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ABI Bankruptcy Brief


ABI Bankruptcy Brief
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October 6, 2016

 
ABI Bankruptcy Brief
 
 
NEWS AND ANALYSIS

Commentary: Puerto Rico Oversight Board's Success May Hinge on the Ballot Box



A forthcoming financial turnaround plan for Puerto Rico, which the territory's oversight board wants on its desk in nine days, will probably change after the island's November election, according to a Reuters commentary yesterday. The bipartisan board, created by the Puerto Rico rescue law known as PROMESA, set Oct. 14 as a deadline for the territory's governor Alejandro García Padilla to deliver a draft plan for how to boost island revenues and tackle its $70 billion debt. García Padilla has unsettled Puerto Rico's creditors by insisting on deep debt cuts and defaulting on some payments, but he is not seeking a second term, so it will ultimately fall to his successor to work with the board to finalize the plan. Ricky Rossello, the leading candidate for his job, is seen as more likely to deliver a plan compatible with the philosophy of the board, according to the commentary. The board is largely reviled in Puerto Rico, where locals feel it infringes upon the U.S. territory's self-governance. Rossello and his main opponent, ruling party member David Bernier, have both taken issue with the scope of the board's powers, but said they would cooperate with it.

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

Ultra’s Collateral-Free Bankruptcy Leaves Lenders Confounded



Ultra Petroleum went into chapter 11 in April listing $3.76 billion in funded debt, none of it secured by the driller’s more than $1 billion in assets, Bloomberg News reported yesterday. Banks led by JPMorgan Chase & Co. didn’t demand collateral when they lent to the company in October 2011. The price of oil was jumping, and lenders were eager to win energy business amid the U.S. shale boom. The senior lenders held an unsecured $1 billion revolving loan. They have sold much of the loan to distressed-debt funds, including Oaktree Capital Group LLC and Anchorage Capital Group. Some of the banks have fully exited their positions, getting out when the company went into chapter 11 amid concerns that, given their uncertain precedence and the driller’s low asset values, they’d be forced to exchange their debt for equity in a reorganized Ultra Petroleum, rather than cash. Their departure has set up what promises to be a contentious fight over which remaining creditors get paid first, and how much.

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Get a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. Order your copy of ABI's revised and expanded When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, Second Edition.

Analysis: Scrutiny of Commercial Real Estate Loans Chills Small Lenders



Financing commercial property has been local banks’ bread-and-butter business for years, but a post-crisis push for loan growth prompted regulatory warnings about lax lending standards, and small banks are now shying away from the market, according to a New York Times DealBook analysis on Tuesday. A shakeout in commercial real estate is underway as some banks unwind or sell off the loans that are under regulators’ microscopes, and bankers say they are wary of making new loans. Brokers say that they are finding fewer lenders for some commercial property deals. Aaron Appel at Jones Lang LaSalle in New York said that there has been less competition for $5 million to $10 million in commercial property deals, particularly loans that involve construction or redevelopment projects, which are considered riskier because they are not properties that are generating income. Commercial property brokers have been working more with institutional investors, like private-equity and pension funds, partly as a result of some banks taking a step back, Appel and others said. And foreign banks have stepped in on some of the deals.

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While commercial real estate values have largely recovered since the 2007 crash and underwriting has loosened, some borrowers are treading water as their property values have not fully recovered, NationalMortgageNews.com reported yesterday. The sheer volume of loans maturing this year and next — $232.4 billion, according to data provider Trepp — leaves some borrowers scrambling for funds to refinance their loans, which repay most of their principal in a final balloon payment. By comparison, $70 billion of CMBS loans matured in 2015 and just $37 billion did in 2014. Analysts at JPMorgan Chase estimate that the net issuance of commercial mortgage bonds was negative $57 billion in the first nine months of the year. Some of the underlying loans that came due were refinanced by other kinds of lenders, such as commercial banks or insurance companies.

