Adjustment for bad debts

Note: Register for this month’s CLE, “Current Developments in Tax Law,” from 1-2 p.m. ET on Wednesday, Nov. 18.Despite recent murmurs that the recession may be easing its grip on the United States, debt continues to sap the financial strength of millions of families and businesses around the country.Home foreclosure is one of debt’s most wrenching symptoms. In August, according to RealtyTrac, foreclosure filings were reported on 358,471 properties. That number amounts to one of every 357 housing units in the country.There was a smidge of good news. Filings were down 1 percent from July. Still, there were 18 percent more than in August 2008.Meanwhile, August consumer bankruptcy filings totaled 119,874, an increase of 24 percent over the number of filings in August 2008,according to the American Bankruptcy Institute, a nonpartisan organization that analyzes issues relating to insolvency. Here, too, there was a little bit of good news: The number of bankruptcy … [Read more...] about The Bad-Debt Blues

So whether they are actively recruiting these low-income students for reasons of open-the-door altruism or keep-the-lights-on capitalism — or, more likely, some combination of the two — there has been a huge, largely hidden byproduct of this dramatic increase in access: These students are often being loaded up with staggering debt that is completely out of whack with the earnings boost they’ll likely get from a degree at a nonselective or less selective college. Already, average student loan debt is higher in Boston than any other metro area in the country, 44 percent above the national average, according to Credit Karma. But  more troubling, many of these low-income students — and, at some colleges, most of them — are not graduating. That means these non-completers are leaving campus saddled with lots of debt but none of the salary gains that traditionally come with a bachelor’s degree. RELATED STORY: Poor at an Ivy League school Dean College … [Read more...] about The college debt crisis is even worse than you think

The director at the heart of the Carrington Wire pension fund deficit saga has been disqualified for a period of 12 years. BackgroundWe have previously reported on the background to the Carrington Wire Limited (“CWL”) collapse and the Pensions Regulator’s actions in issuing warning notices to CWL’s former Russian parent company (OAO Severstal), and a contribution notice to Richard Williams, the sole director and shareholder of Gillico Limited (“Gillico”) (a shelf company that purchased the entire CWL shareholding for £1). You will be aware from our previous post (Dodgy Directors Top Trumps) that the UK Insolvency Service will investigate directors’ conduct and if appropriate commence director disqualification proceedings or enter into disqualification undertakings. Accordingly, the Insolvency Service has also carried out an investigation in relation to the collapse of CWL and the conduct of Richard Williams as a director. Case … [Read more...] about UK Insolvency Regulators’ Bite Now as Bad as Bark

Martin Z. Braun, Bloomberg Published 9:32 am PDT, Tuesday, October 2, 2018 Nine law firms were hired by Connecticut and underwriter Bank of America to vet the state's $492 million bond sale in June. But none appear to have caught what could be a costly mistake: The contract effectively promises that Connecticut will stick to a strict $1.9 billion annual limit on a key type of debt sale, even though that cap was loosened by the state legislature. That misstep, which stemmed from confusion in Treasurer Denise Nappier's office about when the legislature's step took effect, threatens to force the government to choose between saving money by refinancing debt or conserving its ability to fund public works with bonds backed by its general pledge to repay. It could also leave Connecticut facing a cash crunch if the economy lapses into a severe recession by curtailing its ability to sell short-term debt to cover temporary budget shortfalls. "They're going to have to watch their … [Read more...] about Error shackles Connecticut to a debt limit that lawmakers had loosened

The First Circuit’s recent decision in Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund[1] has provoked strong reactions among private equity professionals.  The prospect of fund assets being exposed to portfolio company liabilities is disquieting.  Piercing the corporate veil is a problem that calls for perspective:  when concerns arise in this area, they arise from the magnitude side of the frequency versus magnitude risk equation.  Limited owner liability is a concept that courts (and legislatures) rarely consider.  When they do, however, the potential damages involved tend to be significant, and private equity funds represent a classic deep pocket.  (The Sun Capital funds are in a sense fortunate that the size of the liabilities involved in this case, while not insignificant, are not far larger.)  Moreover, the nature of the private equity business model and the structure of private equity … [Read more...] about Sun Capital Partners: Some Alternative Perspectives