BankruptcyProf Blog

Feds look to give trustees more power

"Federal legislation introduced last week is giving credence to a battle being fought
in Middle Tennessee by bankruptcy trustee Henry "Hank" Hildebrand.

Hildebrand was the subject of a Friday story related to a growing movement across
the country: Judges and debtors who force mortgage companies to produce a physical
note before foreclosing on a home.

Because in Tennessee judges aren't involved in the foreclosure process, it's been
bankruptcy trustees here who have been fighting that battle instead.

In Middle Tennessee, Hildebrand said he's had about 60 cases this year where a
lender couldn't produce the actual note, though he is seeing some movement towards
compliance.

The legislation, introduced by Sen. Patrick Leahy, D-Vt., would give the
U.S. Trustee Program, the arm of the Justice Department that oversees foreclosures,
the power to sanction servicers and lenders who submit false claims, overstate
what's owed or don't produce proper documentation."

Read more here.

Schulte Roth & Zabel News: U.S. Bankruptcy Judge rules in favor of JANA Partners vs. former clients of Marc Dreier

Hi Jonathan,

I’m writing to share with you the news that a U.S. bankruptcy judge has ruled in favor
of the hedge fund JANA Partners LLC in its defense against claims from former clients
of disbarred attorney Marc Dreier. The court ruled that former clients of Marc Dreier
bore the risks of their fraudulent agent when Dreier forged a signature on settlement
documents between his client and the hedge fund JANA.

Schulte Roth & Zabel LLP served as outside legal counsel to JANA Partners LLC;
the team was led by litigation partner Michael E. Swartz, whose practice focuses on
complex commercial, securities and business litigation and antitrust, and of counsel,
Nicole Z. Davidson.

Please let me know if you’d be interested in speaking with Michael Swartz of Schulte
Roth & Zabel. I’m happy to provide you with a copy of the ruling and any additional
information.

All the Best,
Alexis Stoller

Listed in 25 Best Blogs for Bankruptcy

Hi,
 
I posted an article, "The 25 Best Blogs for Dealing With Bankruptcy" (http://www.accountingdegree.com/blog/2011/the-25-best-blogs-for-dealing-with-bankruptcy/). I just thought I'd share it with you in case you thought it would appeal to your readers.
 
I am happy to let you know that your site has been included in this list.
  
Thanks for time!
Rose King

State Bankruptcy

Steven Schwarcz, law professor at Duke, has an article forthcoming in the May 2012 issue of the UCLA Law Review discussing the issue of state "bankruptcy."  He argues that the bankruptcy of a state cannot fit appropriately into the present bankruptcy framework, because state sovereignty both carries implications for the health of the nation's credit system, and obviates the need for conventional protections like the automatic stay.  He says adding states to the Chapter 9 framework will likely create more problems than it solves.  However, avoiding default without a federal bailout will be difficult without some level of debt restructuring assistance.   He suggests a "minimalist framework" to help with binding holdout creditors while avoiding the worst credit problems.  It's an interesting read.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1807944

-Cassidy Hunter Hayes

LA Real Estate Mogul Convicted Of $21m Fraud

"A bankrupt Los Angeles real estate developer has been convicted of stealing some $21 million through a tax shelter scheme.  Ezri Namvar was found guilty Thursday of four counts of wire fraud along with a second defendant, 63-year-old Hamid Tabatabai.  They could face up to 80 years in federal prison.  Namvar, a 59-year-old Brentwood resident, was accused of bilking four people through a company that was supposed to hold their money until it was used for real estate transactions."

Read more here.

 

Borders seeks to extend restructuring period

"The bookstore chain Borders Group Inc BPIQ.PK on Thursday asked a bankruptcy court judge to extend the time during which it has exclusive rights to propose a reorganization plan to its creditors."

Read more here.

Qualified Written Requests - from my new law clerk

12 U.S.C. 2605(e)
Real Estate Settlement Procedures Act
A borrower may send a “Qualified Written Request” (QWR) to a loan servicer when the borrower believes there is an error in his or her mortgage account. The QWR must: (1) be in writing; (2) include the words “Qualified Written Request”; (3) identify the borrower by name and account number; (4) include the reasons why the borrower believes the account is in error. The QWR must be a separate document, and cannot be written on a payment coupon or medium.

