testimony for today's Senate Banking Committee hearing.

ANALYSIS: WIELDING HARRISBURG EXAMPLE, SEC AIMS FOR CITIES TO COMPLY WITH DISCLOSURE RULES

The Securities and Exchange Commission's rebuke of the city of Harrisburg this month over fraudulent statements and long-overdue disclosures to its bondholders could be seen as a warning to state and local politicians who offer too rosy a view of their financial health, according to a Reuters analysis yesterday. However, clear-cut cases of officials misstating their city's finances, such as Harrisburg, remain relatively rare, and the main goal of the U.S. Securities and Exchange Commission is far more basic: cajoling thousands of cities, counties and other organizations that sell bonds into complying with its disclosure rules. When the SEC charged the cash-strapped capital city of Pennsylvania on May 6, it effectively put officials across the country on notice that even political statements such as annual state-of-the-city addresses must not overstate financial conditions. The message was, "What you say can and will be used against you," said Ben Watkins, head of Florida's Division of Bond Finance. "What makes it precedent-setting is that it's the first time there's been an enforcement action on statements made by public officials." The SEC said Harrisburg had defrauded its creditors because numerous officials glossed over its disastrous finances and the city was overdue in its disclosures. While no individuals were held to account, an SEC commissioner said that it would not show such restraint in the future. Read more.

ABI LIVE WEBINAR NEXT WEEK WILL FOCUS ON CLASS ACTIONS IN BOTH BUSINESS AND CONSUMER CASES

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

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

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

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

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

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

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

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: BANK OF CORDELL V. STURGEON (IN RE STURGEON; 10TH CIR.)

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

The Tenth Circuit BAP found that the evidence supported the bankruptcy court’s finding that the debtor was an active, knowing participant in a fraudulent scheme to deceive the appellee through a series of false representations and false pretenses that created a contrived and misleading understanding by the appellee, and that the debtor thereby intended to deceive the appellee.

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: WILL TRADITIONAL CHAPTER 11 INVESTORS FIND A ROLE IN CHAPTER 9?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. While most chapter 11 cases have “rules of engagement” that are well-known by the sophisticated players who are guided by the Bankruptcy Code and an extensive body of case law, chapter 9 lacks much of this clarity, making it a scarier place for traditional funds to invest, according to a recent blog post.

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

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NEXT WEEK:

 

 

CCA Webinar 2013
May 29, 2013
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COMING UP

 

 

 

Memphis 2013
June 7, 2013
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CSBW 2013
June 13-16, 2013
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Golf Tournament 2013
June 14, 2013
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INSOL’s Latin American Regional Seminar in São Paulo, Brazil
June 13, 2013
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NE 2013
July 11-14, 2013
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SEBW 2013
July 18-21, 2013
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MA 2013
Aug. 8-10, 2013
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SW 2013
Aug. 22-24, 2013
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NYIC Golf Tournament 2013
Sept. 10, 2013
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Endowment Baseball 2013
Sept. 12, 2013
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Endowment Football 2013
Oct. 6, 2013
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40-Hour Mediation Program
Dec. 8-12, 2013
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  CALENDAR OF EVENTS
 

2013

May
- ABI Live Webinar: Consumer Class Actions
     May 29, 2013

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

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


  

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

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

October
- ABI Endowment Football Game
    Oct. 6, 2013 | Miami, Fla.

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


 
 
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GAO More Seniors Are Carrying Student Loan Debt into Retirement

ABI Bankruptcy Brief | September 11, 2014
 
  

September 11, 2014

 
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  NEWS AND ANALYSIS   

GAO: MORE SENIORS ARE CARRYING STUDENT LOAN DEBT INTO RETIREMENT

A report released yesterday by the Government Accountability Office found that the total outstanding debt load held by seniors grew to $18.2 billion in 2013, up from $2.8 billion in 2005, the Washington Post reported today. The share of households headed by people between the ages of 65 and 74 who have student loan debt also grew, reaching 4 percent in 2010 from 1 percent in 2004. The GAO report cited a number of reasons why older Americans might still be paying off student loans even as they're gearing up for retirement. The majority of the college debt carried into retirement, about 80 percent, came from loans that seniors took out for their own educations. Some of the loans may have been taken out to pay for graduate or continuing education courses required by their jobs, the report notes. The remaining 20 percent of the debt was for loans people took out for their children or other dependents. Read more.

