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FORECLOSURES GROW AGAIN AS FUNDING FOR HELP WANES



With millions of homes still in the foreclosure pipeline, mortgage counselors across the country say they are handling increasingly complex cases for homeowners who are unemployed, underwater or redefaulting -- and sometimes, all three, Bloomberg News reported today. Even as borrowers’ problems become more intractable, federal support is waning. Counseling programs are funded largely through the U.S. Department of Housing and Urban Development, which has allocated about $620 million to advise approximately 1.36 million homeowners since December 2007, according to a NeighborWorks America June 11 report to Congress. Last November, Congress appropriated $45 million for housing counseling in fiscal year 2012 after slashing all counseling funding during April budget negotiations. HUD had requested $88 million. The House passed a 2013 HUD appropriations bill in June allocating $45 million to housing counseling, $10 million less than HUD requested. The bill is now stalled in the Senate, and the White House has said President Barack Obama plans to veto the bill if passed in its current form. Administration officials are urging states to compensate for declining funds with money from a recent court settlement with mortgage servicers. Counselors, who act as neutral third parties between homeowners and lenders, say their services will be needed as long as unemployment remains high, scammers target struggling homeowners and states change their foreclosure policies, as happens frequently. Read more.

LAWSUIT COULD UNDO SALE THAT CREATED NEW GM, COMPANY SAYS



The new General Motors Co. could be undone by a $3 billion lawsuit that pits general creditors against hedge funds including Appaloosa Management LP, Elliott Management Corp. and Fortress Investment Group LLC, Bloomberg News reported today. A trust for creditors of the old, bankrupt part of the automaker now known as Motors Liquidation Co. sued the hedge funds in bankruptcy court in March, alleging that while GM was preparing its bankruptcy filing on June 1, 2009, the funds, which held notes in a Canadian unit of GM, "saw an eleventh-hour opportunity for profit and pounced." The trust seeks to have a $2.67 billion claim and a $367 million payment negotiated for holders of notes in GM's Nova Scotia unit disallowed or reduced, saying that the hedge funds seek more than three times what General Motors actually owed them. General Motors, the currently operating automaker that split off from the bankrupt unit through a purchase of its assets July 10, said that the trust's objections "threaten to disturb" the sale that saved the U.S. automaker, allowing it to prosper. Read more.

FEDERAL RESERVE SAYS U.S. BANK LENDING CONDITIONS EASING



The Federal Reserve said yesterday that banks continued to ease lending standards for larger firms in the last three months but that small businesses are still having a hard time accessing credit, Reuters reported today. The results from the central bank's quarterly senior loan officer survey suggest that the ability of firms to borrow has continued to improve despite recent signs of weakness in the economic recovery. A number of banks eased loan standards on auto and credit card loans, the Fed said. Strong demand for prime mortgage loans offered further evidence that a nascent housing rebound is finally beginning to take hold, according to the survey. U.S. banks are benefiting from new business due to a decrease in lending from European institutions, the survey found. Read more.

FEARING AN IMPASSE IN CONGRESS, INDUSTRY CUTS SPENDING



A rising number of manufacturers are canceling new investments and putting off new hires because they fear that paralysis in Washington, D.C., will force hundreds of billions in tax increases and budget cuts in January, undermining economic growth in the coming months, the New York Times reported on Sunday. Democrats and Republicans in Congress are far apart on how to extend the Bush-era tax breaks beyond January — the same month automatic spending reductions are set to take effect — unless there is a deal to trim the deficit. The combination of tax increases and spending cuts is creating an economic threat that Federal Reserve Chairman Ben S. Bernanke calls "the fiscal cliff." The worries come amid broader fears that the economy is losing momentum; the annual rate of economic growth in the second quarter fell to 1.5 percent from 2 percent in the first quarter, and 4.1 percent in the last quarter of 2011. On Thursday, the Commerce Department reported that factory orders unexpectedly fell 0.5 percent in June from the previous month, while data on the labor market released on Friday showed job creation still falling short of the level needed to bring down the unemployment rate. Read more.

