Consumer Debt

DETROIT BECOMES BIGGEST U.S. CITY TO FILE FOR BANKRUPTCY



Detroit today became the biggest U.S. city to file for bankruptcy as it officially sought bankruptcy court protection from its creditors while it tries to eliminate a budget deficit and cut its long-term debt, Bloomberg News reported today. The city listed assets and debt of more than $1 billion in a chapter 9 petition filed today in federal court in Detroit. Kevyn Orr, the state-appointed emergency fiscal manager, warned in May that the city might run out of cash. His proposal to restructure more than $17 billion in debt and long-term obligations includes cutting pension payments, ending cost-of-living increases, removing some workers from the system and making the rest pay more. "Without a significant restructuring of its debt, the city will be unable to break the cycle of damaging cutbacks in essential municipal services and investments," Orr said in a report. The case is City of Detroit, 13-53846, U.S. Bankruptcy Court, Eastern District of Michigan (Detroit). Read more.



For an analysis of the situation in Detroit, municipal distress and chapter 9 bankruptcy, be sure to pick up a copy of ABI's Municipalities in Peril: The ABI Guide to Chapter 9, Second Edition, from the ABI Bookstore.

LEGISLATION REINTRODUCED TO STOP EMINENT DOMAIN PROPOSALS AIMED AT UNDERWATER HOMEOWNERS



Rep. John Campbell (R-Calif.) reintroduced "The Defending American Taxpayers from Abusive Government Takings Act" today to stop city and county governments from enacting eminent domain policies aimed at underwater homeowners, according to a press release today from Campbell's office. Despite the failure of Mortgage Resolution Partners LLC (MRP) to receive approval for their eminent domain proposal by San Bernardino County, Calif., and Chicago last year, local governments and cities around the country are entertaining similar proposals. Cities in California and Nevada continue to consider MRP's proposal for local governments to seize mortgages from bond trusts to cut balances and help homeowners. MRP recently sent letters to securities trustees and loan servicers asking them to verify their roles in specific deals and provide information about individual mortgages that could be purchased. MRP must try to negotiate to buy the loans before municipalities can use powers known as eminent domain to force the sales, and then they would then lower the principal owed. The moves signal a renewed battle over the initiative, which has drawn opposition from bondholders such as Pacific Investment Management Co. and DoubleLine Capital LP and at least 18 trade groups representing the finance industry, homebuilders and real-estate firms. Rep. Campbell introduced the same measure last year in response to the MRP proposal. "Using eminent domain to seize mortgages is not only legally questionable," said Campbell, "it represents a complete abrogation of private property rights. The federal government and the American taxpayer would be forced to bear all the risk in the event of a failure." To read Rep. Campbell's press release on the legislation, please click here.

To read the Bloomberg News analysis, please click here.

SENATORS REACH DEAL ON STUDENT LOANS, PREPARE FOR VOTE



Under pressure from the White House, senators are quickly moving forward with a plan to change how the government sets federal student loan interest rates, tying them to market rates but imposing caps on how high those rates can go, the Associated Press reported today. Senate Majority Leader Harry Reid (D-Nev.) said today that a vote could come this week. The deal was brokered by a bipartisan group of senators who have been negotiating for weeks, with the help of Department of Education staffers who have been camped out in their offices. Under this new deal, finalized today, undergraduates would all pay the same interest rate, a change from recent years when some low- and middle-income students received a lower rate. Graduate students and parents of students would have their own rates, which would be higher than those for undergraduates and have higher caps. The plan is expected to save the government $715 million over a decade, according to aides. For the coming school year, undergraduates would see rates of 3.86 percent. That's lower than the current fixed rate of 6.8 percent, but the new rate could go as high as 8.25 percent in future years. Graduate students would pay about 5.41 percent for the coming year and up to 9.5 percent in the future. Loans taken out by parents for their dependent children would have an interest rate around of 6.41 percent that could go as high as 10.5 percent. Right now, graduate students have interest rates of 6.8 and 7.9 percent, while parents pay 7.9 percent. Read more.

ANALYSIS: REGULATORY RIFT DEVELOPS GLOBALLY OVER FINANCIAL SYSTEM



Global regulators are pursuing disparate approaches to protecting the financial system against future shocks, fracturing an agreement forged in the wake of the 2008 financial crisis to adopt a coordinated response, the Wall Street Journal reported today. Policymakers, at odds over how to reduce risk in the financial system, are disagreeing over what the proper capital levels should be for banks, derivatives regulation, criminal prosecutions of bankers and even the appropriate forum for brokering agreements on financial-services issues. Countries such as the U.S., U.K. and Switzerland are demanding that banks build thicker capital cushions to absorb losses and bigger liquidity buffers than most other European countries are embracing. European and U.K. officials have shown a greater willingness than their U.S. counterparts to rein in bankers' pay and target bad behavior with criminal prosecutions. The U.K.'s banking supervisors have also urged some European and U.S. banks to restructure their U.K. operations and have pressured foreign branches of banks from many countries -- from crisis-hit countries like Cyprus to Switzerland and the U.S. -- to stockpile additional funds in their British arms. The different approaches have led to cross-border sniping, with its European Union officials threatening retaliation if the U.S. imposes its rules abroad. Britain's push has led it afoul of European counterparts, who criticize the country's aggressive approach as a violation of the bloc's "single market" rules. U.S. Treasury Secretary Jacob Lew said yesterday that global coordination shouldn't come at the expense of tough rules. Some executives say privately that the discord gives them a chance to delay or water down rules by pitting regulators in different countries against one another. Read more. (Subscription required.)

DID YOU MISS MONDAY'S abiLIVE WEBINAR DISCUSSING § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES? RECORDING IS NOW AVAILABLE!



If you were not able to join Monday's well-attended abiLIVE webinar examining § 1111(b), a recording of the program is now available for downloading! Utilizing a case study, ABI's panel of experts explored the issues surrounding a lender's decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel also walked attendees through the necessary mathematical analyses used to examine these issues. The 90-minute recording is available for the special price of $75 and can be purchased here.

NEW abiLIVE WEBINAR ON AUGUST 20: HOW WILL THE NEW U.S. TRUSTEE FEE GUIDELINES IMPACT YOU?



The new U.S. Trustee Fee Guidelines will affect all attorneys and firms who work on larger chapter 11 cases filed on or after November 1st. ABI's Ethics & Professional Compensation Committee will present a panel of experts, including Cliff White, the director of the U.S. Trustee Program, to discuss some of the ways the new guidelines could change day-to-day operations in firms, issues relating to the new market rate benchmarks, and how these changes might alter insolvency practice. Register today to hear government, attorney and academic perspectives on this important and timely topic.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE MID-ATLANTIC BANKRUPTCY WORKSHOP IN AUGUST



The next stop for the ABI Golf Tour is the Hershey Country Club, in conjunction with the Mid-Atlantic Bankruptcy Workshop. 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.

