December 11, 2010
Glendale Council Sets Vote on New Lease for NHL's Coyotes
"The Glendale City Council has scheduled a vote for Tuesday on a new 30-year lease for the Phoenix Coyotes, a long-awaited move that could clear the way for sale of the team by the NHL to Chicago businessman Matthew Hulsizer...The NHL purchased the Coyotes in U.S. Bankruptcy Court a year ago with the stated intention of selling it to someone who would keep it in Glendale."
December 10, 2010
RHI Files for Bankruptcy Protection
"RHI Entertainment Inc , maker of made-for-television movies, mini-series, and other television programming, on Friday filed for bankruptcy in order to implement a plan of reorganization. The company, whose programs have appeared on the Hallmark Channel, Liftime, Spike TV, broadcast channels and others, reported assets of $524.7 million and debts of $834.1 million in its bankruptcy petition, filed with the U.S. Bankruptcy Court in Manhattan. It has about 60 employees, according to the filing."
December 9, 2010
Bankrupt St. Vincent’s Moves Toward Selling Hospital Site
"The prime Greenwich Village real estate that once housed St. Vincent’s Hospital Manhattan is likely to go on the market soon, if a bankruptcy judge allows the move."
December 8, 2010
Rancho Cordova Firm Accused as 'Scam' in Lawsuit Files Bankruptcy
"A foreclosure rescue company described as a 'scam' in a lawsuit filed by the state attorney general has filed for bankruptcy protection."
December 7, 2010
Madoff Lawsuit Targets Wilpon Family Profits
"The special trustee in the Bernard Madoff fraud case took a big swing for the fences Tuesday as he filed a lawsuit against the owners of the New York Mets, including Fred Wilpon, his son Jeff and other members of their family in an effort to take back profits they allegedly received from the big Ponzi scheme."
BofA Ordered to Pay $90 Mln in Interest to Lehman
"A U.S. bankruptcy court judge ruled that Bank of America Corp (BAC.N) must pay about $90 million in interest to Lehman Brothers Holdings Inc (LEHMQ.PK) on top of the $501.8 million of deposits that the bank already has been ordered to return."
Loan Modification Guidelines in the Northern District of California
December 7, 2010
NORTHERN DISTRICT OF CALIFORNIA INSTITUTES GUIDELINES REGARDING RESIDENTIAL LOAN MODIFICATIONS ON RELIEF FROM STAY MOTIONS AND IN CHAPTER 11 AND CHAPTER 13 PLANS
Dear Insolvency Law Committee constituency list members:
Please be advised that on December 1, 2010, Guidelines governing
(a) first lien mortgage holders who are seeking relief from stay in Chapter 7 cases in which the debtor has sought a loan modification, and (b) Chapter 11 and Chapter 13 debtors who seek consensual modification of the first mortgage loans on their principal residences went into effect in the San Francisco and San Jose divisions of the U.S. Bankruptcy Court for the Northern District of California. You can read the new Guidelines by clicking [HERE]
Disclosure Obligations Of Secured Creditors
Mortgage holders moving for relief must state on the cover sheet accompanying their motion (a) whether or not debtor has requested a loan modification prior to bankruptcy and/or the date any motion is filed, and (b) the status of the request.
Adequate Protection Options After Stay Relief Motion
As adequate protection, the court may set a deadline for the debtor to file a declaration describing (1) the date of such a modification request and to whom it was sent (attaching a copy of any transmittal letter, (2) the status of the request; and (3) the amount that is 31% of the debtor(s)' monthly gross income as shown on Schedule I.
The court may then set “an appropriate monthly payment amount, and in doing so may consider as adequate a monthly amount that is 31% of the debtor(s)' monthly gross income.” Such an adequate protection order will normally provide that, if the modification request is denied, the adequate protection payments will revert to the amount provided in the loan documents in the next calendar month and that the hearing may be restored to the calendar on ten days notice.
Modification In Connection With A Plan
A Chapter 11 or 13 plan premised upon a modification of a first mortgage loan secured by the debtor’s principal residence requires disclosure (by declaration in a Chapter 13 case or in the disclosure statement in a Chapter 11 case) of (1) the date of any modification request, (2) the status of such request, and (3) the present (unmodified) balances and total monthly payments on all claims secured by the debtor’s principal residence. Chapter 11 and 13 plans that propose to modify a first lien mortgage creditor's claim will not be confirmed until the modification has been approved by the first mortgage lender unless the plan provides that the secured creditor’s treatment reverts to the original contract terms if the modification request is denied. If a loan modification request remains pending when all other plan payments have been made, the case may be closed without a discharge.
Guideline 10 makes it possible to confirm a plan while a modification request remains under consideration by a lender, but a potential trap for the unwary debtor exists in confirming a plan premised on approval of a modification. If the modification is denied, cash flow is not sufficient to make payments on the loan’s original terms, and the plan cannot be modified, then the debtor’s residence is likely to be lost after confirmation. Continuing to perform the plan may no longer make sense after such a loss. While a Chapter 13 debtor has an absolute right to dismiss under Bankruptcy Code section 1307(a), Chapter 11 debtors have no such right under Bankruptcy Code section 1112(b); a court must decide whether to convert even if dismissal is the debtor’s preference. In re Camden Ordnance Mfg. Co. of Arkansas, Inc., 245 B.R. 794, 803 (E.D. Pa. 2000). “. . . [T]he standard for evaluating a debtor’s motion to dismiss its own voluntary Chapter 11 is the ‘best interest of creditors and the estate,’ rather than ‘plain legal prejudice’ to the creditors.” Id. at 804. Absent a demonstrated ability to pay or otherwise accommodate creditor claims as a condition of dismissal, practitioners should endeavor to complete any loan modification before confirmation and ensure that the debtor is fully-advised of the risks of not doing so.
These materials were prepared by Robert G. Harris of Binder & Malter, LLP in Santa Clara
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Insolvency Law Committee
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December 5, 2010
$9B Suit in Madoff Bankruptcy Case
"The trustee in the Bernard Madoff bankruptcy continued to go after more high-profile targets with the filing last night of a massive $9 billion lawsuit against the giant financial service company HSBC Holdings Plc. and related companies, as well as a number of European financiers."