Orange County Bar Assn Meeting

By | March 13, 2012 | Programs | No comments

Commercial Law and Bankruptcy Section Meeting

March 22, 2012

Topic:
A Discussion of Overlap Issues Between Assignments for the Benefit of Creditors, Receiverships, and Bankruptcy
  • What is an ABC? How is an ABC similar and different than bankruptcy?
  • Under what circumstances should a debtor consider an ABC rather than bankruptcy?
  • Tips and strategies for representing secured and unsecured creditors in ABCs
  • Impact of threatened or actual bankruptcy on pending receiverships
  • Using bankruptcy to terminate receiverships
  • Receiver’s and secured creditor’s obligations in bankruptcy
  • The pros and cons of receiverships vs. bankruptcies

Speakers:

Michael B. Reynolds
Attorney at Law, Partner
Snell & Wilmer
Joel B. Weinberg
Attorney at Law, Principal
Insolvency Services Group

Advance Registration Ends and Standard Registration Begins on: March 20, 2012

Location: Tustin Banquet Center 721 W. First St. Tustin, CA

Time: 12:00 PM – 1:30 PM

Bank of America will Reduce Principal to 200,000 Underwater Homeowners

By | March 11, 2012 | Current Events | No comments

Bank of America said on Friday, March 9, 2012, that it would reduce by about $100,000 the amount owed by as many as 200,000 underwater homeowners as part of the recently announced government foreclosure settlement with top mortgage servicers.  The details are set forth in the LA Times article here.

Bankruptcy Attorney Night at the LA Kings

By | March 11, 2012 | Programs | No comments

The Central District Consumer Bankruptcy Attorney Association (“CDCBAA”) invites you to come experience the excitement of the LA Kings Hockey VIP Style!

LA Kings vs. Edmonton Oilers Monday, April 2nd at 7:30pm          STAPLES Center

       $150 per person

Your VIP package includes:

  • VIP Credential Grants You Exclusive Access To “The Green Room”, Located On The Event Level, By The LA Kings Locker Room
  • Watch The Players Walk From Their Locker Room To The Ice Up Close
  • 100 Level Seats Close To All The On-Ice Action
  • Access To The Green Room, A VIP Hospitality Area Throughout The Game
  • All-Inclusive Catering (FREE Food!)
  • Open Bar (FREE Beer, Wine, and Soda!)
  • Private Appearance Following The Game By 2 Kings Players
  • The Kings Will Donate Auction Items, Including A Jonathan Quick Autographed Jersey – Proceeds Benefit The EHMGT (our annual fundraiser golf tournament) and The Debtor Assistance Program

Read more…

Bankruptcy Filings in the Central District Exceed all of Texas AND all of New York in February, 2012

By | March 11, 2012 | Bankruptcy Data | No comments

Total bankruptcy filings in February in the Central District of California was 9,307, up 1% from January but 12% lower than the previous February.  To put the total into context, the TOTAL filings in February, 2012 for all four districts in Texas AND all four districts in New York was 7,830.  Of the total here, 2,256 were chapter 13s or about 24% of the total.  This means each trustee received about 450 new cases in February.

Central   District of California
2008 2009 2010 % 2011 2012
Jan 3,694 6,004 9,013 50% 10,868 21% 8,835 -19%
Feb 3,787 6,971 9,659 39% 10,631 10% 9,307 -12%
March 4,381 8,529 12,840 51% 13,543 5%
April 5,023 8,512 12,114 42% 12,087 0%
May 5,177 8,967 11,906 33% 11,669 -2%
June 5,351 9,595 12,190 27% 11,718 -4%
July 5,983 9,894 12,737 29% 10,418 -18%
Aug 6,195 9,748 12,720 30% 11,496 -10%
Sept 6,290 9,214 12,412 35% 10,006 -19%
Oct 6,364 10,322 11,753 14% 9,887 -16%
Nov 6,029 9,462 10,900 15% 9,099 -17%
Dec 6,615 9,864 10,925 11% 9,089 -17%
64,889 107,082 139,169 30% 130,511 -6%
% of total 0.059 0.075 0.089 0.095

 

Bankruptcy Filings Up in February, 2012

By | March 11, 2012 | Bankruptcy Data | No comments

Total bankruptcy filings in February, 2012 was 104,400 or 19% more than January.  The total is 5% less than February, 2011.  Prof. Bob Lawless points out very nicely that there is typically an upward spike in February.  You can get his post on Credit Slips here.

