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Richmond Federal Reserve Bank President Jeffrey Lacker said that federal financial regulators must remove the implicit view from creditors that the government will step in to protect large financial institutions, and better adapt the Bankruptcy Code to these firms, Reuters reported yesterday. Lacker called for the repeal of the Fed's remaining emergency lending powers and further restraining the central bank's ability to lend to failing institutions. He added that the Bankruptcy Code, properly applied to financial institutions, would then no longer require the Federal Deposit Insurance Corp.’s involvement in winding down big banks. "Once robust and credible resolution plans are in place, we would be able to responsibly wind down the FDIC’s Orderly Liquidation Authority and related financing mechanisms," Lacker said. To read Lacker’s full speech, please click here: https://www.richmondfed.org/press_room/speeches/president_jeff_lacker/2…

Federal Deposit Insurance Corp. Vice Chairman Thomas Hoenig said that global banks should set up shields for certain short-term funding deals as a step toward ensuring they can be dismantled in U.S. courts after a failure, Bloomberg News reported yesterday. Hoenig called on banks such as JPMorgan Chase & Co. and Goldman Sachs Group Inc. to look at protecting funding such as repurchase agreements with a system similar to one announced last month that will delay termination of derivatives contracts during a U.S. financial-firm bankruptcy. Industry-driven stays “may be needed for those parts of the repo book that use long-term assets to secure short-term funding,” Hoenig said. “Volatile wholesale funding” at banks’ broker-dealer units is most vulnerable to runs across borders and firms, he said. Banks must prepare for the possibility that broker-dealers could enter bankruptcy and need sufficient financing as part of “living wills” required under the Dodd-Frank Act, Hoenig said. The FDIC and Federal Reserve, which can force business changes at banks that don’t come up with credible plans, found fault with submissions by 11 of the largest banks.

Total bankruptcy filings in the United States decreased 12 percent in October 2014 from October of last year, according to data provided by Epiq Systems, Inc. Bankruptcy filings totaled 78,957 in October 2014, down from the October 2013 total of 89,948.  Consumer filings also declined 12 percent to 76,110 from the October 2013 consumer filing total of 86,360. Total commercial filings in October 2014 decreased to 2,847, representing a 21 percent decline from the 3,588 business filings recorded in October 2013. Total commercial chapter 11 filings dipped 27 percent to 384 filings in October 2014 from the 529 commercial chapter 11 filings registered in October 2013. Average total filings per day in October 2014 were 2,547, a 12 percent decrease from the 2,902 total daily filings in October 2013.

The Roman Catholic Diocese of Helena, Mont., is seeking court approval for a loan that would allow it to contribute about $2 million to a proposed $15 million compensation package for hundreds of people who allege they were sexually abused by clergy members, Dow Jones Daily Bankruptcy Review reported yesterday. To pay for its share of the compensation package as well as for its legal fees, the diocese has asked a bankruptcy judge to sign off on a $3.5 million loan. The loan, provided by Placid Enterprises LLC, would be secured by 13 diocesan properties, including cemetery land and the bishop's residence, according to court papers filed on Monday with the U.S. Bankruptcy Court in Butte, Mont.

GT Advanced Technologies Inc. said a bankruptcy court settlement with Apple Inc. will survive a judge’s order that documents describing the companies’ relationship must be made public, Bloomberg News reported today. GT Advanced, the maker of synthetic sapphire used in smartphone screens, filed under chapter 11 last month, less than a year after announcing a supply agreement with Apple. The case has been shrouded in secrecy, and the settlement was originally conditioned on keeping a statement by a GT Advanced executive under court seal. Bankruptcy Judge Henry Boroff put the deal in peril last week, saying that such secrecy was unnecessary, and yesterday ordered the statement and other materials unsealed. At the same time, Apple and GT Advanced said that they had revised the terms of their settlement to make sealing unnecessary.  In November 2013, GT Advanced said that it had lined up $578 million in prepayment loans from Apple to buy equipment to make sapphire, which wasn’t included in the latest version of the iPhone. On Oct. 6, Merrimack, N.H.-based company filed for creditor protection, citing “burdensome” contracts with Apple and saying that it might be penalized $50 million per violation for breaking confidentiality agreements with the iPhone maker.

