American Bankruptcy Institute Update

CHRYSLER FILES FOR CHAPTER 11 IN MANHATTAN

Chrysler filed its chapter 11 petition in the U.S. Bankruptcy Court in Manhattan today, the Wall Street Journal reported. Judge Arthur Gonzalez, who oversaw the massive bankruptcy of Enron Corp., will handle Chrysler’s case. Law firm Jones Day is serving as the company’s bankruptcy counsel. Lawyers for the automaker will appear before Judge Gonzalez for the first time at a 10 a.m. EDT hearing tomorrow. The automaker decided to file after it failed to get all of its lenders, owed $6.9 billion, to sign on to a debt-restructuring deal ahead of a Thursday deadline imposed by the White House.

In addition, the White House announced today that Chrysler will enter an alliance with the Italian automaker Fiat, according to a New York Times report. The bankruptcy case is envisioned to be a swift, “surgical” process. “I have every confidence that Chrysler will emerge from this process stronger and more competitive,” President Obama said. The president emphasized the speed with which the administration expects the bankruptcy process to be completed, saying that it would be “quick, official and controlled” and that the lives of those who work at Chrysler or live in communities where the company has its operations would not be disrupted. A senior White House official said that the bankruptcy case would begin immediately, and that the government would provide debtor-in-possession financing in a range of $3 billion to $3.5 billion so that the company can continue to operate normally. Once Chrysler restructures, the company would receive $4.5 billion in financing to restart its operations, totaling American government support through the bankruptcy process and afterwards at close to $8 billion. Click here to read the full story.

ANALYSIS: LEVERAGED LOAN MARKET SHOULD WEATHER CHRYSLER BANKRUPTCY FILING

Chrysler’s chapter 11 filing is likely to cause minimal damage to the broader $577 billion leveraged loan market, according to an analysis in today’s Wall Street Journal. While its creditors will take a significant hit, the Chrysler loans were never broadly syndicated, which helps limit more widespread damage. Chrysler has 46 creditors, with four banks holding roughly 70 percent of the loans. "It's a pretty unique situation and not a surprise in the loan market," said Meredith Coffey, senior vice president of research at the Loan Syndications and Trading Association. Other market participants concurred, saying heavy government involvement in negotiations makes it difficult to use Chrysler as a gauge for future loan performance. Chrysler’s chapter 11 filing won’t raise the overall default rate for leveraged loans, according to Standard & Poor's Leveraged Commentary & Data, because its automotive company loan wasn't included in the broader loan index. Chrysler, which in 2007 was acquired by a private consortium led by Cerberus Capital Management, has $6.9 billion of automotive company debt in the form of leveraged loans rather than bonds. As its purchase by Cerberus coincided with the onset of the credit crisis, Chrysler didn't sell bonds in addition to the loans to finance the transaction. Consequently, Chrysler loans have traded at prices more typical of unsecured notes as the bankruptcy filing became more likely. Click here to read the full story.

SENATE REJECTS MORTGAGE CRAMDOWN PROPOSAL

The U.S. Senate today again rejected an amendment to allow bankruptcy judges to modify mortgage terms on the primary residence of a chapter 13 debtor. Looking to tack on the proposal to a comprehensive housing bill, the cramdown amendment was defeated 51-45 as 12 Democrats joined all Republicans opposing the amendment. The vote was well short of the 60 votes agreed to be required for inclusion of the cramdown amendment into the housing package. The House passed its version of cramdown legislation on by a vote of 234-191 on March 5. The mortgage industry has twice succeeded in helping to kill the bankruptcy proposal since Sen. Dick Durbin (D-Ill.) introduced the legislation in 2007. The second-ranking Democrat said that “this is not the last time” he will raise the issue. Read more.

HOUSE PANEL APPROVES MORTGAGE REFORM AND ANTI-PREDATORY LENDING BILL

The House Financial Services Committee yesterday approved H.R. 1728, the “Mortgage Reform and Anti-Predatory Lending Act of 2009,” to outlaw many of the industry practices that marked the subprime lending boom, and it would prevent borrowers from deliberately misstating their income to qualify for a loan, according to a committee press release. The legislation looks to ban the practice of “steering” in which a broker or bank loan officer is compensated for directing applicants toward more costly mortgages, hold creditors responsible for the loans they originate and provide better protections for tenants who rent homes that go into foreclosure. The legislation, sponsored by Reps. Brad Miller (D-N.C.), Mel Watt (D-N.C.) and Barney Frank (D-Mass.), was approved by a vote of 49-21. The House of Representatives is expected to consider H.R. 1728 as soon as next week. Click here to read the press release.

ANALYSIS: WORST MAY BE OVER FOR RECESSION

The American economy is contracting at its steepest pace in 50 years, the government reported Wednesday, but an unanticipated rise in consumer spending since January suggests to many economists that the worst of the recession might have passed, according to a New York Times analysis yesterday. Over the last six months, output fell at a 6.1 percent annual rate in the January-March quarter after falling at a rate of 6.3 percent in last year’s fourth quarter, according to the Commerce Department. If that pace were to continue, nearly $1 trillion would be wiped out this year from the nation’s economic output of $14.2 trillion last year. Not since 1958, in the wake of a brief but severe collapse in home construction, has the national economy lost so much ground in just six months. But as tax breaks and government stimulus spending kick in, the decline in the gross domestic product could be cut in half by summer. “The situation is not nearly as dark as the first-quarter number suggests,” said Mark Zandi, chief economist at Moody’s Economy.com, who predicted at ABI’s Annual Spring Meeting that the recession would end in December. The looming question remains the severity of job losses: More than five million jobs have disappeared since the recession began in December 2007. As their wages disappear, households spend less, and business, in response, reduces the output of goods and services, cutting more jobs in the process—a cycle that was evident in the latest G.D.P. report, except for consumer spending, which rose at its best pace since the recession began. A sharp drop in fuel prices, economists said, helped to free up money for other spending. The Federal Reserve’s policymakers said Wednesday that the outlook for economic recovery had “improved modestly” and that the Fed would continue to pump tens of billions of dollars into the economy to keep credit flowing, adding that to encourage this borrowing and spending, interest rates controlled by the Fed would remain near zero. Click here for the full article.

COULDN’T ATTEND A COMMITTEE MEETING AT ASM? LISTEN TO A RECORDING FOR FREE!

If you were unable to make it to the 2009 Annual Spring Meeting earlier this month, check out the free audio archive of committee sessions from the conference. Featuring 20 committee sessions focused on such topics as financing trends, class actions in chapter 11 cases, international insolvency issues and an update on legislation currently addressing bankruptcy or consumer debt, be sure to take advantage of the free recordings available on asm09.abiworld.org/!

LATEST CASE ANALYSES POSTED TO BANKRUPTCY CASE BLOG

ABI’s new Bankruptcy Case Blog provides up-to-date analysis on cutting-edge bankruptcy issues and cases. The blog is written by top students at St. John's University School of Law. "Master Repurchase Agreement Penetrates the Automatic Stay” and "Single Asset Real Estate: Tightening the Noose for Developers?" are the latest posts to the Bankruptcy Case Blog. Click here to view.

Members are encouraged to review the blog site and comment on the case entries. Comments to the blog site will be considered by the student authors as they convert their blog entries into comprehensive research memoranda that will be published on the St. John's Bankruptcy Research Library later in the spring.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: ANALYSIS OF CHRYSLER’S CHAPTER 11 FILING

The Bankruptcy Blog Exchange is a free ABI service that tracks 25 bankruptcy-related blogs. A recent post examines what variables will lead to a quick emergence for Chrysler from chapter 11.

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.

BENEFIT FROM ABI’S “REFER A COLLEAGUE” PROGRAM!

Refer a colleague to become a new ABI member and receive a free Distance Learning session or a coupon for $75 off your next ABI conference! Additionally, the colleague that you refer will receive free CLE and $75 off their first ABI Conference. To participate in the “Refer a Colleague” program, please click here.

SEE YOU MONDAY! REGISTER FOR ABI’S ELEVENTH ANNUAL NEW YORK CITY BANKRUPTCY CONFERENCE

ABI will hold its popular Eleventh Annual New York City Bankruptcy Conference on May 4 at the New York Marriott Marquis in New York City. Bringing together a faculty of bankruptcy judges and practitioners from the top national insolvency firms, this day-long educational forum is designed to appeal to both experienced and new professionals. More than 500 are registered.

Panel sessions include:

• Alternative Liquidation Regimes under Banking, Securities, Insurance and State Law
• Auto Industry Panel
• Ethics Panel
• Sales Issues
• International
• Liquidate and Litigate: The End of Reorganization?
• Teaching the New Dog Old Tricks: Changes to the Code
• Real Estate Issues
• Retail Bankruptcies Redux
• Return of the Exchange Offer
• DIP and Exit Financing
• SIRVA: The Extreme Prepack
• Valuation Issues

Also featured will be a special Judges’ Roundtable featuring judges from the SDNY and EDNY.

Offered again is the primer course “Bankruptcy Fundamentals: Nuts & Bolts for New and Young Practitioners,” held on Friday, May 1, at the U.S. Bankruptcy Court, prior to the conference. The course will feature an outstanding faculty of judges, academics and attorneys explaining the fundamentals of bankruptcy. Ideal training for those now being shifted into the restructuring departments at large firms. More than 150 are registered to attend.

Click here to register.

DON'T MISS ABI'S INAUGURAL PROFESSIONAL DEVELOPMENT PROGRAM- REGISTRATION IS LIMITED!

ABI welcomes you to take part in the Inaugural Professional Development Program, scheduled for May 28 at the Drinker Biddle & Reath LLP Conference Center in Chicago. ABI's Young and New Members Committee developed this unique program for mid-level insolvency and restructuring professionals. The program includes a morning educational session devoted to issues common to those professionals in the areas of law, finance and accounting. After lunch, attendees will participate in a novel, interactive workshop specifically designed to assist the mid-level professional with networking, communication and rainmaking efforts and allow for hands-on dialogue and relationship-building opportunities with peers. Register now and do not miss this one-of-a-kind event - space is limited!

SIGN UP FOR ABI’S SECOND ATLANTA CONSUMER BANKRUPTCY SKILLS TRAINING PROGRAM IN JUNE

In case you missed the first Atlanta Consumer Bankruptcy Skills Training program, ABI, the Bankruptcy Section of the Atlanta Bar Association and the Metro-Atlanta Consumer Bankruptcy Attorneys Group invite you to take part in the follow-up program on June 4, 2009. The second program will focus on written and oral advocacy. The program features CLE credit and the opportunity to network with Georgia's top consumer attorneys. These educational programs have been developed to provide attendees with an interactive learning experience led by a faculty of prominent bankruptcy judges as well as experienced practitioners. The June session will offer:

* Litigation skills training in the consumer bankruptcy context
* Interactive lectures with demonstrative examples by litigation experts
* Break-out sessions for creditor and debtor representation

To see the full schedule and list of speakers at the program, click here.

Click here to register.

REGISTER FOR ABI’S 16TH ANNUAL CENTRAL STATES BANKRUPTCY WORKSHOP!

Register for ABI’s 16th Annual Central States Bankruptcy Workshop set for June 11-14 at Michigan’s Grand Traverse Resort and Spa! Returning this year are the Judicial Debates, in which bankruptcy judges from the region square off on the hot bankruptcy topics, consumer and business bankruptcy program tracks and the popular Breakfast Views from the Bench.

Panel sessions provide 11 hours of CLE and include:

• How to Avoid Problems with the Trustee: Consumer Best Practices
• Tell It to the Bankruptcy Judge? Limitations on Bankruptcy Court Jurisdiction
• Keep Your License: Ethical Issues for Consumer Bankruptcy Attorneys, Debtor and Creditor
• So Much Information, So Little Time: Managing Consumer Cases in the Electronic Age
• Remember When That Real Estate Was Worth Something? Dealing with the Distressed Real Estate Market in Insolvency and Restructuring Proceedings
• The Never-ending Story: Recent Trends in Automotive Restructuring
• Chapter 13 Discharge Issues: How to Reach the Finish Line
• Consumer Practitioners: How’s Life under BAPCPA? An Update on Post-BAPCPA Consumer Case Law
• “Disclose, Disclose, Disclose!!!” Ethics Issues in Business Cases
• Business Practitioners: Life under BAPCPA—The Impact of BAPCPA and Rule Changes in Chapter 11 Cases

Don’t miss a performance by ABI’s own Indubitable Equivalents, on June 12 at the Late Night Dance Lounge, sponsored by sponsored by BMC Group. There will also be a V.I.P. dinner sponsored by Bankruptcy Insurance Solutions for speakers and sponsors on June 13.

