Analysis: More Young Adults Filing for Bankruptcy​​​

Bankruptcy filings among 18- to 29-year-olds have surged nearly 17% from Q1 to Q2 of 2024 and are up 13% compared to last year, according to Forbes. While the pandemic sparked a drop in filings due to relief measures, debt among young adults has since risen, reaching $1.12 trillion for 18- to 29-year-olds. Filings have jumped 50% since a 24-year low in early 2022. There’s been a rise in both potential and actual bankruptcy filings since late 2022, and the trend has continued into 2023, says Justin Gillman, bankruptcy attorney at Gillman, Bruton & Capone, LLC in New Jersey. “This trend aligns with several other factors, such as rising interest rates, which have driven up minimum payments on credit card debt, making it even harder for people to keep up with their financial obligations.” 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.
 

Landlords Face a $1.5 Trillion Commercial Real Estate Maturity Wall​​​

Landlords for offices, apartment complexes and other commercial real estate have $1.5 trillion of debt due by the end of next year, according to Jones Lang LaSalle Inc. That leaves a gap of as much as $400 billion between the amount owed and the capital available for refinancing, Bloomberg News reported. The value of buildings has broadly dropped after higher interest rates boosted funding costs for property owners. Those lower valuations make it harder for landlords to borrow as much, forcing many property owners to raise equity capital to secure new debt or extend their existing facilities. Apartment buildings, which make up about 40% of the looming maturities, are at the center of the refinancing wave, the broker says. Many U.S. owners of the assets known as multifamily bought their properties using three-year floating rate loans during the easy-money era. Interest rate increases since then have eaten up much of their rental income, making it a challenge to secure additional equity. Rising insurance costs and falling values have added to the pain, leaving about $95 billion of the U.S. properties in distress or at risk of becoming so, according to data compiled by MSCI Real Assets. Read more.
 

Online Returns Fraud Finds a Home on Telegram, Costing Retailers Billions​​​

Apparel retailer PacSun noticed a sharp increase in returns of online purchases earlier this year, including one customer who had returned some 250 orders worth $24,000. PacSun had issued the refunds, but the company never received the actual merchandise at its warehouse. Instead, workers found “used or different merchandise returned in the box, or even empty shoeboxes,” said Shirley Gao, the company’s chief digital and information officer. Other promised packages never arrived at all. For the Southern California-based seller of beachwear, casual clothing and footwear, the case turned out to be part of a broader pattern of purchases and bogus returns, many amounting to thousands of dollars, that started hitting the business in early May. The company said that its investigation found that many of the fraudulent returns followed tips passed along through websites, groups on messaging app Telegram and other forums aimed at siphoning off money through the retail returns process. The turn to such large-scale, seemingly loosely coordinated returns targeting specific merchants marks a new step in what retailers say is a growing problem with the messy, costly process of returns of online purchases. Retailers nationwide have seen online returns skyrocket over the past four years after rolling out generous return policies to attract customers amid a pandemic-driven surge in e-commerce. The return policies have helped change shopping habits: Consumers have grown accustomed to ordering items online in several sizes and colors, then returning what they don’t want. Shoppers last year returned 17.6% of items they purchased online, valued at more than $247 billion and more than double the percentage of goods returned in 2019, according to the National Retail Federation and software provider Appriss Retail. Returns have become such an entrenched part of online commerce that companies have sprung up to handle the growing business. United Parcel Service last year acquired one of those specialized operators, Happy Returns, for $465 million. (Subscription required.) Read more.
 

