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December 13, 2008

New House Bill on Modifying Home Mortgages

110th CONGRESS  2d Session  H. R. 7328
December 10, 2008
Mr. CONYERS (for himself, Mr. DELAHUNT, and Mr. NADLER) introduced the following bill; which was referred to the Committee on the Judiciary

SEC. 2. WAIVER OF COUNSELING REQUIREMENT WHEN HOUSES ARE IN FORECLOSURE.
Section 109(h) of title 11, United States Code, is amended by adding at the end the following:
`(5) The requirements of paragraph (1) shall not apply in a case under chapter 13 with respect to a debtor who submits to the court a certification that the debtor has received notice that the holder of a claim secured by the debtor's principal residence may commence a foreclosure on the debtor's principal residence.'.
SEC. 3. AUTHORITY TO MODIFY CERTAIN MORTGAGES.
Section 1322(b) of title 11, United States Code, is amended--
(1) by redesignating paragraph (11) as paragraph (12),
(2) in paragraph (10) by striking `and' at the end, and
(3) by inserting after paragraph (10) the following:
`(11) notwithstanding paragraph (2) and otherwise applicable nonbankruptcy law, with respect to a claim for a debt for a loan secured by a security interest in the debtor's principal residence that is the subject of a notice that a foreclosure may be commenced, modify the rights of the holder of such claim--
`(A) by reducing such claim to equal the value of the interest of the debtor in such residence securing such claim;
`(B) by waiving any otherwise applicable early repayment or prepayment penalties;
`(C) if any applicable rate of interest is adjustable under the terms of such security interest by prohibiting, reducing, or delaying adjustments to such rate of interest applicable on and after the date of filing of the plan; and
`(D) by modifying the terms and conditions of such loan--
`(i) to extend the repayment period for a period that is the longer of 40 years (reduced by the period for which such loan has been outstanding) or the remaining term of such loan, beginning on the date of the order for relief under this chapter; and
`(ii) to provide for the payment of interest accruing after the date of the order for relief under this chapter at an annual percentage rate calculated at a fixed annual percentage rate, in an amount equal to the then most recently published annual yield on conventional mortgages published by the Board of Governors of the Federal Reserve System, as of the applicable time set forth in the rules of the Board, plus a reasonable premium for risk; and'.
SEC. 4. COMBATING EXCESSIVE FEES.
Section 1322(c) of title 11, the United States Code, is amended--
(1) in paragraph (1) by striking `and' at the end,
(2) in paragraph (2) by striking the period at the end and inserting a semicolon, and
(3) by adding at the end the following:
`(3) the debtor, the debtor's property, and property of the estate are not liable for a fee, cost, or charge that is incurred while the case is pending and arises from a debt that is secured by the debtor's principal residence except to the extent that--
`(A) the holder of the claim for such debt files with the court notice of such fee, cost, or charge before the earlier of--
`(i) 1 year after such fee, cost, or charge is incurred; or
`(ii) 60 days before the closing of the case; and
`(B) such fee, cost, or charge--
`(i) is lawful under applicable nonbankruptcy law, reasonable, and provided for in the applicable
security agreement; and
`(ii) is secured by property the value of which is greater than the amount of such claim, including such fee, cost, or charge;
`(4) the failure of a party to give notice described in paragraph (3) shall be deemed a waiver of any claim for fees, costs, or charges described in paragraph (3) for all purposes, and any attempt to collect such fees, costs, or charges shall constitute a violation of section 524(a)(2) or, if the violation occurs before the date of discharge, of section 362(a); and
`(5) a plan may provide for the waiver of any prepayment penalty on a claim secured by the debtor's principal residence.'.
SEC. 5. CONFIRMATION OF PLAN.
Section 1325(a) of title 11, the United States Code, is amended--
(1) in paragraph (8) by striking `and' at the end,
(2) in paragraph (9) by striking the period at the end and inserting a semicolon, and
(3) by inserting after paragraph (9) the following:
`(10) notwithstanding subclause (I) of paragraph (5)(B)(i), the plan provides that the holder of a claim whose rights are modified pursuant to section 1322(b)(11) retain the lien until the later of--
`(A) the payment of such claim as reduced and modified; or
`(B) discharge under section 1328; and
`(11) the plan modifies a claim in accordance with section 1322(b)(11), and the court finds that such
modification is in good faith.'.
SEC. 6. DISCHARGE.
Section 1328 of title 11, the United States Code, is amended--
(1) in subsection (a)--
(A) by inserting `(other than payments to holders of claims whose rights are modified under section
1322(b)(11)' after `paid' the 1st place it appears, and
(B) in paragraph (1) by inserting `or, to the extent of the unpaid portion of the claim as reduced, provided for in section 1322(b)(11)' after `1322(b)(5)', and
(2) in subsection (c)(1) by inserting `or, to the extent of the unpaid portion of the claim as reduced,
provided for in section 1322(b)(11)' after `1322(b)(5)'.
SEC. 7. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(a) Effective Date- Except as provided in subsection (b), this Act and the amendments made by this Act shall take effect on the date of the enactment of this Act.
(b) Application of Amendments- The amendments made by this Act shall apply only with respect to cases commenced under title 11 of the United States Code on or after the date of the enactment of this Act.

