American Bankruptcy Institute Update

December 2, 2008

In This Issue

Highlights

NOVEMBER CONSUMER BANKRUPTCY FILINGS INCREASE 39 PERCENT OVER LAST YEAR

U.S. consumer bankruptcy filings increased 39.2 percent nationwide in November from the same period a year ago, according to ABI, relying on data from the National Bankruptcy Research Center (NBKRC). The overall November consumer filing total of 99,925 represented a decrease from the October total of 106,266. Chapter 13 filings constituted 32.7 percent of all consumer cases in November, a slight increase from October. So far in 2008, there have been 980,000 new consumer bankruptcies filed. Click here to view the latest consumer filing charts.

AMENDMENTS TO FEDERAL BANKRUPTCY RULES IN EFFECT DEC. 1

Modifications to the Federal Rules of Bankruptcy Procedure went into effect on Dec. 1. Most significantly, the changes this year replace the interim bankruptcy rules that have been in place following the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Changes include new rules to protect patients when health care businesses file for bankruptcy while others govern the proposed sale or transfer of personally identifiable information by any type of business. Separate rule changes implement provisions of chapter 15, address a range of issues in small business chapter 11 cases, grant courts more flexibility in giving notice to foreign creditors, introduce various consumer bankruptcy procedural changes and establish a process to allow some bankruptcy court decisions to be appealed directly to the U.S. Court of Appeals. Click here to access the updated Federal Rules of Bankruptcy Procedure.

LARGE BANKRUPTCIES PREDICTED TO TOP 100 NEXT YEAR

Bain Corporate Renewal Group predicted yesterday that an increasing number of defaults on speculative grade debt could push more than 100 companies with a market capitalization over $100 million into bankruptcy in each of the next two years, Bankruptcy Law360 reported. Bain CRG said it expects to see the number of bankruptcies of $100 million companies swell to between 95 and 120 in 2009 and slip slightly to around 100 in 2010. Those estimates are based on an expected increase in defaults on high-yield debt as the current recession takes hold. Bain CRG expects to see between 160 and 190 defaults on high-yield debt in 2009 and between 120 and 140 defaults on debt rated B or lower in 2010. Click here to read the full article. (Subscription required.)

More than 100 public companies have already filed under chapter 11 or chapter 7 this year, the largest number since 2005, according to BankruptcyData.com.

DELINQUENT MORTGAGES SET TO NEARLY DOUBLE IN 2009

TransUnion LLC reported today that the number of consumers with delinquent mortgages is poised to almost double by the end of next year, hitting its highest level in at least 16 years, according to the Wall Street Journal. TransUnion, which analyzed about 27 million consumer records in its database, predicted that the proportion of consumers with mortgages that are 60 days or more past-due will hit 7.17 percent in the fourth quarter of 2009. That would be the highest level reached since TransUnion first started tracking these statistics in 1992. It compares with an expected delinquency rate of 4.67 percent at the end of 2008. Click here to read the full story. (Subscription required.)

FHA’s CAPITAL CUSHION DECREASED 39 PERCENT

The latest annual audit of the Federal Housing Administration shows a steep drop in the capital cushion the U.S. agency holds against losses from mortgage defaults, the Wall Street Journal reported today. The audit, prepared by Integrated Financial Engineering Inc. of Rockville, Md., estimated the economic value of the FHA's insurance fund was $12.9 billion as of Sept. 30, down 39 percent from a year earlier. The estimated value of the fund as of Sept. 30 worked out to 3 percent of total loans insured by the FHA, down from 6.4 percent a year ago. Federal law requires that the ratio be at least 2 percent. If the FHA runs short of money to pay claims, Congress would have to provide taxpayer funds to make up the difference. The share of new mortgages insured by the FHA jumped to 26 percent in this year's third quarter, from just 3 percent for the full year of 2007. Click here to read the full article. (Subscription required.)

SMALLER MORTGAGE LENDERS SEE OPPORTUNITY IN ECONOMIC TURMOIL

As many of the biggest U.S. banks continue to pare back their mortgage lending, some financial institutions see global financial turmoil as an opportunity to pick up market share, the Wall Street Journal reported today. The eight largest mortgage lenders, as measured by total volume in the first nine months of 2008, reported declines in originations from a year earlier, according to Inside Mortgage Finance. With larger lenders now preoccupied with cleaning up the mess left when the housing bubble burst, the fact that other institutions are revving up their mortgage lending could help consumers who have had trouble finding anyone willing to lend. At U.S. Bancorp, mortgage originations by the Minneapolis regional bank's U.S. Bank Home Mortgage unit jumped 35 percent to $25.95 billion in the first nine months of this year. That was one of the biggest increases of any lender tracked by Inside Mortgage Finance. Click here for the full article. (Subscription required.)