ABI IN-DEPTH

NORTON JUDICIAL EXCELLENCE AWARD NOMINATIONS OPEN



Nominations are now open for the 8th Annual Judge William L. Norton Judicial Excellence Award, to be presented during the ABI luncheon at the annual meeting of the National Conference of Bankruptcy Judges on Nov. 1, 2013. The award is presented by ABI and Thomson Reuters each year to the current or retired bankruptcy judge whose career embodies the same continued dedication and outstanding contributions to the insolvency community as the award’s namesake, Judge Norton. Nominations are considered by a committee made up of representatives from the Norton treatise and past ABI presidents. Nomination forms are available from Clay Mattson at Thomson Reuters (clay.mattson@thomsonreuters.com) and should be submitted by July 29.

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



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

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



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

NEW CASE SUMMARY ON VOLO: UNITED JOINT VENTURE LP V. NOBLE (IN RE JENNINGS; 11TH CIR.)



Summarized by Lyndel Anne Mason of Cavazos, Hendricks, Poirot & Smitham, PC

The Eleventh Circuit ruled that the chapter 7 trustee's decision to close the estate as a "no asset" estate and not sell or settle a state court's judgment in favor of the debtor was within his business judgment under § 544(a), and the district court deference to that decision was affirmed.

There are more than 900 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: BIG BANKS' WARNINGS ABOUT LEVERAGE RATIO FAIL THE SMELL TEST

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new blog post finds that the new leverage ratio is a relatively modest proposal that can be easily addressed by affected banks without material capital raises or changes in distribution policy.

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

When will the dowward trend of consumer bankruptcy filings turn around?

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

August

- Mid-Atlantic Bankruptcy Workshop

    August 8-10, 2013 | Hershey, Pa.

- abiLIVE Webinar: How Will the New U.S. Trustee Fee Guidelines Impact You?

     August 20, 2013

- 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.

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

    Sept. 18-19, 2013 | New York

- abiLIVE Webinar: Complex Requirements and Ethical Duties of Representing Consumer Debtors

     Sept. 24, 2013

- Bankruptcy 2013: Views from the Bench

    Sept. 27, 2013 | Washington, D.C.

October

- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum

    Oct. 4, 2013 | Kansas City, Mo.

- ABI Endowment Football Game

    Oct. 6, 2013 | Miami, Fla.

- Professional Development Program

    Oct. 11, 2013 | New York, N.Y.

- Chicago Consumer Bankruptcy Conference

    Oct. 14, 2013 | Chicago, Ill.

- International Insolvency Symposium

    Oct. 25, 2013 | Berlin, Germany

November

- Austin Advanced Consumer Bankruptcy Practice Institute

   Nov. 10-12, 2013 | Austin, Texas

- Detroit Consumer Bankruptcy Conference

   Nov. 11, 2013 | Detroit, Mich.

December

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York

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.

JUDGE STRIKES FEDERAL RULE ON FOR-PROFIT COLLEGES

The U.S. Department of Education's rule designed to prevent for-profit colleges from leaving students with debts they struggle to repay was struck down by a federal judge who said the regulation was arbitrary, Bloomberg News reported yesterday. U.S. District Judge Rudolph Contreras ruled on June 30 the department's requirement that at least 35 percent of graduates must be repaying their loans for a college to qualify for federal grants wasn’t based on any facts. "No expert study or industry standard suggested that the rate selected by the department would appropriately measure whether a particular program adequately prepared its students," Contreras ruled. "The entire debt measure rule must therefore be vacated and remanded to the department." Read more.

FHA RESCINDS TOUGH NEW CREDIT RESTRICTIONS ON MORTGAGE LOAN APPLICANTS

In a policy switch that could be important to thousands of applicants seeking low-down-payment home mortgages, the Federal Housing Administration (FHA) has rescinded tough new credit restrictions that had been scheduled to take effect on Sunday, the Los Angeles Times reported on Sunday. The policy change would have affected borrowers who have one or more collections or disputed-bill accounts on their national credit bureau files in which the aggregate amounts were $1,000 or more. Some mortgage industry experts estimate that if the now-rescinded rules had gone into effect, as many as 1 in 3 FHA loan applicants would have had difficulty being approved. Under the withdrawn plan, borrowers with collections or disputed unpaid bills would have been required to "resolve" them before their loan could be closed, either by paying them off in full or by arranging a schedule of repayments. Read more.

COMMENTARY: HOW WALL STREET SCAMS COUNTIES INTO BANKRUPTCY

Wall Street refuses to learn that it is illegal to bribe public officials to get access to lucrative municipal-bond underwriting business because the miniscule price it ends up having to pay for misbehaving has absolutely no deterrent value whatsoever, according to a Bloomberg News commentary on Sunday. In 2009, the Securities and Exchange Commission charged that two bankers at JPMorgan, Charles LeCroy and Douglas MacFaddin, had in 2002 and 2003 privately agreed with "certain" county commissioners in Jefferson County, Ala., to pay more than $8.2 million to "close friends of the commissioners who either owned or worked at local broker-dealers" that had been hired to advise the county commissioners on awarding underwriting business. The purpose of the payments, the SEC alleged, was to make sure the commissioners hired JPMorgan as the underwriter of municipal-bond sales and swaps contracts. According to a suit filed by the county, JPMorgan even agreed to pay Goldman Sachs Group Inc. $3 million if it would not compete for a $1.1 billion interest-rate swap that JPMorgan entered into with Jefferson County. The payments were all undisclosed -- the Goldman money, the suit claimed, was shuffled through a separate derivatives contract created just to make the payment -- and decreased the proceeds the county received from the offerings. To settle the charges with the SEC, JPMorgan neither admitted nor denied wrongdoing, but paid $722 million, including forgiving $647 million in fees that the county would have had to pay to unwind the swap deals. Last November, Jefferson County filed for bankruptcy protection, largely a result of the deals JPMorgan Chase put together. Read more.

ANALYSIS: CONSUMERS UNLIKELY TO REKINDLE THE RECOVERY

After adding more than 250,000 jobs a month from December through February, U.S. employers have added an average of less than 100,000 jobs for the past three months, and as hiring has slowed, so has consumer spending, according to an analysis in yesterday's Wall Street Journal. Retail sales have fallen for two consecutive months. Overall consumer spending fell slightly in May, the Commerce Department said Friday, the first drop in nearly a year. Consumer sentiment tumbled in June to its lowest level since December, wiping out nearly all the recent gains. Beneath the weak May and June numbers lies a deeper problem: The consumer recovery was never as robust as it first appeared. In May, the Commerce Department revised down its estimate of first-quarter spending growth to 2.7 percent from 2.9 percent. Last week, the figure was revised down yet again, to 2.5 percent. That still represents the fastest growth since late 2010, but it is not enough to shift the recovery into a higher gear as some economists were predicting at the beginning of the year. Read more. (Subscription required.)

Meanwhile, the American Bankers Association reported that consumer delinquencies fell in the first quarter for 10 of 11 categories that it tracks, including personal loans, bank cards and direct auto loans. Read more.

