Thomas Duignan and Jeffrey Rosenthal have joined the Otterbourg law firm as members of the banking and finance group. The two will coordinate with the workout, distressed debt and insolvency group. Mr. Rosenthal focuses on advising clients on workouts of existing loans and debtor-in-possession, or DIP, financing. Mr. Duignan focuses on asset-based lending, commercial lending and on representing people buying or selling financial assets. The two most recently were partners with law firm Troutman Sanders LLP.
Randall Reese and David Leamon have joined UpShot Services LLC to help expand the claims firm’s national presence. Mr. Reese founded Restructuring Concepts LLC, which develops and markets technology products that are designed for legal professionals. He will work in the Chicago office. Mr. Leamon, who started a legal firm in 2011, will work in the New York office. Bankruptcy Beat
(posted 6 days 7 hours ago)

The inclusion of third-party releases in plan of reorganization can be a particularly contentious aspect of the plan confirmation process. Debtors seeking such releases typically face opposition from affected creditors and scrutiny from bankruptcy courts that consider such releases prone to abuse. As the Fourth Circuit’s recent decision in National Heritage Foundation, Inc. v. Highbourne Foundation makes clear, courts will not simply “rubber stamp” third-party releases absent creditor consent unless the debtor is able to prove that the unique circumstances of the case justify the release. Even in jurisdictions where third-party releases may be enforced in appropriate circumstances, many courts only grant releases “cautiously and infrequently.”

(posted 6 days 8 hours ago)

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One trait distinguishes great bankruptcy lawyers from the run of the mill.
Bankruptcy forms suck you in to the view that filing a case is just recording what the debtor owns and owes today.  If all you focus on is the here and now, you can assemble a bankruptcy petition.
But if there is one, uniform failing in average bankruptcy lawyers, it’s that they confine their attention to the here and now-what does the client have, owe, and earn.
Great bankruptcy lawyers take the broad view.  They look backwards and forwards from the filing date before uploading the petition.  Because bankruptcy rights and consequences flow from both the past and the future.
Let me count the ways this works.
Past events impact today’s petition
Our client’s present circumstances didn’t just pop up, overnight, like a mushroom.  They are the product of years of interlayered events.  The better we understand those events, the better we can advise the debtor.

Bankruptcy Mastery
(posted 6 days 8 hours ago)

Trust-preferred creditors have forced two indebted bank holding companies into involuntary bankruptcy this summer. Secured lenders may soon follow their lead and start foreclosing on bank stock collateral.

(posted 6 days 9 hours ago)

The Archdiocese of Milwaukee has been running a tab when it comes to professionals working on its Chapter 11 bankruptcy case, and lawyers for unsecured creditors—chiefly survivors of sexual abuse—say it’s time to pay the bills.
Court records show the archdiocese has stacked up more cash than it projected back in January 2013, when it petitioned the bankruptcy court to suspend monthly professional fee payments on the grounds money was tight, according to papers filed by creditor lawyers led by James Stang. Mr. Stang represents the official committee of unsecured creditors in the Archdiocese of Milwaukee case. With a few exceptions, bankruptcy professionals have not been paid in 17 months, court papers say.
As of the end of June, the archdiocese reported it had run up $5.8 million worth of fees, court records show. Whyte Hirschboeck Dudek S.C., the lead lawyer for the archdiocese, is owed the most, $2.9 million. Lead creditor firm Pachulski Stang Ziehl & Jones is owed $1.9 million, court records show. Lawyers for survivors contend that the archdiocese has the money, and it should pay. Bankruptcy Beat
(posted 6 days 9 hours ago)

A recent article by Thad Woodard proposed slashing the number of Federal Home Loan Banks in order to free up funds for community lending. But the Home Loan Banks' member institutions are already empowered to push for consolidation any time they choose, writes the FHLBanks' Steven F. Rosenbaum.

(posted 6 days 11 hours ago)

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 6 days 11 hours 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. Bankruptcy Beat
(posted 6 days 11 hours 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...

(posted 6 days 11 hours 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 6 days 11 hours ago)