New designation for "Amended Plans"

Effective Wednesday January 25 2006 when you file an "Amended Plan" for a Chapter 11,12, or 13, use the event Modified Plan in the course of e-filing.

In re Slack/Murphy v. Slack (J. Squires)

Posts on the ABI Website

WHEN FLIERS BENEFIT FROM AIRLINE BANKRUPTCY Does an airline in bankruptcy court offer better customer service? It seems so to Sharon Miller, who recently flew from Boston to Anchorage on United Airlines, the New York Times reported today. Miller had sworn off traveling on United several years ago because of what she called the consistent rudeness of its employees. Enticed by an inexpensive fare, though, she decided to give it another try. "It was like flying on a different airline," she said. "The flight attendants were friendly and the service was efficient." Customer service, so the conventional wisdom goes, is the first casualty of an airline bankruptcy filing. And for certain airlines, notably those with intractable labor disputes, that may still be the case. But it is no longer universally true. For some airlines, entering a bankruptcy proceeding can be a turning point in the way they treat customers, particularly business travelers, their most lucrative passengers. "A bankrupt airline is anxious not to lose customers, especially business travelers, and may be wary of cutting service below competitors' levels for fear of confirming passenger suspicions that the company is not long for this world," said Philip Baggaley, a senior airline credit analyst at Standard & Poor's. A look at the troubled airlines' customer service rankings suggests that even when salaries are being cut and worker morale is hitting bottom, an airline that is reorganizing is often able to keep its act together surprisingly well. Click here for the full story. SOME FORECASTERS SEE SIGNS OF COOLING OFF IN 2006 Economic growth slowed late last year, fueling a debate over whether higher interest rates, higher energy costs and a cooling housing market will dampen U.S. expansion this year, the Wall Street Journal reported today. Largely because consumer spending slowed to a near halt in the fourth quarter last year, overall economic growth fell below a 3 percent annual rate, economists estimate, after 10 quarters of averaging about 4 percent. Many attribute the fourth-quarter slowdown to temporary factors, and the consensus estimate for growth this year is a still-solid 3.4 percent, according to the publication Blue Chip Economic Indicators. But a handful of forecasters see a marked slowdown in the works, predicting that economic growth will fall this year to its lowest rate since 2002, pushing up unemployment. The Federal Reserve is determined to see economic growth of slightly more than 3 percent and will raise rates until that goal is achieved, says Ed Hyman, chief economist at ISI Group, a research firm in New York. Click here for the full story. ARE GM RUMORS HURTING SALES? Even as the world's largest automaker insists it has no plans to file for bankruptcy protection, a loss of nearly $4 billion in the first nine months of 2005 has fueled rumors to the contrary, according to a Wall Street Journal article today. Cognizant that a recent study shows that almost 75 percent of Americans wouldn't buy a car from a bankrupt company, Mark LaNeve, GM's vice president of North American marketing and sales, envisions salespeople at competing dealerships telling customers they'd be crazy to consider a GM vehicle because the company might not be able to honor its warranty. "As much as I hate to do this, we're probably going to have to do something proactively on the marketing side just to address that issue," he says. LaNeve says that he doesn't want to trumpet a defensive message that is the equivalent of "GM isn't dead yet," but he is struggling to come up with something that will "get America rooting for us again." Click here for the full story. SPOTTY CHAPTER 13 SCHEDULES BRING DEBTOR’S LAWYER ETHICS CENSURE The ethics prosecution of one of New Jersey's busiest bankruptcy lawyers, Eric Clayman, raises the question of whether it's common practice—or used to be—for bankruptcy lawyers to be less than candid in chapter 13 petitions, the New Jersey Law Journal reported today. The Disciplinary Review Board (DRB) voted 5-2 to censure Clayman, of Audubon's Jenkins & Clayman, for trying to get more favorable treatment for a client by filing a chapter 13 petition that misrepresented and omitted facts. That violated rules requiring candor to courts, the DRB said in a Dec. 28 ruling. Two dissenters would have gone further and suspended him for three months. Clayman's defense: He was merely following acceptable standards that govern bankruptcy practice. The District Ethics Committee that heard the case agreed with him and dismissed the charges, saying Clayman was sloppy but had no evil intent. The DRB got involved only because the Office of Attorney Ethics jumped in and appealed that dismissal. According to the DRB, Clayman's client, stockbroker Henry Lubaczewski, filed a chapter 13 petition in 1998 to discharge a $404,000 debt to Advest Inc., a former employer. Advest loaned the money to Lubaczewski as an incentive to join the company and the loan was to be forgiven if he remained in its employ for a certain period. But he left after three months, and when Advest asked for the money, he said he had already spent it. On the schedule "F" that Clayman filed for Lubaczewski, the Advest loan and alimony to his ex-wife were listed as having zero balances. But upon closer scrutiny by Advest and Isabel Balboa, the chapter 13 standing trustee, it turned out that "zero" was wrong by several hundred thousand dollars in both categories and that a number of other debts weren't listed. The matter was converted to chapter 7 liquidation. After an inquiry, U.S. Bankruptcy Judge Gloria Burns reprimanded Clayman, imposed a $1,500 sanction to offset the trustee's costs and referred the matter to disciplinary authorities. Click here for the full story. (Free login required).