CFPB SIGNS OFF ON CONFIDENTIALITY RULES

The Consumer Financial Protection Bureau on Thursday adopted rules outlining how it would handle privileged information it receives from the financial entities it oversees, The Hill reported on Friday. Banks and other financial institutions had aired concerns that secret information it provides to the new agency through the course of regulation might not be kept private. The rules offered by the bureau are aimed at reassuring those institutions. In the new rules, the CFPB states that providing privileged information to the regulator does not mean an institution needs to waive its right to confidentiality of that content when it comes to it being shared with a third party. Furthermore, it states the bureau can share that information with other federal and state regulators without violating confidentiality. 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: RNPM, LLC V. MERCADO ALVAREZ (IN RE MERCADO ALVAREZ; 1ST CIR.)

Summarized by Bruce Harwood of Sheehan Phinney Bass + Green

Pursuant to §1322(e) of the Bankruptcy Code, the amount of an arrearage under a mortgage secured by the debtor’s principal residence, including the amount of the mortgagee’s attorneys fees and costs recoverable under the mortgage, is determined by applicable nonbankruptcy law, and not the reasonableness, lodestar-based standards of §506(b) or Bankruptcy Rule 2016, which are overridden by §1322(b). Since applicable Puerto Rico law provides that the amount of attorneys’ fees and costs recoverable under "penal clauses"—which permit recovery of attorneys' fees and costs as a percentage of the original principal of the mortgage note—is subject to adjustment on equitable grounds, the Bankruptcy Court properly considered those grounds in reducing the mortgagee’s claim for attorneys' fees from $7,600 (the contract rate, equal to 10 percent of the original principal amount) to $2,000.

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: STOCKTON'S CHAPTER 9 FILING- ANOTHER OUTLIER OR HARBINGER?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines whether Stockton's chapter 9 filing last week represents a wave of chapter 9 filings to come or will remain a contained event. Last weekend, Pennsylvania extended until Nov. 30 a ban on a possible chapter 9 filing by the capital city of Harrisburg.

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

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.

ANALYSIS: FIRMS IN CHAPTER 11 FACE FAST TRIP TO AUCTION BLOCK



More companies that wind up in bankruptcy court are facing a stark demand from their banks: Sell yourself now, the Wall Street Journal reported yesterday. Digital Domain Media Group Inc., a special-effects company founded by director James Cameron to work on "Titanic" and other films, filed for chapter 11 protection in September; its lenders gave it a window of just 12 days to find a buyer or risk losing its bankruptcy financing. Lenders gave RG Steel LLC less than two months to sell its steel plants, and ATP Oil & Gas Corp. is scrambling to find a buyer to avoid defaulting on its bankruptcy loan. Most companies that file for bankruptcy these days have debts that far exceed their assets, according to experts. That means they probably won't be able to pay off their lenders in full, let alone more-junior creditors like suppliers, no matter how long they stay in bankruptcy proceedings. As a result, banks and other lenders, who often are owed millions of dollars and get claims on any sale proceeds, are using their clout to press for a speedy sale. Read more. (Subscription required.)

COMMENTARY: U.S. SHOULD NOT HAND OVER BATTERY TECHNOLOGY TO CHINA



Unless the U.S. government acts quickly, over a decade’s worth of advanced American technology is about to be handed to the Chinese at a creditors' sale in the A123 bankruptcy case, according to a commentary by former Congressman Ike Skelton and Duncan Hunter in yesterday's U.S. News and World Report. Under the decision of a federal bankruptcy judge, the company whose patents comprise the cutting edge of this technology, A123 Systems Inc., will soon become the property of China's Wanxiang Group, a leading Chinese manufacturer, for the relative bargain price of $250 million. Like all sales of critical technology to foreign entities, the bankruptcy court's auction is subject to approval by a powerful but obscure federal interagency panel known as the Committee on Foreign Investment in the United States. Wangxiang has sought to win approval of the deal by agreeing to split off A123 Systems' existing military contracts to an American corporation. The trade secrets and patents that would be controlled by the Wanxiang Group, according to the commentary, resulted from a decade of trial and error by some of America's scientists, with much of the work funded by U.S. taxpayers. Read more.

RECOVERY IN U.S. SAVING 8 MILLION UNDERWATER HOMEOWNERS



As housing prices have recovered, the number of underwater borrowers fell by almost 4 million last year to 7 million, according to JPMorgan Chase & Co. (JPM), and that number could drop to 4 million within 2 years, Bloomberg News reported today. The housing market is rebounding faster than anyone thought possible, according to Blackstone Group LP's global head of real estate Jonathan Gray, as the Federal Reserve buys mortgage bonds to keep rates near record lows and investors sop up a diminishing supply of properties for sale. JPMorgan analysts led by John Sim estimate that the price growth last year was responsible for a drop of almost 4 million in underwater borrowers. The number of homeowners that owe more on their mortgages than their properties are worth may fall to 4 million by the end of 2015, according to Sim. Foreclosure starts dropped 28 percent in November from a year earlier, data provider Lender Processing Services Inc. wrote in a report this week. Read more.

401(k) BREACHES UNDERMINING RETIREMENT SECURITY FOR MILLIONS



A large and growing share of American workers are tapping their retirement savings accounts for non-retirement needs, raising broad questions about the effectiveness of one of the most important savings vehicles for old age, the Washington Post reported today. More than one in four American workers with 401(k) and other retirement savings accounts uses them to pay current expenses, new data show. The withdrawals, cash-outs and loans drain nearly a quarter of the $293 billion that workers and employers deposit into the accounts each year, undermining already-shaky retirement security for millions of Americans. Fresh data from Vanguard, one of the nation’s largest 401(k) managers, show a 12 percent increase in the number of workers who took loans against their retirement accounts or withdrew money outright since 2008. Overall, about a third of American households participate in 401(k)-type accounts, which hold a combined $3.5 trillion in assets. But a large portion of that money does not make it to retirement. A recent study by Boston College’s Center for Retirement Research found that the typical household approaching retirement age has an average of $120,000 in retirement savings, enough for roughly a $7,000-a-year annuity. Read more.

REPORT: RANKS OF WORKING POOR INCREASING



A new report released today by the Working Poor Families Project found that nearly a third of the nation’s working families earn salaries so low that they struggle to pay for their necessities, the Washington Post reported today. Analyzing 2011 data from the Census Bureau’s American Community Survey, the report said that 32 percent of working families earned salaries that put them below double the poverty threshold, which was $45,622 for a family of four. That percentage has crept up from 28 percent in 2007, the year the recession began. And 37 percent of the nation’s children — 23.5 million — were part of working poor families in 2011, the report said, up from 33 percent in 2007. Read more.

