Insolvency Alerts March 2012

Insolvency Alerts March 2012

 

March 22nd

Recently Reported Insolvency News from the American Bankruptcy Institute and other sources

Charter Airline Direct Air Files Chapter 11, Shuts Down

Direct Air, a Myrtle Beach, S.C.-based charter airline, shut down its operations as its parent company Southern Sky Air & Tours of Worcester, Mass., filed for Chapter 11 bankruptcy.

Credit Card Processor BC Funding Files Chapter 11

BC Funding, a credit card processor and merchant cash advance provider, filed for Chapter 11 after its senior lender and 50% equity holder rejected deals that could have provided capital to avoid bankruptcy.

Wolfgang Candy Business Sours, Files Chapter 11

Wolfgang Candy, a 91-year old company, filed for Chapter 11 bankruptcy after failing to complete a new partnership deal.

In General Economic News

Loan Defaults Decline

Data through February 2012, released yesterday by S&P Indices and Experian for the S&P/Experian Consumer Credit Default Indices, a comprehensive measure of changes in consumer credit defaults, showed that all loan types saw a decrease in default rates for a second consecutive month. The national composite declined to 2.09% in February from the 2.16% January rate. The first mortgage default rate decreased from January’s 2.08% to February’s 2.02%. Second mortgage, bank card and auto loans default rates also declined from 1.30%, 4.57% and 1.27% in January to 1.20%, 4.41% and 1.22% in February, respectively. “It seems that 2012 has begun on a positive note for the consumer,” says David M. Blitzer, Managing Director and Chairman of the Index Committee for S&P Indices. “We appear to be resuming the downward trend in consumer default rates that began in the spring of 2009. With last month’s release we reported that the second half of 2011 saw a rise in consumer defaults, led by four consecutive monthly increases in first mortgage default rates. January and February’s combined reports shows broad based declines in all types of default rates, which is a good way to start the year.

Foreclosure Rates Decline

Foreclosure filings were down 2 percent nationally from January to February. According to RealtyTrac, a California-based firm that tracks foreclosures, these states had the highest rates of foreclosure in February. Nationally, 1 in every 637 housing units received a foreclosure filing last month. The top States for foreclosures, in order, are: Nevada, California, Arizona, Georgia, Florida, Illinois, Michigan, South Carolina, Ohio, and Wisconsin.

And Now for Something Completely Different:
Some Random Insolvency Thoughts

Student Loan Rate to Double

On July 1, as many as eight million college students will see their interest rates on federally subsidized student loans double, from 3.4% to 6.8%. It’s worse for those students who take out the most money. Those who borrow the maximum $23,000 in subsidized student loans will see their debt load upped by $5,000 over a 10-year repayment plan and $11,000 over a 20-year repayment plan.

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March 19th

Recently Reported Insolvency News from the American Bankruptcy Institute and other sources
Neurologix Chapter 7 Petition Filed

Neurologix filed for Chapter 7 protection with the U.S. Bankruptcy Court in the District of Delaware, case number 12-10936. The development stage company, which is engaged in the research and development of proprietary treatments for disorders of the brain and central nervous system, is represented by Bill Sullivan.

Bahrain’s Arcapita Files for Chapter 11 Protection

Investment house Arcapita has filed for chapter 11 protection in the United States after it was unable to reach a $1.1 billion debt deal with creditors, Reuters reported today. Arcapita blamed non-bank creditors for its inability to strike a deal on its proposal to delay repayments by three years. Arcapita’s debt maturity has been regarded as one of the most challenging liabilities facing the region in 2012, given its poor cash position and the difficulty it has faced in selling assets because of the market volatility caused by the European debt crisis. The investment firm had $119 million in cash on its balance sheet on Dec. 31, according to a Standard & Poor’s’ report published in February. Most of its portfolio companies are based in the United States, according to its website, hence its decision to file for chapter 11 in the U.S.

