Debt Eligibility Limits for Subchapter V, Chapter 13 Set to Revert to Lower Amounts After Tomorrow​​​

The debt limits for subchapter V and chapter 13 will expire after tomorrow as a bill to extend the existing caps for two more years continues to face a legislative roadblock. A bipartisan group of senators from the Senate Judiciary Committee consisting of Sens. Richard Durbin (D-Ill.), Lindsey Graham (R-S.C.), Sheldon Whitehouse (D-R.I.), Charles Grassley (R-Iowa), Christopher Coons (D-Del.) and John Cornyn (R-Texas) in April introduced S. 4150, the Bankruptcy Threshold Adjustment Extension Act, to push the sunset dates out to 2026. Due to its simplicity and perceived lack of opposition, the sponsors had hoped to advance the bill swiftly through the Senate via unanimous consent before sending it to the House of Representatives. However, one senator has raised an issue with the legislation, thereby placing a hold on the bill. At the same time S. 4150 was introduced, ABI's Subchapter V Task Force issued its Final Report with recommendations and data supporting the maintenance of the higher debt eligibility limit. Absent a legislative fix, the debt limits will revert to the amounts in effect in early March 2020, subject to adjustment for inflation. The subchapter V debt limit will drop from $7,500,000 to $3,024,725, and the chapter 13 threshold of $2,750,000 for both secured and unsecured debt will revert to a two-part test limiting eligibility to a maximum of $465,275 for unsecured debt and $1,395,875 for secured debt. 

U.S. Regulators at Odds over Whether to Issue New Draft of Bank Capital Hikes​​​

U.S. bank regulators are arguing over the path forward for rules easing bank capital hikes, with some wanting to allow additional feedback from Wall Street after the industry vigorously pushed back, Reuters reported. The Federal Reserve, which is leading the project, is considering reproposing the "Basel endgame" rule, while the Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency (OCC) do not want to go that route. All three have spent the past few months poring over dozens of comments criticizing its July 2023 proposal and considering changes. Once the agencies have agreed to a revamped draft, they have to decide whether to finalize the rules and have them take effect, or repropose them, allowing for a second round of feedback. A reproposal that includes significant changes can add months to an already lengthy and complex process. Fed officials believe that reissuing the proposal and allowing Wall Street banks, which have said the rules will hurt lending and the economy, to comment on changes to the draft would reduce the risk of them suing to overturn the final version. But FDIC and OCC officials believe that there is no legal need to repropose the rule and that doing so just months ahead of the Presidential election could endanger the project. Read more.

U.S. Jobless Claims Fall to 238,000 from 10-Month High​​​

The number of Americans applying for unemployment benefits slipped last week as the U.S. labor market remained resilient, the Associated Press reported. The Labor Department reported today that jobless claims fell by 5,000 to 238,000 from a 10-month high of 243,000 the week before. The four-week average of claims, which evens out weekly ups and downs, rose by 5,500 to 232,750, the highest since September. Weekly unemployment claims — a proxy for layoffs — remain at low levels by historical standards, a sign that most Americans enjoy unusual job security. Still, after mostly staying below 220,000 this year, weekly claims have moved up recently. Nearly 1.83 million people were collecting unemployment benefits the week of June 8, up by 15,000 the week before and the seventh straight weekly uptick. Unemployment is still low at 4%. Read more.

New U.S. Home Construction Plunges to Slowest Pace Since June 2020​​​

New home construction in the U.S. slumped in May to the slowest pace in four years, as higher-for-longer interest rates are sapping the housing industry’s momentum from earlier this year, Bloomberg News reported. Housing starts decreased 5.5% to a 1.28 million annualized rate last month, according to government data released today. Building permits, which point to future construction, fell 3.8% to a 1.39 million annual rate, also the weakest since June 2020. The declines in starts and permits were broad across multifamily and single-family units. Authorized permits for single-family homes dropped for a fourth straight month to the slowest pace in a year. The drop in homebuilding suggests that residential construction may detract from economic growth after stabilizing earlier this year. Before the report, the Federal Reserve Bank of Atlanta’s GDPNow forecast had pegged the category to barely contribute to gross domestic product in the current quarter. Read more.

