Consumer Bankruptcy

ACADEMICS WANT CONGRESS TO GIVE CHAPTER 14 A CHANCE



Members of Stanford University's Hoover Institution's "resolution project" say that the environment is right to revisit their proposed modification of the Bankruptcy Code that adds a section, dubbed "Chapter 14," to address large financial institutions, Dow Jones Newswires reported yesterday. When the official debate on Capitol Hill ended in July 2010 with the passage of the Dodd-Frank financial reform, it looked as though the Hoover Institution had lost its battle to keep the job of unwinding a failing financial institution out of the hands of government. Their proposal, presented at a Senate Banking Committee hearing, never gained traction, and Dodd-Frank's Title II tasks the Federal Deposit Insurance Corp. with intervening should the collapse of a financial institution threaten the economy. However, the academics now argue in a new book, Bankruptcy Not Bailout: A Special Chapter 14, that their proposal still has a chance at becoming law. The book's authors also have an unlikely supporter: the FDIC. "The FDIC would support improvements to the Bankruptcy Code that would better allow for the failure of a large complex financial institution without broad systemic disruption," said Andrew Gray, a spokesman for the FDIC, characterizing Title II as a last resort. "Constructive efforts to improve the bankruptcy law and reduce the likelihood that Title II would be necessary are positive." Acknowledging that the repeal of all or part of Dodd-Frank is unlikely, the authors argue that Dodd-Frank and chapter 14 could coexist, providing the government and companies with another option. Read more.

REGULATORS TRY TO BEAT THE CLOCK IN RATE PROBE



U.S. prosecutors are seeking more time to complete their investigation of alleged interest-rate fixing, while banks ensnared in the probe are trying to turn the clock to their advantage as they battle lawsuits claiming damages from rate-rigging, the Wall Street Journal reported today. The Justice Department recently asked several banks to sign "tolling" agreements, in which the companies promise they will not challenge any enforcement action on the grounds that the alleged wrongdoing occurred beyond the statute of limitations. The requests were sent to all the major banks under investigation including Citigroup Inc., Deutsche Bank AG, JPMorgan Chase & Co., Royal Bank of Scotland Group PLC and UBS AG. Read more. (Subscription required.)

ANALYSIS: CRIMINAL AND CIVIL MORTGAGE-FRAUD CASES HAVE EXPLODED SINCE HOUSING CRISIS



The problem of mortgage scams involving attorneys is growing, according to experts, the Wall Street Journal reported today. Joseph Dunn, executive director of the State Bar of California, said that more than 100 lawyers in California have been disbarred or otherwise disciplined, while about 200 others are facing charges or are under investigation. The California Bar has received more than 11,000 mortgage-related complaints about lawyers since early 2009. John Berry, director of the legal division of the Florida Bar, calls the involvement of attorneys in alleged mortgage scams "one of the most difficult issues we have had to deal with." In a national database of 25,000 homeowner complaints regarding suspected mortgage-related frauds, more than a quarter relate to activities by lawyers or law firms, said Yolanda McGill, a senior counsel at the nonprofit Washington-based Lawyers' Committee for Civil Rights under Law, which began collecting the complaints in 2010. The committee has filed eight lawsuits against parties for allegedly cheating homeowners with false promises of help with their mortgages. Read more. (Subscription required.)

REPORT: PAY GAPS WIDENING AMONG PARTNERS



According to a new survey conducted by legal search consultant Major, Lindsey & Africa and Am Law Daily affiliate ALM Legal Intelligence, partners at Am Law 200, NLJ 350, and American Lawyer Global 100 firms saw their annual compensation rise, on average, 6.4 percent to $681,000 over the past two years. The jump was apparently driven, at least in part, by an uptick in the average rate those partners are billing, from $555 per hour in 2010 to $585 today. The survey, which drew 2,228 responses from attorneys at the firms in question, shows that not all partners have benefited equally from the increase. On average, equity partners are better compensated than their non-equity counterparts, male partners make more than their female colleagues, corporate partners earn more than litigators, and partners in open compensation systems are paid better than those in closed compensation systems. Read more.

FORMER GM CEO: TIME FOR "GOVERNMENT MOTORS" TO HIT THE ROAD



Until the government sells its shares of GM, the company won't be master of its own destiny and will remain wrongly tagged a failure, according to a commentary in today's Wall Street Journal by former GM CEO Ed Whitacre. The government has been an active participant in GM's management for more than three years, according to Whitacre, and it is time for Treasury to step out of the way so that GM can fully focus on what it does best: designing, building and selling the world's best vehicles. The government's authority over GM today is not concentrated in the 500 million shares it still owns, which amount to a hefty but not controlling 26.5 percent ownership stake, according to Whitacre. Rather, the government's power comes from the management apparatus of TARP, the Troubled Asset Relief Program, from which the $50 billion bailout originally came. The result: GM spends an awful lot of time checking in with the people who administer TARP over everything from hiring to executive compensation and management. Read more. (Subscription required.)

HIGH-SPEED TRADING IN THE CONGRESSIONAL SPOTLIGHT



An insider of the secretive world of high-frequency trading is set to attack that industry today on Capitol Hill, giving lawmakers a potential road map to address practices that critics say can put ordinary investors at a disadvantage and the financial system at risk, the Wall Street Journal reported today. Since rapid-fire trading firms now provide many of the buy-and-sell orders that support the market, investors are at the mercy of automated systems that can run amok during volatile times, according to Dave Lauer, who last year quit his job as a trader for an elite Chicago high-frequency trading outfit. Lauer is part of a growing chorus of industry insiders blowing the whistle on approved trading techniques that they say are designed by the traders who derive the most benefit. Lauer is now a consultant on market-structure issues for Better Markets, a Washington, D.C., advocacy group funded by a hedge fund. He testified today before the Senate Banking committee about how he came to believe that high-speed trading has made the market less fair for many investors. One way sophisticated firms get an edge over other investors is the use of complex order types, which are commands that traders use to tell exchanges how to handle their buy-and-sell orders, according to Lauer's testimony. Regulators are looking into whether exchanges, in a rush to gain the business of high-frequency firms, have provided advantages to some sophisticated trading firms that allow them to trade profitably at the expense of other investors. High-frequency trading accounts for some two-thirds of all trading volume, experts say. Read more. (Subscription required.)

Click here for prepared testimony from today's Senate Banking Committee hearing.

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A FELLOW COLLEAGUE AND ABI MEMBER



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

ABI IN-DEPTH

ABI LAUNCHES FIFTH ANNUAL WRITING COMPETITION FOR LAW STUDENTS; PARTICIPANTS RECEIVE ONE-YEAR ABI MEMBERSHIP



Law school students are encouraged to submit a paper now through March 1, 2013, for ABI’s Fifth 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 prestigious 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.

LATEST CASE SUMMARY ON VOLO: STATE OF NEVADA V. MORTGAGE ELECTRONIC REGISTRATION SYSTEM INC. (9TH CIR.)



Summarized by Richard Corbi of Lowenstein Sandler PC

Because the defendants had no "obligation" to record assignments or other documents relating to securing property, the prosecution failed to state a claim of liability under Nevada False Claims Act section 357.040(1)(g).

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SECOND CIRCUIT SUMMARILY REVERSES CLAIMS-TRADING DECISION



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines a ruling by the U.S. Court of Appeals for the Second Circuit in Longacre Master Fund v. ATS Automation Tooling Systems. The Second Circuit summarily reversed a district court decision that will likely strengthen the hand of specialized firms that look to buy claims in large chapter 11 cases, 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

Bankruptcy courts should have unfettered discretion in adjusting fee applications, even when no party-in-interest has raised objections.

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.

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September

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

     September 27, 2012

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

     September 28, 2012 | Chicago, Ill.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

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

October 15, 2012

- ABI/Bloomberg Distressed Lending Conference

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

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

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

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

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

December

- Forty-Hour Bankruptcy Mediation Training

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

2013

February

- Kansas City Advanced Consumer Bankruptcy Practice Institute

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

COMMENTARY: THE INTANGIBLE COSTS OF BANKRUPTCIES



While most experts examine direct costs, such as filing fees, professionals fees and court fees, there are indirect costs of a company’s financial distress, which are more abstract, like lost revenue, lost opportunities and lost good will, according to a commentary by Prof. Stephen Lubben in the New York Times DealBook blog on Monday. Some of these costs may be of concern to the company’s stakeholders, but not to policy makers if, for example, financial distress simply results in the shifting of sales from the distressed firm to a competitor firm – unless the competitor is abroad, according to Lubben. If most of the cost is incurred long before bankruptcy, according to Lubben, then we may need to reform the chapter 11 portion of the bankruptcy code in a way that will allow those costs to be cut sooner. Read the full commentary.

ANALYSIS: BURDENED BY OLD MORTGAGES, BANKS ARE SLOW TO LEND NOW



While the average rate on a 30-year fixed-rate mortgage hit 3.53 percent last week, thousands of would-be homeowners are being locked out of the market because lenders, facing a hard-line stance from Fannie Mae and Freddie Mac, have grown wary of making new loans, the Wall Street Journal reported yesterday. The two mortgage giants have been forcing banks to take back an increasing number of loans that the banks made during the boom years and sold to Fannie and Freddie. To protect themselves from such demands in the future, banks are ratcheting up credit and documentation standards for new mortgages. This play-it-safe stance by banks threatens to undercut the Federal Reserve's latest effort to push down mortgage rates by buying up mortgage-backed securities. Even if rates keep falling, many people will find it much harder to take advantage. Read more. (Subscription required.)

REPORT: CONSUMER CREDIT DELINQUENCIES NEAR 6-YEAR LOW



The American Bankers Association (ABA) said that U.S. consumer-loan delinquencies dropped to their lowest level in nearly six years during the second quarter of 2012, Bloomberg News reported today. Delinquencies across eight loan categories fell a total of 11 basis points to 2.24 percent of all accounts in the second quarter, the best showing since the fourth quarter of 2006, when the rate was 2.23 percent. The rate has now been below the 15-year average of 2.40 percent for two consecutive quarters, the ABA said in its Consumer Credit Delinquency Bulletin. Delinquencies on bank card debt fell from 3.08 percent of all accounts in the first quarter to an 11-year low of 2.93 percent, well below the 15-year average of 3.91 percent. Read more.

SUBPRIME SECURITIES GAIN 30 PERCENT AS GOLDMAN, CERBERUS TARGET MARKET



U.S. home-loan securities without government backing, the kind of debt that sparked the worst financial crisis since the Great Depression, shrank last quarter to less than $1 trillion for the first time in eight years, leaving fewer bonds to meet soaring demand as housing recovers, Bloomberg News reported today. The non-agency mortgage bond market has contracted from $2.3 trillion in mid-2007, when a property bubble fueled by shoddy loans burst, according to Federal Reserve data. It’s fallen to about $970 billion after record homeowner defaults, borrower refinancing and limited sales of new debt. Growing interest in a diminishing asset has bolstered a rally that has pushed returns on subprime-backed securities to almost 30 percent this year. Cerberus Capital Management LP and Goldman Sachs Group Inc. are among firms that have raised money for new funds targeting the bonds, as investors speculate on the real estate recovery or seek to earn higher returns as the Fed pushes yields on safer debt to record lows. Read more.

COMMENTARY: WHY DODD-FRANK RULES KEEP LOSING IN COURT



Since the mid-2000s, regulations of the Securities and Exchange Commission have been challenged six times in the federal court of appeals in Washington, D.C., and the SEC lost every time, according to a commentary in the Wall Street Journal today. Some former SEC staffers and investor advocates try to blame the judges of the U.S. Court of Appeals for the D.C. Circuit, saying that they favor Wall Street. The "blame-the-appellate-judges" theory suffered its latest setback last Friday, when a judge appointed by President Obama, in the district court in Washington, D.C., struck down the controversial rule of the Commodity Futures Trading Commission (CFTC) that placed new "position limits" on the amounts of commodities investors can hold. Financial regulators should be particularly attentive to the financial consequences of their actions when adopting regulations, the commentary said. Other agencies have conducted sophisticated cost-benefit analyses for decades, and these are reviewed (and sometimes rejected) by a special White House office of regulation. As an independent agency, the SEC is exempt from that external expert review. Its rules have suffered as a result, according to the commentary. Read the full commentary.

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



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

ABI IN-DEPTH

SEE THE N.L. EAST DIVISION CHAMPION WASHINGTON NATIONALS IN THE PLAYOFFS: ABI HAS YOUR TICKET FOR OCTOBER 10!



Don't miss playoff baseball in Washington, D.C.! Only 20 tickets are available to the ABI Endowment's special event at the Nationals first home playoff game to be played on Oct. 10. For $400, you will receive a game ticket to a luxury suite, food and open bar.Click here to register!

Sponsorships Are also Available!

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

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



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

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



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

LATEST CASE SUMMARY ON VOLO: SUHAR V. BRUNO (IN RE NEAL; 6TH CIR.)



Summarized by Robert Miller of the U.S. Bankruptcy Court for the Middle District of North Carolina

The Sixth Circuit found that the debtor's assumption of the marital credit card debt of the debtor and the defendant, as part of a separation agreement, should not impact whether the debtor received reasonably equivalent value for transfers to the defendant in the separation agreement. The Sixth Circuit also followed recent precedent holding that a separation decree under Ohio law neither adjudicates reasonably equivalent value nor has a preclusive effect in a subsequent bankruptcy proceeding to determine whether reasonably equivalent value was transferred as part of the separation agreement.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: STOCKTON'S CREDITORS CHALLENGE CITY'S ELIGIBILITY TO FILE FOR CHAPTER 9



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the court challenge from Stockton, Calif.'s creditors about the city's eligibility to file for chapter 9 protection.

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

ABI Quick Poll

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

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

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



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

INSOL INTERNATIONAL



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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

October

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- ABI Endowment Event: Nationals Playoff Game

     October 10, 2012 | Washington, D.C.

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

October 15, 2012

- ABI/Bloomberg Distressed Lending Conference

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

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

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

     October 19, 2012 | Queens, N.Y.

- ABI Program at NCBJ's Annual Conference

     October 26, 2012 | San Diego, Calif.

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

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

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

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

December

- Forty-Hour Bankruptcy Mediation Training

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

2013

February

- Kansas City Advanced Consumer Bankruptcy Practice Institute

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

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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2013

October

- Professional Development Program

    Oct. 11, 2013 | New York, N.Y.

- Chicago Consumer Bankruptcy Conference

    Oct. 14, 2013 | Chicago, Ill.

- International Insolvency & Restructuring Symposium

    Oct. 25, 2013 | Berlin, Germany

November

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

   Nov. 6, 2013 | Alexandria, Va.

- Complex Financial Restructuring Program

   Nov. 7, 2013 | Philadelphia, Pa.

- Corporate Restructuring Competition

   Nov. 7-8, 2013 | Philadelphia, Pa.

- Austin Advanced Consumer Bankruptcy Practice Institute

   Nov. 10-12, 2013 | Austin, Texas

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

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

   Nov. 15, 2013 | Alexandria, Va.

- Delaware Views from the Bench

   Nov. 25, 2013 | Wilmington, Del.

December

- Winter Leadership Conference

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

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York

January

- Western Consumer Bankruptcy Conference

    Jan. 20, 2014 | Las Vegas, Nev.

- Rocky Mountain Bankruptcy Conference

    Jan. 23-24, 2014 | Denver, Colo.

FEDERAL RESERVE PLANS TO BUY $40 BILLION IN MORTGAGE SECURITIES A MONTH



The Federal Reserve said today that it will expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month in a bid to boost growth and reduce unemployment, Bloomberg News reported today. "If the outlook for the labor market does not improve substantially, the committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases and employ its other policy tools as appropriate," the Federal Open Market Committee said today. The FOMC said it would likely hold the federal funds rate near zero "at least through mid-2015." Since January, the Fed had said that the rate was likely to stay low at least through late 2014. The Fed also said it will continue its program to swap $667 billion of short-term debt with longer-term securities to lengthen the average maturity of its holdings, an action dubbed “Operation Twist.” The central bank will also continue reinvesting its portfolio of maturing housing debt into agency mortgage-backed securities. Read more.