COMMENT PERIOD OPEN FOR PROPOSED RULE ON U.S. TRUSTEES’ APPROVAL OF FINANCIAL EDUCATION PROVIDERS

The Department of Justice recently issued a notice that comments on a proposed rule are now being accepted for proposed procedures and criteria that U.S. Trustees shall use when determining whether applicants seeking to become or remain an approved provider of a personal financial management instructional course satisfy all prerequisites of the U.S. Bankruptcy Code, as implemented under this rule. Under BAPCPA, individual debtors must participate in an instructional course concerning personal financial management before receiving a discharge of debts. The current law enumerates mandatory prerequisites and minimum standards that applicants seeking to become approved providers of a personal financial management instructional course must meet. Under this rule, the U.S. Trustees will approve applicants for inclusion on publicly available provider lists in one or more federal judicial districts if an applicant establishes that it meets all the requirements of the Code, as implemented under the new rule. Comments should be submitted before Jan. 13, 2009. Click here to read the Notice of Proposed Rule Making.

NEW ON ABI’S BANKRUPTCY BLOG EXCHANGE: EFFECTS OF A U.S. AUTOMAKER BANKRUPTCY

The Bankruptcy Blog Exchange is a free ABI service that tracks nearly 25 bankruptcy-related blogs. A recent post examines the effects of a bankruptcy filing by one of the Big Three U.S. automakers.

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.

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.

LAST CHANCE TO REGISTER FOR ABI’S WINTER LEADERSHIP CONFERENCE

Don’t miss this week’s 20th Annual Winter Leadership Conference, taking place, Thursday-Saturday, Dec. 4-6 at the Westin La Paloma Resort & Spa in Tucson, Ariz. In addition to insights from some of the top insolvency and restructuring experts on issues confronting the profession in 2009, this year’s conference will also feature ABI’s “Great Debate” series. Concurrent panel sessions at the conference include:

• Gift Plans, Settlements, Releases and Other Confirmation Strategies
• Insolvency and the Increasing Role of Distressed  Investment Firms in the Pacific Rim
• Bankruptcy’s New Wave – Preparing for the Perfect Storm
• Mortgage Industry – Who Holds the Paper and How Much Is Really Due? Proof and Accounting Issues
• Real Estate Bankruptcies: What’s Happening Now, and What’s Next?
• Chapter 9: It Could Happen to a Town Near You!
• The Art of Deal-Making in Bankruptcy
• Chapter 13 Plans: The Latest on Modification Standards, Measuring Disposable Income and Plan Duration
• E –Discovery, Professional and Ethical Limitations
• Evidence/Trial Practice Program

The conference also includes a luncheon featuring author, columnist and former journalist and presidential speechwriter William Safire, as well as a performance by the ABI band, the Indubitable Equivalents!

More than 550 people are already registered to attend. Click here to register.

ABI’S NORTHEAST CONSUMER WINTER FORUM SET FOR JANUARY 19 IN BOSTON

ABI brings its CLE programming to Boston on January 19 for a day-long educational conference devoted to the consumer bankruptcy professional. Faculty members include experienced local chapter 7 and 13 consumer attorneys, bankruptcy judges including the new Judge-Designate and the Acting Assistant U.S. Trustee. In addition, attendees are invited to join ABI Executive Director Samuel J. Gerdano for a lunchtime discussion on current and prospective legislative developments in the new Congress. Approval for up to 6.5 hours is pending. Program sessions include:

• Balloons, Bargains (Cramdowns) and Bewares: Hot Issues and Best Practices in Chapter 13
• Hot Chapter 7 Issues, Including the Means Test, U.S. Trustee Inquiries and Obtaining the No-Distribution Report
• Litigation Skills Part One: Lexicons of Litigation
• Pretrial Orders and Discovery, The Trial and Post Trial Proceedings
• Litigation Skills Part Two: Let's Litigate (Trial Techniques)

Click here to register.

REGISTER FOR ABI’S 14TH ANNUAL ROCKY MOUNTAIN BANKRUPTCY CONFERENCE

Register now for the 14th Annual Rocky Mountain Bankruptcy Conference, to be held at the Westin Tabor Center in Denver from Jan. 22-23, 2009. Conference programming will feature a faculty of outstanding scholars, judges and practitioners from the region. The conference will also feature a lunchtime debate on equitable vs. plain meaning jurisprudence of the Supreme Court.

Timely panel sessions include:

• Mining for Gold or Copper? 2009 Economic Forecast
• Women and Finance: A Winning Hand
• Hitting Four of a Kind—Matching Financing Needs with Financing Sources
• Branding the Cattle: Executory Contracts—How to Keep the Ones You Want
• The Saloon or the Corral? Jurisdictional Battles from Forum-Shopping
• Building the Ranch House: Where's the Roof? Construction/Developers Gone Bad
• Consumer Workshop I: Knocked into a Cocked Hat—Means Test Unresolved Issues and Case Law Update
• There's a New Sheriff in Town: Receiverships and Other Alternatives to Bankruptcy
• Consumer Workshop II: Robber Barons, the Old Homestead and the Beloved Model T: Mortgages and Auto Loans in Chapter 7 and 13 Cases
• The Pony Express: Delivering the Latest News—Recent Developments
• How the West Was Won: Trying the Insolvency/Valuation Case—Iridium and Beyond
• Consumer Workshop III: Riding the Circuits—Case Law Update, Eligibility, Consumer Chapter 11
• Swing Your Partner Round and Round: Discovery, Disclosure and Ethics in Bankruptcy
• Culture in the West: The Fine Art of Recharacterization/Subordination of Debt
• Consumer Workshop IV: Beat the Devil Around the Stump—Ethically Making Adversary Proceedings Affordable to Debtors

Register by Friday and save $50.

