Additional Chapter 7 Trustee Payments Suspended for FY 2022​​​

The Department of Justice (DOJ) has advised the Administrative Office of the U.S. Courts that it has insufficient funds available to transfer to the Judiciary to make additional payments to eligible chapter 7 bankruptcy trustees for fiscal year 2022, according to a U.S. Courts press release. Trustees interested in receiving the additional payments for fiscal year 2023 should still file payment eligibility certifications. The Bankruptcy Administration Improvement Act of 2020 (BAIA) established an additional payment for eligible chapter 7 trustees for fiscal years 2021 to 2026. The payments are funded by excess collections in the DOJ’s U.S. Trustee System Fund. Eligible chapter 7 trustees received an additional payment of $60 for each applicable case in fiscal year 2021. However, the DOJ has indicated that it lacks sufficient funds for the additional payment in applicable fiscal year 2022 cases. Read more.

Commentary: Where Have All the Examiners Gone?*​​​

The FTX bankruptcy case, FTX Trading Ltd., et al., case no. 22-11068 (Bankr. D. Del.), highlights several of the problems in mega-chapter 11 case administration that warrant further appellate scrutiny for their impact on future cases, according to a commentary by Cliff White in a post on the Creditor Rights Coalition's website. White is the former director of the Justice Department’s U.S. Trustee Program and is currently managing director for Bankruptcy Compliance at AIS, a financial technology company. (Note that the views expressed by White are his alone.) The FTX case reflects the continuing weakening of traditional standards of disclosure, professional conflicts of interest, and statutory construction by bankruptcy courts. But perhaps recent reversals of bankruptcy court decisions in Purdue Pharma and LTL reflect greater judicial oversight of bankruptcy court actions. The recent decision by the bankruptcy court in FTX to deny the U.S. Trustee Program’s (USTP’s) request (joined by 18 states and the District of Columbia) for an examiner may provide the next vehicle that speeds a return to a more Code-based jurisprudence. 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.

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Don't Miss the Feb. 28 abiLIVE Webinar Looking at Student Loans!

Join our panelists on a special abiLIVE on February 28 as they discuss the DOJ’s new student loan guidelines and provide context on how the guidelines will impact debtor attorneys, trustees and other entities in the bankruptcy process. Register for FREE!

U.S. Regulators Warn Banks to Be on Alert for Crypto-Related Liquidity Risks​​​

Top U.S. banking regulators issued a fresh warning to banks to be on guard for any liquidity risks from cryptocurrency-related clients, cautioning that some of their deposits could prove volatile, Reuters reported. In a joint statement issued today, the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency said that banks should have robust tools in place to monitor funds placed by crypto asset-related entities. The agencies noted that deposits placed with banks for the benefit of crypto consumers, as well as stablecoin reserves, could be subject to rapid outflows. Regulators said the new statement was spurred by "recent events" in the crypto sector that highlighted volatility risks. While they noted that the statement does not include new requirements and that banks are not prohibited from providing services to particular sectors, it does mark the latest in a series of moves by bank regulators urging caution in any crypto dealings. The guidance represents the first time that bank regulators have highlighted deposits linked to stablecoins — a type of cryptocurrency typically pegged to the U.S. dollar — as being susceptible to volatility during periods of stress in the crypto market. Most of the major stablecoins, including Tether and USD Coin, are asset-backed, meaning that the stablecoin-issuer holds assets, including bank deposits, that can quickly be redeemed to meet withdrawal requests. Read more.

U.S. Jobless Claims Fall; Inflation Revised Higher in Fourth Quarter​​​

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, pointing to a persistently tight labor market and further fueling fears that the Federal Reserve could raise interest rates higher than anticipated, Reuters reported. Those worries were amplified by other data on Thursday showing that inflation was much stronger than initially thought in the fourth quarter, which raises the risk of higher readings when the government publishes January's personal consumption expenditures (PCE) price data on Friday. While the Fed is expected to deliver two additional rate hikes of 25 basis points in March and May, financial markets are betting on another increase in June. The U.S. central bank has raised its policy rate by 450 basis points since last March from near zero to a 4.50%-4.75% range. Initial claims for state unemployment benefits decreased 3,000 to a seasonally adjusted 192,000 for the week ended Feb. 18, the Labor Department said. Economists polled by Reuters had forecast 200,000 claims for the latest week. Unadjusted claims declined 14,465 to 210,867. Claims for four states including California were estimated, likely because of Monday's Presidents' Day holiday, which usually means that there is less time for state offices to process applications. Read more.

USTP to Resume Debtor Audits on March 13

Effective March 13, 2023, the USTP will resume its designation of individual chapter 7 and chapter 13 cases for audit. These audits had been suspended in March 2020 due to public health concerns associated with the COVID-19 pandemic. As authorized in section 603(a) of Public Law 109-8, the USTP established procedures for independent audit firms to audit petitions, schedules and other information in consumer bankruptcy cases. Pursuant to 28 U.S.C. § 586(f), the USTP contracts with independent accounting firms to perform audits in cases designated by the USTP. Click here for more information.

Prof. Kenji Yoshino to Provide Keynote on Diversity and Inclusion at ABI’s Annual Spring Meeting​​​

Prof. Kenji Yoshino, the Chief Justice Earl Warren Professor of Constitutional Law at NYU School of Law and the director of the Meltzer Center for Diversity, Inclusion and Belonging, will provide the keynote address at ABI's Annual Spring Meeting. A graduate of Harvard (A.B. summa cum laude), Oxford (M.Sc. as a Rhodes Scholar) and Yale (J.D.), he specializes in constitutional law, anti-discrimination law, and law and literature. He received tenure at Yale Law School, where he served as deputy dean before moving to NYU. Prof. Yoshino has published in major academic journals, including the Harvard Law Review, the Stanford Law Review and the Yale Law Journal. He is the author of three books and co-authored a fourth, Say the Right Thing: How to Talk About Identity, Diversity, and Justice, published by Simon and Schuster this month. All Annual Spring Meeting attendees will receive a free copy of the book in their conference tote bags! Register before the early-bird rate expires on March 3! 

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