Click here to read the full GAO report.

For more on student debt and bankruptcy, be sure to pick up a copy of Graduating with Debt: Student Loans under the Bankruptcy Code, available now in the ABI Bookstore.

COMMENTARY: DISRUPTING CONSUMER FINANCIAL SERVICES

Financial businesses like banks, credit card issuers, payday loan companies, student and car lenders, credit bureaus, money transmitters and retirement funds are being challenged from all sides, according to a commentary yesterday on Forbes.com. One driver, according to the commentary, is regulation itself, as banks increasingly find that profit margins in their consumer business lines are not worth the regulatory costs and risks they carry. The financial industry overall is hiring thousands of new compliance personnel and paying billions of dollars in redress for past actions — exemplified by this month's record $16.65 billion Bank of America mortgage settlement — but it is still losing ground in containing risks. Rising regulatory ambiguity, including subjective, high-penalty mandates to ensure consumer "fairness," are making it impossible for providers to assess and limit legal exposure. Many are quietly doing so, especially in vulnerable lower-end markets, according to the commentary, where regulatory uncertainties are highest. Some will fully exit consumer businesses where risks seem unmanageable. As a result, private capital is flowing into less-regulated financial businesses, while technology innovators are leveraging the revolutions underway in big data, social media, and smartphone-based mobile payments that are rapidly transforming the industry. Established companies with cumbersome IT systems and costly branch networks face novel threats, including millennial consumers' attraction to phone apps that manage bill-paying, saving, and borrowing. An industry that has not recovered the public trust lost in the financial crisis could find it itself with unexpected vulnerability. Click here to read the full commentary.

S&P: INVERSIONS COULD LEAD TO CREDIT DOWNGRADES

Standard & Poor's Ratings Service yesterday warned that companies trying to lower their tax rates by moving their headquarters overseas may get hit with lower credit ratings, the Wall Street Journal reported today. Many U.S. companies have recently sought to cut their tax rates by acquiring foreign firms and then reincorporating in lower-tax jurisdictions. The controversial strategy has raised the ire of the Obama administration, which has decried the tactic as harmful to the U.S. Companies no longer domiciled in the U.S., which has a 35 percent corporate tax rate, could pay lower taxes and have access to vast stores of cash formerly trapped overseas for buybacks and dividend payments. But S&P's analysts argued that bondholders would suffer from credit downgrades as a result. "All you have left is weaker liquidity and higher debt," said S&P analyst Andrew Chang. Read more (subscription required).

NEW CASE SUMMARY ON VOLO: LOPEZ V. BANK OF AMERICA (IN RE LOPEZ; 11TH CIR.)

Summarized by Walter Kelley of Kelley, Lovett & Blakey, PC

The Eleventh Circuit ruled that the debtor may "strip off" or void a junior lien where the amount of debt securing the senior lien exceeds the value of the house.

There are more than 1,400 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: HAS APPLE INADVERTENTLY BECOME A REGULATED FINANCIAL INSTITUTION WITH ITS "PAY" SERVICE?

A recent post examines whether Apple's new "Pay" service may have made the company a "service provider" for purposes of the Consumer Financial Protection Act, which would make Apple subject to CFPB examination and UDAAP.

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

SARE cases should not be allowed in chapter 11.

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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NEXT WEEK


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COMING UP

SW14
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GT14
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CT14
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IIS14
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CFRP14
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CRC14
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CHICAGO14
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DETROIT14
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PDP14
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WLC14
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MT14
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  CALENDAR OF EVENTS
 

2014

September
- 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
- Complex Financial Restructuring Program
    Nov. 6, 2014 | Philadelphia
- Corporate Restructuring Competition
    Nov. 6-7, 2014 | Philadelphia
- Chicago Consumer Bankruptcy Conference
    Nov. 11, 2014 | Chicago, Ill.
- Detroit Consumer Bankruptcy Conference
    Nov. 11, 2014 | Troy, Mich.
- Mid-Level Professional Development Program
    Nov. 12, 2014 | Chicago

December
- Winter Leadership Conference
    Dec. 4-6, 2014 | Palm Springs, Calif.
- 40-Hour Mediation Training Program
   Dec. 7-11, 2014 | New York, N.Y.

