Finance and Banking

Analysis: Foreclosure Wave Averted as Doomsayers Defied

Legislation

Practice and Procedure

ABI Bankruptcy Brief | April 11 2013

April 11, 2013

NEWS AND ANALYSIS

ANALYSIS: WHITE HOUSE DERIVATIVES TAX PROPOSAL PUTS WALL STREET IN THE CROSSHAIRS

The Obama administration yesterday proposed that derivatives be taxed under "mark-to-market" accounting rules on an annual basis, a move that takes aim at Wall Street and could give a lift to a similar plan circulated by House Republicans, the Wall Street Journal reported today. "The disparate treatment of derivatives under current tax rules, which have evolved sporadically over more than 50 years, has created a regime that is essentially elective," the Treasury Department wrote in its companion piece to the budget that contains more detail about tax proposals. "Sophisticated taxpayers can use these instruments to achieve the timing and character that meets their objectives. At the same time, the wide variance in the tax treatment of derivatives contracts that are economically similar leads to uncertainty about how the tax rules apply." The plan would raise about $18.9 billion over 10 years. House Ways and Means Committee Chairman Dave Camp (R-Mich.) has circulated a similar proposal. The main difference between the two plans is that Treasury's plan would be tied to whether or not derivatives were being actively traded in the market. The new treatment would apply to derivatives contracts entered into after Dec. 31, 2013. Read more. (Subscription required.)

A related New York Times editorial yesterday looked at several bills to pre-empt the regulation of derivatives that are the focus of a hearing today in the House Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee. The bills, which have already passed the Agriculture Committee, should be stopped to curb reckless risk-taking by banks, according to the editorial. As it turns out, House Financial Services Chairman Jeb Hensarling (R-Texas) could be the member of Congress to stop them. Hensarling recently outlined a free-enterprise approach to bank regulation that sensibly supported "greater capital and liquidity standards" and better "ring-fencing, fire-walling — whatever metaphor you want to use — between an insured depository institution and a noninsured investment bank." One of the bills before his committee would do the opposite of what he envisions. It would gut a provision of the Dodd-Frank financial reform law that effectively requires banks to spin off their riskiest derivatives transactions into separately capitalized uninsured subsidiaries, according to the editorial. The spinoff provision, which is being phased in this year, is important for shielding taxpayers from future bailouts. Read more.

To view the witness list and prepared testimony for today's House Financial Services Capital Markets and Government Sponsored Enterprises Subcommittee hearing titled, "Legislative Proposals Regarding Derivatives and SEC Economic Analysis," please click here.

COMMENTARY: WHAT'S WRONG WITH THE CHAPTER 14 PROPOSAL

While not a proponent of Dodd-Frank's orderly liquidation authority, Prof. Stephen Lubben of Seton Hall University Law School writes in the New York Times DealBook blog today why he opposes the "Chapter 14" proposal put forth by the Hoover Institute group at Stanford. First, Lubben writes that the chapter 14 proposal throws away most of the benefits of using the existing bankruptcy system by calling for cases to be heard by Federal District Court judges. Next, the chapter 14 proposal has an ill-conceived financing mechanism, according to Lubben, as it is based on the assumption that private debtor-in-possession financing will be available in times of financial distress, especially in the size a large financial institution would need. But the even bigger problem with chapter 14, which has gotten little coverage, is its effort to penalize the provider of DIP financing if the new financing is used to "overpay" creditors. For example, if a counterparty received a 50 percent upfront recovery made possible by the debtor-in-possession financing, and unsecured creditors later received only 35 percent in the chapter 14 case, the proposal would subordinate the debtor-in-possession lenders’ claim by that extra 15 percent. That pretty much kills off any chance of private debtor-in-possession financing, and even raises some serious doubts about future government debtor-in-possession financing too, according to Lubben. Read the full commentary.

HOUSING ADMINISTRATION MIGHT NEED $943 MILLION BAILOUT, ACCORDING TO WHITE HOUSE

The Obama administration said yesterday that the cash-strapped Federal Housing Administration will probably require a $943 million taxpayer bailout to cover expected losses on loans it insured as the U.S. housing bubble was deflating, Reuters reported yesterday. It would be the first bailout of the government's mortgage insurer in its nearly 80-year history. The White House estimated that the FHA has about $30 billion on hand but said its cash reserves would probably be depleted by souring loans. FHA Commissioner Carol Galante said that the agency might still be able to avoid taking aid from the U.S. Treasury, despite the financial hole projected in President Obama’s 2014 budget proposal. It has until Sept. 30 to decide whether it needs a cash infusion. In November, an independent audit found that the FHA faced a projected deficit of $16.3 billion. Since then, the agency has taken steps to shore up its finances, including raising the premiums that borrowers pay. Read more.

BANKS LOOK TO SHIFT RISK TO FUNDS

Banks are trying to boost their capital cushions by shifting risk to investment funds, even as global regulators threaten to clamp down on such transactions, the Wall Street Journal reported today. In recent weeks, Citigroup Inc., Switzerland's Credit Suisse AG and France's Société Générale SA have marketed "synthetic securitizations" in which investors, for a fee, agree to absorb future losses on portfolios of assets. The transactions are designed to thicken the banks' capital buffers by reducing the riskiness of their balance sheets. Citigroup wants to cap its exposure to shipping loans, Credit Suisse wants to curtail the risk of small Swiss businesses defaulting on loans, and Société Générale is aiming to reduce the credit risk in a derivatives portfolio. Read more. (Subscription required.)