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Commentary: The Subprime Superhighway



The U.S. and Europe are lowering capital standards for ‘investments’ in public infrastructure — ignoring the lessons from 2007-08, according to a Wall Street Journal commentary. In January, the EU lowered capital standards for infrastructure investments by as much as 40 percent, but cited no major errors in the old risk model or any new empirical evidence to justify the change. Instead, the EU repeatedly emphasized its need for “€2 trillion in [infrastructure] investment” by 2020. The U.S. seems set to follow Europe’s lead, according to the commentary. The Treasury Department’s new Federal Insurance Office released a report last year encouraging “state insurance regulators to assess the current [risk-based capital] approach and explore appropriate ways to increase incentives for infrastructure investments by insurers.”

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UPCOMING EVENTS
International Insolvency Symposium October 7, 2016 Amsterdam, Netherlands
Bankruptcy: Views from the Bench October 7, 2016 Washington, D.C.
Hon. Eugene R. Wedoff 7th Circuit Consumer Bankruptcy Conference October 10, 2016 Chicago, Ill.
ABI Live Webinar: Procedures and Strategies for Effective Mediation of Ch. 5 Claims and Causes of Actions October 13, 2016 Online Webinar
ABI Live Webinar: 2d Circuit Decision in GM Increases Risk of Successor Liability for Purchasers October 19, 2016 Online Webinar
ABI Endowment Event: An Evening at the Grove November 1, 2016 Houston, Texas
ABI Live Webinar: Administration of a Mega Ponzi Scheme Case: Receivership vs. Bankruptcy November 8, 2016 Online Webinar
Complex Financial Restructuring Program November 10, 2016 Philadelphia, Pa.
Corporate Restructuring Competition November 10, 2016 Philadelphia, Pa.
Hon. Steven W. Rhodes Detroit Consumer Bankruptcy Conference November 11, 2016 Troy, Mich.
Cross-Border Insolvency Program November 14, 2016 New York N.Y.
Winter Leadership Conference December 1-3, 2016 Rancho Palos Verdes, Calif.
Consumer Connect December 2, 2016 Rancho Palos Verdes, Calif.
40-hour Mediation Training Program December 11-15, 2016 New York, N.Y.
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BLOG EXCHANGE

City of Detroit Withstands Another Challenge to Its Confirmed Bankruptcy Plan



Several Detroit pensioners had challenged the City of Detroit’s plan confirmation order because the plan reduced their benefits, according to a recent blog post. The U.S. District Court in Detroit had dismissed their challenge, and the pensioners appealed. On October 3, 2016, a three-judge panel of the U.S. Sixth Circuit Court of Appeals issued its decision affirming the District Court’s dismissal.



For further analysis of this decision in Detroit, be sure to read Rochelle's Daily Wire.



To read more on this blog and all others on the ABI Blog Exchange, please click here.

 
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ABI Bankruptcy Brief


ABI Bankruptcy Brief
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September 29, 2016

 
ABI Bankruptcy Brief
 
 
NEWS AND ANALYSIS

Scotiabank Sues Puerto Rico over Loan Repayment

Scotiabank filed a lawsuit against Puerto Rico's government yesterday seeking repayment of a multimillion-dollar loan despite a debt moratorium imposed amid an economic crisis, the Associated Press reported. The Canadian-based bank's Puerto Rico operation argued in the filing that the moratorium is unlawful. It said that it loaned the island's Metropolitan Bus Authority nearly $38 million in 2012 and accused the state agency of not making any payments since November 2015. The lawsuit marks the first time that the U.S. territory's government is being sued over a loan and not over bond payments since the governor declared Puerto Rico’s $70 billion in public debt unpayable last year. The lawsuit is the latest of more than a dozen that Puerto Rico's government is facing as it seeks to restructure its public debt. A federal judge is expected to decide soon whether Puerto Rico will have to pay its debts despite U.S. legislation enacted in June that protects the island from lawsuits through February 2017.

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In related news, Puerto Rico's newly created federal oversight board, charged with helping the U.S. commonwealth navigate through its $70 billion debt burden, will hold its first meeting tomorrow in New York City. The seven-member board, created by the U.S. Congress in part to stave off a massive default and help the Puerto Rican government renegotiate its debt obligations, is scheduled to meet at 8:30 a.m. EDT, when it will elect a chairperson. The board also said that it will formally request from Puerto Rico's governor the submission of a fiscal turnaround plan, which is a key requirement of the federal Puerto Rico rescue law that created the board, known as PROMESA. Click here to view the agenda.



