Biden Administration Looks to Expand Student Loan Forgiveness to Those Facing 'Hardship'​​​

Americans who are struggling to repay federal student loans because of financial hardship could get some of their debt canceled under President Joe Biden's latest proposal for widespread loan forgiveness, the Associated Press reported. Several categories of borrowers would be eligible for relief under Biden's second try at widespread cancellation after the Supreme Court rejected his first plan last year. Those with older loans or large sums of interest are being targeted for relief, for example. On Thursday, the Education Department expanded its proposal to include those who face financial hardship. The plan was expanded amid pressure from advocates and Democrats who said the proposal didn't do enough for struggling borrowers who don't fit into one of the other cancellation categories. Whether any of the relief will materialize is a looming question as conservatives vow to challenge any attempt at mass student loan cancellation. The proposal is now going through a rulemaking process that's expected to take months to finalize, and a legal challenge is almost certain. Biden initially attempted to cancel up to $20,000 for an estimated 43 million people with incomes under $125,000. After the Supreme Court ruled he had overstepped his authority, Biden asked the Education Department to craft a new plan under a different legal basis. The new proposal is narrower, focusing on several categories of borrowers who could get some or all of their loans canceled. Read more.

Analysis: The Brutal Reality of Plunging Office Values Is Here​​​

The shakeout in the $20 trillion U.S. commercial real estate market has long been delayed for a simple reason: No one could figure out just how much properties were worth. More crucially, few wanted to, according to a Bloomberg News analysis. Since the COVID-19 pandemic upended the use of real estate around the world, lenders have had little incentive to get tough on borrowers squeezed by soaring interest rates and take on loans that have lost value. Transactions ground to a halt as potential sellers were unwilling to unload buildings at distressed prices — an outcome that allowed them to pretend that nothing had fundamentally changed. Across the country, deals are starting to pick up, revealing just how far real estate prices have fallen. That’s spurring widespread concern about losses that could ripple across the global financial system — as underscored by the recent turmoil unleashed by New York Community Bancorp, Japan’s Aozora Bank and Germany’s Deutsche Pfandbriefbank as they took steps to brace for bad loans. In Manhattan, brokers have started to market debt backed by a Blackstone-owned office building at a roughly 50 percent discount. A prime office tower in Los Angeles sold in December for about 45 percent less than its purchase price a decade ago. Around the same time, the Federal Deposit Insurance Corp. took a 40 percent discount on about $15 billion in loans it sold backed by New York City apartment buildings. It’s a turning point for the market as the Federal Reserve ends the fastest pace of interest-rate hikes in a generation — providing more clarity to real estate investors on where borrowing costs stand. Some property owners will have little choice but to sell as their debt comes due; more than $1 trillion in commercial real estate loans is set to mature by the end of next year, according to data firm Trepp. Read more.  

ABI will be presenting a program that will address CRE exposure: the 2024 Distressed Real Estate Symposium, to be held April 30-May 2 in Ojai, Calif. Click here to register!  

Volunteer Today to Become a Preliminary-Round Judge for the Duberstein National Bankruptcy Moot Court Competition!

The Duberstein National Bankruptcy Moot Court Competition, now in its 32nd year and widely recognized as one of the nation’s preeminent moot court competitions, will be held in New York on March 2-4, 2024. Fifty-three teams from law schools across the country will compete through written briefing and oral argument. Please find the fact pattern by clicking here. Volunteers are needed for judges for the preliminary rounds (please sign up here) of the Competition. Click here for more information and to volunteer!

Retail Sales Fall 0.8% in January from December as Shoppers Pause After Strong Holiday Season​​​

Americans pulled back on their spending more than expected in January after the traditional holiday season splurge, the Associated Press reported. Retail sales fell 0.8% in January from the strong pace in December when they rose a revised 0.4%, according to the Commerce Department's report on Thursday. Excluding sales at auto dealerships and gas stations, sales were down 0.5% for the month. The decline was bigger than the 0.10% drop that economists projected and marked the lowest monthly figure since March of last year. Economists attributed part of the pullback to snowy weather conditions, but they also said the slowdown shows that shoppers may finally be buckling under higher interest rates and other financial hurdles, and that the economic momentum from the end of 2023 could be starting to fade. Excluding sales of autos, gas, building materials and restaurant meals, the so-called control group of sales — which is used to calculate economic growth — fell 0.4% in January. Last month's slowdown was widespread as shoppers cut back their spending in nine of 13 categories, including clothing and accessory stores, health and personal care businesses. Sales at building materials stores and garden suppliers fell a steep 4.1%, reflecting bad weather. Online sales fell 0.8%. But a solid gain at restaurants showed that service-industry spending remains sturdy, analysts said. Read more.

Unpack ADR in Global Restructuring & Insolvency Cases on Special Feb. 27 abiLIVE Webinar!

ABI's Mediation and International Committees will be hosting a special abiLIVE webinar on Feb. 27, with experts exploring the dynamic world of mediation and arbitration in restructuring and insolvency cases across common law and civil law jurisdictions. The program will delve into the different (supra)national legal frameworks shaping these processes, uncovering when and why mediation and arbitration is a game-changer, especially for cross-border and parallel proceedings. Register for FREE!

