Business Reorganization

CRITICS QUESTION WHY BIG BANKS, EXECS DO NOT FACE MONEY LAUNDERING CHARGES



A few former federal prosecutors are critical of the Justice Department's record $1.9 billion settlement against British bank HSBC last week, saying that it was only the latest case of the government stopping short of bringing criminal money laundering charges against a big bank or its executives, the Associated Press reported yesterday. While some prosecutors heralded the settlement as a powerful blow to a dysfunctional institution accused of laundering money for Iran, Libya and Mexico’s murderous drug cartels, others called the action “too big to jail.” Sen. Jeff Merkley (D-Ore.) wrote a letter to U.S. Attorney Eric Holder after the HSBC settlement, saying that the government "appears to have firmly set the precedent that no bank, bank employee, or bank executive can be prosecuted even for serious criminal actions if that bank is a large, systemically important financial institution." Read more.

COMMENTARY: LAST-DITCH ATTEMPT TO DERAIL VOLCKER RULE



In an attempt to prevent implementation of the Volcker Rule, representatives of megabanks are asserting that the Volcker Rule violates the international trade obligations of the United States and would offend other member nations of the Group of 20, according to a commentary in today's New York Times DealBook blog. The Volcker Rule is almost finished winding its way through the regulatory process, and a version should be implemented soon. But in a last-ditch attempt to block it, the U.S. Chamber of Commerce has sent a letter to the United States Trade Representative asserting that the Volcker Rule creates a discord in G20 and invites foreign governments to retaliate at a time when we need those same regulators in foreign countries to support initiatives to liberalize trade in financial services. According to the commentary, there is no violation because there is no provision in any trade agreement that says U.S. banking regulators cannot protect our financial system by engaging in prudent regulation. Read more.

FITCH: BELOW-AVERAGE U.S. HIGH YIELD DEFAULT RATE TO PERSIST INTO 2013



Fitch Ratings is projecting a U.S. high yield par default rate of 2 percent in 2013, in line with 2012 activity, Reuters reported today. However, a bankruptcy filing by Energy Future Holdings, given its large size ($16 billion), has the potential to drive up the rate an additional 1.5 percent. The leading support for another below-average default year is Fitch's expectation of modestly higher U.S. GDP growth of 2.3 percent in 2013 combined with relatively good corporate fundamentals and the Federal Reserve's commitment to loose monetary policy. While the default rate is projected to remain low in 2013, it is important to note that the positive high yield rating drift of 2010 and 2011 reversed direction over the course of 2012 and the 'CCC' or lower pool expanded for the first time since 2009 - now $228 billion in size versus $197 billion at the beginning of the year. Read more.

NEW YORK FED: PROGRESS BEING MADE IN IMPROVING TRI-PARTY REPO SECTOR



The Federal Reserve Bank of New York reported today that progress was being made in reducing the risk created by a key market where dealers go to finance trading positions, the Wall Street Journal reported today. The bank said that JPMorgan and the Bank of New York Mellon have both made key changes that will reduce the amount of intraday credit in the tri-party repo market, the New York Fed said. The tri-party repo market allows bond dealers to borrow and lend securities. The New York Fed has been pressuring market participants to reform their market sector as part of a bid to strengthen the overall state of the financial system. Read more.

UPDATED EDITION OF MUNICIPALITIES IN PERIL: THE ABI GUIDE TO CHAPTER 9 NOW AVAILABLE FOR PRE-ORDER!



The second edition of Municipalities in Peril: The ABI Guide to Chapter 9 has been revised and updated to include coverage of the latest cases and offers insight into pending actions in such larger urban settings as Detroit. Including a convenient summary of all relevant state statutes, this Guide is a must-have for bankruptcy professionals entering this burgeoning practice area, as well as for municipal finance personnel and counsel seeking detailed information about the fundamental issues of governance, credit and debt adjustment that uniquely surround municipal debt cases. Member price is $35 (Please log in to obtain the member price.) Orders will ship in mid-January. Click here to pre-order.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: STATE OF MONTANA V. BLIXSETH (IN RE BLIXSETH; 9TH CIR.)



Summarized by Joel Newell of Lane & Nach, P.C.

The majority opinion ruled that by using the "context-specific" analysis based on the Nevada Statutes the involuntary bankruptcy case is viewed in the same context as a creditor seeking a charging order pursuant to the Nevada Statutes. The majority further held that Blixseth’s interests in the Nevada entities were created and exist under the Nevada Statutes; therefore, his creditor’s remedies are limited by Nevada state law, that is sufficient reason to deem Blixseth’s interests to be located in Nevada.

There are more than 700 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: THE COMMUNITY REINVESTMENT ACT AND THE HOUSING BUBBLE



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog discusses a recently released research paper examining the role of the Community Reinvestment Act and the housing bubble.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

A licensee of a trademark has the right to retain the license even when a debtor rejects the underlying contract creating the license. (Sunbeam Products, 7th Cir.)

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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2013

January

- Western Consumer Bankruptcy Conference

     January 21, 2013 | Las Vegas, Nev.

- Rocky Mountain Bankruptcy Conference

     January 24-25, 2013 | Denver, Colo.

February

- Caribbean Insolvency Symposium

     February 7-9, 2013 | Miami, Fla.

- Kansas City Advanced Consumer Bankruptcy Practice Institute

     February 17-19, 2013 | Kansas City, Mo.

- VALCON 2013

     February 20-22, 2013 | Las Vegas, Nev.

March

- 37th Annual Alexander L. Paskay Seminar on Bankruptcy Law and Practice

     March 7-9, 2013 | St. Petersburg, Fla.

- Bankruptcy Battleground West

     March 22, 2013 | Los Angeles, Calif.

April

- Annual Spring Meeting

     April 18-21, 2013 | National Harbor, Md.

JUSTICE DEPARTMENT OPENS JPMORGAN INQUIRY



The Justice Department has opened an inquiry into JPMorgan Chase & Co.'s $2 billion-plus trading loss, the Wall Street Journal reported today. The probe is at an early stage and it is not clear what possible legal violation federal investigators may be focusing on. Last week, the Securities and Exchange Commission began its own review of the matter, examining the company's accounting and disclosures to investors. The trading loss has aroused intense scrutiny in Washington, D.C., where some lawmakers have been fighting efforts by big banks to delay or scale back regulations mandated by the 2010 Dodd-Frank financial overhaul. Read more. (Subscription required.)

ANALYSIS: BANKS TREAD A FINE LINE IN TRADING



When JPMorgan Chase revealed its $2 billion loss last week, it looked as though the big Wall Street banks were up to their old tricks, using their government-backed funds to make risky trades in a misguided effort to improve their profits, according to an analysis in the New York Times' Dealbook Blog on Sunday. While few other banks pursue the complex strategies that led to JPMorgan's losses, many traditional lenders regularly buy and sell securities, and make bets with derivatives, as part of their core operations. Financial firms say that such activities allow them to earn a basic return on the deposits they collect and to offset risks on their balance sheets. These widespread trading practices are creating a headache for regulators, who are trying to devise new rules to prevent another financial crisis. Regulators are putting the finishing touches on the so-called Volcker Rule, which would ban banks from making speculative bets with their own money. However, regulators face a dilemma when faced with the question of "what constitutes proprietary trading?" Such activities are easy to spot when financial firms run independent trading units devoted to making profits. Already, most big banks have moved to exit these businesses in preparation for the Volcker Rule. Regulators, however, are having a harder time telling when other trading activities — like market-making and portfolio hedging — cross the line. Big banks, even those with little presence on Wall Street, contend that their trading activities are part of prudent risk-management. Without the ability to invest in bonds and other securities, these companies argue that they would not be able to make loans or extend credit as easily. Read more.

DOJ NOT KEEPING STATS ON FINANCIAL CRISIS CONVICTIONS



The Department of Justice has been short on answers for congressional inquiries looking to find out how many executives have been convicted of criminal wrongdoing related to the financial crisis of 2008-09, as the department said that it does not keep count of the numbers of board-level prosecutions, according to a report today in the Wall Street Journal. In a response earlier this month to a March request from Sen. Charles Grassley (R-Iowa), the Justice Department said that it does not hold information on defendants' business titles. "Consequently, we are unable to generate the [requested] comprehensive list" of Wall Street convictions stemming from the 2008 meltdown, the letter from the Department of Justice to Grassley said. Prof. William Black, a former bank regulator, said that the government used to keep these figures. He points to a 1993 report by the Government Accountability Office on the savings-and-loan crisis of a generation ago. The report said that "30 percent of those prosecuted are the major corporate insiders—CEOs, presidents, shareholders, directors and officers" of the affected firms. Some other law-enforcement agencies are keeping a similar tally for the latest financial crisis. The Securities and Exchange Commission highlights on its website its civil crisis-related enforcement actions against senior corporate officers—a total of 55 so far. Read more. (Subscription required.)

In related news, the House Financial Services Committee will hold a hearing on Thursday titled "Examining the Settlement Practices of U.S. Financial Regulators." Click here to view the witness list.

COMMENTARY: SAYING NO TO STATE BAILOUTS



States that have followed Europe's economic policy model of unbridled spending are getting Europe's economic results: low growth and looming fiscal catastrophe, according to a commentary by Rep. Kevin Brady (R-Texas) and Sen. Jim DeMint (R-S.C.), members of the Joint Economic Committee (JEC), in today's Wall Street Journal. Compared with the 10 U.S. states with the lowest rates of economic growth since 1990, according to a JEC report released today, the states with the highest rates of growth had smaller unfunded pension ratios (by 26 percent); lower debt ratios (by 18 percent); less tax revenue collected (by 22 percent); and lower welfare benefits (by 31 percent). The report also shows that over the last decade, states with no income tax have much higher rates of job growth and population growth than states with the highest income taxes. The fuse on the U.S. debt bomb—which according to the National Bureau of Economic Research may be armed with as much as a $211 trillion fiscal shortfall—may prove to be the states' public-employee pension systems, according to the commentary. Years of overly optimistic growth projections, underfunding and overpromising by politicians, according to the commentary, have rendered many of these public pension systems toxic assets on states' books. Read more. (Subscription required.)

REGISTER FOR THE LABOR & EMPLOYMENT COMMITTEE'S "EVOLVING LABOR ISSUES IN CHAPTER 11" WEBINAR



Make sure to mark your calendars for May 23 from 2-3:30 p.m. ET for the ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar. A panel of experts will be discussing recent developments in several large complex bankruptcy cases, including Hostess, Kodak, Nortel and American Airlines. The expert panel includes Babette A. Ceccotti of Cohen, Weiss & Simon LLP (New York), former chief counsel of the PBGC Jeffrey B. Cohen of Bailey & Ehrenberg PLLC (Washington, D.C.), Marc Kieselstein of Kirkland & Ellis LLP (New York) and Ron E. Meisler of Skadden, Arps, Slate, Meagher & Flom LLP.
Issues to be discussed include:

• Hostess' efforts to eliminate their multi-employer pension plan contribution liability through motions to reject their labor agreements under Section 1113.

• Kodak's attempt to terminate retiree health benefits.

• The effect of the automatic stay upon efforts by the U.K. Pension Protection Fund and the U.K. Nortel Pension Plan to enforce its powers under the U.K. Pensions Act.

• American Airlines' efforts to reduce legacy costs in bankruptcy.

Click here to register.

U.S. TRUSTEE PROGRAM RE-OPENS COMMENT PERIOD ON PROPOSED GUIDELINES FOR ATTORNEY COMPENSATION IN LARGE CHAPTER 11 CASES



The U.S. Trustee Program has re-opened the comment period until May 21, 2012, on proposed guidelines for reviewing applications for attorney compensation in large chapter 11 cases ("fee guidelines"). The USTP also scheduled a public meeting for June 4, 2012, at the U.S. Department of Justice in Washington, D.C. on the proposed fee guidelines. Click here for more information on submitting comments or attending the public hearing.

ABI IN-DEPTH

JUNE 5 WEBINAR WILL EXAMINE HOW TO HANDLE AN ADMINISTRATIVELY INSOLVENT ESTATE



Panelists from one of the top-rated sessions at the 2011 Winter Leadership Conference are going to reconvene for an ABI and West LegalEd Center webinar on June 5 titled, "Handling the Administratively Insolvent Estate- What to Do When Your Chapter 11 Goes South." CLE credit will be available for the webinar, which will last from 11 a.m. - 12:30 p.m. ET.

Speakers include:

• Robert J. Feinstein of Pachulski Stang Ziehl & Jones LLP (New York)

• Cathy Rae Hershcopf of Cooley LLP (New York)

• Robert L. LeHane of Kelley Drye & Warren LLP (New York)

Robert J. Keach of Bernstein Shur (Portland, Maine) will be the moderator for the webinar.