 

 
 
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States Shift Foreclosure-Suit Funds

ABI Bankruptcy Brief | October 18, 2012
 
  

October 18, 2012

 
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  NEWS AND ANALYSIS   

STATES SHIFT FORECLOSURE-SUIT FUNDS

When states received $2.5 billion from big banks in a mortgage-foreclosure settlement earlier this year, the expectation was that most of it would be used to aid distressed homeowners, but a new report claims that less than half of the money has been designated for that cause so far, the Wall Street Journal reported today. States used much of the settlement money to help close budget gaps, says a report scheduled for release Thursday. In March, 49 states reached a $25 billion settlement with five of the nation's largest mortgage lenders over charges that they had improperly processed foreclosures. The agreement allowed the banks—Ally Financial Inc., Bank of America Corp., Citibank Inc., JPMorgan Chase & Co. and Wells Fargo & Co.—to pay $20 billion of the settlement in the form of relief to distressed homeowners. The states received $2.5 billion of the total. Only about $1 billion of the state funds have been designated for some type of homeowner aid, while $1 billion will go toward state general funds. States haven't decided how to spend the remaining $500 million, according to the report by Enterprise Community Partners, a housing nonprofit. Only 14 states plan to spend their entire allotment on housing relief, according to the report. Read more. (Subscription required.)

DUELING REPORTS LEAVE CONGRESS CONTINUING TO FIGHT OVER "TOO BIG TO FAIL"

Republican and Democratic leaders on the House Financial Services Committee are continuing their battle over the Dodd-Frank financial reform law in a pair of competing reports, The Hill reported yesterday. Nearly two and half years after the Wall Street overhaul was signed into law, the two parties remain entrenched on one of its fundamental questions: Does the law end the problem of firms being "too big to fail" and requiring bailouts? Rep. Barney Frank (D-Mass.), a key author of the law and top Democrat on the committee, on Monday released a report intended to rebut GOP arguments that Dodd-Frank codifies "too big to fail" and explicitly identifies banks as such. “The Wall Street Reform and Consumer Protection Act clearly establishes a framework that allows large financial firms to fail while preventing catastrophic harm to the broader economy," according to the report, compiled by Democratic committee staff. Just two days later, Committee Chairman Spencer Bachus (R-Ala.) fired back with a report of his own. While shorter, this report contended that the law actually codified essential firms that the government would have to bail out. One provision of the law allows regulators to identify banks and other institutions as "systemically significant." Republicans contend that this label hands out an advantage to the singled-out firms and that the government has effectively identified them as "too big to fail." But the Democrats contend in their study that this designation comes with increased regulation and oversight, as well as a requirement that the institutions establish "living wills" that would detail how they could be unraveled if they were on the brink of collapse. Read more.

COMMENTARY: WHY THE FDIC'S APPROACH TO FINANCIAL FAILURES MAKES SENSE

The FDIC's single receivership approach offers a better way to avoid an uncoordinated and destabilizing series of insolvencies for systemically important financial institutions, according to a commentary in yesterday's New York Times DealBook blog by Michael H. Krimminger, the former general counsel of the Federal Deposit Insurance Corp. The agency proposes, if it is appointed and where possible, to close the financial holding company, but keep the viable subsidiaries operating. Subsidiaries that are not viable would be closed and gradually wound down to prevent a sudden collapse, as occurred in the case of Lehman, according to Krimminger. The holding company would be restructured into a bridge entity that can continue to provide financing to viable subsidiaries. Access to funding is critical to continued operations. Dodd-Frank provides for this financing from an "orderly liquidation fund," and it must be paid back from the sale of the subsidiaries or from assessments from the industry. The shareholders and creditors of the holding company – which owned the subsidiaries – bear the losses for the failure as no losses can be borne by taxpayers, according to Krimminger's commentary. Read more.

REGULATORS PROPOSE CAPITAL RULES FOR DERIVATIVES TRADING

Federal authorities moved a step closer to overhauling the derivatives market yesterday, as regulators proposed tougher standards for the nation's biggest banks, the New York Times DealBook blog reported. Firms like Goldman Sachs and JPMorgan Chase would have to bolster their capital cushion and post additional collateral for certain derivatives trades. The Securities and Exchange Commission proposed the crackdown as part of a broader effort to rein in the opaque derivatives business, a main player in the financial crisis. "These rules are intended to make the financial system safer, and the derivative markets fairer, more efficient, and more transparent," SEC chair Mary L. Schapiro said. Schapiro and the agency's commissioners voted unanimously, 5-0, to advance the plan. It now enters a 60-day public comment period, after which the SEC and other federal regulators must finalize the rules. Read more.