While hundreds of thousands of customers are saying that an ignition-switch flaw in their General Motors vehicles depressed their value and that the company should make up the difference, GM will argue in court filings later today that it should not, Bloomberg News reported today. More than $2 billion hangs in the balance for GM as Bankruptcy Judge Robert Gerber’s ruling on the issue, according to a Bloomberg News calculation. It’s increasingly likely that Gerber may say customers such as Jesse Salazar III should be given a shot at collecting, said Chip Bowles, a bankruptcy lawyer at Bingham Greenebaum Doll LLP. “He could easily rule that,” said Bowles, who isn’t involved in the case. At issue is whether the biggest U.S. automaker bears liability related to vehicles it built and sold before its July 2009 bankruptcy. The matter came to a head after GM recalled 2.2 million U.S. vehicles with an ignition-switch flaw that has been linked to at least 30 deaths. GM has said it’s setting aside as much as $600 million to compensate people who were injured or lost loved ones in those vehicles, including pre-bankruptcy models, that inadvertently lost power. GM says that it isn’t obligated, however, to pay economic damages to people who claim those same pre-bankruptcy cars are worth less because of the flaw.

In a Nov. 3, motion, the Rochester, N.Y.-based Eastman Kodak Co. requested that its chapter 11 case be closed, asserting that distributions under its reorganization plan have been completed and it doesn't want to keep incurring further administrative expenses, the Deal reported yesterday. Court papers show Kodak has racked up $103.47 million in attorney fees and $141.77 million in other professional fees and expenses. Bankruptcy Judge Allan Gropper of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan on Aug. 20, 2013, confirmed Kodak's reorganization plan, which took effect on Sept. 3, 2013. The company spun off its personalized imaging and document imaging businesses to the U.K. Kodak Pension Plan for $650 million. The company also closed on $695 million in term exit financing and paid off its debtor-in-possession lenders and second-lien noteholders in full. Additionally, the company completed a rights offering that brought in $406 million in new equity capital.

UniTek Global Services Inc., a contractor for telecommunication companies, filed for bankruptcy with a plan to hand control over to its lenders, Bloomberg News reported yesterday. The Blue Bell, Pa.-based company listed assets of $3.2 million and debt of $186 million in chapter 11 documents filed yesterday. The company announced last month that it had reached an agreement on terms of a restructuring with lenders including affiliates of Littlejohn & Co. and New Mountain Capital. The company will ask to borrow as much as $43 million in debtor-in-possession financing. Apollo Investment Corp. is the administrative agent. The case is In re UniTek Global Services Inc., 14-12471, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Dish Network Corp. Chairman Charlie Ergen would receive a controlling stake in troubled wireless company LightSquared under the company's newest restructuring plan, Dow Jones Daily Bankruptcy Review reported today. The deal, reached Friday as a result of mediation with Bankruptcy Judge Robert Drain, would give Ergen 60 percent of the new equity in the restructured LightSquared plus $1 billion in new junior debt. JPMorgan Chase Co., one of LightSquared's lenders, would receive a total of 31.9 percent of the equity and a seat on the board of directors in exchange for its debt and $189 million in funding. Other lenders would receive a smaller piece of equity and warrants to purchase common stock.

Unsecured creditors are balking at Trump Entertainment Resorts Inc.’s proposed bankruptcy exit plan, calling it a “charade” and a power play by Carl Icahn to preserve hundreds of millions of dollars in tax credits for his benefit, the Wall Street Journal reported today. Unlike most bankruptcy plans that look to secure votes from a variety of creditors, Trump Entertainment has said that the only vote that matters is that of Icahn, the billionaire activist investor who controls the secured debt of the Atlantic City, N.J., boardwalk gambling operation. A hearing is scheduled to take place tomorrow to win a court’s approval for the voting scheme. The chapter 11 plan calls for Icahn’s companies to swap out some of their Trump Entertainment debt for a controlling equity stake in a reorganized company as well as for new debt. Additionally, Icahn’s affiliates will invest $100 million to get the ailing gambling operation on its feet, court papers say.