FORECLOSURE STARTS FELL ON ANNUAL BASIS IN AUGUST



Foreclosure listing firm RealtyTrac Inc. said that fewer homes were placed on the foreclosure track last month than in August last year, when they hit a 17-year high, the Associated Press reported yesterday. More than 99,400 homes entered the foreclosure process in August 2012, up 1 percent from July but down 13 percent from August last year, RealtyTrac said. At the same time, foreclosure starts increased almost exclusively in judicial states like Florida and New York, where the courts must sign off on foreclosures, the firm said. Conversely, in many non-judicial states like California and Arizona, the number of foreclosure starts declined versus August last year. Read more.

ANALYSIS: INVESTMENT FIRMS FLOCK TO FORECLOSURE AUCTIONS



The business of buying foreclosed homes, renovating and renting them out is morphing from a largely mom-and-pop business into the next big thing on Wall Street, according to a report in yesterday's Wall Street Journal. Investors who once chased only big-ticket deals now are buying houses one at a time. According to investment bank Jefferies & Co., major financial firms led by Colony Capital LLC, Blackstone Group LP, Och-Ziff Capital Management and Oaktree Capital Group LLC have raised more than $8 billion to buy houses, largely in markets pummeled by the housing crisis. At first, many investors hoped lenders would sell foreclosed houses in bulk. But most banks prefer to sell one house at a time, figuring that approach will fetch higher prices. As a result, the foreclosure circuit has not yet produced a giant windfall for buyers like Colony, though executives say early returns are promising. Yields on rents from houses owned by the firm are 7 to 8 percent, higher than many other types of real estate. Purchase prices have averaged 12 percent less than Colony expected, which should make it easier to sell the homes or borrow against them and exit with double-digit percentage gains. Read more. (Subscription required.)

REPORT: FINANCIAL CRISIS, RECESSION COST U.S. $12.8 TRILLION



The financial crisis and the Great Recession have taken a heavy toll on the U.S., and now public interest group Better Markets, which supports tougher financial regulations, said that it has calculated that cost to be at least $12.8 trillion, the Los Angeles Times reported today. The report tries to calculate the effect of the crisis and the recession in terms of reduced economic output and the costs of stabilizing the markets and bailing out banks and large financial firms. The estimate builds off previous calculations, including one by economists Alan S. Blinder and Mark Zandi. Blinder and Zandi released a report in 2010 estimating the total budgetary cost of the financial crisis to be $2.35 trillion. Better Markets used that amount as a jumping-off point for what it said was a conservative estimate of the true costs of the crisis. The group estimated that the loss in gross domestic product from 2008 to 2018 will be $7.6 trillion. Then they used the estimates of Blinder and Zandi to add an additional figure: an estimate of how much GDP loss was avoided by government bailouts and other interventions. That figure was $5.2 trillion from 2008 to 2012. Read more.

COMMENTARY: WHY MARKETS NEED "NAKED" CREDIT DEFAULT SWAPS



Many regulators, politicians and academics are recommending a ban on "naked" credit default swap (CDS) purchases, but the premise that only sovereign-debt holders suffer when a country defaults is false, according to a commentary in the Wall Street Journal yesterday. Many other agents are adversely affected by a default, and they should be allowed to purchase sovereign CDS, according to the commentary. A 2006 Bank of England study found that the output losses for 45 sovereign debt defaults between 1970 and 2000 "appear to be very large—around 7 percent a year on the median measure—as well as long lasting." The haircut taken by investors after sovereign defaults ranges from 20-70 percent. But many bystanders in the sovereign-default drama also suffer significant losses of wealth and livelihood. Domestic importers and foreign exporters suffer when the default is accompanied by a devaluation. Financial institutions and holders of domestic corporate debt suffer as their asset values fall. Domestic companies suffer as their credit risk increases, with smaller businesses being especially harmed as banks reduce loan availability. Read the full commentary. (Subscription required.)

REPORT: HOUSEHOLD INCOME SINKS TO 1995 LEVEL



A report from the Census Bureau yesterday said that annual household income fell in 2011 for the fourth straight year to an inflation-adjusted $50,054, an amount last approached in 1995, the Wall Street Journal reported today. Median annual household income—the figure at which half are above and half below—now stands 8.9 percent below its all-time peak of $54,932 in 1999, at the end of the 1990s economic expansion. Other measures of well-being in the report were more positive. The poverty rate, which had risen in the past four years, held steady in 2011, and the number and share of people without health insurance fell. The shift in health coverage is in large part due to more Americans getting covered by government programs, such as Medicare. Read more. (Subscription required.)

ABI IN-DEPTH

ABI MEMBERS WELCOME TO ATTEND ACB'S FREE HALF-DAY "BANKRUPTCY: BACK TO THE FUTURE" PROGRAM IN SEPTEMBER



The American College of Bankruptcy invites you to attend a free half-day program on Sept. 28 in Chicago for a discussion of many of the challenging topics facing current bankruptcy and reorganization professionals. Topics to be addressed include recent decisions of the U.S. Supreme Court and Court of Appeals, important work of the Advisory Committee on Bankruptcy Rules, and developments in the field of bankruptcy ethics. The nation’s leading judges, academics and bankruptcy professionals are among the speakers for the program. While there is no cost to attend, seating is limited, so early reservation is suggested. For more information and to register, please click here.

LATEST CASE SUMMARY ON VOLO: LEFKOWITZ V. MICHIGAN TRUCKING LLC (IN RE GAINEY CORP.; 6TH CIR.)



Summarized by Omid Moezzi from the Office of Nancy Curry, Chapter 13 Trustee

The Sixth Circuit affirmed the bankruptcy court's ruling for an order dismissing the appellant's (the liquidation trustee) adversary complaint for failure to state a claim for relief pursuant to Federal Rule of Civil Procedure 12(b)(6).

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: WHOSE FAULT IS IT THAT PONZI SCHEMES THRIVE?



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines how defrauded investors are increasingly directing their blame at the SEC for failing to detect ponzi schemes.

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 have unfettered discretion in adjusting fee applications, even when no party-in-interest has raised objections.

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

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



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

INSOL INTERNATIONAL



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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

September

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

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

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

     September 27, 2012

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

     September 28, 2012 | Chicago, Ill.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

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

October 15, 2012

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

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

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

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

December

- Forty-Hour Bankruptcy Mediation Training

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

2013

February

- Kansas City Advanced Consumer Bankruptcy Practice Institute

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

BANKRUPTCY FILINGS FALL 14 PERCENT FOR THE FIRST HALF OF 2012, COMMERCIAL FILINGS DROP 22 PERCENT



Total bankruptcy filings totaled 632,130 nationwide during the first six months of 2012 (Jan. 1-June 30), a 14 percent decrease from the 731,500 total filings during the same period a year ago, according to data provided by Epiq Systems, Inc. The 601,184 total noncommercial filings for the first half of 2012 represented a 13 percent drop from the noncommercial filing total of 691,902 for the first half of 2011. Total commercial filings during the first six months of the year were 30,946, representing a 22 percent decrease from the 39,598 filings during the same period in 2011. Chapter 11 filings also fell during the first half of 2012 as the 5,313 filings represented a 12 percent decrease from the 6,070 chapter 11 filings during the first six months of 2011.

“We are on pace for perhaps the lowest total new bankruptcies since before the financial crisis in 2008,” said ABI Executive Director Samuel J. Gerdano. “With sustained low interest rates and weak consumer spending, we expect bankruptcies to stay at relatively low levels through the end of 2012.”

