Business Reorganization

REPORT: BANKRUPTCY BIDDER PROTECTIONS CLIMBED IN 2012



A report from Morgan Joseph TriArtisan LLC, an investment bank that focuses on the middle market, found that bankruptcy bidder protections hit their highest level in recent years, the Wall Street Journal Bankruptcy Beat blog reported today. The report found that the average amount of bidder protections a company offered its lead bidder last year was 4.4 percent of the purchase price, while average bidder protections between 2008 and 2011 hovered between 3.5 and 3.7 percent. (They were a low 2.6 percent in 2007, before the economic downturn hit.) Bidder protections include the break-up fee that a company pays its stalking-horse bidder, as well as expense reimbursements, which cover the legal and due-diligence fees a stalking horse incurs as it puts its bid together. The average break-up fee last year was 3.7 percent of the purchase price compared to 2.5-2.9 percent in prior years, while the average expense reimbursement was 2.3 percent versus a past range of 0.4-1.6 percent. Read the full report.

COMMENTARY: A BETTER WAY TO END "TOO BIG TO FAIL"



Big banks and their defenders insist that the changes proposed in the Terminating Bailouts for Taxpayer Fairness Act—which would require them to boost the value of their stock and other equity to 15 percent of the value of their total assets—are unnecessary and would have dangerous consequences for the U.S. economy and our financial competitiveness, according to a commentary by Prof. David Skeel in today's Wall Street Journal. Both of these claims are wrong, according to Skeel, but in making them, the banks have accidentally pointed the way to a far more promising strategy for finally ending "too big to fail." Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) introduced the Terminating Bailouts for Taxpayer Fairness Act on April 24, which would require U.S. financial institutions with more than $500 billion in assets to substantially increase their "equity capital." The banks further insist that Brown-Vitter would force them to cut back their lending to businesses just as the U.S. economic recovery is getting underway, and to shed assets to create the required 15 percent capital buffer. But as Bank of England's Robert Jenkins has argued, it is a widely held myth that banks reduce lending simply because capital obligations are increased. Still, according to Skeel, the giant banks' concerns do suggest a friendly amendment to Brown-Vitter: Rather than force them to fit the same 15 percent capital mode, why not let them choose either to comply with Brown-Vitter's capital requirements, or to downsize to a specific maximize size within five years of the enactment of the legislation? Read the full commentary. (Subscription required.)

LEGISLATION AIMS TO ENSURE MEDICAL-DEBT ACCURACY IN CREDIT REPORTS



Rep. Gary Miller (R-Calif.) on May 24 introduced legislation to give consumers more time to ensure that only accurate medical debt is reported to credit bureaus, according to a press release from Miller's office. H.R. 2211, the "Accuracy in Reporting Medical Debt Act," aims to ensure that consumers have ample time to resolve medical billing questions and potential errors before medical debt can be reported to the credit bureaus. The Accuracy in Reporting Medical Debt Act would delay the ability of a debt collector to report medical debt to a credit bureau if the consumer notifies the debt collector that:

• the consumer is continuing to work with an insurance company;

• the consumer did not know that the debt existed; or

• the consumer has applied for financial assistance.

To read the full copy of H.R. 2211, please click here.

COMMENTARY: SHADES OF 2007 BORROWING



American investors have taken out more margin loans than ever before, indicating that speculative investing has grown among retail investors, reaching levels that in the past indicated that the market was getting to unsustainable levels and might be in for a fall, according to a commentary in Saturday's New York Times. The amount owed on loans secured by investments rose to $384 billion at the end of April, according to data compiled by the Financial Industry Regulatory Authority (FINRA). It was the first time the total had surpassed the 2007 peak of $381 billion, a peak that was followed by the Great Recession and credit crisis. The latest total of borrowing amounts to about 2.4 percent of GDP, a level that in the past was a danger signal. Rising margin debt was once seen as a primary indicator of financial speculation, and the Federal Reserve controlled the amount that could be borrowed by each investor as a way to dampen excess enthusiasm when markets grew frothy. But the last time the Fed adjusted the margin rules was in 1974, when it reduced the down payment required for stocks to 50 percent of the purchase price from 65 percent. That came about during a severe bear market. Read more.

ABI WEBSITE (ABI.ORG) WILL BE DOWN THIS WEEKEND FOR SCHEDULED MAINTENANCE



From 10 p.m. ET on Friday, June 7, through Sunday evening, June 9, the ABI homepage (abi.org) will be down for scheduled maintenance. During this period, members will not be able to access certain features, including registering for conferences, printing and viewing CLE certificates, and purchasing publications. Other ABI sites, like Search.abi.org, Volo.abi.org, Journal.abi.org, law.abi.org, blogs.abi.org and news.abi.org, will be operational during this time, but users may experience limited functionality. ABI intends to limit this downtime as much as possible. If you have any questions, please email support@abiworld.org.

NEW ABI "BANKRUPTCY IN DEPTH" ON-DEMAND CLE PROGRAM LOOKS AT PRINCIPLES OF PROPERTY OF THE ESTATE: DEMYSTIFYING EQUITABLE INTERESTS



In this 90-minute seminar, Profs. Andrew Kull of Boston University School of Law and Scott Pryor of Regent University School of Law provide an in-depth analysis of a legal principle that has become, in their words, "a long-lost area of the law": § 541 of the Bankruptcy Code. Seeking to demystify what is meant by "property of the estate" and, in particular, the distinction between legal or equitable interests of the debtor in property, Kull and Pryor describe the legal entanglements that ensue when legal title belongs to one person but the equitable title belongs to someone else. The cost of the seminar, which includes written materials and qualifies for 1.5 hours of CLE, is $95. To order or to learn more, click here.

ASSOCIATES: ABI'S NUTS & BOLTS ONLINE PROGRAMS HELP YOU HONE YOUR SKILLS WHILE SAVING ON CLE!



Associates looking to sharpen their bankruptcy knowledge should take advantage of ABI's special offer of combining general, business or consumer Nuts & Bolts online programs. Each program features an outstanding faculty of judges and practitioners explaining the fundamentals of bankruptcy, offering procedures and strategies tailored for both consumer and business attorneys. Click here to get the CLE you need at a great low price!

ABI GOLF TOUR UNDERWAY; NEXT STOP IS CENTRAL STATES BANKRUPTCY WORKSHOP IN JUNE



Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI Golf Tour's first stop at Lake Presidential Golf Club. Next up for the Tour is the famed Bear course at the Grand Traverse Resort at the Central States Bankruptcy Workshop on June 14. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. 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! There's no charge to register or participate in the Tour, and women are most welcome.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: FADEL V. DCB UNITED LLC (IN RE FADEL; 9TH CIR.)



Summarized by Mark Hudson of Schian Walker PLC

The Ninth Circuit BAP affirmed the bankruptcy court's granting of relief from the automatic stay to permit a purchaser at a foreclosure sale to pursue a forcible detainer action against the debtor in state court and denying motion for reconsideration.

There are more than 900 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 EXAMINATION OF THE SUPREME COURT'S RULING IN BULLOCK V. BANKCHAMPAIGN

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post provides further examination of the Supreme Court's ruling on May 13 in the case of Bullock v. BankChampaign, N.A.

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 implement constructive trusts in any case where applicable state law would recognize them.

