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PBGC SAYS PENSION DEFICIT WIDENS TO RECORD $34 BILLION



The Pension Benefit Guaranty Corp. (PBGC) said that its deficit increased to $34 billion by the end of the most recent fiscal year, its largest ever, Dow Jones Daily Bankruptcy Review reported yesterday. As a result of plan failures, the PBGC said last week that its obligations totaled $119 billion by the end of fiscal 2012, while it has $85 billion in assets on hand to cover them. PBGC Director Joshua Gotbaum said that the agency continues its work to preserve pensions but "continuing financial deficits will ultimately threaten its ability to pay benefits." Read more. (Subscription required.)

BANKS SAY THEY HAVE GIVEN $26 BILLION IN HOMEOWNER RELIEF TO DATE



The nation's biggest banks provided more than $26 billion in relief to struggling homeowners between March 1 and Sept. 30, as part of a settlement earlier this year with state and federal officials over widespread foreclosure abuses, the Washington Post reported today. Joseph A. Smith Jr., the former North Carolina banking commissioner hired by the government to ensure the banks follow through on their promises, reported that more than 300,000 homeowners have benefitted so far, for an average of roughly $84,385 per borrower. The aid undertaken by the five banks involved in the settlement — Bank of America, JPMorgan Chase, Wells Fargo, Ally Financial and Citigroup — has taken various forms, from lowering loan balances to completing growing numbers of short sales to helping refinance many homeowners into mortgages with much lower interest rates. Each bank is responsible for providing a set amount of aid under the terms of the settlement, but different kinds of relief receive different amounts of credit. In general, banks received more credit for providing aid during the first year of the settlement and for activities such as reducing principal on loans and refinancing mortgages. Read more.

In related news, big banks are giving billions of dollars to distressed California homeowners through a landmark mortgage settlement — but mostly to get people out of their homes rather than help them stay, the Los Angeles Times reported today. Short sales should be reserved for homeowners who couldn't afford to live in a home even with a lower principal or for people who need to move, said UC Irvine law professor Katherine Porter, who was appointed by the state attorney general's office to monitor the deal. The preponderance of short sales in California may change, Porter said, as banks begin delivering other types of mandated relief, namely principal reduction. In California, the three biggest mortgage servicers — Wells Fargo & Co., Bank of America Corp. and JPMorgan Chase & Co. — promised to contribute $12 billion worth of homeowner aid. Bank of America is on the hook for the biggest portion of that agreement, $8 billion. Read more.

COMMENTARY: WHEN WILL FANNIE AND FREDDIE PAY TAXPAYERS BACK?



Fannie Mae and Freddie Mac owe American taxpayers nearly $140 billion — and there seems to be no plan on any front to pay it back, according to a commentary in yesterday's New York Times. In the midst of the housing crisis and the Great Recession in 2008, Congress agreed to spend $600 billion in public money to rescue major American banks, insurers, automakers and, yes, the GSE's — fearing an even deeper and longer recession if these companies failed. Since then, most of these bailed-out firms have paid taxpayers back, but not Fannie or Freddie. Even more remarkable than their $140 billion public debt (the money lent to the agencies minus dividends paid) is that there seems to be no active plan to reimburse taxpayers. Read more.

SHADOW BANKING GROWS TO $67 TRILLION INDUSTRY, REGULATORS SAY



The shadow banking industry has grown to about $67 trillion, $6 trillion bigger than previously thought, leading global regulators to seek more oversight of financial transactions that fall outside traditional oversight, Bloomberg news reported on Sunday. The size of the shadow banking system, which includes the activities of money market funds, monoline insurers and off-balance sheet investment vehicles, "can create systemic risks" and "amplify market reactions when market liquidity is scarce," the Financial Stability Board said in a report, which utilized more data than last year’s probe into the sector. While watchdogs have reined in excessive risk-taking by banks in the wake of the collapse of Lehman Brothers Holdings Inc. in 2008, they are concerned that lenders might use shadow banking to evade the clampdown. Read more.

ANALYSIS: MIXED RESULTS FOR SEC IN FINANCIAL CRISIS CASES



Last week was a study in contrasts in how the Securities and Exchange Commission has been able to pursue cases from the financial crisis, according to an analysis yesterday in the New York Times DealBook blog. The regulator has been successful in extracting large settlements from banks that were at the heart of the meltdown in the mortgage market, but it has not done as well in proving any significant wrongdoing by individuals. The SEC announced settlements on Friday with JPMorgan Chase and Credit Suisse over their dealings in residential mortgage-backed securities. JPMorgan will pay $296.9 million and Credit Suisse $120 million in disgorgement and penalties. But it had a much worse week in dealing with individuals accused of securities fraud as a federal jury in New York on Nov.12 largely absolved Bruce Bent Sr. and his son, Bruce Bent II, for statements they made about the money market fund they oversaw, the Reserve Primary Fund. That collapsed at the height of the financial crisis in September 2008. 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 welcome to provide testimony on their suggestions for ways to improve the operation of chapter 11. The hearing is the fifth in a series of public field hearings. Statements and video from all the recent hearings can be found at the Commission website at http://commission.abi.org.

