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FANNIE MAE REGULATOR RESTRICTS NEW PURCHASES TO QUALIFIED MORTGAGES



Fannie Mae and Freddie Mac are being asked by their regulator to limit purchases to loans meeting qualified-mortgage requirements and those exempt from Dodd-Frank Act ability-to-repay rules, Bloomberg News reported yesterday. The change announced yesterday by the Federal Housing Finance Agency means that beginning Jan. 10 next year, the U.S.-owned companies will not purchase interest-only mortgages, loans with 40-year terms or those with points and fees exceeding thresholds set by the Consumer Financial Protection Bureau. The government-sponsored enterprises will continue to buy loans that meet their own underwriting and delivery eligibility standards, FHFA said. Most loans purchased by Fannie Mae and Freddie Mac already meet qualified mortgage standards. Read more.

DEBT-REPAIR FIRM CHARGED IN FIRST CFPB CRIMINAL REFERRAL



In the first criminal referral from the Consumer Financial Protection Bureau, a debt-settlement company was accused by the U.S. of defrauding more than 1,200 people struggling with credit card debt, Bloomberg News reported today. U.S. Attorney Preet Bharara’s office today announced the unsealing of an indictment against New York-based Mission Settlement Agency, its manager, Michael Levitis, and three employees. Prosecutors allege that the defendants “systematically exploited and defrauded” people across the country. The case against Mission is the first criminal referral from the CFPB, according to the U.S. attorney’s office. In December, a Florida debt-relief company, Payday Loan Debt Solution Inc., was ordered to pay as much as $100,000 in refunds to customers under the first joint enforcement action between the agency and states. Mission and its employees lied about its fees, taking thousands of dollars from funds that its customers had set aside because they believed the money would be used to pay creditors, according to the indictment. For the majority of customers, Mission did little or no work and failed to reduce debt, prosecutors said. Read more.

INTERNET SALES TAX BILL FACES TOUGH SELL IN HOUSE



Traditional retailers and cash-strapped states face a tough sell in the House as they lobby Congress to limit tax-free shopping on the Internet, the Associated Press reported yesterday. The Senate voted 69-27 yesterday to pass a bill that empowers states to collect sales taxes from Internet purchases. Under the bill, states could require out-of-state retailers to collect sales taxes when they sell products over the Internet, in catalogs, and through radio and TV ads. The sales taxes would be sent to the states where the shoppers live. Current law says that states can only require retailers to collect sales taxes if the merchant has a physical presence in the state. The bill got bipartisan support in the Senate but faces opposition in the House, where some lawmakers regard it as a tax increase and anti-consumer. Read more.

COLLEGES CUTTING PRICES BY PROVIDING MORE FINANCIAL AID



Private U.S. colleges, worried that they could be pricing themselves out of the market after years of tuition increases, are offering record financial assistance to keep classrooms full, the Wall Street Journal reported yesterday. The average "tuition discount rate"—the reduction off list price afforded by grants and scholarships given by these schools—hit an all-time high of 45 percent last fall for incoming freshmen, according to a survey being released Monday by the National Association of College and University Business Officers. It is likely that some private colleges will be forced to be even more generous with discounts this fall. As of the May 1 deadline for many high-school seniors to commit for their freshman year of college, early reports suggest some non-top-tier schools fell 10-20 percent short of enrollment targets, said Jim Scannell, president of Scannell & Kurz, a consulting firm in Pittsford, N.Y., that works with colleges on pricing and financial-aid strategies. The jump in aid shows that many colleges are losing pricing power as more families focus on cost and value. Read more. (Subscription required.)

LISTEN TO THE MEDIA TELECONFERENCE EXAMINING ABI’S ETHICS TASK FORCE REPORT!



ABI held a media teleconference on May 3 that examined the recommendations contained in the ABI Ethics Task Force’s final report. Experts included Task Force reporters Profs. Nancy B. Rapoport of the UNLV William S. Boyd School of Law (Las Vegas) and Lois R. Lupica of the University of Maine School of Law (Portland, Maine), as well as Task Force member Edward T. Gavin of Gavin/Solmonese LLC (Wilmington, Del.). To listen to the teleconference, please click here.

