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Friday, May 6, 2016

New Rule Would Make It Easier For Consumers To Sue Banks

Per www.npr.org
May 5, 2016:

Many credit card and loan agreements these days have in the small type what's called a "mandatory arbitration clause." Most people don't even know what that means. But by signing, customers agree not to sue the financial firm in a class action lawsuit. Instead, they agree to work out any problem with an arbitrator hired by the bank.
"The company can sidestep the legal system, avoid accountability, and continue to pursue profitable practices even if they may violate the law and harm thousands or even millions of consumers," says Richard Cordray, the director of the Consumer Financial Protection Bureau.
The CFPB on Thursday proposed a rule that would ban a range of financial firms from using this tactic to avoid lawsuits.
Restoring The Power Of The Class Action
Suppose you notice that your credit card company charged you a $50 fee you think is unfair. And it turns out the company is doing this to a million people. A class action lawsuit can band you together with them and make it worth some lawyers' time to go after the company for $50 million....
The CFPB is now seeking public comment on the proposed rule. One point of contention between consumer and industry groups is likely to be whether the rule would grandfather in existing arbitration clauses. If a final rule is issued, it will likely go into effect next year.
For more, see: http://www.npr.org/sections/thetwo-way/2016/05/05/476897917/new-rule-would-make-it-easier-for-consumers-to-sue-banks

Thursday, May 5, 2016

'Excessive' PACER Fees Prompt Class Action Complaint

Per Bloomberg BNA:

April 25 — The government agency running the PACER system, which provides online access to federal court records, charges more fees than necessary to recoup its costs in providing its services, a complaint filed in the U.S. District Court for the District of Columbia April 21 alleges.
“The judiciary has taken no steps to change the fee structure or the way it has administered the system and so that means, unfortunately, that a lawsuit is necessary,” Deepak Gupta, an attorney representing the plaintiffs, told Bloomberg BNA April 25. Gupta is with Gupta Wessler PLLC in Washington.
The increase in PACER fees creates “substantial barriers to accessing public records—for litigants, journalists, researchers, and others,” the complaint says.
Further, the complaint says the Administrative Office of the U.S. Courts, which runs the PACER system, discourages fee waivers for journalists, pro se litigants and nonprofits and hires private collection lawyers to sue individuals who can't pay the fees.
$145 Million in Fees
In the class action complaint, the plaintiffs—three non-profit organizations, the National Veterans Legal Services Program, the National Consumer Law Center and the Alliance for Justice—allege that the AO collected more than $145 million in fees in 2014, “much of which was earmarked for other purposes such as courtroom technology, websites for jurors and bankruptcy notification systems.” PACER stands for Public Access to Court Electronic Records.
Charles Hall, a spokesperson for the AO, had no comment on the case, citing its policy not to comment on pending litigation.
E-Government Act
Under the E-Government Act of 2002, the AO is authorized to charge PACER fees “as a charge for services rendered,” but only enough to reimburse expenses relating to providing the services.
Agencies have to get Congress to appropriate money for them, Gupta said.
“They are allowed to charge people fees for services but can't transform those fees into all-purpose, revenue-raising means,” Gupta said.
The judiciary has raised costs twice since 2005, despite accumulating surpluses in the millions of dollars, the complaint alleges.
“The basic idea here is that a government agency can't make up its own taxes,” Gupta said.
The complaint alleges that almost one decade ago, PACER fees had already generated at least $32 million in surplus funds.
First Challenge
The case is the first challenge to the PACER fee schedule by parties represented by counsel, the complaint says.
A pro se plaintiff challenged the fees in 2014 but the case “went the way so many cases do where there are not lawyers involved—it was dismissed,” Gupta said. That case was Greenspan v. Admin. Office, 2014 BL 341599 (N.D. Cal. 2014).
Two PACER-related complaints were filed in December 2015, alleging the system overcharges due to a billing error, Fisher v. United States, Fed. Cl., No. 15-1575C, filed 12/28/15 and Fisher v. Duff, W.D. Wash., No. 15-5944, filed 12/29/15.
Legal Strategy
One reason there haven't been more successful lawsuits is that people aren't sure what legal pathway they can use, Gupta said.
The E-Government Act doesn't create a cause of action, Gupta said, and the court system is exempt from the Administrative Procedures Act, which is the normal method you would use to challenge a government action, he said.
The theory used here is based on a little-known statute from 1887, the Little Tucker Act, he said.
The act waives the government's sovereign immunity and provides jurisdiction for damages claims to recover for an illegal exaction, Gupta said.
The illegal exaction theory provides a cause of action that money has been taken from someone in violation of a statute, he said.
“If such a cause of action didn't exist, the government could just take money from you in a lawless way and you'd have no way of seeking recovery,” Gupta said.
To contact the reporter on this story: Melissa Heelan Stanzione in Washington at mstanzione@bna.com
To contact the editor responsible for this story: Jessie Kokrda Kamens atjkamens@bna.com

For More Information

Complaint at http://src.bna.com/eq4.