For more perspective on Puerto Rico's oversight board, make sure to listen to this ABI podcast.



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

Commentary: Student Loan Defaults Drop, but the Numbers Are Rigged



The good news is that Americans are taking longer to default on their federal student loans, the U.S. Department of Education announced yesterday, but the bad news is that the overall number of defaults continues to rise, according to a Bloomberg News commentary. Defaults fell by a half percentage point, to 11.3 percent, compared with a year earlier. This measures the number of former students who went 360 consecutive days without making a payment since their first bill came due in fiscal year 2013. About 593,000 former college students out of 5.2 million total borrowers defaulted on their federal debt as of Sept. 30, 2015, the department said. Default rates at public and for-profit colleges dipped, while private, nonprofit schools experienced a slight increase. The default rate doesn’t accurately represent the degree to which former students struggle to repay their loans, federal officials and higher education experts have said. This is because of school efforts to push back eventual defaults to later years by persuading students to postpone payments under federally approved programs. Of 6,155 schools with default rates, just 10 may lose access to federal student aid as a result of their high default rates, the department said.

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Wells Fargo Isn’t the Only Bank that Draws Cross-Selling Complaints



Problematic sales practices at banks may extend beyond the abuses revealed in this month’s $185 million enforcement action against Wells Fargo & Co., according to a new analysis of customer complaints maintained by the U.S. government, the Wall Street Journal reported yesterday. While customer complaints don’t equal illegal conduct, the complaint database run by the Consumer Financial Protection Bureau shows that Wells Fargo hasn’t been much of an outlier when it comes to complaints associated with cross-selling and other sales abuses. The analysis of the database by S&P Global Market Intelligence shows that the CFPB received 1,576 complaints about Wells Fargo’s account management, including how it opened and closed accounts, from Jan. 1, 2015 to Sept. 20, 2016. That area, which generally corresponds with the recent allegations that Wells Fargo opened unwanted accounts for its customers, generated about 1.3 complaints for every billion dollars in deposits at the bank as of June 30, according to a Wall Street Journal analysis of the S&P report. Other banks had similar levels of complaints. Citigroup Inc. customers’ 1,722 account-management issues during the nearly 21-month period represented 1.8 complaints for each $1 billion of deposits at the bank. Bank of America Corp. customers had 1.7 complaints, using the same metric, while customers of JPMorgan Chase & Co. had 1.1.

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Lehman Brothers to Pay Another $3.8 Billion to Creditors



The team winding down Lehman Brothers Holdings Inc. said Thursday it would be paying out $3.8 billion to creditors next week, more than eight years after the investment bank’s collapse triggered the financial crisis, the Wall Street Journal reported today. The distribution, the 11th since the investment bank failed in 2008, will bring the total payout in the firm’s bankruptcy to more than $113.6 billion. The bulk of the cash – $83.6  billion – has gone to pay so-called third-party claims. Lehman said in a filing today in U.S. Bankruptcy Court in New York that its senior unsecured creditors, Lehman bondholders who were estimated to receive about 21 cents on the dollar when the bank’s bankruptcy plan went into effect in early 2012, will have recovered more than 40 cents on the dollar after the next distribution is completed.

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Latest ABI Podcast Examines How Artificial Intelligence and Technology Is Changing the Practice of Law



ABI Editor-at-Large Bill Rochelle talks with Prof. Lois Lupica of the University of Maine School of Law, a former ABI Resident Scholar, about artificial intelligence (AI) in the practice of law. As IBM has already rolled out "ROSS," the first AI attorney, Prof. Lupica discusses the potential ways that AI will change the way that bankruptcy practitioners do business, including document discovery, case-predictive software and more.