LATEST BLOOMBERG "BILL ON BANKRUPTCY" VIDEO: RESCAP REPORT, A BARGAIN AT $83 MILLION

Why the Residential Capital LLC examiner's report will cost almost $83 million is the first item on the new Bloomberg bankruptcy video with Bloomberg Law's Lee Pacchia and Bloomberg News bankruptcy columnist Bill Rochelle. Click here to watch the video.

ASM MOBILE WEB APP NOW AVAILABLE FOR SMARTPHONES AND TABLETS!

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

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

Haven’t registered for next week’s Annual Spring Meeting? Hurry, the hotel block at the Gaylord National Resort and Convention Center in National Harbor, Md., is almost sold out! ASM features a roster of the best national speakers, while the depth and scope of topics offer something for everyone. Specifically, four concurrent workshops will cover various “tracks,” including programs for attorneys in commercial cases, a track for restructuring professionals, a track of professional development programming and a track dealing solely with consumer issues. More than 16 hours of CLE/CPE is offered in some states, along with ethics credit totaling 3 hours, making the cost only about $50 per credit. In addition, committee sessions will drill down on other topics to provide you with the most practical and varied CLE/CPE experience ever. Sessions include:

• 17th Annual Great Debates

• Mediation: An Irrational Approach to a Rational Result

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

• Current Issues for Financial Advisors in Bankruptcy Cases

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

• The Power to Veto Bankruptcy Sales

• Real Estate Issues in Health Care Restructurings

• How to Be a Successful Expert

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

• Chapter 9s, Nonprofits and Other Nontraditional Restructuring Processes

• And much more!

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

Make sure to register today!

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: TEED V. THOMAS & BETTS POWER SOLUTIONS LLC (7TH CIR.)

Summarized by Steven Schwartz of the U.S. Bankruptcy Court for the District of Delaware

The Seventh Circuit ruled that successor liability is appropriate in suits to enforce federal labor or employment laws – even when the successor disclaimed liability when it acquired the assets, unless there is a good reason to withhold such liability (i.e., lack of notice of potential liability, maintaining priorities of competing creditors). Increasing the cost to the buyer is not a good reason to withhold successor-liability suits in federal labor or employment law cases.

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: FIRST QUARTER 2013 U.S. LEVERAGED LOAN MARKET ANALYSIS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post provides an analysis of the leveraged loan market during the first quarter of 2013.

TEE OFF ON THE NEW ABI GOLF TOUR!

Starting with the Annual Spring Meeting, ABI will offer conference registrants the option to participate in the ABI Golf Tour. The Tour will take place concurrently with all conference golf tournaments. The Tour is designed to enhance the golfing experience for serious golfers, while still offering a fun networking opportunity for players of any ability. As opposed to the format used at ABI’s regular conference events, Tour participants will "play their own ball." They will be grouped on the golf course separately from other conference golf participants and will typically play ahead of the other participants, expediting Tour play. Tour participants will be randomly grouped in foursomes, unless otherwise requested of the Commissioner in advance of each tournament. Prizes will be awarded for each individual Tour event, which are sponsored by Great American Group. The grand prize is the "Great American Cup," also sponsored by Great American Group, which will be awarded to the top player at the end of the Tour season. Registration is free. Click here for more information and a list of 2013 ABI Golf Tour event venues.

ABI Quick Poll

The scope of protection of "financial contracts" in bankruptcy should be rolled back to what it was before BAPCPA expanded it in 2005.

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

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NEXT WEEK:

April 18-21, 2013

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April 18, 2013

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COMING UP

May 15, 2013

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May 16, 2013

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May 21-24, 2013

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June 7, 2013

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June 13-16, 2013

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July 11-14, 2013

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July 18-21, 2013

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Aug. 8-10, 2013

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CALENDAR OF EVENTS

2013

April

- "Nuts and Bolts" Program at ASM

April 18, 2013 | National Harbor, Md.

- Annual Spring Meeting

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

May

- "Nuts and Bolts" Program at NYCBC

     May 15, 2013 | New York, N.Y.

- ABI Endowment Cocktail Reception

     May 15, 2013 | New York, N.Y.

- New York City Bankruptcy Conference

     May 16, 2013 | New York, N.Y.

- Litigation Skills Symposium

     May 21-24, 2013 | Dallas, Texas

June

- Memphis Consumer Bankruptcy Conference

June 7, 2013 | Memphis, Tenn.

- Central States Bankruptcy Workshop

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

July

- Northeast Bankruptcy Conference and Northeast Consumer Forum

July 11-14, 2013 | Newport, R.I.

- Southeast Bankruptcy Workshop

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

August

- Mid-Atlantic Bankruptcy Workshop

August 8-10, 2013 | Hershey, Pa.

