Highlights
COMMENTARY: PRIVATE EQUITY’S BIG DEBT BURDEN
Private equity's buyout binge has lenders rewriting the rules of debt, with firms borrowing large sums to pay for their record deals, Business Week reported today. As recently as 2004, the average buyout was funded with $4.50 of debt for every dollar of a target's cash flow. Now average debt levels are nearly six times cash flow, and debt multiples of eight or nine times are common. The changes have been driven by a number of factors, including low interest rates, cash-flush lenders, and the belief that healthy corporate earnings and cutting-edge management mitigate risk. An increasing number of investors argue that a big wave of credit defaults is forming at the lower depths of the junk-bond market. "I think default rates will go up a lot," said Wilbur Ross Jr., who became a billionaire by investing in distressed industries such as steel and auto parts. "We think they will at least double by the end of this year and at least double or triple by the end of next year." Click here to read the full article.
REPORT: HOME CONSTRUCTION DOWNTURN MAY LAST UNTIL 2011
New home construction in the U.S. may take until 2011 to return to last year's level, said David Seiders, chief economist for the National Association of Home Builders in Washington, D.C., Bloomberg News reported today. Monthly construction starts would need to jump by 21 percent to reach Seiders's benchmark for full recovery, which is 1.85 million. There were 1.53 million homes built in April, the Commerce Department said. At the height of the five-year housing boom in January 2006, construction began on 2.29 million homes. The inventory of unsold homes is the largest since the Washington, D.C.-based National Association of Realtors started counting them in 1999 and house prices have suffered the steepest drop since the Great Depression, according to the realtors' group. Defaults and foreclosures also may rise as about $650 billion of loans to subprime borrowers, those with poor or limited credit histories, reset at higher interest rates by 2009. “We're still being hit pretty hard by the subprime-related mortgage market problem,'' Seiders said. “One of the biggest unknowns right now is how serious the change on the mortgages side will be on home sales.'' Click here to read the full article.
FIRMS AT ODDS OVER FORECLOSURE DATA
As federal, state and local governments do not compile data on the number of home foreclosures, there is now disagreement among the private firms that track such activity over the statistics of people losing their homes, the Los Angeles Times reported on Sunday. The dispute gets particularly heated over the figures from RealtyTrac, an Irvine, Calif.-based firm that has become the most widely cited authority in the field. RealtyTrac's numbers tend to top all other figures because the company counts every step in the foreclosure process — the notice of default, the auction, the house reverting to the lender — separately. One house might be tallied several times as a foreclosure. The Mortgage Bankers Assn. chastised Congress for depending on the company's data. RealtyTrac's competitors are becoming increasingly vocal about what they see as its overstatements, but are sometimes arguing among themselves as well. "No one is measuring the truth," said Mark Zandi, chief economist for Moody's Economy.com. "This is a problem when formulating policy." Click here to read the full article.
KEEP UP ON THE LATEST BLOGS: USE ABI’S BANKRUPTCY BLOG EXCHANGE
The Bankruptcy Blog Exchange is a free ABI service that tracks over a dozen bankruptcy-related blogs. New today is a post discussing the Third Circuit Appeals Court’s holding that former Eastern Airlines pilots cannot enforce their former collective bargaining agreement against Continental’s pilots. Eastern Airlines pilots were trying to receive compensation for seniority rights that they lost when Continental Airlines merged with Eastern Airlines.
Be sure to check back several times each day; any time a contributing blog posts a new item, a link to the item will appear on the top of this site. 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.
NEW YORK CITY BANKRUPTCY CONFERENCE PROGRAMMING NOW AVAILABLE ON ABI DISTANCE LEARNING!
Programming from ABI's recently concluded 9th Annual New York City Bankruptcy Conference is now available on ABI Distance Learning. Topics discussed at the conference include:
- Getting Even: Who Sues Whom?