FBI: $5.6 Billion Lost to Cryptocurrency Fraud Schemes Last Year​​​

Americans lost more than $5.6 billion in 2023 from fraud schemes involving cryptocurrency, according to the FBI, The Hill reported. The agency, in a report published Monday, said the bureau received more than 69,000 complaints last year from victims of financial fraud involving cryptocurrencies — such as bitcoin, ethereum and tether — equal to roughly $5.6 billion in losses. This marked a 45 percent increase in losses since 2022, the report said. Most of these losses came from investment fraud, which accounted for $3.9 billion of the total loss, per the FBI. Personal data breaches ($494.4 million in losses) and tech support scams (nearly $421 million) also accounted for significant losses. Michael Nordwall, assistant director of the FBI’s criminal investigative division, noted that while only 10 percent of last year’s fraud complaints were related to crypto, financial cuts from these complaints made up nearly half of the total cash lost in 2023. “The decentralized nature of cryptocurrency, the speed of irreversible transactions, and the ability to transfer value around the world make cryptocurrency an attractive vehicle for criminals, while creating challenges to recover stolen funds,” Nordwall wrote. The FBI found that criminals most often established trust and confidence with the victim before convincing them to use fraudulent websites or applications to invest in cryptocurrency. To do this, they contacted victims through things like dating apps, social media platforms, professional networking sites or encrypted messaging apps, the report notes. The states with the highest numbers of complaints were California (9,522), Florida (5,076), Texas (4,770), New York (3,202) and Washington (2,049). States with the lowest number were South Dakota (117), North Dakota (103), Wyoming (96) and Vermont (69). Read the full report.
 

Poverty Increased in 2023 as Prices Rose and Pandemic Aid Programs Expired​​​

The nation’s poverty rate rose last year even as incomes improved, the government reported on Tuesday, reflecting higher prices and the expiration of the last of the pandemic-relief programs, the New York Times reported. The share of Americans living in poverty as defined by the Census Bureau’s “supplemental” measure, which takes into account a broader range of benefits and expenses than the official poverty rate, rose to 12.9 percent in 2023 from 12.4 percent in 2022. Median household income, adjusted for inflation, rose to $80,610, finally regaining its prepandemic level. Poverty levels have risen anew in recent years after a wave of pandemic relief aid — and an exceptionally strong labor market that lifted the wages of many at the bottom of the pay spectrum — collided with the most rapid inflation in a generation. Stimulus checks, extra unemployment insurance and expanded tax credits for low-income families cut child poverty in half in 2021 to the lowest rate since record-keeping began in 1967. But the expiration of those supports, along with the jump in prices for food and other necessities, reversed the gains made in 2022. The income gains were particularly pronounced for low-wage households, rural households and men, with the gap between male and female earnings rising for the first time since 2003. Census officials say that may have been because of an increase in the labor force participation of Hispanic women, who tend to earn less. Read more.
 

U.S. Jobless Claims Pick Up for the First Time in Three Weeks​​​

Applications for U.S. unemployment benefits ticked up for the time in three weeks, consistent with a gradual slowdown in hiring. Initial claims increased by 2,000 to 230,000 in the week ended Sept. 7, according to Labor Department data released today, Bloomberg News reported. The claims data are prone to fluctuations around holidays, and the latest period included Labor Day. The four-week moving average, a metric that helps smooth out volatility in the data, edged up to 230,750 — the first increase in five weeks. Despite the latest increase, the level of claims has remained subdued for several weeks. Economists have been on the lookout for any sign of downturn in the labor market, but so far there’s been no such warning in the weekly applications for benefits. Initial claims, before adjustment for seasonal factors, declined by 12,968 to 177,663. New York saw the biggest decline, followed by Ohio and Georgia. Read more.
 

Analysis: Layoffs Are Low. That Doesn’t Mean the Labor Market Is Strong​​​

As job growth has slowed and unemployment has crept up, some economists have pointed to a sign of confidence among employers: They are, for the most part, holding on to their existing workers. Despite headline-grabbing job cuts at a few big companies, overall layoffs remain below their levels during the strong economy before the pandemic, the New York Times reported. Applications for unemployment benefits, which drifted up in the spring and summer, have recently been falling. But past recessions suggest that layoff data alone should not offer much comfort about the labor market. Historically, job cuts have come only once an economic downturn was well underway. The Great Recession, for example, officially began at the end of 2007, after the bursting of the housing bubble and the ensuing mortgage crisis. The unemployment rate began rising in early 2008. But it was not until late 2008 — after the collapse of Lehman Brothers and the onset of a global financial crisis — that employers began cutting jobs in earnest. The milder recession in 2001 offers an even clearer example. The unemployment rate rose steadily from 4.3 percent in May to 5.7 percent at the end of the year. But apart from a brief spike in the fall, layoffs hardly rose. Read more.
 

Due Tomorrow: International Matter of the Year Nominations!

ABI’s International Committee is accepting nominations for its Third Annual ABI International Matter of the Year Award. For criteria, eligibility and other information on the award, please click here.

All nominations must be received by tomorrow, Sept. 13.
 

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

Two abiLIVE webinars at the end of September 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. 
 

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 — more than 95 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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