All items from Business Reorganization Report

The United States Postal Service (USPS) is cutting Saturday mail service!   That means you will have to wait until Monday to see if you won the most recent Publisher’s Clearinghouse sweepstakes.  More importantly, what is the real story about the financial stability of the USPS?  Long in question, the liquidity of the USPS does not seem to be improving – not even close. 
© Creatista | Stock Free Images & Dreamstime Stock Photos
Astute columnists like Kathyrn Buschman Vasel, @kathyrnvasel, are asking the important questions:  Is this too little too late?  Is it time to privatize?  We at Business Reorganization Report are also curious about what is in store for the pension obligations of the USPS.



Posted 1 year 38 weeks ago

Sometimes a picture (or a graph) is really worth a thousand words.  So, courtesy of the Federal Reserve Bank of New York, we present you with the following charts and graphs that paint a picture of the rapidly growing form of consumer loan indebtedness known as “student loans.” 
As noted by the Federal Reserve Bank of New York, “[s]tudent loan debt is the only form of consumer debt that has grown since the peak of consumer debt in 2008. Balances of student loans have eclipsed both auto loans and credit cards, making student loan debt the largest form of consumer debt outside of mortgages.”  For the interactive chart and graph, please refer to: http://www.newyorkfed.org/studentloandebt/.



Posted 1 year 40 weeks ago

In our second LXBN TV interview and a follow-up to our post on student loans crisis, I had the opportunity to speak with Colin O’Keefe of LXBN.  Colin and I discussed how student loan debt is showing many signs of being a “bubble” that is waiting to burst. In the interview, I explain the statistics driving the developing crisis and who will be hit the hardest if the bubble does indeed burst.
It may well be time that more people start asking the question posed by Martha C. White in November 2012, writing for Time Magazine online, “Is the Student-Loan Debt Crisis Worse than We Thought?



Posted 1 year 41 weeks ago

The more we read about the student loan crisis that is waiting to take the United States economy by storm, the more we see the parallels between the massive amount of student loan debt circulating and the so-called subprime mortgage debt that created the 2008 bubble burst.  Various articles we have cited provide statistics that indicate student loan indebtedness is on the rise. People cannot afford to, or are simply choosing not to, pay back their student loan debt.  As we have noted, the Bankruptcy Code does not provide the average student loan debtor with the option for a discharge of debt through a personal bankruptcy filing (a feature that was not part of the subprime crisis given that debt related to home financing usually has a much easier path toward discharge in bankruptcy).



Posted 1 year 41 weeks ago

In follow-up to our post on Dewey v. Ruden, I had the privilege of speaking with Colin O’Keefe of LXBN regarding the dichotomy presented by the two Chapter 11 bankruptcies filed by law firms Dewey & LeBoeuf and Ruden McClosky. You can watch the full interview here (length of interview, 5:48).



Posted 1 year 41 weeks ago

We recently posted about the Dewey & LeBoeuf and Ruden McClosky law firm bankruptcies.  As reported by Above The Law this week, a former Howrey LLP partner accused Citibank of committing fraud in connection with a loan program that financed the partner’s “buy in” into Howrey’s partnership. It is not uncommon for newly-minted law firm partners to obtain loans from banks with relationships with the law firm to finance their entry into the law firm partnership. What is interesting about this particular case, is that Citibank was also Howrey’s lender and by virtue of that position it had to know (according to the partners) that Howrey was in grave financial condition.  The essence of the suit is that Citibank should not have lent the plaintiffs the money to make the loan because Citibank knew that the firm was in trouble and that is where the repayments were going to come from.



Posted 1 year 42 weeks ago

Student loans and the funding of the higher education industry continues to be a topic that inspires interest and fascination. Recently, AboveTheLaw.com brought us the story of how one law student is selling the right to “legally change [his] name to anything you want”- the going rate for an individual’s name on eBay is $75,000. He needs these funds to repay the loans he incurred after one year of law school. In another story, AboveTheLaw.com highlighted the stories of law students filing bankruptcy in an effort to free themselves of student loan indebtedness. Student loan stories are everywhere.
© Stiven | Stock Free Images & Dreamstime Stock Photos



Posted 1 year 42 weeks ago

 Ruden McClosky (“Ruden”) and Dewey & LeBoeuf (“Dewey”) both experienced what no business of any kind wants to experience: financial distress and Chapter 11.
During the last quarter of 2012, Ruden, the former large Florida law firm, confirmed its liquidating chapter 11 plan (and the first sale of a law firm’s assets as going concern through Chapter 11 in the history of the United States).  At about the same time, the bankruptcy judge overseeing Dewey’s bankruptcy approved a $71.5 million settlement between the estate of and its former partners. This settlement appears to be a significant step forward in moving the Dewey chapter 11 case in a positive direction.
© Dononeg | Stock Free Images & Dreamstime Stock Photos



Posted 1 year 42 weeks ago

It is almost a certainty that in any restructuring or turnaround situation taxes will eventually be a part of the discussion. Over the last few months our leaders in Washington have spent a good deal of time talking about taxes as well. Our Wealth Preservation and Tax Planning colleagues have distilled our government’s work over the New Year holiday into a simple easy to follow understanding of what is new. Read “The American Taxpayer Relief Act: Disaster Averted…For Now.”



Posted 1 year 42 weeks ago

Courtesy, morgueFile, http://mrg.bz/0HI5Rz
A recent Florida Bar Journal article provides the reversal rates of various Federal Courts of Appeal. The Eleventh Circuit, which covers Florida, decided 47.9 % of the cases brought before it on the merits during the 12-month period ending March 31, 2011. Of the cases considered on the merits, 8.9% of them were reversed.
Examined by case type, only 5% of criminal cases during the relevant time frame were reversed, while 26.1 % of the bankruptcy cases it considered were reversed. This was the highest bankruptcy reversal rate in the country for the above-referenced time period.  The article also notes that Review by the Supreme Court is an exceedingly rare proposition, 1.1% of the cases seeking cert were granted.



Posted 1 year 43 weeks ago