Repeat Chapter 11 Filers Dominated 2023 Bankruptcy Landscape​​​

Struggling companies seeking bankruptcy turned 2023 into one of the biggest years for repeat chapter 11 filers, suggesting that many didn’t make the necessary cuts or business changes to successfully revive themselves the first time around, Bloomberg Law reported. With at least 19 businesses with more than $10 million in debt filing chapter 11 for at least a second time, 2023 had the most so-called chapter 22 filings since 2020 during the COVID-19 pandemic, which pushed many already-struggling companies over the edge. The past year was among the top for repeat bankruptcies since the turn of the century, according to BankruptcyData. Read more. 
 

Inflation Rose Slightly in December as Fight to Tame Prices Continues ​​​

Inflation rose slightly in December, offering the latest sign that the economy has made significant progress since prices spiked to four-decade highs — but there’s still a ways to go, especially on housing costs, which dominate the budgets of households nationwide, the Washington Post reported. Data released today by the Bureau of Labor Statistics showed that prices rose 3.4 percent in December compared with the year before. That’s higher than the 3.1 percent rate notched in November. Prices also rose 0.3 percent in December over the previous month. Since price increases peaked at 40-year highs in mid-2022, inflation has come down significantly, giving families more breathing room on gas prices, grocery costs and airfares. But rent costs have proved so sticky that they continue to drive the overall inflation snapshot month after month — accounting for over half of the total monthly increase in December. Specifically, costs were up 0.4 percent compared to the month before, after a few months of rising 0.5 percent. Compared to December 2022, rent costs were up 6.5 percent. Read more. 
 

Don't Miss the Quick Evidence Reunion and an Examination of Chapter 13 Plan Issues on Two Upcoming Webinars!

Two upcoming ABI webinars will make sure you have a well-informed start to the New Year! Be sure to register for these complimentary webinars:

- "Revisiting Evidence in Bankruptcy with the Authors of ABI’s Quick Evidence Handbook" abiLIVE on Jan. 16 at noon ET. Register here.

- "Behind the Bench: Chapter 13 Plan Issues – The Good, The Bad, and The Ugly" in collaboration with NCBJ on Jan. 23 at 1 p.m. ET. Register here.

Analysis: The Fed Launched a Bank Rescue Program Last Year. Now, Banks Are Gaming It ​​​

An emergency lending program the Federal Reserve created during the 2023 banking crisis has turned into easy money. Borrowing from the Fed’s bank term funding program has increased to new highs in recent weeks, a strange consequence of the market’s flip to forecasting multiple Fed rate cuts over the coming 12 months, the Wall Street Journal reported. The rate banks pay to use the program, BTFP for short, is tied to future interest-rate expectations. Now that investors have priced in a series of rate cuts later this year, banks are able to pocket the difference between what they pay to borrow the funds and what they can earn from parking the funds at the central bank as overnight deposits. In March, the failure of Silicon Valley Bank spooked depositors, sending banks scrambling for cash. The Fed rushed to their aid, taking beaten-down bonds at face value as collateral for one-year loans. The program’s creation helped calm depositors into believing that banks had access to ample funds. The facility charges banks a rate equivalent to the market’s expectation for where benchmark interest rates average over the next year, plus an additional 0.1 percentage point. Initially, borrowing was expensive because investors were pricing in higher rates for the future. A dramatic reversal in rate expectations in recent months has changed the math. While the Fed offers financing below 5% through its rescue program, it is currently paying banks 5.4% on parked reserve balances. Lending in the program hit $141.2 billion this past Wednesday, a new high, up 4% from the prior week and up 25% since the middle of November when forecasts started changing. Most of the volume is still loans from the crisis, and the number didn’t move much from July to November. (Subscription required.) Read more. 
 

G30: Banks Should Increase Use of ‘Discount Window’ to Prevent Crises ​​​

Commercial banks should prepare to borrow more readily from central banks to limit contagion in times of stress and discourage runs by depositors, an expert regulatory panel said on Tuesday in a report about last year's banking crisis, Reuters reported. The Group of 30 (G30), an international forum of central bankers, economists and private financiers, also said improving accounting standards, more comprehensive stress testing and better supervision would help prevent future bank failures. Last year's collapses of Silicon Valley Bank, Signature Bank, First Republic Bank and Credit Suisse constituted the worst financial crisis since 2007-09. The U.S. banks all collapsed following depositor runs. However, reforms proposed so far have under-emphasized the importance of "lender of last resort" or central bank "discount window" lending in limiting contagion, according to the report, which was chaired by former New York Federal Reserve Bank President William Dudley. Borrowing from central banks continues to carry a stigma as a sign of weakness and can require collateral that banks don't immediately have handy, meaning that the system goes unused, the report said. Reuters reported last year that many small banks are not set up to borrow from the Fed's discount window. Fixing central bank lending systems is "the most important, most feasible and lowest-cost reform" to contain panic and discourage depositor runs, the group said. Banks should have enough collateral on hand to cover "all runnable liabilities" via discount window borrowing, it added. Read more. 
 

U.S. Applications for Jobless Benefits Fall to Lowest Level in 12 Weeks ​​​

The number of Americans applying for unemployment benefits inched down to its lowest level in nearly three months last week as the U.S. labor market continues to flex its muscle in spite of elevated interest rates, the Associated Press reported. Jobless claim applications fell to 202,000 for the week ending Jan. 6, down by 1,000 from the previous week, the Labor Department reported Thursday. The four-week average of claims, which evens out some of the week-to-week volatility, ticked down by 250 to 207,750. Overall, 1.83 million Americans were collecting jobless benefits during the week that ended Dec. 30, a decrease of 34,000 from the previous week. Read more. 
 

Volunteer Today to Become a Preliminary-Round Judge or Brief Grader 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 brief graders (please sign up by Feb. 9) and judges for the preliminary rounds (please sign up by Feb. 10) of the Competition. Click here for more information and to volunteer!

Asset Sale of the Year Award Application Now Available!

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. Nominations are due February 16; 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. 

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