December 13, 2008 in Legislation | Permalink | Comments (1) | TrackBack

KB Toys First Day Declaration

This is one of the less useful first day declarations.  I wish the author would have told us about him and how he got the job and who he is.  This is fun!  I get to be the judge.  The declaration can be accessed here. 

The timing of this filing is particularly peculiar.  Retailers, especially toy sales I assume, make about 250% of their annual profit in December. I am completely guessing on the amount but the chain I worked for in law school had a huge loss the other 11 months.  We always barely hung on until December.    

December 13, 2008 in Current Affairs | Permalink | Comments (0) | TrackBack

December 12, 2008

KB Toys, Inc. Chapter 11 Filing

U.S. Bankruptcy Court
District of Delaware (Delaware)
Bankruptcy Petition #: 08-13269-KJC

Assigned to: Kevin J. Carey
Chapter 11

Date filed:   12/11/2008

Debtor
KB Toys, Inc., a Delaware corporation, et al.
100 West Street
Pittsfield, MA 01201
Tax ID / EIN: 94-3380658

represented by Joel A. Waite
Young, Conaway, Stargatt & Taylor
The Brandywine Bldg.
1000 West Street, 17th Floor
PO Box 391
Wilmington, DE 19899-0391
302 571-6600
bankfilings@ycst.com

Matthew Barry Lunn
Young, Conaway, Stargatt & Taylor

U.S. Trustee
United States Trustee
844 King Street, Room 2207
Lockbox #35
Wilmington, DE 19899-0035
302-573-6491
   

December 12, 2008 in Current Affairs | Permalink | Comments (2) | TrackBack

December 11, 2008

Bankruptcy Filing Statistics for the Central District of California

It looks like we will have about 65,000 filings (about 3,200 for each of the 20 judges here) in the calendar year 2008 compared to 34,000 last year.  You can access the statistics here.  What surprises me is that the 2008 filings are higher than 2004.  As I have posted earlier, total filings in the country are still about one-third less than total filings in 2004. 

There were 724 chapter 11 filings in the whole district through early December, 2008.  It seems that Delaware gets that many every week and for seven judges. 

There was a funny comment on the Credit Slips blog.  Someone asked how many filings were expected for 2009 and someone answered "about 1.2 million unless Congress permits adjustment of home mortgages, then about 2.5 million." 

December 11, 2008 in Bankruptcy Statistics | Permalink | Comments (0) | TrackBack

December 10, 2008

Tribune Co. First Day Declaration

These First Day Declarations are very useful in understanding why a company filed bankruptcy and what its "challenges" are for the future.  The Tribune Co. First Day Declaration of Chandler Bigelow III (I don't make it up pal-y as Jim Healy used to say) - 90 pages in all - can be accessed here.  It's a nice explanation of what the Tribune owns, specifically, and results of recent operations.  The financing arrangements are mind-numbing.  Surprisingly the declaration says that the debtor, i.e., the 110 companies that filed and the companies that did not, has $7.6 billion in assets and $13.9 billion in liabilities.  You read that and say "Why bother"?  But on closer inspection, the $7.6 billion is the number on the consolidated balance sheet which, of course, shows assets at "book value," i.e., the amount paid for the asset less depreciation.  The assets must have a fair market value considerably higher than $7.6 billion. 