Interested members should contact Sam Gerdano at sgerdano@abiworld.org for more details about in-person testimony. Those interested may also file written statements of any length for consideration by the Commission. All materials will be part of the Commission's record to be transmitted to Congress following the two-year investigation and report. Please consider this great opportunity to become part of the legal reform of the Bankruptcy Code.

LATEST ABI PODCAST EXAMINES BANKRUPTCY'S EFFECTS ON MANUFACTURING SUPPLY CHAINS



ABI’s latest podcast features ABI Resident Scholar Prof. Susan Hauser speaking with the authors of Interrupted! Understanding Bankruptcy's Effects on Manufacturing Supply Chains. John T. Gregg, Deborah L. Thorne and Patrick E. Mears of Barnes & Thornburg LLP discuss the book and the issues that arise when suppliers are unable to make deliveries of promised parts due to financial problems. Click here to listen to the podcast.

To purchase Interrupted! Understanding Bankruptcy's Effects on Manufacturing Supply Chains, please make sure to visit the ABI Book Store at http://bookstore.abi.org.

RICHMOND BAR CALLING FOR NOMINATIONS TO FILL JUDICIAL VACANCY; SUBMISSIONS MUST BE RECEIVED BY DEC. 13



The Judiciary Committee of the Richmond (Va.) Bar Association invites ABI members to submit nominations to fill a judicial vacancy in the U.S. Bankruptcy
Court for the Eastern District of Virginia. The court is looking to fill the vacancy left by the retirement of Bankruptcy Judge Douglas O. Tice, Jr.

Suggestions must be in writing and should be mailed to Virginia H. Grigg, Esq., c/o Richmond Bar Association, P.O. Box 1213, Richmond, Virginia 23218 or hand-delivered to her at the Bar office located at 707 E. Main Street, Suite 1620, Richmond, VA 23219. Nominations must be received by 4:00 p.m. ET on Thursday, December 13, 2012, in order to be considered.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: HAWKS HOLDINGS LLC V. KALINOWSKI (IN RE KALINOWSKI; 10TH CIR.)



Summarized by Steven T. Mulligan of Bieging Shapiro & Barber LLP

The 10th Circuit ruled that since debtor was the de facto manager of an LLC, he stood in a fiduciary relationship to the creditor of that LLC under a New Mexico statute that created a technical trust. Since the debtor’s participation in the mismanagement of funds paid to the LLC for the construction of homes constituted defalcation, the debt was thus excepted from discharge.

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: NINTH CIRCUIT RULES POST-PETITION PAYMENTS RECEIVED BY DEBTOR ARE NOT PROCEEDS OF "PAYMENTS TO BECOME DUE"



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines a recent decision by the Ninth Circuit in LID Acquisition LLC v. Lake at Las Vegas Joint Venture, LLC (In re Lake at Las Vegas Joint Venture, LLC) affirmed the lower courts' rulings that, pursuant to §552(a) of the Bankruptcy Code, a pre-petition security agreement that gives a lender a security interest in "payments" or "future payments" does not give a lender a security interest in post-petition payments.

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.

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.

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.

STATE BANKRUPTCY DEBATE RETURNS



Nearly two years after a "fierce" debate that "fizzled as quickly as it started," University of Pennsylvania law professor David Skeel is arguing that the idea of giving states a way to file for bankruptcy remains relevant and necessary, the Wall Street Journal reported yesterday. In addition to corporations and consumers, the Bankruptcy Code allows municipalities to seek chapter 9 protection. But there is currently no chapter set aside for states that find themselves teetering on the brink of insolvency, nor have states needed one. Yet with major budget deficits, underfunded pensions and declining tax revenues, some say that states should have a legal framework within which to restructure. Skeel advocated the idea of state bankruptcy in The Weekly Standard, as well as in the pages of the Wall Street Journal between November 2010 and January 2011, and the view picked up steam once Newt Gingrich and Jeb Bush added their voices. "Creditors of states have a great deal [of difficulty] collecting from the state," Skeel said recently in resurrecting the idea of state bankruptcy. "It's really hard to get a state to pay you because of sovereign immunity." Read more. (Subscription required.)