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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Join our networks to expand yours.

2013

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

     June 13-16, 2013 | Grand Traverse, Mich.

- INSOL’s Latin American Regional Seminar

     June 13, 2013 | São Paulo, Brazil

- Charity Golf Tournament

     June 14, 2013 | City of Industry, Calif.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- Southeast Bankruptcy Workshop

     July 18-21, 2013 | Amelia Island, Fla.

August

- Mid-Atlantic Bankruptcy Workshop

    August 8-10, 2013 | Hershey, Pa.

- Southwest Bankruptcy Conference

    August 22-24, 2013 | Incline Village, Nev.

September

- ABI Endowment Golf & Tennis Outing

    Sept. 10, 2013 | Maplewood, N.J.

- ABI Endowment Baseball Game

    Sept. 12, 2013 | Baltimore, Md.

- Bankruptcy 2013: Views from the Bench

    Sept. 27, 2013 | Washington, D.C.

October

- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum

    Oct. 4, 2013 | Kansas City, Mo.

- ABI Endowment Football Game

    Oct. 6, 2013 | Miami, Fla.

November

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

December

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York

ABI'S CHAPTER 11 COMMISSION EYES UPDATES TO BANKRUPTCY CODE



With the Bankruptcy Code now 35 years old, 2013 looks to be a key year in developing a replacement as ABI's Chapter 11 Commission continues its study of chapter 11 with a "top to bottom look" at the Code, The Deal reported yesterday. No specific changes have been recommended to date, and the Commission will not be close to specifics until it gets reports from all 13 of its advisory committees, according to Commission Co-Chair Al Togut of Togut, Segal & Segal LLP (New York). The commission, which is just looking at corporate chapter 11 and the parts of the code that affect business bankruptcies, expects to complete its report in the spring of 2014, said fellow Co-Chair Bob Keach of Bernstein Shur (Portland, Maine), adding that by the end of 2013 the commission should have a good idea of what the report will look like. The report will have two components: ideas for change where there is a consensus and proposals that lack a consensus. Since the ABI does not lobby Congress for legislation, an organization or a combination of organizations will likely work to convert the report into legislation, said Keach. "The idea is to develop a statute for the next 40 years that will get us through as well as this one did," Keach says. Read more.

PENSION FUNDING GAP WIDENS FOR BIG CITIES



A study released on Tuesday by the the Pew Center on the States found that major U.S. cities emerged from the financial crisis with increasingly underfunded pension and retiree health care plans, the Wall Street Journal reported today. Cities employing nearly half of U.S. municipal workers saw their pension and retiree health care funding levels fall from 79 percent in fiscal year 2007 to 74 percent in fiscal year 2009, according to the latest available data, the Pew report stated. The growing funding gulf, which the study estimated at more than $217 billion for the 61 cities in the study, raises worries about local finances at a time when states are also struggling to recover from the recession. More than half, or some $118 billion, of the projected pension shortfall stems from unfunded retiree health care costs, according to the Pew report. Read more. (Subscription required.)

ABI will be holding a media teleconference on Tuesday, Jan. 22, at 11 a.m. ET with experts examining municipal distress in 2013. There are limited spots available to ABI members that would like to join the call next week. Contact John Hartgen, ABI's Public Affairs Manager, at jhartgen@abiworld.org if you would like to participate in the teleconference.

CFPB'S NEW MORTGAGE RULES AID HOMEOWNERS



U.S. banks will have to do more to help struggling mortgage borrowers keep their homes under final rules released today by the Consumer Financial Protection Bureau (CFPB), the Wall Street Journal reported today. Mortgage-loan servicers, which collect borrowers' loan payments, will have to evaluate troubled borrowers for all loan-assistance options permitted by mortgage investors such as Fannie Mae and Freddie Mac, as well as private investors, according to the CFPB rules that will take effect in a year. Currently, no national standard exists for how mortgage servicers must treat defaulting borrowers. The lending industry "must consider all options available from the mortgage owners or investors to help the borrower retain the home," said CFPB director Richard Cordray. The industry "can no longer steer borrowers to those options that are most financially favorable for the servicer." The agency's move follows numerous federal and state efforts to regulate the industry, which came under fire after reports in 2010 found that banks were foreclosing on borrowers without properly reviewing documents and other paperwork, a practice dubbed "robo-signing." In 2011, regulators found abuses of foreclosure processes at 14 lenders. Ten of those lenders agreed to an $8.5 billion settlement of regulators' allegations. Read more. (Subscription required.)

ANALYSIS: "ODD COUPLE" IN U.S. HOUSE TO TACKLE MORTGAGE FINANCE



The will of the new Congress to begin rebuilding the U.S. mortgage finance system rests largely in the hands of Reps. Jeb Hensarling (R-Texas) and Maxine Waters (D-Calif.), known to be partisan fighters from opposite ends of the ideological spectrum, Bloomberg News reported yesterday. Hensarling is the new chairman of the House Financial Services Committee, while Waters is the highest-ranking Democrat. "While we clearly have profound philosophical differences – some might call us Capitol Hill’s newest odd couple – we are exploring areas of common concern where we hopefully can work together," Hensarling said. In addition to grappling with proposals to tweak and amend the Dodd-Frank regulatory law, they will be seeking common ground on what may be the panel's biggest issue this year: The future of Fannie Mae and Freddie Mac. For Hensarling, the solution is to abolish the government-owned mortgage companies and completely privatize the mortgage market. Waters argues that some government involvement is needed to preserve the 30-year fixed home loan. It is likely that the two lawmakers eventually will support a plan that would shrink the role of Fannie Mae and Freddie Mac without threatening to choke off the flow of money into home loans. Read more.

FLORIDA DEFIES HOUSING REBOUND AS FORECLOSURES SOAR



More than six years after subprime lending and overbuilding led to the recent U.S. real estate slump, RealtyTrac Inc. reported that Florida had the biggest increase in home seizures last year, and the highest foreclosure rate, Bloomberg News reported today. One in every 32 Florida households received a notice of default, auction or repossession in 2012, more than double the average U.S. rate of one in every 72, according to RealtyTrac Inc.'s report. Home repossessions increased by 16,276 during the year to 84,456, the biggest gain nationwide. Adding to the state’s woes is a backlog of foreclosures caused by a required court review of each case. Judicial supervision of repossessions is slowing Florida’s rebound, in contrast to California and Arizona, so-called nonjudicial states, where lenders send notices to delinquent borrowers and record defaults at the county level without court intervention, said Lawrence Yun, chief economist of the National Association of Realtors. It took 853 days on average in Florida to complete a foreclosure in the fourth quarter, the third-longest behind New York and New Jersey, RealtyTrac said in today’s report. The U.S. average rose to 414 days from 348 days a year earlier, the most since the data firm began tracking the metric in 2007. Texas had the shortest period at 113 days. Almost 20 percent of outstanding Florida loans were more than 30 days delinquent or in foreclosure in November, the largest share of non-current mortgages in the nation, according to data provider Lender Processing Services. Read more.

