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In a case of first impression at the Circuit Level, the Ninth Circuit has held that an insider who waives his right to indemnification from a debtor is not a “creditor” for purposes of preferential transfers under § 547(b)(4). The facts before the court in Alberta Stahl, Chapter 7 Trustee v. Simon (In re Adamson Apparel), 2015 WL 2081575 (9th Cir.

Read More from: Creditors' Rights

6 hours 23 min ago
Weren’t we all taught as kids to clean up after ourselves? It’s as true and useful in our financial and personal lives as in the playroom.  Especially in divorce. Left-over debts are nothing but trouble. Yet, divorcing couples don’t always mop up the joint debts they held during the marriage, and chaos ensues years later when one ex-spouse hits financial trouble. Joint account remained open after divorce It’s playing out in a bankruptcy case I have now:
  • divorce final for decades.
  • no balance on joint line of credit when the spouses divorced.
  • no one closed the account
When one spouse hit a rough patch, she accessed the left-over line of credit, big time.  But it wasn’t enough to avoid the need for bankruptcy. My client’s financial mess threatens to slop over to the former spouse who remained listed on a dormant line of credit.  Even though the current debt is long after the divorce, the ex spouse remains liable to the lender because his name is on the account. During the marriage, the community would have gotten the benefit of the community property discharge.  Not so after divorce, when there is no community. What is discharged on joint debt
6 hours 37 min ago
Puerto Rico missed most of a $58 million bond payment Monday, marking the first default by the U.S. commonwealth and escalating its attempt to restructure about $72 billion in debt, The Wall Street Journal reported. The payment to bondholders is the first skipped since Gov. Alejandro García Padilla in June said the island’s debts were unsustainable and urged negotiations with creditors, which range from individuals to hedge funds.  (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”) Investors who bet with hope on an oil-and-gas business rebound probably aren’t happy that oil prices have turned downward again, dropping below $46 a barrel in New York to a four-month low. Funds managed by Franklin Resources Inc., Blackstone Group LP and Oaktree Capital Group LLC, among others, are facing paper losses on substantial investments this year in exploration-and-production companies, WSJ reports.

Read More from: Bankruptcy Beat

7 hours 37 min ago
Dan Brenner for The Wall Street Journal
Miners’ debt hole is deepening. Coal producer Alpha Natural Resources Inc.’s chapter 11 bankruptcy filing Monday helped push a measure of financial woe among U.S. miners to its highest level in more than five years. The trailing-year default rate for U.S. metals and mining companies tracked by Fitch Ratings surged to 10% from July’s 7%, for the highest reading since at least the start of 2010, according to the firm. This year had already seen fellow coal companies Walter Energy Inc. and Patriot Coal Corp. file for chapter 11, as well as others like gold mining group Allied Nevada Gold Corp. and iron ore recovery company Magnetation LLC. Much of the pain revolves around slowing economic growth in China and elsewhere around the globe. For years, China’s urbanization had driven a boom in materials used to produce steel, among other commodities. Amid the euphoria, Alpha, Walter and other coal companies loaded themselves with debt to pursue multi-billion-dollar acquisitions.

Read More from: Bankruptcy Beat

7 hours 54 min ago
Authored by Adam B. Brandon of Rogers TowersOn July 24, 2015, a federal court cleared the way for a small Texas bank to challenge the constitutionally of the Consumer Financial Protection Bureau (“CFPB”).  In State National Bank of Big Spring, et al. v. Lew, et al., the U.S. Court of Appeals for the District of Columbia held that the bank falls under the regulatory authority of the CFPB and may contest regulations issued by the CFPB. Previously, the United States District Court for the District of Columbia had found that the bank lacked standing and dismissed the suit. By reversing this decision, the appellate court ensures that the case will move forward. The bank alleges that the CFPB is an independent agency which must be headed by several members, not an individual director. The bank also suggests that the President’s recess appointment of Richard Cordray, the CFPB’s Director, was illegal and that actions taken by Mr. Cordray before Senate confirmation were unlawful. Congress created the CFPB in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”) in the wake of the financial crisis. The CFPB’s stated mission is to protect consumers by regulating consumer finance markets.