The loan servicer must, either acknowledge receipt or take the action requested, in the QWR within 20 business days. The servicer has 60 days from the date of the request to take the following actions on the QWR. The servicer may either notify the borrower of the errors corrected in the mortgage account, which may include crediting of late charges and penalties, or provide the borrower an explanation of why the servicer believes the account is correct. If the borrower’s QWR was solely for the request of information, the borrower may satisfy section 2605 by providing to the borrower the information requested, or provide an explanation as to why the information requested is not available.

In all of the above circumstances, the servicer must provide the information requested by the borrower and the action taken by the servicer, to the borrower in a written notification which contains the name and telephone number on a representative of a service representative of the servicer, whom the borrower may contact and further discuss the dispute.

During this 60 day period, the servicer is prohibited from providing information relating to the dispute to any consumer reporting agency.

Should the servicer fail to comply with the requirements of section 2605 for the QWR, the borrower may recover actual damages, a maximum of $1000 in additional damages if the borrower can prove a pattern of noncompliance on the part of the servicer, costs and attorneys fees.

Detailed Outline of Code Section:

(e) Duty of Loan Servicer to Respond to Borrower Inquiries
 (1) Notice of Receipt of Inquiry
  (A) General
Upon receipt of Qualified Written Request (QWR) by servicer, servicer written acknowledgment of receipt required within 20 days
20 Days Excludes Saturdays, Sundays, and Holidays
Unless action requested is done within 20 days
  (B) Qualified Written Request
   QWR is written correspondence
Not notice on payment coupon/medium
Includes:
 Name and Account of Borrower
Statement of Reasons of borrower’s belief of why account is in error
Sufficient detail regarding other information sought by borrower
 (2) Action with Respect to Inquiry
 Servicer must do the following within 60 days of receipt of QWR:
  (A) Make corrections to account, including:
   1. Crediting of late charges or penalties, and
2. Provide to borrower written notification of correction, and
3. Name and phone number of service representative
(B) After investigation, provide to borrower written explanation including:
 1. Reasons why servicer believes borrower’s account is correct, and
2. Name and phone number of service representative
(C) After investigation, provide borrower written explanation including:
1. Information requested by borrower, or why information requested is not available by servicer, and
2. Name and phone number of service representative
 (3) Protection of Credit Rating
  1. During 60 day period, from date of servicer’s receipt of QWR
2. Relating to dispute of borrower’s payments
3. Servicer may not provide information of late payments to any consumer reporting agency

 
Sample QWR Letter from HUD website
Attention Customer Service:
Subject: [Your loan number]
[Names on loan documents]
[Property and/or mailing address]
This is a "qualified written request" under Section 6 of the Real Estate Settlement Procedures Act (RESPA).
I am writing because:
• Describe the issue or the question you have and/or what action you believe the lender should take.
• Attach copies of any related written materials.
• Describe any conversations with customer service regarding the issue and to whom you spoke.
• Describe any previous steps you have taken or attempts to resolve the issue.
• List a day time telephone number in case a customer service representative wishes to contact you.
I understand that under Section 6 of RESPA you are required to acknowledge my request within 20 business days and must try to resolve the issue within 60 business days.
Sincerely,
[Your name]
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/ramh/res/reslettr

 Written by: Carolyn Afari

U.S. Courts Bankruptcy Basics Videos

Helpful videos for debtors from Chapter 13 Trustee Jan Hamilton (Topeka, Kansas).

Watch them here.

Orange County Chapter 13 Program

The OCBA Commercial Law & Bankruptcy Section Presents:

Tuesday, May 24, 2011
5:00 p.m. Registration/Social
5:30 p.m. Dinner Buffet
6:00 p.m. – 9:15 p.m. Program

Location: The Villa — 510 E. Katella Ave., Orange, CA 92867

LIFE AFTER CONFIRMATION: CHAPTER 13 POST-CONFIRMATION ISSUES

TOPICS:
• Proof of Claims
• Plan Modifications
• Conversion
• Fee Applications
• Other Related Issues

SPEAKERS:

+Honorable Robert N. Kwan
United States Bankruptcy Court, Santa Ana

+Amrane Cohen
Chapter 13 Trustee

+Michael D. Franco, Esq.
Law Office of Michael D. Franco

+Misty Perry Isaacson, Esq.
Pagter and Miller

PROGRAM CO-CHAIRS:
Anerio Altman, Esq., Law Office of Anerio Altman
Kelly H. Zinser, Shareholder, Olenicoff & Zinser, PC

ADVANCED DISCOUNT DEADLINE: May 17, 2011. Standard rates apply for payments received in the OCBA offices after close of business on May 17, 2011. OCBA is not responsible for lost, misdirected or delayed mail.