STATE REGULATORS URGE CONGRESS TO EXTEND DEPOSIT INSURANCE



State regulators on Friday sent a letter to Congress urging for the extension of a special program that provides government insurance on bank accounts known as the Transaction Account Guarantee (TAG), the Wall Street Journal reported on Saturday. It is clear that "the stability provided by the TAG program is still necessary," wrote John Ryan, president of the Conference of State Bank Supervisors. The guarantee program insures all bank deposits above the traditional $250,000 limit for guaranteed deposits provided by the Federal Deposit Insurance Corp. The result is a sense of safety for companies and municipalities that want to deposit large sums of cash at banks for use in managing payroll, for instance. The program covers more than a trillion dollars worth of zero-interest deposits at large and small banks. The program was created in 2008 in the midst of market chaos stemming from the financial crisis. Four years later, the program faces a Dec. 31 expiration date, absent congressional action. Read more. (Subscription required.)

SMALL BANKS CRITICIZE PROPOSED BANK CAPITAL RULES



Executives at many small banks complain that the forthcoming bank capital rules proposed by the OCC, Federal Reserve and Federal Deposit Insurance Corp. to implement an international agreement known as Basel III could force the banks to cut back on loans to small businesses or homeowners, the Wall Street Journal reported today. The current economic malaise has heightened concern about the health of smaller lenders. Smaller banks say they are a bigger driver of growth in their communities—particularly for small businesses—than their bigger, multinational rivals. Lenders with less than $1 billion in assets made up about 10 percent of industry assets as of the first quarter but made 37 percent of small loans to businesses and farms, according to research by the FDIC, which has launched an initiative to better understand the challenges facing community banks. At a vote to send the draft rules out for comment, Federal Reserve governor Elizabeth Duke raised concerns that new treatment of mortgages and other assets under the new capital rules could hamper legitimate lending by smaller lenders. Small lenders say that the elaborate Basel III system was designed to rein in the large, internationally active banks that brought the financial system to its knees, not small community institutions. Read more. (Subscription required.)

LATEST ABI PUBLICATION EXPLORES OIL AND GAS BANKRUPTCIES



The U.S. oil and gas industry is especially 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. These factors have contributed to a dramatic increase in restructurings and bankruptcy filings over the last decade. Bankruptcy cases involving exploration and production companies raise unique issues, resulting from the interplay among the Bankruptcy Code, federal and state laws, the regulatory structure governing the energy industry, and the political and practical realities of the industry’s significance. When Gushers Go Dry: The Essentials of Oil and Gas Bankruptcy provides a better understanding of what happens when an oil, gas or other natural resources company goes bankrupt. For more information about ordering the book, please visit the ABI Bookstore.

ABI IN-DEPTH

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



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

LATEST CASE SUMMARY ON VOLO: TERRY V. STANDARD INSURANCE CO. (IN RE TERRY; 8TH CIR.)



Summarized by Sarah Smegal of Bartlett Hackett Feinberg P.C.

The Eighth Circuit BAP reversed the bankruptcy court and remanded the case for a determination of whether the equities favored allowing the creditor to recoup the debtor's pre-petition overpayment of disability insurance benefits from post-petition benefits. Reviewing the bankruptcy court's decision de novo, the BAP held that the debtor's debt to Standard was revived when Standard turned over the $45,316.54 to the trustee in response to the preference demand letter. Standard's right to reimbursement was a claim entitled to be paid as a general unsecured claim as allowed under Section 502(h). Standard did not file a proof of claim, so its claim was not allowed and it was not entitled to any distribution in the case. Its claim was also discharged under Section 727(b). The BAP found that although the debt was discharged and Standard could not collect the overpayment affirmatively, Standard's equitable defense of recoupment survived and could be exercised under the policy. For recoupment to apply, the creditor must have a claim against the debtor that arose from the same transaction as the debtor's claim against the creditor. The BAP ruled that both parties' rights and obligations arose out of a single contract, i.e. the long-term disability insurance policy. Recoupment is only allowed where it would be inequitable for the debtor to enjoy the benefits of the transaction without also meeting his obligations, and is also narrowly construed in bankruptcy. Accordingly, as the equities must be weighed and the question was not reached by the bankruptcy court, the BAP remanded the case.