The 99,057 total bankruptcy filings for the month of June represented an 18 percent decrease compared to the 120,698 filings in June 2011. The 94,437 total noncommercial filings for June represented a 17 percent drop from the June 2011 noncommercial filing total of 114,162. Total commercial filings for June 2012 were 4,620, representing a 29 percent decrease from the 6,536 filings during the same period in 2011. Click here to read ABI’s full press release.

CFPB PLANS TO MAKE OVER MORTGAGE MARKET



Over the next six months, the Consumer Financial Protection Bureau (CFPB) intends to overhaul the home mortgage market as a first step toward improving its fairness and clarity, the New York Times reported today. The CFPB plans to propose rules this summer that will address the biggest stumbling blocks buyers face. When shopping for a loan, consumers will get a more complete and understandable "good faith estimate" of the costs. Before closing a sale, consumers will receive a single, revamped disclosure form of the terms — the interest rate that they will pay, how it could change over the course of the loan and how much cash is needed at closing. And mortgage servicers will be required to provide clearer information, better service and options for a borrower facing foreclosure. Read more.

REPORT: COUNTRYWIDE WON INFLUENCE ON CAPITOL HILL WITH DISCOUNT LOANS



A House report found that the former Countrywide Financial Corp., whose subprime loans helped start the nation's foreclosure crisis, made hundreds of discount loans to buy influence with members of Congress, congressional staff, top government officials and executives of troubled mortgage giant Fannie Mae, the Associated Press reported today. The report said that the discounts made from January 1996 to June 2008 were not only aimed at gaining influence for the company but to help prop up mortgage giant Fannie Mae. Countrywide's business depended largely on Fannie, which at the time was trying to fend off more government regulation but eventually had to come under government control. Fannie was responsible for purchasing a large volume of Countrywide's subprime mortgages. Countrywide was taken over by Bank of America in January 2008, relieving the financial services industry and regulators from the messy task of cleaning up the bankruptcy of a company that was servicing 9 million U.S. home loans worth $1.5 trillion at a time when the nation faced a widening credit crisis, massive foreclosures and an economic downturn. The House Oversight and Government Reform Committee also named six current and former members of Congress who received discount loans, but all of their names had surfaced previously. Read more.

ANALYSIS: BIG BANKS' "LIVING WILLS" AIMING FOR BANKRUPTCY NOT BAILOUTS



U.S. regulators, seeking to prevent a repeat of taxpayer-funded bailouts of the financial system, released summaries of plans for breaking up nine of the world’s largest banks in the event of an emergency, Bloomberg News reported on Tuesday. The banks required to file were JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley, Barclays PLC, Deutsche Bank AG, Credit Suisse Group AG and UBS AG. Some banks said that it would be possible to save their main businesses and avoid full liquidations. As regulators instructed, the proposals presumed markets would be functioning normally with buyers ready to make large acquisitions without government backing. That was not the case when firms, including Bear Stearns Cos., collapsed during 2008's credit crisis, and the law allows the regulators to require more complicated stress scenarios in future rounds. Non-banking entities, such as Bank of America's Merrill Lynch unit, could be put through bankruptcy proceedings, the Charlotte, N.C.-based company said. Broker-dealer units would be liquidated according to the Securities Investor Protection Act, it said. Citigroup, the third-biggest U.S. bank with operations in more than 100 countries, said that it could separate its deposit-taking banking unit, Citibank NA, from broker-dealer units that trade stocks and bonds. The N.Y.-based parent would then go bankrupt and sell off the broker-dealers, according to the plan. Read more.

ABI IN-DEPTH

“SUBJECTING BUSINESS PROJECTIONS TO SCRUTINY IN VALUATION DISPUTES” WEBINAR TO BE HELD ON JULY 30!



Reassembling the speakers from one of the most popular panels at the New York City Bankruptcy Conference this year, ABI will be holding a live webinar on July 30 at 11 a.m. ET titled, "Subjecting Business Projections to Scrutiny in Valuation Disputes." Panelists include:

• Moderator David Pauker of Goldin Associates, LLC (New York)
• Martin J. Bienenstock of Proskauer (New York)
• David M. Hillman of Schulte Roth & Zabel LLP (New York)
• Bankruptcy Judge Robert E. Gerber (S.D.N.Y.)

The panel will address:

• How much deference should management projections be accorded?
• How do you determine whether projections are unrealistically optimistic or pessimistic?
• What is the relevance of "market consensus?"
• How do management’s incentives impact projections?

The webinar is available to ABI members for $75 and is approved for 1.0 CLE hours in Calif., Ga., Hawaii, Ill., N.Y. (approved jurisdiction policy) S.C. and Texas. CLE approval is pending in Del., Fla., Pa. and Tenn. To register, please click here.

LATEST CASE SUMMARY ON VOLO: TERRY V. SUNTRUST BANKS, INC. (4TH CIR.)



Summarized by Cullen Speckhart of Roussos, Lassiter, Glanzer & Barnhart

SunTrust, which held the general operating account of LandAmerica 1031 Exchange Services, Inc. (LES), sold LES certain securities, and extended LES a line of credit, could not be held liable for aiding and abetting a breach of fiduciary duty by LES to 1031 exchangers because LES itself had not assumed such fiduciary duties. In addition, SunTrust could not be held liable for civil conspiracy in connection with LES activities.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: WHEN DOES IT MAKE SENSE TO REAFFIRM AN AUTO LOAN IN CHAPTER 7 BANKRUPTCY?



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines when it makes sense to reaffirm car loans in a chapter 7 bankruptcy proceeding.

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

ABI Quick Poll

The full-payment rule in section 1325's "hanging paragraph" for new car PMSIs should be repealed to level the playing field between car lenders and other partially and fully unsecured creditors.

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

IS YOUR ABI MEMBERSHIP PROFILE CURRENT?



Keeping a current profile will allow you to benefit from one of ABI's most important services - networking. When you update your profile, you are putting your most valuable information in the membership directory. Be sure to include your areas of expertise, firm information, education and join any other committees that are of interest. Click here to update your profile.

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.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

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

- Southeast Bankruptcy Workshop

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

-Valuation Webinar, July 30 at 11 a.m. ET

August

- Mid-Atlantic Bankruptcy Workshop

     August 2-4, 2012 | Cambridge, Md.

September

- Complex Financial Restructuring Program

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


- Southwest Bankruptcy Conference

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

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

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

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

REPORT: BIG BANKS ENGAGING IN PAYDAY LENDING



A new report from the Center for Responsible Lending found that some of the nation's largest banks are providing short-term loans with interest rates of up to 300 percent, driving borrowers into a cycle of debt, the Washington Post reported today. The study that was released today gives an updated look at the perils of advance-deposit loans offered by Wells Fargo, U.S. Bancorp, Regions Bank, Fifth Third Bank, Guaranty Bank and Bank of Oklahoma. Researchers looked at a sample of 66 direct-deposit advances over a 12-month period. Critics say that the structure of advance-deposit loans promotes a cycle of debt. Account holders typically pay up to $10 for every $100 borrowed, with the understanding that the loan will be repaid with their next direct deposit. If the deposited funds are not enough to cover the loan, the bank takes whatever money comes in, triggering overdraft fees and additional interest. Banks contend that they are offering a vital service to customers at more reasonable price points than storefront lenders, who often charge twice as much as banks. The Consumer Financial Protection Bureau has supervisory and enforcement authority for storefront and bank payday lenders with more than $10 billion in assets. The bureau issued a request for comment last year to gauge consumer and industry concerns. Read more.

In related news, a New York Times editorial today found that even though JPMorgan Chase has instituted new policies intended to shield customers from predatory lenders, which can charge up to 500 percent in interest, banks should be doing more to protect their customers. State and federal banking officials also need to expedite their investigations into the relationship between banks and predatory lenders, according to the editorial, with the aim of developing industrywide regulations that protect the public. New rules that go into effect at JPMorgan in May will limit the overdraft fees charged to customers in situations where the lender tries to collect a payment multiple times. Banks could adopt common practices that would allow customers to close their accounts at any time and deny lenders access to automatic payments in states where predatory loans are illegal. Read more.