ANALYSIS: REWRITING U.S. TAX LAW HAS CONSENSUS WHILE FIX PROVES ELUSIVE



Maintaining a bipartisan consensus in Congress to rewrite the U.S. tax code will be difficult as there is little agreement on what a tax overhaul means and what it is supposed to achieve, according to a Bloomberg News analysis yesterday. Republicans, who control the U.S. House, want lower tax rates and fewer breaks in a simpler system that raises no additional revenue. The Obama administration and many Democrats endorse some of those goals – particularly corporate rate reduction – while viewing a tax rewrite as a way to guarantee more revenue from top earners. That split will challenge lawmakers as they decide whether to rewrite the code as part of budget talks or work on a major tax bill without a fiscal agreement. Compromise remains elusive, though the code is more convoluted -- and therefore, ripe for change -- following passage of a law Jan. 1 that raised marginal rates and reinstated limits on personal exemptions and deductions. Read more.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: MF GLOBAL CREDITORS UNDETERRED BY LOW VALUE



The low valuation creditors of MF Global Holding Ltd. put on their liquidating chapter 11 plan is not deterring the bond market where debt is being sold for roughly twice the predicted recovery for unsecured creditors of the liquidating commodity broker's holding company. Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle explore this and other current cases in their latest video. Click here to view.

TAKE AN IN-DEPTH LOOK AT CREDITORS' COMMITTEES AND THE ROLE OF THE INDENTURE TRUSTEES AT ABI'S 31ST ANNUAL SPRING MEETING



The 2013 Annual Spring Meeting, to be held April 18-21, 2013, at the Gaylord National Resort and Convention Center in National Harbor, Md., features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:



• 17th Annual Great Debates

• Mediation: An Irrational Approach to a Rational Result

• Current Issues for Financial Advisors in Bankruptcy Cases

• The Individual Conundrum: Chapter 7, 11 or 13?

• The Power to Veto Bankruptcy Sales

• Real Estate Issues in Health Care Restructurings

• Law Firm Bankruptcies

• How to Be a Successful Expert

• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors

• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

• And much more!

The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!

Register today!

ABI IN-DEPTH

ABI LIVE WEBINAR: REVISITING RADLAX AND HALL – NEW LEGAL AND PRACTICAL IMPACT OF THE DECISIONS



See why this was the top-rated panel at the ABI Winter Leadership Conference last month! Join the expert panel on Feb. 19 from 12:00-1:15pm EST as the summarize and discuss the legal impact and practical implications of the Supreme Court’s 2012 decisions in Radlax and Hall. Participants include:

• Susan M. Freeman of Lewis and Roca LLP (Phoenix)

• Adam A. Lewis of Morrison & Foerster LLP (San Francisco)

• Prof. Charles J. Tabb of the University of Illinois College of Law (Champaign, Ill.)

• Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

LATEST CASE SUMMARY ON VOLO: TIMCO LLC V. T AND M SALES AGENCY INC. (IN RE TIMCO LLC; 6TH CIR.)



Summarized by James E. Bailey III of Butler Snow O'Mara Stevens & Cannada PLLC

The Sixth Circuit ruled that the appeal of the bankruptcy court's decision to remand a case removed by state court action to confirm an arbitration award that was affirmed by a district court was not reviewable by the court of appeals under 28 U.S.C. § 1334(d). The appeal of the order granting relief from the automatic stay to allow the state court action to proceed was moot where the debtor failed to obtain stay pending appeal and the state court had entered a valid order confirming an arbitration award.

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: HIGH-INCOME EARNERS NOT BARRED FROM PASSING BANKRUPTCY'S MEANS TEST



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new post discusses the misconception that bankruptcy's means test bars high-income earners from qualifying for chapter 7 relief.

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'S INDUBITABLE EQUIVALENTS: TELL US A TUNE AND WE'LL SING YOU THAT SONG!



ABI's Indubitable Equivalents need your help: Tell us your favorite Rock and Roll tune - that elusive classic that takes you back, makes your feet tap, your head bang, and your horns come out! If we pick your song, you get widespread promotion by the band and you'll receive a free CD of IE’s greatest hits!

To enter, log onto www.abiband.com or “like” the Band’s Facebook page.

The fine print: No purchase necessary. You can enter as many times as you want. Multiple winners will be selected. Winners will be announced on the IE website and on Facebook. Entry deadline: January 31.

ABI Quick Poll

After Stern, bankruptcy courts do not have the constitutional authority to enter final judgments on fraudulent conveyance claims.

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.

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.

- ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions

     February 19, 2013

- 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.

ANALYSIS: DOCTORS BEING DRIVEN INTO BANKRUPTCY



As many doctors struggle to keep their practices financially sound, some are buckling under money woes and are being pushed into bankruptcy, CNNMoney.com reported yesterday. It is a trend that has accelerated in recent years, industry experts say, with potentially serious consequences for doctors and patients. Some physicians are still able to keep practicing after bankruptcy, but for others, it's a career-ending event. Chapter 11 bankruptcy filings by physician practices have spiked recently, noted Bobby Guy, co-chair of the American Bankruptcy Institute's Health Care Committee, who tracks bankruptcy trends tied to distressed businesses. The weak economy has taken a toll on doctors' revenue, as consumers cut back on office visits and lucrative elective procedures, said Guy. Doctors also blame shrinking insurance reimbursements, changing regulations, and the rising costs of malpractice insurance, drugs and other business necessities for making it harder to keep their practices afloat. Read more.

For more on medical insolvencies, be sure to pick up a copy of ABI’s Health Care Insolvency Manual, Third Edition, of which Mr. Guy is a co-author. Click here for more information.

NEW FEE ON BANKRUPTCY TRADES WILL BOOST COURTS' REVENUE



A new fee tied to trades of bankruptcy claims will bring in hundreds of thousands of dollars in revenue for the nation's bankruptcy courts when it takes effect next month, Dow Jones Daily Bankruptcy Review reported yesterday. Starting May 1, those who trade claims against companies under bankruptcy court protection will have to pay a $25 fee for each transaction they file with the court, according to the Administrative Office of the U.S. Courts. Last year saw 18,632 trades of claims worth more than $41 billion in 500 bankruptcy cases, according to SecondMarket Inc. If the fees had been in effect, bankruptcy courts would have earned $465,800 from those trades. For more information from the AOUSC on the fees, effective May 1, please click here.

REGULATORS CONCERNED ABOUT MUNICIPAL-BOND DEALS



U.S. regulators are probing whether securities firms are circumventing the rules that were implemented in the wake of the financial crisis to protect municipalities against potentially biased investment advice, the Wall Street Journal reported today. At issue is whether banks are attempting to skirt post-crisis rules, including those restricting firms that provide financial advice to municipalities from underwriting certain municipal-bond transactions. Lawmakers and regulators implemented the changes to avoid situations similar to those leading up to the crisis in which some municipalities were steered into risky and complex deals that municipal officials did not fully understand. The 2010 Dodd-Frank law stipulates that banks hired as financial advisers act as fiduciaries, or in their clients' best interests. Regulators have also restricted banks from underwriting municipal-bond transactions if they were initially hired to advise on the deals. Yet the Securities and Exchange Commission is concerned that banks may be mischaracterizing their role in order to preserve their ability to underwrite bonds. The SEC is investigating several municipal contracts entered into by banks, including such banks as Goldman Sachs Group Inc., Piper Jaffray Cos., Robert W. Baird & Co. and Stifel Financial Corp. Read more. (Subscription required.)