In re Virginia Scott/Access Landing v. Scott

Posts from the American Bankruptcy Institute

Debtors' Counsel beware: additional UST reporting requirements

“The Violence against Women and Department of Justice Reauthorization Act of 2005” (P.L. 109-162) requires the UST to report on criminal referrals for bankruptcy cases in addition to the fraud and abuse information required by the New Law. UST will also report on higher-risk frauds such as the debtors’ failure to disclose assets. Statutory changes have been made to assure uniform treatment of discharges with regard to signing bonuses and re-enlistment incentives for the military services. New amendments in the National Defense Authorization Act for Fiscal Year 2006 (P.L. 109-163) provide that a discharge in bankruptcy will not relieve individuals from their liability to repay the United States for signing bonuses and similar benefits if a member of the military fails to satisfy the requirements and conditions for receipt of the benefit. This new standard will apply to discharges entered less than 5 years after termination of the agreement or contract or the service on which the debt is based. In the absence of an agreement or contract the standard will apply based on date of termination of the service on which the debt is based. Compliance will probably not be required until late spring or early summer this year. Rise in Household Obligations Attributable to Changes in the Credit Card Market The current issue of the Federal Reserve Bulletin suggests that 3 developments in the credit card market likely account for much of the rise in household financial obligations over the past 15 years: 1. expansion in prevalence of credit cards among lower-income households 2. widespread adoption of variable-rate cards 3. greater willingness of households to use credit cards for day-to-day purchases New cardholders may be less adept at managing credit than existing cardholders, and easy access to credit may make them more prone to taking on unmanageable obligations -- however, this ready access to credit may also help them maintain their consumption during temporary income disruptions, which could help smooth macroeconomic fluctuations.

Your Humble Blogmaster 

Your Cornacopia of Bankruptcy Goodness ...

Federal Regulations Double the Average Minimum Credit Card Payment

By The Associated Press

Federal regulations require credit card companies to increase minimum payments from 2% to 4% of the balance beginning January, 2006; good for consumers in the long run (less interest) but obviously a burden in the short run.

2 Million Plus Filings in 2005

The UST reported that 2,043,535 people and businesses filed in 2005; by far the highest number of filings on record. 60% of filings since the effective date of BAPCPA have been under Chapter 13, roughly double the number typically filed.

Getting Paid from the Chapter 7 Estate (Revisited)

The problem: Getting paid for both pre-petition and predictable post-petition work by your Chapter 7 Client.

The solution: Take a larger retainer before filing

(Bonus problem: if they could afford a large retainer they would not be filing Chapter 7)

Anyway .... let's assume your Chapter 7 client has the money. We have a couple of different options:

1. Claim funds that will pay for post-filing work as exempt.

2. Under a literal reading of the Code, advances for future services are not part of the estate.

3. State-law lien on cash in your possession (check it out)

4. Two contracts -- one for prepetition services and one for post-petition (with payment from a post-petition source).

Enjoy.

Faster than a speeding bullet ... it's ABI Man!