ABI IN-DEPTH

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

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

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

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

LATEST CASE SUMMARY ON VOLO: IN RE GLEASON (11TH CIR.)

Summarized by Michael Pugh of Thompson, O'Brien, Kemp & Nasuti, PC

The U.S. Court of Appeals for the Eleventh Circuit affirmed the order entered by the bankruptcy court and upheld on appeal by the U.S. District Court for the Southern District of Florida that suspended an attorney who practiced bankruptcy law from practice before the bankruptcy court for 60 days. The Court of Appeals ruled that the sanctions order did not violate the attorney's First Amendment right to free speech or Fifth Amendment right to due process, and that the bankruptcy court did not clearly err in determining that the attorney's actions amounted to bad faith that warranted the imposition of sanctions.

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: AIDING AND ABETTING CLAIMS IN PONZI CASES ARE STILL ALIVE AND WELL

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines how aiding and abetting claims against banks in Ponzi scheme cases continue to gain traction in the case law.

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

Section 523(a)(8) should be amended to allow private student loans to be discharged in bankruptcy.

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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TOMORROW:

 

ABI/ST. JOHN'S "BANKRUPTCY AND RACE: IS THERE A RELATION?" SYMPOSIUM
Oct. 19, 2012
Register Today!

 

 

COMING UP:

 

 

ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING
Oct. 26, 2012
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MEXICO 2012
Oct. 29, 2012
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MEXICO 2012
Nov. 7, 2012
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4TH ANNUAL PROFESSIONAL DEVELOPMENT PROGRAM
Nov. 9, 2012
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SE 2012
Nov. 12, 2012
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SE 2012
Nov. 29 - Dec. 1, 2012
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MT 2012
Dec. 4-8, 2012
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ACBPIKC 2013
Jan. 24-25, 2013
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ACBPIKC 2013
Feb. 7-9, 2013
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ACBPIKC 2013
Feb. 17-19, 2013
Register Today!

 
   
  CALENDAR OF EVENTS
 

October
- 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.
- ABI Endowment Event at Peter Max Gallery
     October 29, 2012 | New York, N.Y.

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

  

 

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

2013

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

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


 
 
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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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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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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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Foreclosure Starts Down on Annual Basis in October

ABI Bankruptcy Brief | November 15 2012
 
  

November 15, 2012

 
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  NEWS AND ANALYSIS   

FORECLOSURE STARTS DOWN ON ANNUAL BASIS IN OCTOBER

U.S. homes are entering the foreclosure process at a slower pace than a year ago, and fewer properties are being repossessed by lenders, the Associated Press reported today. Between January and October, 971,533 homes were placed on the path to foreclosure, down 8 percent from the same period last year, foreclosure listing firm RealtyTrac Inc. said today. At the other end of the foreclosure process, banks repossessed 559,063 homes through the end of last month, a decline of nearly 19 percent from a year earlier. That puts lenders on pace to complete 650,000 foreclosures this year, down from 800,000 in 2011, the firm said. The data, however, also shows that there are signs at the state level that more homes could end up in foreclosure in the coming months. The trend is most evident in judicial-process states such as New York, Florida and New Jersey. Fourteen states saw an annual increase in foreclosure activity, which RealtyTrac measures as the number of homes receiving a default notice, scheduled for auction or repossessed by the bank. Read more.

To see the percentage of loans in foreclosure by state (judicial v. non-judicial) for 3Q 2012, please visit ABI's Chart of the Day page.

MAJOR RETAILERS SELLING FINANCIAL PRODUCTS, CHALLENGING BANK OFFERINGS

As the nation's largest banks remain stingy with credit offerings following the financial downturn, major retailers are stepping in to fill the void, the New York Times reported today. Customers can now withdraw cash at an ATM with a prepaid card from Walmart, take out a loan at Home Depot for a kitchen renovation or kick-start a new venture with a small-business loan from Sam’s Club. This year, Walmart even started to test selling a life insurance policy. Consumer advocates are torn about the growth of this shadow banking industry. Financial products are making it into the hands of people who might not otherwise qualify for them, but these products are not always subject to the same regulations as bank products are. And to turn a profit, retailers generally have to charge more to people with poor credit or none at all. Read more.