Read More from: Florida Banking Law Blog

8 hours 17 min ago
Rapper 50 Cent (R), whose real name is Curtis James Jackson III, exited a New York couurthouse last month after testifying in a sex tape lawsuit. REUTERS/Brendan McDermid
Brendan McDermid/Reuters
Fresh court documents just put a spotlight on bankrupt rapper 50 Cent’s personal finances, including details about his income, his business investments and his spending habits. On Monday, his lawyers filed 56 pages of financial information that’s required as part of the process to getting a fresh start through bankruptcy. Find out whether the 40-year-old entertainer, whose real name is Curtis James Jackson III, is really as rich as he claims to be. HIS ASSETS $24,823,899.18

Read More from: Bankruptcy Beat

8 hours 32 min ago
In 2010, the United States Supreme Court expanded the concept of “corporate personhood” when it held in Citizens United v. FEC, 558 U.S. 310, 130 S. Ct. 876, 175 L. Ed. 2d 753 (2010), that corporations can engage in political speech protected by the First Amendment. The same rationale carried over to the religious context in Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751, 189 L. Ed. 2d 675 (2014), when the Court decided closely-held corporations have religious liberties under the Religious Freedom Restoration Act. Now it appears legal entities might be entitled to protection under a federal consumer protection statute too, at least in the Sixth Circuit.

Read More from: Creditors' Sidebar

23 hours 42 min ago
Just weeks after Discover was ordered by the Consumer Financial Protection Bureau to pay $18.5 million for illegal student loan servicing practices, Citibank is facing a probe into its own practices. In a filing dated August 3, 2015 with the Securities and Exchange Commission, the banking giant indicated that federal regulators have opened a probe into its student loan servicing practices. Though Citi didn’t indicate which federal agency is conducting the investigation or which student loan practices are the subject of concern, a source tells Bloomberg that that it is part of a crackdown by the Consumer Financial Protection Bureau. The investigation comes nearly five years after the company sold nearly $28 billion in securitized federal loans to Sallie Mae, and nearly $4.2 billion of private loans and $3.4 billion of securitized loans to Discover Bank. Since that time, Citi has largely remained out of the student loan business. The Citi student loans, by the way, were the same ones that landed Discover in hot water with the CFPB in July 2015.
23 hours 51 min ago
If you’re still beating yourself up over your financial woes and thinking that bankruptcy is only reserved for the poor and financially irresponsible, consider the fact that a top executive in state government who was charged with managing the state’s finances is now, himself, filing for personal bankruptcy. Former Arkansas Lieutenant Governor Mark Darr, along with his wife Kimberly, recently filed for Chapter 13 Bankruptcy protection, according to court documents. Though Darr resigned from office amid rampant financial scandal, including allegations of misappropriation of state funds, his situation proves that no matter how “successful” you seem to be, you’re still vulnerable to financial hardship and subsequent bankruptcy. You’re Not Alone: New Jersey Bankruptcy by the Numbers According to the New Jersey Bankruptcy Court, 26,956 Garden State residents have already filed for some form of bankruptcy protection so far this year. This is actually a slight uptick from the 29,286 residents who had filed at the same point last year, proving that financial struggle is a pervasive issue for both businesses and residents alike in New Jersey. Additionally, consumer bankruptcy filings continue to vastly outnumber those of businesses, many of which close down before ever getting to the point of filing for bankruptcy. Chapter 7 continues to be the most common form of bankruptcy, accounting for 19,028 cases this year.
1 day 2 hours ago
 “It’s not that I’m afraid to die, I just don’t want to be there when it happens.”  — Woody Allen It has not been a good run for proponents of equitable mootness in the Third Circuit Court of Appeals.  The doctrine, designed to prevent a court “from unscrambling complex bankruptcy reorganizations when the appealing party should have acted before the plan became extremely difficult to retract,” has been under significant fire from a growing number of the sitting Third Circuit panels in recent years who have posited it has been applied too offensively for too long.  The Third Circuit’s latest decision on the subject, In re One2One Communications, may well represent the death knell for the doctrine in the Circuit. 
1 day 4 hours ago
If you’re in debt up to your eyeballs, you look to the bankruptcy laws to help you dig out of the hole and start over. That, after all, is what the law’s designed to do – give you another opportunity to put yourself in a better financial position. But if your debts include student loans, you quickly find out that the bankruptcy laws won’t help unless you jump through another set of hoops and prove that your existing financial situation is not only bad, but also long lasting. That’s why so many people with student loan problems don’t consider bankruptcy as a tool to help them get ahead. As an article in the Pittsburgh Post-Gazette shows, bankruptcy is proving to be an option for some people who are struggling with their private student loan debts. The article centers around David King and Julie West, two Pittsburgh area people with private student loans and using bankruptcy as a way to keep them under control.
1 day 4 hours ago
I am stunned at the stupidity of Hillary Clinton's policy proposal to combat purported "short-term capitalism".  I say this as someone who contributed to her campaign in 2008 and wishes she, not Barack Obama, had been elected President that year.  And my objection does not go to whether the goal is a good one, which I have views on, but will set to one side for now.  Rather, my objection is, if you wanted to correct short-term capitalism, increasing the capital gains tax  based on duration of holdings is so obviously ineffective, I call into question whether anyone with any grasp of stock market dynamics was involved in formulating the proposal.1.           The Little Guy is Not The Problem.   Investors who pay long-term capital gains taxes are not responsible for most stock trades.   The vast bulk of trading is done by either (a) tax-exempt institutional investors, like pension funds, mutual funds, hedge funds, charitable and university endowments, etc.  or (b) financial institutions which, while taxable, change their portfolio daily and already have their profits and losses taxed as ordinary income, so will not be affected by changes in capital gains rates.  Just a small fraction of volume comes from people who pay long-term capital gains taxes.  I don't even know if there are any stocks in the S&P 500 as to which non-management, non-institutional holders hold a majority of the outstanding shares.2.           Compensation Formulas Drive Short-Term Focus.

Read More from: Necessary and Proper

1 day 6 hours ago
Payment system transformation has become a pressing need for banks today. The rate at which this is happening is largely controlled by the conflict between rapid technological shifts and the barriers to product acceptance.

Read More from: BankThink

1 day 6 hours ago
Alpha Natural Resources Inc., one of the largest U.S. coal producers, filed for chapter 11 bankruptcy protection on Monday to cut its more than $3 billion debt load, The Wall Street Journal reported. The Bristol, Va., company will likely sell some of its best mines or turn them over to creditors. (Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”) Relativity Media LLC , the Hollywood studio founded by Ryan Kavanaugh, made its first appearance in bankruptcy court Friday, winning a judge’s permission to tap $9.5 million in new cash from a group of hedge funds angling to buy the company’s major assets, The Daily Bankruptcy Review reports. A judge in the Bahamas agreed Friday to delay a critical decision about the future of the $3.5 billion stalled resort project Baha Mar, WSJ reports.

Read More from: Bankruptcy Beat

1 day 7 hours ago
Receiving Wide Coverage ... 'World's Local Bank' No More: HSBC has agreed to sell its Brazilian unit to Banco Bradesco for $5.2 billion as the bank seeks to scale down and concentrate on its Asian operations. The bank pledged in June to cut 50,000 jobs and retreat from low-performing business lines, with the goal of reducing annual costs by up to $5 billion by the end of 2017. The papers note the bank's retrenchment is a...