Thursday, August 21, 2025

ABI Tags

Court Administration

Analysis: White House Derivatives Tax Proposal Puts Wall Street in the Crosshai…

SEC Issues

ABI Bankruptcy Brief | October 11, 2012

October 11, 2012

NEWS AND ANALYSIS

FED GOVERNOR: PUT CAP ON BIG FINANCIAL FIRMS

A top Federal Reserve official yesterday called on Congress to consider capping the size of the nation's financial firms, marking one of the most high-profile challenges to the way Wall Street does business, The Wall Street Journal reported yesterday. In a Philadelphia speech, Fed governor Daniel Tarullo recommended curbing banks' growth by putting a limit on their nondeposit liabilities, which are sources of funding for operations that go beyond consumer deposits. The idea takes direct aim at the biggest U.S. banks, including J.P. Morgan Chase & Co., Bank of America Corp., Goldman Sachs and Citigroup Inc., all of which rely heavily on such funding. Firms outside of this tier make much greater use of regular deposits. Tarullo, who drives much of bank policy-making at the Fed, is the highest-ranking regulatory official to call for limiting the size of banks. Even though the chance of congressional action depends in part on the outcome of November's election, the concept also fits into a growing chorus from across the political spectrum. Critics have voiced concern that the nation's largest financial institutions are too big to fail and pose too great a risk to the U.S. financial system. Tarullo's suggestion would cap banks' nondeposit liabilitieswhich are usually some form of debt, such as short-term borrowingsat a fixed percentage of the U.S. economy, a number he didn't specify. He also warned that the Fed should block any merger or acquisition this group of big banks attempts to make. If larger banks continue to expand, Tarullo said in Wednesday's speech, the market perception will increase that certain of them are "too big to fail," meaning that the federal government would rescue them rather than risk rocking the financial system. Click here to read the full article.

U.S. MORTGAGE FRAUD INITIATIVE DATA INCLUDED OLDER CASES

The Obama administration announced that a yearlong crackdown on mortgage fraud netted charges against 530 suspects in the year ending Sept. 30. However, the list included cases filed as many as two years before U.S. Attorney General Eric Holder said the initiative began, Bloomberg News reported today. Holder said at a news conference in Washington, D.C., on Tuesday that the initiative ran from Oct. 1, 2011 to Sept. 30, 2012, and resulted in "285 federal criminal indictments and informations against 530 defendants for allegedly victimizing more than 73,000 American homeownersand inflicting losses in excess of $1 billion." A sampling of cases incorporated in the data Holder cited shows those numbers includes cases filed as early as 2009. Cases filed before the start of the initiative were included because some type of "law enforcement action" occurred during the yearlong period, according to William Carter, a spokesman for the Federal Bureau of Investigation. Those actions could include indictments, convictions and sentencings, he said. The "Distressed Homeowner Initiative" was spearheaded by the FBI, which began to recognize a sharp increase in fraud aimed at struggling homeowners in the years following the 2008 housing crisis. The information used to compile the results from the initiative came from an FBI survey of the agencies involved in the Mortgage Fraud Working Group. Click here to read the full article.

WHAT TO DO WITH AMERICA'S 14 MILLION VACANT HOMES?

With all the numbers hinting at a housing market recovery, it's a good time to take a look at the challenge of what to do with the millions of homes in America that nobody seems to want, The Wall Street Journal reported on Tuesday. As of the end of June, there are just over 132.7 million housing units in America, and 10.6 percent of themmore than 14 millionare vacant year-round. That number includes everything from holiday homes to places in the temporary purgatory between being rented or sold and new occupants moving in. But at one end of that spectrum are nearly 4 million homes that aren't just sitting unsold or unrentedthey're not even on the market. While vacant properties are broadly decreasing in number as more are sold or rented, that final "other" numberplaces simply not on the market and not being used for anythinghas actually increased in the last year. These vacant homes are bad news for all involved, depressing property values around them, falling into disrepair, and often attracting higher crime rates and other social problems. Places where private investors will likely do much of the heavy lifting include areas like Phoenix, where a boom-era oversupply of new homes is gradually being bought up at low prices and turned into rental units. But other towns prone to longer-term decline will need to simply tear buildings down. And for that, land banksgovernment or nonprofit entities that own, manage and dispose of vacant landhave a role to play. Click here to read the full article.

JOBLESS CLAIMS IN U.S. FALL TO FOUR-YEAR LOW

Fewer Americans than forecast filed first-time claims for unemployment benefits last week, which may reflect difficulty adjusting the data for seasonal swings at the start of a new quarter, Bloomberg News reported today. Applications for jobless benefits dropped 30,000 to 339,000 in the week ended Oct. 6, the fewest since February 2008, Labor Department figures showed today. Economists had forecast 370,000 claims, according to the median estimate in a Bloomberg survey. At the same time, the cooling of the global economy and a lack of clarity on U.S. fiscal policy are acting as hurdles for faster gains in employment. The report "is consistent with a labor market that is gradually getting better," said Guy Berger, a U.S. economist at RBS Securities Inc. in Stamford, Conn., who had predicted a decline in claims. "Layoffs are at a low level and don't seem to be going anywhere. Hiring is still very muted." Click here to read the full article.

U.S. GROWTH EXPECTED TO BE SLOW INTO 2013

The unemployment rate registered a dramatic 0.5 percentage-point drop over the past two months, but economists don't expect that pace of decline to continue, the Wall Street Journal reported today, citing its latest forecasting survey. "The general trend in the unemployment rate is lower, and this should continue to be true as long as the economy grows along the profile we project," said Joseph LaVorgna at Deutsche Bank. "However, the cumulative five-tenths decline over the past two months appears to be overdone." It is expected that the jobless rate will still be at 7.8 percent by June of next year, matching the September figure released last week. The reason for the stagnation in the job market is expectations for lackluster economic growth during the rest of 2012 and into 2013. Economists say they don't see the U.S. falling back into recession and for the most part believe that the economy will grow above 3 percent in 2013. But about two-thirds of the respondents say the risks remain more to the downside than upside. Click here to read the full article.

WATCH COMMISSION HEARING LIVE NEXT WEEK!

