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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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Dec. 4-8, 2012
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Jan. 21, 2013
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Jan. 24-25, 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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Justice Department Issues New Attorney Fee Guidelines in Large Chapter 11 Cases

ABI Bankruptcy Brief | June 11 2013
 
  

June 11, 2013

 
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  NEWS AND ANALYSIS   

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.

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THURSDAY:

 

 

CSBW 2013
June 13-16, 2013
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COMING UP

 

 

 

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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abiLIVEJuly
July 15, 2013
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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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VFB2013
Sept. 27, 2013
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Oct. 4, 2013
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Endowment Football 2013
Oct. 6, 2013
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Detroit
Oct. 14, 2013
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Detroit
Nov. 11, 2013
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40-Hour Mediation Program
Dec. 8-12, 2013
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  CALENDAR OF EVENTS
 

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


 
 
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Analysis White House Derivatives Tax Proposal Puts Wall Street in the Crosshairs

ABI Bankruptcy Brief | April 11 2013
 
  

April 11, 2013

 
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  NEWS AND ANALYSIS   

ANALYSIS: WHITE HOUSE DERIVATIVES TAX PROPOSAL PUTS WALL STREET IN THE CROSSHAIRS

The Obama administration yesterday proposed that derivatives be taxed under "mark-to-market" accounting rules on an annual basis, a move that takes aim at Wall Street and could give a lift to a similar plan circulated by House Republicans, the Wall Street Journal reported today. "The disparate treatment of derivatives under current tax rules, which have evolved sporadically over more than 50 years, has created a regime that is essentially elective," the Treasury Department wrote in its companion piece to the budget that contains more detail about tax proposals. "Sophisticated taxpayers can use these instruments to achieve the timing and character that meets their objectives. At the same time, the wide variance in the tax treatment of derivatives contracts that are economically similar leads to uncertainty about how the tax rules apply." The plan would raise about $18.9 billion over 10 years. House Ways and Means Committee Chairman Dave Camp (R-Mich.) has circulated a similar proposal. The main difference between the two plans is that Treasury's plan would be tied to whether or not derivatives were being actively traded in the market. The new treatment would apply to derivatives contracts entered into after Dec. 31, 2013. Read more. (Subscription required.)

A related New York Times editorial yesterday looked at several bills to pre-empt the regulation of derivatives that are the focus of a hearing today in the House Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee. The bills, which have already passed the Agriculture Committee, should be stopped to curb reckless risk-taking by banks, according to the editorial. As it turns out, House Financial Services Chairman Jeb Hensarling (R-Texas) could be the member of Congress to stop them. Hensarling recently outlined a free-enterprise approach to bank regulation that sensibly supported "greater capital and liquidity standards" and better "ring-fencing, fire-walling — whatever metaphor you want to use — between an insured depository institution and a noninsured investment bank." One of the bills before his committee would do the opposite of what he envisions. It would gut a provision of the Dodd-Frank financial reform law that effectively requires banks to spin off their riskiest derivatives transactions into separately capitalized uninsured subsidiaries, according to the editorial. The spinoff provision, which is being phased in this year, is important for shielding taxpayers from future bailouts. Read more.

To view the witness list and prepared testimony for today's House Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee hearing titled, "Legislative Proposals Regarding Derivatives and SEC Economic Analysis," please click here.

COMMENTARY: WHAT'S WRONG WITH THE CHAPTER 14 PROPOSAL

While not a proponent of Dodd-Frank's orderly liquidation authority, Prof. Stephen Lubben of Seton Hall University Law School writes in the New York Times DealBook blog today why he opposes the "Chapter 14" proposal put forth by the Hoover Institute group at Stanford. First, Lubben writes that the chapter 14 proposal throws away most of the benefits of using the existing bankruptcy system by calling for cases to be heard by Federal District Court judges. Next, the chapter 14 proposal has an ill-conceived financing mechanism, according to Lubben, as it is based on the assumption that private debtor-in-possession financing will be available in times of financial distress, especially in the size a large financial institution would need. But the even bigger problem with chapter 14, which has gotten little coverage, is its effort to penalize the provider of DIP financing if the new financing is used to "overpay" creditors. For example, if a counterparty received a 50 percent upfront recovery made possible by the debtor-in-possession financing, and unsecured creditors later received only 35 percent in the chapter 14 case, the proposal would subordinate the debtor-in-possession lenders’ claim by that extra 15 percent. That pretty much kills off any chance of private debtor-in-possession financing, and even raises some serious doubts about future government debtor-in-possession financing too, according to Lubben. Read the full commentary.

