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March 31, 2008
name='1'>Study: Law Firms Expect Rise in Bankruptcies
As the credit crisis
deepens, law firms across the country are betting that bankruptcy work
will be their most-promising avenue of growth and are accelerating their
recruitment of restructuring specialists, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. A survey conducted by Robert Half Legal of more
than 300 attorneys from the country's largest law firms found that one
out of every four firms expects bankruptcy law to be the fastest area of
growth in the next 12 months. That number exceeds the tally of attorneys
who think litigation or corporate governance will be hot growth areas.
Last year, chapter 11 bankruptcy filings hit a two-year high of 6,236,
according to Jupiter eSources, an Oklahoma-based company that tracks
filing data, and the pace of chapter 11 filings has accelerated further
this year.
href='http://online.wsj.com/article_print/SB120692379488875669.html'>Read
more. (Registration required.)
Mortgage
Lending
name='2'>Democrats Schedule Vote for Housing Stimulus
Package
Senate Democrats are planning
to bring their housing stimulus package, S. 2636, up for a vote on
Tuesday, the Associated Press reported on Saturday. The measure includes
provisions to let bankruptcy judges lower payments for homeowners facing
foreclosure while also letting localities with the highest foreclosure
rates access federal grants to buy foreclosed properties and provide
$200 million in counseling to distressed borrowers. Sen. Charles E.
Schumer (D-N.Y.) said that Bush should lean on congressional Republicans
to allow votes on the Democratic measure. The administration's moves
over the past about six months include expanding the Federal Housing
Administration's ability to offer refinancing to homeowners with good
credit, allowing Fannie Mae and Freddie Mac to buy up more home loans,
and brokering help for struggling homeowners through the Hope Now
Alliance. The group has agreed to offer a five-year rate freeze for
people who have not missed payments or a 30-day foreclosure pause for
those who fall behind. The president has come out strongly against the
Democrats' housing package, warning that an overzealous governmental
response to the nation's housing woes could hurt the economy's ability
to recover long-term.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/03/28/AR2008032801989_pf.html'>Read
more.
name='3'>Lenders Rely on Default Services as Foreclosures
Increase
As the subprime mortgage
crisis has spread, the volume of business for law firms and default
servicing companies representing represent mortgage lenders has soared,
and firms that handle loan defaults have been the primary beneficiaries,
the New York
Times reported yesterday. Some of the firms,
paid by the number of motions filed in foreclosure cases, have sometimes
issued a flurry of claims without regard for the requirements of
bankruptcy law, several judges say. The U.S. Trustees Program is
bringing cases against lenders that it says are abusing the bankruptcy
system. Bankruptcy Judge
size='3'>Joel B. Rosenthal wrote in a case
last year involving Wells Fargo Bank that rising foreclosures were
resulting in greater numbers of lenders that “in their rush to
foreclose, haphazardly fail to comply with even the most basic legal
requirements of the bankruptcy system.”
href='http://www.nytimes.com/2008/03/30/business/30mills.html?ref=business&pagewanted=print'>Read
href='http://www.nytimes.com/2008/03/30/business/30mills.html?ref=business&pagewanted=print'>
name='4'>IRS Objects to Mortgage Lender’s Liquidation
Plan
The U.S. Internal Revenue
Service objected to People's Choice Home Loan Inc.'s chapter 11
liquidation plan on Friday, saying the bankrupt mortgage lender needed
to be clearer about when the plan would become effective and when it
would pay its taxes,
size='3'>Bankruptcy Law360 reported on Friday.
In its disclosure statement, the company said that “at the option
of the debtors, a confirmation order that is subject to a pending appeal
or certiorari proceeding may be considered a final order
provided no court of competent jurisdiction has entered an order staying
the effect of the confirmation order.” This language, the IRS
said, “is too vague to permit any interested party to determine
when, if ever, the plan will become effective.” The agency said
that instead, People's Choice should set a hard deadline if the court
confirms its plan.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=51391'>Read
more. (Registration required.)
name='5'>Paulson Plan Looks to Overhaul Financial Regulatory
Agencies
In a sweeping proposal
circulated over the weekend, Treasury Secretary Henry Paulson proposed
to merge or eliminate institutions of long standing, including the
Securities and Exchange Commission, and to create a controversial new
role of 'super regulator' for the Federal Reserve, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. Paulson said that the
size='3'>U.S.