E-FILING AND THE EXPLOSION IN TAX-RETURN FRAUD



Tax-identity theft exploded to more than 1.1 million cases in 2011 from 51,700 in 2008, the Wall Street Journal reported today. The Treasury Inspector General for Tax Administration last summer reported discovering an additional 1.5 million potentially fraudulent 2011 tax refunds totaling in excess of $5.2 billion. One possible source of identity theft is due to American taxpayers, urged on by the IRS, filing their income-tax returns electronically and arranging for refunds to be directly deposited into bank accounts. E-filing is appealing because it provides an electronic postmark confirmation that the return was filed on time. When it is combined with direct deposit, a refund can arrive in as little as seven days. In 2012, 80 percent of individual returns were e-filed, fulfilling an initial goal Congress set in 1998. The result is an automated system in which the labor burden is transferred to the taxpayer. Tax return fraud can come in the form of tax-identity theft, refund fraud, or return-preparer fraud and is difficult to prosecute. With e-filing, evidence of fraud is difficult to find. There are no signed tax forms, envelopes or fingerprints, and e-filing promises quick refunds. Read more. (Subscription required.)

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



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



• 17th Annual Great Debates

• Mediation: An Irrational Approach to a Rational Result

• Current Issues for Financial Advisors in Bankruptcy Cases

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

• The Power to Veto Bankruptcy Sales

• Real Estate Issues in Health Care Restructurings

• Law Firm Bankruptcies

• How to Be a Successful Expert

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

• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

• And much more!

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

Register today!

ABI IN-DEPTH

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



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

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

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

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

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

Click here to register!

LATEST CASE SUMMARY ON VOLO: GLAZER V. CHASE HOME FINANCE LLC (6TH CIR.)



Summarized by Michael Coury of Butler Snow O'Mara Stevens, & Cannada PLLCs

The Sixth Circuit affirmed the trial court's finding that the mortgage servicer was not a debt collector under the Fair Debt Collection Practices Act and that a subservicer who attempts to collect debts owed to another [from a debtor] that was not in default at the time it was obtained by the servicer is exempt from the definition of "debt collector" under 28 U.S.C. Sec. 1692a(6). The Court also affirmed the trial court's denial of plaintiff's motion to amend as untimely where it was filed four months after discovery of new evidence and after the magistrate had already recommended dismissal of the claim against the subservicer.

There are more than 700 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: PARALLELS BETWEEN THE SUBPRIME MORTGAGE LOAN AND STUDENT LOAN CRISES



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new post examines similarities between the subprime mortgage loan crisis that caused the 2008 financial downturn and the current student loan crisis.

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

ABI Quick Poll

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

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

INSOL INTERNATIONAL



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

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

2013

January

- Western Consumer Bankruptcy Conference

     January 21, 2013 | Las Vegas, Nev.

- Rocky Mountain Bankruptcy Conference

     January 24-25, 2013 | Denver, Colo.

February

- Caribbean Insolvency Symposium

     February 7-9, 2013 | Miami, Fla.

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

     February 19, 2013

- VALCON 2013

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

March

- 37th Annual Alexander L. Paskay Seminar on Bankruptcy Law and Practice

     March 7-9, 2013 | St. Petersburg, Fla.

- Bankruptcy Battleground West

     March 22, 2013 | Los Angeles, Calif.

April

- Annual Spring Meeting

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

DELINQUENT PAYMENTS EDGE UP FOR CREDIT CARD ISSUERS



JPMorgan Chase, Discover Financial Services, American Express Co. and Capital One Financial Corp. each reported higher delinquency rates for September in regular monthly filings with the Securities and Exchange Commission, Dow Jones Newswires reported today. Delinquency rates, typically measured as a percentage of loans for which borrowers are at least 30 days late on a payment, have fallen drastically since the financial crisis as consumers have been cautious about taking on new debt and card issuers have purged troubled accounts from their books. Analysts have predicted that this progress will begin to diminish, though, since there is little room for the rates to fall further and as some banks get back into subprime lending. Read more.

COMMENTARY: CFPB'S RECENT PROPOSAL DOES NOT GO FAR ENOUGH TO ADDRESS FORECLOSURE ABUSES



The Consumer Financial Protection Bureau's (CFPB) recent proposal to regulate the foreclosure process is a disappointment as it retreats from many existing requirements, according to a New York Times editorial today. The CFPB's proposal does not impose any meaningful standards for loan modifications beyond those already required by various federal programs and agreements, many of which will expire in the future and none of which apply to the entire industry, according to the editorial. In place of concrete standards, the bureau’s proposal largely relies on procedural reforms, like requiring servicers to establish reasonable policies for managing paperwork and answering phone calls from borrowers, to contact borrowers at an early stage of delinquency, and to adhere to deadlines for responding to borrowers who need help. What is needed, according to the editorial, are requirements to make sure that all borrowers facing hardship are considered for loan modifications according to specific, publicly available criteria, and that loans are modified for all eligible borrowers. Read more.

OBAMA, ROMNEY SQUARE OFF ON AUTO BAILOUT IN FINAL DEBATE



In their third and final presidential debate ahead of the Nov. 6 election, President Obama said that if Mitt Romney's position on the $85 billion federal auto bailout had been in place, the U.S auto industry would have ceased to exist, the Detroit News reported today. Romney rejected Obama's claims, saying that he would not have allowed Detroit's Big Three automakers to liquidate. In his November 2008 New York Times column titled "Let Detroit Go Bankrupt," Romney said that he would support some aid but only after a bankruptcy filing. "The federal government should provide guarantees for post-bankruptcy financing and assure car buyers that their warranties are not at risk," he wrote. Click here to read more.

Click here to read Romney's op-ed that appeared in the New York Times in 2008.

LATEST ABI PODCAST FEATURES EXPERTS LOOKING AT U.S./MEXICO CROSS-BORDER INSOLVENCY ISSUES



In advance of ABI's Inaugural Mexico Restructuring Symposium on Nov. 7 in Mexico City, ABI Executive Director Sam Gerdano speaks with panelists Richard J. Cooper of Cleary, Gottlieb, Steen & Hamilton LLP (New York) and Thomas S. Heather of Heather & Heather (Mexico City). Cooper and Heather provide a preview of their panel's discussion about similarities and differences between insolvency laws in the U.S. and Mexico. Click here to listen to the podcast.

SHOW YOUR SUPPORT FOR STEVEN GOLICK, A COLLEAGUE AND ABI LEADER FACING MAJOR SURGERY TODAY



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

MEMBERS WILL NOT WANT TO MISS ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING ON FRIDAY



Members planning to attend the 86th Annual NCBJ Annual Conference in San Diego starting tomorrow will not want to miss the exciting line-up scheduled for the ABI program track on Friday. 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 Friday and the full NCBJ Annual Conference schedule, please click here.



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

LATEST CASE SUMMARY ON VOLO: HADDAD V. ALEXANDER, ZELMANSKI, DANNER & FIORITTO, PLLC (6TH CIR.)



Summarized by Scott J. Whitacre

In a nonbankruptcy debt-collection matter, the Sixth Circuit reversed the district court and held that a condominium association assessment was a “debt” regulated by the Fair Debt Collection Practices Act (15 U.S.C. § 1692 et seq.) where the owner purchased the condominium as a residence and used it as such for 13 years but later leased it out to others.

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: SIXTH CIRCUIT FIRST COURT OF APPEALS TO ADDRESS FRAUDULENT TRANSFERS IN LIGHT OF STERN



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post found that in deciding Onkyo Electronics v. Global Technovations Inc. (In re Global Technovations Inc.), the U.S. Court of Appeals for the Sixth Circuit became the first court of appeals to considered whether, following the Supreme Court’s decision in Stern v. Marshall, a bankruptcy court has jurisdiction to enter a final judgment on a fraudulent transfer action. The Sixth Circuit held that the bankruptcy court in question had jurisdiction to enter a final judgment on a fraudulent transfer because the creditor had filed a proof of claim. The holding, however, implied that the Sixth Circuit would not have held that the bankruptcy court had such authority if the creditor had not filed a proof of claim.

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

Section 523(a)(8) should be amended to allow private student loans to be discharged in bankruptcy.

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

- ABI Program at NCBJ's Annual Conference

     October 26, 2012 | San Diego, Calif.

- ABI Endowment Event at Peter Max Gallery

     October 29, 2012 | New York, N.Y.

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

January

- 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.

CFPB CITES PROBLEMS WITH CREDIT CARDS, MORTGAGES AND CREDIT REPORTS



The Consumer Financial Protection Bureau (CFPB) reported yesterday that it is finding problems with credit cards, credit bureau reporting and mortgages, CongressDaily reported today. Specifically, the CFPB said that it found that credit card holders under the age of 21 were raising their credit limits without the consent of their co-applicants, inaccurate information reported to credit bureaus was causing consumers to be charged too much or denied credit, and clear mortgage disclosures with proper rates and timely information regarding payments was not being provided to homeowners. The bureau said that the findings have prompted a compliance review and sparked fines totaling $435 million in refunds to 5.7 million consumers. Click here to read the CFPB's fall summary report.

COMMENTARY: AFTER BAILOUT, LARGE BANKS ALLOWED TO DOMINATE THE MORTGAGE BUSINESS



The broken mortgage market is the unintended consequence of the banking bailout and the regulatory response in the aftermath of the financial crisis, according to a commentary in the New York Times yesterday. In the third quarter, both Wells Fargo and JPMorgan Chase reported that they earned robust profits from the mortgage business. It would be foolish to blame Wells Fargo and JPMorgan for this situation, according to the commentary, but the government allowing takeovers without forcing weak competitors to get healthy quickly leads to an oligopoly. Instead, the two companies’ main competitors, Citigroup and Bank of America, are pulling out. Read the full commentary.

OBAMA SUGGESTS "SECRETARY OF BUSINESS" IN A SECOND TERM



President Barack Obama signaled that if he wins a second term, he would appoint a Secretary of Business to oversee newly consolidated government agencies, including the Small Business Administration, the Wall Street Journal reported on Tuesday. "We should have one Secretary of Business, instead of nine different departments that are dealing with things like giving loans to SBA or helping companies with exports," Obama said on Monday. Read more. (Subscription required.)

COMMENTARY: "TOO BIG TO FAIL" REMAINS VERY REAL



While it is tempting to think that very large financial institutions are no longer too big to fail thanks to the Dodd-Frank Act and regulation, this idea is completely at odds with the facts, according to an op-ed by Prof. Simon Johnson of the M.I.T. Sloan School of Management in Monday's New York Times. In a high-profile paper prepared recently at the behest of the Securities Industry and Financial Markets Association, the lobbying group for the securities industry, Federal Financial Analytics Inc., argues that "too big to fail" has effectively been ended. In theory, “too big to fail” should have been removed by the recent reforms or eliminated by the passage of time. But as a practical matter — looking at what investors really believe — “too big to fail” is still with us, according to Johnson. This implicit government guarantee lowers the funding costs for very large financial institutions because investors are convinced that debt issued by these firms is less risky than, for example, debt issued by small and medium-size banks. In effect, the government is providing a form of insurance that encourages financial institutions to become even bigger — and thus even more likely to be protected by some combination of the Federal Reserve, the Treasury and other agencies. This is an unfair, nontransparent government subsidy that encourages excessive risk-taking, according to Johnson, and creates a very large potential downside for the nonfinancial side of our economy. Read the full op-ed.

HURRICANE SANDY ESTIMATED TO COST INSURERS UP TO $20 BILLION



Hurricane Sandy may cost the insurance industry up to $20 billion, which would put this week's devastating storm second only to 2005's Hurricane Katrina for insured losses, according to a new damage estimate, the Wall Street Journal reported today. Disaster-modeling firm Eqecat Inc. said insured losses likely range from $10 billion to $20 billion and said that the total cost of the storm, including damage that was not insured by private companies, would be between $30 billion and $50 billion. In addition, the closure of major roads, tunnels and the New York City subway system are likely to drive claims higher, the firm said. Read more. (Subscription required.)

TRANSCRIPT OF CHAPTER 11 COMMISSION’S 10/17 HEARING NOW AVAILABLE



A full transcript of ABI's Chapter 11 Reform Commission’s hearing on 10/17 at the LSTA Conference in New York is now available. The transcript can be downloaded by clicking here.

The next public hearing will be Saturday from noon-2 p.m. ET at the 24th Annual TMA Annual Conference in Boston. For future Commission hearings, please click here.

MEMBERS ENCOURAGED TO WEIGH IN ON REAPPOINTMENT OF BANKRUPTCY JUDGE JUDITH WIZMUR



The current 14-year term of office for Judith H. Wizmur, U.S. Bankruptcy Judge for the District of New Jersey at Camden, is due to expire on Sept. 4, 2013. The U.S. Court of Appeals for the Third Circuit is considering the reappointment of the judge to a new 14-year term of office. Members of the bar and the public are invited to submit comments for consideration by the Court of Appeals regarding the reappointment of Bankruptcy Judge Wizmur. All comments should be directed to one of the following addresses: by e-mail at Wizmur_Reappointment@ca3.uscourts.gov or by mail to the Office of the Circuit
Executive, 22409 U.S. Courthouse, 601 Market St., Philadelphia, PA 19106-1790.
Comments must be received no later than noon on Monday, December 3, 2012.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: SHAFFER V. U.S. DEPARTMENT OF EDUCATION (IN RE SHAFFER; 8TH CIR.)



Summarized by William Joanis of JoanisLaw

The Eighth Circuit ruled that the debtor met the burden of proving by preponderance of evidence that educational loans were discharged on basis of undue hardship. The court employed a "totality of circumstances" test (i.e., past, present and future resources, reasonableness of living expenses, and other relevant facts, etc.). While the court noted that each loan needed to be evaluated separately, this issue was not properly raised on appeal.

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: RECAP OF DISCUSSIONS AT THE NCBJ ANNUAL CONFERENCE



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post highlights some of the topic discussions from the panels at last week's NCBJ annual meeting.

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, SDNY).

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

- 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

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.

HOUSE COMMITTEE APPROVES STUDENT LOAN FIX



Members of the Republican-led House Education and Workforce Committee approved a bill that would keep interest rates from doubling on new subsidized Stafford loans on July 1, the Associated Press reported. The GOP measure, which is opposed by House Democrats, provides lower rates immediately and for the next few years, but the plan also comes with potentially higher costs for some students in coming years. Without Congress's action, interest rates for new subsidized Stafford student loans would double from 3.4 percent to 6.8 percent on July 1. Under the proposal by the committee's chairman, Rep. John Kline (R-Minn.), student loans would be reset every year and based on 10-year Treasury notes, plus an added percentage. Using Congressional Budget Office projections, that would translate to a 5 percent interest rate on Stafford loans in 2014 but climb to 7.7 percent for loans in 2023. Read more.

Read the House Education and Workforce Committee's press release.

EDITORIAL: NEW YORK TARGETING PENSION PREDATORS



New York Gov. Andrew Cuomo (D) has done retirees and military veterans a great service by ordering New York’s top banking regulator to investigate “pension advance” firms that persuade customers to sign over all or part of their monthly pensions in exchange for immediate cash payments, according to a New York Times editorial today. The payments, advertised as advances, are, in fact, cleverly disguised loans that can carry ruinously high interest rates and eventually strip older citizens of their meager assets. By insisting that they are making advances, not loans, these firms elude state supervision, including usury laws, licensing regulations and the federal Truth in Lending Act, which requires lenders to disclose borrowing costs. These and other subterfuges have enabled the companies to ambush pensioners with “advance” loans that carry interest charges ranging from 27 percent to 106 percent, according to a review by the New York Times. Read more.

INVESTORS FLOOD INTO LOAN FUNDS



Money is flooding into funds that buy up loans to companies as some investors brace for the end of ultra-low interest rates, the Wall Street Journal reported today. The activity is adding fuel to the roaring corporate-refinancing boom by driving loan prices up, in turn pushing interest rates lower for companies rated below investment grade. Leveraged loans are again increasing in popularity among investors because the interest they pay changes with benchmark interest rates, typically quarterly. That is a major selling point amid concerns that prices of Treasurys and long-term corporate bonds will drop as the Federal Reserve pares back its support for financial markets—even though policymakers have signaled that a shift is not imminent. Yields rise as prices fall. Loan mutual funds took in $5.6 billion in April, dwarfing the combined $2.25 billion that went into Treasury bond and junk-bond funds, according to Lipper Inc. Inflows in the first four months of 2013 hit $22.4 billion, eclipsing full-year tallies for every year since 2003, when Lipper started tracking the data. Read more. (Subscription required.)

NEW SEC CHIEF MARY JO WHITE BEGINS JOB WITH PRESSURE TO TACKLE RULES



Since Mary Jo White took over as head of the Securities and Exchange Commission a month ago, Congress has pressed the former federal prosecutor to pump out long-overdue financial regulations required by the Dodd-Frank Act and rewrite key rules that govern the capital markets, the Washington Post reported today. This week, lawmakers are applying more pressure to get the job done — on their terms. The House passed a measure yesterday that gives the SEC an Oct. 31 deadline to adopt a portion of the JOBS Act, which aims to make it easier for small businesses to raise money. On Friday, another bill is scheduled to reach the House floor that would reinforce the need for the agency to do thorough cost analyses of any rules it’s considering. White yesterday tapped Keith Higgins of Ropes & Gray to head the SEC’s corporation finance division, which is heavily involved in writing the JOBS Act rules. She also named Lona Nallengara, who joined the SEC in 2011, as the agency’s chief of staff. Meanwhile, the SEC staff internally circulated a draft this month to revamp part of the money market fund industry, a plan that’s evolved over the past year. The agency has also proposed a plan for how rules governing derivatives should be applied in the global marketplace. But they are less stringent than what the Commodity Futures Trading Commission has promoted, alarming some investor advocates. Read more.

BLOOMBERG'S LATEST "BILL ON BANKRUPTCY" VIDEO: TRUSTEES SLEEP EASY AFTER HIGH COURT RULING



Trustees of all types are sleeping easier, knowing that their liabilities for theft by a co-trustee is a debt that can be wiped out in bankruptcy as a result of a unanimous Supreme Court decision discussed by Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle on their latest video. To watch, 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.

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



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

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



Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI'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: SOTO V. DORAL BANK (IN RE SOTO; 1ST CIR.)



Summarized by Samuel Ari Mushell of Americans United for Government Reform

The Bankruptcy Appellate Panel for the First Circuit affirmed the bankruptcy court's decision to dismiss the debtors' chapter 13 petition because the debtors did not comply with 521(a) of the Code. 521(a) requires debtors to submit their tax returns and payment advices to the trustee.

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: BROWN-VITTER BILL A POTENTIAL CAPITAL FIX FOR TROUBLED MARKETS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post finds that the common-sense steps taken in the "Terminating Bailouts for Taxpayer Fairness Act," introduced by Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.), will help even the playing field between community banks and big financial firms.

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

- 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.

October

- ABI Endowment Football Game

    Oct. 6, 2013 | Miami, Fla.

December

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York

ANALYSIS: MORE HOMEOWNERS EMERGE FROM "UNDERWATER" STATUS



Rising home values have lifted more borrowers out of the hole of owing more than their properties are worth, an encouraging sign for an economy still closely tied to the health of the housing market, the Wall Street Journal reported today. The number of "underwater" homeowners in the fourth quarter of 2012 declined by 1.7 million from a year earlier, meaning 1.7 million U.S. households have regained home equity, according to data released Tuesday by CoreLogic, a research company. Overall, the company said 21.5 percent of households with a mortgage were underwater at the end of 2012, down from 25.2 percent at the end of 2011. While the trends are encouraging, some newly above-water households are just barely at breakeven and therefore are a long way off from being able to change their finances in any significant way. And the overall ranks of those underwater remain large, at about 10.4 million, down from 12.1 million at the end of 2011, according to CoreLogic. Read more. (Subscription required.)

To see a state-by-state analysis of CoreLogic's 4Q 2012 data, be sure to check out ABI's Chart of the Day site.

FANNIE MAE SEES WAY TO REPAY BILLIONS TO U.S. TREASURY



The rebounding housing market has helped return Fannie Mae to profitability and now might allow the government-controlled mortgage-finance company to repay as much as $61.5 billion in rescue funds to the U.S. Treasury, the Wall Street Journal reported. The potential payment would be the upshot of an accounting move whereby the company would reclaim certain tax benefits that were written down shortly after the company was placed under federal control in 2008. The potential move was disclosed last week in a regulatory filing in which the company said that it would delay the release of its annual report, due yesterday, as it tries to reach a resolution with its accountants and regulator over the timing of the accounting move. The debate about when Fannie should be allowed to reclaim the deferred-tax assets comes as Fannie and its smaller sibling, Freddie Mac, are likely to show large profits in the coming quarters as the housing market gradually recovers from its prolonged bust. The potential payment also has political implications as lawmakers and regulators wrangle over the fate of the firms, which were placed into a federal conservatorship amid soaring losses. The Obama administration has publicly said that the two companies eventually would be wound down and has blocked them from retaining profits, but has done little to de-emphasize their role in the mortgage market. Read more. (Subscription required.)

CFPB ISSUES PROPOSAL TO SUPERVISE STUDENT LOAN SERVICERS



The Consumer Financial Protection Bureau on Friday issued a proposal to supervise nonbank servicers of private and federal student loans that qualify as "larger participants" in the student loan servicing market, according to an analysis yesterday by Ballard Spahr LLP. The proposal represents an attempt by the CFPB to significantly expand its supervisory authority over student loan servicers. Because it already has supervisory authority over larger banks and nonbank private student lenders, the CFPB believes it should oversee student loan servicing by those entities. The CFPB's current authority to supervise nonbank private student lenders, however, does not allow it to supervise the nonbank student loan servicers that do not offer or provide private student loans. The proposal would allow the CFPB to supervise servicing of private and federal student loans by such nonbank servicers. Comments on the proposal will be due 60 days after its publication in the Federal Register. Click here to read the proposal.

OBAMA CUTS STUDENT-DEBT COLLECTOR COMMISSIONS TO AID BORROWERS



President Barack Obama's administration slashed the commissions paid to private collection companies that chase overdue student loans, reducing an incentive to squeeze borrowers, Bloomberg News reported today. Previously, the U.S. Education Department paid a commission as high as 16 percent of the entire loan amount only if collectors convinced defaulted borrowers to make stiff monthly payments. Starting this month, the fee dropped to as low as 11 percent, regardless of payment size. With $77.4 billion worth of student loans in default, the federal government turns to an army of private collectors to pursue borrowers. These companies, which receive about $1 billion annually in commissions, have sparked growing complaints that they insist on high payments, even when borrowers qualify for leniency. Under the new schedule, collectors will no longer have an incentive to avoid offering affordable payments tied to borrowers' incomes. Read more.

PLASTIC-SHY YOUNG IN U.S. SPUR MOVE TO USE NEW CREDIT DATA



Thirty-nine percent of undergraduate students between the ages of 18 and 24 owned a credit card in 2012, down from 49 percent in 2010, a Sallie Mae and Ipsos Public Affairs survey found, Bloomberg News reported today. And young adults who do have credit cards are carrying smaller balances: A median of $1,600 in 2010 compared with $2,500 in 2001 for under-35 households, according to Federal Reserve data. The trend, rooted in stricter lending rules and weaker job outlooks for young Americans since the 2008-09 recession, has implications for the strength of the economy. Fewer are building the traditional credit histories that would help them obtain financing for the purchases of homes and cars, which is critical to economic growth. Credit bureaus and the lending industry are stepping up their search for new ways to bolster credit files, and young people who do not pay credit card bills often do pay mobile phone bills. As reporting agencies gather data from telephone, rent and other payments, some scoring models incorporate this information to help assess candidates' creditworthiness. Read more.

ANALYSIS: WORKERS SAVING TOO LITTLE TO RETIRE



Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement, the Wall Street Journal reported today. New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last. Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49 percent reported having so little money saved in 2008. The survey also found that 28 percent of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study's 23-year history. Read more. (Subscription required.)

NUMBER OF CASES FILED BY SEC SLOWS



The Securities and Exchange Commission is filing significantly fewer civil fraud cases this year as its efforts to punish misconduct related to the financial crisis start to ebb, the Wall Street Journal reported yesterday. The agency is likely to fall short this fiscal year of its record-breaking number of enforcement actions in the previous two years. The expected drop in the numbers could be a headache for Mary Jo White, the former prosecutor nominated by President Barack Obama to be SEC chairman. A Senate panel is set to approve White's appointment today, the last step before the full Senate votes on it. White last week told a Senate hearing that she would strengthen the SEC's enforcement function to ensure that "all wrongdoers … will be aggressively and successfully called to account." The slowdown in enforcement actions reflects changes in the economic cycle, according to SEC officials. "We're at a point of inflection in our enforcement program," George Canellos, acting SEC enforcement head, said last month. Market meltdowns on the scale of the 2008 crisis, when companies implode and trillions of dollars are wiped off asset values, tend to expose major frauds and produce big cases, Canellos said. "We're now in a different era," he added. Read more. (Subscription required.)

NEW ABI BOOK EXPLORES THE DEPTHS OF DEEPENING INSOLVNECY



Any company executive juggling the competing demands of the troubled firm and its obligations to investors, as well as litigators practicing on either side of the insolvency aisle, will be interested in ABI’s latest publication, The Depths of Deepening Insolvency: Damage Exposure for Officers, Directors and Others. Authors Kathy Bazoian Phelps (Diamond McCarthy LLP) and Prof. Jack F. Williams (Mesirow Financial) wrote the book from both the plaintiffs' and defendants' perspectives to offer a deep analysis of the legal principle known as "deepening insolvency." The book also provides potential defenses that may be asserted to deepening insolvency allegations, as well as a state-by-state list of significant case law on this issue. To find out more about the book or to pre-order your copy, please click here. (Make sure to log in using your ABI member credentials to obtain the ABI member discount.)

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



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

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

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

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

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

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

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

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



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

• 17th Annual Great Debates

• Mediation: An Irrational Approach to a Rational Result

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

• Current Issues for Financial Advisors in Bankruptcy Cases

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

• The Power to Veto Bankruptcy Sales

• Real Estate Issues in Health Care Restructurings

• How to Be a Successful Expert

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

• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

• And much more!

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

Make sure to register today!

ABI IN-DEPTH

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 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: GORDON V. PAPPALARDO (IN RE GORDON; 1ST CIR.)



Summarized by Jennifer L. Saffer of J.L. Saffer, P.C.



In this appeal by a debtor in her chapter 13 case, the Bankruptcy Appellate Panel (BAP) for the First Circuit affirmed, after de novo review, the bankruptcy court’s order sustaining the chapter 13 trustee’s objection to the debtor's claimed exemption in a scheduled remainder interest in real estate. Affirming the decision of the bankruptcy court, the BAP determined that the property claimed as exempt was not "owned" by the debtor as required by and within the meaning of Mass. Gen. Laws ch. 188, § 3(a); the debtor had elected Massachusetts exemption rules rather than the federal, as was her option under 11 U.S.C. § 522(b).

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: CONGRESS, NOT FHFA, SHOULD BE REFORMING THE GSEs

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post found that while there is an emerging bipartisan consensus on the way forward for the secondary mortgage market, Congress has punted on what should be done with Fannie Mae and Freddie Mac, and the (Federal Housing Finance Agency) FHFA is taking significant steps without hearings or public discussion.

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.

Have a Twitter, Facebook or LinkedIn Account?

Join our networks to expand yours.

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.

