August 8, 2011
Total U.S. Bankruptcies in First Half of 2011 Down 8 Percent over First Half of 2010
The total number of U.S. bankruptcies filed during the first six months of 2011 dropped 8 percent over the same six-month period in 2010, according to data released on Friday by the Administrative Office of the U.S. Courts. Total filings reached 745,968 during the first half of calendar year 2011 (January 1-June 30), compared to 810,209 cases filed over the same period in 2010. Business filings decreased 15 percent for the six-month period ending June 30, 2011, to 24,680 from the first-half 2010 total of 29,059. Filings by individuals or households with consumer debt decreased 8 percent to 721,288 for the six-month period ending June 30, 2011, from the 2010 first-half total of 781,150. Read more.
Homebuilding Supplier Files for Chapter 11
Homebuilding supply company Lyman Holding Co. filed for chapter 11 protection in the U.S. Bankruptcy Court for the District of Minnesota on Aug. 4, the Deal Pipeline reported on Friday. Debtor affiliate Lyman Lumber Co., along with nine other affiliates, also filed for bankruptcy on Thursday. In its petition, Lyman Holding reported $1 million to $10 million in assets and liabilities, but Lyman Lumber listed $50 million to $100 million in assets and $100 million to $500 million in liabilities. Read more. (Subscription required.)
AIG to Sue Bank of America over Mortgage Bonds
The American International Group is planning to sue Bank of America over hundreds of mortgage-backed securities, adding to the surge of investors seeking compensation for the troubled mortgages that led to the financial crisis, the New York Times reported today. The suit seeks to recover more than $10 billion in losses on $28 billion of investments, in possibly the largest mortgage-security-related action filed by a single investor. It claims that Bank of America and its Merrill Lynch and Countrywide Financial units misrepresented the quality of the mortgages placed in securities and sold to investors. AIG, still largely taxpayer-owned as a result of its 2008 government bailout, is among a growing group of investors pursuing private lawsuits because they believe banks misled them into buying risky securities during the housing boom. At least 90 suits related to mortgage bonds have been filed, demanding at least $197 billion, according to McCarthy Lawyer Links, a legal consulting firm. Read more.
Delaware Supreme Court Rejects PSEG Appeal on Dynegy Deal
Delaware's Supreme Court on Friday rejected Public Service Enterprise Group Inc.'s last-ditch bid to hold up Dynegy Inc.'s $1.7 billion restructuring, noting that the deal was done, the money had moved and the fight was 'moot,' Dow Jones Daily Bankruptcy Review reported today PSEG lost a challenge to the restructuring last month and scrambled to get an emergency hearing before the Delaware Supreme Court to block a deal it says threatens its ability to collect on $790 million worth of lease payments. Read more. (Subscription required.)
U.S. District Court Must Decide Lehman Claims, JPMorgan Says
JPMorgan Chase & Co., sued for $8.6 billion by bankrupt Lehman Brothers Holdings Inc., said that the defunct firm's common-law claims against it must be decided by a U.S. district court judge rather than a bankruptcy judge, Bloomberg News reported on Saturday. In a court filing submitted on Friday, the New York-based bank said that the U.S. Supreme Court ruling in the Anna Nicole Smith case limited the power of bankruptcy judges to rule on such claims. JPMorgan, the second-biggest U.S. bank, has been fighting Lehman's suit in bankruptcy court, fending off demands for the return of $8.6 billion in collateral, plus 'tens of billions' in damages for allegedly accelerating the former investment bank's demise. After the ruling in the Smith case, a district judge must determine damage claims brought under New York state law, JPMorgan said in the filing. Read more. (Subscription required.)
Anger over Credit Rating Agencies Resurfaces
Several lawmakers have publicly questioned whether the credit ratings agencies have the competence to evaluate the country's finances, and whether it was appropriate for them to be so deeply involved in discussions of fiscal politics, the New York Times reported today. The criticism reached a fevered pitch after S.& P. announced on Friday night that it was downgrading America's credit rating, a decision that thrust the ratings agencies to the center of the debate over the government's budget, and prompted renewed scrutiny of an industry that has been harshly criticized since the financial crisis. The ratings agencies' purview is traditionally viewed as evaluating data and revenue projections for debt issuers, but they have long taken governance into account for ratings of sovereign nations and corporations. In its announcement on Friday, S.& P. cited the political gridlock in Washington, D.C., during the debt limit debate as a main reason for its decision. 'The gulf between the political parties,' S.& P. said, had reduced its confidence in the government's ability to manage its finances. Read more.
S.&P. Downgrade Is Seen as Adding Urgency to Debt-Cutting Panel
The downgrade of the United States government's credit rating by Standard & Poor’s is almost sure to increase pressure on a new Congressional 'supercommittee' to mute ideological disagreements and recommend a package of deficit-reduction measures far exceeding its original goal of at least $1.5 trillion, the New York Times reported today. Even before the panel is appointed, its mission is expanding. Its role is not just to cut the annual budget deficit and slow the explosive growth of federal debt but also to appease the markets and help restore the United States' top credit rating of AAA. The stated goal of the new panel, the Joint Select Committee on Deficit Reduction, is to cut federal budget deficits by a total of 'at least $1.5 trillion' over the next decade. Read more.
Dodgers, Baseball Agree on $150 Million in Financing
The Los Angeles Dodgers have reached an agreement to accept as much as $150 million in loans from Major League Baseball to keep the team afloat as it works its way through bankruptcy, Reuters reported on Friday. The deal, announced in court papers on Friday, resolves the team's concern that an MLB loan would contain language allowing the league to take control of team. The agreement is 'satisfactory,' both 'in its economics and its terms,' a team spokeswoman said. The case is In re Los Angeles Dodgers LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-12010. Read more. (Subscription required.)
Washington Mutual Investigation by U.S. Concludes Without Criminal Charges
Washington Mutual Bank's failure, the biggest in U.S. history, will not result in criminal charges against its former executives, U.S. Attorney Jenny A. Durkan said on Friday, Bloomberg News reported. A federal investigation of the bank's collapse included hundreds of interviews and a review of millions of documents concerning its operations, Durkan and the Justice Department said. The bank, the operating unit of Washington Mutual Inc., was seized by regulators on Sept. 25, 2008, and sold to JPMorgan Chase & Co. for $1.9 billion. The bank had more than 2,200 branches and $188 billion in deposits. The following day, the parent company filed for bankruptcy. Read more.
Judge Clears Signature Styles to Pay Google $1 Million, Reinstate Deal
Signature Styles LLC won permission from Bankruptcy Judge Kevin Gross on Wednesday to pay Google Inc. nearly $1 million so that the retailer can restart advertising services it says are crucial to its increasingly Internet-driven business, Dow Jones DBR Small Cap reported today. In exchange, Google will 'immediately reinstate the critical service' whose temporary shutdown initially sparked Signature Styles' desire to pay the company out of turn in the bankruptcy case. Read more. (Subscription required.)
International Headlines
Click here to review today's global insolvency news from the GLOBAL INSOLvency site.