INVESTORS PUT UP MILLIONS OF DOLLARS TO FUND LAWSUITS



A new generation of investors is plunging into "litigation finance" opportunities, putting up millions of dollars to fund lawsuits in hopes of collecting when the verdicts come down, the Wall Street Journal reported yesterday. Established financiers are expanding into new areas, including loans to law firms, and are finding clients among the biggest American companies. Law firms themselves are starting to jump on the bandwagon, seeking funding arrangements for clients who need help going after opponents with deeper pockets or who simply want to keep litigation costs off their balance sheets. Critics complain that the trend will enable frivolous lawsuits, and they have argued—including at a congressional hearing last month—that the government should step in to regulate funders of litigation. But as corporate legal budgets shrink, litigation-finance options are proliferating. One of the latest entrants is Gerchen Keller Capital LLC, a Chicago-based team that includes former lawyers from Gibson Dunn & Crutcher LLP and Bartlit Beck Herman Palenchar & Scott LLP. The group has raised more than $100 million and says there is plenty of room for newcomers given the size of the U.S. litigation market, which they put at more than $200 billion, measuring the money spent by plaintiffs and defendants on litigation. Read more. (Subscription required.)

DEMAND RETURNS FOR COMMERCIAL MORTGAGE-BACKED SECURITIES



Growing demand for subordinated commercial-mortgage debt is the latest example of investors seeking new opportunities for yield, the Wall Street Journal reported today. After years of near-zero benchmark interest rates, under which most fixed-income investments offer little return, some investors are becoming more willing to take risks. Despite the risks of subordinated commercial-mortgage debt, Cerberus Capital Management and other hedge funds are being lured by annual returns that typically top 20 percent for the least-safe portions of commercial mortgage-backed securities (CMBS). Cerberus is the latest large hedge fund to expand into this emerging hot market, which is raising concerns that lenders may make loans on properties with weak credit profiles to produce volume—a phenomenon that spun out of control in the mortgage markets during the years leading up to the financial crisis. The firm aims to launch the "Cerberus CMBS Opportunities Fund," which plans to both buy up and short commercial mortgage debt. Read more. (Subscription required.)

SENATE FINANCE COMMITTEE CHAIR MOVES TO RESHAPE TAX CODE



Last month, Senate Finance Committee Chairman Max Baucus (D-Mont.) summoned members of the committee to a closed-door meeting to discuss the first full-scale rewrite of the 5,600-page U.S. tax code in more than 25 years, the Washington Post reported yesterday. Baucus agrees with Sen. Orrin G. Hatch (R-Utah), the ranking Republican on the panel, that the committee should aim to produce a tax-reform plan by August, when Congress will once again need a deal to justify raising the legal limit on the $16.8 trillion in federal debt. Privately, senior Democrats dismiss Baucus's activities, saying that tax reform will not happen unless President Obama strikes a broad deal with Republicans that includes $600 billion more in taxes over the next decade. But Republicans are unlikely to agree to higher revenue without a tax code rewrite; aides said House Ways and Means Committee Chairman Dave Camp (R-Mich.) is pressing GOP leaders to demand tax reform in exchange for supporting a higher federal debt limit. Read more.

TOMORROW! DON’T MISS ABI’S LIVE WEBINAR, "STUDENT LOANS: BANKRUPTCY MAY NOT HAVE THE ANSWERS – BUT DOES CONGRESS?"



ABI's Consumer Bankruptcy Committee tomorrow presents the "Student Loans: Bankruptcy May Not Have the Answers – But Does Congress?" webinar from noon-1:15 ET. A panel of experts will provide an overview of the student loan industry, examine the numbers behind and causes of student loan debt, and discuss federal loan programs as well as federal consolidation and forgiveness programs. Faculty on the webinar includes:

• Prof. Daniel A. Austin of Northeastern University School of Law (Boston)

• Edward "Ted" M. King of Frost Brown Todd LLC (Louisville, Ky.)

• Craig Zimmerman of the Law Offices of Craig Zimmerman (Santa Ana, Calif.)

CLE credit will be available for the webinar. Register now for the special ABI member rate of $75!

HOTEL BLOCK FOR ABI'S ANNUAL SPRING MEETING ALMOST SOLD OUT! REGISTER TODAY!



The hotel block at the Gaylord National Resort and Convention Center in National Harbor, Md., is almost sold out for ABI’s 2013 Annual Spring Meeting! Held April 18-21, 2013, ASM features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

• 17th Annual Great Debates

• Mediation: An Irrational Approach to a Rational Result

• Creditors’ Committees and the Role of Indenture Trustees and Related Issues

• Current Issues for Financial Advisors in Bankruptcy Cases

• The Individual Conundrum: Chapter 7, 11 or 13?

• The Power to Veto Bankruptcy Sales

• Real Estate Issues in Health Care Restructurings

• How to Be a Successful Expert

• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors

• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

• And much more!

The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!

Make sure to register today!

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: COMMODITY FUTURES TRADING COMMISSION V. WALSH (2D CIR.)



Summarized by Carrie Hardman of Winston & Strawn LLP

The Second Circuit held that (1) securities fraud victims may be considered "similarly situated" for purposes of pro rata distributions when they are similarly situated in relationship to the fraud, losses, fraudsters and nature of their investments in a uniform Ponzi scheme; (2) absent further disparate treatment of the victim-investors, for purposes of distribution, there is no difference between victims that invested in a regulated entity versus a related non-regulated entity, as the protections afforded by regulation were designed not for the victim investors' benefit, but for the benefit of others; and (3) Till v. SCS Credit Corp., 541 U.S. 465, 477 (2004), does not apply in the securities fraud context, and no statutory provision exists to require the receiver to adjust distributions on account of inflation.

There are more than 800 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: EXPLORING WHEN CONSUMERS SHOULD FILE FOR CHAPTER 11 VS. CHAPTER 13

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post explores situations in which a consumer should consider filing for chapter 11 protection rather than chapter 13.

Want to explore further perspectives on consumer filing choices? Be sure to register for ABI's Annual Spring Meeting, which will feature a session on the Consumer Bankruptcy Track titled "The Individual Conundrum—Chapter 7, 11 or 13?" For more information or to register, be sure to click here.

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.

TEE OFF ON THE NEW ABI GOLF TOUR!



Starting with the Annual Spring Meeting, ABI will offer conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour is designed to enhance the golfing experience for serious golfers, while still offering a fun networking opportunity for players of any ability. As opposed to the format used at ABI’s regular conference events, Tour participants will "play their own ball." They will be grouped on the golf course separately from other conference golf participants and will typically play ahead of the other participants, expediting Tour play. Tour participants will be randomly grouped in foursomes, unless otherwise requested of the Commissioner in advance of each tournament. Prizes will be awarded for each individual Tour event, which are sponsored by Great American Group. The grand prize is the "Great American Cup," also sponsored by Great American Group, which will be awarded to the top player at the end of the Tour season. Registration is free. Click here for more information and a list of 2013 ABI Golf Tour event venues.

ABI Quick Poll

The scope of protection of "financial contracts" in bankruptcy should be rolled back to what it was before BAPCPA expanded it in 2005.

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.