JUSTICE DEPARTMENT PROBING BANKS' ROLE IN FRAUD BY CUSTOMERS



The U.S. Justice Department is examining the role financial institutions play in fraud schemes perpetrated by bank customers offering deceptive products, Reuters reported yesterday. Attorneys and investigators in the DOJ's Civil Division are examining banks' possible role in assisting scammers who offer questionable payday loans, false offers of debt relief, fraudulent health care discount cards and phony government grants, according to Michael Bresnick, who heads the department's Financial Fraud Enforcement Task Force. That task force has been focused on pursuing the type of misconduct that fueled the financial crisis, but the new priorities suggest that investigators are looking beyond those cases into other types of financial misconduct that extends to different industries, from payday lending to auto loans. Read more.

WITH FREDDIE MAC SUIT, BANKS FACE BILLIONS MORE IN LIBOR CLAIMS



The fallout from the manipulation of the London interbank offered rate (Libor) has already cost banks $2.5 billion in penalties, but that sum pales in comparison to payouts that will come from private lawsuits, the New York Times DealBook blog reported yesterday. Any finding of liability could be compounded because of the potential for any award to be tripled under the antitrust laws. The latest salvo comes from mortgage finance company Freddie Mac, which has filed a lawsuit in the Federal District Court in Alexandria, Va. It asserts that the company was harmed by collusive activity among the banks that lowered the benchmark interest rate. And where Freddie Mac goes, Fannie Mae, its larger sibling, usually follows, so we can expect it to file a suit seeking damages from Libor manipulation. The three regulatory settlements to date – with Barclays, UBS and the Royal Bank of Scotland — provide much of the evidence Freddie Mac relies on in its complaint. Among the documents now public is a litany of e-mails demonstrating just how the banks worked to lower their Libor submissions to benefit their trading positions and make themselves appear stronger during the height of the financial crisis. Read more.

COMMENTARY: THE PROBLEM WITH "TOO BIG TO FAIL" BANKS



The real issue with "too big to fail" financial institutions resides in the government-provided incentives for banks to get inefficiently big in the first place, according to a commentary in yesterday's Wall Street Journal. In the absence of such incentives, according to the commentary, the risk-averse funding on which banks thrive would not be available to allow banks to create sprawling credit portfolios impossible for regulators or investors in the marketplace to assess. Modern governments, as long as they are assuming the risks of the financial system, find it convenient to have those risks concentrated in a few very large, very handy institutions. A lean solution would be to require banks to hold Treasury paper against their insured deposits, according to the commentary. Those experts who prefer solutions like higher capital requirements maintain that the business of banks would survive, forcing banks to rely more on equity than debt to finance their activities. If so, then experts should also consider that equity markets might erect new business models to finance small businesses and credit-worthy consumers if government-insured deposits were no longer available at all to underwrite such risks. Read the full commentary. (Subscription required.)

ANALYSIS: SYNTHETIC CDOs MAKING COMEBACK



Derivatives that pool credit-default swaps to make magnified bets on corporate debt, popularized in the last credit bubble, are making a comeback as investors search farther afield for alternatives to bonds at record-low yields, Bloomberg News reported yesterday. Citigroup Inc. is among several banks that have sold as much as $1 billion of synthetic collateralized debt obligations (CDOs) this year, following $2 billion in all of 2012, according to estimates from the New York-based lender. Trading in tranches of indexes that use a similar strategy to juice yields rose 61 percent in the past month. Synthetic credit, which amplified the financial crisis five years ago, is enticing investors after corporate-bond yields dropped to less than half the 20-year average. Read more.

LATEST ABI PODCAST EXAMINES EFFECTIVENESS OF CURRENT FINANCIAL EDUCATION PROGRAMS



The latest ABI podcast features ABI Resident Scholar Prof. Scott Pryor speaking with Prof. Lauren Willis of Loyola Law School talking about the effectiveness of current financial education programs. Willis discusses the strengths and weaknesses of current financial education programs and what improvements can be made going forward. Click here to listen to the podcast.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: WHY IS KODAK'S STOCK SOARING?



Despite Eastman Kodak Co. stock shooting up dramatically in a week's time, investors might not have the same long-term profitable outcome that owners of American Airlines shares enjoyed, as Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle discuss on their new video. Click here to watch the video.

DON'T MISS ACB'S FREE EVENT TOMORROW, "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

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 in the regular ABI 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 randomly be 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, and 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.

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: STAKER V. JUBBER (IN RE STAKER; 10TH CIR.)



Summarized by Geoffrey Miller from the U.S. Bankruptcy Court for the District of Arizona

Dismissing the appeals of the bankruptcy court's orders remanding two quiet title actions to state court, the Tenth Circuit BAP held that the appeals were moot and that the debtors lacked the requisite standing to appeal the bankruptcy court's orders.

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: EXAMINATION OF PENSION AND OPEB LIABILITIES FACING MUNICIPALITIES

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines two of the largest issues facing municipalities today: underfunded pensions and unfunded "other" post-employment obligations (OPEB).

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

Who will win the NCAA basketball tournament?

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

INSOL INTERNATIONAL



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

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2013

March

- Bankruptcy Battleground West

     March 22, 2013 | Los Angeles, Calif.

- ACB's Free Event, "The Auto Bankruptcies: Checking the Rearview Mirror" Program

     March 22, 2013 | Newton, Mass.

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.

ANALYSIS: "UNDUE HARDSHIP" PROVISION PROVES TOUGH BARRIER TO SHEDDING STUDENT DEBT IN BANKRUPTCY



Federal bankruptcy law requires debtors who wish to erase student debt to prove that repaying it will cause an "undue hardship." One component of that test is often convincing a federal judge that there is a "certainty of hopelessness" to their financial lives for much of the repayment period, according to a New York Times analysis on Friday. No reliable statistics are kept to track how many people bring undue-hardship cases each year, but it appears to be under 1,000, far less than the number of people failing to make their student loan payments. In its most recent snapshot of student loan defaults, the Department of Education reported that among the more than 3.6 million borrowers who entered repayment from Oct. 1, 2008, to Sept. 30, 2009, more than 320,000 had fallen behind in their payments by 360 days or more by the end of September 2010. About 10.3 million students and their parents borrowed money under the federal student loan program during the 2010-11 school year. One reason so few people try to discharge their student debt may be that such cases require an expensive, separate legal process from the bankruptcy proceeding. Nor is the process quick, since the lender or the federal government often appeals when it loses. Read more.

SHORT SALES WILL SOON BECOME AN OPTION FOR MANY MORE UNDERWATER BORROWERS



Fannie Mae's and Freddie Mac's new short-sale reform policies could be a big help for homeowners with underwater mortgages who are facing financial distress, the Washington Post reported on Saturday. Starting on Nov. 1, owners whose loans have been purchased or guaranteed by Fannie or Freddie may qualify for a short sale if they fit key hardship criteria, including unemployment; divorce; long-term disability; a change in job location that is more than 50 miles from the current home; a business failure; death of the primary or secondary wage earner; or a natural or man-made disaster. In what could be a far-reaching change, Fannie and Freddie will allow borrowers who are current on their mortgage payments — not seriously delinquent, as traditionally has been required — to qualify for short sales, provided they fit the hardship criteria. Borrowers who are considered "most in need" will be eligible for streamlined processing of short sales, involving reduced documentation and much speedier resolutions than usual. Read more.

CHAPTER 9 SAVES RHODE ISLAND CITY, BUT LEAVES SCARS



Central Falls, R.I., is close to emerging from bankruptcy with a plan that hammers its retired municipal employees but leaves bondholders unscathed, in a contrast with other recent U.S. municipal bankruptcies, Reuters reported yesterday. On Thursday, a state-appointed receiver overseeing the finances of the small city is expected to win court approval for a plan that rescues Central Falls from financial collapse and should balance its budget for at least the next five years. The smallest city in Rhode Island and the only one in the state to file for bankruptcy will emerge with powerless elected officials, property owners facing tax hikes every year and retired public employees irate about having their pensions slashed. In the spring of 2010, Central Falls was facing insolvency due to steep cuts in state aid, revenue shortfalls and an unfunded liability of about $80 million for pension and retiree health benefits. The city had revenue collections of about $16 million, but its expenses topped $21 million. Mayor Charles Moreau started cutting the city's workforce after asking for a judicial receiver in May 2010. City employees now total 116, down from 174. The city's 133 retirees had their pensions cut by up to 55 percent, with pensioners now getting an average of $16,626 a year. The state allocated $2.6 million to soften the blow for the next five years. Read more.