COURT RULING PUTS CLOUD OVER CONSUMER FINANCIAL PROTECTION BUREAU AS WORK SLOWS



A court ruling that cast doubt on the authority of its director has hampered the U.S. Consumer Financial Protection Bureau, slowing some enforcement, impeding recruitment of a second-in-command and delaying joint ventures with the states, Bloomberg News reported yesterday. President Obama last year appointed Richard Cordray director when the Senate was not in session, the same day he made appointments to the National Labor Relations Board. The U.S. Court of Appeals in Washington on Jan. 25 concluded that the NLRB moves were unconstitutional, which could also affect Cordray. The Obama administration has appealed to the Supreme Court. House Republicans have said they will not take testimony from Cordray in the meantime. The Senate cannot move on Cordray’s renomination because Republicans will not permit an up or down vote. A Native American tribe has refused to supply information about its online lending business, claiming Cordray is not a legitimate director. In addition, candidates to be Cordray’s deputy will not pursue the job while his fate is unclear. The bureau’s plans to cooperate on enforcement with state attorneys general under the 2010 Dodd-Frank law also have not panned out, said Greg Zoeller, the attorney general of Indiana. “There has not been the gearing-up on consumer protection that I’d expected because of the cloud over the CFPB’s authority,” Zoeller, a Republican, said in an interview. The headwinds have not stopped the bureau’s work. Since it was established by Dodd-Frank, the agency has obtained $425 million in restitution for consumers and has imposed fines, including $15 million on mortgage insurers over kickbacks. The bureau has also warned banks about the consequences of discriminatory auto lending, released data on consumer complaints and published a study on payday lending. Read more.

SURVEY: NUMBER OF AMERICANS IN FORECLOSURE DOWN 25 PERCENT



Survey data by Lender Processing Services (LPS) shows that the number of Americans in the foreclosure process has fallen by almost 25 percent since April 2012, The Hill reported yesterday. Delinquency rates have also dropped, falling below 6.5 percent for the first time since July 2008. In line with LPS data, the National Association of Realtors reported yesterday that distressed homes – foreclosures and short sales – accounted for 18 percent of sales in April, down from 21 percent in March and 28 percent in April 2012. But while lower foreclosure rates are a sign that the economy and household finances are recovering, economists have blamed the dearth of foreclosures for some of the lackluster gains in the housing market recently. Existing and new home sales have both been constrained by tight inventory, according to experts, driving prices up in markets across the country and stunting a more solid recovery. Read more.

WALL STREET SEEKS DODD-FRANK CHANGES THROUGH TRADE TALKS



U.S. bankers and insurers are trying to use trade deals, which can trump existing legislation, to weaken parts of the Dodd-Frank Act designed to prevent a repeat of the 2008 financial crisis, Bloomberg News reported today. While the companies say that they are seeking agreements that preserve strong regulations and encourage economic growth, their effort is drawing fire from groups who argue that Wall Street wants to make the trade negotiations a new front in its three-year campaign to stop or alter the law. Sen. Elizabeth Warren (D-Mass.) said in a May 7 statement that there are “growing murmurs” about Wall Street’s efforts to “do quietly through trade agreements what they can’t get done in public view with the lights on and people watching.” The U.S. has embarked on three major negotiations aimed at reducing barriers to international commerce, one with the European Union covering most types of trade and investment, and a similar one with Asia-Pacific nations including Japan. A third set of talks, covering only services, is under way at the World Trade Organization. The Coalition of Service Industries, a trade association whose website lists Citigroup Inc., JPMorgan Chase & Co., American International Group Inc. and The Chubb Corp. as members, told the Office of the U.S. Trade Representative in a May 10 letter that “more compatible regulations for services” should be part of the EU deal. In separate letters on the EU and Asia-Pacific pacts, the industry coalition said that negotiators should draft rules limiting what regulators can do in the name of protecting financial stability. The letters also urged using the pacts to curb extra-territorial rules that can reach beyond U.S. borders, like ones currently being considered on financial derivatives. Read more.

COMMENTARY: WHY THE SEC NEEDS "NO-ADMIT" SETTLEMENTS



Last week, in a letter to the heads of the Securities and Exchange Commission, the Department of Justice and the Federal Reserve, Sen. Elizabeth Warren (D-Mass.) criticized the SEC practice of settling its civil litigation without requiring the defendant to admit wrongdoing, according to a commentary in today's Wall Street Journal. Warren said that this practice reduces the Wall Street regulator's leverage and forces it "to settle on terms that are much more favorable to the wrongdoer." Warren's criticism has long been shared by others on Capitol Hill and the courts who believe that "no-admit" settlements let defendants off without sufficient accountability, obscure the public record, and deprive private plaintiffs of the ability to piggyback on admissions to win monetary damage awards. In one prominent case in 2011, Judge Jed Rakoff of the district court in Manhattan took the rare step of refusing to sign off on a $285 million settlement between the SEC and Citigroup, calling it "pocket change" for the bank. That refusal has been appealed, and a decision is expected soon. The SEC and defense lawyers counter that no-admit settlements allow the agency to secure prompt and certain sanctions that are comparable to what regulators could reasonably attain through costly litigation—litigation that the SEC might actually lose. They contend that even without admissions, SEC settlements typically involve greater transparency and accountability than civil settlements by other federal agencies, some of which not only don't require an admission of wrongdoing, but actually allow the settling party to explicitly deny any wrongdoing. Read the full commentary. (Subscription required.)

LATEST BLOOMBERG VIDEO EXPLORES DEWEY CASE AND PROSPECT OF FUTURE LAW FIRM FAILURES



While failed law firms make for notoriously difficult bankruptcy cases, Dewey & LeBoeuf's time in bankruptcy court was quicker and easier than other notable law firms. Joe Samet, head of restructuring at Baker & McKenzie, and Al Togut, founding partner at Togut, Segal & Segal, talk with Bloomberg Law's Lee Pacchia about why Dewey's case went so smoothly compared to others, the prospects for other large law firm failures and how managing partners can keep their firms out of bankruptcy. Click here to watch the video.

ABI LIVE WEBINAR NEXT WEEK 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.

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



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

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



Rob Schwartz and Scott Gautier are tied at 34 Stableford Points atop the closely bunched leaderboard after the ABI'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: GENTILE V. DEGIACOMO (IN RE GENTILE; 1ST CIR.)



Summarized by Nathaniel Hull of Verrill Dana LLP

The First Circuit BAP dismissed the debtors’ appeal of a bankruptcy court order granting the chapter 7 trustee’s motion to sell real estate that was fully encumbered by a disputed lien for lack of appellate standing. The BAP concluded that the debtors failed to meet their burden of demonstrating that nullification of the sale would be likely to result in an overall surplus in the chapter 7 estate to which the debtors would become entitled once the bankruptcy case is closed.

There are nearly 900 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: STUDENT LOANS MAY NOW BE DISCHARGED MORE EASILY IN BANKRUPTCY IN THE 9TH CIR.

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new post examines the Ninth Circuit Court of Appeals' opinion in Hedlund v. The Educational Resources Institute, Inc. and Pennsylvania Higher Education Assistance Agency, Case 12-35258 (D.C. 6:11-cv-6281AA), suggesting that the opinion (and other pending decisions) may have made it a little easier on some student loan debtors to have their student loans discharged 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.

ABI Quick Poll

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

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

INSOL INTERNATIONAL



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

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2013

May

- 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.

- Bankruptcy 2013: Views from the Bench

    Sept. 27, 2013 | Washington, D.C.

October

- ABI Endowment Football Game

    Oct. 6, 2013 | Miami, Fla.

December

- ABI/St. John’s Bankruptcy Mediation Training

    Dec. 8-12, 2013 | New York