Sen. Elizabeth Warren Reintroduces Bill Seeking to Block 'Two-Step' Bankruptcy Move​​​

Sen. Elizabeth Warren (D-Mass.) has reintroduced legislation to rein in a controversial bankruptcy maneuver and prevent nonbankrupt entities from using chapter 11 to skirt liability, Bloomberg Law reported. Warren yesterday introduced S. 5415, the "Nondebtor Release Prohibition Act of 2024," aiming to prohibit nonconsensual litigation shields in bankruptcy plans for people and entities that aren’t bankrupt, codifying what the high court banned in its 5-4 decision in Harrington v. Purdue Pharma. The justices in June rejected Purdue’s $6 billion bankruptcy settlement, ruling against liability releases for members of the billionaire Sackler family who own the pharmaceutical giant. Rep. Jerry Nadler (D-N.Y.) introduced H.R. 9223 with the same title in the House of Representatives on July 30. In the previous 117th Congress, Warren, Nadler and other Democratic lawmakers introduced similar legislation in the wake of such high-profile cases as Purdue Pharma LP, Boy Scouts of America and USA Gymnastics. Read more.

Casual Restaurant Bankruptcies Accelerate as Customers Retreat​​​

When TGI Friday’s Inc. filed for bankruptcy last month, the casual dining chain blamed declining sales and shrinking revenue as strained customers pulled back from spending, Bloomberg News reported. The nearly 60-year-old eatery is one of more than a dozen large restaurants or franchisees to seek court protection from creditors from January through October, according to BankruptcyData. That’s the most through that date since 2020. Next year could see more strife as restaurant prices have surged thanks to rising labor costs, supply chain disruptions and higher interest expenses, weighing on consumer demand for dining out. Restaurant prices increased about 44% from 2015 to March 2024, according to data firm Black Box Intelligence, compared to a 26% increase for grocery items over the same period. “It’s really hard for somebody to go to a restaurant at the same pace as we did before,” Victor Fernandez, vice president of insights at Black Box Intelligence, said. “That’s putting a lot of pressure on brands.” Seafood giant Red Lobster, Italian chain Buca di Beppo, fish taco eatery Rubio’s Coastal Grill and the owner of burger and pizza chains BurgerFi and Anthony’s Coal Fired Pizza are among those that have sought to reorganize through bankruptcy this year. Hooters of America is also huddling with lenders and advisers amid revenue declines, Bloomberg reported. Read more.

Subchapter V Experiences to Share? ABI Wants to Hear from You!

ABI is continuing its study of Subchapter V, and it needs your help! We are particularly interested in learning more about the real-world impact of Subchapter V. So our question is, do you have a story about a distressed business or creditor who has used or benefited from the subchapter? If so, could that case still happen under the lower debt cap for Subchapter V debtors? Any and all responses are welcome. Submit your story at https://abi.org/subvstories.
 

Student Loan Borrowers May Find Bankruptcy Harder Under Trump​​​

More federal student loan borrowers have been able to get their debt discharged in bankruptcy over the last few years, but the more lenient policies may be at risk when President-Elect Donald Trump enters the White House in January, experts say, CNBC.com reported. When the Trump administration takes over, “I suspect we’ll see a tightening in the approach of the relief,” said Malissa Giles, a consumer bankruptcy attorney in Virginia. As a result, Giles said she plans to be “a little more conservative” with the clients she recommends pursue bankruptcy for their student debt. “We’re probably not filing those cases that are a bigger ask right now,” Giles said. “I don’t want people to spend their money on it, when it may not come through.” Higher education expert Mark Kantrowitz also expects to see a reversal in the approach. “The Trump Administration is likely to rescind this guidance,” Kantrowitz said, referring to the Biden administration’s looser rules for student loan borrowers in bankruptcy. Latife Neu, a bankruptcy lawyer in Seattle, said she wasn’t sure bankruptcy would necessarily become more difficult for student loan borrowers under Trump. “There is a surprising amount of consensus across the political spectrum,” Neu said. Read more.

Americans Risk Losing Life Savings When Retirement Homes Go Bust​​​

Bob Curtis, 87, and his wife Sandy sold their home in Nassau County three years ago and forked over $840,000 to move into The Harborside, a Long Island retirement home that was supposed to provide care for the rest of their lives. Then the facility went bankrupt and an effort to sell it to new owners was blocked by New York regulators in October. So now, like nearly 200 others who live there, they could see much of their life savings — and their new home — disappear. The collapse is emblematic of the financial stress coursing through an industry that sprouted up to cater to the Baby Boomers, the demographic bulge that by force of sheer numbers has dominated America's cultural and economic life for over half a century. At least 16 continuing care retirement communities, or CCRCs, have filed for bankruptcy since 2020 as pandemic restrictions, labor shortages, soaring wages and rising supply costs have pushed many to the brink. A recent survey of one type of continuing care retirement community — those that also charge a monthly fee and that offer housing, residential services and unlimited health care all at one site — found that 50% were operating in the red last year. Under contracts with The Harborside, residents or their heirs are supposed to get as much as 90% of the entrance fee refunded if they move or die. But the contracts can be voided in bankruptcy court, which treats residents as unsecured creditors, pushing them toward the back of the repayment line. The Harborside’s residents could be forced to move and stand to lose as much as $130 million unless a new buyer is found who is willing to take over the residents’ refund obligations. Read more.

U.S. Weekly Jobless Claims Increase Slightly​​​

The number of Americans filing new applications for unemployment benefits rose slightly last week, pointing to steadily easing labor market conditions heading into the final stretch of 2024, Reuters reported. Sluggish hiring, however, means that some people who lose their jobs are remaining on unemployment rolls longer relative to early this year. "The initial claims data are consistent with a labor market that is still characterized by limited layoffs," said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 224,000 for the week ended Nov. 30, the Labor Department said on Thursday. Economists polled by Reuters had forecast 215,000 claims for the latest week. The data included the Thanksgiving holiday, which could have injected some noise. Claims are entering a period of volatility, which could make it difficult to get a clear picture of the labor market. Unadjusted claims dropped 34,967 to 210,166 last week amid a 9,777 plunge in filings in California and a 6,383 tumble in Texas. There were also sizable declines in Florida and North Carolina as the effects of Hurricanes Helene and Milton faded. Read more.

Federal Agencies Issue Statement on Elder Financial Exploitation​​​

The Board of Governors of the Federal Reserve System (FRB), Consumer Financial Protection Bureau (CFPB), Federal Deposit Insurance Corporation (FDIC), Financial Crimes Enforcement Network (FinCEN), National Credit Union Administration (NCUA), Office of the Comptroller of the Currency (OCC) and state financial regulators issued a statement yesterday to provide institutions supervised by the agencies with examples of risk management and other practices that can be effective in identifying, preventing and responding to elder financial exploitation. This statement does not replace previous guidance on this subject issued by any of the agencies, does not interpret or establish a compliance standard, and does not impose new regulatory requirements or establish new supervisory expectations. The agencies said that it is intended to raise awareness and provide strategies to supervised institutions for combating elder financial exploitation, consistent with applicable legal requirements. A recent study estimates annual losses from U.S. older adults as a result of elder financial exploitation at $28.3 billion. The U.S. Department of the Treasury’s 2024 National Money Laundering Risk Assessment described elder financial exploitation as a growing money laundering threat, which has been linked to more than $3 billion in reported financial losses annually. Furthermore, a FinCEN review of Bank Secrecy Act (BSA) report data found that financial institutions filed 155,415 reports related to elder financial exploitation between June 15, 2022, and June 15, 2023, associated with more than $27 billion in reported suspicious activity, which may include both actual and attempted transactions. In addition to financial losses, elder financial exploitation can also result in increased reputational, operational, compliance, and other risks for supervised institutions. Click here to read the full statement.

Latest "Party in Interest" Podcast Features EOUST Director Tara Twomey​​​

The latest episode of ABI's "Party in Interest" podcast features ABI Executive Director Amy Quackenboss talking with Tara Twomey, the director of the Executive Office for U.S. Trustees (EOUST). How did Twomey develop a passion for consumers and businesses being able to access a financial fresh start in bankruptcy? What steps led her to a career in the restructuring industry? What does she do to decompress? Find out the answers to these questions and more by listening to the latest episode!

Miss Part 1 of CPEX24 Last Week? Access Replays Through Dec. 13!​​​
Part 1 of ABI's Consumer Practice Extravaganza, the largest online consumer bankruptcy practice event of the year, was held on Nov. 11 and 12 featuring the following great panels:

- "Combating the Creative Consecutive Filer"
- "Explaining Racial Disparities in Personal Outcomes"
- "Issues Spotting and Preparing Schedules Properly for Consumer Bankruptcy and Family Law Issues"
- "Injunction of Law in Light of Purdue Pharma"

Not able to make the live airing and want to tap into the replays? All November Part 1 programs, plus Part 2 sessions taking place in January 2025, are included in the registration price of just $100!

Access All Current ABI Titles Through ABI’s New Digital Book Subscription!​​​

One of the best collections of bankruptcy books is now available as an annual digital subscription! ABI’s bankruptcy library opens the door to a constantly evolving area of the law, and our books are continually being updated by top industry professionals. Auto-renewing annual subscriptions guarantee immediate access to this invaluable resource, which is comprised of fully searchable content that’s always available on any digital device. Convenient pricing plans for individual and institutional subscribers offer immediate and unlimited access to our entire digital library of books — nearly 100 treatises! Plus, you get advanced access to new and revised books as soon as they are published — all included in your annual subscription. Learn more!

Have an Idea for a Topic for an ABI Conference Session? Submit Your Proposal via ABI’s “Call for Abstracts” Page!​​​

ABI has launched an online portal for professionals to submit proposals for educational sessions at future ABI conferences. Submitters can describe their proposed topic, outline the session’s focus and learning goals, suggest speakers, and provide contact information via the portal’s detailed form. The portal can be accessed here.

All submissions will be reviewed by an internal Education Committee, which will contact the submitter to ask questions as needed and to discuss the status of the proposal. Submissions will be reviewed on a rolling basis.

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