Borrowers Increasingly Struggling with Credit Card Debt​​​

Consumers are increasingly struggling to pay their credit card bills, raising concerns about severe delinquencies spiraling and sapping consumer spending, the Associated Press reported. The share of credit card debt that's more than 90 days overdue rose to 10.7% during the first quarter, a 14-year high, according to the Federal Reserve Bank of New York’s report on first-quarter household debt. A year ago severe delinquencies totaled only 8.2% of credit card debt. The first-quarter jump in severe delinquencies was the biggest since 2011. Meanwhile total credit card debt rose to $1.12 trillion from just under $1 trillion a year ago. Wall Street has so far brushed off concerns about rising credit debt levels and payment struggles, forecasting earnings growth to accelerate from 5.6% in the first quarter to 17.1% by the fourth quarter. Read more.
 

Commentary: Private Equity Is Bad for Your Health*​​​

The bankruptcy of Steward Health has become the latest cautionary tale about private equity’s involvement in health care, according to a Bloomberg commentary. Cerberus Capital Management’s purchase in 2010 of several Massachusetts-based nonprofit hospitals was meant to be a life preserver for the struggling chain, but instead its woes deepened, compromising patient care. The PE firm saddled the business with debt before making $800 million in profit when it sold the chain in 2020, according to reporting by Bloomberg. As private investors move into new corners of health care, studying the impact of the trend remains frustratingly difficult because so many of the details don’t need to be disclosed. It’s too hard today to even figure out who owns your doctor’s office — let alone whether their influence is good or bad. The Steward Health story adds a dramatic data point to the growing body of evidence showing that private investors can hurt the care hospitals provide. Research has shown that patients experience more complications, like infections or falls, in hospitals bought by PE firms. PE-backed care can also come with a higher price tag and more aggressive debt collection for poor patients. One review of all the academic studies of the influence of private equity in health care concluded: “No consistently beneficial impacts of PE ownership were identified.” But health care continues to be an attractive target for private equity firms, with physician practices becoming particularly alluring since 2016. Such deals are hard to track, however, because the price usually falls below antitrust reporting thresholds. 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.
 

Survey: Home Insurance Is So Pricey People Are Moving​​​

A new survey by real estate brokerage Redfin shows that 12% of Florida residents who are planning to move in the next year are doing so because of rising insurance costs. Nationally, 6% said the same, the Wall Street Journal reported. With both inflation and natural disasters increasing and insurers pulling out of high-risk markets in droves, home insurance premiums have skyrocketed recently. Data from Quadrant Information Systems and Bankrate shows that the average homeowner has seen a 23% increase in just the past year. (Renters insurance has jumped 8% since 2021, with many of the same trends behind it.) “It puts consumers in a challenging position,” says Travis Hodges, managing director of VIU by Hub, an insurance comparison platform. “You can bear the financial strain of home insurance or risk the potential for significant financial losses in the event of property damage.” Some homeowners — many of them in Florida, California or Texas, where catastrophic weather events are becoming increasingly common — are even seeing their policies non-renewed or canceled entirely. (Subscription required.) Read more.
 

U.S. Business Activity Speeds Up to Highest Level in 2 Years, but Price Pressures Build Up​​​

U.S. business activity accelerated to the highest level in just over two years in May, but manufacturers reported a surge in prices for a range of inputs, suggesting that goods inflation could pick up in the months ahead, Reuters reported. S&P Global said on Thursday that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, jumped to 54.4 this month. That was the highest level since April 2022 and followed a final reading of 51.3 in April. A reading above 50 indicates expansion in the private sector. Economists polled by Reuters had forecast the index to remain little changed at 51.1. The increase was driven by the services sector, with the flash PMI rising to 54.8 from 51.3 in April. The manufacturing flash PMI inched up to 50.9 from 50.0. At face value, the jump in activity suggested that economic growth picked up halfway through the second quarter. Read more.
 

U.S. Labor Market Remains Strong as Weekly Jobless Claims Fall​​​

The number of Americans filing new claims for unemployment benefits fell last week, pointing to underlying strength in the labor market that should continue to support the economy, Reuters reported. The second straight weekly decline in claims reported by the Labor Department on Thursday unwound most of the jump at the start of the month, which had lifted applications to a level last seen at the end of August. Though job growth is slowing as a result of hefty Federal Reserve interest rate hikes in 2022 and 2023, layoffs remain very low. Initial claims for state unemployment benefits dropped 8,000 to a seasonally adjusted 215,000 for the week ended May 18. Read more.
 

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. The 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 pursuit of causes of action by litigation trustees. Get your copy of Driving the Recovery Bus.

Application and Nomination Period for ABI’s 2024 “40 Under 40” Class Open Through June 30 ​​​

The ABI "40 Under 40" annual program 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! Nominations and applications are due June 30. 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.

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)!