ADVANCED DISCOUNT RATE: STANDARD SEMINAR
(payment received by 5/17/11) RATE:
OCBA Member $110 $135
New Admittee Member $100 $125
Law Student Member/Judge $ 75 $100

Madoff Trustee Settles Litigation with So-Called Feeder Fund

"The trustee liquidating Bernie Madoff’s firm agreed to not pursue $212 million from two bankrupt funds related to the Fairfield Greenwich Group, the biggest so-called feeder fund in the alleged Ponzi scheme, Bloomberg News reports.

As part of the settlement with the trustee, both funds reduced their claims against the Madoff bankruptcy estate."

Read more here.

Maker of crafts sold at Walmart, Jo-Ann files for bankruptcy

"A crafts manufacturer -- which has produced products such as beading for costume jewelry and scrapbooking and album kits that's been sold by Walmart and Jo-Ann Fabric and Craft Stores -- filed late last month for Chapter 11 bankruptcy protection, according to bankruptcy court documents."

Read more here.

The Effect of Bankruptcy on Credit Scores

"People who are mired in debt often dread the thought of filing for bankruptcy protection and the effect it will have on their credit scores. Many in this situation fear that they will never be able to obtain a loan, get a credit card or that they will be turned down for jobs, all because of a poor credit score.

As a matter of course, bankruptcy can have a serious effect on your credit score. It can lower your score by nearly 240 points. How much it will drop will depend on the type of debts you have and your prior credit history. Essentially, someone with a 680 credit score may suffer a greater score drop than someone with a 520 score. Those seeking bankruptcy protection usually have poor credit scores to begin with, so the drop in credit score may not be significant.

Another consideration is how Fair Isaac (the company that develops credit scoring formulas) grades consumers' credit scores. Bankruptcy filers are commonly compared to those in similar financial straits.

The silver lining is that those who discharge their debts through bankruptcy can achieve a favorable credit score within two years after filing. There are several things you can do to help establish the new credit history that accompanies your fresh start. For instance, bankruptcy filers receive a number of credit card offers. Having a few months of on-time payments on a secured credit card or low balance card can help build a new history and increase your credit score. Also, being listed as an authorized user on another person's charge account can help. While you will not be obligated to make payments on the account, you can reap the benefits of their responsible credit use.

Regardless of your circumstances, bankruptcy can be a new beginning. For additional information and advice regarding your specific situation, contact an experienced bankruptcy attorney."

Read more here.

"ASK THE JUDGES "

LOS ANGELES BANKRUPTCY FORUM IN CONJUNCTION WITH PUBLIC COUNSEL
ANNOUNCES ITS JUNE 6, 2011 PROGRAM
 
COME AND FIND OUT EVERYTHING YOU EVER WANTED TO LEARN ABOUT BANKRUPTCY
BUT WERE AFRAID TO ASK
 
Questions from you and:
Hon. Sheri Bluebond - moderator

Answers from:
The Honorable Barry Russell
The Honorable Vincent P Zurzolo
The Honorable Thomas B Donovan
The Honorable Erithe Smith 
The Honorable Sheri Bluebond - Moderator
The Honorable Peter Carroll
The Honorable Maureen A Tighe
The Honorable Richard M Neiter
The Honorable Robert N Kwan
The Honorable Catherine E Bauer
The Honorable Deborah J Saltzman
The Honorable Mark D Wallace 
The Honorable Scott Clarkson
The Honorable Sandra R Klein
 
PRICE
$80.00 Members
$100.00 for non-members
$35.00 for government
At door: Additional $10.00

Doors open at 6:00 p.m. - Dinner at 6:45 p.m.
Program at 7:30 p.m.
Lights out 8:45 p.m.

Los Angeles Marriott Hotel
333 South Figueroa St.
Los Angeles

Contact Pat Garcia (pgarcia@creditservices.org) at (818) 972-5343
with your questions or to provide your credit card information.