Nearly 600 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: THIRD CIRCUIT REVISITS EQUITABLE MOOTNESS IN PHILADELPHIA NEWSPAPERS CASE



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examined how the U.S. Court of Appeals for the Third Circuit recently held in In re Philadelphia Newspapers LLC, No. 11-3257 (3d Cir. July 26, 2012) that an appeal cannot be dismissed as equitably moot solely on the basis that a chapter 11 plan has been substantially consummated.

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 Twombly/Iqbal rule for pleading ‘plausible’ claims has been applied too stringently in dismissing avoidance actions for failure to state a claim.

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.

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.

- 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.

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

HOME VACANCIES FALL IN CITIES HIT HARDEST BY FORECLOSURES



Trulia Inc. has reported that the home-vacancy rate is falling in U.S. cities such as Las Vegas and Phoenix that were hit hardest by the housing crisis, Bloomberg News reported today. San Jose, Calif., led the declines among metropolitan areas, with a 24.1 percent drop in the number of empty homes and apartments this year through mid-July, according to Trulia, a real estate information company in San Francisco. It was followed by Las Vegas, Denver, the California areas of Bakersfield and Orange County, Seattle and Phoenix. Falling vacancies, based on an analysis of homes where the U.S. Postal Service delivered no mail for at least 90 days, indicate a gain in the number of new occupants, caused by population growth and more household formation, Trulia Chief Economist Jed Kolko said. Home prices rose for a third consecutive month in May in the 20 U.S. cities tracked by the S&P/Case-Shiller index, according to a July 31 report. U.S. apartment rents rose the most in five years in the second quarter as shrinking vacancies allowed landlords to charge more, research firm Reis Inc. (REIS) said on July 5. Read more.

COMMENTARY: REGULATE, DON'T SPLIT UP, HUGE BANKS



While Sanford I. Weill, the mastermind behind the creation of Citigroup, last week called for the dismantling of megabanks, the bank merger frenzy that Weill set off in the late 1990s was not the proximate cause of the 2008 financial crisis, according to an op-ed by Steven Rattner, a former counselor to the Treasury secretary, in today's New York Times. None of the institutions that toppled like dominoes in 2008 — the investment banks Bear Stearns and Lehman Brothers, the mortgage-finance giants Fannie Mae and Freddie Mac, the insurance company American International Group — were commercial banks, according to Rattner. Nor was the concentration of our banking system, which is less centralized than those in Britain, France, Germany, Italy, Japan, Switzerland and many other countries. What brought our financial system to its knees, according to Rattner, was poor management that expanded the banks' portfolios and activities too aggressively without sufficient risk controls, enabled by lax oversight by regulators. Many of those excesses were concentrated in the housing sector, where a now-legendary bubble formed without regulators or industry leaders recognizing it, according to the op-ed. When the bubble inevitably deflated, in 2007, the weakest institutions imploded with it, and systemic risks were exposed. Only with billions of government money — much of it now recouped — was the system saved. The Dodd-Frank Act was passed and includes a rule, proposed by the former Fed chairman Paul A. Volcker, that forbids banks to gamble with insured deposits. We should focus on putting this and other new regulations into effect, and devising better ways to deal with financial giants — not distractions like Weill's call for reinstating an outmoded concept like Glass-Steagall Act, according to Rattner. Read the full op-ed.

MICHIGAN UNVEILS DEMOLITION PLAN FOR PORTIONS OF DETROIT



Michigan's governor unveiled a new urban policy today aimed at jumpstarting the demolition of thousands of vacant and abandoned homes in Detroit, the Wall Street Journal reported today. Detroit, which lost a quarter of its population between 2000 and 2010, is estimated to have as many as 40,000 vacant and dangerous structures across its 139-square-mile spread. Such homes are a magnet for criminal activity and create a hazard for children walking to schools. Michigan Governor Rick Snyder (R) plans to use about $10 million of Michigan's $97 million payout from a national mortgage-settlement fund to help demolish abandoned houses that surround nine schools in three of Detroit's deteriorating communities. The state's broader role in running Detroit is the result of a power-sharing agreement struck in April—and endorsed by Detroit Mayor Dave Bing—to help the city stave off bankruptcy. Read more. (Subscription required.)

