Bankruptcy Blogs

Credit Card Securitization and Skin-in-the-Game

08/16/11

I have a new paper on credit card securitization and what it teaches us about the likely effectiveness of the Dodd-Frank Act's skin-in-the-game risk retention requirements. Credit card securitization has long required 4%-7% credit risk retention (cf. 5% under Dodd-Frank).  

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Why Do I Have to Include ALL My Creditors in Bankruptcy?

08/16/11

One of the most common questions I am asked is why a clients need to list their mortgage, their car loan, the “credit card that payments are current on that’s just used for emergencies and I really need” or the loan from Mom on their bankruptcy schedules. While the short answer is, “Because you have [...]

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Is Florida the Next Non-Judicial Foreclosure State?

08/16/11

   If the mortgage industry has its way, the passage of a new bill floating around Tallahassee will ensure that Floridians will be displaced from their homes without legal representation or due process.  In typical Orwellian style, this bill is entitled the Fair Foreclosure Act – it’s anything but . . . Florida often makes [...]

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Turning a Profit Will Come Down to Staff Cuts

08/15/11

Consolidation has failed to reduce employment and increase efficiency. Even after many mergers and acquisitions, industry expenses are high and profit is anemic.

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Fifth Circuit Rejects Per Se Rule That Recharacterization Applies Only To Insiders

08/15/11

In a recent ruling, the Fifth Circuit Court of Appeals rejected a per se rule that only corporate insiders can have their debt claims recharacterized as equity. Instead, in In re Lothian Oil Inc., 2011 WL 3473354 (5th Cir. Aug. 9, 2011), the Court of Appeals held that "recharacterization extends beyond insiders and is part of the bankruptcy courts' authority to allow and disallow claims under 11 U.S.C. § 502." Thus, all creditors, regardless of their insider status, are susceptible to having their claims recharacterized as equity.

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Fifth Circuit Rejects Per Se Rule That Recharacterization Applies Only To Insiders

08/15/11

In a recent ruling, the Fifth Circuit Court of Appeals rejected a per se rule that only corporate insiders can have their debt claims recharacterized as equity. Instead, in In re Lothian Oil Inc., 2011 WL 3473354 (5th Cir. Aug. 9, 2011), the Court of Appeals held that "recharacterization extends beyond insiders and is part of the bankruptcy courts' authority to allow and disallow claims under 11 U.S.C. § 502." Thus, all creditors, regardless of their insider status, are susceptible to having their claims recharacterized as equity.

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Harry & David cleared to emerge from bankruptcy

08/15/11

"Harry & David Holdings Inc won tentative court approval for its reorganization plan on Thursday, clearing the way for the gift basket maker to emerge from bankruptcy under the control of senior noteholders. U.S. Bankruptcy Judge Mary Walrath, at a...

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Evergreen Solar files for bankruptcy, plans asset sale

08/15/11

"Evergreen Solar Inc. has filed for bankruptcy, the cash-strapped Marlboro company disclosed in a regulatory filing today. Evergreen, which closed its taxpayer-supported Devens factory in March and cut 800 jobs, has been trying to rework its debt for months." Read...

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Chapter 7 Debtor's Liability For Monthly Lease Payments Due After Filing Bankruptcy

08/15/11

One of my Chapter 7  bankruptcy clients rented a house under a one year lease. The lease expires at the end of August, 2011. The client filed bankruptcy in April, 2011. The client stayed in the house and paid rent for May, June, and July. He intends to vacate the house in August at the end of the lease. The client asked me whether the landlord can sue him for money damages if he does not pay the August rent.

Lease debts have their own set of rules in bankruptcy.

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A Plea to Financial Reporters

08/15/11
Why do financial reporters insist on reporting interest rates on complex consumer financial products as if they were meaningful in isolation? To wit, anotherwise good New York Times story http://www.nytimes.com/2011/08/15/business/low-interest-rates-do-little-... reports an increase in credit card interest rates over last year. That figures doubly meaningless. First, interest rates are but one component among many of the cost ofusng a credit card.
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