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(posted 1 day 22 hours ago)

Lawsuit concept.Being served with papers in a collection suit doesn’t generally help your critical thinking process.
In fact, that surge of adreneline seems to blur the eyes and fog the brain.
So when you scan the papers and see a date, months down the road, you exhale and set the problem aside for another day.
Serious mistake.
The date you picked out is the date set for a case management conference in the Superior Court.
Your answer to the complaint is due 30 days after you are served.
No date is typed out because the clerk issuing the California summons can’t know when you’ll be served with the complaint.
The summons form has a summary of what you have to do to defend yourself printed on its face.  Here’s a blank California summons.
The case management conference is only meaningful if you’ve filed an answer and laid out what’s in dispute in the lawsuit.

(posted 1 day 23 hours ago)

Housing policy needs to be refocused on strengthening household balance sheets, especially by making borrowersmore resilient to home price declines. A new 15-year fixed-rate mortgage that allows borrowers to use the down payment to buy down the interest rate on the loan is designed to do just that.

(posted 1 day 23 hours ago)

When evaluating a debtor’s bankruptcy or restructuring options, determining how to increase or preserve the debtor’s liquidity is crucial to the analysis. Well-advised debtors with significant labor liabilities will need to explore whether attaining cost savings through rejection of their collective bargaining agreements is a viable alternative. When dealing with the issue of CBA rejection pursuant to section 1113 of the Bankruptcy Code, the bankruptcy court decision in In re Trump Entertainment Resorts, Inc. is a helpful resource. 
The Stakes
In Trump, the debtors, owners and operators of two casino hotels located in Atlantic City, New Jersey, moved to reject the CBA between the limited liability company that owns the Taj Mahal Casino Resort and the union and implement the debtors’ proposal modifying certain terms of the CBA. In support of their motion, the debtors’ investment banker testified that relief from the CBA would have to be granted if the debtors were to avoid closing the casino and liquidating the business. The union, in contrast, did not present any witnesses at the evidentiary hearing (although the court refused to speculate on the reasoning behind its failure to do so).

(posted 2 days 7 min ago)

Unsecured creditors are campaigning to stop, or at least slow, Energy Future Holdings Corp.’s plan to auction its stake in the Texas transmission business Oncor, a sale the company says is crucial to resolving one of the biggest bankruptcies on record. 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.”)
Detroit’s bankruptcy case could end up as one of the fastest compared with other struggling big communities, with a judge set to rule on Nov. 7, The Wall Street Journal reports.
According to Bloomberg, fertilizer phosphate maker Mississippi Phosphates Corp. filed for Chapter 11 protection with more than $100 million in debt. Bankruptcy Beat
(posted 2 days 17 min ago)

Authored by Jon Sacks and Heather S. Nasonand Jon Sacks and Heather S. Nason of Rogers TowersWhen a closely-held entity applies for a loan, the financial institution usually requires the entity’s owner(s) to guaranty the loan.  If the owner is married, the financial institution may also require the owner(s) spouse(s) to guaranty to improve the likelihood that loan will be repaid if the borrower defaults.  This seems like a logical credit request when structuring a loan since spouses often hold jointly owned assets.
The Equal Credit Opportunity Act (the “ECOA”) makes it “unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction…on the basis of…marital status.”  The ECOA defines “applicant” in part as “any person who applies to a creditor directly for an extension, renewal, or continuation of credit”.  Under the ECOA’s implementing Regulation B, the Federal Reserve Board (now under the Consumer Financial Protection Bureau) the term “applicant” is defined to include guarantors.  Regulation B contains a provision that is sometimes referred to as the “spouse-guarantor rule,” which prohibits a creditor from requiring an applicant’s spouse to guarantee a credit instrument.
Is a spouse-guarantor an “applicant” for credit for purposes of asserting protections under the ECOA?  This issue was recently addressed by two federal appeals courts, resulting in two different conclusions.
Sixth Circuit

Florida Banking Law Blog
(posted 2 days 21 min ago)

Receiving Wide Coverage ...

Making the Grade: If European regulators were being graded on their newly released banking stress tests, what kind of marks would they receive? The European Central Bank would probably have a few points shaved off for the errors and inconsistencies reported by the Wall Street Journal: it misstated the capital ratio of a "large Italian bank" and failed to report on a review of Polish banks' balance sheets because the data was...

(posted 2 days 36 min ago)

In a decision that will have profound implications for insolvency professionals of all types, the U.S. Supreme Court has agreed to hear an appeal of the 5th U.S. Circuit Court of Appeals’ decision that Section 330 of the U.S. Bankruptcy Code does not allow applicants to seek compensation in connection with successful defenses to objections to fee applications.
The case, styled as ASARCO LLC v. Jordan Hyden Womble Culbreth & Holzer P.C., et al., stems from the four-plus year Chapter 11 proceeding of ASARCO LLC, the copper mining, smelting, and refining giant. That proceeding culminated in confirmation of a plan of reorganization that left the company with little debt and $1.4 billion in cash, and resolved potentially difficult environmental, asbestos, and toxic tort claims. ASARCO’s plan was funded with the proceeds generated from fraudulent transfer litigation between ASARCO and its corporate parent. The judgment, valued at between $7 billion and $10 billion, was the largest in the history of Chapter 11.

Absolute Priority
(posted 2 days 1 hour ago)

In re Trinity Coal Corp., 514 B.R. 526 (Bankr. E.D. Ky. 2014) – The debtors sought to reject easement and disposal agreements with the owners of adjacent coal mines. The adjacent owners objected on the basis that the agreements were … Continue reading →

(posted 2 days 3 hours ago)

Caterham MarussiaI am obsessively interested in two things -- bankruptcy and Formula One auto racing. I feed the first interest through this blog. The second interest is tended to by watching way, way too much Formula One on television. Indeed, the best way to wind me up is to ask me if Formula One is the same as Nascar.
This weekend, my worlds collided when two Formula 1 teams -- Caterham and Marussia (shown to the right) --were placed in administration in the U.K., a procedure akin to chapter 11. I was going to resist doing a post, but now that Pat Fitzgerald over at Bankruptcy Beat has posted a story, I feel enabled.

On the business side, a lot has been written about how the cost model of Formula 1 is unsustainable. It probably is. A low-end budget just to go racing in Formula 1 probably pushes $100 million with top end teams like Mercedes, Ferrari, and Red Bull spending $300 - $500 million. Everything is private such that no one outside knows the finances for sure.

Credit Slips
(posted 2 days 16 hours ago)