system is broken, a growing sentiment in recent months in
size='3'>Washington
w:st='on'>
size='3'>D.C.
the nation's financial watchdogs failed in a different way to prevent
the foreclosure crisis and credit-market turmoil from spreading. Little
is likely to happen this year amid the fierce presidential and
congressional election races, even on fixes that Treasury has designated
as short-term items. A new Congress and president will determine
the ultimate shape of any regulatory overhaul.
href='http://online.wsj.com/article_print/SB120675834275673863.html'>Read
more. (Registration required.)
name='6'>Commentary: New Rules for Wall Street
The Bush administration
today is releasing a blueprint for new regulatory reform in the
financial services industry, which is going to be necessary as the
taxpayers bear more of risks taken by Wall Street, according to an
editorial in Sunday’s
size='3'>New York Times. The Fed’s
decision to bail out Bear Stearns put taxpayer dollars on the line to
prevent the bankruptcy of a firm that should have failed, given its
irresponsible risk-taking and lax management. The Fed could not allow
Bear Stearns to fail as the investment company had the ability —
fostered by lack of adequate regulation — to spark severe
problems, and failures, throughout the financial system. Clearly, there
is now a significant public interest in regulation to protect both
taxpayers’ money and the system on which the whole country
depends.
href='http://www.nytimes.com/2008/03/30/opinion/30sun2.html?sq=bankruptcy&st=nyt&scp=8&pagewanted=print'>Read
more.
name='7'>Sharper Image Trustee Objects to Hiring of CEO's
Firm
U.S. Trustee
Kelly Beaudin
Stapleton opposed Sharper Image Corp.'s
request to retain a financial consulting firm founded by the debtor's
new chief executive,
size='3'>Bankruptcy Law360 reported on Friday.
Stapleton said that Conway, Del Genio, Gresi & Co.
LLC should not be hired to help
Sharper Image restructure its business given the firm's obvious bias.
Stapleton said that she was not able to resolve the issue in talks with
Sharper Image prior filing her objection. CDG's founding member, Robert
Conway, was appointed as Sharper Image's CEO five days before the
company filed for bankruptcy on Feb. 19.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=51472'>Read
more. (Registration required.)
name='8'>Former California Governor May Manage Bankrupt Timber
Firm
Former California
Governor Pete Wilson will manage the reorganization of Scotia Pacific
Co., the timber-holding subsidiary of bankrupt Pacific Lumber Co., if a
bankruptcy judge approves the creditors' committee plan, the
San Francisco
Chronicle reported on Saturday. Wilson, now a
principal of Bingham Consulting Group in
w:st='on'>
Angeles
plan agent for the noteholders, who claim to be owed $867.2 million in
the bankruptcy of Pacific Lumber. Bankruptcy Judge
face='Times New Roman' size='3'>Richard Schmidt
size='3'>will consider a number of reorganization plans at an April 8
hearing, including the proposal by the creditors, three by the debtors
and another by hedge fund Marathon Asset Management. The noteholders
propose to auction the timberlands and require the buyer to ship at
least 40 percent of the logs to the Scotia Mill.
href='http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2008/03/29/BU2AVSAAR.DTL&type=printable'>Read
more.
name='9'>Lionel Prepares to Exit Bankruptcy
Bankruptcy Judge
Burton R.
Lifland has
approved Lionel LLC's chapter 11 plan, clearing the way for the iconic
model-train maker to exit bankruptcy, Dow Jones reported on Saturday.
Judge Lifland on Thursday confirmed Lionel's plan, which calls for
private-equity firm Guggenheim Corporate Funding and the estate of the
late Martin Davis, former chairman of Paramount Communications Inc., to
pump $59 million of new cash into the reorganized company, Lionel Chief
Executive Gerald Calabrese said. New York-based Guggenheim will
contribute $37.1 million to the new Lionel, and the
w:st='on'>
size='3'>Davis
size='3'>estate will contribute $21.9
million. Lionel's chapter 11 plan calls for the company to pay all its
creditors in full with interest. Lionel will also obtain up to $40
million in loans to fund its exit from chapter 11, pay off its creditors
and fund its working capital needs in the future.
href='http://www.detnews.com/apps/pbcs.dll/article?AID=/20080328/BIZ/803280451'>Read
more.
face='Times New Roman' size='3'>
name='10'>Delphi
size='3'>, DOL Reach Agreement over ERISA Dispute
Delphi Corp. and the U.S.