Cases of Interest

In re Robbie L. Oglesby (November 2005)

In re Doctors Health, Inc. (April 2005)

More companies refrain from making promises about retirement

The death knell for the traditional company pension has been tolling for some time now, the New York Times reported yesterday. Companies in ailing industries like steel, airlines and auto parts have thrown themselves into bankruptcy and turned over their ruined pension plans to the federal government. Now, with the recent announcements of pension freezes by some of the cream of corporate America—Verizon, Lockheed Martin, Motorola and, just last week, I.B.M.—the bell is tolling even louder. Even strong, stable companies with the means to operate a pension plan are facing longer worker lifespans, looming regulatory and accounting changes and, most important, heightened global competition. Some are deciding they either cannot, or will not, keep making the decades-long promises that a pension plan involves.

The days of rising interest rates may be numbered

Rarely do new years and significant changes coincide as they did this week, the New York Times reported yesterday. The year was less than a week old when it emerged that the Federal Reserve appeared to be easing off the brakes on the economy, the airline industry might be poised for revival and traditional company pensions took a significant step closer to extinction. Federal Reserve policy-makers may be close to ending 18 months of raising interest rates, according to minutes of a meeting last month of the rate-setting Federal Open Market Committee. The suggestion spurred a rally in the stock market and sent the dollar lower against European and Asian currencies. The minutes said "most members" of the committee agreed that "given the information now in hand, the number of additional firming steps (rate increases) required probably would not be large.”

For my finale: I, Alan Greenspan, will calculate the impact of globalization on inflation

Buried in the minutes of the Federal Reserve's Dec. 13 policy meeting, released last week, was this bland observation: Fed officials "noted that robust competition—including from foreign producers...[was] helping to contain cost and price pressures,” the Wall Street Journal reported yesterday. Markets largely ignored the sentence, but it's one of the most important factors guiding Fed Chairman Alan Greenspan in his final weeks at the helm of the nation's central bank. Greenspan has marveled at how inflation and wage growth have stayed low even as the economy continues to grow robustly and the jobless rate falls below 5 percent, a level that has often driven up wages and prices. Searching for an explanation, he has hit on globalization. If the Fed thinks growing imports, outsourcing and international investment are holding a lid on wages and prices, then interest rates can be lower than they otherwise would. Indeed, as the minutes show, this is one reason the Fed seems to think it can stop raising rates soon. Of course, there is no guarantee Ben Bernanke, nominated to succeed Greenspan, will be guided by the same sentiments.

Consumer credit underwhelms expectations in November 2005

Analysts at Irwin Jacobs Greene say that, according to the Fed, consumer credit fell significantly below expectations in November, NewRatings.com reported today. In a research note published this morning, the analysts mention that the Fed reported that outstanding credit had declined $649 million to $2.2 trillion in November. Consumer credit in the United States rose 3 percent over the past 12 months, the slowest pace since May 1993, the analysts added.

Late credit card payment sstill near their all-time high (Ha, ha!)

The proportion of consumers behind on their credit card bills remained near record-high levels in the July-September period as high gasoline prices and rising interest rates continued to put stress on personal budgets, the Associated Press reported today. The American Bankers Associated reported that the percentage of credit card accounts 30 or more days past due dipped slightly to 4.74 percent in the July-September quarter after having hit an all-time high of 4.81 percent in the spring. Even with the slight decline, consumer card delinquencies in the late summer and early fall were at the third-highest level on record, prompting concerns about more problems to come.

Faster than a speeding bullet ... it's ABI Man!

Cases of Interest

In re Robbie L. Oglesby (November 2005)

In re Doctors Health, Inc. (April 2005)

More companies refrain from making promises about retirement

The death knell for the traditional company pension has been tolling for some time now, the New York Times reported yesterday. Companies in ailing industries like steel, airlines and auto parts have thrown themselves into bankruptcy and turned over their ruined pension plans to the federal government. Now, with the recent announcements of pension freezes by some of the cream of corporate America—Verizon, Lockheed Martin, Motorola and, just last week, I.B.M.—the bell is tolling even louder. Even strong, stable companies with the means to operate a pension plan are facing longer worker lifespans, looming regulatory and accounting changes and, most important, heightened global competition. Some are deciding they either cannot, or will not, keep making the decades-long promises that a pension plan involves.