Read More from: BankThink

1 day 7 hours ago
George Orwell famously said that, "all animals are equal, but some animals are more equal than others."   A petition for writ of cert filed on July 20, 2015 challenges the 9th Circuit's ruling upholding a District Court which found that the IRS was more equal than other creditors when it came to an alter ego determination.    The case is No. 15-102, Robert A. Polittle, et al v. United States of America. The Polittes owned several Midas franchises in California through two corporations.   According to the Polittes, their CFO stopped paying employment taxes for one of their companies in 1998 and used his background as a CPA to conceal this fact from them.   The IRS did not detect the non-payment until 2005.    By this time, taxes of $5.3 million had accrued.   After selling all of the assets of the company, the tax debt managed to grow to $11.7 million.   The IRS then filed nominee liens against the Polittes and a second corporation which they owned.    The IRS collected about $1.7 million from sale of two condominiums owned by the Polittes and all of the assets of their other corporation.   The Polittes filed a refund suit against the IRS in U.S.

Read More from: CLLA Bankruptcy Blog

1 day 22 hours ago
STUDENT LOAN DISCHARGES IN THE 7TH CIRCUIT: SOME THOUGHTS Authored by:  Steven P.Taylor Student loans have become one of the largest components of debt in American society.  This size is a major problem that the bankruptcy system must address to effectuate its policy goals of fresh start (Chapter 7 bankruptcy) and rehabilitation (Chapter 13 bankruptcy).
2 days 23 hours ago
Posted by Kathy Bazoian Phelps    Below is a summary of the activity reported for July 2015. The reported stories reflect: 10 guilty pleas or convictions in pending cases; over 166 years of newly imposed sentences for people involved in Ponzi schemes; at least 11 new Ponzi schemes involving over $112 million; and an average age of approximately 50 for the alleged Ponzi schemers. Please feel free to post comments about these or other Ponzi schemes that I may have missed. And please remember that I am just relaying what’s in the news, not writing or verifying it.    Alisa Adler, 54, was charged with running a Ponzi scheme the involved a real estate development business run through ASG Real Estate Services Group. She solicited investor funds to supposedly purchase and develop real estate but instead used the money to make Ponzi scheme payments and for her personal expenses.    Will Allen, 36, was indicted for his involvement with a Ponzi scheme run with Susan Daub, 55, through Capital Financial Partners LLC.  The scheme involved $31 million and supposedly provided high interest short term loans to athletes. More than 40 people invested in the scheme and were promised 18% returns.    John Steven Blount, 54, pleaded guilty to charges relating to a $5.8 million Ponzi scheme that he ran through his company, Professional Consultants LLC.

Read More from: The Ponzi Blog

3 days 18 hours ago
A recap of the informed opinions (and the discussions they generated) on BankThink this week, including whether independent consultants should be criminally liable for misrepresentations in their reports and whether higher rates will help or hurt banks.

Read More from: BankThink

3 days 23 hours ago
In the recent opinion of Burtch v. Revchem Composites, Inc. (In re Sierra Concrete Design, Inc.), Adv. No. 10-52667 (CSS), 2015 WL 4381571 (Bankr. D. Del. July 16, 2015), the Delaware Bankruptcy Court issued a memorandum opinion following trial on claims asserted by Jeoffrey Burtch, Chapter 7 Trustee of Sierra Concrete Design, Inc. (“Sierra” or “Debtors”), seeking recovery against Defendant Revchem Composites, Inc. (“Revchem”) for alleged preferential transfers under Sections 547 and 550 of the Bankruptcy Code. In the memorandum opinion, the Court found that Revchem successfully established at trial that each of the payments received by Revchem from Sierra during the 90 day preference period were made in the “ordinary course” of the parties’ business relationship, and were thus shielded from recovery pursuant to Section 547(c)(2) of the Bankruptcy Code. This opinion is notable because Revchem was able to establish this defense even though it received payments from Sierra during the preference period at a much faster rate (a standard deviation of 27.9 days) than during the pre-preference period.
3 days 23 hours ago