SEC REPORT FINDS FAULTS WITH CREDIT RATERS

The Securities and Exchange Commission (SEC) said in a report today that the credit-ratings industry remains plagued by failures in meeting its own standards, weak oversight and poor documentation of its rating decisions, despite years of heightened scrutiny after the financial crisis, the Wall Street Journal reported. In its second annual report on the nine credit-rating firms registered with the agency, the SEC said that Standard & Poor's Ratings Services, Moody's Investors Service and Fitch Ratings still do not always follow their own standards for rating deals. The firms are required by the SEC to disclose and follow their methodologies for assigning ratings to securities so that investors know how those deals are being judged. The Dodd-Frank financial overhaul legislation required the SEC to conduct annual examinations of the registered rating firms, and deliver a report on its findings. Read more. (Subscription required.)

Click here to read the SEC's report.

REGULATORS SEEK CHANGES IN HOW MONEY-MARKET FUNDS OPERATE

The government on Tuesday inched closer to tightening its oversight of the $2.6 trillion money-market industry when a panel of top financial regulators put forward options for addressing the industry’s vulnerabilities, the Washington Post reported yesterday. The industry immediately expressed frustration with the proposal, saying that it resembles a plan that failed to gain support from the Securities and Exchange Commission. That plan, vigorously opposed by the industry, stalled when three of the SEC’s five commissioners said they would reject it. Under the recommendations put forward on Tuesday by the Financial Stability Oversight Council, the funds would have to set aside reserves as a buffer for times of crisis, restrict how quickly investors can redeem their money, or allow the value of a fund’s shares to fluctuate. Currently, one share of a money market fund is generally valued at $1. The funds have been popular with investors because they seem as stable and reliable as a bank account. But unlike bank accounts, they are not federally insured, and that image of security was shattered during the 2008 financial crisis when the Reserve Primary Fund, the nation’s first money-market fund, "broke the buck" because its value fell below $1 a share. Read more.

OPEN PUBLIC HEARING ON CHAPTER 11 REFORM AT ABI'S WINTER LEADERSHIP CONFERENCE

ABI's Commission to Study the Reform of Chapter 11 will hold a public hearing on Friday, Nov. 30, at 11:15 a.m. (MT) during the Winter Leadership Conference in Tucson, Ariz., at the JW Marriott Starr Pass Resort. Members are welcome to provide testimony on their suggestions for ways to improve the operation of chapter 11. The hearing is the fifth in a series of public field hearings. Statements and video from all the recent hearings can be found at the Commission website at http://commission.abi.org.

Interested members should contact Sam Gerdano at sgerdano@abiworld.org for more details about in-person testimony. Those interested may also file written statements of any length for consideration by the Commission. All materials will be part of the Commission's record to be transmitted to Congress following the two-year investigation and report. Please consider this great opportunity to become part of the legal reform of the Bankruptcy Code.

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. 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: STOEBNER V. SAN DIEGO GAS & ELECTRIC CO. (IN RE LGI ENERGY SOLUTIONS INC.; 8TH CIR.)

Summarized by Eric Lockridge of Kean Miller LLP

The Eighth Circuit ruled that where the debtor acted as a payment intermediary between a utility and a customer and the contract between the debtor and customer required the debtor to remit funds to the utility, the contract created a trust obligation in favor of the utility. Consquently, for purposes of § 547, the utility was a creditor of the debtor because the creditor (1) had unsecured claims for breach of trust and (2) was an intended beneficiary. Further, for purposes of calculating subsequent new value, the issue was not the subsequent services provided by the utility to the customer, but the subsequent payments from the customer to the debtor.

There are nearly 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: BOFA VS. MBIA AND THE FUTURE OF PRIVATE LABEL SECURITIZATION

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the ongoing litigation between BofA and MBIA and its effect on the future of mortgage-backed securities.

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

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.

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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SE 2012
Nov. 29 - Dec. 1, 2012
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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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  CALENDAR OF EVENTS
 

November
- Winter Leadership Conference
     November 29 - December 1, 2012 | Tucson, Ariz.

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

2013

January
- 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.


 
 
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