AUTO LENDERS STEP UP LENDING TO SUBPRIME BORROWERS



A new study by Experian's auto finance research unit showed that U.S. lenders are giving as large a portion of new car loans to subprime borrowers as they did just before the start of the financial crisis, Reuters reported today. Subprime, or less-qualified, borrowers received 25.41 percent of all loans on new vehicles in the three months through the end of June, up from 22.29 percent in the same period a year ago and more than the 24.96 percent at the start of the financial crisis in 2007, according to Experian. The report also found lenders more aggressively making loans to subprime borrowers of used cars. Subprime borrowers received 56.46 percent of loans on used cars in the quarter, up from 52.70 percent a year earlier. Read more.

COMMENTARY: BREAKING UP BANKS IS HARD WITH TRADERS HOOKED ON DEPOSITS



Shareholders of Wall Street banks who agree with former Citigroup Inc. Chief Executive Officer Sanford “Sandy” Weill that the companies should be broken up face an obstacle: bondholders, according to a Bloomberg News commentary today. That is because trading on Wall Street relies on borrowed money/leverage, according to the commentary, that can be obtained cheaply as long as the traders belong to a conglomerate, such as Bank of America Corp., JPMorgan Chase & Co. or Citigroup, that gets federally insured deposits. Jefferies Group Inc., a securities firm that is not part of a bank and cannot turn to the Federal Reserve for help, is currently charged more to borrow in the credit markets than banks are. "If you divorce them from the mother ship, you'd also be divorcing them from the government at the same time, and that's where the subsidy is," said Cornelius Hurley, director of the Morin Center for Banking and Financial Law at Boston University. "The funding advantage is the key." With stock prices at or below liquidation value, Wall Street's biggest banks are fending off calls to break up from stockholders, analysts and industry veterans including Weill. The firms are too complex to manage, over-burdened by regulation, and a risk to taxpayers, their critics say. Read the full commentary.

LATEST ABI PODCAST FEATURES EXPERTS DISCUSSING OIL AND GAS BANKRUPTCIES



The latest podcast features ABI Deputy Executive Director Amy Quackenboss speaking with Deborah D. Williamson and Meghan E. Bishop of Cox Smith Matthews Inc. (San Antonio), authors of When Gushers Go Dry: The Essentials of Oil & Gas Bankruptcy, the newest publication in ABI’s Bookstore. Williamson and Bishop discuss how the U.S. oil and gas industry, perhaps more than any other industry, is vulnerable to the effects of myriad internal and external factors, ranging from global credit markets to domestic and foreign geopolitical events, and from technological developments and limitations to population growth and even the weather. There have been 62 oil and gas company bankruptcy filings since 2008, according to BankruptcyData.com, representing a 170 percent increase from the 23 filings between 2002-07. Click here to listen to the podcast.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: ESTERLING V. COLLECTO, INC. (2D CIR.)



Summarized by Wayne Greenwald of Wayne Greenwald, PC

The Second Circuit reversed the bankruptcy court's decision by saying that the defendant violated the FDCPA's proscription against “false, misleading, or deceptive” debt collection practices by sending the plaintiff, a former debtor, a collection letter incorrectly stating that her student loans were "ineligible for bankruptcy discharge" and therefore her account "must be resolved." Although the plaintiff may face significant hurdles to discharging her student loans, the least-sophisticated consumer would interpret the notice as representing, incorrectly, that discharge of the loans was wholly unavailable.

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

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: TAX COURT RULES ON POST-PETITION AND POST-CONFIRMATION INTEREST ON TAX CLAIMS



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Following up on a previous entry, a new blog post today discusses the case of Everett Associates v. Commissioner and the tax court’s rulings on (i) postconfirmation interest on unsecured priority tax claims, (ii) whether the IRS may assess tax penalties during the pendency of a debtor’s bankruptcy case, and (iii) the dischargeability of tax penalties.

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

ABI Quick Poll

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

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

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



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

INSOL INTERNATIONAL



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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

September

- 7th Annual Golf and Tennis Outing

     September 11, 2012 | Maplewood, N.J.

- Complex Financial Restructuring Program

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

- Southwest Bankruptcy Conference

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

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

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

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

     September 27, 2012

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

     September 28, 2012 | Chicago, Ill.

October

- Nuts & Bolts for Young and New Practitioners - KC

     October 4, 2012 | Kansas City, Mo.

- Midwestern Bankruptcy Institute Program, Midwestern Consumer Forum

     October 5, 2012 | Kansas City, Mo.

- Bankruptcy 2012: Views from the Bench

     October 5, 2012 | Washington, D.C.

- Chicago Consumer Bankruptcy Conference

     October 8, 2012 | Chicago, Ill.

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

     October 15, 2012

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Professional Development Program

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

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

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

ANALYSIS: BETTER LENDING STANDARDS HELPING TO REDUCE FORECLOSURE STARTS



While numerous foreclosure prevention efforts at the national, state and local levels, along with rising home values, have helped drop U.S. foreclosure starts to a six-year low in January, the fundamental factor driving the reduction is better lending practices, according to a Forbes.com commentary yesterday. More than 5 percent of still-active loans originated in 2006 were in some stage of foreclosure as of the fourth quarter of 2012 -- the highest foreclosure rate of any year going back to 2000. That was followed by 2007 vintage loans with a 4.75 percent foreclosure rate, 2005 vintage loans with a 3.52 percent foreclosure rate, and 2008 vintage loans with a 2.95 percent foreclosure rate. The only other loan vintage with a foreclosure rate above 2 percent was 2004, with a 2.16 percent foreclosure rate. The foreclosure rate on 2009 vintage loans dropped to 1.11 percent, and the foreclosure rate has steadily decreased on loans originated in the three years since -- all of which have foreclosure rates below 1 percent. Read more.

COMMENTARY: THE SECOND-MORTGAGE SHELL GAME



Though the federal government and 49 state attorneys general reached a $25 billion deal last February with the country's five largest mortgage servicers (Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial), it is now clear that the settlement has not worked as planned, according to a commentary in yesterday's New York Times. Banks have dragged their feet on modifying first mortgages, much less agreeing to forgive part of the principal on homes that are underwater. A lesser-known but equally grave problem is that banks have been given a backdoor mechanism to continue foreclosures at the same pace as before. The problem involves second mortgages, which millions of homeowners took out during the housing bubble. It is estimated that as much as a quarter of all mortgage debt in the U.S. is in the form of second mortgages. Some of these loans were taken out to finance home improvements, others were part of a subprime product known as an "80/20 mortgage," in which 80 percent of the purchase price was covered by a first, adjustable-rate mortgage, and the remainder by a second mortgage, often with a much higher interest rate. The second mortgages have given the banks a loophole: each dollar a bank forgives goes toward fulfilling its obligation under last year’s settlement. But many lenders have made it a point to almost exclusively modify secondary loans while all but ignoring the troubled, primary mortgages, according to the commentary. Read the full commentary.

SHIFTING STRATEGY, PROSECUTORS BUILD NEW CASES AGAINST BIG BANKS



Criticized for letting Wall Street off the hook after the financial crisis, the Justice Department is building a new model for prosecuting big banks, the New York Times DealBook Blog reported today. In a recent round of actions that shook the financial industry, the government pushed for guilty pleas, rather than just the usual fines and reforms. Prosecutors now aim to apply the approach broadly to financial fraud cases, according to officials involved in the investigations. So far, the Justice Department has extracted guilty pleas only from remote subsidiaries of big foreign banks, a move that has inflicted reputational damage but little else. The new strategy first materialized in recent settlements with UBS and the Royal Bank of Scotland, which were accused of manipulating interest rates to bolster profit. As part of a broader deal, the banks' Japanese subsidiaries pleaded guilty to felony wire fraud. Read more.