For a copy of the report, please click here.

NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CLASS ACTIONS IN BOTH BUSINESS AND CONSUMER CASES



Class action lawsuits in both chapter 11 and 13 cases are becoming more prevalent. Are you wondering whether your clients’ WARN Act claims would be better pursued against a debtor company in a class action adversary proceeding or in a class proof of claim, or both? If your client has been sued in a debtor’s consumer class action adversary proceeding, do you know the best defenses against class certification? ABI's panel of experts will highlight the case law and explore the potential benefits and pitfalls of class actions by creditors against debtor companies in chapter 11 cases and by debtors/trustees against creditors in chapter 13 cases on May 29 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

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



Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI's Golf Tour's first stop at Lake Presidential Golf Club. Next up for the Tour is the famed Bear course at the Grand Traverse Resort at the Central States Bankruptcy Workshop on June 14. Final scoring to win the Great American Cup—sponsored by Great American Group—is based on your top three scores at seven scheduled ABI events, so play as many as you can before the tour wraps up at the Winter Leadership Conference in December. See the Tour page for details and course descriptions. The ABI Golf Tour combines networking with fun competition, as golfers "play their own ball." Including your handicap means everyone has an equal chance to compete for the glory of being crowned ABI's top golfer of 2013! There's no charge to register or participate in the Tour, and women are most welcome.

ABI MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO



ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: FISHER ISLAND LTD. V. FISHER ISLAND INVESTMENTS, INC. (11TH CIR.)



Summarized by Kathleen DiSanto of Jennis & Bowen, P.L.

Affirming the district court, the Eleventh Circuit Court of Appeals held that the district court properly dismissed an appeal from the bankruptcy court for lack of standing. The district court affirmed the bankruptcy court’s order requiring six creditors who filed involuntary bankruptcy petitions to post a $100,000 bond in accordance with Section 303(e) of the Bankruptcy Code. Fisher Island Limited, a non-debtor third party, sought an extension of time to appeal the district court’s order affirming the bankruptcy court’s order on the bond requirement and filed an untimely notice of appeal. The district court denied Fisher Island Limited’s motion for extension and dismissed the appeal based on a lack of standing.

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: INSURANCE COVERAGE FOR PONZI SCHEME LOSSES?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines whether it would be possible to provide insurance against losses from investing in a Ponzi scheme.

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL



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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

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

- ABI Live Webinar: Consumer Class Actions

     May 29, 2013

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

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

- INSOL’s Latin American Regional Seminar

     June 13, 2013 | São Paulo, Brazil

- Charity Golf Tournament

     June 14, 2013 | City of Industry, Calif.

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- Southeast Bankruptcy Workshop

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

August

- Mid-Atlantic Bankruptcy Workshop

    August 8-10, 2013 | Hershey, Pa.

- Southwest Bankruptcy Conference

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

September

- ABI Endowment Golf & Tennis Outing

    Sept. 10, 2013 | Maplewood, N.J.

- ABI Endowment Baseball Game

    Sept. 12, 2013 | Baltimore, Md.

LOANS BORROWED AGAINST PENSIONS SQUEEZE RETIREES



Pension advances are having devastating financial consequences for a growing number of older Americans, threatening their retirement savings and plunging them further into debt, according to a New York Times report on Sunday. The advances, federal and state authorities say, are not advances at all, but carefully disguised loans that require borrowers to sign over all or part of their monthly pension checks. They carry interest rates that are often many times higher than those on credit cards. Pension-advance companies are aggressively courting people with public pensions, such as military veterans, teachers, firefighters, police officers and others. The companies operate largely outside of state and federal banking regulations, but are now drawing scrutiny from Congress and the Consumer Financial Protection Bureau. A review by the New York Times of more than two dozen contracts for pension-based loans found that after factoring in various fees, the effective interest rates ranged from 27 percent to 106 percent — information not disclosed in the ads or in the contracts themselves. Furthermore, to qualify for one of the loans, borrowers are sometimes required to take out a life insurance policy that names the lender as the sole beneficiary. Read more.