Department of Labor have reached a compromise in a dispute over the
agency's attempt to proceed with a claim in the auto supplier's
bankruptcy case arising out of purported violations of the Employee
Retirement Income Security Act,
size='3'>Bankruptcy Law360 reported on Friday.
Bankruptcy Judge Robert
Drain signed off on the pact on Thursday,
which is part of a larger ERISA stipulation agreement tentatively
reached by
size='3'>Delphi
few months ago. The claims involved potential ERISA infractions
connected to the ASEC Manufacturing Savings Plan, the plan's investment
in Delphi common stock and
size='3'>Delphi's restatement of
certain of its financial statements in 2005. The Labor Department's
request triggered an objection from
face='Times New Roman' size='3'>Delphi
size='3'>, which argued that the claims were both untimely and
insufficiently documented in addition to other complaints. As part of
the agreement,
size='3'>Delphi
for the DOL's claim in the amount of $28,000 to move forward, with the
claim to be treated as a general unsecured claim against the estate of
ASEC.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=51389'>Read
more. (Registration required.)
name='11'>Aloha Airlines Halting Passenger Service
Aloha Airlines said that
it will halt all passenger service after today, signaling the end of an
airline that has served
w:st='on'>
size='3'>Hawaii
than 60 years, the Associated Press reported today. Aloha, which filed
for bankruptcy for chapter 11 protection on March 20, was a casualty of
fierce competition and rising fuel prices. The airline said it will stop
taking reservations for flights after Monday. ''We simply ran out of
time to find a qualified buyer or secure continued financing for our
passenger business,'' said Aloha President David Banmiller. Aloha said
that tickets for flights after today will not be honored, and that
it is working to have UAL Inc.'s United Airlines accommodate passengers
with tickets for Aloha's mainland to
w:st='on'>
size='3'>Hawaii
and hopes to seat those with interisland tickets on Hawaiian Airlines
Inc.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/03/30/AR2008033001848.html'>Read
more.
name='12'>Bush Names Two Democrats for SEC
The Bush administration
nominated Luis A. Aguilar, a partner with the law firm McKenna Long
& Aldridge in
face='Times New Roman'
size='3'>Atlanta
Elisse B. Walter, a senior vice president at the Financial Industry
Regulatory Authority, a nongovernmental regulator of securities firms,
to fill two vacant commissioner slots at the Securities and Exchange
Commission (SEC), the
size='3'>Washington Post reported on Saturday.
Aguilar served as a top lawyer at Invesco, an investment company
where he had worked as an SEC staff lawyer earlier in his career.
Walter has held several posts at the SEC, where she worked for over a
decade, and was also
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/03/28/AR2008032803510_pf.html'>the
former general counsel of the Commodity Futures Trading Commission and a
former COO at the National Association of Securities Dealers. Read
more.
International
name='13'>Lehman Brothers Sues Japanese Trading House over Alleged
Financial Scam
w:st='on'>
size='3'>U.S.
size='3'>investment bank Lehman Brothers said that it had filed a
lawsuit today to reclaim $352 million from Japanese trading house
Marubeni Corp in the wake of a finance scam, Reuters reported. The loans
in question were made last year to finance a revamp of hospitals and
lease medical equipment via Asclepius, a now-bankrupt unit of drug firm
LTT Bio-Pharma Co., and arranged through Marubeni staff. When repayment
fell due on Feb. 29, the
w:st='on'>
size='3'>U.S.
size='3'>investment bank was told by Marubeni that its contract was void
because it had been signed with a forged seal. Seals are used for
business and legal transactions in
w:st='on'>
size='3'>Japan
Lehman Brothers also believed that one of the people it had discussed
the loans with had been an imposter.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/03/31/AR2008033100646_pf.html'>Read
more.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/03/31/AR2008033100646_pf.html'>