ANALYSIS: FISCAL TROUBLE AHEAD FOR MOST FUTURE RETIREES



For the first time since the 1930s, a majority of Americans are headed toward a retirement in which they will be financially worse off than their parents, jeopardizing a long era of improved living standards for the nation’s elderly, the Washington Post reported yesterday. The Great Recession and the weak recovery darkened the retirement picture for significant numbers of Americans. The economic downturn exacerbated long-term factors that were already eroding the financial standing of aging Americans: an inexorable rise in health care costs, growing debt among older Americans and a shift in responsibility from employers to workers to plan for retirement. The consequence is that the nation is facing a huge retirement savings deficit -- as much as $6.6 trillion, or about $57,000 per household, according to a U.S. Senate report. Using data on household finances collected by the Federal Reserve, the Center for Retirement Research estimates that 53 percent of American workers 30 and older are on a path that will leave them unprepared for retirement. That marks a sharp deterioration since 2001, when 38 percent of Americans were at risk of declining living standards in old age. In 1989, 30 percent faced that risk. Read more.

REGULATOR PROBES "DARK POOL" INVESTING



The Financial Industry Regulatory Authority (FINRA) in late 2012 sent examination letters to about 15 dark-pool operators seeking information such as how the trading systems handle customer orders, what they disclose to clients and whether affiliates of the pool operators have access to client trading information, the Wall Street Journal reported on Saturday. In dark-pool investing, investors post buy-and-sell orders away from the public market. Most of the letters have been returned, and the regulator is evaluating the responses, said John Malitzis, executive vice president of market regulation at FINRA. Unlike stock exchanges, which are regulated by the Securities and Exchange Commission, the trading venues in dark pools are not required to regularly tell market regulators details about how they handle orders. Dark pools have become controversial as their share of stock trading has increased. One area of concern is whether certain dark-pool clients get more information than other investors about how the venues operate, giving them an edge, said Malitzis. "We asked a lot of questions about disclosure," he said. "We're trying to get a sense of what firms are doing and how they're doing it." Read more. (Subscription required.)

LIVE STREAM AVAILABLE FOR THURSDAY'S CHAPTER 11 COMMISSION HEARING AT VALCON 2013



For those not able to attend the VALCON 2013 conference starting tomorrow in Las Vegas, there will be a live webstream of Thursday's Chapter 11 Commission field hearing looking at valuation issues. The hearing will take place from 2-4 p.m. PT (5-7 p.m. ET) and will be streamed live at http://commission.abi.org.

JUST ADDED FOR APRIL! ABI LIVE WEBINAR "STUDENT LOANS: BANKRUPTCY MAY NOT HAVE THE ANSWERS - BUT DOES CONGRESS?"



Do not miss the "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?" webinar presented by ABI's Consumer Bankruptcy Committee on April 10 from noon-1:15 ET. ABI's 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. This webinar is sure to sell out; register now for the special ABI member rate of $75!

EXPLORE CURRENT ISSUES FOR FINANCIAL ADVISORS IN BANKRUPTCY CASES AND MORE 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

• 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!

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: BLACK V. BONNIE SPRINGS FAMILY LTD. PARTNERSHIP (IN RE BLACK; 9TH CIR.)



Summarized by Tom Phinney of Parkinson Phinney

The Ninth Circuit BAP affirmed the summary judgment in favor of the creditor, which excepted debts from discharge under § 523(a)(6) based on the preclusive effect of a Nevada state court judgment for abuse of process, nuisance and "oppression."

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: S CORPORATION MAY NOT PAY SHAREHOLDERS' POST-PETITION TAX OBLIGATIONS



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Finding that it would violate the absolute priority rule, the U.S. Bankruptcy Court for the Western District of North Carolina in In re Carolina Internet Ltd. held that an insolvent S corporation may not pay post-petition taxes on behalf of its shareholders because a corporation’s creditors have priority over its shareholders, according to a recent blog 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

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

February

- 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

- 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.

FIRST QUARTER BANKRUPTCY FILINGS FALL 16 PERCENT FROM 2012, COMMERCIAL FILINGS DROP 27 PERCENT

Total bankruptcy filings in the United States decreased 16 percent in the first calendar quarter (Jan. 1 - March 31) of 2013 from the same period in 2012, according to data provided by Epiq Systems, Inc. Bankruptcy filings totaled 263,516 in the first quarter of 2013, down from the 314,832 filings registered in the first calendar quarter of 2012. Total commercial filings for the first three months of 2012 were 11,521, representing a 27 percent decrease from the 15,869 filings during the same period in 2012. The 251,995 total noncommercial filings recorded in the first calendar quarter of 2013 represented a 16 percent decrease from the 2012 total of 298,963. Click here to read the full ABI press release.

Click here to access the March 2013 bankruptcy filing data charts.

NEW BANKRUPTCY CLAIMS TRANSFER FEE TO TAKE EFFECT MAY 1

Federal bankruptcy courts will institute a new $25 fee for filing evidence of claims transfers, transactions in which bankruptcy claims are sold by one creditor to another, usually as part of a speculative investment, according to a release today by the Administrative Office of the U.S. Courts. The fee, approved last September by the Judicial Conference of the United States, will take effect May 1. The fee will be assessed by bankruptcy courts on each individual claim or partial claim that is transferred, and it must be paid by the creditor that files evidence of the transfer (typically the claim transfer form) with the courts. Debtors filing for bankruptcy will not be affected by the fee. The fee must be paid by credit card, using Pay.gov, when the claims transfer is filed with the courts' Case Management/Electronic Case Files system, or by whatever means is designated by the court if the claims transfer is not filed electronically. Read more.

OBAMA ADMINISTRATION PUSHES BANKS TO MAKE HOME LOANS TO PEOPLE WITH WEAKER CREDIT

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place, the Washington Post reported yesterday. President Obama's economic advisers and outside experts say the nation's housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession. In response, administration officials say that they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default. Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default. Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today's low interest rates, among other steps. Read more.

In related news, the improving job market is lifting incomes and helping families repair credit scores, expanding the pool of eligible buyers and providing additional firepower to the housing recovery, Bloomberg News reported yesterday. About 7 million mortgageholders have had to leave their homes since 2007 because of foreclosure or a short sale, in which a property is sold for less than is owed, according to RealtyTrac. More than 1 million of them are now eligible for mortgages backed by the Federal Housing Administration, which requires a three-year waiting period and a minimum 3.5 percent down payment, said Mark Zandi, chief economist for Moody’s Analytics Inc. While many Americans will be blocked from buying because of insufficient credit, savings and income, eligible households will expand to nearly 2 million by the end of 2014, Zandi said. Read more.

ANALYSIS: AS BUSINESS LENDING INCREASES, CONCERNS EMERGE ABOUT PROFIT

The recent uptick in bank business lending is starting to flash some warning signs that banks are making loans to businesses at rates that are so low they may end up being unprofitable, the New York Times DealBook blog reported yesterday. A recent survey by the Federal Reserve shows that American banks are charging an average of just 2.83 percent on commercial and industrial loans, down from 3.4 percent a year earlier. Banks of all sizes are participating in this resurgence, including smaller banks, which managed to avoid many of the excesses of the credit boom of the last decade. Extraordinarily low interest rates have breathed life into several markets where companies go to borrow. Last year, companies issued nearly $360 billion of junk bonds in the U.S., according to Dealogic. Less noticed was the increase in commercial and industrial loans at American banks. They added $174 billion of such loans in 2012, a 13 percent increase from the prior year, according to figures from the Fed. Read more.

