American Bankruptcy Institute Update

October 11, 2005

In This Issue

Highlights

Legislation Update

Congress is in recess this week. Both the House and Senate will return on Oct. 17.

ABI President and Resident Scholar Host Washingtonpost.com Chat

ABI President John Penn and Resident Scholar Nathalie Martin hosted a lively on-line discussion of the new bankruptcy law at noon today on washingtonpost.com. Click here to read the chat.

CONSUMER DEBT ON THE RISE

Consumer debt rose by $6.5 billion in July and a huge $14.96 billion in June, the San Jose Mercury News reported on Friday. Economists have been expecting consumer borrowing to slow, given that the savings rate has dipped to record lows. The savings rate was minus 0.7 percent in August, the third straight month it has been in negative territory, but a slight improvement from the all-time low for savings of minus 1.1 percent in July. A negative savings rate means that Americans are spending all they earn in a given month and even dipping into past savings or borrowing to finance spending above their earnings level. Loans on credit cards and other types of revolving debt rose at an annual rate of 3.5 percent in August after having fallen at a 1.3 percent rate in the July. Borrowing to buy autos and other types of non-revolving debt rose at an annual rate of 2.3 percent in August after two huge monthly gains at rates of 6.6 percent in July and 7 percent in June. Those gains reflected strong auto sales in those months as consumers responded enthusiastically to attractive dealer incentives. The total increase in consumer credit of $4.88 billion pushed this debt load to an all-time high $2.15 trillion.

Meanwhile, U.S. consumer credit rose $4.88 billion in August, less than expected, a Federal Reserve report showed on Friday. The central bank said that total consumer debt outstanding grew to a seasonally adjusted $2.152 trillion, up from a revised $2.147 trillion in July, Reuters reported. Wall Street analysts polled by Reuters had expected a rise of $5.0 billion in consumer credit in August. The Fed said that non-revolving credit -- made up of closed-end loans for cars, boats, education expenses and holidays -- rose $2.57 billion in August. Revolving credit, which includes credit and charge cards, rose $2.31 billion. Read the Federal Reserve’s consumer report.

CORPORATE BANKRUPTCIES RISE 20 percent IN 30 DISTRICTS BEFORE U.S. LIMITS TAKE EFFECT

Business bankruptcies rose almost 20 percent at the busiest U.S. courts last quarter as such companies as Delphi Corp., Delta Airlines and Northwest Airlines Inc. seek protection from creditors before a new law forces them to accelerate reorganization plans, Bloomberg reported yesterday. Business bankruptcy filings since July 1 were 19.5 percent higher than in the previous three months, according to data compiled by Bloomberg News in 30 of the 90 U.S. courts that supervise reorganizations and liquidations. The period included the September bankruptcies of Northwest and Delta and the Oct. 8 filing by auto-parts maker Delphi.

Delphi had warned its unions that it would file by the Oct. 17 deadline if it didn't get wage concessions. The new law was “one of several factors'' that Northwest considered in deciding when to file its petition, spokesman Kurt Ebenhoch said. The airline filed a day before a $65 million pension fund contribution was due. Delta spokesman Anthony Black said the changes weren't a factor in the Atlanta-based company's decision to file the largest bankruptcy of the period. Read the full story.

DETROIT BANKRUPTCY CONFERENCE PROVIDES INTENSIVE NEW-LAW EDUCATION

ABI’s Detroit Bankruptcy Conference, "Practice Under the New Bankruptcy Law" brings together the area’s top insolvency professionals for one day of intense learning. The event will be held Nov. 11, 2005, at the Novi Sheraton. Topics include:

  • U.S. Trustee Implementation: Entering, Getting Through and Exiting the Process
  • The Means Test: An In-depth Analysis
  • Chapter 13 Changes
  • What Debtors Get to Keep (and Not): Homestead Exemption; Household Goods; Privacy Issues
  • The New Super-creditor: Domestic Support Changes
  • The New World of Chapter 11: Small Business Rules, Strategies in Real Estate Cases, Lease Rules, Preference and Reclamation Issues and Ethics
  • Tax Changes

Register today at and earn up to 7 hours of CLE credit.

ABIíS WINTER LEADERSHIP CONFERENCE WILL BE BEST EVER!

Join ABI for the 17th Annual Winter Leadership Conference Dec 1-3, 2005 in beautiful Indian Wells, California at the Hyatt Grand Champions Resort and Spa, one of the Palm Spring area’s most luxurious hotels. More than 450 are already registered!

The program of 14 CLE credit hours (including 3 hours of ethics) features a faculty of renowned scholars, judges and practitioners from across the United States. A wide variety of committee educational sessions will be offered. Timely topics—all updated with the latest legislative revisions—include:

  • The Year in Review (other than legislation) and Emerging Issues for 2006
  • Solemn Promise or Past Sin? Implications of Pension Terminations
  • Pre-petition Sanctions, Contempt (Civil/Criminal), Penalties and Punitive Damages: Allow ability and Enforce ability
  • Ten Hints to Surviving the New Consumer Bankruptcy Law
  • A Gift by Any Other Name: Absolute Priority Rule after Armstrong World
  • New Realities for Financial Advisors under the New Law and Other Emerging Problems
  • Right Without a Remedy?: Individual and Small Business Chapter 11 under the New Code
  • Breakfast Educational Program: New Law in Practice
  • Ethics: Swearing Contest—Certifications of Information and Other Ethical Quandaries of the New Law
  • Ethics: Special Conflicts Counsel: Best Practice or Big Case Aberration

This year’s meeting will feature stand-up comedian Steve Bridges (a.k.a. “Mr. President”) and the all-ABI member rock-and-roll band, the Indubitable Equivalents. Optional events will include golf, tennis, The Living Desert, hot air ballooning, a Joshua Tree Jeep Eco-tour, off-road quad tours and a cooking class.

Register today!

2005-06 ABI MEMBERSHIP DIRECTORY PRINT EDITION AVAILABLE FOR SALE

The print edition of the 2005-06 ABI Annual Membership Directory is now available. This 21st edition lists more than 11,000 insolvency professionals, more than ever before, and is a symbol of ABI’s sustained membership growth. The Directory is one of the many benefits of ABI membership and is available exclusively to members. An online version of the Directory is available at the ABI World Web site (www.abiworld.org), which is continually updated. All members will receive a complimentary CD-ROM version of the Directory with their November ABI Journal at the end of this month. The $55 cost of the printed version includes shipping and handling, Visit the ABI bookstore to order .

ABI WORLD TUTORIAL HIGHLIGHTS DAILY NEWS AND BANKRUPTCY COURT UPDATES

Do You Know?

A new online tutorials hows you how to find daily news stories, information and bankruptcy opinions on ABI’s comprehensive Web site. The tutorial features a visual demonstration of how to locate these documents quickly and easily, and guides you through the navigation process. This is the fourth in a series of tutorials that will highlight the many resources and services available at ABI World.

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: