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January 5, 2010
Consumer Bankruptcy Filings
Increase 32 Percent in 2009, Most Since 2005
U.S. consumer bankruptcies increased 32 percent
nationwide in 2009 from the previous year, according to the American
Bankruptcy Institute (ABI) relying on data from the National Bankruptcy
Research Center (NBKRC). The data showed that the overall consumer
filing total for the 2009 calendar year (Jan. 1 – Dec. 31, 2009)
reached 1,407,788 compared to the 1,064,927 total consumer filings
recorded during 2008. Annual consumer filings have increased each year
since BAPCPA was enacted in 2005. NBKRC’s data also showed that
the 113,274 consumer filings recorded in December 2009 represented a 33
percent increase from the 84,926 filings in December 2008. Chapter 13
filings constituted 28 percent of all consumer cases in December, a
slight decrease from November.
href='http://www.abiworld.org/AM/Template.cfm?Section=Monthly_Bankruptcy_Statistics&Template=/MembersOnly.cfm&NavMenuID=3716&ContentID=46994&DirectListComboInd=D'>Click
here to view the filing charts.
Paradise Palms Creditor
Seeks Case Dismissal
A creditor of bankrupt Paradise Palms LLC will look to
continue its pre-petition litigation with the real estate developer, the
Deal’s
size='3'>Pipeline reported yesterday. At a
hearing scheduled for Friday, Jan. 15, in the U.S. Bankruptcy Court for
the Middle District of Florida in Orlando, LEN Paradise LLC will ask
Bankruptcy Judge
face='Times New Roman' size='3'>Karen Jennemann
size='3'>to have the chapter 11 case of Paradise Palms dismissed or, as
an alternative, ask for relief from stay, in order for the creditor to
continue, pending state court foreclosure litigation against the debtor.
LEN Paradise asserts in court papers that the debtor's bankruptcy filing
was made in bad faith, on the grounds that it generates no revenue and
is a failing business, and that the bankruptcy was only used as a
last-ditch effort to delay the state court foreclosure action. LEN
Paradise asserts that it has a claim of about $15.6 million.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005372361'>Read
more . (Subscription required.)
Idearc Exits Bankruptcy,
Renames Itself SuperMedia
U.S. yellow-pages directory publisher Idearc Inc. said
yesterday that it has emerged from bankruptcy with a new name and a plan
to float new shares, Reuters reported yesterday. The company, which
publishes SuperYellowPages and Superpages.com, renamed itself SuperMedia
Inc. and said that its old shares have been canceled. Idearc, which was
spun off from Verizon in 2006, filed for protection from creditors in
March, as revenue for its printed directories business dwindled due to a
shift to online search and advertising. While under chapter 11
protection, the company slashed debt to $2.75 billion from about $9
billion. In December, the company said hedge fund Paulson & Co.
would own almost half the company's new stock. SuperMedia also has
arranged a new $2.75 billion credit facility.
href='http://www.reuters.com/article/idUSN0419957620100104'>Read
more.
Investors Seek Class Status
in Lehman Fraud Suit
Investors are seeking class certification in a
securities fraud suit against former affiliates and executives of
bankrupt Lehman Brothers Holdings Inc. over losses stemming from $52.7
million in real estate partnerships,
face='Times



New
Roman' size='3'>Bankruptcy
Law360 reported yesterday. In a motion filed
Dec. 31 in the U.S. District Court for the Southern District of New
York, members of LP Jefforeed Management Co. Inc. asked to form a
committee that would represent the more than 50 plaintiffs in the suit
against Lehman Brothers Real Estate Associates III LP, Lehman Brothers
Private Equity Advisers LLC and former CEO Richard Fuld, among others.
The suit, filed in October 2009, alleged that the Lehman affiliates and
executives failed to disclose a scheme to use funds from 11 partnerships
it formed with the Jefforeed group in 2007 for real estate purchased at
prices far above fair value.
href='http://bankruptcy.law360.com/print_article/141230'>Read more.
(Subscription required.)
Commentary: Will Congress
Take Another Swipe at Credit Cards?
Fresh off of its enactment this summer of new
regulations on consumer credit card terms, some in Congress want to go
further by imposing a national usury ceiling on credit card interest
rates and limits on interchange fees, according to a commentary by
Prof.
size='3'>Todd Zywicki of George Mason Law
School in today’s
face='Times New Roman' size='3'>Wall Street Journal
size='3'>. That caps on interest rates harm consumers is well
understood, according to Zywicki, but price controls on interchange fees
would also result in consumers paying more and getting less. Credit
cards generate three basic revenue streams: finance charges, merchant
fees, and behavior-based fees such as penalties for late payment.