ResCap Expected to Seek Bankruptcy within Weeks

Ally Financial Inc.’s mortgage-lending unit, Residential Capital LLC, is expected to seek bankruptcy protection in the next several weeks on the way to a possible sale, the Wall Street Journal reported on Friday. Fortress Investment Group LLC is the lead candidate to buy the mortgage-lending unit if it files for bankruptcy protection. After a ResCap filing for chapter 11 protection, Fortress would become the opening bidder in an auction supervised by a federal bankruptcy court under a plan being discussed by Ally’s board. Fortress would make an opening bid, which others interested in ResCap would have to top.

Sky Air & Tours LLC Files for Bankruptcy Protection

Just three days after abruptly stopping service and leaving travelers stranded, Sky Air & Tours LLC, the parent of discount airline Direct Air, filed for chapter 11 protection, the Associated Press reported on Friday. Court documents show the company has between $10 million and $50 million in debt and just $500,000 to $1 million in assets. The company has not yet filed several documents required by the court as part of the bankruptcy filing process, including a list of its top 20 creditors. The airline said that it has 100 to 200 creditors, which could include everything from fuel suppliers to airports.

Foreclosure Actions Lead Apex to Seek Chapter 11

Apartment building owner Apex Investment Properties LLC is planning to file a reorganization plan within the next month that would pay all its secured creditors in full, the Deal Pipeline reported on Friday. The Madison, Wis.-based company filed for chapter 11 protection on March 14 along with 10 affiliates and is seeking joint administration of the cases. Apex is seeking to use cash collateral from secured lenders Anchor Bank, Community Bank, North Shore Bank FSB, BMO Harris Bank NA, Mid American Bank, Union Federal Savings and Loan Association and Grandbridge Real Estate Capital LLC. The company owes its largest lender Anchor, which has a partially unsecured claim, a disputed $32.07 million, court documents show.

In General Economic News

Consumer inflation Spikes – or Doesn’t

Oppenheimer’s James Cady states that gas prices translated into spiking consumer inflation in February. According to the Bureau of Labor Statistics, most of the 0.4% increase was the result of a 6% jump in gas prices during the month.  Excluding food and energy, however, costs were up only 0.1%. Meanwhile, wholesale prices were up 0.4%, with energy once again accounting for the bulk of the increase. More critically, the 3.3% wholesale increase since February 2011 was the smallest yearly figure since August 2010.

And Now for Something Completely Different:
Some Random Insolvency Thoughts

Made Profit on Mortgage Debt

The Treasury Department will announce that taxpayers reaped a $25 billion profit on mortgage bonds purchased at the height of the meltdown, the Wall Street Journal reported today. The profit is the Treasury’s biggest for any program tied to the 2008-09 crisis. The government last week sold the last of the bonds, winding down the Treasury’s ownership of debt backed by the federally backed mortgage investors Fannie Mae and Freddie Mac. Treasury spent $225 billion on purchases over 16 months before it began selling the securities last year.

Wall Street Keys on Landlord Business

Some of the biggest names on Wall Street are lining up to become landlords to cash-strapped Americans by bidding on pools of foreclosed properties being sold by Fannie Mae, the Wall Street Journal reported today. The idea is that the investors would then rent out the homes at first rather than reselling — potentially aiding a housing-market recovery by reducing the number of properties clogging the market.

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March 13th

Recently Reported Insolvency News from the American Bankruptcy Institute and other sources

Cano Petroleum & Units File for Bankruptcy
Cano Petroleum Inc. said that it had recently filed for bankruptcy along with its units, as continued losses and loan defaults prevented the Texas-based oil and gas producer from raising capital.

In General Economic News

Federal Reserve: U.S. State, City Debt Drops For First Time Since 1996
U.S. state and local governments reduced their debts last year for the first time since 1996, according to Federal Reserve data showing the drop in borrowing that fueled a rally in the municipal-bond market, Bloomberg News reported this week. Such debt dropped by almost 2 percent last year, the Fed said today in a quarterly report. The decline shrank the municipal debt market to $3.74 trillion by the end of December from $3.8 trillion a year earlier, the figures show.

