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NEWS AND ANALYSIS
FEBRUARY BANKRUPTCY FILINGS DECREASE 21 PERCENT FROM PREVIOUS YEAR, COMMERCIAL FILINGS FALL 29 PERCENT
Total bankruptcy filings in the United States decreased 21 percent in February over last year, according to data provided by Epiq Systems, Inc. Bankruptcy filings totaled 82,285 in February 2013, down from the February 2012 total of 104,537. Consumer filings declined 21 percent to 78,611 from the February 2012 consumer filing total of 99,378. Total commercial filings in February 2013 decreased to 3,674, representing a 29 percent decline from the 5,159 business filings recorded in February 2012. Total commercial chapter 11 filings also decreased 21 percent, to 609 filings in February from the 756 commercial chapter 11 filings recorded in February 2012.
While bankruptcies were down from a year ago, February’s bankruptcy filings trended upward from January. Total bankruptcy filings for the month of February represented a 5 percent increase over the 78,565 total filings registered in January 2013. The total noncommercial filings for February also represented a 5 percent increase from the January 2013 noncommercial filing total of 74,831. Although the February commercial filing total represented a 2 percent decline from the January 2013 commercial filing total of 3,734, February commercial chapter 11 filings represented a 27 percent increase when compared to the 481 filings the previous month. Read the ABI press release.
STATES, PRIVATE PLAINTIFFS PRESS SUIT AGAINST WALL STREET REFORM LAW
The plaintiffs that are challenging the constitutionality of the Wall Street reform law and the leadership of the Obama administration's new consumer protection agency are fighting to keep alive a suit in Washington, D.C., federal district court, the Legal Times reported on Friday. The private plaintiffs, including advocacy group Competitive Enterprise Institute and Texas-based State National Bank of Big Spring, on Feb. 27 responded to the U.S. Justice Department's effort to end the litigation. The 11 states that have joined the suit include Texas, South Carolina, Oklahoma, Michigan, and Ohio. The attorneys for the private plaintiffs, including O'Melveny & Myers partner Gregory Jacob and C. Boyden Gray, said in their court papers that the plaintiffs have presented sufficient evidence that the Dodd-Frank Wall Street Reform and Consumer Protection Act gave "unchecked and unprecedented powers" to federal agencies, including the newly created Consumer Financial Protection Bureau (CFPB). The states that joined the lawsuit are only challenging the government's ability to liquidate the largest banks, not the composition of the CFPB. Read more.
COMMENTARY: BLEEDING THE BORROWER DRY
Though 15 states have banned predatory, high-interest loans that payday lenders commonly use to pillage low-income borrowers, offshore lenders increasingly get around state laws by issuing predatory loans over the Internet, according to an editorial in yesterday's New York Times. About 12 million borrowers turn to payday lenders each year. A new study by the Pew Charitable Trusts found that only about 14 percent of borrowers can afford to take enough out of their monthly budget to repay the average payday loan. Instead, average borrowers carry a debt for five months, during which time they pay repeated fees to renew the loan. By the fifth month, someone who borrowed $375 will have paid about $520 in interest alone. Many also resort to borrowing from additional payday lenders. Not surprisingly, payday borrowers are more likely than others to default on credit card debt, to file for bankruptcy or to lose their bank accounts because of abuse of overdraft privileges. A bill pending in the Senate known as the Safe Lending Act would require all online lenders to comply with state laws that provide stronger consumer protections than the federal statutes. It would establish once and for all that payday loan borrowers have the right to stop lenders from raiding their bank accounts. State and federal regulators also need to prohibit banks from giving payday lenders access to the automatic payment system in states where predatory, high-interest loans are illegal. Read the full editorial.
REPORT: YOUNG ADULTS RETREAT FROM PILING UP DEBT
Young people are racking up larger amounts of student debt than ever before, but fresh data suggest they are becoming warier of other kinds of borrowing: Total debt among young adults dropped in the last decade to the lowest level in 15 years, the Wall Street Journal reported today. A typical young U.S. household—defined as one led by someone under age 35—had $15,000 in total debt in 2010, down from $18,000 in 2001 and the lowest since 1995, according to a recent Pew Research Center report and government data. Total debt includes mortgage loans, credit cards, auto lending, student loans and other consumer borrowing. In addition, fewer young adults carried credit card balances, and 22 percent did not have any debt at all in 2010—the most since government tracking began in 1983. Read more. (Subscription required.)
ANALYSIS: MOST BIG M&A DEALS FACED LEGAL CHALLENGES IN 2012
A study released by Cornerstone Research on Thursday found that it was rare for a merger or acquisition deal in 2012 to escape legal challenges from shareholders, Corporate Counsel reported on Friday. Nearly 96 percent of M&A deals valued at more than $500 million and 93 percent of those valued at more than $100 million engendered suits, according to Cornerstone's report titled, "Shareholder Litigation Involving Mergers and Acquisitions." On average, the report found that deals attracted more than 4.8 suits per transaction, with some filed within hours after an announcement. The average time between announcement of a deal and commencement of a legal challenge was 14 days, the report said. Read more.