The Cost of Car Ownership Is Getting Painful​​​

Many of the costs related to car ownership continued to outpace the consumer-price index last month, the Wall Street Journal reported. Car insurance premiums rose 20.6% in January from a year earlier. A trip to the mechanic, the price of a parking space, and highway tolls are also up, offsetting the savings from one of the big exceptions, falling gas prices. The ballooning costs for that car in the driveway can squeeze budgets. Transportation is Americans’ second-biggest expense after housing, and one that is hard to cut. Already, more Americans are feeling the strain. In the fourth quarter of last year, 7.7% of auto loans transitioned to delinquency on an annualized basis, according to the New York Fed — the highest rate in 13 years. “It’s been challenging for consumers over the past few years when it comes to car ownership,” said Greg Brannon, the director of automotive research at AAA. The total annual cost of owning a new car, including expenses such as gas and insurance, climbed to $12,182 in 2023, up from $10,728 in 2022, according to the latest estimates from AAA. (Subscription required.) Read more.

David Tanabe Discusses His Transition from NHL Player to Bankruptcy Attorney on Latest ABI "Party in Interest" Podcast​​​

The latest episode of ABI's "Party in Interest" podcast features ABI Executive Director Amy Quackenboss talking with David M. Tanabe, an associate with Winthrop & Weinstine in Minneapolis who played for nine years in the National Hockey League before an injury forced him into early retirement. Find out about Tanabe's drive to transition from professional hockey to law, the mentors that assisted in his transition, and the lessons he’s gleaned from the ice rink that he applies in the courtroom. Listen here.

Residential Solar Industry Confronts a Critical Year​​​

After years of fast and expensive growth, America’s residential solar companies are wilting under high interest rates and less favorable state incentives. Sunlight Financial, a financing provider for rooftop solar systems, declared bankruptcy in October. SunPower, a rooftop solar and storage provider, in a December filing flagged the risk of defaulting on some of its debt and said there was “substantial doubt” about its ability to continue as a going concern. Last month, the company said it adopted a restructuring plan to cut operating costs, citing slower sales driven in part by interest rates. Solar micro-inverter company Enphase Energy said in a December filing that it will lay off about 10% of its workforce and stop manufacturing at certain locations to reduce operating costs. SolarEdge Technologies, another inverter provider, said last month that it would reduce its head count by 16% to “align its cost structure to current market dynamics.” High interest rates have been a double-whammy for the rooftop solar business: Not only do solar companies rely on debt to fund their installations, but customers also tend to finance their purchases. The average quoted interest rate on consumer solar loans is 6.58% so far this year, a steep climb from 2.45% in the first quarter of 2022, according to EnergySage, a marketplace that connects consumers with solar installers. Making matters worse, California, the biggest market for home solar, last year reduced the amount that rooftop solar systems can get for selling excess electricity back to the grid. That effectively cut the value of solar export credits by about 75% on average, which means it now takes consumers 8-10 years to break even on a solar panel. That is about four years longer than it used to take, according to Zoë Gaston, solar analyst at Wood Mackenzie. While California’s new rules do shorten the payback period on solar-plus-storage systems, industry analysts said that the market will take time to grow simply because batteries exceed many consumers’ budgets. (Subscription required.) Read more.  
 

ABI Diversity Mentoring Program Accepting Applications for New Mentees Through March 5

ABI's Diversity and Inclusion Mentoring Program (June 2024 – June 2025) seeks to build personal and professional relationships while promoting diversity and leadership within ABI. The goal of the Mentoring Program is to expose mentees to the many aspects of the restructuring profession, including becoming involved in ABI and interacting with mentors’ colleagues, peers and networks. Guided by the DWG Mentoring Subcommittee, there will be bi-monthly meetings or programming to address a variety of topics, with resources from ABI and members of the restructuring community, including judges, trustees, attorneys and financial professionals. These structured events will occur between April 2024 – June 2025 and will provide opportunities to interact with other experienced insolvency professionals while providing an educational program and fostering opportunities to discuss important topics in the mentees’ professional development. For more information, including eligibility requirements and how to apply, please click here.

Asset Sale of the Year Award Nominations Deadline Extended to March 18

ABI’s Asset Sales Committee is seeking nominations for its Annual ABI Asset Sale of the Year award. Any bankruptcy sale that closed between January 1 and December 31, 2023, and involved at least one professional who is a member of ABI’s Asset Sales Committee is eligible. The nomination deadline has been extended to March 18; please send your nominations to Matt LoCascio and Leyza Blanco. For more information, please click here.

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, who 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, although please note that abstracts to be considered for the upcoming Annual Spring Meeting, being held April 18-20, 2024, at the Marriott Marquis in Washington, D.C., were due on December 31, 2023. 

Bankruptcy Judgeship Vacancy Announcement for the District of New Jersey

Chief Judge Michael A. Chagares of the U.S. Court of Appeals for the Third Circuit on Monday announced the application process for a bankruptcy judgeship in the District of New Jersey, seated in Trenton. For eligibility and qualifications, please click here to access the full announcement. Applications must be submitted electronically by noon on March 6, 2024.
 

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