GAO: 401(K) COMPANIES OFTEN MISLEAD ACCOUNT-HOLDERS

Money management firms frequently offer workers misleading and self-serving information about how to handle their retirement savings when they change jobs, according to a Government Accountability Office report released yesterday, the Washington Post reported. Departing workers are often encouraged to roll their accounts into individual retirement accounts (IRAs) run by the firms that already manage their retirement money, even when it would be best for the outgoing employees to keep their money in a 401(k), the GAO investigation concluded. Having workers move their money into IRAs typically allows money management companies to harvest bigger fees for handling the retirement money, the report said. The GAO had undercover investigators call 30 money management firms posing as workers about to change jobs in an effort to learn how money managers market their services. In seven cases, they were given incorrect information, including that moving their money into an IRA would be "free," even though workers would incur ongoing fees by opening the accounts. The GAO also reviewed the websites of 10 large firms and found that five incorrectly said that their IRAs were free. Read more.

LATEST ABI PODCAST EXAMINES BANKRUPTCY VALUATION ISSUES

ABI's latest podcast features ABI Resident Scholar Prof. Scott Pryor speaking with Dr. Israel Shaked of The Michel-Shaked Group (Boston) and Robert F. Reilly of Willamette Management Associates Inc. (Chicago), authors of a new ABI publication, A Practical Guide to Bankruptcy Valuation. Shaked and Reilly discuss their book and other issues involved in the complex task of valuing a bankrupt or financially distressed business. Click here to listen to the podcast.

For more information or to purchase A Practical Guide to Bankruptcy Valuation, please click here.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: STOCKTON MAY WIN THE BATTLE, BUT LOSE THE WAR

Although Stockton, Calif. established the right to be in a chapter 9 municipal bankruptcy, the judge warned the city that victory may be short-lived if bondholders prove that pensioners must take a haircut along with other unsecured creditors. The latest Bloomberg bankruptcy video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle examines the issue. Click here to watch.

TOMORROW! DON’T MISS THE ABI LIVE WEBINAR – "LEGACY LIABILITIES: DEALING WITH ENVIRONMENTAL, PENSION, UNION AND SIMILAR TYPES OF CLAIMS"

A panel of experts has been assembled for a webinar on April 5 from 1-2:15 p.m. ET to discuss environmental and pension liabilities, the statutory schemes under which these liabilities arise and the key players involved. Are non-monetary environmental claims dischargeable? Do post-petition expenditures for environmental cleanup constitute administrative expenses? When can an employer terminate a pension plan in bankruptcy, what is the process and what are the consequences? Learn the answer to these questions and more from the comfort of your own office. Special ABI member rate is available! Register here.

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: ARROYO V. SCOTIABANK DE PUERTO RICO (IN RE ARROYO; 1ST CIR.)

Summarized by William Amann of Craig, Deachman & Amann PLLC

The First Circuit ruled that a chapter 7 debtor lacked standing to appeal because he could not demonstrate that either (1) a reasonable possibility existed that a surplus would exist if the order on appeal was denied or (2) the appealed order adversely affected his discharge.

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: FURTHER EXAMINATION OF STOCKTON'S ONGOING CHAPTER 9 CASE

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post takes a closer look at Stockton, Calif.'s chapter 9 case, which was allowed to continue after Bankruptcy Judge Christopher Klein on Monday issued a bench ruling finding that Stockton is an eligible debtor and therefore entitled to remain in bankruptcy.

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.

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Join our networks to expand yours.

2013

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.

August
- Mid-Atlantic Bankruptcy Workshop
    August 8-10, 2013 | Hershey, Pa.

FORECLOSURE STARTS DOWN ON ANNUAL BASIS IN OCTOBER



U.S. homes are entering the foreclosure process at a slower pace than a year ago, and fewer properties are being repossessed by lenders, the Associated Press reported today. Between January and October, 971,533 homes were placed on the path to foreclosure, down 8 percent from the same period last year, foreclosure listing firm RealtyTrac Inc. said today. At the other end of the foreclosure process, banks repossessed 559,063 homes through the end of last month, a decline of nearly 19 percent from a year earlier. That puts lenders on pace to complete 650,000 foreclosures this year, down from 800,000 in 2011, the firm said. The data, however, also shows that there are signs at the state level that more homes could end up in foreclosure in the coming months. The trend is most evident in judicial-process states such as New York, Florida and New Jersey. Fourteen states saw an annual increase in foreclosure activity, which RealtyTrac measures as the number of homes receiving a default notice, scheduled for auction or repossessed by the bank. Read more.

To see the percentage of loans in foreclosure by state (judicial v. non-judicial) for 3Q 2012, please visit ABI's Chart of the Day page.

MAJOR RETAILERS SELLING FINANCIAL PRODUCTS, CHALLENGING BANK OFFERINGS



As the nation's largest banks remain stingy with credit offerings following the financial downturn, major retailers are stepping in to fill the void, the New York Times reported today. Customers can now withdraw cash at an ATM with a prepaid card from Walmart, take out a loan at Home Depot for a kitchen renovation or kick-start a new venture with a small-business loan from Sam’s Club. This year, Walmart even started to test selling a life insurance policy. Consumer advocates are torn about the growth of this shadow banking industry. Financial products are making it into the hands of people who might not otherwise qualify for them, but these products are not always subject to the same regulations as bank products are. And to turn a profit, retailers generally have to charge more to people with poor credit or none at all. Read more.

SEC REPORT FINDS FAULTS WITH CREDIT RATERS



The Securities and Exchange Commission (SEC) said in a report today that the credit-ratings industry remains plagued by failures in meeting its own standards, weak oversight and poor documentation of its rating decisions, despite years of heightened scrutiny after the financial crisis, the Wall Street Journal reported. In its second annual report on the nine credit-rating firms registered with the agency, the SEC said that Standard & Poor's Ratings Services, Moody's Investors Service and Fitch Ratings still do not always follow their own standards for rating deals. The firms are required by the SEC to disclose and follow their methodologies for assigning ratings to securities so that investors know how those deals are being judged. The Dodd-Frank financial overhaul legislation required the SEC to conduct annual examinations of the registered rating firms, and deliver a report on its findings. Read more. (Subscription required.)

Click here to read the SEC's report.

REGULATORS SEEK CHANGES IN HOW MONEY-MARKET FUNDS OPERATE



The government on Tuesday inched closer to tightening its oversight of the $2.6 trillion money-market industry when a panel of top financial regulators put forward options for addressing the industry’s vulnerabilities, the Washington Post reported yesterday. The industry immediately expressed frustration with the proposal, saying that it resembles a plan that failed to gain support from the Securities and Exchange Commission. That plan, vigorously opposed by the industry, stalled when three of the SEC’s five commissioners said they would reject it. Under the recommendations put forward on Tuesday by the Financial Stability Oversight Council, the funds would have to set aside reserves as a buffer for times of crisis, restrict how quickly investors can redeem their money, or allow the value of a fund’s shares to fluctuate. Currently, one share of a money market fund is generally valued at $1. The funds have been popular with investors because they seem as stable and reliable as a bank account. But unlike bank accounts, they are not federally insured, and that image of security was shattered during the 2008 financial crisis when the Reserve Primary Fund, the nation’s first money-market fund, "broke the buck" because its value fell below $1 a share. 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.

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: STOEBNER V. SAN DIEGO GAS & ELECTRIC CO. (IN RE LGI ENERGY SOLUTIONS INC.; 8TH CIR.)



Summarized by Eric Lockridge of Kean Miller LLP

The Eighth Circuit ruled that where the debtor acted as a payment intermediary between a utility and a customer and the contract between the debtor and customer required the debtor to remit funds to the utility, the contract created a trust obligation in favor of the utility. Consquently, for purposes of § 547, the utility was a creditor of the debtor because the creditor (1) had unsecured claims for breach of trust and (2) was an intended beneficiary. Further, for purposes of calculating subsequent new value, the issue was not the subsequent services provided by the utility to the customer, but the subsequent payments from the customer to the debtor.

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: BOFA VS. MBIA AND THE FUTURE OF PRIVATE LABEL SECURITIZATION



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the ongoing litigation between BofA and MBIA and its effect on the future of mortgage-backed securities.

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.