REGULATOR FACES ANOTHER LAWSUIT OVER DODD-FRANK



The Obama administration's new rules for Wall Street suffered another setback this week as the financial industry leveled a lawsuit challenging a crucial piece of the regulatory overhaul, the New York Times DealBook blog reported on Friday. The CME Group, a giant Chicago exchange, sued its regulator last Thursday over a new rule that aims to shed light on the murky derivatives trading industry. The regulator, the Commodity Futures Trading Commission, drafted the rule in January under guidance from the Dodd-Frank Act. The case is part of the financial industry's broader legal assault on Dodd-Frank. As regulators hash out the final details of some 400 rules, Wall Street has shifted the fight from backroom lobbying to the courtroom. The trading commission has already been sued twice over Dodd-Frank rules, and Wall Street plans to turn up the heat on the Obama administration next year with a bevy of other legal challenges. Read more.

ANALYSIS: CHILD'S EDUCATION, PARENTS' CRUSHING LOANS



There are record numbers of student borrowers in financial distress, but millions of parents who have taken out loans to pay for their children's college education make up a less-visible generation in debt, the New York Times reported yesterday. For the most part, these parents did well enough through midlife to take on sizable loans, but some have since fallen on tough times because of the recession, health problems, job loss or lives that took a sudden hard turn. In the first three months of this year, the number of student loan borrowers aged 60 and older was 2.2 million, a figure that has tripled since 2005. That makes them the fastest-growing age group for college debt. All told, those borrowers owe $43 billion, up from $8 billion seven years ago, according to the Federal Reserve Bank of New York. Read more.

TWO MILLION COULD LOSE UNEMPLOYMENT BENEFITS UNLESS CONGRESS EXTENDS PROGRAM



More than 2 million Americans stand to lose their jobless benefits unless Congress reauthorizes federal emergency unemployment help before the end of the year, the Washington Post reported today. The people in danger of having their unemployment checks cut off are among those who have benefited least from the slowly improving job market: Americans who have been out of work longer than six months. These workers have exhausted their state unemployment insurance, leaving them reliant on the federal program. In addition to those at risk of abruptly losing their benefits in December, 1 million people would have their checks curtailed by April if the program is not renewed, according to lawmakers and advocates pushing for an extension. Read more.

ANALYSIS: DEEP DISCOUNTS ON FORECLOSED HOMES DISAPPEARING



A market analysis by Zillow found that the average national discount on a foreclosure in September has fallen to only about 8 percent below market value, the Washington Post reported today. That is a significant change from the 24 percent average markdown reported in 2009 during the depths of the housing bust, and another signal that the country's housing market is inching toward recovery. "There’s no such thing as a fire sale on a foreclosure right now," said Marc Joseph, a real estate agent in Fort Myers, Fla. "We’re getting back to that point where if something good hits the markets, we’re getting multiple offers again." According to Zillow, the deepest discounts can be found on foreclosures in the Pittsburgh area, at 27 percent. Cleveland, Cincinnati and Baltimore have average markdowns on foreclosures topping 20 percent. But in many hard-hit markets, particularly ones where home prices fell sharply and investors and buyers have swooped in to buy up foreclosures, discounts have all but vanished. Zillow found that in Las Vegas and Phoenix, there is "no discernible difference" between foreclosure and non-foreclosure sales. 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 welcome to provide testimony on their suggestions for ways to improve the operation of chapter 11. The hearing is the fifth in a series of public field hearings. Statements and video from all the recent hearings can be found at the Commission website at http://commission.abi.org.

Interested members should contact Sam Gerdano at sgerdano@abiworld.org for more details about in-person testimony. Those interested may also file written statements of any length for consideration by the Commission. All materials will be part of the Commission's record to be transmitted to Congress following the two-year investigation and report. Please consider this great opportunity to become part of the legal reform of the Bankruptcy Code.

The next public hearing will be Thursday, Nov. 15, at the CFA Annual Convention in Phoenix. For future Commission hearings, please click here: http://commission.abi.org/.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: OVERSTREET V. JOINT FACILITIES MANAGEMENT, LLC (IN RE CRESCENT RESOURCE LLC; 5TH CIR.)



Summarized by Eric Lockridge of Kean Miller LLP

The Fifth Circuit ruled that an untimely Rule 59(e) motion to alter or amend a district court's judgment affirming a bankruptcy court's dismissal order does not extend the 30-day deadline to file a notice of appeal of the district court's judgment.

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: DEWEY LEBOEUF AVOIDS LITIGATION MORASS OF MOST LAW FIRM BANKRUPTCY CASES



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines how the settlement in the Dewey LeBoeuf case has helped the firm avoid the failures that typically produce lengthy and litigious bankruptcy cases. For more on issues related to large firm bankruptcies, listen to a recent ABI podcast 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.

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.

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.

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.