The days of rising interest rates may be numbered

Rarely do new years and significant changes coincide as they did this week, the New York Times reported yesterday. The year was less than a week old when it emerged that the Federal Reserve appeared to be easing off the brakes on the economy, the airline industry might be poised for revival and traditional company pensions took a significant step closer to extinction. Federal Reserve policy-makers may be close to ending 18 months of raising interest rates, according to minutes of a meeting last month of the rate-setting Federal Open Market Committee. The suggestion spurred a rally in the stock market and sent the dollar lower against European and Asian currencies. The minutes said "most members" of the committee agreed that "given the information now in hand, the number of additional firming steps (rate increases) required probably would not be large.”

For my finale: I, Alan Greenspan, will calculate the impact of globalization on inflation

Buried in the minutes of the Federal Reserve's Dec. 13 policy meeting, released last week, was this bland observation: Fed officials "noted that robust competition—including from foreign producers...[was] helping to contain cost and price pressures,” the Wall Street Journal reported yesterday. Markets largely ignored the sentence, but it's one of the most important factors guiding Fed Chairman Alan Greenspan in his final weeks at the helm of the nation's central bank. Greenspan has marveled at how inflation and wage growth have stayed low even as the economy continues to grow robustly and the jobless rate falls below 5 percent, a level that has often driven up wages and prices. Searching for an explanation, he has hit on globalization. If the Fed thinks growing imports, outsourcing and international investment are holding a lid on wages and prices, then interest rates can be lower than they otherwise would. Indeed, as the minutes show, this is one reason the Fed seems to think it can stop raising rates soon. Of course, there is no guarantee Ben Bernanke, nominated to succeed Greenspan, will be guided by the same sentiments.

Consumer credit underwhelms expectations in November 2005

Analysts at Irwin Jacobs Greene say that, according to the Fed, consumer credit fell significantly below expectations in November, NewRatings.com reported today. In a research note published this morning, the analysts mention that the Fed reported that outstanding credit had declined $649 million to $2.2 trillion in November. Consumer credit in the United States rose 3 percent over the past 12 months, the slowest pace since May 1993, the analysts added.

Late credit card payment sstill near their all-time high (Ha, ha!)

The proportion of consumers behind on their credit card bills remained near record-high levels in the July-September period as high gasoline prices and rising interest rates continued to put stress on personal budgets, the Associated Press reported today. The American Bankers Associated reported that the percentage of credit card accounts 30 or more days past due dipped slightly to 4.74 percent in the July-September quarter after having hit an all-time high of 4.81 percent in the spring. Even with the slight decline, consumer card delinquencies in the late summer and early fall were at the third-highest level on record, prompting concerns about more problems to come.

In re Claxton, 00 B 13340/Claxton v USA, 00 A 893

In re Szabo, 03 B 14242/Trustee v. Szabo, 05 A 988

Case Updates courtesy of your DCBA BK Blog

3rd Circuit

In re: Submicron Systems Corp. (01/06/06 - No. 03-2102)

Approval of a sale under 11 U.S.C. section 363 of the debtor's assets is affirmed in a bankruptcy case over claims of error by the plan administrator for the bankruptcy estates on behalf of unsecured creditors left out of the deal.

7th Circuit

Klesalek v. Klesalek (01/06/06 - No. 04-6064)

Order requiring that debtor return certain real property to the estate of the deceased seller is reversed where the bankruptcy court erred in requiring the return of land without ordering the probate estate to repay the amounts the debtor had paid the decedent for said property.

California Appellate Districts

Bosworth v. Whitmore (01/06/06 - No. B163771)

Absent a completion date set by agreement, Code of Civil Procedure section 1283.8 gives a trial court the authority, on petition by a party to an arbitration, to set a date by which the arbitration proceeding must be concluded.

In re UAL Corp., 02-48191

Issued: 01/03/2006

Judge: Eugene R. Wedoff

In Re Dameron, 03-16263/DeAmicis vs. Dameron, 03-02122

Date of Issuance: November 29, 2005 Judge: Pamela S. Hollis

Happy New Year ... fees not quite ready to pop!

Revisiting the fee increase:

Final congressional action on legislation to increase filing fees will not take place until House members return on January 31st. If approved, the new fees will be:

CHAPTER 7 $299

CHAPTER 13 $ 274

CHAPTER 11 [unchanged]

Effective date will be 60 days after signing by the President.

P.S. Chapter 7 trustees continue to lobby for an increase in their fees