- Buying Low, Selling High and Getting Out of Dodge
- Confidentiality in Bankruptcy
- Chapter 15s under BAPCPA
- Intersection Between Bankruptcy and Securities Law
- Holding Co./Operating Company Ethical Issues in Large Chapter 11s
- Intercreditor Issues in Restructurings of First-Lien/Second Lien Debt
- Management Compensation and KERPs
- Developments in DIP Lending and Restructuring Finance
- Recent Developments in Bankruptcy Jurisdiction
Also featured is a roundtable discussion entitled “Hedge Funds Have Changed the Chapter 11 Process. Is That Good or Bad?” and a special Judges’ Roundtable on selected current issues featuring 11 judges from the SDNY, EDNY, WDNY and the DNJ. Click here to order – all Distance Learning programs are 50 percent off through Thursday!
dON'T MISS ABI’S 14TH ANNUAL CENTRAL STATES BANKRUPTCY WORKSHOP
More than 350 are already registered to attend ABI’s 14th Annual Central States Bankruptcy Workshop from June 14-17 at Michigan’s Grand Traverse Resort and Spa!
Earn up to 10.0 hours of CLE and CPE credit, including 1.25 hours of ethics, with workshop format panel sessions on essential topics including:
- Reaffirmation: The Ground Rules Have Changed
- Supply Agreements and Other Hot Contract Issues: Adequate Assurance Demand–Does “Cure” Mean “Cure and More?”
- Litigation Skills–Consumer: Valuation, Evidence, Burden of Proof
- Pension and Legacy: New Laws and Old Obligations
- Using Your Business Litigation Skills–Get in Your Experts and Support Your Values
- Alternatives to Chapter 11: Receiverships, Operating 7s, Mortgage Trusts and More
- Ouch! Administrative Insolvency and Disgorgement of Fees–Case Strategies
- Cash Flow Statements, Budgets, Financial Reporting: Watch Out for the Catches
- Avoid Professional Liability: Aiding and Abetting Client Wrongdoing and Other Liability Risks
- Secured Creditor Rights in Consumer Cases
- Filing a Consumer Case: Pesky Prerequisites
- Disposable Income and the Means Test–What Do They Mean?
New this year are Judicial Debates, where judges for the Sixth and Seventh circuits square off on the hot bankruptcy topics of the day.
Click here to register.
REGISTER FOR ABI’S 14TH 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 12-15 at the Newport Marriott in Newport, R.I. Bring the whole family and enjoy the best Newport has to offer. Topics this year include:
- “E-Discovery”
- Bankruptcy Litigation Workshop
- Turnarounds from Financial and Operational Perspectives
- ABCs, Receiverships and Other Nonbankruptcy Vehicles for Turnarounds, Workouts and Liquidations
- Investment Strategies of the New Lenders, and What the Next Round of Cases Will Look Like
- Intercreditor Agreements–Strategies for Negotiation and Enforcement
- Ethics for Lawyers and Nonlawyers
- Income Tax Consequences of Common Commercial Bankruptcy Transactions
- Beyond Notes and Security Agreements–Financial Instruments and Financial Industry Transactions: What Do They Look Like, and How Do They Work?
- Preparing the Chapter 11 Case: Where to Begin?
- Health Care Reorganizations
- Views from the Bench–Supreme Court Year in Review
More than 400 will attend and this event will sell out, so act today. Click here to register.
Returning this year and held in conjunction with ABI’s Northeast Bankruptcy Conference, the Northeast Consumer Forum, July 12-14, offers educational programs designed for both experienced and new professionals. Approximately 6 hours of CLE/CPE credit, including 1.5 hours of ethics, are available for attending the Consumer Forum. Topics include:
- Too Close to Call - Confirmation Requirements of a Chapter 13 Plan
- Evidentiary Hearing Advocacy
- Automatic Stay Pitfalls and Pointers under BAPCPA
- Issues, Trends and Ethical Problems in Chapter 7 Cases under BAPCPA
Register here for the Northeast Consumer Forum.
REGISTER NOW FOR ABI’S 12TH ANNUAL SOUTHEAST BANKRUPTCY WORKSHOP
ABI’s 12th Annual Southeast Bankruptcy Workshop will be held on July 25 - 28 at the Sanctuary on beautiful Kiawah Island, S.C. This program of 13.5 CLE credit hours (including 1.5 hours of ethics) features a faculty of outstanding scholars, judges and practitioners from across the United States.
