All items from A Texas Bankruptcy Lawyer's Blog

When I was in high school, social media consisted of my home telephone line.   I could use it to access the outside world until my parents told me to get off the phone because they were expecting an important call.   Today’s teens have many more opportunities for social interaction without actual physical presence than I did thanks to twenty-something developers of social media platforms who became instant billionaires when their product that didn’t actually generate any revenue got picked up by a big corporation afraid of missing out on the next big thing.   However, the funny thing is that as social media has proliferated, its user base has gotten wider and older.   Paren



Posted 1 week 4 days ago

The ABI Commission to Study the Reform of Chapter 11 unveiled a summary of its recommendations at the Winter Leadership Conference on December 4 in La Quinta, California.   The full report will be released on December 6 and contains 240 recommendations in a report spanning four hundred pages and twelve hundred footnotes. The Report was adopted unanimously by the eighteen commissioners suggesting that the group placed a high value on consensus and compromise.  
Introduction



Posted 1 week 4 days ago

November brought four bankruptcy opinions from the Fifth Circuit covering everything from interpleader to Navajo law.



Posted 1 week 6 days ago

This is an article about the end of a Chapter 11 case.  As the Doors put it:
This is the end
Beautiful friend
This is the end
My only friend, the end

Of our elaborate plans, the end
Of everything that stands, the end
No safety or surprise, the endAll cases must come to an end.   Sometimes they linger on the docket until they smell like unwashed sweat socks stuffed behind the sofa.  Other times, the parties are eager to escape the scrutiny of the court and are looking for a creative way out.  This post focuses on how two cases reached their ends.
Structured Dismissal

In a recent case, Judge Harlin Hale wrote:
This case presents the issue of whether a bankruptcy court can approve a structured dismissal of a chapter 11 case, instead of conversion or forcing the parties to confirm a plan, when dismissal is what the parties want and is in the interest of creditors.  In re Buffet Partners, L.P., et al, No. 14-30699 (Bankr. N.D. Tex. 7/23/14), p.1.    The opinion can be found here (PACER registration required).
     
What Happened:



Posted 3 weeks 1 day ago

It's been a slow month in the Fifth Circuit, my home Circuit with just two bankruptcy-related opinions.   This month's cases involve a non-filing spouse who lost her homestead interest and a bank which provided "reasonably equivalent" value but not enough to constitute a complete defense to a fraudulent transfer claim.
Homestead Exemption; Takings Claim by Non-Filing Spouse



Posted 5 weeks 6 days ago

The Supreme Court doesn't take many cases on bankruptcy issues.  It has only ruled on attorney's fees in bankruptcy once since the Code was adopted and that ruling was on the narrow issue of whether a chapter 7 debtor's attorney could recover fees from the estate.    As a result, it was big news when the Court granted cert in  No. 14-103, Baker Botts, LLP v. ASARCO, LLC on October 2, 2014.    The issue in ASARCO is whether an attorney can recover fees for defending his fee application or whether those expenses are merely "a cost of doing business" as held by the Fifth Circuit.   The issue matters in the particular case because Baker Botts spent $5 million in time defending its $113 million application.   
What Happened



Posted 7 weeks 2 days ago

Saturday concluded NCBJ with ethics and the Supreme Court review.   (There was also a program on scientific studies of mindfulness which I missed).
Wait, Wait, Don’t Tell Me! An Ethics Game Show:  Retired Judge James H. Haines as Peter Segal, Christine Devine (DeMaillie & Lougee), Judge Benjamin Goldgar, Timothy Nixon (Godfrey & Kahn), Judge Neil Olack, Prof. Nancy Rapoport and Judge Erithe Smith.  



Posted 9 weeks 4 days ago

Jeffrey Lacker, President of the Richmond Federal Reserve Bank, made the case for why large financial institutions should subject to bankruptcy as the ABI Luncheon Keynote Speaker.  He started his address with the question "Why is a central banker interested in bankruptcy?"  His answer was that during the financial crisis of 2007-2008, the government played a role by distorting incentives of market players with multiple discretionary interventions which destabilized expectations.   He called on the government to realign incentives of major market participants by using bankruptcy instead of discretionary government interventions.
Mr. Lacker said that the advantages of the bankruptcy system are that it is a collective proceeding, it is subject to judicial supervision and is a predictable, rules-based system.    He described the bankruptcy process as "one of the best tools we have for reconciling the goals of creditors and debtors."   He said that the probability of bankruptcy versus the benefits of risk taking would change the incentives of large banks.



Posted 9 weeks 5 days ago

I spent the morning listening to presentations on very disparate topics:  hedge funds, examining an expert witness and the balance between secured creditors and unsecured creditors.   I was not able to capture the full extent of the discussions and in some cases my descriptions below may be a bit cryptic.   My intent is not to provide a transcript, but rather to provide a flavoring of issues being discussed at NCBJ. 
However, the day began with the 5th annual Berkley-Bernstein 5k race.    As usual, I finished near the back of the back.   However, there is something perversely fun about seeing the sun come up over the water while gasping for breath with fellow bankruptcy practitioners and judges.   Kudos to Berkley-Bernstein for sponsoring this event.   
Watching the Hedges Grow: Inside the Mind of Distressed Investors:  Ret. Judge James Peck, William Derrough (Moelis & Co.), Bruce Bennett (Jones Day), Mark Brodsky (Aurelius Capital) and Ken Liang (Oak Hill Advisors)



Posted 9 weeks 6 days ago

William A. Strauss, an economist with the Chicago Fed, delivered the keynote address for the Commercial Law League of America's luncheon Thursday.   His overall forecast was for slow but steady growth, declining unemployment and low interest rates as the country digs its way out of the Great Recession.    In other words, he predicted a good climate for reorganizing debtors.

His only reference to bankruptcy was in his opening remarks when he stated:Bankruptcy is good.  Unemployment is good.   They are necessary evils. . . . Unemployment makes workers available to industries that are rising.   Bankruptcy makes resources available to industries that are rising.He described the economic picture as a good news, bad news story.   He said that the United States has the strongest economy in the world, although its growth is not impressive.   He said that we should see positive growth this year.   However, he tempered his remarks by pointing out that the relevant metric is not zero.   Each year the labor force grows by 1% while productivity can be expected to grow by 1.0-1.25%.   Thus, a growth in GDP of 2.0-2.25% is the expected trend line.
He said that the outlook for the next five years was growth at:



Posted 9 weeks 6 days ago