EDITORIAL: REGULATORS SHOULD CONTINUE CRACKDOWN ON PREDATORY LENDERS



Federal banking regulators are clamping down on the small but growing number of banks that emulate the predatory practices of storefront payday lenders, according to an editorial in yesterday's New York Times. The Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency last week proposed new guidelines for the banks they oversee. The Federal Reserve, which oversees other banks that engage in payday lending, should follow suit, according to the editorial. The payday industry business model relies on the fact that most people cannot afford to repay the original loan, which means they end up saddled with long-term debts carrying interest rates of 400 percent or more, according to the editorial. After watching millions of consumers being eaten alive by the transactions, 15 states have banned these predatory loans. The federal agencies are soliciting public comment on the proposals, but on the face of it these loans seem to be grounded in common-sense lending practices. The banks will have to assess the consumer’s ability to repay before making a loan. Banks will be required to wait 30 days before making another loan, and will not be able to extend loans to borrowers who have not paid previous obligations. Finally, banks will be required to disclose the actual cost of the loan. Read more.

CFTC DEMANDS THAT BANKS PROVE DODD-FRANK ACT SWAPS COMPLIANCE



The U.S. Commodity Futures Trading Commission has given the world’s largest banks until May 3 to prove that they are complying with a part of the Dodd-Frank Act, Bloomberg News reported today. The 2010 law requires swaps brokers to accept or reject a trade for clearing in less than 60 seconds. Goldman Sachs Group Inc., Bank of America Corp., Credit Suisse Group AG, UBS AG, Barclays Plc and JPMorgan Chase & Co. were among the banks that received the April 17 letter, a copy of which was given to Bloomberg News. The CFTC in November granted three-month delays to at least eight banks for implementing the time standard. Read more.

COMMENTARY: SHOULD SMALLER BANKS REALLY HAVE LESS CAPITAL PROTECTION?



While Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) last week introduced S. 798, the "Terminating Bailouts for Taxpayer Fairness Act," nowhere in the proposal is there a provision to end “too big to fail,” according to a New York Times DealBook blog on Friday. What the two senators are offering, according to the commentary, is an unprecedented attempt to unfairly advantage smaller “regional banks” and disadvantage bigger “megabanks.” The pretext underlying the Brown-Vitter proposal is that smaller regional banks are less risky than the large institutions. Historically, however, just the opposite has been true, according to the commentary. It was the smaller banks that failed in huge numbers during the Great Depression. And despite the urban legend of ruined Wall Street bankers jumping from windows, the New York banks had much more diversified loan and investment portfolios than the more rural, farm-loan-heavy smaller community banks. In addition, the New York banks were more professionally managed, according to the commentary. Read more.

Click here to read a the text of S. 798.

CEO PAY RATIO CLIMBS AFTER FINANCIAL CRISIS



Across the Standard & Poor’s 500 Index of companies, the average multiple of CEO compensation to that of rank-and-file workers is 204, up 20 percent since 2009, according to data compiled by Bloomberg News. The numbers are based on industry-specific estimates for worker compensation. Almost three years after Congress ordered public companies to reveal CEO-to-worker pay ratios under the Dodd-Frank law, the actual numbers remain unknown. Mandatory disclosure of the ratios remains bottled up at the Securities and Exchange Commission, which has not yet drawn up the rules to implement it, and some of America’s biggest companies are lobbying against the requirement. The average ratio for the S&P 500 companies is up from 170 in 2009, when the financial crisis reduced many compensation packages. Estimates by academics and trade-union groups put the number at 20-to-1 in the 1950s, rising to 42-to-1 in 1980 and 120-to-1 by 2000. Former J.C. Penney Co. Chief Executive Officer Ron Johnson, who was replaced on April 8 after less than 18 months on the job, had the highest pay multiple, based on $53.3 million in compensation reported in the company’s 2012 proxy. Johnson received a compensation package worth 1,795 times the average wage and benefits of a U.S. department store worker when he was hired in November 2011. Read more.

"CROWDFUNDING" TREND POISED TO MAKE MARK ON U.S. INVESTING LANDSCAPE



Gathering small sums of money from a large number of people online — known as “crowdfunding” — is poised to take off in the investing world, with backing from Washington policymakers who see it as a chance to involve the masses in an arena dominated by big Wall Street firms, the Washington Post reported today. A law signed by President Obama a year ago enables small businesses to offer a stake in their firms via the Web, giving the small companies access to a new pool of investors. Companies will be able to raise up to $1 million a year this way once the law is implemented. But given its potential to upend the nation’s investment landscape, critics are worried that crowdfunding will leave unsophisticated investors vulnerable to fraud or big losses, especially since small businesses generally suffer high failure rates and the firms involved in crowdfunding will have to make only limited financial disclosures. Those fears have played a role in delaying new regulations from the Securities and Exchange Commission, which was supposed to adopt rules nearly a year ago to put the crowdfunding law into effect. Agency observers expect them to come out soon, although no timeline has been set for their consideration. Read more. For more on crowdfunding and private investment trends, please see the podcast below.

LATEST ABI PODCAST EXPLORES NEW METHODS FOR COMPANIES TO RAISE CAPITAL



The latest ABI podcast features ABI Resident Scholar Scott Pryor speaking with Daniel Gorfine of the Milken Institute and Ben Miller, co-founder of investment platform Fundrise, about new ways for companies to raise money. Gorfine and Miller explore issues surrounding crowdfunding and potential regulatory responses to shifts in how companies raise money. Click here to listen to the podcast.

NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CLASS ACTIONS IN BOTH BUSINESS AND CONSUMER CASES



Class action lawsuits in both chapter 11 and 13 cases are becoming more prevalent. Are you wondering whether your clients’ WARN Act claims would be better pursued against a debtor company in a class action adversary proceeding or in a class proof of claim, or both? If your client has been sued in a debtor’s consumer class action adversary proceeding, do you know the best defenses against class certification? ABI's panel of experts will explore the potential benefits and pitfalls of class actions by creditors against debtor companies in chapter 11 cases and by debtors/trustees against creditors in chapter 13 cases by highlighting recent appellate and bankruptcy court decisions on May 29 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO



ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.

ABI IN-DEPTH

NEW CASE SUMMARY ON VOLO: LONGAKER V. BOSTON SCIENTIFIC CORP. (8TH CIR.)



Summarized by Brendan Gage of the U.S. Bankruptcy Court for the Eastern & Western Districts of Arkansas

The Eighth Circuit Court of Appeals held that the debtor’s breach-of-contract action was properly dismissed for lack of subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) because § 541(a)(6)’s exception to property of the estate only applies when there is a post-petition payment attributable to post-petition services.

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: SAN BERNARDINO SAYS OK TO CALPERS IN NEW BUDGET

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post looks at the decision by the city of San Bernardino to resume payments to the California Public Employees’ Retirement System (CalPERS), a decision not likely to sit well with bondholders and other creditors.

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!



ABI now offers conference registrants the option to participate in the ABI Golf Tour. The Tour kicked off at ABI’s Annual Spring Meeting and will take place concurrently with most conference golf tournaments. The next tour stop is at the Central States Bankruptcy Workshop on June 14 in Traverse City, Mich. Designed to enhance the golfing experience for serious golfers while still offering a fun networking opportunity for players of any ability, tour participants will "play their own ball" in stroke play format. 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

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

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

INSOL INTERNATIONAL



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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

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

- ABI Live Webinar: Consumer Class Actions

     May 29, 2013

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

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

- INSOL’s Latin American Regional Seminar

     June 13, 2013 | São Paulo, Brazil

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- Southeast Bankruptcy Workshop

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

August

- Mid-Atlantic Bankruptcy Workshop

    August 8-10, 2013 | Hershey, Pa.

- Southwest Bankruptcy Conference

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

September

- ABI Endowment Golf & Tennis Outing

    Sept. 10, 2013 | Maplewood, N.J.

- ABI Endowment Baseball Game

    Sept. 12, 2013 | Baltimore, Md.

FINAL REPORT OF ABI’S ETHICS TASK FORCE PROVIDES GUIDANCE TO BOTH CONSUMER AND BUSINESS BANKRUPTCY PROFESSIONALS



The ABI National Ethics Task Force released its final report at ABI’s 31st Annual Spring Meeting to provide recommendations for both consumer and business practitioners for uniform ethical standards in bankruptcy practice. Funded by ABI’s Anthony H.N. Schnelling Endowment Fund, the Task Force formulated a set of uniform ethical standards on a variety of bankruptcy-related matters, including use of conflicts counsel, employment of counsel and necessary disclosures, competency standards, and fiduciary duties of counsel for the debtor in possession (DIP).



The Ethics Task Force was established in 2011 by then-ABI President Geoffrey L. Berman of Development Specialists Inc. (Los Angeles) to address ethics problems encountered by bankruptcy professionals and judges as state ethics rules do not always fit with the realities of bankruptcy practice. The Task Force formed committees, surveyed bankruptcy professionals, academics and judges, and examined recent case law to focus on seven recommendations:

1. proposed amendments to Bankruptcy Rule 2014 governing the hiring of bankruptcy professionals, including greater disclosure provisions for conflicts and connections;

2. duties of counsel for a debtor in possession as fiduciary and responsibilities to the estate;

3. framework for pre-approval of terms for retention and compensation under 11 U.S.C. § 328 to provide efficiency and clarity to courts in bankruptcy professional employment applications;

4. use of conflicts counsel in business reorganization cases, especially in large or complicated cases that may present significant conflicts;

5. best practices for limited services representation in consumer bankruptcy cases;

6. competency for debtors’ counsel in business and consumer cases; and

7. report on best practices on creditors’ committee solicitation.

Profs. Nancy B. Rapoport of the UNLV William S. Boyd School of Law (Las Vegas) and Lois R. Lupica of the University of Maine School of Law (Portland, Maine) served as reporters and said that while the report provides an ethical guide to all in the bankruptcy profession, new bankruptcy lawyers in particular should make sure they review the final report. "The findings and recommendations within the report are essential for new bankruptcy attorneys to absorb," Lupica said.

To read the ABI Ethics Task Force Final Report, please click here.

REPORT: DISCLOSURE OF INSIDER PAY MURKY IN A FEW CHAPTER 11 CASES



A Wall Street Journal analysis released today found that in 250 chapter 11 cases over the past five years, 19 companies tried to keep the details of insider pay secret, and 17 were successful at doing so. When Reader's Digest first ventured into bankruptcy in the summer of 2009, the multimillion-dollar payouts to top executives that showed up in court filings sparked outrage from employees facing layoffs and retirees staring down benefit cuts. Less than four years later, the publisher is now back in chapter 11, but how much its insiders were paid is not in the public record. RG Steel, whose collapse last year put thousands out of work, identified its top executives only as "Employee A" through "Employee G" when listing what it paid insiders. New York law firm Dewey & LeBoeuf LLP navigated bankruptcy without identifying the firm's top earners. Media giant Tribune Co. didn't reveal the names of insiders who collected $268 million the same year a leveraged buyout put the company on the path to bankruptcy. Read more. (Subscription required.)

DOWN PAYMENT RULES ARE AT THE HEART OF THE MORTGAGE DEBATE



While making home buyers put more money down seemed like an easy fix to prevent the excesses of the housing market, the issue is up for debate as the housing market starts to return and the subprime mess fades from memory, the New York Times DealBook blog reported yesterday. Lenders and consumer advocates — rarely on the same side of the issue — are now cautioning against down payment requirements. They argue that such restrictions could limit lending, and prevent lower-income borrowers from buying homes. They also contend that the new mortgage rules put in place this year will do enough to limit foreclosures, making down payment requirements somewhat superfluous. Regulators want to protect borrowers and promote homeownership. But they also want to encourage lending and insulate the financial system from future shocks. Read more.

ANALYSIS: HOW THE WHEELS CAME OFF FOR FISKER AUTOMOTIVE



The near-collapse of Anaheim, Calif.-based Fisker Automotive Inc.—it missed a loan payment on Monday, earlier dismissed most of its staff and has hired bankruptcy advisors—comes as affluent buyers have turned away from the once-promising startup and falling gasoline prices have chipped away at demand for electric cars, the Wall Street Journal reported yesterday. Barring a last-minute rescue, the company’s dissolution also represents one of the most prominent failures of the government's use of public funds to wean American industry from fossil fuels—and of how that government backing pushed Fisker to reach too far. At its peak, tiny Fisker received one of the largest U.S. venture capital payouts ever. Its founders raised more than $1 billion from highly regarded Silicon Valley venture funds including Kleiner Perkins Caufield & Byers. Its biggest single investor, though, was the U.S. In 2009, the Obama administration's interest in cultivating electric cars got the untested Fisker loans totalling $529 million, more than the company had initially requested, and an amount that encouraged private backers to chip in more funds. But despite its wealthy backers, Fisker had plenty of problems. Troubles with suppliers and regulatory requirements added months to the release of the company's first car, the Karma. Although engineers expressed concerns that the software that ran the Karma's display screens and phone connections was not ready, the Karma was released to customers. The company said that its problems were similar to those that would be expected of any new model. In May 2011, the Obama administration, under pressure from critics of its alternative energy spending and after the high-profile failure of U.S.-backed solar panel maker Solyndra LLC, froze disbursements to Fisker, citing delays in the Karma's rollout. Read more. (Subscription required.)

NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CLASS ACTIONS IN BOTH BUSINESS AND CONSUMER CASES



Class action lawsuits in both chapter 11 and 13 cases are becoming more prevalent. Are you wondering whether your clients’ WARN Act claims would be better pursued against a debtor company in a class action adversary proceeding or in a class proof of claim, or both? If your client has been sued in a debtor’s consumer class action adversary proceeding, do you know the best defenses against class certification? ABI's panel of experts will explore the potential benefits and pitfalls of class actions by creditors against debtor companies in chapter 11 cases and by debtors/trustees against creditors in chapter 13 cases by highlighting recent appellate and bankruptcy court decisions on May 29 from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO



ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: IN RE RODRIGUEZ (3D CIR.)



Summarized by Thomas Horan of Womble Carlyle Sandridge & Rice LLP



Because a chapter 13 plan confirmation order may be revoked only if such order was procured by fraud, the Third Circuit ruled that absence of such fraud prevents the court from reconsidering the plan confirmation order under Rule 60(b) of the Federal Rules of Civil Procedure, made applicable in a bankruptcy case by Rule 9014 of the Federal Rules of Bankruptcy Procedure.

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: WILL THE NEXT WAVE OF CHAPTER 9 FILINGS BE FROM PUBLIC HOSPITALS?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new blog post examines the possibility of a wave of chapter 9 filings by public hospitals.

For further analysis on bankruptcy filings and distress by hospitals, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition, from ABI's Bookstore!

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 ABI GOLF TOUR!



ABI now offers conference registrants the option to participate in the ABI Golf Tour. The Tour kicked off at ABI’s Annual Spring Meeting and will take place concurrently with most conference golf tournaments. It 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" in stroke play format. 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 and early leader board.

ABI Quick Poll

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

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

INSOL INTERNATIONAL



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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

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

- ABI Live Webinar: Consumer Class Actions

     May 29, 2013

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

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

- INSOL’s Latin American Regional Seminar

     June 13, 2013 | São Paulo, Brazil

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

     July 11-14, 2013 | Newport, R.I.

- Southeast Bankruptcy Workshop

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

August

- Mid-Atlantic Bankruptcy Workshop

    August 8-10, 2013 | Hershey, Pa.

REPORT: STUDENT BORROWERS RETREAT FROM HOME BUYING



The Federal Reserve Bank of New York issued a report yesterday saying that Americans who borrowed to pay for school are now less likely to have a home mortgage at age 30 than those who never had student debt, a reversal of past trends, the Wall Street Journal reported today. As of late last year, roughly 22 percent of 30-year-olds with a history of student debt—either currently or in the past—owed money on a mortgage, the Fed said. That compares with 24 percent of 30-year-olds who never took out student loans. Similarly, young people with a history of student debt are less likely to have a car loan than those who did not have student loans, the report said. This marks a significant turnabout from recent history. For most of the past decade, student borrowers were much more likely to own a home or car, relative to those without student loans, because they typically were college graduates with higher incomes. But now, student debt could be among the factors holding them back, at least temporarily, the Fed report suggests. The report shows that credit scores for student borrowers have fallen sharply since the recession, likely due to higher average student-debt levels and a rise in delinquencies. Read more. (Subscription required.)

MORTGAGE RELIEF CHECKS GO OUT, ONLY TO BOUNCE



Many struggling homeowners received checks stemming from a $3.6 billion settlement with the nation’s largest banks over wrongful evictions and other abuses, only to find that the checks were bouncing, the New York Times DealBook Blog reported yesterday. It is unclear how many of the 1.4 million homeowners who were mailed the first round of payments covered under the foreclosure settlement have had problems with their checks. But housing advocates from California to New York and even regulators say that in recent days frustrated homeowners have bombarded them with complaints and questions. The mishap is just the latest setback to troubled homeowners. It took more than two years to resolve a federal investigation into foreclosure abuses, and even after the settlement was reached in January, the checks were delayed for weeks. Read more.

RISING BANK PROFITS TEMPT A PUSH FOR TOUGHER RULES



Banks have been reporting steady growth in earnings since the financial crisis, but their ballooning bottom lines could embolden lawmakers and regulators who want to introduce additional measures to overhaul the banking system, the New York Times DealBook blog reported yesterday. After the financial crisis, many officials involved in the regulatory revamping feared that tougher rules, like caps on bank assets, could destabilize the financial system and harm economic growth. It is a view that prominent bankers and lobbyists have also voiced. Despite industry opposition to the new rules, the buoyant bank profits could add to the ammunition that influential figures in Washington, D.C., are using to advocate for more radical ideas to overhaul the banks. "I hope the regulators move forward with tougher regulations," said Sheila C. Bair, a former chairwoman of the Federal Deposit Insurance Corp. and now a senior adviser at the Pew Charitable Trusts. "This wouldn’t endanger the economic recovery." Read more.

SEC TO MOVE PAST FINANCIAL CRISIS CASES UNDER CHAIRMAN WHITE



Mary Jo White, the first former prosecutor to serve as chairman of the U.S. Securities and Exchange Commission, has pledged to run a "bold and unrelenting" enforcement program at the agency charged with regulating Wall Street, Bloomberg News reported today. With financial crisis cases mostly done and some of the biggest insider-trading cases in history closed, White will have to chart a course into new areas to keep that pledge. White, who was sworn in last week, has already provided a few signals about what that cause might be. During her Senate confirmation hearing, she said that she intends to focus on high-frequency and automated trading. She has also raised questions about a drop in the number of accounting fraud cases the agency has brought in recent years. Read more.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: EASTERBROOK TURNS THE TIDE ON STUDENT LOANS



Why and when U.S.-managed hedge funds can go bankrupt in the Caribbean, but not in the U.S., is the first item discussed on the new bankruptcy video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. The video ends with discussion of an opinion by U.S. Circuit Judge Frank Easterbrook, who's turning the tide against recent decisions that have left former students virtually incapable of shedding education loans in bankruptcy. Click here to watch the video.

Attending ASM? Don't miss Bloomberg's Bill Rochelle moderating the "BK 360 Revisited: ABI Past-Presidents Panel" session at lunch on Saturday from 12:30-2 p.m. ET.

ATTENDING ABI'S ANNUAL SPRING MEETING? MAKE SURE TO DOWNLOAD THE MOBILE APP FOR SMARTPHONES AND TABLETS!



The official Annual Spring Meeting mobile web app, sponsored by Diamond McCarthy LLP, is now available for iOS, Android and Blackberry devices! Utilize the app during ASM this week to view your personal schedule, browse what programs are taking place or search for information related to the meeting. The mobile web app stores the schedule data locally on your phone for offline access, too.

To take advantage of the ASM web app, bookmark the following address on your device’s browser: http://31stannualspringmeeting2013.sched.org/mobile

LIVE WEBSTREAMS OF THE GREAT DEBATES AND ABI'S CHAPTER 11 REFORM COMMISSION HEARING AVAILABLE TOMORROW FROM THE ANNUAL SPRING MEETING!



17TH ANNUAL GREAT DEBATES

Starting at 8:30 a.m. EST, the 17th Annual Great Debates will be streamed live at the following address: http://www.abiworld.org/debate13/

There will be three debates moderated by Jeffrey N. Pomerantz, ABI VP-Education, of Pachulski Stang Ziehl & Jones LLP (Los Angeles):

I. Past Presidents’ Debate

Resolved: The Bankruptcy Code should be revised to eliminate a debtor in possession's and trustee's ability to recover preferential transfers.

Pro: John D. Penn

Haynes and Boone LLP; Fort Worth

Con: Andrew W. Caine

Pachulski Stang Ziehl & Jones LLP; Los Angeles

II. Judicial Debate

Resolved: A claim against the debtor’s estate, transferred to a third party, should be treated the same as if in the hands of the original holder.

Pro: Hon. Arthur J. Gonzalez

New York University School of Law; New York

Con: Hon. Kevin J. Carey

U.S. Bankruptcy Court (D. Del.); Wilmington

III. Consumer Debate

Resolved: An attorney in a consumer case should be able to limit the scope of her employment.

Pro: Brian Michael Shockley

Clark & Washington, PC; Atlanta

Con: Pamela J. Griffith

Office of the U.S. Trustee; Washington, D.C.

ABI's CHAPTER 11 REFORM COMMMISSION HEARING AT 1 P.M. EST

There will also be a live webstream available on the ABI Chapter 11 Reform Commission's site (http://commission.abi.org) of the hearing tomorrow starting at 1 p.m. EST. Prepared witness testimony will also be linked to the site at that time.

Witnesses set to testify at the hearing include:

Panel I:

Wilbur L. Ross of WL Ross & Co. (New York)

Panel II (Bankruptcy Judges’ Panel):

Hon. Dennis R. Dow (W.D. Mo.)

Hon. Barbara J. Houser (N.D. Texas)

Hon. Pamela Pepper (W.D. Wis.)

Panel III:

Holly Felder Etlin of AlixPartners LLC (New York)

Daniel F. Dooley of MorrisAnderson (Chicago)

John M. Haggerty of Argus Management (Grafton, Mass.)

ABI IN-DEPTH

NEW ABI LIVE WEBINAR ON MAY 29 WILL FOCUS ON CONSUMER CLASS ACTIONS



Class action lawsuits in chapter 13 cases are becoming more prevalent. Are you wondering whether your client's claims would be better pursued in a class action? If your client is a defendant in a consumer class action, do you know what your client's best defenses are against class certification? ABI's panel of experts on May 29 from 1-2:15 p.m. ET will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases by highlighting two recent appeals court decisions. Special ABI member rate available! Click here to register.

ABI MEMBERS WELCOME TO ATTEND INSOL'S LATIN AMERICAN REGIONAL SEMINAR ON JUNE 13 IN SAO PAULO



ABI members are encouraged to attend INSOL’s Latin American regional seminar in São Paulo, Brazil, on June 13. The one-day seminar has been organized by INSOL in association with TMA Brasil to cover current cross-border insolvency and restructuring topics. The seminar is designed to be interactive and to allow the attendees to discuss and debate about practical issues with speakers who are leading players in the insolvency and restructuring field and with experience in insolvency proceedings involving different countries. The seminar will benefit from simultaneous translation in English, Portuguese and Spanish. For more information and to register, please click here.

LATEST CASE SUMMARY ON VOLO: THOMAS V. BENDER (IN RE THOMAS; 11TH CIR.)



Summarized by Melissa Youngman of McCalla Raymer LLC



The Eleventh Circuit found no reversible error in the lower court's holding that proceeds from a post-petition real estate deal arising from a pre-petition option contract constituted property of the debtor's bankruptcy estate, pursuant to 11 U.S.C. § 541.

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: SMALL BANKS WOULD BENEFIT FROM BIG-BANK BREAKUPS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Taking on the size of firms that put our financial system at risk is the only way to eliminate unfair competitive advantages, unleash free markets and allow community banks to thrive, 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.

TEE OFF ON THE NEW ABI GOLF TOUR!



ABI offers conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour, which kicked off this morning at ABI’s Annual Spring Meeting, 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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2013

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

- ABI Live Webinar: Consumer Class Actions

     May 29, 2013

June

- Memphis Consumer Bankruptcy Conference

     June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

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

- INSOL’s Latin American Regional Seminar

     June 13, 2013 | São Paulo, Brazil

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.