ABI's Commission to Study the Reform of Chapter 11 will hold a public hearing on Wednesday, October 17, at the LSTA Annual Conference in New York. The event will be live webcast beginning at 3:15 p.m. ET at the Commission's website (commission.abi.org).

ABI MEMBERS CAN RECEIVE A DISCOUNT ON THEIR PURCHASE OF A DEBTOR WORLD

A Debtor World, published by Oxford University Press, contains a collection of contributions about the societal implications of private debt from top scholars at the 2008 Debt Symposium sponsored by ABI and hosted by the University of Illinois College of Law. The essays comprising this volume are authored by dozens of leading U.S. and international academics who have written about debt or issues related to debt in a wide range of disciplines including law, sociology, psychology, history, economics and more. The collection explores debt as neither a problem nor a solution but as a phenomenon, and promotes the exchange of knowledge to better comprehend why consumers and businesses decide to borrow money. It explores what happens to businesses and consumers under heavy debt loads, and what legal norms and institutions societies need in order to encourage the efficient use of debt while promoting a greater understanding of the global phenomenon of increased indebtedness and societal dependence. To order your copy and receive an ABI member discount, please click here and enter promo code "31256" when making your purchase. The discount expires 12/31.

ABI IN-DEPTH

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

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

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

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

LATEST CASE SUMMARY ON VOLO: WILLIAMS V. KING (IN RE KING; BAP 8TH CIR.)

Summarized by Lars Fuller of Baker and Hostetler LLP

The Eighth Circuit BAP affirmed an order of the U.S. Bankruptcy Court for the Western District of Missouri denying a motion to reconsider an order awarding sanctions and directing a creditor to dismiss a claim pending in state court as violating the debtor's chapter 7 discharge. The bankruptcy court had first granted a motion for sanctions against the appellants, then denied the appellants' motion to reconsider. The appellants appealed both the order for sanctions and the order denying the motion to reconsider. The BAP indicated that the appeal of the motion for sanctions was likely untimely, but the timeliness was not necessary for disposition, given the affirmation of the bankruptcy court's order on the merits and the timely appeal of the denial of the motion to reconsider.

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: LETTING YOUR CREDITORS SUE YOU

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post raises the notion of debtors allowing creditors to sue them, rather than the debtors filing for bankruptcy, as a way to deal with debt.

ABI Quick Poll

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

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

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

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

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NEXT EVENT

ABI YOUNG AND NEW MEMBERS COMMITTEE “TRENDING ISSUES: EXAMINERS AND SELECT PLAN CONFIRMATION ISSUES” WEBINAR

Oct. 15, 2012

Register Today!

COMING UP:

Oct. 16, 2012

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Oct. 18, 2012

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ABI/ST. JOHN'S "BANKRUPTCY AND RACE: IS THERE A RELATION?" SYMPOSIUM

Oct. 19, 2012

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ABI'S PROGRAM AT NCBJ'S ANNUAL MEETING

Oct. 26, 2012

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Nov. 7, 2012

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4TH ANNUAL PROFESSIONAL DEVELOPMENT PROGRAM

Nov. 9, 2012

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Nov. 12, 2012

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Nov. 29 - Dec. 1, 2012

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Dec. 4-8, 2012

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Jan. 24-25, 2013

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Feb. 17-19, 2013

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CALENDAR OF EVENTS

October

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

October 15, 2012

- ABI/Bloomberg Distressed Lending Conference

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

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

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

     October 19, 2012 | Queens, N.Y.

- ABI Program at NCBJ's Annual Conference

     October 26, 2012 | San Diego, Calif.

November

- U.S./Mexico Restructuring Symposium

November 7, 2012 | Mexico City, Mexico

- Professional Development Program

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

- Detroit Consumer Bankruptcy Conference

November 12, 2012 | Detroit, Mich.

- Winter Leadership Conference

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

December

- Forty-Hour Bankruptcy Mediation Training

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

2013

January

- Rocky Mountain Bankruptcy Conference

January 24-25, 2013 | Denver, Colo.

February

- Kansas City Advanced Consumer Bankruptcy Practice Institute

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

Thursday, August 21, 2025

ABI Tags

Bankruptcy Litigation

Fed Governor: Put Cap on Big Financial Firms

Legislation

ABI Bankruptcy Brief | June 13 2013

June 13, 2013

NEWS AND ANALYSIS

REGULATORS QUESTION BANKS ON BUSINESS LENDING RISKS

U.S. regulators are grilling banks over lending standards and warning them about mounting risks in business loans, the Wall Street Journal reported today. Lending to companies has been a bright spot for banks searching for revenue amid slow economic growth and historically low interest rates. But regulators worry that banks have sweetened loan terms too much, which could put them in jeopardy if corporate borrowers can't repay. Bank examiners are pulling out more loans for inspection, questioning loan officers more thoroughly about credit standards and studying other underwriting functions more closely than they have in years, according to bankers, consultants and regulators. In private meetings with bankers in recent months, regulators from the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corp. and the Federal Reserve Board have all focused heavily on commercial lending. Looser lending standards are part of a wave of risk-taking that is sweeping through the capital markets, from stock investors loading up on margin debt and piling into high-yield and investment-grade corporate bonds, to private-equity firms ramping up leveraged buyouts. Read more. (Subscription required.)

HOUSE PASSES BILL TO LIMIT CFTC'S CROSS-BORDER SWAPS AUTHORITY

House lawmakers passed legislation yesterday that would curb the U.S. Commodity Futures Trading Commission’s authority to oversee the $633 trillion global swaps market, Bloomberg News reported today. The bipartisan bill’s approval came as a majority of CFTC commissioners have signaled they want to delay final action on how new derivatives rules apply to foreign banks and the overseas affiliates of U.S. banks and hedge funds. Chairman Gary Gensler insists the agency should take its final vote on the guidance by July 12, when the current deadline expires. While the bill is not expected to be introduced in the Senate, the House vote could increase pressure on Gensler to agree to a delay. The CFTC will decide how to press forward after the Securities and Exchange Commission last month outlined a different approach to regulating swaps that it oversees, which hews closer to industry viewpoints. The House bill would exempt foreign banks from CFTC rules if their home countries have broadly similar regulations and would force the CFTC and SEC to reconcile their approaches. Read more.

FORECLOSURES JUMP AS BANKS BET ON RISING U.S. HOME PRICES

Home repossessions in the U.S. jumped 11 percent in May after declining for the previous five months as rising prices and limited inventory for sale across the country spurred banks to complete foreclosures, Bloomberg News reported today. Lenders took back 38,946 homes, up from 34,997 in April, according to Irvine, Calif.-based data firm RealtyTrac, which tracks notices of default, auction and seizures. Thirty-three states had increases in the number of homes repossessed, RealtyTrac said in a report today. The biggest annual jumps in states with more than 1,000 home repossessions occurred in North Carolina, up 60 percent from the previous month, followed by gains of 44 percent in both Wisconsin and Illinois, 23 percent in Colorado and 19 percent in Michigan, according to RealtyTrac. Read more.

COMMENTARY: GOVERNMENT'S GSE OVERHAUL EFFORTS REFLECT FEW LESSONS OF HOUSING CRISIS

Nearly five years after the government took over mortgage giants Fannie Mae and Freddie Mac, Congress is gingerly approaching the process of how Americans buy homes, according to a commentary in the New York Times DealBook blog yesterday. Sens. Bob Corker (R-Tenn.) and Mark R. Warner (D-Va.) have been working on a bill that would create a government insurance operation, similar to the Federal Deposit Insurance Corporation, that would insure mortgage-backed securities. Private investors would have to shoulder the first losses, probably about 10 percent. Taxpayers would not have to bail out those investors should things go south. If the Corker-Warner proposal were to go through, the private companies that have pole position would be the private mortgage insurers. However, private mortgage insurers were quietly a major part of the problem after the housing bubble burst, according to the commentary. They were woefully undercapitalized and have been operating almost as zombie institutions. Read the full commentary.

REPORT: STATE BUDGETS ARE ON THE MEND

A new report released today showed that states are climbing out of the deep fiscal hole they fell into during the economic downturn, but the pace of the recovery is expected to slow as federal budget cuts kick in and a valuable tax windfall disappears, the Washington Post reported today. The Fiscal Survey of States found that the fiscal distress that gripped states in the years after the recession has largely eased. The report said that 30 states are on course to enjoy surpluses and that 10 others are right on target with revenue. Meanwhile, 42 governors proposed budgets that increased spending for next year, and many states can begin restoring money to key programs that they were forced to cut in recent years. But the report warned that the fiscal future is uncertain. Analysts are still waiting for states to feel the full impact of the across-the-board federal budget cuts that went into effect earlier this year. Also, although improving, unemployment remains high, creating a drag on revenue while elevating social service spending. Read more.

NEW ABI LIVE WEBINAR ON JULY 15 WILL FOCUS ON THE § 1111(b) ELECTION, PLAN FEASIBILITY AND CRAMDOWN ISSUES

Utilizing a case study, ABI's panel of experts on July 15 will explore issues surrounding a lender’s decision on whether or not to make an election under § 1111(b), plan feasibility and voting. The abiLIVE panel will also walk attendees through the necessary mathematical analyses used to analyze these issues. The webinar will take place from 1-2:15 p.m. ET. Special ABI member rate available! Click here to register.

ABI GOLF TOUR UNDERWAY; NEXT STOP IS THE NORTHEAST BANKRUPTCY CONFERENCE ON JULY 12

The next stop for the ABI Golf Tour is the famed Newport National course in Newport, R.I., in conjunction with the Northeast Bankruptcy Conference on July 12. Final scoring to win the Great American Cupsponsored by Great American Groupis 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 IN-DEPTH

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: PAZDZIERZ V. FIRST AMERICAN TITLE INSURANCE CO. (IN RE PAZDZIERZ; 6TH CIR.)

Summarized by Geoffrey Peters of Weltman, Weinberg & Reis Co. LPA

Affirming the U.S. District Court for the Eastern District of Michigan, the Sixth Circuit Court of Appeals held that claims of fraud that are grounded in tangible property rights such as judgments or promissory notes are assignable under Michigan law. The Sixth Circuit distinguished naked claims of fraud, not based upon a tangible property right, which are not assignable under Michigan law. The Sixth Circuit also held that the assignee of a tangible property right can seek nondischargeability under 11 U.S.C. section 523(a)(2)(B).

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: A "BOUNDLESS INFORMANT" FOR FINANCIAL SYSTEM COULD END TBTF

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A new blog post speculates that regulators could use the power of data mining and pattern-matching algorithms to seek out triggers of contagion across an interconnected financial system.

ABI Quick Poll

Law firms should provide support for law student-staffed bankruptcy clinics for consumer debtors.