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UPCOMING EVENTS
International Insolvency Symposium October 7, 2016 Amsterdam, Netherlands
Bankruptcy: Views from the Bench October 7, 2016 Washington, D.C.
Hon. Eugene R. Wedoff 7th Circuit Consumer Bankruptcy Conference October 10, 2016 Chicago, Ill.
ABI Live Webinar: Procedures and Strategies for Effective Mediation of Ch. 5 Claims and Causes of Actions October 13, 2016 Online Webinar
ABI Live Webinar: 2nd Circuit Decision in GM Increases Risk of Successor Liability for Purchasers October 19, 2016 Online Webinar
ABI Endowment Event: An Evening at the Grove November 1, 2016 Houston, Texas
ABI Live Webinar: Administration of a Mega Ponzi Scheme Case: Receivership v. Bankruptcy November 8, 2016 Online Webinar
Complex Financial Restructuring Program November 10, 2016 Philadelphia, Pa.
Corporate Restructuring Competition November 10, 2016 Philadelphia, Pa.
Hon. Steven W. Rhodes Detroit Consumer Bankruptcy Conference November 11, 2016 Troy, Mich.
Cross-Border Insolvency Program November 14, 2016 New York N.Y.
Winter Leadership Conference December 1-3, 2016 Rancho Palos Verdes, Calif.
Consumer Connect December 2, 2016 Rancho Palos Verdes, Calif.
40-hour Mediation Training Program December 11-15, 2016 New York, N.Y.
Click here for Full calendar

BLOG EXCHANGE

New on ABI’s Bankruptcy Blog Exchange: Lien-Stripping of Mortgage on Property with Co-Owner at Time of Filing Allowed



Bankruptcy Judge Christine Gravelle ruled that a second mortgage secured by property that is owned by a debtor and a non-filing ex-spouse of the debtor can be stripped in a chapter 13 case, according to a recent blog post.



To read more on this blog and all others on the ABI Blog Exchange, please click here.

 
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ABI Bankruptcy Brief


ABI Bankruptcy Brief
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August 11, 2016

 
ABI Bankruptcy Brief
 
 
NEWS AND ANALYSIS

PROMESA Breaks from Muni Traditions on Collective Action, According to Experts



The Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) makes its biggest break from municipal finance tradition in a section dealing with collective action, public finance lawyers said, Bond Buyer reported on Tuesday. The section is "unique in our justice system," said James Spiotto, managing director of Chapman Strategic Advisors; it is the first law in U.S. history that carves out a period outside of bankruptcy for bondholders to negotiate terms of a restructuring. Title VI, section 601(j) of PROMESA addresses how bondholders can agree to modify their own bond terms. It says that holders of at least two-thirds of each pool's principal who vote must approve the modification, and that holders of at least 50 percent of total principal outstanding in each pool must approve it. According to the Act, every bond issuer has at least one pool of bonds, and these
bonds are divided into different pools if they have different priorities or security features. Under the Trust Indenture Act, which normally applies to municipal bonds, 100 percent of bondholders have to agree to changes in certain terms like principal, interest and maturity, Spiotto said. PROMESA, which Pres. Obama signed on June 30, trumps the Trust Indenture Act with regards to Puerto Rico bonds. Normally in chapter 11, at least two-thirds of the holders of the debt by amount and half by number of holders must vote to accept a restructuring offer before the deal can be accepted. Ballard Spahr attorney Matthew Summers said this was similar to the PROMESA section.

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

Analysis: Despite Plunging Interest Rates, Cities and States Steer Away from Borrowing



Wall Street is urging governments to invest in big-ticket infrastructure projects, but voters and public officials are not so keen on the idea, according to a Wall Street Journal analysis on Monday. Plunging global interest rates have made borrowing cheaper than ever. But instead of spending on aging roads, bridges and buildings, many state and local governments are scaling back. New government-bond issues have dropped to levels not seen in the past 20 years. Municipal borrowers issued about $140 billion in bonds for new projects last year. Adjusted for inflation, that is 53 percent lower than in 2006 and 21 percent lower than in 1996. So far this year, municipalities have borrowed $95.1 billion, about $10 billion more than at this time last year. Seven years after the recession ended, voters and government officials remain scarred by the deep budget cuts they endured at the
height of the financial crisis and the sluggish revenue growth that has constrained spending since then.

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U.S. Household Debt Climbs to $12.3 Trillion in 2Q 2016



Total U.S. household debt increased by $35 billion to $12.3 trillion in the second quarter, according to the New York Fed's latest quarterly report on household debt, FoxBusiness.com reported yesterday. That increase was driven by two categories: auto loans and credit cards. From 2008 to 2013, total household debts dropped by more than $1.5 trillion. First student loan and auto loan balances began to rise, then mortgages and finally credit cards. Total household debt balances are now $400 billion below their 2008 peak. Now, credit card use is returning among individuals with low credit or subprime credit scores below 660. Among people with credit scores between 620 and 660, the share that had a credit card rose to 58.8 percent in 2015 from a low of 54.3 percent in 2013. Among those with scores below 620, the number of people with a credit card increased to 50 percent from a low of 45.6
percent two years ago. Both figures for 2015 are the highest since 2008. The report "highlights a positive ongoing trend in household debt," said Donghoon Lee, a New York Fed economist. "Delinquency rates continue to improve, even as credit has become more widely available." Less than 1 percent of credit card balances are 90-180 days delinquent, the lowest on record in data going back to 2003. Severely derogatory balances, including those that have been written off by banks, are at 6.2 percent, near the lowest levels in the available data. 

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For more on U.S. household debt, be sure to check out yesterday's ABI Chart of the Day.

 

Layoffs Matched a Record Low in June, but Hiring Still Hasn’t Recovered



The rate of layoffs in the U.S. dipped to 1.1 percent in June, matching the lowest in records dating back 15 years, according to the Labor Department’s monthly survey of labor market turnover, the Wall Street Journal reported today. Despite a low rate of layoffs, the report presents an ambiguous picture of the U.S. labor market, showing that the rate of hiring still has yet to fully recover from the decline that occurred during the recession from 2007 to 2009. The new figures are from the Job Openings and Labor Turnover Survey (JOLTS). The report is released with a one-month lag from the main jobs report, which showed that the economy added 255,000 jobs in July.

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Commentary: New Bank Rules Won't Stop Bailouts



Since the 2008 financial crisis, policymakers around the world have put new rules in place to make banks less risky and more transparent. While they're confident that these changes have made the financial system safer and eliminated the need for taxpayer bailouts, that may not be the case, according to a Bloomberg commentary on Tuesday. Prodded by regulators, banks have been increasing their buffers against losses with higher levels of shareholder capital and total loss-absorbing capital (TLAC). But more capital won't reduce the incidence of losses: In any future crisis, the problem will simply be transferred to shareholders and holders of TLAC securities, such as private investors, pension funds and insurance companies. Given the systemic and political importance of those investors, a government bailout is still the likely result. Similarly, banks are now required to hold more
high-quality assets, typically government bonds, to protect against a run on deposits or a disruption to money markets. While this arrangement has helped governments finance themselves, it also introduces new problems. The credit quality of many government issuers has deteriorated, and the default risk of governments and banks are inherently linked. In a crisis, banks may not be able to sell these assets, according to the commentary.

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UPCOMING EVENTS
Jevic's Potential Effects on Asset Sales & Plan Confirmation August 18, 2016 ABI Live Webinar
Midwest Regional Bankruptcy Seminar August 18-19, 2016 Cincinnati, Ohio
Southwest Bankruptcy Conference September 8-10, 2016 Las Vegas, Nev.
Midwestern Bankruptcy Institute & Professional Development Workshop September 29-30, 2016 Kansas City, Mo.
International Insolvency Symposium October 7, 2016 Amsterdam, Netherlands
Bankruptcy: Views from the Bench October 7, 2016 Washington, D.C.
Hon. Eugene R. Wedoff 7th Circuit Consumer Bankruptcy Conference October 10, 2016 Chicago, Ill.
Hon. Steven W. Rhodes Detroit Consumer Bankruptcy Conference November 11, 2016 Troy, Mich.
Winter Leadership Conference December 1-3, 2016 Rancho Palos Verdes, Calif.
Click here for Full calendar

BLOG EXCHANGE

New on ABI’s Bankruptcy Blog Exchange: Unredeemed Gift Cards Are Not Entitled to Priority Status Under Bankruptcy Code § 507(a)(7)



In what the bankruptcy court deemed a purely academic issue given the circumstances of the City Sports bankruptcy cases, a recent blog post said that Bankruptcy Judge Kevin Gross held that unredeemed gift cards are not entitled to priority status, but instead, are properly classified as general unsecured claims.



See also an article in the July 2016 ABI Journal on this issue, from the Radio Shack case.



To read more on this blog and all others on the ABI Blog Exchange, please click here.

 
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ABI Bankruptcy Brief
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September 1, 2016

 
ABI Bankruptcy Brief
 
 
 
 
NEWS AND ANALYSIS

Analysis: Although Student Loans Delinquencies Declining, Borrowers Still in Distress

Late payments on student loans, when measured by loan balances in arrears, have fallen significantly in recent years, according to a Bloomberg analysis on Monday. In 2013, a quarter of student loans were at least 31 days late. Delinquency rates have steadily dropped since then, falling to about 19 percent as of June 30. However, less than $3 of every $5 is being repaid on time. More than 42 percent of loan balances are either delinquent, temporarily postponed, in default or in bankruptcy, or borrowers are seeking to shed the debt by convincing the feds that their disability prevents them from ever repaying what they owe. More than 1.1 million borrowers defaulted last year on Education Department student loans.
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Commentary: Puerto Rico Bonds Risk Court Workout if Consensus Eludes Panel

The seven-member federal control board just appointed to address Puerto Rico’s $70 billion of debt may ultimately leave it up to a court to force investors to accept losses if they don’t do so willingly, according to a Bloomberg News commentary today. The panel appointed by President Barack Obama yesterday consists of a former bankruptcy judge (Arthur Gonzalez) who oversaw the workouts of Enron Corp., Chrysler LLC and WorldCom Inc., a former president of the island’s Government Development Bank, a woman who oversaw California’s budget after the recession, and a law professor (David Skeel) who has argued that states should be given legal power to impose haircuts on bondholders, according to the commentary. In addition to cutting Puerto Rico’s debt, the panel is tasked with ending recurring budget deficits and addressing $43 billion of unfunded obligations to its employee pension plans. Bringing together the island’s bondholders, insurance companies and public workers may be too complex to be resolved without the power imposed by a court, said Matt Fabian, a partner at Concord, Mass.-based Municipal Market Analytics. “Any board doesn’t want to fight with stakeholders,” Fabian said. “So what the board proposes, a lot of it will likely have to be validated in the courts and so you don’t have to worry so much about individual predispositions or preferences.” The island isn’t authorized to file for bankruptcy and Puerto Rico Governor Alejandro García Padilla was unable to get bondholders to voluntarily accept less than they’re owed, which prompted Congress to step in with legislation giving it the tools to cut its obligations. “The board will undoubtedly encourage voluntary settlements, but it’s almost certain that there will be lots of holdouts,” said Phil Fischer, head of municipal research at Bank of America Merrill Lynch.
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The financial control board is controversial on the island and in Congress. Protestors this week blocked a street in front of a hotel hosting a conference of finance executives holding a sign that read: “The people before the debt.” Meanwhile, Rep. Luis Gutierrez (D-Ill.), an opponent of the law creating the oversight role, referred to the board as a “federal junta.”

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

New ABI Video Takes a Look at Ch. 11 Filing Trends over the Past 35 Years

Watch ABI's Ed Flynn as he provides insight on chapter 11 filing trends since 1980, and a forecast for 2016's chapter 11 totals.

Bank Groups Weigh Legal Challenge to Fed Stress Tests

Bank trade groups and industry advisers are debating the possibility of legally challenging the Federal Reserve in an attempt to force changes to annual “stress tests” of the biggest U.S. lenders, the Wall Street Journal reported today. Over the past several months, industry advisers and representatives from some big U.S. banks have been involved in several calls discussing the possibilities, with the latest occurring a few weeks ago. The discussions have centered on legal strategies that would allow a challenge to the stress tests, with much of the focus on their opacity and how the Fed changes certain aspects of the exams each year. Additionally, participants in the talks have weighed how the Fed and tests could be influenced by the outcome of the presidential election and whether they would argue for a more cautious course of action. The Fed-administered stress tests are the centerpiece of the post-financial-crisis regulatory overhaul and affect firms with more than $50 billion in assets. Last year, 33 firms took them.
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Banks May Face RICO Claims on Payday Loans

An Aug. 29 federal appeals court ruling on arbitration means that two banks may have to face claims that they violated federal anti-racketeering laws by unlawfully facilitating high-interest payday loans, Bloomberg BNA reported on Tuesday. The U.S. Court of Appeals for the Second Circuit upheld a district court that refused to appoint a substitute arbitrator when the arbitrator designated in a contract became unavailable (Moss v. First Premier Bank, 2d Cir., No. 15-cv-02513, 8/29/16). The court, saying that it's bound by a 1995 ruling on that question, said that the federal circuits have come to different conclusions on what to do in such cases. The decision, if it stands, allows plaintiff Deborah Moss to resume her putative class suit against First Premier Bank of South Dakota and Bay Cities Bank of Florida. The two banks served as the originating depository financial institutions for a payday loan that Moss obtained from SFS Inc., an online payday lender. Moss alleged violations of the Racketeer Influenced and Corrupt Organizations Act (RICO) against the two banks, saying that they “facilitate payday loans to consumers residing in states that banned the practice and collect usurious interest rates in violation of state law.” The banks moved to compel arbitration, citing an arbitration agreement that named the National Arbitration Forum (NAF) as the arbitrator. However, the NAF declined to handle the case, saying it was barred from doing so by a 2009 consent judgment reached with Minnesota authorities, which had alleged consumer fraud by the NAF.
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UPCOMING EVENTS
ABI Live Webinar: Criminal Investigation Affects on Litigation in Fraud Cases September 8, 2016 Online Webinar
Southwest Bankruptcy Conference September 8-10, 2016 Las Vegas, Nev.
ABI Live Webinar: 546(e) and 547(c)(6) Safe Harbors: Expand or Limit? September 12, 2016 Online Webinar
Annual Charity Golf & Tennis Outing September 12, 2016 Alpine, N.J.
ABI Workshop: Turnaround and Secured Lending Program September 29-30, 2016 Alexandria, Va.
Midwestern Bankruptcy Institute & Professional Development Workshop September 29-30, 2016 Kansas City, Mo.
International Insolvency Symposium October 7, 2016 Amsterdam, Netherlands
Bankruptcy: Views from the Bench October 7, 2016 Washington, D.C.
Hon. Eugene R. Wedoff 7th Circuit Consumer Bankruptcy Conference October 10, 2016 Chicago, Ill.
ABI Endowment Event: An Evening at the Grove November 1, 2016 Houston, Texas
ABI Live Webinar: Administration of a Mega Ponzi Scheme Case: Receivership v. Bankruptcy November 8, 2016 Online Webinar
Hon. Steven W. Rhodes Detroit Consumer Bankruptcy Conference November 11, 2016 Troy, Mich.
Cross-Border Insolvency Program November 14, 2016 New York N.Y.
Baltimore Endowment Event November 17, 2016 Baltimore, Md.
Winter Leadership Conference December 1-3, 2016 Rancho Palos Verdes, Calif.
Consumer Connect December 2, 2016 Rancho Palos Verdes, Calif.
40-hour Mediation Training Program December 11-15, 2016 New York, N.Y.
Click here for Full calendar

BLOG EXCHANGE

New on ABI’s Bankruptcy Blog Exchange: August 2016 Ponzi Scheme Roundup

A recent blog post provides a summary of the ponzi scheme activity reported for August 2016.

You won't want to miss the abiLIVE webinar on Nov. 8 titled "Administration of a Mega Ponzi Scheme Case: Receivership vs. Bankruptcy." Sign up here for free!

For a further analysis of commercial fraud, make sure to pick up a copy of ABI’s Fraud and Forensics: Piercing Through the Deception in a Commercial Fraud Case.

To read more on this blog and all others on the ABI Blog Exchange, please click here.

 
© 2016 American Bankruptcy Institute
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