HOUSING ADMINISTRATION MIGHT NEED $943 MILLION BAILOUT, ACCORDING TO WHITE HOUSE

The Obama administration said yesterday that the cash-strapped Federal Housing Administration will probably require a $943 million taxpayer bailout to cover expected losses on loans it insured as the U.S. housing bubble was deflating, Reuters reported yesterday. It would be the first bailout of the government's mortgage insurer in its nearly 80-year history. The White House estimated that the FHA has about $30 billion on hand but said its cash reserves would probably be depleted by souring loans. FHA Commissioner Carol Galante said that the agency might still be able to avoid taking aid from the U.S. Treasury, despite the financial hole projected in President Obama’s 2014 budget proposal. It has until Sept. 30 to decide whether it needs a cash infusion. In November, an independent audit found that the FHA faced a projected deficit of $16.3 billion. Since then, the agency has taken steps to shore up its finances, including raising the premiums that borrowers pay. Read more.

BANKS LOOK TO SHIFT RISK TO FUNDS

Banks are trying to boost their capital cushions by shifting risk to investment funds, even as global regulators threaten to clamp down on such transactions, the Wall Street Journal reported today. In recent weeks, Citigroup Inc., Switzerland's Credit Suisse AG and France's Société Générale SA have marketed "synthetic securitizations" in which investors, for a fee, agree to absorb future losses on portfolios of assets. The transactions are designed to thicken the banks' capital buffers by reducing the riskiness of their balance sheets. Citigroup wants to cap its exposure to shipping loans, Credit Suisse wants to curtail the risk of small Swiss businesses defaulting on loans, and Société Générale is aiming to reduce the credit risk in a derivatives portfolio. Read more. (Subscription required.)

LATEST BLOOMBERG "BILL ON BANKRUPTCY" VIDEO: RESCAP REPORT, A BARGAIN AT $83 MILLION

Why the Residential Capital LLC examiner's report will cost almost $83 million is the first item on the new Bloomberg bankruptcy video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. Click here to watch the video.

 

ASM MOBILE WEB APP NOW AVAILABLE FOR SMARTPHONES AND TABLETS!

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

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

Haven’t registered for next week’s Annual Spring Meeting? Hurry, the hotel block at the Gaylord National Resort and Convention Center in National Harbor, Md., is almost sold out! ASM features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

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

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

Make sure to register today!

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: TEED V. THOMAS & BETTS POWER SOLUTIONS LLC (7TH CIR.)

Summarized by Steven Schwartz of the U.S. Bankruptcy Court for the District of Delaware

The Seventh Circuit ruled that successor liability is appropriate in suits to enforce federal labor or employment laws – even when the successor disclaimed liability when it acquired the assets, unless there is a good reason to withhold such liability (i.e., lack of notice of potential liability, maintaining priorities of competing creditors). Increasing the cost to the buyer is not a good reason to withhold successor-liability suits in federal labor or employment law cases.

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: FIRST QUARTER 2013 U.S. LEVERAGED LOAN MARKET ANALYSIS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post provides an analysis of the leveraged loan market during the first quarter of 2013.

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

TEE OFF ON THE NEW ABI GOLF TOUR!

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

ABI Quick Poll

The scope of protection of "financial contracts" in bankruptcy should be rolled back to what it was before BAPCPA expanded it in 2005.

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

INSOL INTERNATIONAL

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

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

 

 

 

NYCBC 2013
May 15, 2013
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ASM 2013
May 16, 2013
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ASM 2013
May 21-24, 2013
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ASM 2013
June 7, 2013
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ASM 2013
June 13-16, 2013
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NE 2013
July 11-14, 2013
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ASM 2013
July 18-21, 2013
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MA 2013
Aug. 8-10, 2013
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  CALENDAR OF EVENTS
 

2013

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

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


  

 

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

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

August
- Mid-Atlantic Bankruptcy Workshop
    August 8-10, 2013 | Hershey, Pa.