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TOMORROW:

June 14, 2013

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COMING UP

July 11-14, 2013

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July 15, 2013

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July 18-21, 2013

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Aug. 8-10, 2013

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Aug. 22-24, 2013

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Sept. 10, 2013

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Sept. 12, 2013

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Sept. 27, 2013

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Oct. 4, 2013

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Oct. 14, 2013

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Nov. 10-12, 2013

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Nov. 11, 2013

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Dec. 8-12, 2013

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CALENDAR OF EVENTS

2013

June

- 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.

- abiLIVE Webinar

     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

- Midwestern Bankruptcy Institute Program and Midwestern Consumer Forum

    Oct. 4, 2013 | Kansas City, Mo.

- ABI Endowment Football Game

    Oct. 6, 2013 | Miami, Fla.

- Chicago Consumer Bankruptcy Conference

    Oct. 14, 2013 | Chicago, Ill.

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

Thursday, August 21, 2025

ABI Tags

Regulators Question Banks on Business Lending Risks

Real Estate

ABI Bankruptcy Brief | November 15 2012

November 15, 2012

NEWS AND ANALYSIS

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.

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.

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.

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NEXT EVENT:

Nov. 29 - Dec. 1, 2012

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Dec. 4-8, 2012

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Jan. 21, 2013

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Jan. 24-25, 2013

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Feb. 7-9, 2013

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Feb. 17-19, 2013

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Feb. 20-22, 2013

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CALENDAR OF EVENTS

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.

Thursday, August 21, 2025

ABI Tags

Consumer Bankruptcy

Foreclosure Starts Down on Annual Basis in October

Practice and Procedure

Venue/Jurisdiction

Retail

SEC Issues

ABI Bankruptcy Brief | January 15 2013

January 15, 2013

NEWS AND ANALYSIS

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!

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.

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.

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ENDS TODAY: SAVE $25 ON A NEW REGISTRATION FOR ALL UPCOMING CONFERENCES! Click here for more information!

NEXT WEEK:

Jan. 21, 2013

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Jan. 24-25, 2013

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COMING UP:

Feb. 7-9, 2013

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

Feb. 19, 2013

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Feb. 20-22, 2013

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March 7-9, 2013

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March 22, 2013

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April 18-21, 2013

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CALENDAR OF EVENTS

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.

Thursday, August 21, 2025

ABI Tags

Asset Sales

Claims

Bankruptcy Litigation

Analysis: Firms in Chapter 11 Face Fast Trip to Auction Block

Creditors' Committee

ABI Bankruptcy Brief | May 21 2013

May 21, 2013

NEWS AND ANALYSIS

REPORT: AVERAGE CREDIT CARD DEBT, LATE PAYMENTS FALL IN FIRST QUARTER

Credit reporting agency TransUnion said that the rate of credit card payments at least 90 days overdue fell to 0.69 percent in the first quarter from 0.85 percent a year earlier — a drop of nearly 19 percent, the Associated Press reported today. The January-March card delinquency rate was also down from 0.73 in the October-December quarter, when many consumers ramped up credit use to finance holiday season purchases. Average credit card debt per borrower fell 1.7 percent to $4,878 in the first quarter from $4,962 in the same period last year, TransUnion said. On a quarterly basis, it declined 4.8 percent from $5,122 in the fourth quarter. TransUnion, however, has forecast that average credit card debt will rise by roughly 8 percent to $5,446 by the end of this year — the highest level in four years. Read more.

EDITORIAL: DERIVATIVES REFORM ON THE ROPES

New rules to regulate derivatives, adopted last week by the Commodity Futures Trading Commission, are a victory for Wall Street and a setback for financial reform, according to a New York Times editorial yesterday. The regulations, required under the Dodd-Frank reform law, are intended to impose transparency and competition on the notoriously opaque multitrillion-dollar market for derivatives, which is dominated by five banks: JPMorgan Chase, Goldman Sachs, Bank of America, Citigroup and Morgan Stanley. In the run-up to the financial crisis — and since — the lack of transparency and competition has fostered recklessness and instability, according to the editorial. Under the Dodd-Frank law, derivatives are supposed to be traded on “swap execution facilities,” which are to operate much like the exchanges that exist for equities and futures. Even as the new rules shift much of the trading to those facilities, the editorial says that they will also preserve the ability of the banks to maintain their old practices. For instance, the commission’s initial proposal called for hedge funds, asset managers and corporations to contact at least five banks when seeking prices for a derivatives contract. In a major concession to the banks, that number was lowered to two in the final rule. Read the full editorial.

REGULATORS TO VOTE ON OVERSIGHT OF NONBANK FINANCIAL INSTITUTIONS

Treasury Secretary Jacob Lew told the Senate Banking Committee that U.S. regulators will soon vote on which large nonbank financial firms will face much stricter government oversight as policymakers seek to reduce risks posed by Wall Street to the broader economy, the Wall Street Journal reported today. Lew appeared before the Senate Banking Committee to discuss the work of federal regulators to implement the 2010 Dodd-Frank financial-overhaul law and limit potential risks to the financial system. The Financial Stability Oversight Council, comprised of Treasury officials and other regulators, have struggled in deciding which large, complex financial firms should be subject to higher capital and other rules because of the potential risks they pose to the financial system. "The Council discussed its ongoing analysis at its most recent meeting on April 25, and it expects to vote on proposed designations of an initial set of nonbank financial companies in the near term," Lew said. While federal officials have declined to say publicly which firms are being considered for a "systemic" designation, at least three companies have reached the final of three stages in the review process. Prudential Financial Inc., American International Group Inc. and the GE Capital unit of General Electric Co. have advanced to the third stage, though regulators are considering a number of firms that could ultimately be subject to the enhanced oversight. "Yields and volatility in fixed-income markets are very low by historical standards, which may be providing incentives for market participants to 'reach for yield' by investing in lower-grade credit," Lew said in prepared remarks. Read more. (Subscription required.)

Click here to read Lew's prepared testimony for today's Senate Banking Committee hearing.

ANALYSIS: WIELDING HARRISBURG EXAMPLE, SEC AIMS FOR CITIES TO COMPLY WITH DISCLOSURE RULES

The Securities and Exchange Commission's rebuke of the city of Harrisburg this month over fraudulent statements and long-overdue disclosures to its bondholders could be seen as a warning to state and local politicians who offer too rosy a view of their financial health, according to a Reuters analysis yesterday. However, clear-cut cases of officials misstating their city's finances, such as Harrisburg, remain relatively rare, and the main goal of the U.S. Securities and Exchange Commission is far more basic: cajoling thousands of cities, counties and other organizations that sell bonds into complying with its disclosure rules. When the SEC charged the cash-strapped capital city of Pennsylvania on May 6, it effectively put officials across the country on notice that even political statements such as annual state-of-the-city addresses must not overstate financial conditions. The message was, "What you say can and will be used against you," said Ben Watkins, head of Florida's Division of Bond Finance. "What makes it precedent-setting is that it's the first time there's been an enforcement action on statements made by public officials." The SEC said Harrisburg had defrauded its creditors because numerous officials glossed over its disastrous finances and the city was overdue in its disclosures. While no individuals were held to account, an SEC commissioner said that it would not show such restraint in the future. Read more.

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.

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 Cupsponsored by Great American Groupis 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: BANK OF CORDELL V. STURGEON (IN RE STURGEON; 10TH CIR.)

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

The Tenth Circuit BAP found that the evidence supported the bankruptcy court’s finding that the debtor was an active, knowing participant in a fraudulent scheme to deceive the appellee through a series of false representations and false pretenses that created a contrived and misleading understanding by the appellee, and that the debtor thereby intended to deceive the appellee.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: WILL TRADITIONAL CHAPTER 11 INVESTORS FIND A ROLE IN CHAPTER 9?

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. While most chapter 11 cases have “rules of engagement” that are well-known by the sophisticated players who are guided by the Bankruptcy Code and an extensive body of case law, chapter 9 lacks much of this clarity, making it a scarier place for traditional funds to invest, according to a recent blog post.

ABI Quick Poll

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

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NEXT WEEK:

May 29, 2013

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COMING UP

June 7, 2013

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June 13-16, 2013

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June 14, 2013

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INSOL’s Latin American Regional Seminar in São Paulo, Brazil

June 13, 2013

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July 11-14, 2013

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July 18-21, 2013

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Aug. 8-10, 2013

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Aug. 22-24, 2013

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Sept. 10, 2013

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Sept. 12, 2013

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Oct. 6, 2013

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Dec. 8-12, 2013

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CALENDAR OF EVENTS

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.

October

- ABI Endowment Football Game

Oct. 6, 2013 | Miami, Fla.

December

- ABI/St. John’s Bankruptcy Mediation Training

Dec. 8-12, 2013 | New York

Thursday, August 21, 2025

ABI Tags

Report: Average Credit Card Debt, Late Payments Fall in First Quarter

ABI Bankruptcy Brief | November 6 2012

November 8, 2012

NEWS AND ANALYSIS

ANALYSIS: NEARLY A THIRD OF COMPANIES THAT FILED FOR CHAPTER 11 DID NOT DISCLOSE PLANS IN ADVANCE

More than two dozen companies in the past five years did not disclose chapter 11 bankruptcy preparations to investors, according to a Wall Street Journal analysis of regulatory filings. The companies, including Eastman Kodak Co. and American Airlines parent AMR Corp., refrained from warning investors about potentially seeking chapter 11 protection from creditors despite facing dire financial straits or, in some cases, hiring restructuring advisers to make the preparations. Some of the firms only disclosed later in court documents that they had laid the groundwork for the filings in advance. The law is murky in this area: Federal securities laws and regulations do not require disclosure of bankruptcy preparations in most circumstances, even though such information could be deemed "material" to investors, according to securities-law specialists. The Financial Accounting Standards Board is working on proposing a rule that would require executives under certain circumstances to be responsible for disclosing issues related to a company's ability to continue as a going concern. Under current rules, auditors determine whether companies must make that sort of disclosure. The "going concern" disclosure is separate from other general bankruptcy-preparation notifications a company could choose to make. Read more. (Subscription required.)

U.S. CONSUMER CREDIT EXPANDS IN SEPTEMBER

Federal Reserve data released yesterday showed that U.S. consumer credit grew $11.36 billion in September, although Americans appeared to use their credit cards more sparingly, Reuters reported yesterday. So far this year, overall consumer credit has expanded in eight of nine months. Nonrevolving credit, which includes student and auto loans, rose $14.27 billion in September. Student loans made by the government rose 27.9 percent in the 12 months through September, slightly less than the 12-month growth posted through August. The figures also showed a contraction in revolving credit, which mostly measures credit card use. That category dropped to $2.90 billion in September. Read more.

