Senators Vote to Recommend Contempt Prosecution for Steward Health CEO​​​

A Senate panel voted to recommend that Dr. Ralph de la Torre, the majority owner and chief executive of bankrupt hospital chain Steward Health Care System, be held in contempt of Congress, the Wall Street Journal reported. The bipartisan move followed de la Torre’s refusal to comply with a subpoena for his testimony at a Sept. 12 hearing by the Senate Health, Education, Labor and Pensions Committee, which is investigating Steward’s collapse. De la Torre was a no-show at the hearing last week, which went on without him. The committee today approved two resolutions, each by a 20-0 vote, which will go to the full Senate for consideration. One resolution would refer de la Torre to the U.S. Attorney’s Office for the District of Columbia for criminal prosecution. The other would instruct Senate attorneys to file a civil suit to require de la Torre’s compliance with the subpoena and his testimony before the committee. In a letter yesterday to the committee, an attorney for de la Torre cited constitutional grounds as a reason for not testifying, including his right not to incriminate himself under the Fifth Amendment. It was the first time he had cited Fifth Amendment grounds publicly. Committee leaders said a witness who receives a valid subpoena must appear in person and invoke such rights in response to specific questions. (Subscription required.) 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.
 

Federal Judge Extends Block on Biden’s Student Debt Forgiveness Plan​​​

A federal judge has extended a temporary restraining order against the Biden administration’s latest student loan forgiveness plan, threatening the White House hope to provide financial relief to tens of millions of Americans ahead of the Nov. 5 presidential elections, CNBC.com reported. U.S. District Judge Randal Hall, appointed by former Republican President George W. Bush, said Wednesday that he would maintain the order blocking the Biden administration from forgiving student debt for an additional 14 days. In the meantime, Judge Hall said that he would review the plaintiffs’ request for a preliminary injunction against the Biden’s relief plan, and the Biden administration’s request to dismiss the case. The continuation of the restraining order is the latest setback for the Biden administration’s efforts to cancel people’s federal student loans. President Joe Biden began promising to alleviate people’s education debts during his 2020 campaign bid, but Republican legal challenges have consistently stymied his attempts. The development stems from a lawsuit against the president’s aid package brought by seven GOP-led states earlier this month. The states — Alabama, Arkansas, Florida, Georgia, Missouri, North Dakota and Ohio — said the U.S. Department of Education’s new debt cancellation effort, like its previous attempts, is illegal. The states also accused the Biden administration of trying to secretly implement the plan before the final rule on the program was issued in October, which would violate rules around the timeline of new regulations. However, a Biden administration official told CNBC on Sept. 11 that the Education Department did not plan to begin forgiving up to $147 billion in student debt for as many as 25 million Americans until it was allowed to do so. Judge Hall first issued a temporary restraining order against Biden’s debt plan on Sept. 5, shortly after the states sued. Read more.
 

U.S. Weekly Jobless Claims Drop to Four-Month Low​​​

The number of Americans filing new applications for unemployment benefits dropped to a four-month low last week, pointing to solid job growth in September and offering confirmation that the economy continued to expand in the third quarter, Reuters reported. The weekly jobless claims report today from the Labor Department also showed unemployment rolls shrunk to levels last seen in early June. Initial claims for state unemployment benefits dropped 12,000 last week to a seasonally adjusted 219,000 for the week ended Sept. 14, the lowest level since the middle of May, the Labor Department said today. Unadjusted claims increased by 6,436 to 184,845 last week, amid notable rises in California, Texas and New York, which more than offset a decrease of 2,055 in Massachusetts. Read more.
 