The webinar costs $115, and purchase provides online access for 180 days. If you are purchasing a live webcast, you will receive complimentary access to the on-demand version for 180 days once it becomes available. Click here for more information.

LATEST CASE SUMMARY ON VOLO: MCNEAL V. GMAC MORTGAGE, LLC (IN RE MCNEAL; 11TH CIR.)



Summarized by Melissa Youngman of McCalla Raymer, LLC

The Eleventh Circuit held that a wholly unsecured junior lien on a chapter 7 debtor's home may be "stripped off" pursuant to Section 506(d) of the Bankruptcy Code.

More than 500 appellate opinions are summarized on Volo typically within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: FURTHER INSIGHT ON HOW THE SUPREME COURT MAY APPROACH CREDIT BIDDING IN THE RADLAX CASE



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A blog post provides further insight on a few approaches that the Supreme Court may take on the credit-bidding issues presented in the RadLAX case.

Hear a discussion of the RadLAX post-argument featuring lead counsel David Neff by clicking here. ABI will hold a webinar on the Court’s decision as soon as it is announced in late June.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

The Constitutional scheme of uniform federal bankruptcy is a bad idea; the states should have more leeway to adopt their own different approaches to financial distress, at least for their own individual citizens and companies with purely intra-state operations. Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

May

- ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar

     May 23, 2012



June

- Memphis Consumer Bankruptcy Conference

     June 1, 2012 | Memphis, Tenn.

- ABI'S "Handling the Administratively Insolvent Estate- What to Do When Your Chapter 11 Goes South?" Webinar

     June 5, 2012

- Central States Bankruptcy Workshop

     June 7-10, 2012 | Traverse City, Mich.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 12-15, 2012 | Bretton Woods, N.H.

- Southeast Bankruptcy Workshop

     July 25-28, 2012 | Amelia Island, Fla.

August

- Mid-Atlantic Bankruptcy Workshop

     August 2-4, 2012 | Cambridge, Md.

CREDITOR LAWSUIT COULD UNDO AUTO BAILOUT, FORCE GM INTO BANKRUPTCY



A backroom deal negotiated by General Motors during the auto bailout to fulfill the Obama administration's demand for a quick bankruptcy could be reversed, draining the automaker of nearly all of its cash on hand and leaving it in worse shape than it was when it collapsed in 2009, according to a report in the Washington Free Beacon yesterday. As GM teetered on the edge of bankruptcy in June 2009, it cut a $367 million "lock-up agreement" with several major creditors in order to prevent its Canadian subsidiary from going under. The move spared the subsidiary from fulfilling the $1 billion debt it owed the creditors—major hedge funds—ensuring that GM would not have to face bankruptcy courts in two nations, which could have delayed the company’s recovery. "Many U.S. creditors waived their rights to object because the government wanted to push through the bailout for political reasons," risk analyst Chris Whalen said. "If they had continued through normal channels, they could have easily been in bankruptcy for five years." "When I approved the sale agreement and entered the sale approval order, I mistakenly thought that I was merely saving GM, the supply chain, and about a million jobs,” Bankruptcy Judge Robert Gerber said in July. “It never once occurred to me, and nobody bothered to disclose, that amongst all of the assigned contracts was this lock-up agreement, if indeed it was assigned at all." Industry experts say that GM should be very concerned with the judge’s reaction to the deal. More is at stake than the roughly $1 billion that “old GM’s” spurned creditors are seeking, according to industry observers. Judge Gerber may have to reopen the entire bailout, and that, according to bankruptcy experts, could unravel the entire settlement. Read more.

U.S. CHARGES 530 PEOPLE IN MORTGAGE PROBE WITH $1 BILLION IN LOSSES



Attorney General Eric Holder said today that the U.S. brought charges against 530 people over mortgage schemes that cost homeowners more than $1 billion, Bloomberg News reported. More than 73,000 homeowners were victims of various frauds for which charges were filed during a year-long crackdown, including "foreclosure rescue schemes" that take advantage of those who have fallen behind on payments, the Justice Department said. Typical schemes involved promises to homeowners that foreclosures could be prevented by payment of a fee, according to the statement. As part of the schemes, "investors" purchase the mortgage or the titles of homes are transferred to those taking part in the fraud, resulting in homeowners losing their property, the department said. Read more.

COURT SAYS CONGRESS CANNOT BLOCK PAY HIKES FOR JUDGES



The U.S. Court of Appeals for the Federal Circuit in a 10-2 decision on Friday found that Congress cannot revoke cost-of-living adjustments promised to federal judges in the Ethics Reform Act of 1989, reversing the court's holding to the contrary in 2001, the National Law Journal reported yesterday. Six current and retired federal judges sued over Congress' decision to block cost-of-living adjustments in the past and whether legislation passed after the court's 2001 decision overrode provisions of the 1989 law. In the Oct. 5 decision, the court found that Congress had violated the Compensation Clause of the Constitution, which aims to protect judicial independence by limiting the ability of the other branches of government from reducing judges' salaries. If Congress wanted to amend the 1989 law, the judges wrote, it could, but not in a way that affected any sitting judges. Read more.

WALL STREET REGULATOR RAMPS UP ENFORCEMENT



The Commodity Futures Trading Commission (CFTC), once considered a toothless regulator, brought a record number of enforcement cases over the past year as fines soared, the New York Times DealBook blog reported on Friday. The agency said on Friday that it levied $585 million in sanctions during its 2012 fiscal year, which ended Sept. 30, up from $450 million the year before. The surge in fines is largely tied to one case. In June, the British bank Barclays agreed to pay $200 million to the agency for trying to manipulating a crucial interest rate. Read more.

ABI MEMBERS CAN RECEIVE A DISCOUNT ON THEIR PURCHASE OF A DEBTOR WORLD



A Debtor World, published by Oxford University Press, contains a collection of contributions about the societal implications of private debt from top scholars at the 2008 Debt Symposium sponsored by ABI and hosted by the University of Illinois College of Law. The essays comprising this volume are authored by dozens of leading U.S. and international academics who have written about debt or issues related to debt in a wide range of disciplines including law, sociology, psychology, history, economics and more. The collection explores debt as neither a problem nor a solution but as a phenomenon, and promotes the exchange of knowledge to better comprehend why consumers and businesses decide to borrow money. It explores what happens to businesses and consumers under heavy debt loads, and what legal norms and institutions societies need in order to encourage the efficient use of debt while promoting a greater understanding of the global phenomenon of increased indebtedness and societal dependence. To order your copy and receive an ABI member discount, please click here and enter promo code "31256" when making your purchase. The discount expires 12/31.

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A COLLEAGUE AND ABI LEADER



Our friend Steven Golick (Osler Hoskin & Harcourt LLP, Toronto) is facing a medical crisis. He has been diagnosed with a serious brain tumor, requiring complex surgery and treatment. Steven’s spirits are very strong and he and his family remain optimistic, but he can use our support. A prominent international restructuring attorney and an ABI member since 1994, Steven is also a founding member of the ABI house band, the Indubitable Equivalents. Because the band is important to Steven, his fellow band-mates have organized a new Blog site for Steven's friends and colleagues to show their love and support at this critical time. Please click on this link to share your thoughts with many others, and post as often as you'd like.

ABI IN-DEPTH

LAST CHANCE TO GET YOUR TICKET FOR TOMORROW’S PLAYOFF GAME TO SEE THE ST. LOUIS CARDINALS TAKE ON THE WASHINGTON NATIONALS IN D.C.!



Only a few tickets remain to the ABI Endowment's special event at Nationals Park tomorrow at 1 p.m. ET to see the St. Louis Cardinals take on the Washington Nationals in Game 3 of the National League Division Series. For $400, you will receive a game ticket to a luxury suite, food and open bar. Don't miss playoff baseball in Washington, D.C.! Click here to register!

Sponsorships Are also Available!

Stand out from the crowd and sponsor this historic playoff event! Bring a client; tickets included with your sponsorship. All sponsorships are tax deductible. Click here for details.

MEMBERS WILL NOT WANT TO MISS ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING ON OCT. 26



Members planning to attend the 86th Annual NCBJ Annual Conference in San Diego from Oct. 24-27 will not want to miss the exciting line-up scheduled for the ABI program track on Oct. 26. In addition to roundtable discussions on the hottest consumer and business bankruptcy topics, ABI will be hosting a ticketed luncheon that will feature the presentation of the 7th Annual Judge William L. Norton, Jr. Judicial Excellence Award and entertainment by Apollo Robbins, a sleight-of hand artist, security consultant and self-described gentleman thief. Click here to register for the Conference.

To view the list of ABI programs on Oct. 26 and the full NCBJ Annual Conference schedule, please click here.



ABI's Chapter 11 Reform Commission will also be holding a public hearing on Oct. 26 from 2:30-4:30 p.m. PT at the San Diego Marriott. Interested parties have the opportunity to submit testimony at the hearing. For further information, please contact ABI Executive Director Samuel J. Gerdano at sgerdano@abiworld.org.

LATEST CASE SUMMARY ON VOLO: LIQUIDATORS OF LEHMAN BROTHERS AUSTRALIA LTD. V. LEHMAN BROTHERS SPECIAL FINANCING INC. (IN RE LEHMAN BROTHERS HOLDINGS INC.; 2D CIR.)



Summarized by Janice Grubin of Todtman, Nachamie, Spizz & Johns, P.C.

The Second Circuit vacated and remanded the judgment of the district court and reinstated the appeal for consideration of the bankruptcy court order denying intervention on the merits. Given that (1) denials of intervention are generally considered to be final appealable orders in the non-bankruptcy context, (2) the bankruptcy standard for finality is more flexible than other civil litigation and (3) the pragmatic approach is required by the instant circumstances, the Circuit held that the bankruptcy court's denial of the appellants' motions to intervene was a final, appealable order.

There are more than 650 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: PINNACLE UNIONS BALK AT AIRLINE'S ATTEMPTS TO SCRAP CONTRACT



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post reported on how Pinnacle Airlines Corp.'s thousands of pilots and flight attendants are objecting to the airline’s bid to scrap their contracts, a move the regional carrier says is necessary to exit bankruptcy protection.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Bankruptcy courts should adopt formal loss mitigation procedures to facilitate the negotiation of residential mortgage modifications for consumer debtors.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

October

- ABI Endowment Event: Nationals Playoff Game

     October 10, 2012 | Washington, D.C.

- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar

October 15, 2012

- ABI/Bloomberg Distressed Lending Conference

October 16, 2012 | New York, N.Y..

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

- ABI/St. John's "Bankruptcy and Race: Is There a Relation?" Symposium

     October 19, 2012 | Queens, N.Y.

- ABI Program at NCBJ's Annual Conference

     October 26, 2012 | San Diego, Calif.

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.

December

- Forty-Hour Bankruptcy Mediation Training

     December 4-8, 2012 | New York, N.Y.

2013

January

- Rocky Mountain Bankruptcy Conference

     January 24-25, 2013 | Denver, Colo.

February

- Kansas City Advanced Consumer Bankruptcy Practice Institute

     February 17-19, 2013 | Kansas City, Mo.

SIGTARP REPORT DETAILS "HARDEST HIT FUND" FAILURES

The "Hardest Hit Fund," which was launched by the Treasury to help families in areas stricken by the housing bust, fell short of its stated goals, a new report from Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) warns, HousingWire.com reported today. Christy Romero, special inspector general for TARP, sent an update to Congress, criticizing the handling of the Hardest Hit Fund and the toxic corporate culture still festering within certain banks. The Hardest Hit Fund started with ambitious goals, SIGTARP says, but ineffective barometers and metrics prompted states receiving the funds to substantially lower their goals. However, Tim Massad, assistant secretary for financial stability at Treasury, said that the states are innovating as they go. It also took time to get these locally run programs up and running, Massad told HousingWire. State housing finance agencies received billions of TARP funds to assist local homeowners and communities back in 2010. In all, the Treasury allocated $7.6 billion, giving 18 states and the District of Columbia permission to participate. The plan was formulated in 2010. However, as of June 30, 2013, states had spent only 22 percent, or roughly $1.7 billion of the $7.6 billion in TARP funds allocated through the Treasury, SIGTARP said. Approximately 146,356 program participants have received aid, or roughly 27 percent of the original goal. Read more.

CFTC VOTES TO DROP COURT APPEAL OF POSITION LIMITS RULE

The Commodity Futures Trading Commission voted today to abandon a court challenge of a rule designed to limit speculation in commodity markets, agreeing to drop the agency's appeal as it works to advance a revised version of the rule, the Wall Street Journal reported today. The CFTC voted to drop its appeal of a September 2012 decision tossing out the agency's "position limits" rule, which aimed to curb sharp price spikes by limiting the percentage of the market any one firm can control in certain commodities. The CFTC is working to modify the rule--authorized by the 2010 Dodd-Frank law--to address problems identified by a federal court last year, including providing further legal justification for the limits as well as a more thorough cost-benefit analysis. The agency is expected to vote on the revised rule next week. Read more. (Subscription required.)