DON’T MISS THE ABI LIVE WEBINAR ON APRIL 5 - "LEGACY LIABILITIES: DEALING WITH ENVIRONMENTAL, PENSION, UNION AND SIMILAR TYPES OF CLAIMS"
A panel of experts has been assembled for a webinar on April 5 from 1-2:15 p.m. ET to discuss environmental and pension liabilities, the statutory schemes under which these liabilities arise and the key players involved. Are non-monetary environmental claims dischargeable? Do post-petition expenditures for environmental cleanup constitute administrative expenses? When can an employer terminate a pension plan in bankruptcy, what is the process and what are the consequences? Learn the answer to these questions and more from the comfort of your own office. Special ABI member rate is available! Register here as this webinar is sure to sell out.
ABI'S ANNUAL SPRING MEETING: CONSUMER PROGRAMMING WITH CROSS-OVER APPEAL
With four session tracks looking at issues geared toward chapter 11 restructurings, financial advisors, professional development and consumer bankruptcy, a number of sessions at ABI's Annual Spring Meeting have cross-over appeal for both consumer and business practitioners. Sessions include:
• The Appellate Process: This distinguished panel will explore recent issues in appellate practice that are of interest to both consumer and business practitioners, including the ability to bypass intermediary appellate courts and take appeals directly to the circuit courts.
• Consumer Class Actions: This panel will explore the potential benefits and pitfalls of class actions by debtors/trustees against creditors in chapter 13 cases, which are highlighted by two recent decisions of the Fifth Circuit. Many of the issues discussed during this panel will be useful in business cases as well.
• The Individual Conundrum - Chapter 7, 11 or 13?: Deciding on the appropriate chapter for a high net worth individual contemplating a bankruptcy filing can be a daunting task. This panel will explore the considerations that guide the practitioner in advising individual clients in making this decision.
To register for the Annual Spring Meeting and to see the full schedule of program tracks and events, please click here.
ABI IN-DEPTH
MARK YOUR CALENDARS FOR APRIL 10 TO TAKE PART IN ABI’S LIVE WEBINAR "STUDENT LOANS: BANKRUPTCY MAY NOT HAVE THE ANSWERS – BUT DOES CONGRESS?"
Do not miss the "Student Loans: Bankruptcy May Not Have the Answers - But Does Congress?" webinar presented by ABI's Consumer Bankruptcy Committee on April 10 from noon-1:15 ET. ABI's panel of experts will provide an overview of the student loan industry, examine the numbers behind and causes of student loan debt, and discuss federal loan programs as well as federal consolidation and forgiveness programs. Faculty on the webinar includes:
- Prof. Daniel A. Austin of Northeastern University School of Law (Boston)
- Edward "Ted" M. King of Frost Brown Todd LLC (Louisville, Ky.)
- Craig Zimmerman of the Law Offices of Craig Zimmerman (Santa Ana, Calif.)
CLE credit will be available for the webinar. This webinar is sure to sell out; register now for the special ABI member rate of $75!
NEW BANKRUPTCY PROFESSIONALS: DON'T MISS THE NUTS AND BOLTS PROGRAM AT ABI'S ANNUAL SPRING MEETING! SPECIAL PRICING IF YOU ARE AN ASM REGISTRANT!
An outstanding faculty of judges and practitioners explains the fundamentals of bankruptcy in a one-day Nuts and Bolts program on April 18 being held in conjunction with ABI's Annual Spring Meeting. Ideal training for junior professionals or those new to this practice area!
The morning session covers concepts all bankruptcy practitioners need to know, and the afternoon session splits into concurrent tracks, focusing on consumer and business issues. The session will include written materials, practice tip sessions with bankruptcy judges, continental breakfast and a reception after the program. Click here to register!
LATEST CASE SUMMARY ON VOLO: PAUL V. ALLRED (IN RE PAUL; 8TH CIR.)
Summarized by Michael Tamburini of Polsinelli Shughart, PC
The BAP affirmed the order of the bankruptcy court concluding that the debtor had abandoned the subject property as his homestead, and therefore was not permitted to claim a homestead exemption on it.
There are more than 750 appellate opinions summarized on Volo, and summaries typically appear within 24 hours of the ruling. Click here regularly to view the latest case summaries on ABI’s Volo website.
NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: ASSIGNMENT OF RENTS: GOVERNMENT BENEFIT CARDS CAN OPEN DOORS TO BANKING SYSTEM
The Bankruptcy Blog Exchange is a free ABI service that tracks 35 bankruptcy-related blogs. Cards preloaded with unemployment insurance, child support, food stamps and other government benefits can be viewed as potential bank accounts, waiting to be opened by people with the fewest quality opportunities to connect to the financial mainstream, according to a recent blog post.
Be sure to check the site several times each day; any time a contributing blog posts a new story, a link to the story will appear on the top. If you have a blog that deals with bankruptcy, or know of a good blog that should be part of the Bankruptcy Exchange, please contact the ABI Web team.
ABI Quick Poll
As a result of the RadLAX decision, the right to credit-bid will likely chill bidding at auctions, as potential purchasers may be dissuaded from participating in the bidding process.
Click here to vote on this week's Quick Poll. Click here to view the results of previous Quick Polls.
INSOL INTERNATIONAL
INSOL International is a worldwide federation of national associations for accountants and lawyers who specialize in turnaround and insolvency. There are currently 37 member associations worldwide with more than 9,000 professionals participating as members of INSOL International. As a member association of INSOL, ABI's members receive a discounted subscription rate. See ABI's enrollment page for details.
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