Municipal Borrowers Set to ‘Shatter’ Bond Sale Records by Year-End​​​

U.S. state and local governments are poised to sell record levels of debt this year as borrowers continue to flood the market while conditions remain attractive, Bloomberg News reported. “This year has a momentum that’s extraordinary,” said Paul Creedon, head of national infrastructure at Janney Montgomery Scott in a market outlook panel at the Bond Buyer’s Infrastructure Conference in Philadelphia on Tuesday. “It’s probably going to shatter a lot of records.” Municipal borrowers have sold nearly $350 billion of bonds over the last nine months, a figure that is running 38% above last year’s volume and poised to be the largest amount in at least a decade, according to data compiled by Bloomberg. Some of that issuance was accelerated as issuers seek to avoid market volatility caused by the US election in November. Governments had pulled back borrowing for several years as pandemic-era stimulus aid left budgets flush with cash and borrowing costs rose after the Federal Reserve increased interest rates. While the uptick in issuance is a part of a frenzied effort by issuers to get ahead of potential turbulence from the presidential election, there are a slew of other factors on the radar that could impact the market. “There’s a potential for this to be the beginning of what could be looked at as a golden age for infrastructure project finance for the next five to six years,” said Rob Dailey, head of public finance at PNC. But in addition to the outcome of the election, murky state balance sheets and the unclear future of the rate backdrop could suppress sales, he added. Read more.
 

Commentary: COVID Aftershocks Still Imperil Freight Companies*​​​

From all perspectives, COVID was tough on the freight industry. Millions of people across the globe lost their jobs in the economic downturn and the resulting plunging global demand for goods. At the same time, travel and transportation turmoil, consumer hoarding, and seismic shifts in buying behavior driven by the lockdown resulted in supply chain disruption that took years to unsnarl. But ironically, it is the aftershocks — the post-COVID boom and subsequent bust — that are proving to be more calamitous to trucking companies than COVID, according to a commentary in Freight Waves by Travelers Financial Group CEO Jim Case. Four years later, the roller coaster of demand is still a way of life, challenging freight companies to manage cash flow and capital expenditures with solvency in the balance. The FreightWaves SONAR Outbound Tender Volume Index (OTVI) has tracked the mayhem in global freight markets through COVID and the aftermath. The post-pandemic boom spurred freight companies to overinvest in equipment to capitalize on then-high demand. However, freight hauling rates have pancaked since 2022, and there are simply too many trucks for too little freight. Examples abound of the havoc in today’s freight industry, according to Case. After experiencing record sales growth during the pandemic, digital freight brokerage Surge Transportation filed for bankruptcy protection in July 2023. Company officials said the company was unprepared for the abrupt decline in product demand and soaring shipping costs that rocked the transportation industry in the years following the post-pandemic boom. A similar story is playing out with the rise and fall of dot-com unicorn Convoy. Launched in 2015 as an online marketplace connecting shippers with carriers, Convoy disrupted the traditional market and enabled explosive growth for small trucking companies. When Convoy abruptly shut down operations in October 2023, CEO Dan Lewis blamed it on “a massive freight recession and a contraction in the capital markets…. [I]t was the perfect storm.” As is often the case in this industry, the collapse of one company can trigger disastrous effects for interdependent companies. Read more.

*The views expressed in this commentary are from the author/publication cited, are meant for informative purposes only, and are not an official position of ABI.

abiLIVE Webinars Next Week to Examine 2023 Asset Sale of the Year and Provide Insights on African Insolvency Regimes​​​

Two abiLIVE webinars next week will feature expert panels looking at key features from the 2023 Asset Sale of the Year and facets of African insolvency regimes:

- Sept. 23: The recipients of ABI's 2023 Asset Sale of the Year award will discuss Borrego Community Health Foundation's threatened suspension by the California Medi-Cal program and the execution of a strategy that initially had led to court orders stopping the suspension, then later culminated in the sale of assets. Complimentary registration.

- Sept. 26: Discover firsthand insights into insolvency in Africa! In this webinar, the panelists will showcase their countries' approaches, followed by engaging discussions on the pivotal roles and rights of stakeholders (creditors, employees and shareholders). Complimentary registration. 
 

Cryptocurrency Issues in Bankruptcy, Supreme Court Developments, Real Estate and More to Be Discussed at Next Week's Views from the Bench Program!​​​

Don't miss hearing the views of 20 sitting and retired bankruptcy judges at next week's Bankruptcy 2024: Views from the Bench program next Friday at the Washington, D.C., offices of Jones Day. Panels will examine key issues surrounding bankruptcy confirmation, Supreme Court cases, real estate in bankruptcy, ethics and much more. The luncheon will provide a judicial perspective on resolving crypto issues in bankruptcy. Views from the Bench will also feature ABI’s popular “Great Debates” session, during which judges and experts will square off on issues related to bankruptcy examiners. Attendees have the chance to earn up to 6/7.2 hours of CLE/CPE credit and 1 hour of ethics. Register today! 

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.

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 'X' (Formerly known as Twitter)!