Class action lawsuit filed against 'owners' of TransCare

Per www.lohud.com:

, mcdonofrio@lohud.com8:41 p.m. EST March 3, 2016

The suit also mentions a tweet posted by Patriarch Partners CEO Lynn Tilton about the February bankruptcy.

Former employees for a regional ambulance service that suddenly shut down last week filed class-action federal lawsuits seeking two months’ wages and benefits for 1,200 employees who lost their jobs.
Warren Eisenstadt, 52, was one of hundreds of employees fired in a mass layoff on Feb. 25 by TransCare Corporation, a for-profit ambulance company that serviced Westchester County, New York City, Long Island and other states. Eisenstadt worked at TransCare as a transport emergency medical technician in Brooklyn since 2002.
On Monday, Eisenstadt filed a class-action lawsuit in Brooklyn federal court against Patriarch Partners LLC, a private equity fund. The lawsuit alleges Patriarch, whose portfolio includes TransCare,  owns TransCare. The suit also mentions a tweet posted by Patriarch CEO Lynn Tilton about the February bankruptcy.
In addition, the lawsuit names “XYZ Entities 1-10,” which are “unknown entities which Patriarch lent to, acquired, or otherwise controlled TransCare.”
Eisenstadt's lawsuit seeks 60 days’ wages and benefits for at least 1,200 employees who were laid off. The lawsuit claims employees were fired without cause or notice in violation of federal employment law and the state WARN Act.
Are you a former TransCare worker and want to share your story? Contact Michael D'Onofrio at mcdonofrio@lohud.com.
Eisenstadt's lawsuit also alleges employees have not been paid for the work they performed shortly before they were fired, and some employees’ paychecks have bounced.
Patriarch said in a statement that the lawsuit was “meritless.”
“The plaintiffs’ claims of violation of the WARN Act are meritless since neither Patriarch Partners nor Lynn Tilton were the employer here,” Patriarch said in a released statement. “We will vigorously defend ourselves against these lawsuits.”
TransCare did not immediately respond to requests for comment.
A similar class-action lawsuit was filed against Patriarch on Wednesday on behalf of Dalibel Garcia, who was also an employee at TransCare fired on Feb. 25.
On TransCare's website, Patriarch and Tilton are mentioned multiple times. OnTransCare's homepage, there is a link that reads, "About Patriarch Partners," that leads to an information page about Patriarch accompanied by a picture of Tilton. In addition, there is a link that reads, "A Lynn Tilton Company," which leads to Tilton's life story on Patriarch's own website.
When Eisenstadt found out he was going to lose his job, he said, "“I thought it wasn’t real. It was surreal, like it wasn’t happening.”
Eisenstadt, who lives in Brooklyn, said he went to the TransCare office on Hamilton Avenue around 1 a.m. on Feb. 26 to try to get his final paycheck, which he managed to get. Eisenstadt said he and other employees immediately went to cash their checks "because we thought the banks were bouncing them."
Eisenstadt's lawsuit alleges TransCare attempted to convince employees that the company was solvent, even as red flags continued to be raised. TransCare hired numerous employees about a month before the shutdown, who were only to be laid off weeks later.

When TransCare filed for Chapter 7 bankruptcy protection on Feb. 24, the company notified employees that the restructuring would take place during the next “several months,” the lawsuit says.
For more, see: http://www.lohud.com/story/money/business/2016/03/03/class-action-lawsuit-patriarch-partners-transcare/81288184/

Colt Defense LLC Announces Resignation of Chief Financial Officer; Appoints Interim Chief Financial Officer

April 07, 2016 04:50 PM Eastern Daylight Time
HARTFORD, Conn.--()--Scott Flaherty, Senior Vice President and Chief Financial Officer of Colt’s Manufacturing Company, LLC, has resigned his positions with the company in order to pursue other opportunities. Richard Harris has been named Interim Chief Financial Officer.
About Colt
Colt is one of the world’s leading designers, developers and manufacturers of firearms. The company has supplied civilian, military and law enforcement customers in the United States and throughout the world for more than 175 years. Our subsidiary, Colt Canada Corporation, is the Canadian government’s Center of Excellence for small arms and is the Canadian military’s sole supplier of the C7 rifle and C8 carbine. Colt operates its manufacturing facilities in West Hartford, Connecticut and Kitchener, Ontario. For more information on Colt and its subsidiaries, please visit www.colt.com.