December 10, 2008 in Current Affairs | Permalink | Comments (0) | TrackBack

December 9, 2008

Tribune Co. Files Chapter 11

U.S. Bankruptcy Court
District of Delaware (Delaware)
Bankruptcy Petition #: 08-13141-KJC

Assigned to: Kevin J. Carey
Chapter 11
Date filed:   12/08/2008

Debtor
Tribune Company
435 N. Michigan Avenue
Chicago, IL 60611
Tax ID / EIN: 36-1880355
fka
Times Mirror Corporation

represented by J. Kate Stickles
Cole, Schotz, Meisel, Forman & Leonard,
1000 N. West Street, Suite 1200
Wilmington, DE 19801
302-295-4862
Email: kstickles@coleschotz.com

Norman L. Pernick
Cole, Schotz, Meisel, Forman & Leonard,
1000 N. West Street,Suite 1200
Wilmington, DE 19801
302-295-4829
Email: bankruptcy@coleschotz.com

U.S. Trustee
United States Trustee
844 King Street, Room 2207
Lockbox #35
Wilmington, DE 19899-0035
302-573-6491
   

December 9, 2008 in Current Affairs | Permalink | Comments (0) | TrackBack

Circuit Court of Appeals Cases from Last Week

11th Circuit Court of Appeals, December 02, 2008
Trusted Net Media v. The Morrison Agency, --- F.3d ---, 2008 WL ----- (11th Cir. 2008)(court's refusal to dismiss involuntary petition affirmed where objection on grounds of non-compliance with section 303(b) was waived)

Thanks to Findlaw.com

December 9, 2008 in Other Circuit Briefs | Permalink | Comments (0) | TrackBack

December 8, 2008

Senator Richard J. Durbin Press Conference

Senator Durbin will be holding a press conference on Tuesday, Dec. 9th, at 12:30 p.m., where he will announce that the very first bill he will introduce in the first minute of the first day of the 111th Congress will be his Helping Families Save Their Homes in Bankruptcy legislation. He will further announce his intention to see to it that this legislation is included in the economic stimulus package that will be considered in the first weeks of the new Congress.  Assuming this new legislation is the same as the bill he offered in October, 2008, it is Senate Bill S.2136. 

1. Attend the press conference.
If you are in DC, or a member of an organization that is headquartered in DC, PLEASE ATTEND OR URGE YOUR ORGANIZATION to attend.

2. Write an op-ed for your local paper in support of this important legislation. You know what to say: Tell a story of someone you know who is about to lose a home through no fault of their own.  Remind readers that this legislation requires no federal funding.  Bankruptcy courts deal with valuations every day.  If you own TWO homes, you can revalue the mortgage on the second already!  If you own 10 homes in a corporation, you can revalue the mortgages on all of them.  Why not extend the same right to poor single-home owners who can afford to pay a fixed-rate, market rate mortgage for the current value of the home?

3. Contact your Senators and Representative and ask for their support for this legislation. They are hearing every day from the mortgage industry that this "can't" work.  We know different. 

4. Get the word out:  If each of you e-mails 10 people who are concerned about the impact that foreclosures are having on your community, that will be an additional 2000 e-mails. Trust me, 2000 e-mails or calls from constituents is a huge number, and if you ask the people on your list to send it along, we can get a viral movement started.

Write to people who are being directly affected by the economic downturn: your friends who are realtors, contractors, subs, mortgage brokers, property managers, commercial landlords. They have the greatest stake. E-mail your friends who have lost their jobs, or whose companies are at risk. E-mail people who work with homeless services and charities. Let them know that this is a simple and cost-neutral way to help all homeowners. It does not create a complicated new federal bureaucracy. And remind them that it's past time to focus on keeping people in their houses, in order to stabilize the real estate market.

Thanks to Marc S. Stern, Seattle, WA

December 8, 2008 in Legislation | Permalink | Comments (0) | TrackBack