TARIFFS UPHELD, BUT MAY NOT HELP U.S. SOLAR INDUSTRY'S STRUGGLES

Though the U.S. International Trade Commission decided yesterday to uphold tariffs of about 24 to 36 percent on most solar panels imported from China, the action might not do much to aid the financially struggling U.S. solar panel industry, according to a report from today's New York Times. Domestic solar manufacturers said that the duties, to be in place for five years, would make up for unfair business practices by Chinese companies that had harmed the domestic market and allow homegrown companies to hire more workers and thrive. Because the duties apply to panels made of Chinese-produced solar cells, Chinese companies are already avoiding the duties by assembling their panels from cells produced elsewhere, like Taiwan, even if the cell components come from China. The case is also unlikely to have much effect on the central market dynamic that analysts say is driving companies out of business: oversupply. About a dozen panel makers in the United States have gone bankrupt or closed factories since the start of last year. "There have been a few bankruptcies and a few plant closures and so on, but at this point it's just a drop in the bucket," said Shayle Kann, the head of GTM Research, a unit of Greentech Media. Read more.

VIDEO AND PREPARED WITNESS STATEMENTS FROM THE CHAPTER 11 COMMISSION'S 11/3 HEARING NOW AVAILABLE

The video recording of ABI's Chapter 11 Reform Commission’s hearing on 11/3 at TMA's annual conference is now available. Additionally, prepared witness statements can also be downloaded. Click here to watch the video and access the prepared witness statements.

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

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

ELECTION ANALYST AND AUTHOR LARRY SABATO TO DISSECT THE 2012 ELECTION RESULTS AT ABI’S 24TH ANNUAL WINTER LEADERSHIP CONFERENCE!

Don't miss ABI's 24th Annual Winter Leadership Conference, taking place Nov. 29 - Dec. 1 at the JW Marriott Starr Pass Resort & Spa in Tucson, Ariz. This year's conference will feature insights from some of the top insolvency and restructuring experts on issues confronting the profession in 2013, including four specialized tracks geared toward business, consumer, financial advisor and professional development. The featured keynote speaker will be election analyst and author Larry Sabato. ABI's Great Debates a field hearing of ABI’s Commission to Study the Reform of Chapter 11 and 10 committee educational sessions will also be taking place at the conference. Panel sessions include:

Business Track:

• Fraudulent Conveyance Litigation from Soup to Nuts

• Pushing the Envelope

• The Role of the Hedge Fund in Corporate Restructurings: White Knight or Villain?

• Social Networking and Bankruptcy Issues

Financial Advisors Track

• Advising the Corporate Entity

• How to Create Value for the Estate from Your First Client Meeting until Entry of a Final Decree

Consumer Track

• From Infants to Toddlers: Bankruptcy Rules 3001 and 3002.1 Experience First-Year Growing Pains

• The National Mortgage Settlement: How Will It Affect Consumer Bankruptcy Cases?

Professional Development Track

• Litigation Skills: Mock Expert Examination

• “I'm Shocked—Shocked!—to Find that Unethical Conduct Is Going On in Here!”: A Tale of Ethics in Bankruptcy

The conference will also include a final night dinner featuring impressionist, comedian and singer Jeff Tracta, and the sounds of ABI's rock-n-roll band, the Indubitable Equivalents. Register by Monday to save $50 on your registration!

TUCK SCHOOL OF BUSINESS WINS NINTH ANNUAL CORPORATE RESTRUCTURING COMPETITION

A team from Tuck School of Business at Dartmouth College won the Bettina M. Whyte Trophy at the Ninth Annual ABI Corporate Restructuring Competition, held Nov. 1-2 at the University of Pennsylvania Wharton School of Business in Philadelphia. The second-year MBA student winners also shared a $6,000 cash prize. Students from the University of Chicago Booth School of Business won the second-place award of $3,500, while a team from the University of Virginia Darden School of Business received the $2,500 prize for third place. Click here to read the full press release.

LATEST CASE SUMMARY ON VOLO: MICHIGAN STATE UNIVERSITY V. ASBESTOS SETTLEMENT TRUST (IN RE THE CELOTEX CORP.; 11TH CIR.)

Summarized by Jeffrey Snyder of Bilzin Sumberg Baena Price & Axelrod LLP

The Eleventh Circuit ruled that although a district court, at its discretion, may review interlocutory judgments and orders of a bankruptcy court pursuant to 28 U.S.C. §158(a), a court of appeals only has jurisdiction over final judgments and orders entered by a district court or bankruptcy appellate panel sitting in review of a bankruptcy court pursuant to 28 U.S.C. §158(d).

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: SECOND CIRCUIT ADOPTS DEFERENTIAL ABUSE OF DISCRETION STANDARD OF REVIEW FOR EQUITABLE MOOTNESS APPEALS

The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent blog post examines how the U.S. Court of Appeals for the Second Circuit, in R2 Investments v. Charter Communications, Inc., recently affirmed the dismissal of an appeal from the confirmation order in the bankruptcy of cable company Charter Communications, concluding that the deferential abuse of discretion standard of review was applicable.

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.

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TOMORROW:

4TH ANNUAL PROFESSIONAL DEVELOPMENT PROGRAM

Nov. 9, 2012

Register Today!

MONDAY:

Nov. 12, 2012

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COMING UP:

Nov. 29 - Dec. 1, 2012

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Dec. 4-8, 2012

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Jan. 21, 2013

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Jan. 24-25, 2013

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Feb. 7-9, 2013

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Feb. 17-19, 2013

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Feb. 20-22, 2013

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CALENDAR OF EVENTS

November

- 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.

Thursday, August 21, 2025

ABI Tags

Consumer Bankruptcy