 
 
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Report Assets Liabilities Decrease with Drop in 2011 Consumer Filings

ABI Bankruptcy Brief | August 28, 2012
 
  

August 28, 2012

 
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  NEWS AND ANALYSIS   

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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NEXT EVENTS:

SE 2012
Sept. 11, 2012
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SW 2012
Sept. 13-15, 2012
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SE 2012
Sept. 13-14, 2012
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COMING UP:

 

NYU 2012
Sept. 19-20, 2012
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"WHEN IS AN INDIVIDUAL CHAPTER 11 THE BEST FIT?" LIVE WEBINAR
Sept. 27, 2012
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NABMW 2012
Oct. 4, 2012
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SE 2012
Oct. 5, 2012
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SE 2012
Oct. 5, 2012
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SE 2012
Oct. 8, 2012
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ABI YOUNG AND NEW MEMBERS COMMITTEE “TRENDING ISSUES: EXAMINERS AND SELECT PLAN CONFIRMATION ISSUES” WEBINAR
Oct. 15, 2012
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SE 2012
Oct. 18, 2012
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MEXICO 2012
Nov. 7, 2012
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4TH ANNUAL PROFESSIONAL DEVELOPMENT PROGRAM
Nov. 9, 2012
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SE 2012
Nov. 12, 2012
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SE 2012
Nov. 29 - Dec. 1, 2012
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  CALENDAR OF EVENTS
 

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.


 
 
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Analysis Foreclosure Wave Averted as Doomsayers Defied

ABI Bankruptcy Brief | November 27 2012
 
  

November 29, 2012

 
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  NEWS AND ANALYSIS   

ANALYSIS: FORECLOSURE WAVE AVERTED AS DOOMSAYERS DEFIED

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

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

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

DODD-FRANK SWAP-CLEARING RULE GETS CFTC FINAL APPROVAL

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

FINAL VOLCKER RULE TO BE DELAYED UNTIL 2013

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

EXPERTS SAY BANKRUPTCY AN UNATTRACTIVE OPTION FOR DETROIT

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

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

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

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

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

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

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

ABI IN-DEPTH

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

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

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

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

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

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

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

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

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL

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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

  

 

TOMORROW:

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

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

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

 

COMING UP:

 

 

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

 

 

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

 
   
  CALENDAR OF EVENTS
 

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

2013

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

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


  


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

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


 
 
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Feds Find Racial Hostility Discrimination to Be Rampant Inside CFPB

ABI Bankruptcy Brief | August 28, 2014
 
  

August 28, 2014

 
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  NEWS AND ANALYSIS   

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.

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September
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    Sept. 4-6, 2014 | Las Vegas, Nev.
- abiLIVE Webinar: Understanding Make-Whole and No Call Provisions
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- 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
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Homeowners See Benefits of Foreclosure Settlement Plan

ABI Bankruptcy Brief | August 30, 2012
 
  

August 30, 2012

 
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  NEWS AND ANALYSIS   

HOMEOWNERS SEE BENEFITS OF FORECLOSURE SETTLEMENT PLAN

More than 130,000 homeowners have received $10.5 billion in relief under the national settlement over foreclosure abuses, according to a preliminary report issued yesterday by the settlement monitor, the New York Times reported today. Under the settlement in February, reached in response to evidence that the foreclosure process had been riddled with fraud, the country’s five largest mortgage servicers promised $25 billion to help stem the tide of homeowner losses. About $20 billion of that was designated to provide relief to homeowners, primarily through various forms of debt forgiveness. Although it may seem that banks have already satisfied more than half of their commitment, only a portion of the $10.5 billion will count, because of the way the relief is tallied. The banks — Ally Financial, Bank of America, Citigroup, JPMorgan Chase and Wells Fargo — reported that the bulk of the help so far had come in the form of short sales, in which lenders allow homeowners to sell for less than what they owe. Many homeowners have been stuck in their homes because they have lost so much value. The banks reported $8.7 billion in debt written off through short sales. But far less progress has been seen under the central provision of the settlement, reducing the principal owed on homes. Banks reported a total of only $750 million in principal reduction, and Bank of America, which has the highest obligations under the settlement, reported none. Read more.

