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Supreme Court to Address Whether Collection of Time-Barred Debts Violate FDCPA

October 14, 2016

Authors

Robert Klingler

Supreme Court to Address Whether Collection of Time-Barred Debts Violate FDCPA

October 14, 2016

by: Robert Klingler

Our colleagues at The Bankruptcy Cave, Bryan Cave’s Bankruptcy & Restructuring Blog, recently published a blog post on the Supreme Court agreeing to to hear the issue of whether a debt collector that buys old, charged off debt which is beyond the statute of limitations violations the Fair Debt Collection practices Act when it files a proof of claim on that debt in a Chapter 13 bankruptcy (which they all do, as no one has an incentive to object to the claim, and they often collect far more on the debt than what they paid).

[On October 11, 2016,] the Supreme Court granted certiorari on an issue that (a) is pretty important in the world of consumer debt collection, and (b) makes some folks pretty darn furious. The issue is this:  if you file a proof of claim in a bankruptcy case, and you know such claim is barred

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Forming a Game Plan for TruPS

November 14, 2014

Authors

Ken Achenbach and Michael Shumaker

Forming a Game Plan for TruPS

November 14, 2014

by: Ken Achenbach and Michael Shumaker

For the past 15 years, trust preferred securities (TruPS) have constituted a significant percentage of the capital of many financial institutions, mostly bank holding companies.Their ubiquity, both as a source of capital and as a common investment for banks, made them a quiet constant for many financial institutions. Even in the chaos of the Great Recession, standard TruPS terms allowed for the deferral of interest payments for up to five years, easing institutions’ cash-flow burdens during those volatile times. However, with industry observers estimating that approximately $2.6 billion in deferred TruPS obligations will come due in the coming years, many institutions are now considering alternatives to avoid a potential default.

Unfortunately, many of the obstacles that caused institutions to commence the deferral period have not gone away, such as an enforcement action with the Federal Reserve that limits the ability to pay dividends or interest. It is unclear if regulators

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Bankruptcy Judge Allows Involuntary Bankruptcy to Move Forward

September 3, 2014

Authors

Robert Klingler

Bankruptcy Judge Allows Involuntary Bankruptcy to Move Forward

September 3, 2014

by: Robert Klingler

On August 29, 2014, Judge John T. Laney, III, the Chief United States Bankruptcy Judge for the Middle District of Georgia, issued an order denying FMB Bancshares’ motion to dismiss the involuntary bankruptcy petition filed by its TruPS creditor, Trapeza CDO XII.  Among other conclusions, Judge Lacey found that the restrictions contained in FMB Bancshares’ written agreement with the Federal Reserve constituted a a restriction on the company’s ability to pay, rather than its legal duty to pay.  While detrimental to FMB Bancshares’ motion to dismiss, this conclusion should reinforce the ability of third parties to enter binding contractual arrangements with bank holding companies, which should be of great relief to those willing to lend to bank holding companies.

As reflected in the opinion and other court documents, FMB Bancshares issued $12 million in Trust Preferred Securities to Trapeza CDO XII in 2006.  Starting in March 30, 2009, FMB

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TruPS and Involuntary Bankruptcy

July 8, 2014

Authors

Jerry Blanchard

TruPS and Involuntary Bankruptcy

July 8, 2014

by: Jerry Blanchard

One of the most dramatic tools a lender can use in the collection of a loan is the involuntary bankruptcy case.  It is dramatic because of the implications for both the debtor and the lender who files the case. If a bankruptcy court determine that the petitioning creditor has not met the statutory requirements it may require the creditor to pay the debtor’s costs and attorneys fees in defending the petition and if the court finds that the petition was filed in bad faith it can award compensatory and punitive damages.  The consequences for the debtor are that if the creditor is successful, the debtor’s business and assets are now subject to disposition under a frameworks found in the Bankruptcy Code which may involve the appointment, at least initially,  of a bankruptcy trustee to administer the debtor’s estate.  Even if the debtor is successful in fighting off the petition it

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The Upcoming Trust Preferred Interest Deferral Cliff

January 7, 2014

Authors

Robert Klingler

The Upcoming Trust Preferred Interest Deferral Cliff

January 7, 2014

by: Robert Klingler

While we continue to emerge from the Great Recession, we are also approaching another cliff that could have significant ramifications for many community banks that continue to defer interest payments under their Trust Preferred securities.  Under the terms of such Trust Preferred, issuers are generally allowed to defer interest payments for up to twenty consecutive quarters (or five years) without triggering a default.  Many institutions began deferring interest payments about four and half years ago, both to preserve capital generally and in reaction to Federal Reserve Bank enforcement actions that limited the ability of banks to pay interest on the subordinated debt supporting the Trust Preferred.  As we approach the end of the permitted five-year deferral period, we are now assisting a number of clients, on all sides of the equation, in addressing the ramifications of approaching, and potentially ultimately exceeding, the five-year deferral period.

One issue we have looked

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August 2011 Client Alerts

September 2, 2011

Authors

Bryan Cave

August 2011 Client Alerts

September 2, 2011

by: Bryan Cave

U.S. Supreme Court Upholds Arizona’s Employment Verification Law

On May 26, 2011, the U.S. Supreme Court upheld the Arizona law that sanctions employers for hiring unauthorized aliens and endorsed Arizona’s requirement that employers use the federal E-Verify screening program.  A 5-3 majority of the Court found that language in the Immigration Reform and Control Act of 1986 did not pre-empt the Arizona Law.  For the answers to frequently asked questions about the Arizona law, please click here to read the Client Alert published by the Labor & Employment Client Service Group on August 4, 2011.

Employers Should Consider Expressly Prohibiting FMLA Fraud

Many employers have updated their FMLA policies to reflect recent amendments to the law and revisions to the regulations.  Another aspect of an FMLA policy that merits attention is ensuring that the policy expressly prohibits FMLA fraud and specifies the penalty for the offense.  The United States Court

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June 2011 Client Alerts

July 16, 2011

Authors

Bryan Cave

June 2011 Client Alerts

July 16, 2011

by: Bryan Cave

The Implications for FCPA Enforcement of the SEC’s New Whistleblower Rules

The SEC’s recent adoption of rules to implement the whistleblower program mandated by the Dodd-Frank Act has particular significance for enforcement of the Foreign Corrupt Practices Act.  For a discussion of the overall SEC enforcement context for the new whistleblower rules, a summary of the rules,  and a discussion of the key issues for FCPA enforcement, including recommendations that companies should take now, please click here to read the Alert published by the Global Anti-Corruption Team of the Securities Litigation and Enforcement  and International Trade Groups on June 22, 2011.

Supreme Court De-Certifies Largest Employment Discrimination Class Action In History

In Wal-Mart Stores, Inc. v. Dukes, the Supreme Court reversed a lower court’s decision to certify a nationwide class pursuing employment discrimination claims against the nation’s largest employer.  A 5-4 majority of the Court concluded that the class

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February 2011 Client Alerts

March 1, 2011

Authors

Jeannie Osborne

February 2011 Client Alerts

March 1, 2011

by: Jeannie Osborne

CPSC Opens Business Registration for New Consumer Product Safety Information Database

The new Consumer Product Safety Information Database is now available online on a trial basis, and will launch officially in March at www.SaferProducts.gov.  The Database allows a broad range of people to file so-called “reports of harm” informing the CPSC about an incident or concern that the submitter believes is an indication a product is unsafe or potentially hazardous.  To read more the database, please click here to see the Alert published by the Retail Team on February 3, 2011.

IRS Reverses Course — Breast Pumps and Other Lactation Supplies are Now Deductible Medical Expenses Subject to Reimbursement under FSAs, HRAs and HSAs

In Announcement 2011-14, the Internal Revenue Service concluded that breast pumps and supplies that assist lactation are medical care under Section 213(d) of the Internal Revenue Code and can therefore be reimbursed under a health

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The Second Circuit Rejects "Gifting" Strategy by a Senior Secured Creditor Class and Sends a Warning to Strategic Claim Traders

February 16, 2011

Authors

Laurence Frazen and Robert Miller

The Second Circuit Rejects "Gifting" Strategy by a Senior Secured Creditor Class and Sends a Warning to Strategic Claim Traders

February 16, 2011

by: Laurence Frazen and Robert Miller

In Dish Network Corp. v. DBSD N. Am., Inc. (In re DBSD N. Am., Inc.), — F.3d —-, 2011 WL 350480, (2d Cir. Feb. 7, 2011), the Second Circuit issued a ruling that sends two very important messages to parties involved in chapter 11 restructurings. First, the Second Circuit enforced the absolute priority rule in favor of an unsecured creditor who opposed a debtor’s plan that was premised on a “gifting” strategy, where a secured creditor left value behind for the benefit of the equity holders even though unsecured creditors were not paid in full. Second, and perhaps more importantly, the Second Circuit ruled that a competitor of the debtor that bought a large claim was properly denied the right to vote on the claim because it did so for an improper “ulterior motive.

The Absolute Priority Rule “Trumps” The Strategy Of Gifting Value To A Debtor’s Equity Holders

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Creditors: Proceed with Caution on Involuntary Bankruptcy Filings

November 11, 2010

Authors

Bryan Cave

Creditors: Proceed with Caution on Involuntary Bankruptcy Filings

November 11, 2010

by: Bryan Cave

A recent Ninth Circuit Court of Appeals decision provides several clear messages regarding the dangers of poorly thought out involuntary bankruptcy petitions. In In re Southern California Sunbelt Developers, Inc., 608 F.3d 456 (9th Cir. 2010), the two debtors placed into involuntary bankruptcies won an attorney fee award of $745,000 and a punitive damages award of $130,000 against all 13 petitioning creditors.

Section 303(b) of the Bankruptcy Code provides the general rule that an involuntary chapter 7 or 11 case may be commenced “by three or more entities, each of which is either a holder of a claim . . . that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount, or an indenture trustee representing such a holder, if such noncontingent, undisputed claims aggregate at least $13,475 . . .” more than the value of the underlying collateral (if

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