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January 14, 2008
name='1'>Countrywide Draws Ire of Bankruptcy Judges
More federal bankruptcy
judges are calling into question the business practices of Countrywide
Financial Corp., as Bank of America Corp. prepares to buy the ailing
mortgage lender, the
size='3'>Wall Street Journal reported today.
According to court documents in a bankruptcy case in
w:st='on'>
size='3'>Houston
Countrywide didn't properly credit a borrower's payments made during
bankruptcy but instead applied them to prebankruptcy debt. During a
hearing last month, Bankruptcy Judge Jeff
Bohm chastised Countrywide and its
lawyers after the company admitted making numerous errors in the case.
Countrywide says that it has incurred at least $400,000 in costs
associated with the case after having its employees deposed by the U.S.
Trustee Program. The agency has been investigating the company's
handling of loan payments and court claims in cases across the
country.
href='http://online.wsj.com/article/SB120027204884687351.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
FBR
Subprime Unit to File for Bankruptcy
Investment firm Friedman,
Billings, Ramsey Group said that its subprime mortgage subsidiary would
file for bankruptcy protection and that it was likely to lose all of its
investment in the firm, the
size='3'>Washington Post reported on Saturday.
First NLC 'will liquidate its assets as a result of the continued
deterioration of the non-prime market,' FBR Group said. FBR bought First
NLC, a mortgage originator in
w:st='on'>
size='3'>Florida
winter of 2005 for $101 million. At the time, FBR's profit was surging,
partly because of investments in subprime mortgages. FBR made a $550
million bet on the subprime market in 2005, but much of that investment
has been lost.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/01/11/AR2008011103669_pf.html'>Read
more.
name='3'>Options Still Open for ResCap According to General
Motors’ CFO
General Motors
Corp. CFO Fritz Henderson said yesterday that GMAC Financial
services is keeping its options open when it comes to restructuring its
troubled Residential Capital mortgage arm, the
face='Times New 

Roman'
size='3'>Wall Street Journal reported today.
ResCap, once a major originator of sub-prime home loans, fell into deep
financial losses in 2007 as the market in the investment community for
purchasing such loans from GMAC went south. Now, after being bruised by
billions of dollars in losses and seeing its core lending business slow,
GMAC, which owns ResCap, may need to take action in order to prop up
ResCap's net worth. GM owns 49 percent of GMAC and still holds
considerable influence in ResCap's future.
href='http://online.wsj.com/article_print/SB120024802256686721.html'>Read
more. (Registration required.)
name='4'>Commentary: Presidential Candidates Should Push for
Economic Proposals
The presidential
candidates, especially those still in Congress, should press for swift
approval of two important measures that would help blunt some of the
effects of the ailing economy and be ready to press the case for a
targeted and temporary stimulus package if conditions worsen, according
to an editorial in today’s
size='3'>New York Times.
face='Times New Roman' size='3'>The House has passed a bill to modernize
the nation’s unemployment compensation system — expanding
the number and types of workers who qualify — but the Senate has
yet to move the measure. Congress should also pass a measure that would
allow bankrupt homeowners to modify their mortgages under bankruptcy
court protection.
href='http://www.nytimes.com/2008/01/14/opinion/14mon1.html?sq=bankruptcy&scp=1&pagewanted=print'>Read
more.
name='5'>Americans Cut Back Sharply on Spending
Strong evidence is
emerging that consumer spending, a bulwark against recession over the
last year even as energy prices surged and the housing market sputtered,
has begun to slow sharply at every level of the American economy,
the New York
Times reported today. The abrupt pullback
raises the possibility that the country may be experiencing a rare
decline in personal consumption, not just a slower rate of growth. Such
a decline would be the first since 1991, and it would almost certainly
push the entire economy into a recession in the middle of an election
year. A raft of consumer companies — high-end stores like
Nordstrom and Tiffany, and middle-of-the-road ones like Target and J. C.
Penney — reported a pronounced slowdown in growth last month, and
in several cases an outright drop in business. Andrew Kohut, president
of the
face='Times New Roman' size='3'>Pew
size='3'>Research
face='Times New Roman'
size='3'>Center
that consumer satisfaction with the economy has reached a 15-year low,
according to the firm’s polling.
href='http://www.nytimes.com/2008/01/14/business/14spend.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
w:st='on'>
name='6'>Tennessee
face='Times New Roman' size='3'> Bankruptcies Increase amid Housing
Downturn
Bankruptcy filings for
middle Tennessee climbed 24 percent in 2007 to 9,757 cases and attorneys
are predicting that filings will keep rising until they return to
pre-2005 levels, in part because of home loan problems, the
Tennessean
size='3'>reported yesterday. Bankruptcy attorney Maria Salas estimates
she has seen 10 percent more people year over year who run into
financial trouble because of their mortgages, often because adjustable
rate mortgages have reset. 'We're definitely seeing an uptick related to
housing,' she said.
size='3'>Still, others say simple economics is the underlying reason for
most bankruptcies. 'People are still spending too much, they're still
getting divorced and getting sick and they still need help paying their
bills,' according to Nashville
bankruptcy attorney Edgar Rothschild.
href='http://www.tennessean.com/apps/pbcs.dll/article?AID=/20080113/BUSINESS01/801130383'>Read
more.
name='7'>New
w:st='on'>
size='3'>U.S.
size='3'>Trustee Appointed for Region 20
Richard A. Wieland has
been appointed by the Attorney General as the U.S. Trustee for
size='3'>Kansas
w:st='on'>
size='3'>Oklahoma
size='3'>New Mexico
size='3'>(Region 20), Clifford J. White III, Director of the Executive
Office for U.S. Trustees, announced in a press release on Friday.
Wieland was appointed Acting U.S. Trustee for Region 20 on Sept. 1,
2007. Prior to that appointment, he had served as a Trial Attorney in
the
size='3'>Wichita
w:st='on'>
size='3'>Kans.
the U.S. Trustee Program since 1988. From November 2003 to November 2007
he was designated as a Special Assistant U.S. Attorney in the District
of Kansas to assist in the prosecution of criminal bankruptcy fraud
cases, and in 2002 he received the Director’s Award for the
Prevention of Fraud and Abuse.
Dura
Looks for Exclusivity Extension
Car parts maker Dura Automotive
Systems Inc. has asked a bankruptcy court for an
face='Times New Roman'>order extending its exclusivity
rights under chapter 11 until the end of June, citing problems securing
exit financing,
size='3'>Bankruptcy Law360 reported on Friday.
Thursday's amended motion in the U.S. Bankruptcy Court for the District
of Delaware is the bankrupt auto maker's third request for extra time to
file a reorganization plan free from competing proposals by creditors.
Dura said that since May it had drafted a “largely
consensual” chapter 11 plan, but woes in the credit market had
precluded it from negotiating acceptable exit financing terms. The
company said it was now revising its business plan and valuation to
reflect the “changed realities in the economy,” specifically
the auto industry and was engaged in discussions with its lenders for an
extension of its debtor-in-possession credit facility to June
30.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=43850'>Read
more. (Registration required.)
International
size='3'>Riding School on the Verge of
Bankruptcy
Officials of the
size='3'>Spanish
face='Times New Roman' size='3'>Riding
size='3'>School
yesterday that the school— famed for its white Lipizzaner
stallions — is on the verge of bankruptcy, the Associated Press
reported. The 430-year-old school, whose shows at the former imperial
stables at the
size='3'>Hofburg
face='Times New Roman' size='3'>Palace
size='3'>in downtown
w:st='on'>
size='3'>Vienna
the Austrian capital’s top tourist attractions, lost nearly $2.9
million last year, said business adviser Elisabeth Guertler. Guertler
said a planned
w:st='on'>
size='3'>U.S.
size='3'>tour has been canceled to save on travel expenses as officials
scramble to put together a bailout plan. In addition to canceling
the
size='3'>U.S.
school will boost the number of performances in
w:st='on'>
size='3'>Vienna
69 this year in hopes of boosting ticket receipts, and plans to
cultivate its own grain to cut feed costs for the prized
stallions.
href='http://www.theworldlink.com/articles/2008/01/12/news/doc4787b3ee2f025282545128.txt'>Read
more.
href='http://www.theworldlink.com/articles/2008/01/12/news/doc4787b3ee2f025282545128.txt'>