U.S. Bankruptcy Filings Decline

U.S. bankruptcy filings in February declined 5% from a year ago but rose 19% from January, reports the American Bankruptcy Institute based on data from Epiq Systems Inc. In February, 104,418 individuals and businesses filed for bankruptcy, compared to 87,981 in January and 109,565 in February 2011. Business filings increased 3% and noncommercial filings jumped 20%, ABI said. California had the most bankruptcies, 32,553 for January and February, followed by Florida, 12,745; Illinois, 10,756; and Georgia, 10,290. “The stagnant housing sector and high unemployment continue to stress the cash flow of consumers and businesses,” said ABI Executive Director Samuel J. Gerdano. “As consumers and businesses work to shed tremendous debt loads, there are times when bankruptcy is the only shelter to provide financial relief.”

And Now for Something Completely Different:
Some Random Insolvency Thoughts

Increase In Foreclosures In 2012 Could Be A Good Sign
The number of foreclosures is expected to rise significantly in 2012, but some of these new defaults may be necessary medicine for the housing market to recover in the long term, according to a commentary in the Washington Post this week. They represent homes that have been backlogged in the courts and elsewhere that cannot be sold until they finish going through legal foreclosure proceedings, according to the commentary. Over the past year, delays in the foreclosure process have prevented a large number of distressed homes from going onto the market. While this is partly because of the recent crackdown on robo-signing and other abusive, illegal practices, it is also because states where foreclosures go through the courts — including Florida, New York and Maryland — have become backlogged, slowing down the process even further, according to the commentary. Partly as a result, about one million homes have begun but not finished foreclosure proceedings — a big chunk of the so-called “shadow inventory” that isn’t included in the official foreclosure count, according to analysis from Capital Economics, a Britain-based research firm.

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March 8th

Recently Reported Insolvency News from the American Bankruptcy Institute and other sources

Federated Sports & Gaming Files Chapter 11

Federated Sports & Gaming, a Chevy Chase, Md.-based producer of televised poker tournaments, interactive digital programming and social media gaming, filed for Chapter 11 bankruptcy to prevent foreclosure on its assets.

Ryan International Airlines Files for Chapter 11
Ryan International Airlines Inc., a leading airlift provider for the U.S. military, filed for chapter 11 protection on Tuesday, blaming decreased government spending and the millions it spent acquiring two airplanes it cannot fully operate.

In General Economic News

Americans’ Student Loans Exceed Other Debt

Americans owe more on student loans than on credit cards or car loans, according to a report from the Federal Reserve Bank of New York. Student loan debt stands at $870 billion nationally, surpassing the nation’s outstanding balance on auto loans ($730 billion) and credit cards ($693 billion), according to Grading Student Loans, a blog post published by the economists at the New York Fed. One-third of the student-loan balance is owed by people ages 30 to 39, and another third by people older than that.  This shows that only a small share of college graduates manage to retire their loan debt while still in their 20s.

Consumer Credit Card Balances Drop

Consumer credit card balances dropped in January, ending a four-month streak in which card balances steadily rose. The Federal Reserve’s G.19 consumer credit report released Wednesday showed a 4.4 percent drop in revolving debt, after rising steadily for the last four months. Revolving debt, which is made up almost entirely of credit card debt, declined by $3 billion in January to $800.9 billion.

New U.S. Home Foreclosures Rise

Starts on U.S. home foreclosures shot up 28 percent in January, data provider Lender Processing Services said on Tuesday in a report that suggested paper backlogs that had clogged the system were rapidly clearing. U.S. lenders had cut back on foreclosures after accusations of faulty foreclosure practices had surfaced in late 2010. Last month, five big U.S. banks reached a $25 billion settlement with the federal government to end a national investigation into claims of flaws in their foreclosure process, including allegations of so-called “robo-signing” of documents.

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March 6th

Recently Reported Insolvency News from the American Bankruptcy Institute and other sources

Bankruptcy Judge Clears Way for Record Bankruptcy in Alabama

Bankruptcy Judge Thomas E. Bennett has cleared the way for Jefferson County, Ala., to move forward with the largest municipal bankruptcy in U.S. history, overruling Wall Street claims that state law did not allow the county to file the case, the Associated Press reported yesterday. Judge Bennett allowed Alabama’s largest county to remain in bankruptcy as it attempts to sort out more than $4 billion debt linked to borrowing for the county’s sewer system. Lenders asked Bennett to throw out the case during a hearing December, arguing that Alabama’s 1901 Constitution does not allow Jefferson County to file a municipal bankruptcy.

Hercules, Calif. to Avoid Bankruptcy, According to City Manager

Hercules, Calif. is no longer at risk of a municipal bankruptcy after settling a lawsuit by bond insurer Ambac Assurance Corp, the city’s manager said, Reuters reported yesterday. “This outcome will keep the city from having to consider pre-bankruptcy mediation and a potential chapter 9 bankruptcy protection filing,” according to a report by City Manager Steven Duran said.

Pemco World Air Services Files for Bankruptcy to Sell Assets

Pemco World Air Services Inc., which provides aircraft maintenance and repair services, sought bankruptcy protection with plans to sell the company at auction, Bloomberg News reported yesterday. The company, based in Tampa, Fla., listed assets and debt of $50 million to $100 million each in chapter 11 documents filed yesterday. Pemco will seek court approval to borrow as much as $37.8 million from Avion Services Holdings LLC to help fund operations while in bankruptcy, according to court documents.

United Western Bancorp Files Chapter 11

United Western Bancorp (fka Matrix Bancorp) and two subsidiaries have filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Colorado. The company is a former unitary thrift holding company. According to a corporate release, “The Bankruptcy Filing is intended to allow the Company time to facilitate a reorganization and to pursue the case titled United Western Bank v. Office of the Comptroller of the Currency, et al. 1:11-cv-408 (ABJ) (the ‘OCC Litigation’) in the United States District Court for the District of Columbia (the ‘Court’).” In the litigation, the Company’s subsidiary, United Western Bank seeks to secure the return of control of the bank’s assets, liabilities and operations. The bank alleges that, on January 21, 2011, the Office of Thrift Supervision acted in an arbitrary and capricious manner without due regard to law and regulation when it appointed the FDIC as receiver for the bank and that, as a consequence, the OCC should be ordered to return control of the bank and its assets, liabilities and operations to the bank’s board of directors and, indirectly, the Company.

In General Economic News

February Bankruptcy Filings Up 19 Percent over January

Total bankruptcy filings increased 19 percent in February over last month, according to data provided by Epiq Systems, Inc. Bankruptcy filings totaled 104,418 in February, up from the 87,981 filings in January 2012. The 99,288 total noncommercial filings in February 2012 represented a 20 percent increase over the January 2012 total of 83,014. The total commercial filings of 5,130 for February 2012 increased 3 percent over the 4,967 filings in January 2012.

When compared to a year earlier, however, the Epiq data showed that the total February 2012 filings decreased 5 percent from the February 2011 total of 109,565. The total commercial filings for February 2012 fell 16 percent from the 6,076 commercial filings recorded in February 2011. Total noncommercial filings registered a 4 percent decrease from the 103,489 filings in February 2011.

Soaring College Debt a Ticking Time Bomb

Experts have called the nation’s soaring college debt load a “ticking time bomb” threatening young adults, their families, and the broader economy. A new report raises even more alarms: It’s likely that as many as 1 in 4 borrowers was carrying a past-due student loan balance in the third quarter, the Federal Reserve Bank of New York said Monday. That’s a much higher delinquency rate than previously thought. By a more conventional measure, the New York Fed said, 5.4 million of 37 million borrowers with student loan balances had at least one past-due student loan account – a 14.6% rate. Many educators are concerned about the increasing financial squeeze on college students and their families and the repercussions for the nation’s economy. W. Norton Grubb, a professor at UC Berkeley’s School of Education, is worried that rising debt levels are forcing some students to drop out. Only 40% to 50% of those enrolling at universities such as the California State University schools end up completing their degrees, he said.

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March 5th

Recently Reported Insolvency News from the American Bankruptcy Institute and other sources

Vallejo Begins to Recover from Bankruptcy

Vallejo, California has cut about 20 percent from its general fund budget since it filed for bankruptcy in 2008, according to a report yesterday in the San Francisco Chronicle. It has had a balanced budget the past three years and created a very conservative, five-year financial plan. Based on these steps, a federal judge let Vallejo emerge from bankruptcy.

