SEC Issues

"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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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.

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

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

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

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

FORMER ENERGY SECRETARY: EXPECT MORE GREEN ENERGY BANKRUPTCIES

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

SEC REVIEWING GUILT-FREE SETTLEMENT POLICY

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

ANALYSIS: SOME BANKS HELPING TO DEFRAUD OLDER CONSUMERS

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

LATEST ABI PODCAST LOOKS AT ISSUES SURROUNDING CHIEF RESTRUCTURING OFFICERS

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

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

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

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

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

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

ABI IN-DEPTH

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

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

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

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

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

Summarized by Lars Fuller of Baker & Hostetler LLP

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

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

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

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

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

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

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

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

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

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

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

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

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

REPORT: ASSETS, LIABILITIES DECREASE WITH DROP IN 2011 CONSUMER FILINGS

Liabilities and assets of debtors decreased along with overall personal bankruptcy filing numbers, according to a report released yesterday by the Administrative Office of the U.S. Courts (AOUSC). The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) requires the annual compilation of statistics by the AOUSC on debtors who are individuals with primarily consumer debts seeking relief under chapters 7, 11, and 13. Compared to 2010 data, the AOUSC found the following decreases among debtors filing for personal bankruptcy in 2011:

• 11 percent decrease in overall filings
• 23 percent decrease in filer assets
• 25 percent decrease in filer liabilities
• 28 percent incidence of repeat filers

To read the AOUSC's full 2011 BAPCPA Report, please click here.

REGULATORS SAY LOAN QUALITY IMPROVING

The credit quality of large loan commitments owned by financial institutions regulated in the U.S. improved in 2012 for the third consecutive year, according to a review by the Federal Reserve and two other regulators, MarketWatch.com reported yesterday. However, the review also added that, despite the progress, poorly originated large loans in 2006 and 2007 "with weak underwriting standard" continued to hurt the portfolio of institutions reviewed. The agencies reviewed loan commitments of $20 million or more in real estate, stocks, notes or bonds extended by American and foreign financial institutions regulated in the U.S. The study noted that so-called nonbank firms, such as hedge funds insurance companies and pension funds, held the smallest share of large loan commitments but the largest share of credits rated "substandard or doubtful" or considered uncollectible and of little value. According to the report, institutions held roughly $2.8 trillion of large loans, with roughly 8,700 credit facilities going to roughly 5,600 borrowers. That number is up from about $2.5 trillion in 2011. Read more.

FSOC MAY HAVE TO MOVE SLOWLY ON MONEY FUNDS

Though the Securities and Exchange Commission said on Wednesday that it would have to drop its proposed overhaul of the money market mutual fund industry, regulators are contemplating pursuing money fund overhaul through the Financial Stability Oversight Council (FSOC), the New York Times DealBook blog reported on Saturday. The FSOC was set up by the Dodd-Frank legislation to identify systemic risks and then set in motion plans to remove those risks. The council, which is led by Treasury Secretary Timothy F. Geithner, has said that money funds are a concern, and backed the reforms scuttled at the SEC. While the FSOC certainly has the freedom and power to take up the issue of money market funds, some experts question whether the council will officially designate money funds as a risk, especially in the last few months before the presidential election. Read more.

CONSOLIDATION OF SMALL BANKS ON THE RISE

A growing number of small- and medium-sized banks are merging as shrinking profit margins, tepid loan demand and low interest rates place pressure on their operations, the Washington Post reported today. Community banks also are contending with the added cost of complying with new regulations stemming from the Dodd-Frank financial reform law. Industry watchers say all of these factors will spur buying activity in the coming quarters. M&T Bank, with $81 billion in assets, became the latest bank buyer, with a $3.7 billion deal yesterday to acquire Hudson City Bancorp, a $43.6 billion community bank in Paramus, N.J. Banking analyst Bert Ely said that the Dodd-Frank Act places the heaviest burden on banks with less than $500 million in assets, which will likely be the primary source of deal activity. Small banks, he said, will be especially taxed by new requirements to keep 5 percent of the loans they issue through mortgage-backed securities on their books. He also thinks smaller banks will be discouraged by higher and stricter capital requirements. Read more.

U.S. HOME PRICES CONTINUE UPWARD MOVE IN JUNE

The S&P/Case-Shiller 20-city composite index showed that U.S. home prices bounced higher for a second month in June, MarketWatch.com reported today. The S&P/Case-Shiller index registered a 2.3 percent advance in June, matching upwardly revised gains in May. Prices in the second quarter of 2012 gained 6.9 percent compared to the first quarter.All 20 cities in the index managed monthly gains, including a 6 percent surge in hard-hit Detroit and a 4.8 percent advance in Minneapolis. Read more.

