Republicans Holding Up Bankruptcy Bill in Senate
From the Legal News section of Curtis Law Group’s website:
“Congressional Democrats in the Senate are trying to pass a bankruptcy bill, coined as a “cramdown” bill by opponents of the legislation, which aims to help stem the tide of foreclosures by giving bankruptcy judges the discretion to modify mortgages for homeowners who otherwise cannot afford their homes.
The House of Representatives have already passed a version of this bill, but Republicans are holding it up in the Senate. The Senate has decided to put off the vote until later in April, while changes to the bill are negotiated.”
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New Audit Report Designed for Bankruptcy Judges & Trustees
It seems that allowing bankruptcy judges to modify mortgages is leading to entrepreneurial ventures by firms seeing the new change as an opportunity.
A California company has designed a new audit report to help bankruptcy judges and trustees.
From Yahoo news:
“A specialist in providing forensic loan audits for attorneys and financial institutions has developed a new product designed for bankruptcy attorneys, judges and trustees, who will soon be operating under a law allowing judges to restructure residential mortgages in bankruptcy proceedings.
Industry analysts predict that the pending legislation, which has passed the House and is expected to win Senate approval, will produce a surge in bankruptcy filings, as financially-pressed borrowers seek bankruptcy protection in an effort to avoid foreclosure…
Audit reports can consist of approximately 100+ pages of information. In order to expedite the review process, a concise, two-page summary of the audit will highlight all relevant information about the transaction and the parties involved in it.”
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Bankruptcy Protection Sought By Another Orange County Retailer
From the OC Register online:
“Retail chain Everything But Water recently filed for Chapter 11 bankruptcy protection, according to a court document.
The chain has Everything But Water stores at Brea Mall, South Coast Plaza and The Shops at Mission Viejo, according to its Web site.
The company wants to close 10 stores; none of those are in Orange County, according to a court document.
During the period from late September to December 2008, the company experienced a more than 23 percent decrease in gross sales compared to the same period in 2007. Still, the company showed a profit for 2008. But recognizing that no end to the economic crisis was in sight, the company began efforts to reduce expenses and streamline operations as early Sept. 15, 2008. The company has been operating at a net loss in 2009, according to a court document.
The company is also attempting to sell the business as a going concern in Chapter 11, according to a court document.
Everything But Water has been a retailer of women’s swimwear, resort wear and accessories for 25 years. In October of 2006, Everything But Water acquired the assets of another retailer in the same line of business, Water Water Everywhere, and in February of 2007, Everything But Water acquired the stock of Just Add Water, effectively doubling the size of the business’ retail operations.
The Florida-based company has 70 stores in malls and strip malls in 26 states and Puerto Rico.
In April of 2006, Everything But Water was acquired by Bear Growth Capital Partners, an affiliate of Bear Stearns Merchant Banking, which is now a part of J.P. Morgan Chase Bank.”
Both Chapter 11 bankruptcies and Chapter 7 bankruptcies have seen a marked increase in Orange County this year, according to the bankruptcy attorneys at Curtis Law Group, a bankruptcy law firm with Orange County offices in Irvine, Mission Viejo, and Fullerton.
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Chapter 7 Bankruptcy Filings in Orange County for February 2009
For bankruptcy attorneys in Orange County, there were no shortage of Chapter 7 bankruptcies that needed to be filed in February, 2009. The amount of Chapter 7 bankruptcy filings in the Santa Ana Bankruptcy Courthouse in February totals 612, a slight increase from January’s total of 605.
The ten cities with the most Chapter 7 bankruptcy filings in Orange County for the month of February 2009 were: Anaheim, Costa Mesa, Fullerton, Garden Grove, Huntington Beach, Irvine, Laguna Niguel, Orange, San Clemente, and Santa Ana. Other Orange County cities that also had a high number include: Aliso Viejo, Mission Viejo, and Tustin.
Bankruptcy Bill Passes in House of Representatives
Attention, bankruptcy attorneys in Orange County — the number of rising bankruptcies in the near future may not be due to the economy alone. Consumer bankruptcies, especially Chapter 13 bankruptcies, may increase do to the new Bankruptcy Bill that has just passed in the House. How the Senate may change the bill remains to be seen, but now we know how the House wants it to look.
From the AP:
“A plan to give debt-strapped American homeowners a chance to lower their mortgage payments through bankruptcy courts won House of Representatives approval Thursday as a report revealed that foreclosures and past-due home loans hit a record 5.4 million last year.
A survey by the Mortgage Bankers Association released Thursday found that nearly 12 percent of U.S. homeowners were in foreclosure or behind on their payments at the end of 2008.
The legislation, part of President Barack Obama’s housing rescue plan, is facing a much tougher road in the Senate amid the same industry opposition and reservations from moderate Democrats that nearly derailed it in the House.
The House passed the bill 234-191 mostly along party lines, and the Senate could consider it within weeks.
The legislation would give bankruptcy judges — who now can modify loans for such items as cars and student loans but not for primary residences — new power to reduce the interest rate and principle on a home mortgage.
Supporters regard the threat of a mortgage modification in bankruptcy as a crucial tool to prod banks to negotiate with homeowners for more affordable terms. Critics argue the measure will create a flood of bankruptcy filings that ultimately will drive up mortgage rates and further destabilize the battered housing market.
The House bill is the product of a compromise between dueling Democratic factions. A group of moderates broke with liberal backers last week and refused to support the measure unless it included several changes the banking lobby had sought.
It took days of intense bargaining with an assist from Obama’s team to get the measure back on track. The president dispatched his housing secretary, Shaun Donovan, to a closed-door meeting in the Capitol to explain to restive Democrats how the measure fits in with the $75 billion housing initiative Obama unveiled this week.
The resulting compromise would bar homeowners from getting loan modifications in bankruptcy court unless they have first tried to work out a deal with their lenders and have no other way of affording their mortgages.
It also would let judges consider whether the home loan company had made a reasonable offer to change the terms to those embodied in Obama’s housing plan — allowing the homeowner to reduce his monthly payments to about one-third of his income.”
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