Supreme Court Upholds a Tax on Foreign Income over a Challenge Backed by Business Interests​​​

The Supreme Court today upheld a tax on foreign income over a challenge backed by business and anti-regulatory interests, declining their invitation to weigh in on a broader, never-enacted tax on wealth, the Associated Press reported. The justices, by a 7-2 vote, left in place a provision of a 2017 tax law that is expected to generate $340 billion, mainly from foreign subsidiaries of domestic corporations that parked money abroad to shield it from U.S. taxes. The law, passed by a Republican Congress and signed by then-President Donald Trump, includes a provision that applies to companies that are owned by Americans but do their business in foreign countries. It imposes a one-time tax on investors’ shares of profits that have not been passed along to them, to offset other tax benefits. But the larger significance of the ruling is what it didn't do. The case attracted outsize attention because some groups allied with the couple who brought the case argued that the challenged provision is similar to a wealth tax, which would apply not to the incomes of the very richest Americans but to their assets, like stock holdings. Such assets now get taxed only when they are sold. Justice Brett Kavanaugh wrote in his majority opinion that “nothing in this opinion should be read to authorize any hypothetical congressional effort to tax both an entity and its shareholders or partners on the same undistributed income realized by the entity.” Underscoring the limited nature of the court's ruling, Kavanaugh said as he read a summary of his opinion in the courtroom, “the precise and very narrow question” of the 2017 law “is the only question we answer.” Read more.

The Supreme Court will be issuing more opinions tomorrow as the October 2023 term winds down. ABI is ready to report and analyze the forthcoming decision in Purdue Pharma in Rochelle’s Daily Wire!

Donate to the Kevin J. Carey Memorial Scholarship ​​​

Hon. Kevin J. Carey (ret.), who served as ABI’s President from 2022-23 after previously having served as ABI’s Vice President-Membership, among other leadership roles, died on April 11 at his home in Devon, Pa., at the age of 69. An ABI member since 1997, he had served as a U.S. Bankruptcy Judge for the District of Delaware from 2001-19, then as senior counsel at Hogan Lovells in Philadelphia from 2019 until his death. The Carey family is grateful for the continued prayers and support they have received since Judge Carey’s passing, and have since formed a scholarship in his name at Villanova University School of Law, which will be awarded to academically talented students enrolled in the Charles Widger School of Law with demonstrated financial need. To donate in support of the Kevin J. Carey Memorial Scholarship, please send a check to Villanova University at 299 North Spring Mill Road, Villanova, PA 19085, with “The Kevin J. Carey Memorial Scholarship” in the memo. Donations also can be made online at givecampus.com/campaigns/36916/donations/new. From there, select “Other/Your Choice” to write in “The Kevin J. Carey Memorial Scholarship.”  

Pick Up Your Copy of Driving the Recovery Bus​​​

Make sure to pick up your copy of Driving the Recovery Bus: Augmenting Creditor Recoveries Through Claims Brought by a Litigation Trustee. Written by Gordon Z. Novod, this book is not only for litigation trustees, but also for creditors who serve on official committees of unsecured creditors, attorneys and other professionals who frequently represent official committees of unsecured creditors, and others with a general interest in the pursuit of causes of action by litigation trustees. Get your copy of Driving the Recovery Bus. 
 

Applications for ABI’s 2024 “40 Under 40” Program Due June 30​​​

June 30 is the deadline for nominations and applications for ABI’s annual "40 Under 40" program, which continues to highlight the best up-and-comers in the industry. If you are, or know of, a dynamic insolvency professional who is committed to growth and excellence both professionally and in your community, this is one opportunity not to be missed! Click here for more information and to submit a nomination or application. 

Get Your Copy of The Purdue Papers to access Amicus Briefs and Commentaries Related to Purdue Pharma Case!​​​

A petition by the U.S. Trustee regarding the case of Purdue Pharma L.P. is currently being considered by the U.S. Supreme Court. Regardless of how the Court rules, the case has already generated a mountain of commentary in the form of amicus briefs, petitions and other related background material. ABI, guided by editor David R. Kuney (who represented one group of amicus filers), has gathered together all of this material in a fully searchable form — more than 3,000 pages worth! This collection will be updated with the final Supreme Court decision — expected later in 2024 — as well as a final commentary by ABI Editor-at-Large Bill Rochelle, who writes Rochelle’s Daily Wire. This collection is an invaluable resource for anyone working in the area of third-party releases, either as a practitioner, an academic or just an interested party. Get your digital copy for only $25!

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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