Thursday, April 21, 2016

Creditor Sale Brings Dubai's Limitless To Brink Of Debt Plan Deal

Per www.globalinsolvency.com:

Thu., April 21, 2016
Dubai-based property developer Limitless is set to complete a drawn-out debt restructuring after the final dissenting creditor sold its share of the company's 4.45 billion dirhams ($1.2 billion) debt, sources with knowledge of the matter said on Wednesday, Reuters reported. New York-based Stonehill Capital Management sold its debt in the state-controlled company, worth around $15 million at face value, to Dubai Islamic Bank, an existing creditor and one of the members of the creditor committee, the sources said. The sale means Limitless can now move ahead with its second debt restructuring since Dubai's property crash around seven years ago and begin to try to turn around its fortunes when the emirate's real estate sector is once again going through a softer period. Limitless needed all 18 creditor banks to agree to the plan, which involves extending its debt by two years to December 2018. In return, Limitless will make an advance repayment of 2.07 billion dirhams to creditors, including 1.9 billion dirhams in bank debt and a further 176 million dirhams to trade creditors, using cash from the sale of land in Saudi Arabia. 

Pending Changes in Bankruptcy Forms Effective April 2016

According to the website for the United States Bankruptcy Court for the Southern District of New York:

Pending Changes in Bankruptcy Forms Effective April 2016

Release Date: 
March 15, 2016
Pending Changes in Bankruptcy Forms Effective April 2016
Automatic adjustments will be made on April 1, 2016, to dollar amounts stated in various provisions of the Bankruptcy Code, one provision in Title 28, seven Official Bankruptcy Forms which contain adjusted dollar amounts, the Instructions for Individual and Non-Individual Debtors, two Director’s Forms which include dollar amounts, and one set of instructions for a Director’s Form which includes a dollar amount. The adjustments will apply to cases filed on or after April 1, 2016.
Section 104 of the Code provides that the Judicial Conference make the adjustments, which are calculated at three-year intervals on the basis of the change in the Consumer Price Index for the most recent three-year period ending immediately before the year in which the adjustment is made and rounded to the nearest $25. The Conference has delegated that authority to the Administrative Office. The revised dollar amounts were published on February 22, 2016, volume 81, number 34, of the Federal Register, at page 8,748.
The Official Forms, Director’s Forms, and instructions impacted include:
• Official Form 106C, The Property You Claim as Exempt, Line 3
• Official Form 107, Your Statement of Financial Affairs for Individuals Filing for Bankruptcy, Line 6
• Official Form 122A-2, Chapter 7 Means Test Calculation, Lines 29 and 40
• Official Form 122C-2, Chapter 13 Calculation of Your Disposable Income, Line 29
• Official Form 201, Voluntary Petition for Non-Individuals, Line 8
• Official Form 207, Statement of Your Financial Affairs, Lines 3 and 4
• Official Form 410, Proof of Claim, Line 12
• Director’s Form 2000, Required Lists, Schedules, Statements, and Fees, Pages 2, 3, and 4
• Director’s Form 2830, Chapter 13 Debtor's Certifications Regarding Domestic Support Obligations and Section 522(q), Part III
• Instructions for Individual Debtors, Pages 8 and 22
• Instructions for Non-Individual Debtors, Page 12
• Director’s Form 2500E, Instructions, Page 1

For more, see http://www.nysb.uscourts.gov/news/pending-changes-bankruptcy-forms-effective-april-2016

Wednesday, February 24, 2016

Emerging Market Bonds Hit As Foreign Investors Dump Debt

Per www.globalinsolvency.com:

Wed., February 24, 2016

Twenty years ago, a dangerous cocktail of debt accumulated in foreign money and deteriorating exchange rates led emerging markets into financial meltdown, the Financial Times reported. In the aftermath, countries vowed to repent of the “original sin” of borrowing huge sums in non-domestic currencies. Major emerging markets went from having more than three-quarters of their debt in foreign currencies to around half. Finance ministers were applauded for better protecting economies from swings in global market sentiment. Yet as the world recoils from risky assets amid a slowdown in China and collapsing oil prices, emerging market bonds are once again being dragged into the fray. Unable to resist strengthening currencies and double-digit yields at a time when returns in developed markets were falling, the share of local-market government debt owned by foreigners more than doubled between 2009 and 2015. Now they want out.

Sunday, February 21, 2016

French Pianist Scores Rare Win in Luxembourg Madoff-Fund Lawsuit

Good news for investors. Bad news for Madoff custodian banks.

Per www.bloomberg.com

February 18, 2016

A French concert pianist won a six-year fight to get back money she lost to Bernard Madoff’s Ponzi scheme after a Luxembourg appeals court said her bank committed a substantial error when advising her about the investment.