U.S. BANKS' LEGAL TAB IS POISED TO RISE

U.S. banks have agreed to billions of dollars in mortgage-related settlements stemming from the financial crisis, but new estimates show that the total figure could still rise sharply -- to $107 billion or more -- in coming years, the Wall Street Journal reported today. The six largest U.S. banks by assets have agreed to more than $66 billion in credit crisis and mortgage-related settlements since 2010, new data from research firm SNL Financial show. After factoring in estimates by Bernstein Research for the remaining legal exposure at three of the largest banks, the overall number could balloon 62 percent above the current SNL figure. That would include JPMorgan Chase & Co.'s expected $13 billion settlement with the Justice Department and other regulators, a piece of which was announced on Friday. Excluding its expected settlement, the mortgage-litigation push has caused overall legal expenses this year at JPMorgan to nearly triple -- to $10.3 billion through September -- from $3.8 billion over the first nine months of 2012. Read more. (subscription required.)

MICROCREDIT EXPANDS IN THE U.S.

Since the financial crisis, microcredit has taken off in the United States, attracting thousands of clients who do not qualify for credit cards or traditional bank loans, the New York Times reported yesterday. Microcredit was pioneered by Grameen Bank in Bangladesh and has long aimed to ease poverty in the world's developing countries. The purpose of the loans, as conceived by Muhammad Yunus, the Nobel Prize-winning founder of Grameen Bank, is to help countless millions of poor people unlock their inner entrepreneur, to "use money to make money," as he puts it. In the U.S., microcredit has generally been defined as loans of less than $50,000 to people -- mostly entrepreneurs -- who cannot, for various reasons, borrow from a bank. Most nonprofit microlenders include services like financial literacy training and business plan consultations, which contribute to the expense of providing such loans but also, those groups say, to the success of their borrowers. Read more.

AMR, US AIRWAYS, U.S. AGREE TO MEDIATOR IN ANTITRUST CASE

American Airlines, US Airways Group Inc. and the U.S. Justice Department agreed to go to a mediator to possibly resolve the government's lawsuit seeking to block the proposed merger of the airlines, Bloomberg News reported yesterday. Both sides said in a filing yesterday in federal court in Washington, D.C., that they agreed to a mediator "suggested by the court" without providing further details. The Justice Department sued American parent AMR Corp. and US Airways in August, claiming that the planned merger, which would create the world's largest airline, would reduce competition and lead to higher prices. A status conference is set for Oct. 30. Read more.

LATEST ABI PODCAST LOOKS AT NEW LEGAL ISSUES ARISING FROM A DIOCESAN BANKRUPTCY

As the Dioceses of Gallup, N.M. and Stockton, Calif., recently were the ninth and tenth, respectively, to file for bankruptcy, ABI Resident Scholar Kara Bruce talks with Susan Boswell, a partner at Quarles & Brady LLP (Tucson, Ariz.), about 10 years of diocesan case history. Boswell provides her perspective of some of the challenges that arise in a diocesan bankruptcy from having represented the Dioceses of Tucson, San Diego, and Fairbanks, Alaska, and will be representing the diocese of Gallup, N.M. in its bankruptcy case. Click here to listen.

ATTENDING NCBJ'S 87TH ANNUAL CONFERENCE STARTING TOMORROW IN ATLANTA? DOWNLOAD THE CONFERENCE APP AND BE SURE TO ATTEND ABI'S SESSIONS!

If you are attending the National Conference of Bankruptcy Judges 87th Annual Conference in Atlanta starting tomorrow, be sure to tap into the following resources and programs:

Have you downloaded the official NCBJ Conference app for Apple iOS or the Google Android devices? Built by ABI, the app contains the conference schedule, materials, hotel map, speaker info, access to the conference Twitter feed and more. You can customize it to remind you when your favorite session is about to start.

To download the app for iOS devices from iTunes, please click here.

To download the app for Android devices from the Google Play store, please click here.

Also, ABI will be sponsoring a number of great programs on Nov. 1 at the conference:

-Topics for the ABI/NCBJ Roundtables include: Single Asset Real Estate Cases, Streamlining the Process- National Chapter 13 Plan- Good or Bad? Part 1, What to Do after the Sale? Structured Dismissals, Liquidating Trusts and Chapter 7 Conversion, Chapter 7 & Hot Topics, Current Labor and Employment Issues in Bankruptcy Cases, Where the Work Is: Does the Restructuring Profession Need to Be Restructured?, Streamlining the Process- National Chapter 13 Plan- Good or Bad? Part II, Chapter 11 Professional Issues: Proper Disclosure and Retention and Addressing the New Rules of the Road on Compensation. The programs require pre-registration through the NCBJ.

-ABI luncheon in the Imperial Ballroom from 12:45-2:30 p.m. ET featuring Prof. Jeffrey Rosensweig, global and economics forecaster and expert on global investing and business strategy.

-Hearing from 2:30-4:30 p.m. ET of ABI's Commission to Study the Reform of Chapter 11. The hearing will take place in Room A706 and will focus on corporate governance issues in bankruptcy. Witnesses set to testify at the hearing include:

• Dennis F. Dunne of Milbank, Tweed, Hadley & McCloy, LLP (New York) will testify about the role of committees in chapter 11.
• William K. Snyder of Deloitte CRG (Dallas) will testify on the role of the chief restructuring officer (CRO) in chapter 11.
• Brady C. Williamson of Godfrey & Kahn, SC (Madison, Wisc.) will testify about the use of fee examiners in corporate bankruptcy cases.
• Mark A. Gittelman of PNC Bank (Philadelphia) will testify on structural changes in the court systems, including creating a national bankruptcy court venue for mega cases.
• Prof. Anne Lawton of Michigan State University College of Law (East Lansing, Mich.) will testify about special accommodations for small and middle market cases.
• W. Clarkson McDow, U.S. Trustee (ret.) Region 4 (Columbia, S.C.) will testify about the U.S. Trustee's role in chapter 11 cases.
  
  For more, please visit http://commission.abi.org.

- Be sure to visit ABI's booth (#5) and C.A.R.E's booth (#6) to learn about new promotions, products and more!

RENEW YOUR ABI MEMBERSHIP BY DEC. 31 AND SAVE!

Beginning in January 2014, ABI will institute its first dues increase to the regular dues rate in six years. The $20 increase will ensure that ABI can continue to provide you with the latest and most effective tools available in insolvency information and education. You can lock in 2013 rates, and additional discounts, for up to three years by using a multi-year renewal option (save $75!). You can also save 10 percent on future dues by opting into the automated dues program. To renew your membership and save, please go to renew.abi.org.

NOW AVAILABLE FOR PURCHASE; ETHICS CLE AVAILABLE! "BANKRUPTCY IN DEPTH" VIDEO PREVIEWS UPCOMING SUPREME COURT BANKRUPTCY CASES

Available now for purchase from ABI's eLearning Center (http://cle.abi.org) is the new "Bankruptcy In Depth" video featuring ABI Resident Scholar Kara Bruce and Eric Brunstad of Dechert LLP (Hartford, Conn.) previewing the bankruptcy cases that the Supreme Court will consider during its 2013 term. Brunstad, who has argued many cases before the Court and is an expert in bankruptcy appellate practice, discusses in depth Law v. Siegel, which questions whether the court may use its general equitable authority under §105 of the Bankruptcy Code to surcharge a debtor's exempt assets, and Executive Benefits Insurance Agency v. Arkison (In re Bellingham), which will address the bankruptcy court's authority to adjudicate Article III matters. He also provides a candid view of what it is like to argue a case before the Court and an in-depth analysis of the issues involved with the upcoming cases. Available for the member price of $75, ABI will also seek 1.25 hours of ethics CLE credit in 60-minute-hour states and 1.5 hours of credit in 50-minute-hour states for this program. This online CLE program is presumptively approved in CA, DE, FL, GA, HI, IL, NV, NJ, NY (Approved Jurisdiction Policy), RI, and SC. Credit hours granted are subject to approval from each state, which has not been determined. To purchase the new "Bankruptcy In Depth" video, please click here.

NEXT WEDNESDAY! RISKY TIMES FOR SECURED LENDERS AND SERVICERS TO BE FOCUS OF FIRST ABI WORKSHOP PROGRAM; ATTEND IN PERSON OR VIA LIVE WEBSTREAM

You will not want to miss the abiWorkshops series' inaugural program, "Risky Times for Secured Lenders and Servicers." The program is cosponsored by TMA (Chesapeake), IWIRC (D.C./Greater Maryland) and RMA (Potomac), and will be held on Nov. 6 from 9 a.m. to 3 p.m. ET in the ABI Headquarters Conference Center in Alexandria, Va. The abiWorkshops series provides attendees two great ways of participating: You can register to attend in person at the ABI Conference Center, or you can participate via a live webstream! Topics that will be covered on the Nov. 6 program include:



- Living with the New CFPB Mortgage Servicing Rules

-
Business Lending: Navigating What Lies Ahead

- Business Lending: Recent Legal Developments



For more information or to register for the "Risky Times for Secured Lenders and Servicers" abiWorkshop on Nov. 6, please click here.

EXPERTS TO EXAMINE STUDENT LENDING AND BANKRUPTCY AT ABI WORKSHOP PROGRAM ON NOV. 15

Experts will tackle the hot topic of student lending issues in bankruptcy on the abiWorkshops series' new program, "You Can't Discharge Student Loans in Bankruptcy - Or Can You?" The program will be held on Nov. 15 from 9 a.m. to 3 p.m. ET in the ABI Headquarters Conference Center in Alexandria, Va. The abiWorkshops series provides attendees two great ways of participating: You can register to attend in person at the ABI Conference Center, or you can participate via a live webstream! Topics that will be covered on the Nov. 15 program include:

- Student Lending Today: Who Borrows, How Much, Delinquency & Default Trends

- Repayment Options: Income Based Repayment and New Lender/Servicer Programs

- Litigation under Sect. 523(a)(8): What Proofs Are Needed? Evidence Demonstration

For more information or to register for the "You Can't Discharge Student Loans in Bankruptcy - Or Can You?" abiWorkshop on Nov. 15, please click here.

ABI GOLF TOUR UNDERWAY; LAST STOP FOR 2013 IS WINTER LEADERSHIP CONFERENCE IN DECEMBER

The 7th and final stop for the 2013 ABI Golf Tour is on Dec. 5 at the Trump National Golf Club, held in conjunction with ABI’s Winter Leadership Conference. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores from the seven ABI events. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! A 22-handicapper won the tour event at July’s Southeast Bankruptcy Workshop. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NEW ABILIVE WEBINAR LOOKS AT HOW TO HIRE THE RIGHT FINANCIAL ADVISORS

ABI's Financial Advisors & Investment Banking Committee
is proud to present the next abiLIVE webinar, "How to Hire the Right Financial Advisors," on Dec. 11 from 1-2:15 p.m. ET. The program will provide attendees with an overview and basic understanding of the different types of financial advisors that may be relevant for in- and out-of-court cases. Topics include:

- The different types of financial advisors available;

- The benefits and limitations for each category of advisor; and

- How to select the right advisor for the job.

Speakers on the webinar include:

-Daniel F. Dooley of MorrisAnderson (Chicago)

-Gregory S. Hays of Hays Financial Consulting LLC (Atlanta)

-Ivan Lehon of Ernst & Young (New York)

-Allen Soong of Deloitte CRG (Los Angeles)

• Teri Stratton of Piper Jaffray & Co. (El Segundo, Calif.)

Registration is $75 for ABI members/$175 for non-members. Have a number of colleagues that would like to participate? Take advantage of group pricing for ABI members: register 5 or more and the registration cost drops to $60 per person!

Click here for more information and to register.

ABI LAUNCHES SIXTH ANNUAL WRITING COMPETITION FOR LAW STUDENTS

Law school students are invited to submit a paper between now and March 4, 2014 for ABI's Sixth Annual Bankruptcy Law Student Writing Competition. ABI will extend a complimentary one-year membership to all students who participate in this year's competition. Eligible submissions should focus on current issues regarding bankruptcy jurisdiction, bankruptcy litigation, or evidence issues in bankruptcy cases or proceedings. The first-place winner, sponsored by Invotex Group, Inc., will receive a cash prize of $2,000 and publication of his or her paper in the ABI Journal. The second-place winner, sponsored by Jenner & Block LLP, will receive a cash prize of $1,250 and publication of his or her paper in an ABI committee newsletter. The third-place winner, sponsored by Thompson & Knight LLP, will receive a cash prize of $750 plus publication of his or her paper in an ABI committee newsletter. For competition participation and submission guidelines, please visit http://papers.abi.org.