46th Annual Seminar NATIONAL ASSOCIATION OF CHAPTER 13 TRUSTEES

The 46th Annual NACTT Seminar will be held August 3rd-6th, 2011, in Anaheim, California. Join
us to experience “Riding the Incoming Wave of Chapter 13.”

The annual seminar will officially begin on Thursday morning, August 4, 2011.
Judge RogermEfremsky will lead a distinguished panel that will review the Ransom
and Lanning cases and an examination of the subsequent fallout from their holdings.
Dean Erwin Chemerinsky will join with Judge Barry Russell and our own Rick Fink for
a Supreme Court review examining where we have been and where we are going. The
afternoon will feature panels of interest to practitioners,trustees and trustees’
staff. We are especially pleased to feature Michael Roake, who will present
two sessions devoted to trial skills for the novice or the proficient. Current hot
topics related to securitization and assignments will be examined. Modification and
income issues will also be examined. The staff attorneys have devised a track for
Thursday afternoon to examine issues that they confront every day. The day will
conclude with the elegant President’s Reception.

On Friday, August 5, 2011, our panelists will examine ethical issues surfacing from
social networking and its effect on us in the bankruptcy arena. Our second panel of
the morning will examine demographic issues. Friday afternoon will be open for
everyone to enjoy everything that beautiful southern California has to offer.

On Saturday morning, August 6, 2011, we will have the annual Case Law Update
presented by Judge Lundin, Judge Brown and Chapter 13 Trustee Henry Hildebrand.
Be prepared for nonstop discussion from the panel that always has all of the
cases-all of the analysis –and all of the Goo Goo Clusters. Saturday afternoon will
feature a wide range of topics to be discussed by distinguished nationally
recognized panelists. As always, Saturday night will be the final night dinner.

To register, please go to https://www.dmcnetwork.com/event.registry/
NACTT2011Tours/.

From the Bankruptcy Roundtable Digest

CLLA: update: CRS Report Examines Legislation Exempting Firearms in
Posted by: "David P. Goch" dgoch@wc-b.com

A May 2nd Congressional Research Service report examines HR 1181, the
"Protecting Gun Owners in Bankruptcy Act of 2011," and its goal of
exempting firearms under the Bankruptcy Code. H.R. 1181, has 23
co-sponsors and has been referred to the House Committee on the
Judiciary.

According to the report, the Supreme Court's decisions on the Second
Amendment and the right to "keep and bear arms" has raised the question
as to whether firearms are protected from the reach of creditors under
federal or state laws.

While a number of states have provisions shielding firearms from
creditors' claims, there is no such provision in the Bankruptcy Code.
According to the report, there is a great variety in the protection
states provide for firearms with most states providing no explicit
protection. Of the states that provide explicit protection, the
conditions for providing protection vary. Some states limit the
exemption by both the number and value of the firearms; other states
specify the type of firearms that can be exempted. In most states that
allow an exemption for firearms, the exemption is not dependent on the
way in which the firearm is used; however Ohio, Oklahoma, and Wisconsin,
exempt guns for personal use only, and Louisiana requires that the
firearm be used for business purposes. Both Montana and Nevada exempt
"all arms ... required by law to be kept by any person" in addition to
the one gun, selected by the debtor, the report states.

Section 2 of the bill amends Code Section 522(d) adding an exemption for
the debtor's aggregate interest, up to a value of $3,000, "in a single,
shotgun, or pistol or any combination thereof." The exemption would not
reduce the amount allowed for any other type of exemption under Section
522. Further, the bill also amends Code Section 522(f)(4)(A) to include
firearms in the definition of "household goods." This provision would
apply to any number or combination of rifles, shotguns, and pistols as
long as the aggregate value was no more than $3,000.

WaMu Inc. bankruptcy costs top $400M

"Washington Mutual Inc., the bankrupt shell of closed thrift Washington Mutual, has spent more than $400 million on expenses relating to its more than 2-year-old bankruptcy case, according to a recent filing with the Securities and Exchange Commission."

Read more here.

"Ace Ventura" film co. seeks protection in U.S.

"The Bermuda-based company that holds the rights to the films "Ace Ventura: Pet Detective" and "Last of the Mohicans" asked a U.S. bankruptcy judge on Tuesday to recognize it as insolvent, citing $74 million in debt."

Read more here.