Banque Internationale a Luxembourg SA must pay 250,000 euros ($277,000), plus interest dating back to 2010, the Luxembourg Court of Appeal ruled, according to a copy of the judgment. The bank failed to highlight the “clearly exorbitant, exceptional risks” the client took by investing in an unregulated hedge fund.

“The bank can’t hide behind the signature” of the unidentified woman “of a waiver that was pre-drafted in language that was technically correct and comprehensible to people with some knowledge in the economic and financial area, but inappropriate when it comes to a concert pianist,” the court said in the Feb. 4 decision....

For more, see http://www.bloomberg.com/news/articles/2016-02-18/french-pianist-scores-rare-win-in-luxembourg-madoff-fund-lawsuit






Monday, January 25, 2016

Hearing to be held on February 1, 2016 concerning attempted involuntary bankruptcy petition brought against certain Zohar funds by Patriarch Partners XV, LLC

A hearing has been scheduled before United States Bankruptcy Judge Robert D. Drain for 10:00 am on February 1, 2016 concerning whether Patriarch Partners XV, LLC (a company that is subject to investigation by the Securities and Exchange Commission) should be allowed to bankrupt certain of the Zohar feeder funds.

The hearing is to be held in the courthouse located at 300 Quarropas Street in White Plains, New York.  For more information, see http://www.nysb.uscourts.gov/content/judge-robert-d-drain

No notice of hearing has been filed with the Bankruptcy Court by the parties before the Bankruptcy Court.  This is highly abnormal.  The hearing information below is from the calendar kept on the Bankruptcy Court's website, http://www.nysb.uscourts.gov/calendars/rdd.html

It is difficult to characterize the nature of the February 1, 2016 hearing beyond that it will be an evidentiary hearing.  This is because the transcript of the previous hearing in this case is not available to the public.  According to commentators, issues to be addressed at the February 1, 2016 hearing include whether the bankruptcy process is being used in good faith by Patriarch Partners XV, LLC or whether it is engaged in a delay tactic.

If you are an investor in Zohar CDO 2003-1, Limited, Zohar CDO 2003-1, Corp. or Zohar CDO 2003-1,
LLC - the targets of the bankruptcy - then your rights are affected.  If you are an investor in other Zohar entities, your rights may also be affected by the hearing.

This has been a public service announcement, by way of reaction to the absence of notice provided by the parties before the Bankruptcy Court, and for the sake of transparency.

Honorable Robert D. Drain 
Monday
01/25
Tuesday
01/26
Wednesday
01/27
Thursday
01/28
Friday
01/29
Monday
02/01
Tuesday
02/02
Wednesday
02/03
Thursday
02/04
Friday
02/05
Monday, February 01, 2016

10:00 AM
15-23680-rdd   Zohar CDO 2003-1, Limited    Ch. 11
Evidentiary Hearing on Motion to Dismiss Involuntary Petition // Answer and Motion of Alleged Debtors for an Order Dismissing Involuntary Chapter 11 Petitions or, in the Alternative, Abstaining Pursuant to 11 U.S.C. 305 






Tuesday, December 29, 2015

U.S. Companies Led the World in 2015 Debt Defaults, S&P Says

Bloomberg Business reports that, according to Standard & Poors analysts, more American companies have defaulted on their debts this year than have companies issuing debt in any other country or region.

Per Bloomberg Business:
By 
December 28, 2015

More U.S. companies have defaulted on their debt this year than issuers from any other country or region, S&P analysts led by Diane Vazza wrote in a Dec. 24 report.
As of last week, 111 companies worldwide had defaulted on their obligations, the highest tally since 2009 when the the figure hit 242 for the same period. About 60 percent of this year’s global defaults have come from U.S. borrowers, Vazza wrote, up from 55 percent a year ago, when 33 of 60 defaulters were American.
After the U.S., companies from emerging markets were the second-largest defaulters, accounting for 23 percent of the pool, which is a smaller share than last year, according to S&P data.
Plummeting oil prices and speculation about how the Federal Reserve’s plan to tighten monetary policy would affect corporate borrowing costs has made companies more vulnerable, Vazza wrote.
“The current crop of U.S. speculative-grade issuers appears fragile, and particularly susceptible to any sudden, or unanticipated shock,” she wrote.
Arch Coal Inc. was the most recent addition to the list, having its credit rating downgraded to “speculative default” by Standard & Poor’s last week after the coal producer missed about $90 million in interest payments and exercised a 30-day grace period with the holders of some of its notes.
Looking ahead, S&P expects the U.S. corporate default rate will rise to 3.3 percent by September 2016 from 2.5 percent a year earlier. The bulk of the failures will come from companies in the oil and gas sector, which accounted for about a quarter of this year’s defaults....