ANALYSIS: U.S. HOUSEHOLDS CONTINUE TO CHIP AWAY AT THE DEBT ON THEIR HOMES

Total U.S. household debt fell by 0.5 percent in the April-to-June period from the previous quarter to $11.38 trillion, the Federal Reserve Bank of New York said yesterday, according to a report in the Wall Street Journal. The drop was due almost entirely to falling mortgage balances, as some households paid down home loans while others erased their debts and lost their homes by completing the foreclosure process. Additionally, the number of homeowners entering foreclosure fell by 12 percent to an estimated 256,000 during the quarter, the lowest level since mid-2007, another sign the housing market may be stabilizing. Read more. (Subscription required.)

STUDENT-LOAN DEBT RISES TO $914 BILLION IN SECOND QUARTER

The Federal Reserve Bank of New York said that debt from educational loans in the U.S. rose 1.1 percent to $914 billion in the second quarter, Bloomberg News reported yesterday. Outstanding student debt increased from $904 billion three months earlier, the New York Fed said yesterday in a report. The loans were taken out by students and their parents, and the majority are backed by the U.S. government. Ninety-day delinquency rates for student loans increased to 8.9 percent from 8.69 percent in the first quarter, the New York Fed said. Since the peak in household debt in the third quarter of 2008, student-loan debt has increased by $303 billion, while other forms of debt fell a combined $1.6 trillion. Read more.

SEC PROPOSAL WOULD REMOVE PROHIBITION AGAINST GENERAL SOLICITATION BY HEDGE FUNDS

The Securities and Exchange Commission on Wednesday proposed rules that would remove a longtime prohibition against general solicitation by hedge funds, a huge change for an industry that has ballooned in size and influence in recent decades, the New York Times DealBook blog reported yesterday. Unlike their mutual fund brethren, hedge funds have long been barred from advertising in public forums like newspapers or television. Releasing information as basic as performance and assets has been prohibited, the idea being that such complicated and risky investment opportunities should be promoted only to those deemed financially fit. That threshold has been at least $1 million in liquid assets, or a $200,000 annual income for an individual or $300,000 for a couple. But under the new rules, hedge funds might be able to rent billboards, buy full-page advertisements in newspapers or have Web sites that offer the public a real look inside their operations and performance, as opposed to the password-protected sites most operate today. The proposal –mandated by a new law, the Jump-Start Our Business Start-Ups Act – could go a long way toward demystifying and increasing understanding of hedge funds, which are often accused of being highly secretive. Read more.

CONSUMER SPENDING TICKS UP

The Commerce Department released a report today that U.S. personal spending rose the most in five months in July, the Wall Street Journal reported today. Personal consumption expenditures increased 0.4 percent from the prior month, according to the Commerce Department. Personal consumption fell 0.2 percent in May and was flat in June as Americans saved, rather than spent, their slowly rising incomes. Today's report showed that personal incomes rose 0.3 percent in July, the eighth consecutive month that incomes increased. July's savings rate ticked down to 4.2 percent from 4.3 percent in June, which had been the highest level in a year. Read more. (Subscription required.)

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: CAGE V. HARDY RAWLS ENTERPRISES, LLC (IN RE MOYE; 5TH CIR.)

Summarized by Omid Moezzi of the Office of Chapter 13 Trustee Nancy Curry

Affirming the decision of the U.S. District Court for the Southern District of Texas (Houston) that the trustee had proved that all but one of the payments in question made by the debtors were avoidable preferences and that the creditor failed to successfully establish its affirmative defenses.

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: EMINENT DOMAIN WILL DRIVE HOMEOWNERSHIP INTO THE SUNSET

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post finds that the proposed plan by San Bernardino County, Calif., to seize underwater mortgages through eminent domain would serve only to damage homeownership, not protect it.

For more on the issue of localities examining the use of eminent domain to seize underwater properties, listen to an ABI podcast featuring Prof. Mark Scarberry discussing the proposal and the potential legal ramifications of using eminent domain to provide relief from the foreclosure crisis. Click here to listen.

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.

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  CALENDAR OF EVENTS
 

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.


 
 
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