The U.S. Bankruptcy Code isn’t just for companies in the U.S.
A new report from scholars Oscar Couwenberg of University of Groningen Faculty of Law in the Netherlands and Stephen J. Lubben of Seton Hall University School of Law in New Jersey identified 49 corporate bankruptcy filings between 2005 and 2012 that included foreign debtors. Of those, 15 had no U.S. parent company.
The U.S. Bankruptcy Code has been interpreted to qualify companies with as little as a U.S. bank account and will reorganize assets anywhere in the world. So with the explosion of high-yield debt in Europe, European companies burdened with bond debt are expected to come to the U.S. to reorganize with increasing frequency, according to the report.
The only European country with a bankruptcy law to rival the U.S.—the United Kingdom with its “scheme of arrangement”—isn’t good at dealing with bond debt, Mr. Lubben told Bankruptcy Beat Wednesday. Plus, the U.K. is trying to discourage forum shopping to its country, which will almost certainly send distressed European companies to U.S. courts, Mr. Lubben added.
Read the full report here.

WSJ.com: Bankruptcy Beat
(posted 2 days 3 hours ago)

Are you considering debt relief through a consumer credit counseling or debt consolidation service ? You may be surprised to learn that they can do more harm than good to your credit. Many times, bankruptcy is a better option, and you should always meet with a bankruptcy attorney to thoroughly discuss your personal financial situation in order to allow them to help you decide what is the best solution to your financial problems. In analyzing your particular situation, always consider if there is an alternative to filing bankruptcy. The decision to file bankruptcy is a difficult choice for many people to make. A bankruptcy will affect, in some fashion, your future credit. Bankruptcy, though, does not totally destroy your ability to get credit in the future. The decision to file bankruptcy must be carefully made in consultation with an attorney.

(posted 2 days 3 hours ago)

We previously described ISS’ draft voting policy to be effective for 2015 meetings beginning next February. Please see our comment letter to ISS on their proposed changes to the independent chair shareholder proposal. Final policy updates are expected on or around November 7, and are likely to cover more topics than the two proposals issued for comment.

(posted 2 days 4 hours ago)

The Bankruptcy Code allows a trustee to recover fraudulent transfers made by the debtor prior to bankruptcy. 11 U.S.C. § 548(a). An innocent recipient of a fraudulent transfer is not without a defense, however. The Code allows a transferee that takes in good faith to retain what it received from the debtor in a fraudulent transfer “to the extent that such transferee . . . gave value to the debtor in exchange for such transfer.” 11 U.S.C. § 548(c). The appeal to the Fifth Circuit of a bankruptcy court’s proposed findings in the Positive Health Management bankruptcy (Case No. 12-20687; Bankr. S.D. Tex.) that allowed the innocent recipient of fraudulent transfers to retain all the funds it received under the affirmative defense in section 548(c) turned on the meaning of “value” in the statute.
The Fifth Circuit previously held that value must be assessed from the perspective of what the transferee gave up, rather than what the debtor received. Jimmy Swaggart Ministries v. Hayes (In re Hannover Corp.), 310 F.3d 796, 799–802 (5th Cir. 2002). The unresolved question is what happens when a transferee gave less value to the debtor than it received. Is the transferee allowed to keep all that it received so long as it gave “reasonably equivalent” value in exchange? Or is “netting” required so that the transferee keeps only the value that it gave to the debtor?

Insolvency Insights
(posted 2 days 5 hours ago)

The question “Where’s the Beef?” is typically associated with the famous Wendy’s television commercial from 1984 and its lovable actress, Clara Peller. But the recent decision in the chapter 7 case of a national meat processor had an avoidance action defendant asking, “Where’s the Beef … (with me)?” after the debtor’s chapter 7 trustee attempted to avoid over $5 million in transfers made by the debtor to the defendant prepetition. This is the first of two posts on Saracheck v. Crown Heights House of Glatt, Inc., a recent decision from the Bankruptcy Court for the Northern District of Iowa that provides insight into fraudulent transfer and preference defenses. Today’s post focuses on the court’s fraudulent transfer analysis, and the next post will focus on its preference analysis.
Background
The debtor, Agriprocessors Inc., operated a slaughterhouse and meat-packing factory in Postville, Iowa. Agriprocessors was one of the nation’s largest producers of kosher meat and poultry. Aaron Rubashkin, a Hasidic butcher from Brooklyn, and his family founded, owned, and ran the business. The Rubashkins were part of a tight-knit Lubavitch community. Prepetition, certain members of the community lent money to Agriprocessors on an unsecured basis.

(posted 2 days 5 hours ago)

Rather than wait until after a data breach to increase information-security investments, banks should put into place practices that help prevent cyberattacks in the first place.

BankThink
(posted 2 days 6 hours ago)

As the financial industry scrambles to monetize big data, it would be smart to remember that consumers' growing concerns about privacy issues might staunch the flow of personal information in coming years.

BankThink
(posted 2 days 8 hours ago)

A bankruptcy judge cleared the operator of the Indiana Toll Road to exit Chapter 11 and continue its hunt for a buyer who can help the company pay off about $6 billion in debt. The Wall Street Journal has 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.”)
GT Advanced Technologies Inc . said it needs to settle disputes with Apple Inc. because “protracted litigation against one of the largest corporations in the world with over $100 billion of cash would be challenging and expensive,” DBR reports in WSJ.
A new lawsuit accuses pension consultant Gabriel Roeder Smith & Co. of covering up a shortfall in Detroit’s pension plan, DealBook reports.

WSJ.com: Bankruptcy Beat
(posted 2 days 9 hours ago)

Receiving Wide Coverage ...

New CFO in the Haus: Deutsche Bank has tapped Goldman Sachs partner Marcus Schenck as its future chief financial officer, with plans for current CFO Stefan Krause to take on a newly created position at the company. The change comes as investors pressure the German lender to improve its financial strength, according to the Wall Street Journal. The papers all note Krause has made slow progress in strengthening the bank's regulatory reporting;...

BankThink
(posted 2 days 9 hours ago)

I always assume that people who like NASCAR are really watching for the wrecks.  The cars loop around the track for hours, but only the wrecks make the highlight reels.  In a recent Texas Supreme Court case, the high court considered whether a supermarket was liable for destruction of evidence when it retained only the video recorded around the time of a slip and fall after its looped camera system deleted the rest.
shake and bake
The case is Brookshire Brothers Ltd. v. Aldridge at the Texas Supreme Court (for those of you outside of Texas, Brookshire Brothers is a supermarket).
In the Brookshire case, a slip and fall claim made it to the SCOTX because Brookshire had allowed a security camera (on a loop) to record over all but a few minutes before and after of the actual fall.  At the heart of Brookshire’s reasoning for recording over the video was the risk manager’s mistaken belief that the time prior to the fall was “not relevant”.
Even folks not familiar with the law have a general concept that destroying evidence is a bad thing.  The question in practical terms in a real lawsuit is – what is “evidence”.  At the heart of that question is relevance to the dispute.  That concept fills volumes of scholarly papers.  I won’t go into it here.

Tough Times for Lenders
(posted 2 days 10 hours ago)