2013

April

- ABI Live Webinar: "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?"

     April 10, 2013

- "Nuts and Bolts" Program at ASM

     April 18, 2013 | National Harbor, Md.

- Annual Spring Meeting

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

May

- "Nuts and Bolts" Program at NYCBC

     May 15, 2013 | New York, N.Y.

- ABI Endowment Cocktail Reception

     May 15, 2013 | New York, N.Y.

- New York City Bankruptcy Conference

     May 16, 2013 | New York, N.Y.

- Litigation Skills Symposium

     May 21-24, 2013 | Dallas, Texas

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

     June 13-16, 2013 | Grand Traverse, Mich.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- Southeast Bankruptcy Workshop

     July 18-21, 2013 | Amelia Island, Fla.

August

- Mid-Atlantic Bankruptcy Workshop

    August 8-10, 2013 | Hershey, Pa.

REPORT: SHARP DROP IN U.S. HOMES LOST TO FORECLOSURE IN FEBRUARY



Though the nation's foreclosure woes persist, new data from RealtyTrac Inc. show they are easing amid a resurgent housing market, rising home prices and efforts by some states to buy homeowners more time to avoid losing their homes, the Associated Press reported today. The number of U.S. homes repossessed by lenders last month fell 11 percent from January and declined 29 percent from February last year, tumbling to the lowest level since September 2007, RealtyTrac said today. Some states continued to see sharp increases in homes lost to foreclosure last month, including Washington, Wisconsin and Iowa. But home repossessions declined both on an annual and monthly basis in a majority of states, including past foreclosure hotbeds such as California, Georgia and Arizona. All told, 45,038 U.S. homes completed the foreclosure process in February, less than half of the 102,000 homes lost to foreclosure in March 2010, when home repossessions peaked, according to the firm's records, which go back to January 2005. Read more.

COMMENTARY: FANNIE, FREDDIE AND THE GOVERNMENT'S HOUSE OF CARDS



The nascent housing price recovery is restoring health to Fannie Mae and Freddie Mac, the two government-sponsored enterprises that contributed so much to the crash of 2008, according to a commentary in today's Wall Street Journal. Both had earnings in 2012 and thus will not need money from the U.S. Treasury to cover operating losses, which is in contrast to the preceding three years when they cost the taxpayers over $180 billion. When Fannie and Freddie were losing money, Congress had a strong incentive to privatize or liquidate them, according to the commentary. The Obama administration proposed three options, the third of which was to restore them to the public-private status that fueled their rapid expansion in the late 1990s and early 2000s—and contributed to their downfall. Now that these GSEs promise to become cash cows able to palliate the government's budgetary distress, the government's talk about "resolving" them is more subdued, according to the commentary. The latest monthly Federal Reserve survey reported that "home prices rose amid falling inventories across much of the country." The GSEs' business in mortgage-backed securities is thriving, with Fannie having issued $865.5 billion of these instruments in 2012. The disturbing thing about this rosy scenario is that the entire home mortgage industry—not only Fannie and Freddie—has been effectively nationalized, according to the commentary. Read more. (Subscription required.)

ANALYSIS: AFTER FINANCIAL CRISIS, PROSECUTORS NAVIGATE TRICKY WATERS



Despite the recent political finger-pointing, the fact remains that few executives have been held responsible for when their companies engaged in misconduct, the New York Times DealBook blog reported yesterday. Despite the fear of charging a large bank with a crime, the Justice Department has tried to show its mettle recently in cases involving the manipulation of the London interbank offered rate (Libor). Its solution to the problem has involved having foreign subsidiaries of global banks plead guilty to a charge, rather than the whole entity. At a Senate Banking Committee hearing, Treasury Undersecretary David S. Cohen acknowledged that regulators had not aggressively pursued the individuals "who are responsible for the conduct that has resulted in fines and penalties against the institution itself." Although a few lower-level traders have been charged, the settlements involving large banks over Libor manipulation have not involved any real costs to senior executives, and HSBC’s money-laundering case involved neither a corporate guilty plea nor any direct action against the individuals responsible for long-running practices. Read more.

JOBLESS CLAIMS AT FIVE-YEAR LOW



A measure of jobless claims widely followed by economists fell to a five-year low, the latest sign that the labor market is slowly improving, the Wall Street Journal reported today. The four-week moving average of jobless claims, which smooths out weekly volatility in new unemployment claims, sank to 346,750, the lowest level since March 2008, the Labor Department said today. Meanwhile, the weekly number of U.S. workers filing new applications for benefits fell more than economists forecast, declining by 10,000 to a seasonally adjusted 332,000 for the week ended March 9. The Labor Department reported last week that employers added 236,000 jobs in February while the unemployment rate moved down to a four-year low of 7.7 percent. Read more. (Subscription required.)

CONSUMER SPENDING INCREASED IN FEBRUARY



The Commerce Department reported yesterday that retail sales rose 1.1 percent in February from the prior month, seasonally adjusted, thanks in large part to robust gains for cars and building materials and at Internet stores, the Los Angeles Times reported today. Consumers did feel the pinch from higher fuel prices; sales at gasoline stations jumped 5 percent last month from January. After excluding consumer spending for gas and cars, so-called core retail sales increased 0.4 percent in February, and this measure was revised up to 0.3 percent for January from the previously estimated 0.1 percent. Car and home sales are benefiting from pent-up demand as well as low interest rates, and that is supporting business at other retailers. Sales at building material and garden supply stores rose 1.1 percent in February from the prior month. Read more.

For more on consumer spending, be sure to visit yesterday’s post on ABI’s Chart of the Day.

IPHONE AND IPAD USERS: THE ABI JOURNAL APP IS AVAILABLE NOW!



The wait is over! With the new ABI Journal iPad app, sponsored by KCC, each new issue will be sent automatically to your device, ready to read at your convenience. Download the app for free from the Apple iTunes store (link below) to your iPad and/or iPhone. Once it's installed, open the app and you will be prompted to log in (see below). (You only have to provide this information once, then the app will recognize you each time you open it.)

Each available issue will show up automatically in the onscreen library. Simply download the issue you wish to read and access it anytime, even when you're not connected to the Internet. With the app, you can:



• take notes or leave comments

• share individual pages to social media

• bookmark favorite pages

• search for key phrases in all online issues

Unlock the power of this terrific new app* today. Download the app here.

USERNAME: Your email address (it must be the one that ABI has on file for you)

PASSWORD: abijournal

*The app is not available for Android devices at this time.

Go to journal.abi.org to access ABI Journal archives, submission guidelines and more!

LATEST BLOOMBERG "BILL ON BANKRUPTCY" VIDEO: HOW PURCHASERS OF AMR STOCK MADE A KILLING



Someone who bought stock in American Airlines last year already made a killing. Stock that could have been bought in November for less than 40 cents a share is now trading above $4, for reasons explained on the video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. Click here to watch.

DON'T MISS ABC'S FREE EVENT, "THE AUTO BANKRUPTCIES: CHECKING THE REARVIEW MIRROR," ON MARCH 22!



ABI members are encouraged to register for the American College of Bankruptcy's "The Auto Bankruptcies: Checking the Rearview Mirror" on March 22 at Boston College Law School in Newton, Mass. The afternoon event will feature key players looking back at the events that led to GM and Chrysler being placed into bankruptcy and the lessons that have been learned from the cases. Panelists include:

• Corinne Ball of Jones Day (New York), who served as lead bankruptcy counsel to Chrysler.