Click here to register.

DON'T MISS ABI'S HEALTH CARE TRIAGE 2009 CONFERENCE IN JUNE!

Insolvency practitioners who focus on health care restructurings will not want to miss ABI's Health Care Triage 2009 Conference on June 26. The day-long conference will take place at the Loyola University Chicago Beazley Institute for Health Law and Policy in Chicago. Programming and speakers information are now online. Register by May 15 and save $50.

REGISTER NOW FOR ABI’S 16TH ANNUAL NORTHEAST BANKRUPTCY CONFERENCE AND NORTHEAST CONSUMER FORUM

ABI’s popular Northeast Bankruptcy Conference provides the opportunity to earn up to 8.75 hours of continuing education credit, including 1.5 hours of ethics, from July 16-19 at the Mount Washington Resort in Bretton Woods, N.H. Topics this year include:

• Nuts and Bolts of Representing a (Really) Small Business
• Single-asset Real Estate
• Outlook for Restructuring Industry
• Ethical Considerations in Insolvency Cases – Beyond Conflicts
• Evidence
• Fraud Investigations
• Asset Protection in Bankruptcy: The Good, The Bad and The Ugly
• Hedge Fund Workouts and Chapter 11 Cases
• Industry Focus: Retail and Restaurant Bankruptcies
• Effective Strategies for Trade Creditors
• Breakfast with a Judge

Register here for the Northeast Bankruptcy Conference. This event will sell out early, so don’t delay!

Returning this year and held in conjunction with ABI’s Northeast Bankruptcy Conference, the Fourth Annual Northeast Consumer Forum, July 16-18, offers educational programs designed for both experienced and new consumer professionals. Topics include:

• Home Retention and Loss Mitigation Update
• Credit Card Defaults
• Cramdowns Now and New: Ins and Outs of Chapter 13 Mortgage Cramdowns (More Info)
• High-income, High-debt Reorganization: Chapter 11 for the People

Register here for the Northeast Consumer Forum.

REGISTRATION NOW OPEN FOR ABI’S 14TH ANNUAL SOUTHEAST BANKRUPTCY WORKSHOP

ABI’s 14th Annual Southeast Bankruptcy Workshop will be held on July 29-Aug. 1 at the Westin Hilton Head Island Resort & Spa on Hilton Head Island, S.C. Plenary sessions will bring you up to speed on the latest consumer and business updates and will examine distress in the real estate market, the latest trends in chapter 7 and 13 cases and financing strategies during the recession.

Click here to register.

REGISTER FOR ABI’S 5th ANNUAL MID-ATLANTIC BANKRUPTCY WORKSHOP

ABI’s Fifth Annual Mid-Atlantic Bankruptcy Workshop will be held Aug. 6-8 at the Hotel Hershey in Hershey, Pa. Members will have the opportunity to earn 7.0 CLE credits at the workshop sessions, including 1.0 hour of ethics.

Sessions at the Workshop include:
• Been Down So Long, It Looks Like Up to Me: The Economic Recovery
• Capital Markets: Making Bricks without Straw
• Clean-up in Aisle 5: Retail Industry Reorganizations and Liquidations
• After the Ball: Post-confirmation Issues
• Prove It! Evidence in Bankruptcy Proceedings
• Anything but Bankruptcy! Redux: Nonbankruptcy Alternatives
• Not So Fast! Creditor Committees Stake Their Claim
• When Circuits Collide: Circuit Splits
• The Forgotten Faces: Employment Issues in Bankruptcy
• Do Not Pass 'Go': Bankruptcy Crimes

Click here to register for the Mid-Atlantic Bankruptcy Workshop.

GET INVOLVED!

From publishing opportunities to committee involvement, ABI offers many options for members to raise their professional profiles. Click here for more opportunities.

INSOL INTERNATIONAL

The International Association of Restructuring, Insolvency & Bankruptcy Professionals 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 9,500 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.

Latest Job Postings at ABI Career Center

Check out the ABI Career Center. The Center is a one-stop site for job seekers and employers in the insolvency community. Career Center resources are available free to both employers and job seekers. New positions are featured daily. The latest listings include: