NEWS AND ANALYSIS
BANKRUPTCY FILINGS THROUGH FIRST THREE QUARTERS OF 2013 FALL 13 PERCENT FROM 2012, COMMERCIAL FILINGS FALL 23 PERCENT
Bankruptcy filings totaled 801,783 nationwide during the first nine months of 2013 (Jan. 1-September 30), a 13 percent decrease from the 921,927 total filings recorded during the same period a year ago, according to data provided by Epiq Systems, Inc. The 767,445 total noncommercial filings for the first three quarters of 2013 represented a 13 percent drop from the noncommercial filing total of 877,123 during the first three quarters of 2012. Total commercial filings during the first nine months of the year were 34,338, a 23 percent decrease from the 44,804 filings during the same period in 2012. Chapter 11 filings also fell during the first nine months of 2013; the 5,171 filings in the first nine months of 2013 represented a 14 percent decrease from the 5,999 chapter 11 filings during the first nine months of 2012. "Sustained low interest rates and sluggish consumer spending since the financial crisis have suppressed bankruptcy filings to 2008 levels," said ABI Executive Director Samuel J. Gerdano. "Some individuals are too broke to afford the cost to file for bankruptcy." To read the full ABI press release, please click here.
ANALYSIS: STUDENT LOAN DEFAULTS ARE STILL SOARING
A Department of Education report released on Tuesday showed that the official student loan default rate has hit a 16-year high, the Atlantic reported yesterday. One out of every ten borrowers whose loans went into repayment during 2011 defaulted within two years, up from a 9 percent two-year default rate among students who began repaying in 2010. The total default rate across institutions is 14.7 percent, almost 50 percent higher than the two-year rate. Read more.
For an analysis of student debt issues in bankruptcy, make sure to pick up ABI's newest title, Graduating with Debt: Student Loans under the Bankruptcy Code, now available for pre-order in the ABI Bookstore.
An abiWorkshop to be held on Nov. 15 will focus on student debt and bankruptcy, including new developments under Sect. 523 (a)(8). Click here for more information or to register.
U.S. GOVERNMENT SHUTDOWN THREATENING HOUSING RECOVERY
The U.S. government's shutdown has quickly slowed down the approval of thousands of mortgages, and some experts are predicting that if it lasts more than a week, it will threaten housing and the broader economic recovery, Bloomberg News reported yesterday. Since Congress forced the first partial government closure in 17 years after failing to pass a budget, borrowers in the process of obtaining home loans could be delayed because lenders are blocked from verifying Social Security numbers and accessing Internal Revenue Service tax transcripts. The process may also lengthen the wait for borrowers seeking approval for mortgages backed by the Federal Housing Administration because its full-time staff is now less than a tenth of its normal size and the U.S. Department of Agriculture, which backs mortgages in rural areas, won't take on new business during the shutdown. The shutdown comes as construction and new housing sales are climbing back from the worst financial crisis since the Great Depression. Builders broke ground on residences at an annual pace of 891,000 in August, up from a low of 478,000 in April 2009, but that is still only about two-thirds of the last 20 years' average rate, according to Commerce Department data compiled by Bloomberg. Read more.
U.S. BANKS DETAIL CRISIS PLANS
Major Wall Street banks could shed assets, sell key business lines or enter into bankruptcy proceedings during times of severe market stress and wouldn't require being bailed out by taxpayers, a group of the 11 largest banks operating in the U.S. told regulators in the latest round of "living wills," released today, the Wall Street Journal reported. The banks, all of which have more than $250 billion in total U.S. nonbank assets, filed the first versions of their living wills with regulators last year. The blueprints were required under the 2010 Dodd-Frank financial overhaul law for all banks with more than $50 billion in total assets, as well as any nonbanks deemed by federal regulators to be systemically important. Regulators have stressed the importance of the plans, both for forcing companies and their executives to get a better handle on their sprawling operations, and for providing regulators with a roadmap to dismantling increasingly complex firms. Read more. (Subscription required.)
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.
FREE PROGRAM TOMORROW! ABI LAW REVIEW/ST. JOHN'S SYMPOSIUM TO EXAMINE HEDGE FUNDS IN BANKRUPTCY
ABI Law Review and St. John's School Law Center for Bankruptcy Studies invite members to attend the Fall 2013 "Hedge Funds in Bankruptcy" Symposium on Oct. 4. The free program will be held at St. John's School of Law in Queens, N.Y., from 9 a.m. to 2:30 p.m. ET. Distinguished scholars and professionals in the hedge fund and bankruptcy fields will discuss the growing role that hedge funds now play in the bankruptcy process. The keynote will be given by Bankruptcy Judge James Peck, who presided over the Lehman bankruptcy. While there is no fee to attend the symposium, advance registration is required. To register, please complete and submit the online registration form.
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 CASE SUMMARY ON VOLO: DEITRICH V. WYNDHAM WORLDWIDE CORP. (IN RE EQUIVEST ST. THOMAS INC.; 3D CIR.)
Summarized by Michael Nestor of Young Conaway Stargatt & Taylor LLP
The Third Circuit Court of Appeals affirmed the decision of the district court and dismissed the appellant's appeal with prejudice. The appeal involved an adversary complaint that had been dismissed by the bankruptcy court, which decision was subsequently affirmed by the district court.
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: FITCH RATINGS HAMMERS NATIONAL COLLEGIATE STUDENT LOAN TRUST IN RESPONSE TO HIGH DEFAULT RATES
The Bankruptcy Blog Exchange is a free ABI service that tracks more than 80 bankruptcy-related blogs. With anywhere from 22-55 percent of trusts being issued by National Collegiate Student Loan Trust, a new blog post reported that Fitch Ratings downgraded 42 classes of the portfolio. Overall, there are about $8.1 billion in private student loans in default, according to the post.
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
Does the bankruptcy court's Section 105 power enable it to surcharge the debtor's exempt property?
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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