REGISTER NOW FOR THE ATLANTA CONSUMER BANKRUPTCY SKILLS TRAINING PROGRAMS

Join ABI, the Bankruptcy Section of the Atlanta Bar Association and the Metro-Atlanta Consumer Bankruptcy Attorneys Group for the Atlanta Consumer Bankruptcy Skills Training programs. The first program will be offered on January 28, 2009, and focus on trial preparation and courtroom skills. The second program, held on June 4, 2009, will focus on written and oral advocacy. Both programs feature 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 regional bankruptcy judges as well as experienced practitioners. The sessions will offer:


* Litigation skills training in the consumer bankruptcy context
* Interactive lectures with demonstrative examples by litigation experts
* Break-out sessions to "practice" skills learned
* All annual CLE requirements for Georgia

Register for both the January 28 and June 4 programs and save $105! Click here to register.

REGISTER NOW FOR ABI’S FIFTH CARIBBEAN INSOLVENCY SYMPOSIUM

Registration is now open for ABI’s Fifth Caribbean Insolvency Symposium at the The Westin Casuarina in Grand Cayman, Feb. 5-7, 2009. The program features up to 8.0 CLE credit hours, with an expanded program including both business and international topics with a faculty of outstanding scholars, judges and practitioners from the region. Timely topics include:

• Who Has $$, and What Are They Buying?
• "101" on Restructuring Portfolio Companies
• U.S. Litigation Reaching Cayman Directors - What to Do?
• New and Exciting Developments in Chapter 15
• View from the Benches
• Distressed Industries in the Caribbean
• Claims Trading in Aid of Hostile Takeovers in Bankruptcy or in Defense of a Plan of Reorganization (including Green Mail)
• Alternatives to Chapter 15: United States/Caribbean

Click here to register.

EARN UP TO 15.25 HOURS OF CLE CREDIT AT VALCON ‘09 CONFERENCE

Registration is now open for VALCON 09: Risk, Restructurings, Real Estate & Retail, taking place at the Four Seasons Hotel in Las Vegas Feb. 25-27, 2009. VALCON 09 attendees will be able to earn up to 15.25 hours of CLE and 18 hours of CPE credit and will have the opportunity to take part in special valuation fundamentals and technical valuation breakout tracks! VALCON 09 sessions include:

• Bubbles and Bursts: Do Traditional Valuation Methodologies Work in a World Where Markets Misbehave?
• Valuation Case Law Update: Legal and Financial Perspectives
• Judicial Panel: Valuation Issues
• Credit, Liquidity, Treasury and Toxic Swaps
• Mid-Market Restructurings: What Happens if No One Comes to the Sale?
• Real Estate: State of the Industry
• Judicial Panel: How Will the Bankruptcy Courts Deal with Problems in the Real Estate Sector?
• The Credit Crisis, Capital and the Failure of Risk Management
• 2009 Deals, Valuations, Investment Strategies and Risks
• Advising Boards in an Illiquid World
• Retailing: Market Developments and Restructuring Issues Including Brand Valuations

This timely program is co-sponsored by ABI, AIRA and the University of Texas Continuing Legal Education program. Click here to register.

REGISTER FOR ABI’S 17TH ANNUAL BANKRUPTCY BATTLEGROUND WEST

Registration is now open for ABI’s 17th Annual Bankruptcy Battleground West conference, scheduled for March 13, 2009, at the Beverly Wilshire in Beverly Hills, Calif. The day-long conference, titled " Singing in the Rain: Preparing for the Bankruptcy Floodgates to Open," highlights emerging legal issues involving real estate, asset sales, and claim preservation accented with a courtroom-style debate along with a glimpse of what our futures may hold. The program will also feature a luncheon presentation by Jerry Nickelsburg, a economist at UCLA Anderson Forecast.

Panel topics for ABI’s Bankruptcy Battleground West conference include the following timely issues:

• House of the Rising Sun: Emerging Real Estate Legal Issues
• Can't Buy Me Love, But How about a Company?
• Bolt the Door Before You Lose Your Rights
• Escape from Bankruptcy's Hotel California? Trying to Sell Trapped Assets Before They Die

Click here to register.

DON’T MISS THE BANKRUPTCY PROGRAM AT THE LAW EDUCATION INSTITUTE’S 26TH ANNUAL NATIONAL CLE CONFERENCE IN JANUARY

The Law Education Institute will hold its 26th Annual National CLE Conference at the Marriott Mountain Resort in Vail, Colo., from January 3-7. The bankruptcy program at the conference will examine such topics as business valuation, civil litigation, family law, health law, intellectual property, labor and employment, real estate⁄land use, environmental law and tax law. Participants have the opportunity to earn 18-23 CLE credits, plus ethics credits. Click here to register.

GET INVOLVED!

Do You Know?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: