Insolvency Alerts September 2012

Insolvency Alerts September 2012

 

 

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

September 5th

Judge Gives AMR Permission to Reject Labor Contract with Pilots
American Airlines won bankruptcy court approval to throw out its labor agreement with its pilots.  This completes the airline’s campaign to force cost cuts on the lone union it could not reach a deal with on concessions.

“Unfinished Business Doctrine” Does Not Include Hourly Fee Matters of Bankrupt Law Firm
A Southern District of N.Y. judge yesterday refused to expand the “unfinished business doctrine” to include pending hourly fee matters of a bankrupt law firm.  The court refused to allow the former partners of the bankrupt Thelen law firm to retain a property interest in hourly fee matters that former Thelen lawyers took with them to new firms. The decision conflicts with a May decision by the district court in the Coudert Brothers bankruptcy.

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In General Economic News

Consumers Becoming More Confident
Credit and Collection News reports that consumers are growing more confident, with “massive” spending levels across all areas of the finance world.  They suggest two important factors that have caused consumers to become more confident with their money. First, merchants have been lowering their prices. Second, interest rates are at an all-time low. A consumer confidence survey that was recently released by the University of Michigan and Thompson Reuters backs up the consumer confidence trend.

Automakers Turn In Best August Since Before Recession
Automakers turned in their best August since before the 2007-09 recession.  U.S. monthly auto sales rose 20 percent from a year ago as consumers with aging vehicles showed more confidence in buying big-ticket items on easier credit terms. Big sales gains were achieved Toyota and Honda, and all three Detroit automakers increased August sales more than analysts had expected. “The reason for the improvement is that consumers are feeling better about making big-ticket item purchases,” said Jesse Toprak, auto analyst with TrueCar.com.

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September 4th

Ampal-American Israel Corp. Files for Chapter 11
Ampal-American Israel Corp. has filed a Chapter 11 bankruptcy, facing deepening financial troubles in the wake of a halt to natural gas supplies to Israel from Egypt, Reuters reported last week. Ampal has 12.5 percent of East Mediterranean Gas Co., the sole supplier of gas from Egypt to Israel until the Egyptian government cancelled its 20-year agreement from the Mubarak era earlier this year. Ampal sought to renegotiate agreements with its bondholders on three series of bonds for eight months and proposed a stretchout on paying bond principal for two years.  It also offered bondholders an equity kicker in the company.

China Medical Technologies Inc. Files Chapter 15 Bankruptcy
China Medical Technologies Inc., a Chinese maker of diagnostic products, has filed a foreign-firm bankruptcy proceeding under Chapter 15 of the U.S. Bankruptcy Code.  The case is pending in N.Y.  The debtor makes products to monitor various diseases including cancer.  Chapter 15 is the provision of the U.S. Bankruptcy Code that shields overseas companies from U.S. lawsuits and creditor claims while a company undergoes insolvency proceedings in a foreign country.  The debtor lists operations in Beijing, Hong Kong and the Cayman Islands.

San Bernardino Showdown
A high-stakes showdown in the San Bernardino California bankruptcy case is pitting California’s public employee pension fund against Wall Street bond firms.  The issues are further complicated by wildly divergent estimates of how much the city owes for its retirees, Reuters reported last week. San Bernardino, a city of about 210,000 near Los Angeles, filed for bankruptcy on August.

Syms Wins Court Confirmation of Chapter 11 Reorganization Plan 
Syms Corp. yesterday obtained bankruptcy court confirmation for its chapter 11 plan.  The former retailer will evolve into a real estate owner.

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In General Economic News

U.S. Households Continue to Reduce Home Debt
Total U.S. household debt fell 0.5 percent in the Third Quarter of 2012, the Federal Reserve Bank of New York said last week.  This was due almost entirely to falling mortgage balances, as households paid down home loans, erased debts, or simply lost their homes to foreclosure. Additionally, homeowners entering foreclosure fell by 12 percent to an estimated 256,000 during the quarter, the lowest level since mid-2007.  This may finally be a sign that the housing market is stabilizing

Student-Loan Debt to $914 Billion in 2nd Quarter
The New York Federal Reserve Bank said last week that debt from student loans increased 1.1 percent to $914 billion in the 2nd quarter. Outstanding student debt increased from $904 billion three months earlier, the New York Fed reported. The loans were taken out by students and their parents, and the majority are backed by the U.S. government. Moreover, 90 day delinquency rates for student loans increased to 8.9 percent from 8.69 percent in the 1st quarter, according to the New York Fed. Since the peak in household debt in the third quarter of 2008, student-loan debt has increased by $303 billion, while other forms of debt fell a combined $1.6 trillion.

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 And Now for Something Completely Different:

Some Random Insolvency Thoughts

All Eyes on Draghi
This week all eyes will once again be on the European Central Bank and on its embattled President Mario Draghi, as he once again tries to put in place a mechanism to tame the European sovereign debt crisis.

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If you have any questions about these matters, and wish to discuss them, please feel free to call.  Please also feel free to follow me on my blog at http://www.newjerseybankruptcynow.com/ or on Twitter at @JGlucksman.


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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