CreditSlips

The Sky Is Falling: Securitization, Chicken Little Edition

09/18/19

It's been quite a week for "valid-when-made (up)".

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FDIC and OCC Race to Court to Defend 120.86% Interest Rate Small Business Loan

09/18/19

FDIC and OCC filed an amicus brief in the district court in an obscure small business bankruptcy case to which a bank was not even a party in order to defend the validity of a 120.86% loan that was made by a tiny community bank in Wisconsin (with its own history of consumer protection compliance issues) and then t

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Purdue and the Sacklers and the Limits of Fraudulent Transfer Law

09/17/19

One of the major issues in the Purdue Pharma bankruptcy is how much the Sackler family, which (indirectly) controls Purdue will contribute in order to get releases from opioid liability. (Relatedly, are such non-debtor releases allowed outside of the asbestos context, where they are specifically authorized by statute? Second Circuit law says "sometimes.") 

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A Drafting Error in Small Business Reorganization Act?

09/17/19

Is there a drafting error in the Small Business Reorganization Act? The other day I posted my estimate that 42% of chapter 11's would qualify, but my sharp-eyed colleague, Ralph Brubaker, noticed something wonky (in all senses of the word) in the new definition of a "small business debtor." (He also tells me that the next issue of the always-excellent Bankruptcy Law Letter will provide an in-depth look at the new law.)

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Driven to Bankruptcy — New Research from the Consumer Bankruptcy Project

09/16/19

In America, people drive — to work, to the doctor, to the grocery store, to their kids' daycare, to see their aging parents. Research shows that car ownership increases the probability of employment and number of hours worked; households without cars have lower incomes and are more likely to be in poverty. In short, cars are essential. Household financial distress can threaten people's cars, and with them, the day-to-day stability that car ownership brings. People thus may file bankruptcy, in part, to save their cars.

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How Many New Small Business Chapter 11s?

09/14/19

The Small Business Reorganization Act of 2019 adds a new subchapter V to chapter 11 for small businesses. The new subchapter gives small businesses the option of choosing a more streamlined -- and hence cheaper and quicker -- procedure than they would find in a regular chapter 11. Perhaps most significantly, the absolute priority rule, which requires creditors to be paid in full before owners retain their interests, does not apply.

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Two New Podcasts: Succession/Slate Money and The Business Scholarship Podcast

09/11/19

I loved the first season of HBO’s Succession.  Superb acting, great sets, and a story about a totally dysfunctional family (that makes me think that my own dysfunctional one is relatively functional).  Plus, the really really rich and despicable people in the show (modeled on actual really really rich people – see here) are miserable – and I can’t help but be entertained by that.

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Enough With the Old Chinese Debt Already

09/10/19

Mark Weidemaier and Mitu Gulati

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Small Borrowers Continue to Struggle Without Relief

09/10/19

Several recent stories remind us that many, many ordinary people around the world continue to struggle with crushing debt with no access to legal relief, and when relief is introduced, it is vehemently opposed by lenders and often limited to the most destitute of debtors.  These stories also reveal the dark underside of the much-heralded micro-finance industry.

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The Weinstein Company Bankruptcy: What She Said

09/09/19

Nearly a year has passed since my last Credit Slips post on The Weinstein Company bankruptcy. The case, filed March 2018, remains open. Contract disputes have dominated many if not most bankruptcy court hearings this past year.

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