Texas Oil Woes Still Spilling into Bankruptcy Courts



The number of Texas companies seeking to restructure their debt and reorganize under chapter 11 hit a record high during the first six months of 2017, the Houston Chronicle reported today. Bankruptcy data shows that 649 businesses sought protection in Texas federal courts from creditors and lenders during the first half of 2017 — a 44 percent increase over the same period a year ago and 12 percent more than in 2009 when bankruptcies peaked during the Great Recession, according to new research conducted by Androvett Legal Media. More than 300 companies filed for bankruptcy during the first six months of this year in the Southern District of Texas — a jump of 58 percent from 2016, which had been the previous high, according to the Androvett data.





Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition.

Commentary: Puerto Rico’s Broken PROMESA



Puerto Rico’s government-owned electricity monopoly — known by the acronym PREPA — filed for bankruptcy protection on July 2. It did so even though it had negotiated a restructuring agreement with creditors that would have saved $2.2 billion in debt service that could have been used to invest in modernizing the utility, according to a commentary in the Wall Street Journal on Monday. Puerto Rico is now run by a seven-member, unelected federal board under the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) passed by Congress last year. On June 27 that board unilaterally rejected the restructuring agreement, leading the company to declare bankruptcy. Even if the board is right, it is hardly a justification to trample creditor rights or violate the PROMESA law, according to the commentary. Doing so increases legal uncertainty on the island and is unlikely to produce the desired result of faster growth through investment. Three years after Detroit declared bankruptcy, it is still not able to access the capital markets without the backing of the state of Michigan. Puerto Rico has no such backstop, according to the commentary.





For updated news and analysis of Puerto Rico's debt crisis, along with current docket filings in Puerto Rico's case, be sure to visit ABI's "Puerto Rico in Distress" webpage.

 

"Contract for Deed" Financing Draws Attention of Regulators, Housing Advocates



Unable to obtain a traditional mortgage, some consumers have signed high-interest, seller-financed deals known as contracts for deed that work like an installment plan for housing. For many, though, these deals can quickly turn into money traps, according to a New York Times report on Saturday. Contracts for deed are difficult to track because the transactions are not recorded in many states. It can become difficult to determine who actually owns the property — and who is responsible for its upkeep and paying property taxes — often because the original contract is sold to several investors over time. The Federal Reserve Bank of Atlanta recently issued a report calling for better recording of contracts for deed. The Uniform Law Commission, an organization that proposes model laws for states, is examining whether there should be a uniform law governing the rights and responsibilities of buyers and sellers in contracts for deed. A commission committee looking into the matter conducted a survey that “found problems or abuses with contract[s] for deed in 80 percent of the states.”

First Test of India's New Bankruptcy Law Offers Cautionary Tale



In January, Innoventive Industries, a specialty steelmaker based in western India, was forced into the bankruptcy court by its lenders, testing for the first time new insolvency rules that aim to resolve India's $150 billion bad debt overhang, Reuters reported on Monday. The company, which makes steel tubes and auto parts for customers including Ford, Volkswagen and Tata Motors, posted its third straight annual loss in 2016, prompting ICICI, one of its lead lenders, to trigger bankruptcy proceedings early this year. Nearly six months on, the proceedings against Innoventive, seen as a test case for the first national bankruptcy law, are raising questions about the efficiency of the new regime that regulators are now compelling lenders to use to recover debts. The new Insolvency and Bankruptcy Code aims to move cases of company failure into a single forum, replacing an archaic system of overlapping regulations under which banks, company promoters and other creditors could all initiate competing proceedings in different courts, tribunals and regions. The World Bank estimates that it took 4.3 years on average in India to resolve insolvency under the country’s old laws, more than twice as long as in China. In addition, average recoveries were just 25.7 cents on the dollar, one of the worst among similar-sized economies. The new regime aims to significantly boost recoveries and put a firm timeline around case resolution in the hope that this will help clean up bank balance sheets and spur lending. India's central bank, the Reserve Bank of India, has already told banks to push 12 of the largest defaulters into insolvency, but experts worry the framework is largely untested and hampered by a shortage of experienced bankruptcy professionals.

Participate at Next Consumer Commission Meeting on Saturday at NACTT



The ABI Commission on Consumer Bankruptcy welcomes you to participate at its next open meeting on Saturday at the NACTT Annual Meeting in Seattle (Sheraton Seattle Hotel). The meeting will be held from 4:00 to 5:30 p.m. PT and is a field hearing for the Chapter 13 Committee. Major topics for consideration by the Committee include (a) chapter 13 eligibility, (b) homeowner issues, (c) chapter 13 plans, (d) credit reporting, (e) local legal culture and (f) after-acquired property. For more information, go to consumercommission.abi.org. To request a time for a public statement or to submit a written statement, email the Commission at ConsumerCommission@abiworld.org.



For more information on the Commission, including oral and written statements from the May 6 meeting, please click here.

Sign up Today to Receive Rochelle’s Daily Wire by E-mail!

Have you signed up for Rochelle’s Daily Wire in the ABI Newsroom? Receive Bill Rochelle’s exclusive perspectives and analyses of important case decisions via e-mail!



Tap into Rochelle’s Daily Wire via the ABI Newsroom and Twitter!