NEW CASE SUMMARY ON VOLO: SEARS V. U.S. TRUSTEE (IN RE AFY; 8TH CIR.)

Summarized by Bruce Weiner of Rosenberg, Musso & Weiner

The Eighth Circuit affirmed the district court's holding that the appeals of the debtor's principals and of an entity related to the debtor must be dismissed. The debtor's principals appealed from an order authorizing the chapter 11 debtor to sell assets. That appeal was ordered to be dismissed because the bankruptcy court found that the buyer was a good-faith purchaser within the meaning of 11 U.S.C. § 363(m) and no stay pending appeal was granted. Once the sale was consummated, the appeal was moot, the Eighth Circuit ruled.

There are more than 1,000 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: REASONS A STRUGGLING SMALL BUSINESS OWNER SHOULD CONSULT WITH A BANKRUPTCY ATTORNEY

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post looks into reasons that a struggling small business owner should consult with a bankruptcy attorney when their business reaches a financial crossroad.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Can litigant consent enable the bankruptcy court to enter final judgment in a matter which, after Stern, falls outside the court's constitutional authority?

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 43 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

November

- abiWorkshop: "Risky Times for Secured Lenders and Servicers"

   Nov. 6, 2013 | Alexandria, Va.

- Complex Financial Restructuring Program

   Nov. 7, 2013 | Philadelphia, Pa.

- Corporate Restructuring Competition

   Nov. 7-8, 2013 | Philadelphia, Pa.

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

-abiWorkshop: "You Can't Discharge Student Loans in Bankruptcy - Or Can You?"

   Nov. 15, 2013 | Alexandria, Va.

- Delaware Views from the Bench

   Nov. 25, 2013 | Wilmington, Del.

December

- Winter Leadership Conference

    Dec. 5-7, 2013 | Rancho Palos Verdes, Calif.

-abiLIVE Webinar

    Dec. 11, 2013

January

- Western Consumer Bankruptcy Conference

    Jan. 20, 2014 | Las Vegas, Nev.

- Rocky Mountain Bankruptcy Conference

    Jan. 23-24, 2014 | Denver, Colo.

FORECLOSURES FALL IN 62 PERCENT OF U.S. CITIES



RealtyTrac said that foreclosures fell in nearly two-thirds of the nation's largest metro areas during the third quarter, CNNMoney.com reported today. With 62 percent of the nation's 212 largest markets seeing foreclosure activity shrink during the latest quarter, the ongoing decline is yet another sign that the housing market is starting to stabilize, according to RealtyTrac. During September, foreclosure activity in 58 percent of the major metro markets had even dropped below September 2007 levels. Major cities like San Francisco, Detroit, Los Angeles, Phoenix and San Diego saw foreclosures fall by double-digit percentages of 26 percent or more. Of the metro areas with the 20 highest foreclosure rates, all are still in California, Arizona, Nevada and Florida. Read more.

COMMENTARY: STUDENT DEBT DEBACLES



Students who finance their educations through private lenders often wrongly assume that private and federal loans work the same way, according to an editorial in today's New York Times. The problem is serious because private student loans now account for $150 billion of the $1 trillion in total outstanding student loan debt in the country, according to the first annual report from the Consumer Financial Protection Bureau’s student loan ombudsman. The report found that many loan servicers — the companies that collect the payments for the lenders — make it extremely difficult for student borrowers to manage their debts. Borrowers often have difficulty finding out how much they owe or getting information about their payment histories. Some struggling borrowers who need loan modification said that servicers forced them to pay more per month than they could possibly afford, without telling them the payments would not prevent default. The federal government needs to open up refinancing and debt-relief opportunities for these borrowers, according to the editorial, as it did for some mortgage-holders. The bureau should also set national standards for loan servicers to require clear disclosure of conditions, advance notice of any changes in the status of the account and prompt resolution of customer requests for information. Read the full editorial.

ANALYSIS: OUTSIDE LAW FIRMS FOR U.S. REGULATOR TO NET QUARTER OF CREDIT UNION SETTLEMENT



The National Credit Union Administration, the credit union industry's regulator, last year hired outside attorneys to recover between $6 billion and $9 billion in losses incurred by failed credit unions from their purchase of toxic mortgage securities from Wall Street banks before the 2008 financial crisis, according to a Wall Street Journal analysis yesterday. The law firms were hired under a contingency fee arrangement that would give them one-fourth of any judgment or settlement, according to congressional investigators who reviewed the contracts. It could mean a payday of hundreds of millions of dollars for the firms. The amount recovered in securities lawsuits typically falls short of the losses, said an attorney involved in the case. The NCUA filed suits in federal court in Kansas and California last year and this month against seven banks that structured and sold the deals. The NCUA declined to provide details about the lawyers' contract, saying it would compromise litigation and negotiation strategy. The two firms, Kellogg Huber Hansen Todd Evans & Figel PLLC and Korein Tillery LLC, declined to discuss the fee arrangement. House Oversight Committee Chairman Darrell Issa (R-Calif.) asked the inspector general of the NCUA last week to determine whether the agreement was legal. "Contingency fee arrangements impose exorbitant or unnecessary costs on taxpayers who have a right to expect the government to operate transparently and efficiently," Issa said. Read more. (Subscription required.)

JUDGE SAYS VISA, MASTERCARD DEAL APPEARS TO MEET STANDARD



A federal judge said that the proposed settlement of lawsuit brought by merchants over credit card fees that may cost Visa Inc., MasterCard Inc. and banks as much as $7.25 billion is probably worthy of initial approval, Bloomberg News reported today. "I have reviewed the settlement agreement, and at first blush it appears to satisfy the requirements for preliminary approval," U.S. District Judge John Gleeson said in an order yesterday. The order, containing Judge Gleeson's first public comments on the deal since it was unveiled in July, came in response to objections lodged by an expanding group of retailers and trade groups who contend that it is unfair. Judge Gleeson said that he will hear arguments against preliminary approval of the settlement on Nov. 9. He declined a request to form a committee for objecting retailers and said that there would be an opportunity for a more thorough discussion at a later hearing on final approval. Read more.

CFTC SAID TO ALLOW MORE SWAPS TRADING VIA PHONE IN FINAL RULE



The Commodity Futures Trading Commission (CFTC) will allow more swaps to be traded over the phone than initially indicated under proposed Dodd-Frank Act reforms, Bloomberg News reported today. Chairman Gary Gensler outlined the changes on Tuesday with executives of firms that want to create regulated entities allowed to trade swaps, known as swap execution facilities (SEFs). The details of what will be allowed are still being worked out for the final draft rule, which is expected to be shown to the four other CFTC commissioners today. The change in phone trading contrasts with the proposal written in the Federal Register in January 2011, which said that "entities offering the following services do not comply with the statutory definition of a SEF: one-to-one voice services for the execution or trading of swaps (other than for the execution of block trades)." Read more.

LIVE WEBCAST AVAILABLE FOR ABI'S CHAPTER 11 COMMISSION HEARING AT NCBJ'S ANNUAL MEETING TOMORROW!



If you are not able to attend the public hearing of ABI's Chapter 11 Reform Commission tomorrow from 2:30-4:30 p.m. PT (5:30-7:30 p.m. ET) at the 86th Annual NCBJ Annual Conference, there will be a live webcast stream available! To access the live webcast, simply go to the Commission’s website (http://commission.abi.org) and the webcast will appear on the main page when the hearing begins. Prepared witness testimony for the hearing will also be accessible from the webpage.

Additionally, members planning to attend the NCBJ Annual Conference in San Diego will not want to miss the exciting line-up scheduled for the ABI program track tomorrow. In addition to roundtable discussions on the hottest consumer and business bankruptcy topics, ABI will be hosting a ticketed luncheon (tickets can be purchased at the ABI Booth) that will feature the presentation of the 7th Annual Judge William L. Norton, Jr. Judicial Excellence Award and entertainment by Apollo Robbins, a sleight-of hand artist, security consultant and self-described gentleman thief. To view the list of ABI programs tomorrow and the full NCBJ Annual Conference schedule, please click here.

MEMBERS ENCOURAGED TO WEIGH IN ON REAPPOINTMENT OF BANKRUPTCY JUDGE JUDITH WIZMUR



The current 14-year term of office of Judith H. Wizmur, U.S. Bankruptcy Judge for the District of New Jersey at Camden, is due to expire on Sept. 4, 2013. The U.S. Court of Appeals for the Third Circuit is considering the reappointment of the judge to a new 14-year term of office. Members of the bar and the public are invited to submit comments for consideration by the Court of Appeals regarding the reappointment of Bankruptcy Judge Wizmur. All comments should be directed to one of the following addresses: by e-mail at Wizmur_Reappointment@ca3.uscourts.gov or by mail to the Office of the Circuit
Executive, 22409 U.S. Courthouse, 601 Market St, Philadelphia, PA 19106-1790.
Comments must be received no later than noon on Monday, December 3, 2012.

ABI IN-DEPTH

NEW DIP FINANCING BOOK AVAILABLE FOR PREORDER IN THE ABI BOOKSTORE



The Bankruptcy Code provides a variety of mechanisms designed to facilitate a chapter 11 debtor's access to new credit to fund its reorganization or sale efforts. DIP financing, or credit extended to a chapter 11 debtor, offers unique benefits—and challenges—for those that take on the risk of providing secured credit to troubled businesses. Debtor-in-Possession Financing: Funding a Chapter 11 Case details the real-world application of this part of the Code, particularly § 364, and explains common lending practices, including the critical financial analyses that lenders should complete before entering into a DIP agreement. Concluding with a detailed analysis of a "Model DIP Financing Order," this manual provides practitioners, lenders and debtors with an understanding of the history behind DIP financing and a practical explanation of its often-complex mechanics. (Softbound, 212 pages. Member price: $60. Non-member price: $85. To obtain member pricing, please log in prior to purchase.)

Click here to pre-order your copy today!

LATEST CASE SUMMARY ON VOLO: ANDERSON V. CRANMER (IN RE CRANMER; 10TH CIR.)



Summarized by Adam Kunst

The Tenth Circuit ruled that Social Security income need not be included in the calculation of projected disposable income for a chapter 13 repayment plan. Not including Social Security income in the calculation of projected disposable income in a chapter 13 repayment plan is not a ground for finding that the plan was not proposed in good faith.

There are more than 650 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: BIG BANKS NOW OFFERING PAYDAY LOANS



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines how Wells Fargo, First Third Bank and other large banks offer payday-style loans, called direct deposit advances or ready advances. Both the FDIC and the CFPB have taken notice of the loans and are investigating the practices.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Section 523(a)(8) should be amended to allow private student loans to be discharged in bankruptcy.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

October

- ABI Program at NCBJ's Annual Conference

     October 26, 2012 | San Diego, Calif.

- ABI Endowment Event at Peter Max Gallery

     October 29, 2012 | New York, N.Y.

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.

December

- Forty-Hour Bankruptcy Mediation Training

     December 4-8, 2012 | New York, N.Y.

2013

January

- Western Consumer Bankruptcy Conference

     January 22, 2013 | Las Vegas, Nev.

- Rocky Mountain Bankruptcy Conference

     January 24-25, 2013 | Denver, Colo.

February

- Caribbean Insolvency Symposium

     February 7-9, 2013 | Miami, Fla.

- Kansas City Advanced Consumer Bankruptcy Practice Institute

     February 17-19, 2013 | Kansas City, Mo.

- VALCON 2013

     February 20-22, 2013 | Las Vegas, Nev.

FITCH: SOME PAST CHAPTER 11 FILERS AGAIN AT RISK OF DEFAULT



US Airways Group Inc. and Great Atlantic & Pacific Tea Co. top a list of companies that restructured under chapter 11 but remain at risk of another default in the future, according to a new report by Fitch Ratings, Dow Jones Daily Bankruptcy Review reported yesterday. Fitch analysts Sharon Bonelli and Michael Simonton identified 31 companies that have defaulted in the past, whether via a bankruptcy filing, debt exchange or missed bond payment. Five publishing companies made the list, putting that industry most at risk of default. Building products companies came in second, with four in all. Read more. (Subscription required.)

COMMENTARY: A QUICK END TO TARP MEANS A SMALLER PAYOFF FOR TAXPAYERS



The federal government still holds investments in hundreds of small banks around the country in the Troubled Asset Relief Program (TARP), and in an effort to wind down TARP, the government is trying to sell off its holdings of preferred stock of the remaining smaller banks, according to a commentary yesterday in the New York Times DealBook blog. The problem, according to the commentary, is that the Treasury Department is not getting great bids on some of the bank paper, even on the shares of banks with strong profits and strong capital. When the government sold its holdings in MetroCorp Bancshares of Houston this month, the bank itself bought back most of it – at 98 cents on the dollar. Wilshire Bancorp of Los Angeles bought back its paper at 94 cents on the dollar. The Treasury Department sold preferred shares of Ohio-based First Defiance at 96 cents, and Peoples Bancorp of North Carolina at 93 cents. While all of these small banks are regarded as healthy, the taxpayers take the loss, according to the commentary. Read more.

