The Bankruptcy Law Firm, Prof. Corp.
American Bankruptcy Institute (“ABI”) Task Force on Subchapter V Chapter 11 cases, issues its Final Report on 4/23/24
Following is a summary of the Report: Overall The Task Force undertook an in-depth study of Subchapter V statutes and case law, analyzed empirical data, and heard from major bankruptcy constituents. Overall, the Task Force finds that: Subchapter V is working as Congress intended, allowing smaller companies to reorganize and pay creditors; and Subchapter V statutes and practices could benefit from refinement or statutory amendment. Background Smaller businesses are the core of the U.S. economy: U.S. has 33.2 million small businesses, employing over 61 million people and 46% of all private sector employees; but 50% of small businesses fail in…
Chamber of Commerce of the United States of America, et al, v Consumer Financial Protection Bureau, ___F.4th.____ (5th Cir. 5/1/24), case No. 24-10248:
The U.S. Circuit Court of Appeals for the Fifth Circuit, on 5/1/24, directed a US District Judge in Texas, to rule, by the end of next week, whether or not to issue a preliminary injunction, to block the U.S. Consumer Financial Protection Bureau’s new rule capping credit card late fees at $8. The order, opens new tab late Tuesday by the three-judge panel of the New Orleans-based 5th U.S. Circuit Court of Appeals came in response to a bid by banking and business groups to have the appellate court itself decide whether the rule should be blocked. Groups including the…
Americans Are Falling Behind On Their Payments
[reports Credit & Collection 4/25/24 e-newletter, repeating what CNN said] America’s relentless spending has kept the economy motoring. But it’s starting to worry some observers. Chicago Federal Reserve President Austan Goolsbee said Friday that while consumer debt levels aren’t yet “especially” high, the Fed is concerned about the rate of consumer delinquencies, or missed or late payments on expenses such as auto loans, credit card bills and rent. “If the delinquency rate of consumer loans starts rising, that is often a leading indicator for, ‘things are about to get worse,’” he said at a moderated panel hosted by the Society…
RE: CHAPTER 13 FEES Case RARA (“no look”) fees for attorneys representing debtors in Chapter 13 cases Increase effective 5/1/24
RE: CHAPTER 13 FEES Case RARA (“no look”) fees for attorneys representing debtors in Chapter 13 cases Increase effective 5/1/24 The US Bankruptcy Court for the Central District of California has approved increases, effective 5/1/24, in the amounts attorneys for chapter 13 debtors may charge if they execute and file a Rights and Responsibilities Agreement Between Chapter 13 Debtors and Their Attorneys, LBR Form 3015-1.RARA (RARA). For chapter 13 cases filed on or after May 1, 2024, the maximum no-look RARA fees have increased from $6,000 to $8,500 for cases involving a business. For chapter 13 cases involving non-business debtors,…
American Bankruptcy Institute (“ABI”) on 4/11/24 reports Credit Card Delinquency Rates Were Worst on Record in Fed Study
A Federal Reserve Bank of Philadelphia report found that U.S. credit card delinquency rates were the highest on record in the fourth quarter, Reuters reported. Almost 3.5% of card balances were at least 30 days past due as of the end of December, the Philadelphia Fed said. That’s the highest figure in the data series going back to 2012, and up by about 30 basis points from the previous quarter. The share of debts that are 60 and 90 days late also climbed. “Stress among cardholders was further underscored in payment behavior, as the share of accounts making minimum payments…
BankBeat, a digital publication whose audience is mainly banks and other credit card issuer, on 3/14/24 reports, in an article by BankBeat’s digital managing editor, Sam Wilmes, that the Consumer Financial Protection Bureau’s (“CFPB”) newly adopted rule forbidding credit card late fees of more than $8 “Ignores Reality”
The Consumer Financial Protection Bureau’s recent capping of credit card late fees at $8 continues the bureau’s erroneous view of the expense as an unnecessary “junk fee.” The rule also ignores two foreseeable unintended consequences: A rise in instantly declined transactions and reduced customer access to credit lines and credit card reward programs. Finalized March 5, the rule reduces the typical credit card late fee 75 percent from the usual $32 for credit card issuers with more than 1 million open accounts. The CFPB claims limiting late fees will save American families more than $14 billion annually. Alluding to the…
In re Bestwall LLC, __BR__ (Bankr. W.D.N.C. Feb. 21, 2024, case no. 17-31795)
In re Bestwall LLC, __BR__ (Bankr. W.D.N.C. Feb. 21, 2024, case no. 17-31795) holds Lack of Financial Distress of person/entity filing bankruptcy does NOT Divest a Bankruptcy Court of Subject Matter Jurisdiction over the bankruptcy case, but Bankruptcy Court can dismiss the bankruptcy case for being filed in bad faith, or can grant relief from stay to creditors, etc. Example: In In re LTL Management LLC, 58 F.4th 738, 64 F.4th 84 (3d Cir. Jan. 30, 2023), the Third Circuit dismissed the chapter 11 case of a Johnson & Johnson subsidiary for lack of “financial distress”, but didn’t rule there…
American Bankruptcy Institute February 2024 Analysis: The Brutal Reality of Plunging Office Values Is Here
The shakeout in the $20 trillion U.S. commercial real estate market has long been delayed for a simple reason: No one could figure out just how much properties were worth. More crucially, few wanted to, according to a Bloomberg News analysis. Since the COVID-19 pandemic upended the use of real estate around the world, lenders have had little incentive to get tough on borrowers squeezed by soaring interest rates and take on loans that have lost value.
Raymond James & Associates Inc. v. Jalbert (In re German Pellets Louisiana LLC), 23-30040 (5th Cir. Jan. 30, 2024)
Raymond James & Associates Inc. v. Jalbert (In re German Pellets Louisiana LLC), 23-30040 (5th Cir. Jan. 30, 2024): US court of appeals for the 5th Circuit rules, in a published decision, that a creditor that does not file a proof of claim, and does not file any pleadings in Ch11 case, is still bound by the Ch11 plan, if the BkyCt confirms that plan. This 5th Circuit Court of Appeals decision holds that knowledge of existence of a chapter 11 bankruptcy case is enough to bind a creditor to the terms of a plan, if the Bankruptcy Court confirms…
American Bankruptcy Institute Reports that SPAC Companies Accounted for at Least 21 Bankruptcies this Year (2023) and $46 Billion in Lost Investor Value
Wall Street’s affair with blank-check firms, the finance fad that pushed companies onto the stock market during the COVID-19 pandemic, ended this year with a string of big bankruptcies and even bigger losses for shareholders, Fortune reported. At least 21 firms that went public by merging with special purpose acquisition companies, or SPACs, went bankrupt this year, according to data compiled by Bloomberg. Measured from their peak market capitalizations, the insolvencies bookend the loss of more than $46 billion of total equity value. The failures span money-losing electric vehicle startups and forward-thinking farming companies. Blank-check firms were good at propelling…