For actively helping two public company clients lobby congressional staff members about pending legislation, the SEC charged Ernst & Young (EY) with violating the auditor independence rules by unlawfully advocating on behalf of audit clients.  Although the clients were involved with EY in the lobbying activities, neither were named in the SEC cease-and-desist proceedings against EY, and there appears to be no impact on the companies’ financial statements.

(posted 1 week 1 day ago)

Teen-focused clothing retailer Love Culture Inc. sought Chapter 11 protection Wednesday, citing an overexpansion that left the chain with weakened finances. Read the Daily Bankruptcy Review article here.
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
A bankruptcy judge put Crumbs Bake Shop Inc. on the path to a quick sale, giving the cupcake chain hope that it will reopen the doors at many locations. WSJ has the DBR article here.
Canadian steelmaker Essar Steel Algoma Inc. filed for Chapter 15 protection in the U.S. with more than $1 billion in debt, Bloomberg reports.

WSJ.com: Bankruptcy Beat
(posted 1 week 1 day ago)

Receiving Wide Coverage ...

Deal or No Deal: Bank of America and the Justice Department are at odds over how much the Charlotte, N.C., bank should pay to settle charges that it sold shoddy mortgage-backed securities in the run-up to the financial crisis. According to the Wall Street Journal, DOJ lawyers rebuffed B of A's offer to pay $13 billion in cash and consumer relief in a Tuesday meeting. The Financial Times' sources say Bank of...

BankThink
(posted 1 week 1 day ago)

Judge Jed S. Rakoff of the Southern District of New York last week ruled that the U.S. Bankruptcy Code does not permit a bankruptcy trustee to recover foreign transfers.  Specifically, Judge Rakoff refused to allow Irving Picard, the trustee of Bernard L. Madoff Investment Securities LLC (“BLMIS”), to recoup monies initially transferred from BLMIS to non-U.S. investment firms that were direct investors in BLMIS, and then subsequently transferred to such firms’ non-U.S. customers.  Picard argued that Section 550(a)(2) of the Bankruptcy Code empowers a bankruptcy trustee to recover fraudulently transferred funds from subsequent transferees of the initial recipient.  Judge Rakoff declined, however, to give that provision extraterritorial application, and denied recovery against the non-U.S. indirect BLMIS investors.  (Kelley Drye & Warren LLP represents certain alleged subsequent transferees.) 

Bankruptcy Law Insights
(posted 1 week 1 day ago)

As we noted last month, the U.S. Supreme Court’s unanimous decision in Executive Benefits Insurance Agency v. Arkison, Case No. 12-1200, 573 U.S. ___ (2014), affirmed the constitutional authority of bankruptcy courts to issue proposed findings of fact and conclusions of law to federal district courts in connection with “Stern claims”.  The Executive Benefits Court stopped short of deciding whether litigants could consent to a bankruptcy court entering final judgment on Stern claims. 
On July 1, 2014, the Supreme Court agreed to answer that question by granting certiorari in Wellness Int’l Network v. Sharif.  When it hears this appeal, the Supreme Court will consider whether bankruptcy courts can enter final judgments in Stern claims against a debtor where the debtor has consented to the exercise of such judicial power by voluntarily filing for bankruptcy relief.  In the lower court decision, the Seventh Circuit held that bankruptcy courts lack such authority.

Absolute Priority
(posted 1 week 1 day ago)

Q:  “Why Do you Want All these Forms Filed Out for our Bankruptcy Consultation?” A:  “Because you and I should not play Texas hold’em.” I’ve never played Texas hold’em.  But I’ve seen it on TV.  Maybe you have, too. Each players has their own cards–then the cards dealt in the middle face down are turned […]
The post Bankruptcy consultation shouldn’t be like “Texas Hold’em” by Robert Weed appeared first on Robert Weed.

Robert Weed
(posted 1 week 1 day ago)

Walk a mile in my shoes
Walk a mile in my shoes
Yeah, before you abuse, criticize and accuse
Walk a mile in my shoes
(Elvis Presley, “Walk a Mile in My Shoes”)
Walk a mile in these Louboutins
But they don’t wear these *%!# where I’m from
I’m not hating, I’m just telling you
I’m tryna let you know what the %#!* that I’ve been through
(Iggy Azalea, “Work”)

(posted 1 week 1 day ago)

Authored by Heather S. Nason of Rogers TowersThe hotel industry appears to be on an uptick, which is good news for lenders.  Hotel construction in May 2014 is up over 13% from the same time period in 2013.  Moreover, record high occupancy rates and low supply could continue to drive an influx of new rooms into 2015 and beyond.  As more lenders are called upon to secure these projects, lenders should consider that hotel projects require a particular diligence not always found in other types of commercial projects.  Below are a few of the more commonly overlooked issues.
The Elevated Role of UCC Financing.  A significant percentage of the value of a hotel property is in furnishings, artwork, televisions, dining equipment, and other personal property.  As such, lenders should obtain a separate security agreement that specifically identifies the personal property and prevents the borrower from disposing of the property except in the ordinary course of business.  The lender should consider obtaining UCC insurance as well.

Florida Banking Law Blog
(posted 1 week 1 day ago)
Melanie Cohen

Since emerging last week as Crumbs Bake Shop ’s would-be savior, investor Marcus Lemonis has vowed to relaunch the cupcake chain in some fashion and hire back laid off employees.
But as Crumbs’s bankruptcy kicks off this week, it’s already clear that many of the chain’s recently shuttered cupcake shops will remain dark for good.
In a request made Friday in U.S. Bankruptcy Court in New Jersey, Crumbs asks a court’s permission to reject 21 leases that it says “represent an unnecessary expense and contribute no value” to its bankruptcy estate. Through bankruptcy, companies are often allowed to ditch leases and other contracts to help lessen debts.

WSJ.com: Bankruptcy Beat
(posted 1 week 1 day ago)

Startups that focus on person-to-person payments or peer-to-peer lending may well be the future heavyweights of the financial services industry. Banks must either band together to create viable alternatives or risk losing relevance.

BankThink
(posted 1 week 1 day ago)