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August 12, 2011

Lehman, Barzel, Harry & David, Hooters Casino: Bankruptcy

Bloomberg Businessweek weekly bankruptcy roundup:

Read it here.

August 12, 2011 in Current Affairs | Permalink | Comments (1) | TrackBack

August 11, 2011

For Bank of America, Countrywide Bankruptcy Is Still an Option

"The real issue around Bank of America is not whether it survives, but whether it sacrifices Countrywide to save itself. More specifically, will Bank of America put Countrywide into bankruptcy? And will this stem the bleeding?

The Countrywide acquisition will go down in history as a deal from hell. It has already cost Bank of America tens of billions of dollars in litigation settlements, let alone losses resulting in a $20.6 billion charge to earnings in the second quarter. Bank of America has already announced that it expects another $5 billion charge for earnings, and American International Group said this week that it would sue Bank of America for $10 billion, mostly for loans issued by Countrywide. It appears that $5 billion is the floor."

Read the article here.

August 11, 2011 in Current Affairs | Permalink | Comments (2) | TrackBack

August 10, 2011

Change in California Deficiency Law

SB 485: No Deficiency Judgments After a Short Sale
The California Legislature approved and the Governor has signed SB 458, which will eliminate any deficiency judgments that a holder of a Mortgage Loan may have against a Borrower after a short sale of a dwelling of 1-4 units that has been approved by the holder is completed, and also provides that no deficiency shall be collected or requested.  This legislation was passed as an urgency statute and became effective on July 15, 2011. 
It follows SB 931 which went into effect on January 1, 2011 and added Section 580e to the California Code of Civil Procedure. That section provides that no holder of a Note secured by a first Deed of Trust could obtain a deficiency judgment against a Borrower when a dwelling of 1-4 units  is sold in a short sale that has been approved by the holder. A short sale is a sale of the Secured Property for less than the remaining amount of the indebtedness due at the time of the sale with the written consent of the holder of the Deed of Trust.   The written consent of the holder obligates the holder to accept the sale proceeds as full payment of the debt. The prohibition against deficiency judgments in SB 931 applied only to first Deeds of Trust but included non-owner-occupied as well as owner-occupied dwellings.

SB 458 expands the prohibition against deficiency judgments in Section 580e to junior Deeds of Trust on the Secured Property. It is also applicable to owner-occupied and non-owner-occupied dwellings.  It does not apply when the property at issue is secured with multiple collateral (not solely the deed of trust or mortgage at issue).
Section 580e does not apply to Borrowers that are corporations, limited liability companies or limited partnerships.
For more information about this topic, please contact Julie Greenfield, (949) 230-3241, juliegreenfield@cox.net
For more information about the Business Law Standing Committees, please see the standing committees web page.

These periodic e-mails are being sent to you because you expressed interest in receiving updates from the Consumer Financial Services Committee of the State Bar of California's Business Law Section.  As a Section member, if you would also like to sign up to receive e-bulletins from other standing committees, simply click HERE and follow the instructions for updating your e-bulletin subscriptions in My State Bar Profile. If you have any difficulty or need assistance, please feel free to contact Susan Orloff Section Coordinator of the Business Law Section. If you are not a member, or know of friends or colleagues who might wish to join the Section to receive e-bulletins such as this, please click HERE to join online.

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August 10, 2011 in Legislation | Permalink | Comments (2) | TrackBack

Raiders Legend BANKRUPT Sells Super Bowl Rings

"NFL legend Ray Guy -- widely considered the GREATEST punter of ALL-TIME -- has been forced to sell off his three SUPER BOWL rings after filing for bankruptcy back in the spring.

61-year-old Guy -- a seven-time Pro Bowler -- banked a total of $80,100 for the three rings he earned during his 14-year NFL career ... two while the Raiders were in Oakland ... and one after the team moved to Los Angeles."

Read more here.


August 10, 2011 in Current Affairs | Permalink | Comments (0) | TrackBack

Dodgers' merchandise vendor cries foul

"As the Dodgers operate under bankruptcy protection, their merchandise vendor has asked the U.S. Bankruptcy Court for protection from the Dodgers.