BILL PROVIDES NEW PROTECTIONS FOR ANTITRUST WHISTLEBLOWERS



Whistleblowers would get more protections for reporting criminal antitrust violations to the Department of Justice under new legislation introduced on Tuesday by Sens. Patrick Leahy (D-Vt.) and Chuck Grassley (R-Iowa ), the top members of the Senate Judiciary Committee, the Legal Times reported yesterday. The Criminal Antitrust Anti-Retaliation Act would provide a civil remedy for those who are retaliated against for reporting violations such as price-fixing, market allocation and bid-rigging, which can result in reduced competition and more overcharges for businesses and consumers. The bipartisan bill is based on the results of the General Accountability Office's 2011 study on enforcing antitrust laws, where antitrust attorneys and law professors broadly supported the addition of that remedy because it would motivate more people to come forward with evidence. The DOJ's Antitrust Division, the enforcer of antitrust laws, has relied heavily upon a leniency program to help the agency uncover and prosecute illegal cartel activity, according to the GAO report. Under that current leniency program, the first individual or company that reports its involvement in a criminal antitrust conspiracy to the Antitrust Division will avoid criminal conviction, fines and prison sentences. The bill introduced on Tuesday does not propose a rewards program for whistleblowers, which DOJ officials said could jeopardize witness credibility in criminal cases and could undermine companies' internal compliance programs. Read more.

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



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

For more information on the program, please contact Claudia Gunderson at cgunderson@mcguirewoods.com or
(312) 750-3540.

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: U.S. V. CONEY (5TH CIR.)



Summarized by Gregory Hesse of Hunton & Williams LLP

The Fifth Circuit ruled that the chapter 7 discharge that was issued in favor of the defendants did not discharge their tax obligations because the debtors' conduct violated Sec. 727(a)(1)(C).

More than 570 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: THE GROWING TREND OF MIDDLE-AGED AMERICANS WITH STUDENT LOAN DEBT



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines how middle-aged Americans are caught up in the student loan debt crisis at a growing rate.

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 Twombly/Iqbal rule for pleading ‘plausible’ claims has been applied too stringently in dismissing avoidance actions for failure to state a claim.

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.

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.

- 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.

- International Insolvency and Restructuring Symposium

     October 18, 2012 | Rome, Italy

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.

U.S. CONSUMER SPENDING FALLS IN JUNE; INCOMES RISE



Consumer spending in the U.S. fell slightly in June and marked the second straight decline even though wages rose sharply, according to the latest government data, MarketWatch.com reported. Spending fell less than 0.1 percent last month on a seasonally adjusted basis, the Commerce Department said today, and spending for May was revised down slightly to a 0.1 percent decrease. Personal income, meanwhile, jumped 0.5 percent in June. Since incomes rose faster than spending, the personal savings rate rose to 4.4 percent from 4.0 percent. Read more.

REPORT: COMPLETED U.S. FORECLOSURES HOLD STEADY IN JUNE



CoreLogic reported today that the amount of completed U.S. home foreclosures held steady in June compared to the month before, although the level was down from a year ago, according to Reuters. There were 60,000 finished foreclosures in June, the same as in May and down from the 80,000 seen in June 2011, CoreLogic said. Since the financial crisis erupted in September 2008, there have been about 3.7 million foreclosures.
About 1.4 million homes, or 3.4 percent of homes with a mortgages, were in some stage of the foreclosure process. That was down from 1.5 million homes, or 3.5 percent, a year ago and unchanged from May. The five states with the highest number of foreclosures in the last 12 months were California, Florida, Michigan, Texas and Georgia. Those states alone accounted for 48.4 percent of all completed foreclosures. Read more.

ANALYSIS: CALIFORNIA LURING MOST MUNICIPAL FUND INVESTMENT SINCE 2007, DEFIES BANKRUPTCY WAVE



California municipal funds are garnering the most demand since 2007, helping fuel the biggest rally in the state's debt since May and allaying concerns that bankruptcies might curb the appetite of individual investors, Bloomberg News reported yesterday. With local yields close to their lowest rates since the 1960s, investors seeking tax-free income are willing to take the added risk of debt from Standard & Poor's lowest-rated U.S. state. Bond funds focusing on California issuers have added assets for 18 straight weeks, the longest streak since 2007, according to Lipper US Fund Flows data. The funds increased even as three municipalities in the past six weeks from the most-populous state decided to file for bankruptcy protection, including San Bernardino and Stockton, a city east of San Francisco that is trying to set a precedent by imposing losses on bondholders. Read more.

MUNI RATES EXAMINED FOR SIGNS OF RIGGING



Attention has swung to a set of benchmark interest rates that help determine how much cities and states pay to borrow money in the bond market, the New York Times reported today. The scrutiny of the Municipal Market Data (or M.M.D.) index comes on the heels of revelations that a broader financial industry benchmark, the London Interbank Offered Rate (Libor), was manipulated by banks before and after the financial crisis. Libor is used to help determine the costs of products like mortgages and credit cards. Thomson Reuters, which owns Municipal Market Data, said yesterday that it "has been involved in discussions with regulators" about the rates, which influence the prices of bonds and derivatives in the $3 trillion municipal bond market. The M.M.D. rates influence a much smaller market than Libor, but it is one that is crucial to how cities and states across America borrow money to maintain roads and bridges and provide essential services such as public education. The scrutiny of the M.M.D. rates comes as a number of other events are drawing attention to the transparency and fairness of the municipal bond market. Three former bankers at UBS yesterday went on trial in Manhattan on charges that they had colluded to steer municipal bond transactions to specific banks in exchange for kickbacks. Separately, the Securities and Exchange Commission will release a lengthy report soon that recommends reforms for the municipal bond market so that investors are put on more even footing. Read more.

ANALYSIS: THOUGH SPLITTING UP WAS CONSIDERED, BANK OF AMERICA EXECUTIVES VOTED AGAINST THE IDEA



Long before Sanford Weill suggested last week that big banks should split up, Bank of America Corp. executives and directors considered the idea and then decided against it, the Wall Street Journal reported yesterday. While the Charlotte, N.C.-based company's exploration of a possible breakup in 2010 and 2011 came and went, it illustrates the powerful and contradictory forces buffeting giant financial companies even as the financial crisis recedes. Stung by public revulsion to the bailouts of 2008, regulators are pushing rules that would tax the biggest firms based on size. Big-bank share prices have tumbled, and even some bankers who spent their careers assembling sprawling conglomerates are questioning whether combining traditional lending with trading and deal-making makes sense. At Bank of America, Chief Executive Brian Moynihan and his team looked at a possible bankruptcy of Countrywide Financial Corp., the troubled mortgage operation it purchased in 2008. Management also studied whether it made sense to break off Merrill Lynch, the securities firm it purchased in 2009. Moynihan ultimately recommended to his board that neither action made sense. The company decided that Merrill had become too big of a profit center and that splitting it off could expose the brokerage firm to the sort of funding problems that killed off other Wall Street firms in 2008. Meanwhile, it felt that a bankruptcy of Countrywide might invite more legal and reputational troubles for Bank of America while exposing other subsidiaries to problems. Read more. (Subscription required.)

ABI IN-DEPTH

LATEST CASE SUMMARY ON VOLO: IN RE PHILADELPHIA NEWSPAPERS LLC (3D CIR.)



Summarized by Suzanne Iazzetta of Becker Meisel LLC

The Third Circuit ruled that when deciding whether an appeal is equitably moot, a court must consider all five factors set forth in In re Continental Airlines, 91 F.3d 553, 560 (3d Cir. 1996). In particular, a court must consider whether allowing the appeal to go forward would undermine the plan, an analysis that the court must undertake even if the plan has already been "substantially consummated."

Additionally, under applicable Pennsylvania law, the debtor’s post-petition publication of an article that included hyperlinks to a previously published allegedly defamatory article was not a "republication" such that it could be deemed a separate act of defamation. Therefore, the tort claimant did not sustain its burden to show its entitlement to a § 503(b)(9) administrative expense claim based on the debtor's post-petition publication.

More than 570 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: HOW LONG UNTIL RESCAP LIQUIDATES?



The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. A recent post examines the $109 million loss by Rescap in the first 45 days of its chapter 11 case and ponders whether there will be a liquidation in the case.

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 Twombly/Iqbal rule for pleading ‘plausible’ claims has been applied too stringently in dismissing avoidance actions for failure to state a claim.

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.

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

November

- U.S./Mexico Restructuring Symposium

     November 7, 2012 | Mexico City, Mexico

- Detroit Consumer Bankruptcy Conference

     November 12, 2012 | Detroit, Mich.