For a historic look at housing prices, be sure to check out ABI’s Chart of the Day to browse house price data since 1976.

ABI IN-DEPTH

ABI MEMBERS WELCOME TO ATTEND ACB'S FREE HALF-DAY "BANKRUPTCY: BACK TO THE FUTURE" PROGRAM IN SEPTEMBER

The American College of Bankruptcy invites you to attend a free half-day program on Sept. 28 in Chicago for a discussion of many of the challenging topics facing current bankruptcy and reorganization professionals. Topics to be addressed include recent decisions of the U.S. Supreme Court and Court of Appeals, important work of the Advisory Committee on Bankruptcy Rules, and developments in the field of bankruptcy ethics. The nation’s leading judges, academics and bankruptcy professionals are among the speakers for the program. While there is no cost to attend, seating is limited, so early reservation is suggested. For more information and to register, please click here.

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

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

Affirming the district court ruling, the Third Circuit held that a debtor's plan, as submitted by his counsel, would have voided the state court's sale order issued prior to the bankruptcy filing. Without deciding whether the Rooker-Feldman doctrine actually applied, the debtor's attempt to confirm a plan that contemplated a forced sale was improper.

There are more than 600 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SIXTH CIRCUIT RULES THAT TORTIOUS USE OF PROPERTY IS NOT PROTECTED BY THE AUTOMATIC STAY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Noting that the “commission of a tort is not protected by the Bankruptcy Code,” a recent blog post examined the ruling by the U.S. Court of Appeals for the Sixth Circuit that found that the automatic stay imposed by section 362(a) of the Bankruptcy Code did not apply to a contempt proceeding against a debtor for violation of an injunction. The injunction related to, among other things, a suit for trademark infringement and trademark dilution.

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

Client matters left unfinished at a firm when it files for bankruptcy are the property of the defunct firm.

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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September
- 7th Annual Golf and Tennis Outing
     September 11, 2012 | Maplewood, N.J.
- Complex Financial Restructuring Program
     September 13-14, 2012 | Las Vegas, Nev.
- Southwest Bankruptcy Conference
     September 13-15, 2012 | Las Vegas, Nev.
- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization
     September 19-20, 2012 | New York, N.Y.
- "When Is an Individual Chapter 11 the Best Fit?" Live Webinar
     September 27, 2012
- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program
     September 28, 2012 | Chicago, Ill.

October
- Nuts & Bolts for Young and New Practitioners - KC
     October 4, 2012 | Kansas City, Mo.
- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum
     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench
     October 5, 2012 | Washington, D.C.
- Chicago Consumer Bankruptcy Conference
     October 8, 2012 | Chicago, Ill.
- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar
     October 15, 2012
- International Insolvency and Restructuring Symposium
     October 18, 2012 | Rome, Italy

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

FEDS FIND RACIAL HOSTILITY, DISCRIMINATION TO BE RAMPANT INSIDE CFPB

America's newest federal agency, charged with regulating financial institutions to prevent another hostile economic downturn, is reportedly having trouble regulating hostilities and discrimination among its own employees, the Washington Times reported yesterday. Evidence gathered by congressional investigators, internal agency documents and Washington Times interviews with workers discloses scores of cases of U.S. Consumer Financial Protection Bureau employees seeking protection from racially offensive, sexist or discriminatory behavior, including: (1) a naturalized U.S. citizen with more than a decade of service with the U.S. government was called an "f'ing foreigner" by management; (2) a department was internally dubbed "the Plantation" because of the number of African Americans working in it — all supervised by white managers — without any obvious promotional track or way to get transferred; (3) white employees were twice as likely as minorities to get the most favorable personnel ratings in employee reviews; and (4) managers intimidated and retaliated against employees for voicing complaints or offering an alternative point of view — from denying vacation requests to hiring unqualified friends to supervise jobs and then asking subordinates to train them. The CFPB acknowledges its employees' complaints about a hostile working environment and says it is working with the National Treasury Employees Union — which represents CFPB employees — to settle worker protests and iron out new performance reviews, which are at the heart of many of the protests. However, current CFBP employees say that more work needs to be done. Click here to read the full article.

SEC TIGHTENS RULES ON CREDIT RATING AGENCIES, ASSET-BACKED SECURITIES

The Securities and Exchange Commission yesterday approved final rules cracking down on credit rating agencies and asset-backed securities — two areas that SEC Chairwoman Mary Jo White said were "at the center of the financial crisis," according to an article in yesterday's ThinkAdvisor. In her opening remarks at the SEC open meeting at the agency's Washington headquarters, White said that the final rules in the "two closely related areas" give investors "powerful new tools" for independently evaluating the quality of asset-backed securities and credit ratings. "ABS issuers and rating agencies will be held accountable under significant new rules governing their activities," said White, adding that the issuance of "flawed credit ratings by certain credit rating agencies was a key contributor to the financial crisis." Since 2011, SEC staffers have annually examined each of the nationally recognized statistical rating organizations (NRSROs) registered with the SEC, as required by the Dodd-Frank Act. "While the reports from these reviews have catalogued a number of improvements, they have also identified concerns that persist, including ones related to the management of conflicts of interest, internal supervisory controls, and post-employment activities of former staff of NRSROs," White said. Click here to read the full article.

EXECUTIVES TO BE HELD MORE RESPONSIBLE FOR GOING-CONCERN DISCLOSURES

Corporate managers will have to make more uniform disclosures when there is substantial doubt about their business's ability to survive, the Financial Accounting Standards Board said yesterday, according to a Wall Street Journal blog yesterday. The FASB updated U.S. accounting rules, effective by the end of 2016, to define management's responsibility for evaluating whether their business will be able to continue operating as a "going concern" and to make relevant disclosures in financial statement footnotes. Previously, there were no specific rules under U.S. Generally Accepted Accounting Principles, and disclosures were largely up to auditors. Investors, however, have grown frustrated with the lack of going-concern opinions during the financial crisis; such missing opinions, they believe, failed to warn them of impending bankruptcies. The FASB first issued a proposal at the peak of the financial crisis in 2008, but debate and revisions delayed the final standard, which didn't go up for a vote until May. Supporters of the changes have argued that corporate managers have better information about a company's ability to continue financing their operations than auditors do. Click here to read the full article.

ANALYSIS: MORTGAGE CRISIS IS ABOUT TO FLARE UP AGAIN

We are nearly eight years removed from the beginnings of the foreclosure crisis, and since it began, more than five million homes have been lost. So it would be natural to believe that the crisis has receded. Statistics point in that direction. Financial analyst CoreLogic reports that the national foreclosure rate fell to 1.7 percent in June, down from 2.5 percent a year ago. But these numbers are likely to reverse next year, with foreclosures spiking again, according to an analysis in the New Republic Sunday. A series of temporary relief measures and legacy issues from the crisis will begin to bite in 2015, causing home repossessions that could present economic headwinds. In other words, the foreclosure crisis was never solved; it was deferred. The problem comes from many different angles. Home equity lines of credit will start to feature increased payments, as borrowers must pay back principal instead of just the interest. In addition, the relief offered by the government's Home Affordable Modification Program (HAMP), which provided temporary interest rate easing to borrowers, will start running out, and interest rates will start rising about 1 percent each year. Analysts also believe that the foreclosure backlog, mostly in states that require a court ruling to foreclose, will finally unclog in the coming years, which might already be happening. Despite the mostly rosy statistics, foreclosure activity did rise 2 percent from June to July after months of reductions, a potentially troubling omen of things to come. Click here to read the full analysis.

POOR CITIES CAN GET HIGH CREDIT RATINGS

Detroit's bankruptcy case cast a cloud of doubt over other U.S. cities with large populations of poor residents, but a surprising number of them are in relatively good financial shape, the Wall Street Journal reported yesterday. In a new report, Moody's Investors Service found that 27 of the 50 poorest large cities are rated relatively high in their ability to pay back debts and manage their long-term needs. "Poverty is something that we get asked about a lot," said Moody's Thomas Compton, an analyst and co-author of the report. "What we found is that contrary to what a lot of people may think, just because there is a high poverty rate it doesn't mean that you're going to have low credit quality." Poverty can lead to paltry tax revenues and an increased need for municipal services, making debt repayment a challenge. But the cities with high poverty rates and relatively high credit ratings — Provo, Utah, and Dayton, Ohio, among them — have achieved some combination of a large and diverse tax base, strong finances, stable government and controlled costs, according to Moody's. Cities with a lot of poor people also may have a lot of rich people, and other entities may chip in to pay for the kind of costly social services associated with the poor. But although many cities manage high poverty rates effectively, Moody's noted that poverty does remain a challenge to local governments. Click here to read the full article (subscription required).

COMMENTARY: HOW WOULD THE FED RAISE RATES?

While central bankers at the Jackson Hole symposium on Friday heard a lot of talk from Federal Reserve Chair Janet Yellen about the labor market, over which central bankers have proved to have only limited influence, they heard very little about global asset inflation, over which they could have a lot of influence. Yet the Fed does not appear to be inclined to exercise such influence, according to a Wall Street Journal commentary Tuesday. Yellen said that the time is not yet right to raise short-term interest rates, which would end six years of a near-zero policy and restore something more closely resembling financial normality. Given the risks of a resulting stock market crash or political uproar, it may not happen even next year unless some crisis, internal or external to the Fed, forces Yellen's hand. Meanwhile, savers and investors will continue to be denied a proper return on their investments and multibillion-dollar pension funds will flirt with insolvency, according to the commentary. A question mostly unasked at Jackson Hole is a crucial part of today's when-will-it-happen guessing game: Exactly how will the Fed go about draining liquidity if a burst of inflation urgently presented that necessity? Click here to read the full commentary (subscription required).

WHY PACER REMOVED ACCESS TO CASE ARCHIVES OF FIVE COURTS

PACER is most often the first stop for downloading public court records, which has led some freedom-of-information advocates to criticize the electronic service — and try to create some public archives outside of it. However, on Aug. 10, the database announced the removal of access to certain case files — and not just a handful, but entire categories of documents coming from five courts, according to a Washington Post blog Tuesday. The move affects archived files in Second, Seventh, Eleventh and Federal Circuit Courts of Appeals, as well as the U.S. Bankruptcy Court for the Central District of California. Charles Hall, a spokesperson for the Administrative Office of the U.S. Courts, said that the change was made in preparation for an overhaul of the PACER architecture, including the implementation of the next generation of the Judiciary's Case Management and Electronic Case Files System. However, as a result of the changes, the locally developed legacy case-management systems of some courts are no longer compatible with PACER, according to Hall, although he added that the dockets and documents no longer available through the system could still be obtained directly from the relevant court, and that "all open cases, as well as any new filings, will continue to be available on PACER." But that also means that it is much harder for the public to access historical records — and the lack of forewarning left some legal and technical experts reeling. Click here to read the full article.

NEW TO THE LAW PROFESSION? LAW FIRM RECENTLY ADD NEW ASSOCIATES TO THE RANKS? BE SURE TO PRE-ORDER ABI'S SURVIVAL GUIDE FOR THE NEW LAWYER!

Available now for pre-order in ABI's Bookstore is the Survival Guide for the New Lawyer: What They Didn't Teach You in Law School. The Survival Guide provides real-world guidance on the everyday aspects of practicing law, with a special emphasis on bankruptcy law. Full of anecdotal examples and hard-earned advice, this Guide is perfect for the aspiring lawyer fresh out of law school, or for any firm that wants to give its associates a leg up on the competition. Click here to pre-order, and be sure to log in first to obtain the ABI member discount!

NEW CASE SUMMARY ON VOLO: MERUELO V. REORGANIZED MERUELO MADDUX PROP. INC. (IN RE MERUELO MADDUX PROP. INC.; 9TH CIR.)

Summarized by Elie Herman

The Bankruptcy Appellate Panel vacated the order of the bankruptcy court for abuse of discretion in applying the "reasonableness" standard under § 502(b)(4) to a post-petition claim for administrative expense based on an unpaid severance and unpaid bonus, rather than the "actual and necessary" standard set forth in § 503(b)(1), and the BAP remanded for application of the proper standard.

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: HOW THE MOMENTIVE RULING HAS SHAKEN UP DEBT MARKETS

A recent post discusses Tuesday's ruling in the Momentive Performance Materials Inc. case, and how it has rattled the distressed-investing world.

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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Join our networks to expand yours.

2014

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

October
- abiWorkshop: Government Contracting and Bankruptcy
    Oct. 6, 2014 | Alexandria, Va.
- Midwestern Bankruptcy Institute
    Oct. 16-17, 2014 | Kansas City, Mo.

- Views from the Bench
    Oct. 24, 2014 | Washington, D.C.
- Claims-Trading Program
    Oct. 30, 2014 | New York, N.Y.
- International Insolvency & Restructuring Symposium
    Oct. 30-31, 2014 | London

November
- 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.