United Western Bank Parent Files for Chapter 11

The parent company of United Western Bank, which was seized by federal regulators in January 2011, has filed for chapter 11 protection, the Denver Business Journal reported today. Denver-based United Western Bancorp Inc. announced today that it made the filing to give the company time to pursue its lawsuit against those regulators.

BroadSign International Files for Bankruptcy With Plan to Sell Most Assets

BroadSign International Inc., a maker of software for operating digital signs, sought bankruptcy protection from creditors and said that it intends to auction almost all its assets, Bloomberg News reported yesterday. The company, based in Boise, Idaho, listed debt of $10 million to $50 million and assets of $1 million to $10 million in chapter 11 documents.

Cheboygan Memorial Hospital Files for Chapter 11

Cheboygan Memorial Hospital says that it is filing for chapter 11 protection after losing more than $7 million last year, the Associated Press reported on Friday. The hospital said on Thursday that its board had decided the move would enable it to continue operating while it restructures and the bankruptcy court takes offers from potential buyers. The hospital chairman says the hospital has struggled for years. He says recent workforce reductions and other cost-cutting measures saved $3 million but are not enough. The Cheboygan hospital says Flint, Mich.-based McLaren Health Care Corp. has agreed to provide a loan so it can keep running during the bankruptcy reorganization.

In General Economic News

Sales of Foreclosed Homes Increasing

Sales of foreclosed and, most notably, pre-foreclosed homes are increasing as lenders become more aggressive in their push to dispose of distressed assets more quickly, says Brandon Moore, CEO of RealtyTrac, which this week released its Q4 and Year End 2011 US Foreclosure Sales Report. The report found that sales of foreclosed homes rose 4% between third- and fourth-quarter 2011 as a segment of total residential sales for the quarters. A growing trend in major markets is lenders selling homes in pre-foreclosure, rather than waiting until the foreclosure process is complete and the property becomes bank-owned. “In the three markets we called out-Los Angeles, Phoenix and Miami-there were more pre-foreclosure sales than bank-owned sales in the [fourth] quarter,” Daren Blomquist, VP of RealtyTrac, tells GlobeSt.com. “This is more than we’ve seen in the past. The fact that we’ve seen more of them indicates that lenders are more willing to sell before a short sale.” Lenders are demonstrating aggressive sales methods by pricing distressed assets low in attempt to attract more buyers and by proactively approving that price so that interested buyers can be confident that they’re not getting involved in a bait-and-switch situation, Blomquist continues.

U.S. Bank Industry Recovering

The U.S. bank industry has recovered to the point that it can boost the economic recovery by extending more loans, the top bank regulator said on Tuesday. Martin Gruenberg, acting chairman of the Federal Deposit Insurance Corp, said he was encouraged by banks’ increased lending but said they must do more to continue reaping the profits seen in recent quarters. Bank loan balances rose $130.1 billion, or 1.8 percent, in the 2011 fourth quarter compared to third quarter, according to a quarterly report by the FDIC released on Tuesday. Gruenberg said that with balance sheets now greatly strengthened from their weak state following the 2007-2009 financial crisis, the industry can lend more if demand increases. “The industry is now in a much better position to support the economy through expanded lending,” he said.

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March 2nd

Recently Reported Insolvency News from the American Bankruptcy Institute and other sources

Fannie Mae In Trouble Again

Fannie Mae is in trouble again and asking taxpayers to come to the rescue. On Wednesday, the mortgage behemoth reported $2.41 billion in fourth-quarter losses and is asking the federal government to help cover its deficit to the tune of $4.57 billion, according to the Washington Post. Since the government helped Fannie Mae and sibling company Freddie Mac cover their losses on bad mortgage loans in September 2008, the Federal Housing Finance Agency has been in charge of their financial decisions. The bailout, which cost taxpayers more than $150 billion, was the costliest rescue of the 2008 financial crisis. However, the government says it could cost more than an estimated $259 billion after dividend payments to prop up the companies through 2014.

Three California Cities Could Test State’s New Bankruptcy Law

Confronted by declining tax revenue and rising employee costs, Stockton, Calif., is considering bankruptcy – while other struggling California cities warn they could eventually face the same predicament, the Wall Street Journal reported yesterday. Stockton officials voted Tuesday night to take the initial step toward a bankruptcy filing, launching the first test of a new state law that requires cities to negotiate with employees, creditors and others to try to stave off a filing before making the move.

Two other Northern California cities, Hercules and Lincoln, are attempting to restructure their debt and cut employee costs to forestall insolvency. Late last year, Hercules retained bankruptcy attorneys in part to explore options with its creditors.

Cash-Strapped Florida Transit Workers Union Files for Bankruptcy

A local chapter of the Amalgamated Transit Union, an AFL-CIO member that ranks as the country’s largest transit workers union, filed for chapter 11 protection in Tampa while its leaders try to figure out how to pay a roughly $175,000 legal judgment owed to a former member that sued the chapter, the Wall Street Journal reported today. That judgment is just a few thousand dollars more than what chapter collected in revenue during the entirety of its most recent fiscal year. That revenue mostly comes from membership dues paid by about 260 bus drivers, clerical staffers and maintenance workers who help run a public transportation system for a Tampa suburb.

Homebuilder American West Files for Bankruptcy

Canarelli’s firm, American West Development Inc., filed for chapter 11 protection listing $55.4 million in assets against liabilities of $207.7 million, VegasInc.com reported yesterday. Bankruptcy records show the company generated revenue of $61.5 million in 2009, growing to $63.7 million in 2010. But in 2011, revenue tumbled to just $12.2 million, the filing said. American West said the bankruptcy was filed as part of a pre-packaged reorganization and that it expects to keep all of its operations.

In General Economic News

Banks Rev Up Lending
The Federal Deposit Insurance Corp. (FDIC) released a report on Tuesday that U.S. banks posted their biggest quarterly increase in lending in four years, the Wall Street Journal reported yesterday. The FDIC report also showed that the banking industry posted a $119 billion profit for 2011, up 40 percent from a year earlier and the banks’ biggest profit since 2006, when the housing boom was in full swing.

However, in a sign of the tough choices facing banks, the industry’s annual revenue dropped for the first time since 2008 and only the second time in 74 years. Low interest rates, several years of anemic loan demand and new limits on fees that lenders can levy on their customers have eaten into the top line, leaving bankers searching for new ways to generate income without angering clients.

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March 1st

Recently Reported Insolvency News from the American Bankruptcy Institute and other sources

 

Cliffs Club & Hospitality Group Files for Bankruptcy

Cliffs Club & Hospitality Group Inc., which owns several luxury golf communities in South Carolina and North Carolina, filed for chapter 11 protection, Bloomberg News reported yesterday. The Travelers Rest, S.C.-based company listed assets of less than $50,000 and debt from $100 million to $500 million in chapter 11 documents.

Ener1 Secures Reorganization Plan Confirmation

Battery maker Ener1 Inc. is on the verge of exiting bankruptcy just over a month after it filed its petition, the Deal Pipeline reported yesterday. Bankruptcy Judge Martin Glenn confirmed Ener1’s pre-packaged reorganization plan on Tuesday, and Ener1 said that the plan would take effect in mid-March. Ener1’s pre-packaged plan lays out a debt-for-equity swap that cuts its funded debt in half, from about $91 million to $45.98 million.

CyberDefender Files Chapter 11, Plans Sale to its Lender GR Match

CyberDefender Corp., a Los Angeles-based provider of direct-to-consumer remote technical support services, Internet security software and utilities, filed for Chapter 11 bankruptcy last week and plans to sell all of its assets to its senior lender GR Match, an affiliate of Guthy-Renker.

Fuller Brush Co. Files Chapter 11 Bankruptcy

Fuller Brush Co., a Great Bend, Kan.-based cleaning supplies company that was established in 1906, filed for Chapter 11 bankruptcy last week.

Stockton’s City Council Approves Bond Default Plan

Stockton, Calif.’s city council approved a plan yesterday for the city to skip some bond payments in an effort to restructure its precarious finances and avoid becoming the biggest U.S. city to file for bankruptcy, Reuters reported earlier this week. Along with defaulting on about $2 million of debt payments through the end of its current fiscal year, the city located about 85 miles east of San Francisco will seek mediation with its major bond holders to try to get a break on its debt to help tackle a budget gap projected to range from $20 million to $38 million. A state law approved after Vallejo, Calif.’s 2008 bankruptcy requires negotiations in front of a mediator that could last up to 90 days with creditors, bond insurers, public employee unions and retired government employees before a local government can file for bankruptcy.

A&P Grocery Chain Wins Approval for Plan to Exit Bankruptcy Protection 
Great Atlantic & Pacific Tea Co., the supermarket company known as A&P, won approval for a plan to restructure and exit bankruptcy with financing from an investor group that includes Ron Burkle’s Yucaipa Cos.

In General Economic News

Homes in Foreclosure Account for Almost 25% of Sales

Homes in some stage of foreclosure accounted for nearly one in four homes sales during the fourth quarter, according to RealtyTrac. During the three months that ended December 31, homes that were either bank-owned or going through the foreclosure process accounted for 24% of all home sales, up from 20% in the previous quarter and down only slightly from a year earlier when foreclosures accounted for 26% of sales, RealtyTrac said. In total, 204,080 distressed properties were purchased during the fourth quarter, down 2% from the year-ago quarter. For all of 2011, foreclosure-related sales were down 2% year-over year to 907,138, accounting for 23% of all home sales.

National Auto Delinquency Rate Drops

The national auto delinquency rate (the rate of borrowers 60 or more days past due) decreased on a year-over-year basis for the ninth consecutive quarter, dropping from 0.59% in Q4 2010 to 0.46% Q4 2011. On a quarter-over-quarter basis, auto delinquencies remained essentially flat compared to 0.47% in Q3 2011. This is according to TransUnion’s ongoing series of quarterly analyses of credit-active U.S. consumers. Ending the year flat is particularly interesting because new auto loans have consistently increased since the end of the recession.

Largest U.S. Banks Very Profitable

U.S. banks are coming off their most profitable year since 2006, a sign that many have put the financial crisis behind them. The surge in bank earnings came largely because banks suffered fewer losses – not because they took in more money. The slow recovery, record-low interest rates and weak demand for loans left bank revenue mostly flat for the year. The Federal Deposit Insurance Corp. said Tuesday that bank earnings rose in the October-December quarter to $26.3 billion. And for the entire year, earnings rose to $119.5 billion. That’s 40 percent higher than the previous year and the most since 2006. Banks with assets exceeding $10 billion accounted for almost all of the earnings growth last year. While they make up just 1.4 percent of U.S. banks, they accounted for more than 83 percent of the earnings. Those banks include Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. Most of them have recovered with help from federal bailout money and record-low borrowing rates.

And Now for Something Completely Different:
Some Random Insolvency Thoughts

New Jersey Supreme Court Rejects Popular Attack On Foreclosures

New Jersey’s Supreme Court in U.S. Bank v. Guillaume rejected a popular attack on foreclosures, saying that while state law requires the name of the actual lender to be on the paperwork, the lack of that information alone isn’t enough to set aside a foreclosure. The court also rejected another popular tactic, seeking rescission of the entire loan because of an allegedly undisclosed $120 “filing fee” in the original loan documents. While that might violate the federal Truth in Lending Law, the justices said, the delinquent borrowers had already demonstrated they couldn’t comply with another requirement of the law: That they pay back the amount they borrowed to cancel the debt. The decision is technically a defeat for lenders, since the court upheld New Jersey’s strict law requiring the name, address and phone number of the actual lender, not just the mortgage servicer, to be on foreclosure filings. This is to ensure that the borrower can contact the lender directly to verify that he is in default and try to negotiate a solution.

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Joel Glucksman is an experienced civil and bankruptcy litigator specializing in the representation of secured lenders and other creditors in complex suits and bankruptcies. His court appearances take him throughout the State and Federal courts in the metropolitan area, focusing in particular on the Bankruptcy Courts for the District of New Jersey and the Southern and Eastern Districts of New York. For more information, please visit Joel Glucksman's full biography at Scarinci Hollenbeck

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