Because annual fees have largely disappeared on standard credit cards,
interchange is generally the only compensation issuers receive for the
billions of dollars of credit they make available to consumers who pay
their balance off every month. Credit unions and community banks, which
cater to lower-risk customers who are less prone to revolve balances and
pay penalty fees, rely especially heavily on interchange revenues.
Merchants pay, on average, less than 2 percent of the transaction amount
in interchange fees. In exchange, merchants are relieved of the cost and
risk associated with running their own in-house credit operations.
However, the Merchants Payments Coalition—a group of retailers,
supermarkets, drug stores, convenience stores, gas stations, online
merchants and other businesses—wants Congress to intervene to
rewrite their contracts. Several legislative proposals are on the table,
and while they differ in their details, they are identical in their
intent—to artificially reduce interchange prices. Read the
href='http://online.wsj.com/article/SB10001424052748704905704574622722184163510.html'>full
commentary . (Subscription required.)
in Mortgage Portfolio
Bankrupt U.S. mortgage lender Thornburg Mortgage Inc.
is seeing wide interest from dozens of traditional mortgage banks,
banks, hedge funds, private equity firms and special servicers in the
auction for its $11 billion mortgage servicing portfolio, Reuters
reported today. Of that group, more than 20 are likely to meet
qualifications to bid on the portfolio this week, according to Tom
Piercy, a managing member of Interactive Mortgage Advisors, the firm
hired by the company's bankruptcy trustee to sell the portfolio. Piercy
is expecting about five to ten of those qualified bidders to submit
formal bids by the Jan. 28 deadline for the auction. Thornburg, once one
of the leading providers of 'jumbo' residential mortgages with some
$24.4 billion of assets, became one of the biggest casualties of the
subprime housing crisis when it filed for bankruptcy in May.
href='http://www.reuters.com/article/idUSN0421265420100104'>Read
more.
Icahn, Beal Bank File Rival
Chapter 11 Plan for Trump Entertainment
Billionaire Carl Icahn and Beal Bank filed a competing
reorganization plan for Trump Entertainment Resorts, which offers a $45
million loan to the bankrupt casino operator, Reuters reported
yesterday. Icahn and Beal Bank said they were also willing to put up an
additional $50 million as penalty if this plan or any other plan
supported by them does not go effective within 270 days from
confirmation due to lack of any regulatory approvals. The plan includes
a proposal for a $225 million rights offering, of which $80 million
would be used by the company as additional working capital. The current
reorganization plan, filed by the casinos' bondholders and backed by
Donald Trump and his daughter Ivanka, if confirmed, will jeopardize the
estates as it will leave the company with an over-leveraged balance
sheet and inadequate liquidity, Icahn and Beal Bank said in a filing
last Wednesday. The bondholders' plan would give Trump a 10 percent
stake in the company and leave his name on the casinos.
href='http://www.reuters.com/article/idUSSGE6030I520100104'>Read
more .
Mesa Air Files for Chapter
11 Protection
Arizona air carrier Mesa Air Group Inc., who said that
it leased more planes than it needs, filed for chapter 11 protection
today and will continue operating throughout its restructuring,
Bloomberg News reported. Mesa Air listed assets of about $975 million
and debts of almost $869 million owed to as many as 10,000 creditors,
according to court filings. The company said it serves 127 cities in 41
states in North America. The chapter 11 filing included 11 affiliated
companies, but did not include Mesa’s Hawaiian joint venture,
which will continue full operations. The case is
face='Times New Roman'>In re
Mesa Air Group Inc., 10-10018, U.S. Bankruptcy
Court, Southern District of New York (Manhattan).
href='http://www.bloomberg.com/apps/news?pid=20601103&sid=ams5S9UXSVuM'>Read
more.
U.S. Manufacturing Activity
Accelerates
The growth in manufacturing accelerated in the final
month of 2009, according to data released yesterday, a sign that
recovery of the long-beleaguered sector remains on track, the
size='3'>Washington Post reported today. The
Institute for Supply Management said that its index of manufacturing
activity was 55.9 in December, up from 53.6 in November. Numbers above
50 indicate that the sector is expanding, as has been the case for five
straight months. Manufacturers are cranking up production to rebuild
business inventories that firms let shrink during the depths of the
recession, and the report included a particularly strong read on new
orders.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/01/04/AR2010010401175_pf.html'>Read
more.
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