Randomly Distributed Trial Court Justice: A Case Study and Siren from the Consumer Bankruptcy World Forthcoming in American Bankruptcy Institute Law Review by Gary Neustadter*
“Between February 24, 2010 and April 23, 2012, Heritage Pacific Financial, L.L.C. (“Heritage”), a debt buyer, mass produced and filed 218 essentially identical adversary proceedings in California bankruptcy courts against makers of promissory notes who had filed Chapter 7 or Chapter 13 bankruptcy petitions. Each complaint alleged Heritage’s acquisition of the notes in the secondary market and alleged the outstanding obligations on the notes to be nondischargeable under the Bankruptcy Code’s fraud exception to the bankruptcy discharge. The notes evidenced loans to California residents, made in 2005 and 2006, which helped finance the purchase, refinancing, or improvement of California residential real property. When issued, the notes were secured by junior consensual liens on the real property, but subsequent foreclosure of senior consensual liens, precipitated by the mid-decade burst of the housing bubble, left the notes unsecured.
This article reports an empirical study of these bankruptcy adversary proceedings. Continue reading →
While all too much of our analysis of market developments comes to us in the form of sound bites and snippets, leave it to the great writers of our time to provide real depth and study of the business and political relationships that ultimately impact all of us.
I recently completed reading just such a study, All The Presidents’ Bankers by Nomi Prins. The author is not only a Wall Street insider but also highly regarded for her prior books and well documented written and spoken commentaries.
I very much had the sensation of sitting in on a semester long tutorial in Financial and Political History while working my way through this book. Continue reading →