• Matthew A. Feldman of Willkie Farr and Gallagher LLP (New York), who served as chief legal advisor to the Obama administration's Task Force on the Auto Industry.

• Hon. Arthur J. Gonzalez, a Senior Fellow at New York University School of Law and formerly the Chief Bankruptcy Judge for the U.S. Bankruptcy Court for the Southern District of New York, who presided over the Chrysler chapter 11 proceedings.

• Harvey R. Miller of Weil, Gotshal & Manges LLP (New York), who served as lead bankruptcy counsel to GM.

The moderator will be Mark N. Berman of Nixon Peabody LLP (New York).

Registration for the afternoon event is free, so be sure to sign up today before it reaches capacity!

HOTEL BLOCK FOR ABI'S ANNUAL SPRING MEETING ALMOST SOLD OUT! REGISTER TODAY!



The hotel block at the Gaylord National Resort and Convention Center in National Harbor, Md., is almost sold out for ABI’s 2013 Annual Spring Meeting! Held April 18-21, 2013, ASM features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

• 17th Annual Great Debates

• Mediation: An Irrational Approach to a Rational Result

• Creditors’ Committees and the Role of Indenture Trustees and Related Issues

• Current Issues for Financial Advisors in Bankruptcy Cases

• The Individual Conundrum: Chapter 7, 11 or 13?

• The Power to Veto Bankruptcy Sales

• Real Estate Issues in Health Care Restructurings

• How to Be a Successful Expert

• The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors

• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

• And much more!

The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!

Make sure to register today!

ABI IN-DEPTH

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!



An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

LATEST CASE SUMMARY ON VOLO: VASSALLE V. MIDLAND FUNDING LLC (6TH CIR.)



Summarized by Jim Morgan of the Enterprise Law Group



The Sixth Circuit Court of Appeals reversed the decision of the U.S. District Court for the Northern District of Ohio approving a class action settlement and certifying a nationwide class. The Sixth Circuit found that the settlement was not fair or reasonable because it provided preferential treatment to the class representatives and only perfunctory relief to the unnamed class members. The Sixth Circuit further held that class certification was inappropriate because the class representatives were inadequate and that a class action was not a superior method of resolving the controversy.

There are more than 800 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 SHOULD BREAK UP VOLUNTARILY

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post said that megabanks may be able to fight off regulatory forces demanding their corporate downsizing, but a voluntary break up may be the only way to sway public opinion their way.

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

As a result of the RadLAX decision, the right to credit-bid will likely chill bidding at auctions, as potential purchasers may be dissuaded from participating in the bidding process.

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.

2013

March

- Bankruptcy Battleground West

     March 22, 2013 | Los Angeles, Calif.

April

- ABI Live Webinar: "Legacy Liabilities : Dealing with Environmental, Pension, Union and Similar Types of Claims"

     April 5, 2013

- ABI Live Webinar: "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?"

     April 10, 2013

- "Nuts and Bolts" Program at ASM

     April 18, 2013 | National Harbor, Md.

- Annual Spring Meeting

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

May

- "Nuts and Bolts" Program at NYCBC

     May 15, 2013 | New York, N.Y.

- ABI Endowment Cocktail Reception

     May 15, 2013 | New York, N.Y.

- New York City Bankruptcy Conference

     May 16, 2013 | New York, N.Y.

- Litigation Skills Symposium

     May 21-24, 2013 | Dallas, Texas

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

     June 13-16, 2013 | Grand Traverse, Mich.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- Southeast Bankruptcy Workshop

     July 18-21, 2013 | Amelia Island, Fla.

RESTRUCTURING EXPERTS: RECESSION DID NOT IMPROVE CORPORATE GOVERNANCE



The Great Recession taught businesses some valuable lessons, but a recent survey found that restructuring experts do not think companies learned enough about changing their corporate governance practices, the Wall Street Journal reported today. In its 2013 Outlook Survey of restructuring experts, advisory firm AlixPartners said that slightly less than half of the 98 professionals questioned believe corporate governance is better now than it was before the recession. Corporate governance breakdowns have indeed been a major factor in several bankruptcies of the past few years, including the collapse of MF Global Holdings Ltd. and the massive fraud at Peregrine Financial Group Inc. Despite those events, more than two-thirds of the restructuring professionals who think corporate governance is worse said that it was because of liquidity oversight. When asked which sectors might face increases in distressed situations, the restructuring gurus picked industries facing scrutiny in Washington, D.C. Forty-one percent of those surveyed picked health care, up from just 20 percent last year. The restructuring experts also expect an uptick in distressed situations at energy companies, along with aerospace and defense. Read more. (Subscription required.)

PRIVATE EQUITY BRACING FOR BUYOUT-BOOM SHAKEOUT



The private-equity industry, comprised of nearly 4,500 firms with $3 trillion in assets, is bracing for a shakeout that has been brewing since the collapse of credit markets choked off a record leveraged-buyout binge, Bloomberg News reported today. Firms that attracted an unprecedented $702 billion from investors from 2006 to 2008 must replenish their coffers for future deals and avoid a reduction in fee income when the investment periods on those older funds run out, typically after five years. As many as 708 firms face such deadlines through 2015, according to London-based researcher Preqin Ltd. Many firms are suffering from below-average profits on their boom-period funds, and top executives from Carlyle Group LP co-founder David Rubenstein to Blackstone Group LP President Tony James say that future returns will be far more modest than those investors got used to in the past. As investors gravitate to the best-performing managers and cut loose others, 10 to 25 percent of the firms may find themselves without fresh money. Read more.

REPORT: SEC'S REVOLVING DOOR HURTS ITS EFFECTIVENESS



The Project on Government Oversight, a nonprofit watchdog group long critical of the SEC's revolving door, released a study yesterday highlighting a pattern of SEC alumni going to bat for Wall Street firms, the New York Times DealBook blog reported yesterday. The report, similarly skeptical of Wall Street lawyers joining the SEC, cites recent enforcement cases and scuttled money market regulations to underscore its concerns. "Former employees of the Securities and Exchange Commission routinely help corporations try to influence SEC rule-making, counter the agency's investigations of suspected wrongdoing, soften the blow of SEC enforcement actions, block shareholder proposals and win exemptions from federal law," the report says. Read more.

SPECULATIVE BETS PROVE RISKY AS SAVERS CHASE PAYOFF



Regulators across the country are confronting a wave of investor fraud that is saddling retirement savers with steep losses on complex products that until a few years ago were pitched only to the most sophisticated investors, the New York Times reported yesterday. The victims are among the millions of Americans whose mutual funds and stock portfolios plummeted in the wake of the financial crisis, and who started searching for ways to make better returns than those being offered by bank deposits and government bonds with minuscule interest rates. Tens of thousands of them put money into speculative bets promoted by aggressive financial advisers. The investments include private loans to young companies like television production firms and shares in bundles of commercial real estate properties. Those alternative investments have now had time to go sour in big numbers, state and federal securities regulators say, and are making up a majority of complaints and prosecutions. "Since the crisis, we've seen more and more people reaching out into different types of exotic investments that are a big concern to us," said William F. Galvin, the Massachusetts secretary of the commonwealth. Last Wednesday, Galvin's office ordered one of the nation's largest brokerage firms, LPL Financial, to pay $2.5 million for improperly selling the real estate bundles, known as nontraded REITs, or real estate investment trusts, to hundreds of state residents from 2006-09, in some cases overloading clients' accounts with them. Read more.