2007 2008 2009 2010 % 2011 % 2012
Jan 55,200 70,300 89,000 102,600 15% 102,200 0% 87,900 -14%
Feb 58,800 79,500 102,000 117,800 15% 109,600 -7% 104,400 -5%
March 73,100 90,400 131,000 159,200 22% 146,400 -8%
April 67,800 93,200 128,700 146,200 14% 129,800 -11%
May 69,900 89,700 120,400 133,500 11% 122,800 -8%
June 67,300 89,900 124,800 133,850 7% 120,700 -10%
July 69,100 96,400 130,500 134,600 3% 110,200 -18%
Aug 77,100 94,300 120,000 135,600 13% 120,900 -11%
Sept 67,500 96,200 125,500 134,000 7% 110,400 -18%
Oct 81,200 108,900 130,200 129,700 0% 111,500 -14%
Nov 74,200 91,400 115,500 118,100 2% 98,500 -17%
Dec 65,900 95,900 117,000 114,700 -2% 96,500 -16%
827,100 1,096,100 1,434,600 1,559,850 9% 1,379,500 -12%

 

Prof. Katie Porter’s Analysis of the Financial Management Program

By | March 8, 2012 | Chapter 7 | No comments

I have been as big a critic as anyone about the silliness of the pre and postpetition counseling requirements.    The prepetition counseling is completed 99% of the time after the decision to file bankruptcy has been made and is usually done immediately prior to the actual filing.  A study by Prof. Katie Porter however has turned my eye a little about the postpetition financial management course.  You can find her analysis on the blog Credit Slips.  Here is a portion of the post.

Evaluating Mandatory Financial Education in Bankruptcy

posted by Katie Porter
Dr. Deborah Thorne and I have a new study that looks at how debtors themselves feel about the mandatory financial education course. It is a chapter in this book, Consumer Knowledge and Financial Decisions (ed. Douglas Lamdin, Springer, 2012) and available to read here. In the 2007 Consumer Bankruptcy Project, we asked debtors whether they believed that the information from the financial education class 1)would what they learned in the financial education class have helped them avoid bankruptcy originally, and 2) would help them avoid financial trouble in the future. While only 33% thought a financial instruction course similar to the one required of bankruptcy debtors could have helped them avoid filing, 72% thought it would help them avoid future financial trouble.  As we report in detail in the chapter, some demographic groups were much more positive about the value of financial education than others.
About half (48.7%) of minority persons who filed bankruptcy, for example, thought the course would have helped them avoid bankruptcy; for whites, the response was 27.6%, a little more than half.  Similarly, there significant differences in the perceived value of financial education–both to have helped prevent their bankruptcy and to help them keep out of future financial trouble.  Those without a college degree, those aged under 25 years or 65 years or over, and those who less familiar with their household finances believed the course had more value.  Note that the point is not that the course actually would have or will help debtors; the measure here is debtor’s perception of value, which I think is well worth evaluating in a system that is designed to rehabilitate debtors.

Shinbrot’s Five Rules of Litigation

By | March 8, 2012 | Programs, Specialist Information | No comments

We had a great cdcbaa meeting on Saturday.  Jeff Shinbrot and Judge Mitchell Goldberg (Ret.) discussed dischargeability litigation.  Jeff regaled us with his five rules of litigation.

  1. Keep your judge happy.  File your motions timely, show up to hearings on time, solve your discovery disputes without court intervention, be professional, open minded.  Judge Goldberg commented that a better way of saying rule 1 is “Keep your judge neutral.”
  2. Develop a good story.  Trials, he said, are about telling a story.  Make sure you have your story straight, and present it at trial.  Judge Goldberg commented that it would be nice if the lawyers understand the rules of evidence and use the rules to tell the story.
  3. Know the local rules and the local, local rules.  Look up your judge’s page on the bankruptcy court website.  Ask around about the judges preferences.  Follow the local rules specifically made for trials, like lodging depo transcripts, timely pre-trial orders, the judge’s trial rules.
  4. Learn and follow FRCP 26.  This is huge.  Rule 26 requires disclosure throughout the process without a request by the other side.  It requires continuing disclosure and will result in striking your evidence if you have not followed rule 26.
  5. Have a good trial notebook.  Your trial notebook will include the entire trial.  It will remind you of what you need to do.  All the witnesses, all the exhibits, checklists, legal briefs, opening and closing statements.  In a trial, he said, you are caught up in the moment, you are focusing on the witness in front of you and the judges comments at the time.  A trial notebook will help you remember to ask the court to “admit” the exhibits for example.

San Fernando Valley Bar Program – March 22, 2012

By | March 5, 2012 | Chapter 11, Programs | No comments

Jon,

On Thursday, March 22nd, from 12 noon until 1:15 p.m., the San Fernando Valley Bar Association will be putting on what I believe is a highly needed program, especially for bankruptcy attorneys new to chapter 11 practice or who are considering trying their hands at chapter 11.

As attorneys, we learn the law and how to apply it.  Chapter 11 is foremost not the practice of law; it is the practice of understanding.  Understanding people, e.g., the client or the client’s principal, understanding why they have failed and what we can do to help create success out of failure, understanding the creditors and seeing what we can do to bring them on board for the reorganization, and giving understanding the bankruptcy judge who will have reason to support the debtor too.

The attorney needs to set the rhythms of a case but the rhythms do not come from the law.  The things we learn in law school really do not help us in chapter 11.  What we learn in other areas of bankruptcy practice do not help us much in chapter 11 either.  We set the rhythms, we make a difference and we help our clients succeed by understanding business, understanding people and, of course, understanding the law.

Read more…

How does the IRS determine how to attach liens to property?

By | March 2, 2012 | Taxes | No comments

The tax lien secures payment of a specific year or account. That year or account is either priority or general.
The POC may report $5,000 of secured debt, and this secured debt will relate to a specific year. The POC will always assume that the IRS is going to get paid the secured amount.

IRS always applies payments in the way that is in its best interest. Remember that rule, and you understand a great deal about the taxing authority.  Let’s say that the taxpayer-debtor has $5,000 of personal property (all exempt, but the IRS doesn’t care, because exemptions don’t apply to it).  The debtor owes $15,000 in general tax debts, $25,000 in priority tax debts.

Assuming that the tax lien covers both the general and the priority years, the IRS will take $5,000 of the general unsecured liability and make it secured, and leave the rest the way it is, because it would rather have the security use up general unsecured debt than priority debt, which will still be owed at the end of the day anyway.

Form 1099 in Chapter 13 cases

By | March 2, 2012 | Chapter 13, Taxes | No comments

A reader asks: If a second lien is stripped in a chapter 13, and the mortgage lender issues a 1099 before the discharge is entered, is the cancellation of debt income still excluded from gross income under IRC Section 108?

Answer: The debt is not uncollectible until there is a discharge that gets rid of  it.  The lender can’t issue the 1099, even if there is a confirmed plan that  hoses it on 70% of the debt, because the debtor may flake out and never  complete the plan, win the lottery, and HELOC lender can collect.  But lenders aren’t always rational about their issuance of 1099s.  If the  debtor gets a 1099 during or after a year when he was in bankruptcy, the  debtor should file Form 982 with his return explaining why the 1099 doesn’t  represent taxable income.

IRS can’t assess the tax on COD income until either the taxpayer reports it  on his return, or it goes through the deficiency process ­ audit, Tax Court,  the whole enchilada.  FTB can assess as soon as it thinks it’s being abused,  but it would just about never open an audit on this issue before the IRS would.

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