FHFA: SECOND QUARTER U.S. HOUSING PRICES INCREASED MOST SINCE 2005 IN SECOND QUARTER



The Federal Housing Finance Agency (FHFA) reported that U.S. house prices jumped 1.8 percent in the second quarter from the previous three months, fueled by record-low mortgage rates and tight inventory, Bloomberg News reported today. The seasonally adjusted increase was the biggest since the fourth quarter of 2005, the FHFA said. Prices climbed 3 percent from a year earlier. The number of Americans who owed more than their homes were worth fell by about 400,000 in the second quarter, according to a report today by Zillow Inc. Read more.

MASSACHUSETTS FORECLOSURE PREVENTION ACT SIGNED INTO LAW



Massachusetts Governor Deval Patrick (D) on August 3, 2012, signed into law Massachusetts’ Foreclosure Prevention Law, according to a recent post on the Massachusetts Real Estate Law blog. The new law makes significant changes to existing foreclosure practices in Massachusetts, and also attempts to clean up the recent turmoil surrounding defective foreclosure titles after the U.S. Bank v. Ibanez and Eaton v. FNMA rulings. Provisions of the new law include:

• New requirement that mortgage assignments be recorded

• New mandatory requirement to offer loan modifications and mediation to qualified borrowers

• New Eaton foreclosure affidavit confirming ownership of note/mortgage loan

• Protection for third party buyers of foreclosed properties

The new Massachusetts law goes into effect on Nov. 1, 2012. Click here to read the full text of the law.

COMMENTARY: GOVERNMENT STILL FRUSTRATED BY GMAC



Among the companies that were bailed out by the federal government during the financial crisis, perhaps the most intractable is the company formerly known as the General Motors Acceptance Corp. (GMAC), according to a commentary in the New York Times DealBook blog yesterday. GMAC was the financial arm of General Motors, and in the years leading up to the financial crisis, it was also GM's most profitable unit. In 2005, desperate to raise cash, General Motors sold a 51 percent stake in GMAC to the private equity firm Cerberus Capital Management. During the financial crisis, however, the only way that GMAC staved off collapse was thanks only to a government infusion of $17.2 billion. The company was renamed Ally Financial and the Treasury Department now owns 73.8 percent of Ally, with Cerberus retaining an 8.7 percent stake. Almost since that time, the Treasury Department has wanted to rid itself of its Ally stake, according to the commentary. Ally filed for an initial public offering in March 2011, but it has so far languished in the face of a weak market and concerns over Ally itself. The Treasury Department has been paid back about $5.7 billion and still controls the company through its stock ownership and appointment of a majority of Ally's directors. Despite lingering concerns about Ally, the automobile sales market is recovering and Ally's auto finance operations turned a profit last year. But Ally is still suffering from legacy debts, according to the commentary primarily concentrated in its ResCap unit. Despite having “General Motors” as part of its former title, the company did not just finance automobiles, but was also one of the largest subprime housing lenders through its ResCap subsidiary. Read more.

ANALYSIS: BUYOUTS BOOM, BUT NOT LIKE 2007



Private-equity buyouts are back but with a twist—they are smaller and less flashy than in past booms, according to an analysis in today's Wall Street Journal. Emboldened by a flurry of activity, private-equity executives say that the buyout market is crawling back from the doldrums of the financial crisis, when the debt that fueled such deals disappeared and potential sellers were put off by low valuations. Private-equity firms have snapped up $64.7 billion worth of U.S. companies since January, the highest amount year-to-date since 2007, according to data provider Dealogic. Experts cite a range of reasons, from relatively inexpensive financing to a push by troubled European banks to sell assets. Activity could cool off for the rest of the year amid uncertainty over the global economy and the U.S. presidential election, according to experts. And unlike in 2007, a blockbuster year for private equity that witnessed a bevy of large buyouts for household names, the current targets are smaller and lesser known. Read more. (Subscription required.)

DON'T MISS THE "WHEN IS AN INDIVIDUAL CHAPTER 11 THE BEST FIT?" WEBINAR ON SEPT. 27!



Chapter 11 can offer significant relief for certain individuals who need a restructuring of their finances. Learn when and how to use this tool in a 75-minute live webinar on Sept. 27 at noon ET. An expert panel will guide you through a successful individual chapter 11 and discuss key issues such as plan confirmation, modification and treatment of future income and secured debt.

Panelists on the webinar include:

• James F. Molleur of the Molleur Law Office (Biddeford, Maine)

• John P. Fitzgerald, III, of the Office of the U.S. Trustee (Boston)

• Raymond J. Obuchowski of Obuchowski & Emens-Butler, PC (Bethel, Vt.)

• Jennifer Rood of Bernstein Shur (Manchester, N.H.)

This panel was the highest rated at ABI's Northeast Bankruptcy Conference in July. The webinar is available to ABI members for $75. To register, please click here.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: OKLAHOMA DEPARTMENT OF SECURITIES V. WILCOX (10TH CIR.)



Summarized by Daniel Glasser of Chipman Glasser, LLC

Reversing an earlier district court decision, the 10th Circuit held that debtors were entitled to a discharge of a claim related to debtors' unjust enrichment from proceeds of a Ponzi scheme, because such proceeds fell outside the exception in 11 U.S.C. § 523(a)(19) – judgments for the violation of securities laws. The Tenth Circuit held that the plain language of section 523(a)(19) is limited to the perpetrators of securities violations, not to debtors unjustly enriched by a third party's violation of the law. Chief Circuit Judge Briscoe, however, dissented. He disagreed with the majority’s reading of the statute and argued that at least one of the debtors was complicit in the Ponzi scheme.

There are more than 600 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: THE CONTRACTS CLAUSE VERSUS THE BANKRUPTCY CLAUSE: BANKRUPTCY COURT HOLDS BANKRUPTCY CLAUSE REIGNS SUPREME



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new blog post examines a recent decision by the Bankruptcy Court for the Eastern District of California that affirmatively held that the contracts clause did not eclipse the bankruptcy clause in the chapter 9 case of Stockton, Calif. Shortly after Stockton filed for chapter 9 protection in June, a group of retired employees commenced an adversary proceeding to prevent termination of their benefits on the theory that the contracts clause of the Constitution prevented the city from reducing retiree health benefits.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Client matters left unfinished at a firm when it files for bankruptcy are the property of the defunct firm.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

HAVE YOU TUNED IN TO BLOOMBERG LAW'S VIDEO PODCASTS?



Bloomberg Law's video podcasts feature top experts speaking about current bankruptcy topics. The podcasts are available via Bloomberg Law's YouTube channel so that you can access the programs from your computer or device of your choice! Click here to view the Bloomberg Law video podcasts.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

September

- 7th Annual Golf and Tennis Outing

     September 11, 2012 | Maplewood, N.J.

- Complex Financial Restructuring Program

     September 13-14, 2012 | Las Vegas, Nev.

- Southwest Bankruptcy Conference

     September 13-15, 2012 | Las Vegas, Nev.

- 38th Annual Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization

     September 19-20, 2012 | New York, N.Y.

- "When Is an Individual Chapter 11 the Best Fit?" Live Webinar

     September 27, 2012

- American College of Bankruptcy's "Bankruptcy: Back to the Future" Program

     September 28, 2012 | Chicago, Ill.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- "Trending Issues: Examiners and Select Plan Confirmation Issues" Webinar

     October 15, 2012

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

     November 9, 2012 | New York, N.Y.

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

     November 29 - December 1, 2012 | Tucson, Ariz.

ANALYSIS: AN IN-DEPTH LOOK AT HOW DETROIT WENT BROKE

Detroit's financial history back to the 1950s shows that its elected officials and others charged with managing its finances repeatedly failed -- or refused -- to make the tough economic and political decisions that might have saved the city from financial ruin, according to a Detroit Free Press analysis on Sunday. Faced with a huge exodus of residents, plummeting tax revenues and skyrocketing rates of home abandonment, Detroit's leaders engaged in a billion-dollar borrowing binge, created new taxes and failed to cut expenses when they needed to. Simultaneously, they gifted workers and retirees with generous bonuses. And under pressure from unions and, sometimes, arbitrators, they failed to cut health care benefits -- saddling the city with staggering costs. The State of Michigan also bears some of the blame, as Lansing politicians reduced Detroit's state-shared revenue by 48 percent from 1998 to 2012, withholding $172 million from the city, according to state records. Decades of mismanagement added to Detroit's fiscal woes. The city notoriously bungled multiple federal aid programs and outrageously overpaid to incentivize projects such as the Chrysler Jefferson North plant. Read more.

SINCE LEHMAN'S COLLAPSE, COMPANIES MORE FORTHCOMING ON COMPLIANCE

One major change since the financial crisis is how companies have become more transparent about pending litigation and government investigations, the New York Times DealBook blog reported yesterday. And in response to greater public scrutiny, that has meant committing a lot more money and resources to comply with a host of regulatory requirements. The collapse of Lehman Brothers had little to do with how well, or poorly, the firm followed the rules. Public outrage, however, over the government's failure to oversee financial institutions has created a much tougher regulatory environment in which companies cannot afford to fall short. The Dodd-Frank Act was adopted in 2010 to address inadequate oversight and regulation of the financial markets. But many of the rules mandated by the law have yet to be adopted, as the Securities and Exchange Commission and the Commodity Futures Trading Commission are bogged down with figuring out exactly how to regulate financial products like derivatives and money market funds. Companies, surprisingly though, have not waited around to be prodded. Read more.

ABI held a media teleconference on Sept. 12 that discussed the Lehman chapter 11 filing, the lessons learned from it five years later and what the future holds for distressed large financial institutions. An audio archive of the teleconference is available here.

COMMENTARY: REGULATORS SHOULD DRAW A LINE BETWEEN FINANCE AND COMMERCE

The Federal Reserve, Congress and some of the world's largest financial institutions are about to tackle the existential issue of what a bank is, according to a commentary in today's Wall Street Journal. The narrow version of the debate, according to the commentary, is whether JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley should continue to own, store and transport commodities such as oil, copper and electricity. But its ramifications reach into a cornerstone of modern U.S. financial architecture: the separation of finance and commerce. Decisions made in the coming weeks should determine the boundaries of what banks can and can't do, as well as affect other participants in the economy ranging from brewers to Coke drinkers. Read more. (Subscription required.)

ANALYSIS: A TOXIC SUBPRIME MORTGAGE BOND'S LEGACY LIVES ON

Composed entirely of loans made by Countrywide Financial Corp., subprime mortgage bond "CWABS 2006-7" was so battered by delinquencies in 2009 that it appeared that nearly all of the thousands of mortgages held by the bond could default, according to an analysis in Friday's Wall Street Journal. Subprime bond CWABS 2006-7 began as a bundle of nearly 6,000 mortgages in 2006, but by 2013, fewer than a third remained. One might think that today, such a relic of misbegotten lending would be as dead as orbiting space junk. Instead, CWABS 2006-7 is alive and well, a sought-after asset that has made big profits for savvy investors. A senior slice of it now trades at 91 cents on the dollar, having come nearly all the way back. That has been a boon for firms such as bond giant Pimco, whose stake in the Countrywide bond has helped make one of Pimco's funds a top performer in its category. At the same time, the bond has affected the lives of struggling Florida homeowners; some are unable to make their payments, and others determinedly continue to do so at above-market mortgage rates. Read more. (Subscription required.)

ABILIVE WEBINAR ON SEPT. 24 TO EXAMINE THE COMPLEX REQUIREMENTS AND ETHICAL DUTIES OF REPRESENTING CONSUMER DEBTORS

The abiLIVE webinar on Sept. 24 will feature a panel of experts discussing the ethical and compensation issues that can arise while representing chapter 7 and 13 debtors as well as individual chapter 11 debtors. Topics covered include client fraud and an attorney's duty to verify client information, attorney fee structures, and complex issues in individual chapter 11 cases. The panel includes perspectives from the attorneys and trustees, as well as the academic reporter for the ABI Ethics Task Force. Click here to register.

NEW ABILIVE WEBINAR OCT. 3: THE INTERSECTION OF INTELLECTUAL PROPERTY AND BANKRUPTCY: KODAK, NORTEL AND OTHER CASES

IP experts will shed light on the mysteries of understanding IP law and navigating the often puzzling sales processes, drawing from their experiences in Nortel, Kodak and other important cases, in an abiLIVE webinar on Oct. 3 from 1:00-2:15 p.m. ET. Speakers will include David Berten (Global IP Law Group, LLC; Chicago), Pauline K. Morgan (Young Conaway Stargatt & Taylor, LLP; Wilmington, Del.), Cassandra M. Porter (Lowenstein Sandler LLP; Roseland, N.J.), Kelly Beaudin Stapleton (Alvarez & Marsal; New York) and Christopher Burton Wick (Hahn Loeser & Parks LLP; Cleveland). To register, click here.

RECORDING AVAILABLE OF THE ABILIVE WEBINAR EXAMINING THE NEW U.S. TRUSTEE FEE GUIDELINES!

If you were not able to join ABI's recent well-attended abiLIVE webinar examining the U.S. Trustee Fee Guidelines for chapter 11 cases filed on or after Nov. 1, a recording of the program is now available for downloading! A panel of experts, including Clifford J. White, the director of the U.S. Trustee Program, discussed some of the ways the new guidelines could change day-to-day operations in firms, issues relating to the new market rate benchmarks, and how these changes might alter insolvency practice. The 90-minute recording is available for the special ABI member price of $75 and can be purchased here.

ABI GOLF TOUR UNDERWAY; LAST STOP FOR 2013 IS WINTER LEADERSHIP CONFERENCE IN DECEMBER

The 7th and final stop for the 2013 ABI Golf Tour is on Dec. 5 at the Trump National Golf Club, held in conjunction with ABI’s Winter Leadership Conference. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores from the seven ABI events. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! A 22-handicapper won the tour event at July’s Southeast Bankruptcy Workshop. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: MORRIS AVIATION LLC V. DIAMOND AIRCRAFT INDUSTRIES INC. (6TH CIR.)

Summarized by Mike Debbeler of Graydon Head & Ritchey LLP

The Sixth Circuit ruled that the airplane manufacturer's opinion of the "quality and reliability" of components was not a fraudulent or negligent misrepresentation where the component manufacturer filed bankruptcy and voided warranties on components shortly after plaintiff purchased the airplane from the manufacturer. The airplane manufacturer's mere opinion as to component manufacturer's financial health did not form the basis of a misrepresentation claim.

There are more than 1,000 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: FURTHER ANALYSIS OF JPMORGAN'S SETTLEMENT OVER "LONDON WHALE" LOSSES

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post explores JPMorgan Chase's $750 million to $800 million settlement with U.S. and U.K. regulators related to last year's $6 billion "London Whale" trading loss.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Success fees for financial advisors should be prohibited.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 43 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

September

- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization

    Sept. 18-19, 2013 | New York

- abiLIVE Webinar: Complex Requirements and Ethical Duties of Representing Consumer Debtors

     Sept. 24, 2013

- Bankruptcy 2013: Views from the Bench

    Sept. 27, 2013 | Washington, D.C.

October

- abiLIVE Webinar: The Intersection of Intellectual Property and Bankruptcy: Kodak, Nortel and Other Cases

     Oct. 3, 2013

- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum

    Oct. 4, 2013 | Kansas City, Mo.

- Professional Development Program

    Oct. 11, 2013 | New York, N.Y.

- Chicago Consumer Bankruptcy Conference

    Oct. 14, 2013 | Chicago, Ill.

- International Insolvency & Restructuring Symposium

    Oct. 25, 2013 | Berlin, Germany

November

- Complex Financial Restructuring Program

   Nov. 7, 2013 | Philadelphia, Pa.

- Corporate Restructuring Competition

   Nov. 7-8, 2013 | Philadelphia, Pa.

- Austin Advanced Consumer Bankruptcy Practice Institute

   Nov. 10-12, 2013 | Austin, Texas

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

- Delaware Views from the Bench

   Nov. 25, 2013 | Wilmington, Del.

December

- Winter Leadership Conference

    Dec. 5-7, 2013 | Rancho Palos Verdes, Calif.

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York

ABI MEDIA TELECONFERENCE EXAMINES LESSONS LEARNED FROM LEHMAN’S CHAPTER 11

ABI held a media teleconference today looking at the Lehman chapter 11 filing, the lessons learned from it five years later and what the future holds for distressed large financial institutions. An audio archive of the teleconference will be posted soon on ABI.org, and its availability will be announced via social media (Twitter: twitter.abi.org; Facebook: facebook.abi.org). Key figures in the case who spoke on today's teleconference included:

- Bankruptcy Judge James Peck (S.D.N.Y.; New York) presided over the Lehman Brothers chapter 11 case.

- Harvey Miller of Weil, Gotshal & Manges LLP (New York) was the lead debtor attorney for Lehman Brothers.

- Dennis Dunne of Milbank, Tweed, Hadley & McCloy (New York) represented unsecured creditors in the Lehman case.

- Bryan Marsal of Alvarez and Marsal (New York) served as Lehman's Chief Executive Officer after it filed for chapter 11 until 2012.

- Chris Kiplock of Hughes Hubbard & Reed LLP (New York) worked with the team of attorneys representing trustee James W. Giddens in liquidating Lehman Brothers.

The moderator for the program was ABI Fall Resident Scholar Kara Bruce of Toledo University School of Law. Be sure to check ABI's feeds on Twitter or Facebook for the availability of the teleconference audio archive!

ANALYSIS: VOLCKER RULE TO CURB BANK TRADING PROVES HARD TO WRITE

Three years after first proposing that banks be prevented from making market bets with their own money, Paul Volcker's rule remains unfinished, the Wall Street Journal reported yesterday. The Volcker rule, a centerpiece of the sweeping overhaul of financial regulation known as Dodd-Frank, is an attempt to protect the financial system from risk. The rule looks to prohibit banks from making investment bets with their own money, but it has proved difficult to apply. Five years after cratering financial firms ignited a global crisis, and three years after Dodd-Frank outlined the Volcker rule as a central part of the government response, the rule languishes unfinished and unenforced, mired in policy tangles and infighting among five separate agencies whose job is to produce the fine print. Read more. (Subscription required.)

COMMENTARY: FIVE YEARS LATER, FINANCIAL LESSONS NOT LEARNED

Sunday marks the fifth anniversary of the fateful day that investment bank Lehman Brothers filed for bankruptcy, signaling the start of a frightening financial meltdown, but we are still missing some of the lessons drawn out by the crisis, according to a commentary in yesterday's Wall Street Journal by Prof. Alan Blinder of Princeton University. Years of disgraceful financial shenanigans in the 2000s, some illegal but many just immoral, brought on the Great Recession with virtually no help from any co-conspirators, according to Blinder. Congress and President Obama reacted comparatively weakly with the Dodd-Frank Act of 2010, which Blinder said certainly did not seek to remake the U.S. financial system. A supporter of Dodd-Frank, Blinder has found that the law now seems to be withering on the regulatory vine. Far from being tamed, the financial beast has gotten its mojo back, according to Blinder. Read the full commentary. (Subscription required.)

ANALYSIS: SEC TRIES TO REBUILD ITS REPUTATION

The Securities and Exchange Commission is ending its push to punish financial-crisis misconduct in the same way it started -- with a new chairman vowing that Wall Street's top cop will be tougher in the future, according to a Wall Street Journal analysis today. In 2009, at the depths of the recession, Mary Schapiro took the reins at the SEC, promising to "move aggressively to reinvigorate enforcement" at the agency. She created teams to target various types of alleged misconduct, including one focused on the complicated mortgage bonds that helped set off a global financial panic. The agency has filed civil charges against 138 firms and individuals for alleged misconduct just before or during the crisis, according to the analysis, and it received $2.7 billion in fines, repayment of ill-gotten gains and other penalties. But some of the SEC's highest-profile probes of top Wall Street executives have stalled and are being dropped. In April, former federal prosecutor Mary Jo White took the reins as SEC chairman with a simple enforcement motto: "You have to be tough." She tossed out the SEC enforcement policy that allowed almost all defendants to settle cases without admitting wrongdoing. In August, hedge-fund manager Philip Falcone became the first example of this new approach when he and his firm, Harbinger Capital Partners LLC, admitted to manipulating bond prices and improperly borrowing money from a fund. The policy shift comes as the SEC turns the page on its financial crisis work. New investigations into misconduct linked to the meltdown have slowed to a trickle, and a statute-of-limitations deadline is looming for many cases, which will generally restrict the sanctions that the SEC can enforce for misconduct that is more than five years old. Read more. (Subscription required.)

U.S. FORECLOSURE FILINGS DROP 34 PERCENT AS PROPERTY PRICES RISE

RealtyTrac issued a report showing that foreclosure filings fell 34 percent in the U.S. last month as first-time defaults dropped to the lowest level in almost eight years and rising home prices made it easier for distressed owners to sell, Bloomberg News reported today. Default, auction and repossession filings totaled 128,560 in August, with one in 1,019 U.S. households receiving a notice, the Irvine, Calif.-based data seller said today in a report. It was the 35th consecutive month in which total notices declined on an annual basis, with foreclosure starts plunging 44 percent, RealtyTrac said. Increasing buyer demand and climbing property values are helping some troubled borrowers refinance or sell rather than lose their homes to foreclosure. The S&P/Case-Shiller index of property values in 20 cities rose 12.1 percent in June from a year earlier. Last month, foreclosure starts totaled 55,775, the lowest level since December 2005, and fell on a year-over-year basis in 38 states, RealtyTrac said. Read more.

LATEST ABI PODCAST EXPLORES BANKRUPTCY'S CORPORATE TAX IMPLICATIONS

ABI Resident Scholar Prof. Kara Bruce speaks with Prof. Diane Lourdes Dick of Seattle University School of Law about how companies in chapter 11, such as Solyndra and WaMu, preserve valuable tax attributes through holding companies. Prof. Dick discusses her current research looking into how stakeholders of financially distressed firms exploit various loopholes in chapter 11 to transfer value outside of bankruptcy's distributional norms. Click here to listen to the podcast.

NEW ABILIVE WEBINAR OCT. 3: THE INTERSECTION OF INTELLECTUAL PROPERTY AND BANKRUPTCY: KODAK, NORTEL AND OTHER CASES

IP experts will shed light on the mysteries of understanding IP law and navigating the often puzzling sales processes, drawing from their experiences in Nortel, Kodak and other important cases, in an abiLIVE webinar on Oct. 3 from 1:00-2:15 p.m. ET. Speakers will include David Berten (Global IP Law Group, LLC; Chicago), Pauline K. Morgan (Young Conaway Stargatt & Taylor, LLP; Wilmington, Del.), Cassandra M. Porter (Lowenstein Sandler LLP; Roseland, N.J.), Kelly Beaudin Stapleton (Alvarez & Marsal; New York) and Christopher Burton Wick (Hahn Loeser & Parks LLP; Cleveland). To register, click here.

RECORDING AVAILABLE OF THE ABILIVE WEBINAR EXAMINING THE NEW U.S. TRUSTEE FEE GUIDELINES!

If you were not able to join ABI's recent well-attended abiLIVE webinar examining the U.S. Trustee Fee Guidelines for chapter 11 cases filed on or after Nov. 1, a recording of the program is now available for downloading! A panel of experts, including Clifford J. White, the director of the U.S. Trustee Program, discussed some of the ways the new guidelines could change day-to-day operations in firms, issues relating to the new market rate benchmarks, and how these changes might alter insolvency practice. The 90-minute recording is available for the special ABI member price of $75 and can be purchased here.

ABI GOLF TOUR UNDERWAY; LAST STOP FOR 2013 IS WINTER LEADERSHIP CONFERENCE IN DECEMBER

The 7th and final stop for the 2013 ABI Golf Tour is on Dec. 5 at the Trump National Golf Club, held in conjunction with ABI’s Winter Leadership Conference. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores from the seven ABI events. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! A 22-handicapper won the tour event at July’s Southeast Bankruptcy Workshop. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: MORRIS AVIATION LLC V. DIAMOND AIRCRAFT INDUSTRIES INC. (6TH CIR.)

Summarized by Mike Debbeler of Graydon Head & Ritchey LLP

The Sixth Circuit ruled that the airplane manufacturer's opinion of the "quality and reliability" of components was not a fraudulent or negligent misrepresentation where the component manufacturer filed bankruptcy and voided warranties on components shortly after plaintiff purchased the airplane from the manufacturer. The airplane manufacturer's mere opinion as to component manufacturer's financial health did not form the basis of a misrepresentation claim.

There are more than 1,000 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: HOW HAS THE FINANCIAL SECTOR CHANGED SINCE THE LEHMAN FILING?

The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. A recent blog post explores how the financial sector has changed since the Lehman Brothers chapter 11 filing on Sept. 15, 2008.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Success fees for financial advisors should be prohibited.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 43 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

September

- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization

    Sept. 18-19, 2013 | New York

- abiLIVE Webinar: Complex Requirements and Ethical Duties of Representing Consumer Debtors

     Sept. 24, 2013

- Bankruptcy 2013: Views from the Bench

    Sept. 27, 2013 | Washington, D.C.

October

- abiLIVE Webinar: The Intersection of Intellectual Property and Bankruptcy: Kodak, Nortel and Other Cases

     Oct. 3, 2013

- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum

    Oct. 4, 2013 | Kansas City, Mo.

- Professional Development Program

    Oct. 11, 2013 | New York, N.Y.

- Chicago Consumer Bankruptcy Conference

    Oct. 14, 2013 | Chicago, Ill.

- International Insolvency & Restructuring Symposium

    Oct. 25, 2013 | Berlin, Germany

November

- Complex Financial Restructuring Program

   Nov. 7, 2013 | Philadelphia, Pa.

- Corporate Restructuring Competition

   Nov. 7-8, 2013 | Philadelphia, Pa.

- Austin Advanced Consumer Bankruptcy Practice Institute

   Nov. 10-12, 2013 | Austin, Texas

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

- Delaware Views from the Bench

   Nov. 25, 2013 | Wilmington, Del.

December

- Winter Leadership Conference

    Dec. 5-7, 2013 | Rancho Palos Verdes, Calif.

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York

COMMENTARY: THE LESSONS OF LEHMAN: ARE WE READY FOR THE NEXT MELTDOWN?

It's been five years since Lehman Brothers failed, setting off a chain of unanticipated consequences that came perilously close to melting down the world's financial system. Had the Federal Reserve, other central banks and the U.S. government not intervened and thrown trillions of dollars at the crisis to keep financial markets afloat, we would be talking about Great Depression II. The true lesson to take from Lehman is that a simple move that was praised by free-market types at the time — letting Lehman fail — set off unanticipated consequences that brought the financial world to its knees within days. It was an object lesson about how things that seem simple on the surface can come back to bite you in unanticipated places in unanticipated ways, according to an editorial in Friday's Washington Post. When Lehman went under, the Reserve Fund, a big money-market fund, had to take losses because it owned Lehman paper, and some hedge funds that used Lehman's London office as their "prime broker" found their assets frozen as a result of its bankruptcy. That triggered a mad scramble in the U.S. as hedge funds pulled their accounts out of Goldman Sachs and Morgan Stanley, neither of which had full access to the array of Fed lending programs that commercial banks did. Both firms would have gone under — inflicting catastrophic pain on the financial system by setting off a worldwide cascade of failures — had the Fed not made Goldman and Morgan Stanley bank holding companies and given them access to unlimited cash to meet customer withdrawals. These two Lehman side effects, which many people have forgotten, typify the problems of dealing with financial crises. We've forced giant, too-big-to-be-allowed-to-fail financial institutions to beef up their capital relative to their assets, which is a good thing. However, we've gravely weakened the ability of the Federal Reserve by taking away key powers that it had used to stabilize things. This problem, combined with the unhappy fact that much of the rest of the federal government is dysfunctional, will cost us dearly when the next financial crisis hits, according to the editorial. And there always is a next one. Click here to read the full commentary.

ABI will host a media call on Sept. 12 at 2:00 p.m. ET on lessons learned at the Lehman anniversary, featuring guests Bankruptcy Judge James M. Peck (S.D.N.Y.; New York) and Harvey R. Miller (Weil, Gotshal & Manges LLP; New York). Contact (703) 739-0800 for more information.

ANALYSIS: BIG DREAMS, BUT LITTLE CONSENSUS, FOR A NEW DETROIT

There are 78,000 abandoned buildings in Detroit standing in various levels of decay. Services have fallen into dysfunction, and debts are piling ever higher. Yet for all the misery, Detroit's bankruptcy gives an American city a rare chance to reshape itself from top to bottom, according to an analysis in the New York Times yesterday. But reinventing a city so devastated is hardly a sure thing, and the questions about how to proceed loom as large as the answers: Should its areas of nearly vacant blocks be transformed into urban farms, parks and even ponds made from storm water? Could its old automobile manufacturing economy be shifted into one centering on technology, bioscience and international trade? Should Detroit, which lost a million residents over the last 60 years, pin its sharpest hopes on luring more young people here, counting on an influx of artists and entrepreneurs? Some have long been searching for solutions to the hollowing out of Detroit, a city that measures six times the landmass of Manhattan but is now home to only 700,000 people, down from 1.8 million at its peak. No single economic answer will be enough to rescue Detroit on its own, experts say. Instead, leaders have their hopes set on a range of fields, many of which have already found some success here. They have pushed for new medical and science-related businesses near the city's universities and new technology companies and start-ups in the city's downtown. And some are pondering prospects for expanding international trade, given plans for a new bridge to Canada. Click here to read the full analysis.

COMMENTARY: THE NATION'S FUTURE DEPENDS ON ITS CITIES

The residents of Minneapolis-St. Paul suffer, collectively, from a serious insecurity complex. They're always talking about how no one knows anything about their "twin" cities on the upper Mississippi River. Yet the Twin Cities' identity crisis has also proven to be one of their greatest economic strengths. One can't quite put one's finger on exactly what's there because, well, there's an awful lot there. Diversity, in a word, is the secret sauce that creates urban success, according to a commentary in last week's National Journal. Detroit, of course, never suffered from an identity crisis. Everyone always knew what the Motor City stood for: the Big Three automakers. But a lack of diversity was one of Detroit's biggest problems, contributing to its bankruptcy filing. What also sank Detroit, according to the commentary, was that its leaders failed to connect with the sprawl around it and turn the suburbs into part of a unified economic base. In the Detroit area, the city and its suburbs became virtual enemies. Ironically, given the nature of our high-tech, super-connected age, the future will look increasingly like the city-states that ruled the world for millennia. The future, in other words, is going medieval. The rise of the city-state has been a long-term trend, but it's gaining speed. Today, the 388 metro areas in the United States make up 84 percent of the nation's population and 91 percent of its gross domestic product. Urban centers are estimated to generate 80 percent of economic growth in the world, and the percentage may be growing because of the way well-built urban areas with good infrastructure can better apply resources and make more efficient use of tight public funds. Read the full commentary (subscription required).

ANALYSIS: CAN KODAK REINVENT ITSELF AFTER BANKRUPTCY?

Eastman Kodak Co. scientists are tinkering with a new technique, called Stream Inkjet Technology, to improve printing performance, and are working on further perfecting SquareSpot laser-writing technology and potentially toward breakthroughs in spatial atomic layer deposition. The hope is that these kinds of technologies can save a 121-year-old company emerging from 20 months of bankruptcy this week, according to an analysis in Sunday's Rochester (N.Y.) Democrat and Chronicle. The question of whether Kodak can succeed will take years to answer. But sink or swim, the company is now officially entering its next era with a much smaller workforce, dramatically cut costs and a narrower focus on a specific set of markets and offerings. Kodak has bet its immediate survival in part on commercial printing. But for tomorrow, it has its atomic layer research and other similar technology, bonding microscopically thin materials to surfaces. If all of Kodak's plans pan out, it will stop a slide in revenues that dates back to 2005 — the last year Kodak grew. Kodak projections have it bottoming out this year with sales of $2.5 billion, and then slowly growing to $3.2 billion in 2017. However, the company has a lengthy history of promising that it's finally turned the corner and that starting next year, things are going to be better. Kodak has argued that bankruptcy gave it the ability to essentially catch its breath and unload a variety of costs — including retiree health care coverage and some pensions — and that it is ready to soar. Now comes the challenge of taking that revamped and slimmed-down Kodak and making it into something the old Kodak has not been for years: consistently profitable. Click here to read the full analysis.

NEW LIFELINE FOR HOME BUYERS

The Obama administration wants to create a mortgage market that is more forgiving to borrowers who lost their homes due to the recession, an effort that could widen the pool of potential homeowners, according to an article in the Wall Street Journal yesterday. A recent rule change lets certain borrowers who have gone through a foreclosure, bankruptcy or other adverse event — but who have repaired their credit — become eligible to receive a new mortgage backed by the Federal Housing Administration after waiting as little as one year. Previously, they had to wait at least three years before they could qualify for a new government-backed loan. To be eligible for the new FHA loans, borrowers must show that their foreclosure or bankruptcy was caused by a job loss or reduction in income that was beyond their control. Borrowers also must prove that their incomes have had a "full recovery" and complete housing counseling before getting a new mortgage. But it isn't clear whether banks will be eager to offer loans with the new terms at a time when they are facing a wave of lawsuits and investigations related to other government-backed loans. In addition, over the past four years, banks have had to buy back tens of billions of defaulted loans as Fannie, Freddie and the FHA faced mounting losses. Because of uncertainties about these "put-backs," lenders have imposed more conservative standards than what the federal entities require. The FHA says it has a separate effort under way to provide greater clarity about when banks could face put-backs. However, lenders say those changes haven't been specific enough to change their lending posture. Click here to read the full article.

EQUIFAX: AUTO, STUDENT LENDING EACH RISE MORE THAN 10%

Student and auto lending surged in the 12-month period ended in July, according to an Equifax report released Thursday, American Banker reported Friday. The total balance on federal and private student loans increased to $884.2 billion in July 2013, up 11.3% from a year earlier, according to the Atlanta credit bureau's National Consumer Credit Trends Report. However, Americans also took out fewer student loans in the first half of the year. The total number of loans originated between January and May fell 9.3% to 4.2 million. Auto loans rose 10.9% to $826.8 billion in July from a year earlier. Meanwhile, bank credit card balances rose for the first time in five years to $536.6 billion, a scant 0.6%. New credit opened between January and May rose 6% to $77.7 billion — the highest level since 2008. "In all other segments, consumers are reducing their debt burdens," Equifax Chief Economist Amy Crews Cutts said. Total balances on first mortgages, home-equity installments and home-equity revolving all fell, and severely delinquent balances for each loan type were at five-year lows. Click here to read the full article.

PROPOSED AMENDMENTS PUBLISHED FOR PUBLIC COMMENT

The Judicial Conference Advisory Committees on Bankruptcy and Civil Rules have proposed amendments to their respective rules and requested that the proposals be circulated to the bench, bar and public for comment. The following proposed amendments were approved for publication by the Judicial Conference Committee on Rules of Practice and Procedure in June 2013:

Preliminary Draft of Proposed Amendments to the Federal Rules of Bankruptcy and Civil Procedure: The public comment period is open for proposed amendments to Bankruptcy Rules 2002, 3002, 3007, 3012, 3015, 4003, 5005, 5009, 7001, 9006 and 9009; Official Forms 17A, 17B, 17C, 22A-1, 22A-1Supp, 22A-2, 22B, 22C-1, 22C-2, 101, 101A, 101B, 104, 105, 106Sum, 106A/B, 106C, 106D, 106E/F, 106G, 106H, 106Dec, 107, 112, 113, 119, 121, 318, 423 and 427; and Civil Rules 1, 4, 6, 16, 26, 30, 31, 33, 34, 36, 37, 55, 84 and Appendix of Forms. The public comment period closes on Feb. 15, 2014. Your comments are welcome on all aspects of each proposal. The advisory committees will review all timely comments, which are made part of the official record and are available to the public. Click here to read the proposed amendments and submit comments.

NEW ABILIVE WEBINAR OCT. 3: THE INTERSECTION OF INTELLECTUAL PROPERTY AND BANKRUPTCY: KODAK, NORTEL AND OTHER CASES

IP experts will shed light on the mysteries of understanding IP law and navigating the often puzzling sales processes, drawing from their experiences in Nortel, Kodak and other important cases, in an abiLIVE webinar on Oct. 3 from 1:00-2:15 p.m. ET. Speakers will include David Berten (Global IP Law Group, LLC; Chicago), Pauline K. Morgan (Young Conaway Stargatt & Taylor, LLP; Wilmington, Del.), Cassandra M. Porter (Lowenstein Sandler LLP; Roseland, N.J.), Kelly Beaudin Stapleton (Alvarez & Marsal; New York) and Christopher Burton Wick (Hahn Loeser & Parks LLP; Cleveland). To register, click here.

RECORDING NOW AVAILABLE OF THE ABILIVE WEBINAR EXAMINING THE NEW U.S. TRUSTEE FEE GUIDELINES!

If you were not able to join ABI's recent well-attended abiLIVE webinar examining the U.S. Trustee Fee Guidelines for chapter 11 cases filed on or after Nov. 1, a recording of the program is now available for downloading! A panel of experts, including Clifford J. White, the director of the U.S. Trustee Program, discussed some of the ways the new guidelines could change day-to-day operations in firms, issues relating to the new market rate benchmarks, and how these changes might alter insolvency practice. The 90-minute recording is available for the special ABI member price of $75 and can be purchased here.

