It is too easy to miss poignant moments in the news avalanche of Argentina debt litigation. Here is one from Judge Griesa's monologue at the July 22 hearing:
I can't remember whether it was 2010 or 2011, but thereabouts, the attorneys for the plaintiffs requested the Court to recognize a provision which had been in the contractual documents all along but had not been relied on, and that is the pari passu provisions, essentially meaning if the republic paid certain kinds of debts, there had to be a recognition -- and I'm not trying to get into the arithmetic -- there had to be a recognition of the rights of people with judgments under the pari passu clauses, whatever they were.
Whatever they were indeed.

Credit Slips
(posted 3 hours 29 min ago)

So we are again treated to what has become an annual tradition:  the analysis of Dodd-Frank on its anniversary.  The Republicans trot out a report critical of the Act, and the Democrats defend it.  Yawn.
Actually, this year the Republican report is not half bad.  Sure it contains the usual rubbish about the Community Reinvestment Act, which really had nothing to do with the crisis.
But in many respects, it raises good points and real concerns about whether Dodd-Frank actually solved the "too big to fail" problem, and whether regulators got off too easy by saying they needed new powers, while barely using the ones they already had.
The name on the cover will scare off some Slips readers – Chairman Hensarling's politics are rather strident, to put it mildly.  But the report deserves to be read.

Credit Slips
(posted 6 hours 39 min ago)

repeat
The discharge in a Chapter 7 case only covers the debts that were incurred before the case was filed. The bills that a debtor incurs after the case is filed are not discharged. The hope is that, after their old debts are canceled by the discharge, debtors will be able to pay their new obligations as they become due. But unexpected circumstances, such as illness or loss of employment, may again put debtors in a situation where they cannot pay their bills. In this situation, a debtor may be able to file another Chapter 7 case, but there might not be a right to discharge. After a debtor receives a discharge in a Chapter 7 case, the debtor only has the right to receive a discharge in a later Chapter 7 case if the later case is filed at least eight (8) years after the first case was filed. However, even during this eight (8) year “waiting” period, debtors may still be able to obtain relief in Chapter 13 under certain circumstances.
photo credit: Thomas Hawk via photopin cc

(posted 9 hours 53 min ago)

If a time-traveler had visited me in the mid-1990s and told me that I would attend law school, I wouldn’t have believed it.  If that visitor told me that I would graduate and subsequently become a bankruptcy lawyer, I would have said “that’s an oddly-specific prediction, but I still don’t believe you.”  If the time-traveler then told me that the 1996 bankruptcy of then-model/actress Anna Nicole Smith would haunt me and other bankruptcy lawyers with vexing constitutional questions for the ensuing 20 years, and would entail three (and counting!) trips to the Supreme Court, I would have checked myself into a mental institution.

Creditors' Sidebar
(posted 11 hours 7 min ago)

In “How Much Can I Add to My Claim? (says Lender) How Much Liquidity Will I Have? (says Reorganizing Debtor): On the Payment of Post-Petition Interest,” the Editorial Staff of Commercial Bankruptcy Litigation discusses how a secured creditor’s claim in a chapter 11 reorganization may be increased because the debtor’s good work enhanced collateral value – and how the debtor might lessen that pain and preserve precious liquidity under a plan.
To read the article click here or visit www.commercialbankruptcylitigation.com for more information.

(posted 11 hours 56 min ago)

There is an easy fix for the student loan debt crisis.  Bankruptcy laws should be restored to give back to the bankruptcy courts the responsibility of deciding whether or not to give relief to give individuals who claim they can’t pay. We need to take this out of the hands of the bureaucracy in the Department of Education. The bankruptcy courts were in charge of the process before there ever was a student loan bubble. In a nutshell, bankruptcy used to discharge student loans. That is, provided the borrower had owed the money for a specified length of time and had proved the inability to pay anything back. Borrowers who don’t want to expose themselves to the strictures of the bankruptcy process should continue to owe what they borrowed.

It was ill advised policy to take bankruptcy law out of the student loan relief equation. (A tiny exception remains for the almost impossible to achieve “undue hardship” bankruptcy discharge). The present crisis is the fruit of that ill advised policy change. The elimination of a bankruptcy discharge removed an important safety valve which used to protect the economy from the explosive pressures now referred to as a student loan debt bubble.

We can fix the problem with no need to expand the court system.

Los Angeles Bankruptcy Blog
(posted 12 hours 50 min ago)

Banks can ensure that their oversight teams help to propel the whole company forward by creating a thorough governance structure and hiring overseers with experience in key business lines.

BankThink
(posted 15 hours 23 min ago)

Republic of Texas Brands Inc., which exited Chapter 11 bankruptcy protection earlier this month, is blazing a new trail in Texas.
The company plans to change its name to Totally Hemp Crazy and complete a merger with Chill Texas Inc., the distributor of a cannabis-based energy drink made in Austria.
“The completion of the acquisition is in process and will be completed before the end of the month,” Tom Shuman, a 30-year veteran of the beverage industry and the company’s new chief executive, said in a statement Tuesday.
The new name reflects the company’s renewed focus on THC-free, cannabis-based beverages like its Chillo energy drink, which promises consumers “a whole new feeling of being alive.”

WSJ.com: Bankruptcy Beat
(posted 15 hours 36 min ago)

Discounted cash flow analysis is a mainstay among the valuation methodologies used by restructuring professionals and bankruptcy courts to determine the enterprise value of a distressed business. Despite its prevalence, the United States Bankruptcy Court for the Southern District of New York recently concluded the DCF method was inappropriate for the valuation of “dry bulk” shipping companies. In re Genco Shipping & Trading Limited. Although the bankruptcy court merely applied existing law to the facts of the case, the decision in Genco could serve as precedent for the valuation of companies in other segments of the shipping industry, or other industries, that experience significant volatility in rates.
Genco and the Prepackaged Plan of Reorganization
Genco Shipping & Trading Limited is a leading provider of maritime transportation services for “dry bulk” cargoes, such as iron ore, coal, grain, and steel products. Through its subsidiaries, Genco owns and operates a fleet of 53 vessels, which it contracts out to third-parties under fixed-rate or spot-market time charters.

(posted 15 hours 55 min ago)

Banc of CaliforniaÂ's proposed acquisition of 20 Banco Popular branches offers an opportunity for regulators to ensure that underserved customers and communities are not left behind in bank deals, writes Paulina Gonzalez of the California Reinvestment Coalition.

BankThink
(posted 17 hours 23 min ago)