COMMENTARY: QUIETLY KILLING A CONSUMER WATCHDOG



Having failed to block the creation of the Consumer Financial Protection Bureau (CFPB) in the 2010 Dodd-Frank financial reform bill, Senate Republicans are now trying to take away its power by filibuster, and they may well succeed, according to a New York Times editorial today. Under the Dodd-Frank law, most of the CFPB's regulatory powers -- particularly its authority over nonbanks like finance companies, debt collectors, payday lenders and credit agencies -- can be exercised only by a director. Knowing that, Republicans used a filibuster to prevent President Obama's nominee for director, Richard Cordray, from reaching a vote in 2011. Obama then gave Cordray a recess appointment, but a federal appeals court recently ruled in another case that the Senate was not in recess at that time because of the Republicans' tactics. That opinion, if upheld by the Supreme Court, is likely to apply to Cordray as well, which could invalidate the rules the bureau has already enacted. The president has renominated Cordray, but Republicans have made it clear that they will continue to filibuster to block his confirmation. Earlier this month, 43 Senate Republicans wrote a letter to the president vowing to block any nominee until "key structural changes" are made, including a bipartisan commission to run the bureau instead of one director, and congressional control of its appropriations. Other bank regulators, like the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, are not subject to the appropriations process, as a shield against political interference. Congress does, however, control the budgets of the Securities and Exchange Commission and the Commodity Futures Trading Commission, and House Republicans have voted to strip those agencies of money needed to regulate derivatives and curb abuses. Read the full editorial.

ANALYSIS: S&P'S TOXIC AAA RATINGS OF MORTGAGE DEBT HAD FAR-REACHING EFFECTS



Institutions throughout the financial services industry felt the effects of the damages inflicted when S&P allegedly inflated rankings of mortgage debt that contributed to the biggest financial crisis since the Great Depression, according to a Bloomberg News analysis yesterday. As a result, the Justice Department sued New York-based S&P and parent McGraw-Hill Cos. last week. The world's leading financial institutions suffered more than $2.1 trillion of writedowns and losses after soaring U.S. mortgage defaults caused the credit crunch. Some of the biggest losers were banks, including Citigroup and Bank of America Corp., which created and purchased collateralized debt obligations. Many of these investments -- created by packaging mortgage-backed bonds, derivatives and other CDOs and dividing them into new securities with varying degrees of risk -- imploded within a year after they were sold, even though they had pristine credit ratings. Smaller financial institutions were also ruined by mortgage-backed debt. Western Federal Corporate Credit Union failed after its executives employed an improperly "aggressive investment strategy" that had no limits on highly rated mortgage bonds, according to a regulatory report on its collapse. Read more.

ABI LIVE WEBINAR: REVISITING RADLAX AND HALL – NEW LEGAL AND PRACTICAL IMPACT OF THE DECISIONS



See why this was the top-rated panel at the ABI Winter Leadership Conference last month! Join the expert panel on Feb. 19 from 12:00-1:15pm EST as they summarize and discuss the legal impact and practical implications of the Supreme Court’s 2012 decisions in Radlax and Hall. Participants include:

• Susan M. Freeman of Lewis and Roca LLP (Phoenix)

• Adam A. Lewis of Morrison & Foerster LLP (San Francisco)

• Prof. Charles J. Tabb of the University of Illinois College of Law (Champaign, Ill.)

• Eric E. Walker of Perkins Coie LLP (Chicago)

Click here to register!

POWER TO VETO BANKRUPTCY SALES AMONG ISSUES TO BE EXAMINED AT ABI'S 31ST ANNUAL SPRING MEETING



The 2013 Annual Spring Meeting, to be held April 18-21, 2013, at the Gaylord National Resort and Convention Center in National Harbor, Md., features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

- 17th Annual Great Debates

- Mediation: An Irrational Approach to a Rational Result

- Creditors' Committees and the Role of Indenture Trustees and Related Issues

- Current Issues for Financial Advisors in Bankruptcy Cases

- The Individual Conundrum: Chapter 7, 11 or 13?

- Real Estate Issues in Health Care Restructurings

- Law Firm Bankruptcies

- How to Be a Successful Expert

- The Ethical Compass: Multiple Ethical Schemes Applicable to Financial Advisors

- Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

- And much more!

The Spring Meeting will also feature a field hearing of the ABI Commission to Study the Reform of Chapter 11, a report from the ABI Ethics Task Force, a luncheon panel discussion moderated by Bill Rochelle of Bloomberg News, and a Final Night Gala Dinner featuring a concert by Joan Jett and the Blackhearts!

Enter code "LOVEASM50" at checkout to save $50 on a new registration this week! Click here to register today!

ABI IN-DEPTH

DON'T MISS THE 9TH ANNUAL WHARTON RESTRUCTURING AND DISTRESSED INVESTING CONFERENCE ON FEB. 22!



The University of Pennsylvania's Wharton School of Business will be holding the 9th Annual Wharton Restructuring and Distressed Investing Conference on Feb. 22 at the Hyatt at The Bellevue in Philadelphia. The theme of this year's conference is “Health of Nations: Distress, Recovery or Revival?” It will offer a unique opportunity to hear from a distinguished gathering of keynote speakers and panelists in their discussion of the current economic climate and issues of debt, investing, and restructuring across the globe. To register, please click here.

NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!



An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!

The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!

LATEST CASE SUMMARY ON VOLO: LEAVITT V. FINNEY (IN RE FINNEY; 9TH CIR.)



Summarized by David Hercher of Miller Nash LLP

The Ninth Circuit ruled that because the chapter 13 debtor received a chapter 7 discharge in a prior case commenced during the four-year period before the current petition date, she was not entitled to a discharge in the current chapter 13 case, even though the first case was commenced under chapter 13 and converted to chapter 7 before discharge.

There are more than 750 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: CASE FOCUSES ON A COMMERCIAL LANDLORD'S CLAIM FOR INDEMNIFICATION



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the case of In re Mervyn's Holdings, LLC, in which the U.S. Bankruptcy Court for the District of Delaware held that a claim arising from an indemnification provision, in a non-residential commercial lease, which was rejected post-petition, was entitled to administrative priority pursuant to § 365(d)(3) of the Bankruptcy Code.

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

After Stern, bankruptcy courts do not have the constitutional authority to enter final judgments on fraudulent conveyance claims.

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.

2013

February

- ABI Live Webinar: Revisiting RadLAX and Hall- New Legal and Practical Impact of the Decisions

     February 19, 2013

- VALCON 2013

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

- 9th Annual Wharton

Restructuring and Distressed Investing Conference

     February 22, 2013 | Philadelphia, Pa.

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

- "Nuts and Bolts" Program at ASM

     April 18, 2013 | National Harbor, Md.

- Annual Spring Meeting

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

May

- "Nuts and Bolts" Program at NYCBC

     May 15, 2013 | New York, N.Y.

- New York City Bankruptcy Conference

     May 16, 2013 | New York, N.Y.

- Litigation Skills Symposium

     May 21-24, 2013 | Dallas, Texas

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

ANALYSIS: MORTGAGE INTEREST DEDUCTION UNDER SCRUTINY IN CONGRESSIONAL BUDGET TALKS



As President Obama and Congress try to work out a deal to reduce the budget deficit, scrutiny of the mortgage interest deduction for homeowners will likely be part of the discussion, the New York Times DealBook blog reported today. Limits on a broad array of deductions could emerge in any budget deal. It is likely that caps would target high-income households, and would diminish or end the mortgage tax break for many of those taxpayers. Such a move would be fiercely opposed by the real estate industry, which has played a crucial role in defending the tax break, even as other countries with high homeownership have phased it out. Read more.

SECOND CIRCUIT HEARS FHFA'S MBS LITIGATION



The U.S. Court of Appeals for the Second Circuit this week will hear arguments over whether the Federal Housing Finance Agency (FHFA) will be allowed to follow through with lawsuits filed against 16 banks alleged to have sold Fannie Mae and Freddie Mac $200 billion worth of mortgage-backed securities that did not live up to representations made by the banks, the Wall Street Journal reported yesterday. The banks argue that FHFA filed the suits too late. FHFA claims that the suits were timely brought. The disagreement largely turns on whether a statute of limitations provision within the Housing and Economic Recovery Act of 2008, which created FHFA and vested within it the power to bring suits to recover losses stemming from the mortgage crisis, displaces the statutes of repose in the various securities laws. Read more. (Subscription required.)

EDITORIAL: ELIZABETH WARREN SHOULD GET SEAT ON SENATE BANKING COMMITTEE



Some bankers, their lobbyists and their Republican allies on the Senate Banking Committee are reportedly angling to keep Senator-elect Elizabeth Warren off the Committee, according to a New York Times editorial on Friday. Republicans have opposed Ms. Warren before, notably in their successful fight in 2011 to prevent her from becoming the first director of the Consumer Financial Protection Bureau, the agency that was her brainchild and is arguably the most important part of the Dodd-Frank financial reform. Senate Majority Leader Harry Reid, who assigns freshman senators to the committees, should not let them get their way again, the editorial argues. As a bankruptcy expert, Harvard law professor and former chair of the Congressional Oversight Panel charged with overseeing the bank bailouts, Warren would join the banking committee as the fight intensifies over the Volcker Rule, a provision of Dodd-Frank she has supported that would curb speculation by banks. Read more.

SCHAPIRO'S DEPARTURE COULD SLOW DODD-FRANK IMPLEMENTATION



Mary Schapiro's departure from the Securities and Exchange Commission will leave the agency's rulemakers evenly split between Republicans and Democrats, which could slow progress on many Dodd-Frank rules that the agency still has to write, National Journal reported today. Schapiro is stepping down from her post as SEC chairman on Dec. 14. President Obama plans to designate current commissioner Elisse Walter as chairman, but the five-member commission will be down to four: Walter and Luis Aguilar, who are both Democrats, and Troy Paredes and Daniel Gallagher, who are Republicans. Experts expect Obama to name a replacement for Schapiro as soon as early 2013, but any pick will need Senate confirmation, which could take months. That means it could be up to a year before the SEC is back up to full strength. Read more.

OPEN PUBLIC HEARING ON CHAPTER 11 REFORM AT ABI'S WINTER LEADERSHIP CONFERENCE



ABI's Commission to Study the Reform of Chapter 11 will hold a public hearing on Friday, Nov. 30, at 11:15 a.m. (MT) during the Winter Leadership Conference in Tucson, Ariz., at the JW Marriott Starr Pass Resort. Members are encouraged to watch the hearing via a live webstream available at http://commission.abi.org. All materials are part of the Commission's record to be transmitted to Congress following the two-year investigation and report.

JUST RELEASED: BEST OF ABI 2012 FOR CONSUMER AND BUSINESS BANKRUPTCY



New in the ABI Bookstore is the latest in ABI's annual “Best of ABI” series for 2012. Drawn from the most incisive ABI Journal articles and the highest-rated conference sessions of 2012, these volumes gather the hottest topics in consumer and business bankruptcy into two must-have references that belong in every practitioner’s library. Best of ABI 2012: The Year in Consumer Bankruptcy, edited by ABI Resident Scholar Susan E. Hauser (North Carolina Central University School of Law; Durham, N.C.) and ABI Board Member and ABI Journal Executive Editor Alane A. Becket (Becket & Lee LLP; Malvern, Pa.), covers the latest on chapter 13, the foreclosure crisis, tax issues, student loans and much more.

The companion volume, Best of ABI 2012: The Year in Business Bankruptcy, edited by Peter S. Partee, Sr. (Hunton & Williams LLP; New York), includes the latest on such timely topics as intercreditor and confirmation issues, avoidance actions and executory contracts. New this year: Both volumes include summaries of relevant cases drawn from volo.abi.org, as well as commentary from the editors. Available for purchase separately or as a specially-priced bundle, the new Best of ABI books can be ordered today at bookstore.abi.org. (Please log in first to obtain the discounted member price).

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: RASO V. FAHEY (IN RE FAHEY; 1ST CIR.)



Summarized by Bodie Colwell of Bernstein Shur

Concluding that the debtor acted in a fiduciary capacity as an ERISA fiduciary, as well as a fiduciary of a technical trust under common law, the BAP reversed the order of the bankruptcy court and remanded for proceedings consistent with the opinion.

There are nearly 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: BANKRUPTCY COURT WARNS ON "WARN" ACT



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines a decision by Bankruptcy Judge Martin Glenn, who recently dismissed a putative class action complaint filed on behalf of former employees of MF Global that alleged that the chapter 11 trustee for MF Global Holdings Ltd. and certain of its subsidiaries and the SIPA trustee for MF Global Inc. failed to provide sufficient notice under the federal Worker Adjustment and Retraining Notification Act (the “WARN Act”) and the New York version of the WARN Act prior to terminating these employees. In its memorandum opinion and order, the bankruptcy court considered whether the SIPA trustee and chapter 11 trustee were "employers" for purposes of the WARN Act and the NY WARN Act, or "liquidating fiduciaries" who are excepted from the obligation to comply with the advance-notice requirements of these WARN statutes, in which case the actions of the trustees would be protected.

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

Despite the "free and clear" language of Sect. 363(f), purchasers of assets in 363 sales may still be liable for injuries to unidentifiable future claimants. (In re Grumman Olson Indus, S.D.N.Y.).

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

LATEST BLOOMBERG LAW VIDEO: RESERVE FUND'S LAWYER: MY CLIENTS WERE "VICTIMS"



John Dellaportas, partner at Duane Morris LLP, talks with Bloomberg Law’s Lee Pacchia about his successful representation of Bruce Bent Sr., Bruce Bent II and their investment advisory firm Reserve Management Co. and Resrv Partners Inc. in a securities fraud lawsuit brought by the U.S. Securities and Exchange Commission. Click here to watch.

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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November

- 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 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

- Bankruptcy Battleground West

     March 22, 2012 | Los Angeles, Calif.