January Commercial Bankruptcy Filings Up 12 Percent, Total Filings Decrease 11 Percent from Previous Year

Total U.S. bankruptcy filings decreased 11 percent in January from the same period last year, according to data provided by Epiq Systems, Inc. Bankruptcy filings totaled 52,522 in January 2016, down from the January 2015 total of 59,092. Consumer filings declined 12 percent in January 2016 to 49,720 from the January 2015 consumer filing total of 56,611. However, total commercial filings in January 2016 jumped to 2,802, representing a 12 percent increase from the 2,481 business filings recorded in January 2015. The 492 total commercial chapter 11 filings in January 2016 represented a decrease of 6 percent from January 2015's total of 523.

Click here to access the full bankruptcy stat charts for January.

Commentary: Puerto Rico Faces Hurdles Seeking a 46 Percent Cut in Debt

Puerto Rico's debt-restructuring plan unveiled on Monday is unlikely to get much traction from bondholder groups because it would require them to accept big losses on debt, according to a Barron's commentary on Tuesday. Puerto Rico proposed to cut its $49.2 billion of tax-supported debt by 46 percent to $26.5 billion as part of a broad plan to put the financially beleaguered island on a stronger footing. There has been a mild negative reaction in the market as Puerto Rico's benchmark 8 percent general-obligation bond is down about 1.5 points to 70.625 in afternoon trading, for a yield of 11.9 percent. The problem with the proposal, according to the commentary, is that key groups of bondholders, notably those holding GO debt and senior sales-tax revenue bonds (COFINA), believe that they have strong constitutional and legal protections and probably aren’t going to accept the hits of the magnitude that the commonwealth is currently proposing.

To view the Puerto Rico Restructuring Proposal released on Monday, please click here.

In addition to the discussions today at ABI's Caribbean Insolvency Symposium, Puerto Rico will be the focus of an ABI podcast next week as ABI Resident Scholar Prof. Melissa Jacoby interviews Prof. Mitu Gulati of Duke University School of Law and Prof. Anna Gelpern of Georgetown Law to discuss Puerto Rico's economic distress and sovereign-debt topics.

For more news and analysis of Puerto Rico's debt crisis, be sure to visit ABI's "Puerto Rico in Distress" webpage.

Payday Lenders Are Changing the Game Ahead of a U.S. Crackdown

Many payday lenders are making drastic changes to their businesses, such as switching products or moving overseas, ahead of new regulations coming from the Consumer Financial Protection Bureau this year, Bloomberg Businessweek reported today. The agency, which hasn't finalized the details, says that the rules will stop borrowers from taking out short-term loans they can't afford and racking up fees week after week to buy more time. Lenders say that the CFPB will kill off payday advances and similar loans, hurting borrowers with no other options. The regulations will also cover similarly costly loans that allow payment over a longer period of time but still require borrowers to provide access to their bank accounts. Some storefront-based lenders aren't even waiting to see the final version of the federal rules before making major changes. The regulations won't cover pawnshops, so customers at EZCorp's 522 U.S. stores now need to put up valuables such as jewelry or electronics to get emergency advances. The company stopped offering its EZMoney unsecured loans in July, citing an "increasingly challenging legislative and regulatory environment," even though U.S. and Canadian loans generated $165 million in fees in 2014. Cash America International, which has 825 stores, is making a similar shift.

Op-Ed: The Markets Are Pessimistic Because China Didn't Learn from Russia

By Bill Rochelle
ABI Editor at Large

Despite the crash in energy prices and the rout in the stock market, most economists remain sanguine about the U.S. economy. Whether ABI members once again achieve full employment depends, I submit, on the honesty of the Chinese in reporting their own economic growth. There is no occasion to fear worldwide contagion from a decline in the rate of growth in China, according to accepted dogma, because the Communist behemoth still reports almost 7 percent annual growth in GDP. But what if China's numbers are phony? What if GDP seemingly grew in recent years only because China was and still is plugging investment capital down a rat hole? A recent article in the New York Times asked whether the "markets could be pricing in some darker facts about the outlook for the world that economists don't fully understand." Perhaps the root of China's problems explains why the stock market is more pessimistic than your average economist. China either forgot or never learned a lesson taught by Soviet Russia: Centrally planned economies ultimately don't work because investment decisions are made to coincide with political philosophy, not with good judgment.

Latest ABI Podcast Examines Potential Lender Discrimination in Black Church Bankruptcies

The latest American Bankruptcy Institute (ABI) podcast features ABI Resident Scholar Prof. Melissa Jacoby talking with Prof. Pamela Foohey of the Indiana University Maurer School of Law about Prof. Foohey's recent research finding that churches with predominantly black membership appeared in chapter 11 more than three times as often as other churches. Prof. Foohey found that lenders may have charged black churches more for credit and denied black churches' modification requests in times of financial troubles more often, leading these churches to seek chapter 11 protection more frequently. Prof. Foohey concludes that just as race matters in consumer bankruptcy, it may matter in chapter 11 as well.

Have You Seen Rochelle's Daily Wire? Don't Miss the Insights and Analyses of Important Case Decisions!

ABI Editor-at-Large Bill Rochelle provides his exclusive perspectives and analyses of important case decisions. New summaries appearing on today's Daily Wire include:

- Successor Liability Overrides Sale Free and Clear on Labor Law Claim

- Subjective Bad Faith Alone Is Sufficient to Warrant Dismissal

Tap into Rochelle's Daily Wire via the ABI Newsroom, Daily Headlines e-mail and Twitter!