Latest ABI Podcast Explores Why More Retailers Have Opted to Liquidate Rather Than Restructure Since 2005

ABI Resident Scholar Prof. Michelle Harner talks with Holly Etlin, Managing Director in AlixPartners Turnaround and Restructuring practice, and AlixPartners Director James Hogarth about their recent study examining retail bankruptcies since the implementation of BAPCPA in 2005. Etlin and Hogarth found that 55 percent of retail bankruptcies since the 2005 Code change have ultimately ended in liquidation rather than restructuring. Click here to listen to the podcast.

Click here to read AlixPartners' study.

Puerto Rico Says Offer Won't Be Made During Tomorrow's Creditor Meeting

Puerto Rico representatives will meet with advisers of the commonwealth's major bondholders tomorrow in New York to discuss a restructuring plan without extending any offers, according to a statement by the Government Development Bank, Bloomberg News reported. As Puerto Rico faces debt payments in less than two weeks, the bank and its advisers will further explain the structure of a proposed transaction to the creditors, which hold general obligations and sales-tax bonds issued by the bank and the island. The meeting isn't open to the public, and attendees have signed non-disclosure agreements. The bank had already provided advisers to the bondholder groups with information through in-person meetings and an electronic data room, according to the release. Read more.

For more news and analysis on Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.

House Votes to Roll Back Mortgage Rules

The House passed legislation yesterday that critics argue rolls back regulations for mortgages that were created to prevent the bad lending practices responsible for the financial crisis of 2008, The Hill reported today. The Portfolio Lending and Mortgage Access Act, which was introduced by Rep. Andy Barr (R-Ky.), passed by a 255-174 vote. The bill extends a federal exemption meant for small and rural banks to all banking institutions. The Consumer Financial Protection Bureau (CFPB) issued regulations last year that require lenders to ensure a borrower's ability to repay a loan in order to obtain a qualified mortgage status, which provides lenders a "safe harbor" protection from federal penalties and lawsuits brought by borrowers who have defaulted on their loans. But the bureau created an exemption to allow small and rural banks to achieve that qualified mortgage status without following the ability-to-repay rule, which requires a borrower's debt-to-income ratio to be 43 percent or less.

Efforts to Rein in Arbitration Come under Well-Financed Attack

A new television ad campaign started last week by the conservative American Action Network attacks the Consumer Financial Protection Bureau, calling for the agency to be reined in, partly because of its efforts to restrict mandatory arbitration, the New York Times DealBook blog reported on Monday. The consumer agency's stance on arbitration, while difficult to convey in a TV spot, "is a perfect example of how government is taking away the power of individuals and handing it to the trial lawyers," said Mike Shields, president of the American Action Network and a former top aide at the Republican National Committee. Last week's ad is one of multiple efforts across the country in recent weeks by both advocates and opponents of arbitration to revisit the much-debated practice, which, in two powerful decisions beginning in 2011, has been affirmed by the Supreme Court. The most significant moves came in Washington, D.C., where regulators, lawmakers and the Justice Department pushed for new restrictions on arbitration.

Commentary: Due Process vs. Administrative Law

The Securities and Exchange Commission has recently come under fire for pressuring its in-house administrative-law judges (ALJs) to rule in its favor during agency enforcement proceedings, according to a commentary in Monday's Wall Street Journal. These are serious charges because ALJs are guaranteed independence by statute. More troubling, but largely overlooked, are the judges in federal regulatory proceedings who lack statutory independence. While enforcement proceedings before administrative law judges are imperfect and can be improved, the commentary thinks that Congress should require that ALJs, or administrative judges with substantially similar statutory independence, preside over all agency hearings.