With Dodger Stadium merchandise revenue down by 25% this season, Facility Merchandising Inc. (FMI) could face a "business-threatening event" if the court does not intervene on its behalf, the company attorneys wrote in a court filing.

FMI pays the Dodgers a minimum of $4.5 million per year under a contract that extends through 2017, according to court papers. In its filing, FMI claims it will lose about $2.5 million over the first two years of the agreement.

The company contends it could recoup those losses over the life of the contract. However, bankruptcy law affords the Dodgers the option to walk away from the contract. FMI wants the court to order the Dodgers to decide whether to honor or reject the contract by the end of the season, before the company has to make this year's payments to the Dodgers and buy next year's merchandise."

Read the article here.

August 10, 2011 in Current Affairs | Permalink | Comments (0) | TrackBack

August 8, 2011

AIG sues Bank of America for $10B over mortgages

August 08, 2011 1:14 PM EDT

NEW YORK (AP) — American International Group Inc. said Monday it sued Bank of America Corp. for more than $10 billion, saying the bank cheated it by selling residential mortgage-backed securities that were overvalued.

Bank of America denied the allegations, saying AIG "recklessly" chased investments with high returns, and was big and sophisticated enough to know the risks.

Banks have been hit by a series of suits over misrepresentations of mortgage-based securities.

AIG said Bank of America and two companies that were later gobbled up by the bank, Countrywide and Merrill Lynch, sold the insurance company $28 billion in securities backed by home mortgages between 2005 and 2007, at the height of the housing boom. It said it looked at more than 260,000 of the underlying mortgages, and found that the bank's "stated metrics" for 40 percent of the securities were false.

In one case, a borrower said she had been the owner of a construction business for 25 years, which would have made her 10 years old when she took ownership, AIG said.

Bank of America spokesman Lawrence Grayson said the blame lies with AIG.

"AIG recklessly chased high yields and profits throughout the mortgage and structured finance markets. It is the very definition of an informed, seasoned investor, with losses solely attributable to its own excesses and errors," Grayson said.

AIG spokesman Mark Herr shot back: "It is disappointing but unsurprising that Bank of America continues to attempt to blame others for its own misconduct. Investors, no matter how sophisticated, were entitled to rely on its numerous written representations about the securities it sold."

Bank of America shares fell $1.17, or 14 percent, to $7 in noon trading as investors reacted to the downgrade of the U.S. government's credit rating by Standard & Poor's. Earlier in the day, they hit a 2-year low of $6.83.

AIG shares fell $2.08, or 8.3 percent, to $23.02, setting a one-year low.

In June, Bank of America agreed to pay $8.5 billion to a group of investors for selling them poor-quality mortgage securities. AIG's suit is separate, but the company is raising questions about whether the settlement went far enough. On Friday, New York Attorney General Eric Schneiderman urged the judge to reject the settlement, calling it unfair.

August 8, 2011 in Current Affairs | Permalink | Comments (1) | TrackBack


Chapter 11 Compliance Camp:
An Overview of New Electronic and
Existing Compliance Procedures

Presented by
Los Angeles Field Office, Region 16

Date: Friday August 19, 2011
Time: Noon to 1:30pm (you are welcome to bring your lunch)
Where: Office of the United States Trustee
Ernst & Young Plaza, Lobby Level, Room 101
725 South Figueroa Street, Los Angeles, CA 90017

This program has been approved for 1 hour of MCLE credit.

This program is designed for attorneys with a valid State Bar number who have
experience with Chapter 11 proceedings. To ensure adequate accommodations, be aware
that seating is limited to 91 persons.

This U.S. Trustee program is co-sponsored by the Los Angeles Bankruptcy Forum.
This activity will count for one hour of MCLE credit with the State Bar of
California. The Los Angeles Bankruptcy Forum certifies that this activity
conforms to the standard for approved education activities prescribed by the
rules and regulations of the State Bar of California.

August 8, 2011 in Programs | Permalink | Comments (0) | TrackBack