ABI GOLF TOUR UNDERWAY; LAST STOP FOR 2013 IS WINTER LEADERSHIP CONFERENCE IN DECEMBER

The 7th and final stop for the 2013 ABI Golf Tour is on Dec. 5 at the Trump National Golf Club, held in conjunction with ABI’s Winter Leadership Conference. Final scoring to win the Great American Cup — sponsored by Great American Group — is based on your top three scores from the seven ABI events. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! A 22-handicapper won the tour event at July’s Southeast Bankruptcy Workshop. There's no charge to register or participate in the Tour.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: IN RE TOWNE (3D CIR.)

Summarized by Terry Hall of Faegre Baker Daniels LLP

In an opinion marked "Not Precedential," the Third Circuit Court of Appeals affirmed the bankruptcy and district courts' holdings that the law firm hired as special counsel to the chapter 11 debtors was not entitled to payment of its fees and expenses from the secured creditor's collateral sale proceeds under § 506(c) following a sale conducted by a chapter 7 trustee after conversion of the case because (a) the law firm's efforts were not necessary to preserve or dispose of the collateral and there was no direct benefit to secured creditor, (b) the secured creditor was not estopped from refusing payment from the proceeds, and (c) conduct by the secured creditor, either lawful or unlawful, is not relevant to the analysis under § 506(c).

There are more than 1,000 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: COMING RULES COULD CUT OFF BANKS FROM AFFILIATES

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post discusses the Fed's preparation of a proposal to toughen Regulation W, which governs how banks do business with their subsidiaries and affiliates.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

Success fees for financial advisors should be prohibited.

Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 43 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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2013

September

- ABI Endowment Golf & Tennis Outing

    Sept. 10, 2013 | Maplewood, N.J.

- Lawrence P. King and Charles Seligson Workshop on Bankruptcy & Business Reorganization

    Sept. 18-19, 2013 | New York

- abiLIVE Webinar: Complex Requirements and Ethical Duties of Representing Consumer Debtorsbr>
     Sept. 24, 2013

- Bankruptcy 2013: Views from the Bench

    Sept. 27, 2013 | Washington, D.C.

October

- abiLIVE Webinar: The Intersection of Intellectual Property and Bankruptcy: Kodak, Nortel and Other Cases

     Oct. 3, 2013

- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum

    Oct. 4, 2013 | Kansas City, Mo.

- Professional Development Program

    Oct. 11, 2013 | New York, N.Y.

- Chicago Consumer Bankruptcy Conference

    Oct. 14, 2013 | Chicago, Ill.

- International Insolvency & Restructuring Symposium

    Oct. 25, 2013 | Berlin, Germany

November

- Complex Financial Restructuring Program

   Nov. 7, 2013 | Philadelphia, Pa.

- Corporate Restructuring Competition

   Nov. 7-8, 2013 | Philadelphia, Pa.

- Austin Advanced Consumer Bankruptcy Practice Institute

   Nov. 10-12, 2013 | Austin, Texas

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

- Delaware Views from the Bench

   Nov. 25, 2013 | Wilmington, Del.

December

- Winter Leadership Conference

    Dec. 5-7, 2013 | Rancho Palos Verdes, Calif.

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York

SPECIAL ABI PODCAST EXAMINES SUPREME COURT'S DECISION IN U.S. V. HALL



The U.S. Supreme Court ruled (5-4) on May 14 in the case of U.S. v. Hall that farmers who sold farm assets during a bankruptcy reorganization under chapter 12 of the Bankruptcy Code were liable for the full amount of the capital gains tax that resulted from the sale. In this special podcast, ABI has assembled three experts involved in the case to discuss the Court's decision and potential ramifications of U.S. v. Hall.

• Susan M. Freeman of Lewis and Roca LLP (Phoenix, Ariz.) represented the petitioners before the Supreme Court and presented the oral arguments in the case.

• Joseph A. Peiffer of Day Rettig Peiffer, PC (Cedar Rapids, Iowa) is the counsel of record for the amicus brief filed by Profs. Neil Harl, Jack Williams and Robert Himschoot in support of the petitioners.

• Prof. Jack F. Williams of Georgia State University / Mesirow Financial Consulting, LLC (Atlanta) filed an amicus brief with Profs. Neil Harl and Robert Himschoot in support of the petitioners.

The moderator of the podcast is ABI Resident Scholar Prof. David Epstein.

Click here to listen to the podcast.

CFTC TO RELEASE CLEARING RULE FOR SWAPS



U.S. lawmakers and regulators are seizing on the more than $2 billion in losses disclosed by JPMorgan Chase & Co. to bolster their positions in the nearly two-year-old debate over Wall Street’s rules, Bloomberg News reported today. The Senate Banking Committee was the flash point for the debate today, as Democrats and Gary Gensler, the chairman of the Commodity Futures Trading Commission, used the losses to argue for the 2010 Dodd- Frank Act rules, including a ban on proprietary trading by banks. The types of derivative swaps said to have led to a loss of at least $2 billion at JPMorgan Chase & Co. may be the first for which the CFTC would require guarantees by clearinghouses under the Dodd-Frank Act, Gensler testified. The commission, the main U.S. derivatives regulator, will seek comments this summer on the requirement for swaps of interest rates and credit-default indexes, according to Gensler. Read more.

Click here to read the prepared witness testimony.

COMMENTARY: REINSTATING GLASS-STEAGALL IS NOT A CURE FOR PREVENTING THE NEXT FINANCIAL CRISIS



Since JPMorgan Chase announced its surprise $2 billion and growing trading loss there have been renewed calls from economists, pundits and politicians to reinstate the Glass-Steagall Act, a Depression-era law that prevented commercial banks from participating in investment banking activities, according to a commentary today on the New York Times' DealBook Blog. Elizabeth Warren, the Democratic candidate for Senate in Massachusetts, sent an e-mail to thousands of her constituents, pressing to bring back the law, which she said, "stopped investment banks from gambling away people's life savings for decades — until Wall Street successfully lobbied to have it repealed in 1999." However, Glass-Steagall would not have prevented the last financial crisis, according to the commentary, and it probably would not have prevented JPMorgan's $2 billion-plus trading loss. Read the full commentary.

CONSUMERS MAY SEE NEW LIMITS ON MANDATORY ARBITRATION



The Consumer Financial Protection Bureau and the Securities and Exchange Commission are studying whether to take steps to limit or ban mandatory arbitration clauses from financial contracts with consumers, Bloomberg News reported yesterday. Alan Kaplinsky, head of the consumer finance practice at Ballard Spahr LLC, said that a regulatory rollback of mandatory arbitration has the potential to impose new litigation risks and costs on providers of checking accounts, credit cards and payday loans. They can also be found in contracts for employment, mobile phones and rental equipment. The regulator push-back has been evident in at least two recent actions. In February, the SEC forced The Carlyle Group LP to remove from its proposed public offering documents a clause that would have required its new shareholders to use arbitration. The consumer bureau, established by the same Dodd-Frank Act that gave it the power to regulate the clauses, has started a study to determine whether arbitration does consumers more harm than good. Read more.

REPORT: RECORD NUMBER OF CALIFORNIA SCHOOL DISTRICTS FACE BANKRUPTCY



Pummeled by relentless budget cuts, a record number of California school districts are facing bankruptcy, state Superintendent of Public Instruction Tom Torlakson announced yesterday, the Los Angeles Times reported. The Inglewood Unified School District and 11 others -– most in northern California -- are currently not able to pay their bills this school year or next, according to a biannual report on the financial health of the state's 1,037 school systems compiled by the state Department of Education. An additional 176 school districts may not be able to meet their financial obligations. All told, the financially troubled districts serve 2.6 million children. Education officials blame much of the crisis on a double blow by the state: budget cuts amounting to 20 percent over the last three years and the deferment of millions of dollars owed to schools but not dispersed until months later. Read more.

ANALYSIS: GRADUATE SCHOOL DEBT ACCOUNTS FOR NEARLY A THIRD OF STUDENT LOAN DEBT



Lost in the debate over the nation's student loan debt topping the $1 trillion mark is that graduate students account for a third of that sum -- and that their indebtedness is likely about to grow much worse, according to a SmartMoney.com analysis last week. Beginning in July, subsidized Stafford loans will no longer be available to graduate students, a shift that experts say will force student borrowers into more expensive loans to cover tuition, according to the analysis. Mark Kantrowitz, publisher of FinAid.org, which tracks student debt, estimates their debt load at graduation will increase by about 6 percent on average. Read the full analysis.

LAST CHANCE TO REGISTER FOR TOMORROW’S LABOR & EMPLOYMENT COMMITTEE "EVOLVING LABOR ISSUES IN CHAPTER 11" WEBINAR



Don’t miss the ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar scheduled for tomorrow from 2-3:30 p.m. ET. A panel of experts will be discussing timely developments in several large complex bankruptcy cases, including Hostess, Kodak, Nortel and American Airlines. The expert panel includes Babette A. Ceccotti of Cohen, Weiss & Simon LLP (New York), former chief counsel of the PBGC Jeffrey B. Cohen of Bailey & Ehrenberg PLLC (Washington, D.C.), Marc Kieselstein of Kirkland & Ellis LLP (New York) and Ron E. Meisler of Skadden, Arps, Slate, Meagher & Flom LLP.
Sam Alberts of SNR Denton (Washington, D.C.) will be the moderator for the program. Issues to be discussed include:

• Hostess' efforts to eliminate their multi-employer pension plan contribution liability through motions to reject their labor agreements under Section 1113.

• Kodak's attempt to terminate retiree health benefits.

• The effect of the automatic stay upon efforts by the U.K. Pension Protection Fund and the U.K. Nortel Pension Plan to enforce its powers under the U.K. Pensions Act.

• American Airlines' efforts to reduce legacy costs in bankruptcy.

Click here to register.

ABI IN-DEPTH

JUNE 5 WEBINAR WILL EXAMINE HOW TO HANDLE AN ADMINISTRATIVELY INSOLVENT ESTATE



Panelists from one of the top-rated sessions at the 2011 Winter Leadership Conference are going to reconvene for an ABI and West LegalEd Center webinar on June 5 titled, "Handling the Administratively Insolvent Estate- What to Do When Your Chapter 11 Goes South." CLE credit will be available for the webinar, which will last from 11 a.m. - 12:30 p.m. ET.

Speakers include:

• Robert J. Feinstein of Pachulski Stang Ziehl & Jones LLP (New York)

• Cathy Rae Hershcopf of Cooley LLP (New York)

• Robert L. LeHane of Kelley Drye & Warren LLP (New York)

Robert J. Keach of Bernstein Shur (Portland, Maine) will be the moderator for the webinar.

The webinar costs $115, and purchase provides online access for 180 days. If you are purchasing a live webcast, you will receive complimentary access to the on-demand version for 180 days once it becomes available. Click here for more information.

LATEST CASE SUMMARY ON VOLO: WRIGHT V. OWENS CORNING (3D CIR.)



Summarized by Kevin Larner of Riker Danzig Scherer Hyland & Perretti LLP

The Third Circuit Court of Appeals confirmed its test for defining a claim in JELD-WEN, Inc. v. Van Brunt (In re Grossman’s Inc.), 607 F.3d 114 (3d Cir. 2010), but held that those claims that arise under Grossman’s, related to bankruptcy cases with plans confirmed prior to the Grossman’s decision, are not subject to discharge because a retroactive application of Grossman’s violates procedural due process. The court also extended Grossman’s test for determining whether there is a claim to include post-petition, pre-confirmation injuries, but also held that this portion of its holding would not be applied retroactively.

More than 500 appellate opinions are summarized on Volo typically within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SECOND CIRCUIT UPHOLDS DISMISSAL OF CLAIMS AGAINST AUDITOR IN MADOFF PONZI SCHEME



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post looks at a recent decision by the Second Circuit to uphold dismissal of claims against the auditor in the Madoff ponzi scheme.

Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.

ABI Quick Poll

The Constitutional scheme of uniform federal bankruptcy is a bad idea; the states should have more leeway to adopt their own different approaches to financial distress, at least for their own individual citizens and companies with purely intra-state operations. Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.

INSOL INTERNATIONAL



INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.

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May

- ABI Labor and Employment Committee's "Evolving Labor Issues in Chapter 11" Webinar

     May 23, 2012



June

- Memphis Consumer Bankruptcy Conference

     June 1, 2012 | Memphis, Tenn.

- ABI'S "Handling the Administratively Insolvent Estate- What to Do When Your Chapter 11 Goes South" Webinar

     June 5, 2012

- Central States Bankruptcy Workshop

     June 7-10, 2012 | Traverse City, Mich.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 12-15, 2012 | Bretton Woods, N.H.

- Southeast Bankruptcy Workshop

     July 25-28, 2012 | Amelia Island, Fla.

August

- Mid-Atlantic Bankruptcy Workshop

     August 2-4, 2012 | Cambridge, Md.

September

- Southwest Bankruptcy Conference

     September 13-15, 2012 | Las Vegas, Nev.

- Complex Financial Restructuring Program

     September 13-14, 2012 | Las Vegas, Nev.