Timely topics include:
- Consumer and Business Bankruptcy Developments
- Complex Chapter 11 Developments
- Ethics in the Real World
- Outside of Court/Outside the Box
- Post-BAPCPA Issues for Attorneys Representing Individual Chapter 11 Debtors: Stays, Cases and Ethical Obligations
- Troubled Industries–The Next Wave of Chapter 11s
- Scams and Schemes: Fraud in the Marketplace
- Cap Markets Update: The Lenders’ Views
- Litigation in Bankruptcy Court: 2007 and Beyond
The conference will also feature a special ABI Presidents Panel, “Advocacy in Your Bankruptcy Practice,” plus “Effective Pre-Bankruptcy Negotiating and Packaging.”
Click here to register.
REGISTER FOR ABI’S MID-ATLANTIC BANKRUPTCY WORKSHOP
ABI’s 3rd Annual Mid-Atlantic Bankruptcy Workshop will be held Aug. 9-11 at the Hyatt Regency Chesapeake Bay in Cambridge, Md. Members will have the opportunity to earn 7 CLE credits at the workshop sessions, including 1.0 hour of ethics. Sessions at the Workshop include:
- Breakfast Plenary Session: Choose Me! Ethical Considerations in Solicitation of Creditor Committee Engagements
- BAPCPA Solutions: KERPs, MIPs and Workarounds
- Bring Me Your Tired, Your Poor… Chapter 15 and Cross-border Bankruptcy
- The Brave New World of Hedge Funds and Second-lien Issues
- Consumer Bankruptcy: Is BAPCPA Working?
- Anything but Bankruptcy, Revisited: A Nonbankruptcy Case Study
- Insult to Injury: Preferences and Avoidances Update
- Workers of the World, Unite! Pensions, Union Issues and MEPA Liability
- Problems in the Code
- Plenary Session: When Circuits Collide
Click here to register for the Mid-Atlantic Bankruptcy Workshop.
REGISTER NOW FOR ABI’S ANNUAL SOUTHWEST BANKRUPTCY CONFERENCE, COMPLEX FINANCIAL RESTRUCTURING PROGRAM
Register for ABI’s popular 15th Annual Southwest Bankruptcy Conference will be held Sept. 6-8 at the Four Seasons Hotel in the heart of the Vegas Strip. Programming for the conference features 10.5 CLE credit hours, including 1.5 hours of ethics. Timely topics for the panel sessions include:
- Litigation Skills for Your Toolbox, Featuring Past ABI Presidents
- What You Need to Know about Fraud, Restructuring and Liquidation in the Hedge Fund Industry
- We, The People: Planning for the High-End Individual Filer
- Current Developments in Commercial Case Law
- Liquidating Agents and Examiners and Ombudsmen, Oh My!
- First This Way, Then That Way: Conflicting Interpretations of BAPCPA
- Executory Contract Issues in Commercial Cases
- Here’s Dirt in Your Eye-Advanced Issues in Reorganization Cases Involving Homebuilders; Other Residential Projects; Developers and Contractors
- What Happened to My Money? Restructuring of Lenders and Loan Servicers
- Ethics: Negotiating the Sanction Minefield
- Small Business 11 Workshop
- Judges’ Roundtable Q & A
Click here to register for ABI’s 15th Southwest Bankruptcy Conference.
Held in conjunction with ABI’s Southwest Bankruptcy Conference, ABI's Investment Banking Committee presents the 7th Annual Complex Financial Restructuring Program at the Four Seasons Hotel in Las Vegas, Sept. 6-7, 2007. The program offers a unique approach to understanding the role of investment bankers and financial advisors in insolvency and restructuring contexts. A case study will be presented that will dramatize the various perspectives of parties-in-interest as they examine strategic alternatives and seek the highest value for an insolvent company. Leaders in the industry will play the role of the major constituents as they work through the case study in this day-long program.
Click here to register for the Complex Financial Restructuring Program.
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 8,000 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:
