Banking and Financial Services

Chapman wrote the book on the marketplace lending regulatory landscape that the entire industry has come to rely upon. First published in 2013, the 2024 update covers a vast array of topics affecting the marketplace lending industry.

Chapman is a proud sponsor of the Fund Finance Association (FFA) 13th Annual Global Fund Finance Symposium

Chapman is a proud sponsor of the 2024 Turnaround Management Association (TMA) Distressed Investing Conference.

On November 27, 2023, the US Securities Exchange Commission (“SEC”) adopted final Securities Act Rule 192 (“Final Rule 192”) prohibiting certain conflicts of interest in securitization transactions. In general, Final Rule 192 prohibits a “securitization participant” with respect to an “asset-backed security” (“ABS”) from directly or indirectly engaging in any “conflicted transaction” during the applicable prohibition period.

Chapman is a proud member of the Secured Finance Network (SFNet). Our feature within The Secured Lender’s Great Places to Work 2023 issue highlights Chapman's efforts to be a leader in the finance industry and promote careers in law and finance.

The Second Circuit Court of Appeals recently issued an eagerly awaited decision in Kirschner v. JP Morgan Chase Bank, N.A., which reconfirmed the widely accepted view that loans are not securities under federal or state securities laws.

Chapman is a proud sponsor of the Fund Finance Association (FFA) 12th Annual Global Fund Finance Symposium.

The much anticipated updated regulations for disclosure requirements for commercial financing in New York have been adopted by the New York Department of Financial Services ("NYDFS"). 

Chapman is a proud sponsor of the 2023 Turnaround Management Association (TMA) Distressed Investing Conference.

On February 19, 2020, the Small Business Reorganization Act came into effect and Debtors with aggregate liabilities that do not exceed $2,566,050 were provided an opportunity to resolve their outstanding liabilities. But even before the SBRA could see its first successes (or failures), the Coronavirus Aid, Relieve and Economic Security Act of 2020 increased a small business’s debt threshold to $7.5 million.

As interested parties look for more direction on Environmental, Social and Governance (“ESG”) matters, the Loan Syndication and Trading Association (“LSTA”) recently issued new Guidance for Green, Social, and Sustainability-Linked Loans External Reviews (“External Review Guidance”) and Guidance on Social Loan Principles (“Social Loan Principle Guidance”). A summary of this guidance is below.

Chapman is sponsoring the Fund Finance Association Global Symposium.

Chapman's Marc Franson presents a consumer banking update at the Illinois Bankers Association Bank Counsel Conference. 

Chapman's Marc Franson is speaking at the 44th Annual Illinois Credit Union League Attorneys Conference.

As a go-to firm for asset-based lending, Chapman is a proud sponsor of the Secured Finance Network’s (SFNet) 77th Annual Convention.

Chapman attorney Steve Tetro spoke at iiBIG's 13th Annual Investment and M&A Opportunities in Healthcare Conference.

Lenders and investors are taking different approaches to building ESG portfolios based on the entity’s own preferences and values. However, one widely used tool involves screening of select assets or transactions that align with those values.

A recent federal district court decision out of Massachusetts found that a bank was the true lender on a loan subsequently transferred to a trust consisting of student loans. Robinson and Spears v. Nat’l. Collegiate Student Loan Trust 2006-2, 2021 WL 1293707, Case No. 20-cv-10203 ADB (D. Mass. April 7, 2021).

At today’s Earth Day Climate Summit, President Joe Biden announced to world leaders that the United States is committed to cutting its greenhouse gas emissions by 50% to 52% from 2005 levels by 2030.

Last week the Loan Syndications and Trading Association, the Loan Market Association, and the Asia Pacific Loan Market Association jointly published their first ever Social Loan Principles.

In the past few days, two courts have actions that are of significance to marketplace lenders and their funding sources. 

The Securities and Exchange Commission this month announced that the Divisions of Corporation Finance, Examinations, and Enforcement are all undertaking climate or ESG-related initiatives. 

Chapman attorney Melanie Gnazzo spoke at the Virtual Investors' Conference on LIBOR.

Environmental, Social and Governance investing in the United States has reportedly reached an estimated $250 billion in assets under management and is expected to see continued growth in 2021 and beyond. 

On December 27, the Consolidated Appropriations Act, 2021 was signed into law, which, among other things, contains an important amendment to Section 547 of the United States Bankruptcy Code.

Chapman attorney Marc Franson spoke at the Illinois Bankers Association Bank Counsel Conference. 

Chapman attorney Marilynn Tham spoke at the Secured Finance Network's 76th Annual Convention.

Chapman attorney Marc Franson spoke at the 43rd Annual Illinois Credit Union League Attorneys Conference.

Under the expanded Medicare Accelerated and Advance Payments Program, more than 22,000 Medicare Part A providers and 28,000 Medicare Part B suppliers requested and received accelerated or advance payments from the Centers for Medicare & Medicaid Services to help ease financial strain and uncertainty caused by the COVID-19 pandemic.

Chapman attorney Rick Cosgrove spoke at the Virtual US P3 Forum 2020.

Chapman attorney Melanie Gnazzo spoke at The Virtual Investors' Conference on LIBOR. 

In 2015, the Second Circuit Court of Appeals issued an opinion finding that, under the doctrine of federal preemption, a non-bank assignee of a bank loan could not charge and collect the rates and fees that the bank could charge and was therefore subject to state law usury limits.

As companies default under their credit agreements, lenders have to decide what course of action is appropriate to effectuate their goals. Should the lender give the borrower breathing room by entering into a forbearance agreement in exchange for certain milestones, or is more aggressive enforcement action required?

The Office of the Comptroller of the Currency recently issued its final rule codifying as a regulation that the interest charged on loans that is permissible before the loan is transferred remains in effect after the loan is transferred.

The parties to the closely watched litigation by the Attorney General of Colorado as Administrator of the Colorado Uniform Consumer Credit Code against two marketplace lending platforms have agreed to settle the litigation.

This is the third and final Client Alert of a three-part series relating to executing a Strict Foreclosure. As discussed in our previous Client Alerts, it is imperative to focus on who is going to run the business after consummating the Strict Foreclosure.

On July 22, Online Lending Policy Institute hosted a conversation covering the new FDIC rule issued on June 25 which adopts the common law doctrine of “valid when made” as well as other topics related to fintech.

The CARES Act, which was designed to support individuals and businesses affected by the COVID-19 pandemic, was signed into law on March 27. This article summarizes various tax provisions in the CARES Act.

The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation have been quite active in issuing or proposing new regulations and initiatives focused on financial technology and innovation in financial services.

This is the second Client Alert of a three-part series relating to executing a Strict Foreclosure. 

The Online Lending Policy Institute will be hosting a conversation with Chairman of the FDIC, Jelena McWilliams. Chapman attorney Marc Franson will also be moderating a conversation with FDIC Deputy to the Chairman & Chief of Staff, Brandon Milhorn.

This Client Alert is part of a three Alert series. This Alert focuses on when Strict Foreclosure can be a lender’s best option and the potential path to execute a Strict Foreclosure. 

The Federal Reserve has established the Main Street Loan Program to provide support to small and medium-sized businesses that were in sound financial condition before the onset of the COVID-19 pandemic.

On June 11, the Online Lending Policy Institute hosted a conversation covering the expansive advance notice of proposed rulemaking in the fintech space.

On June 11, the Federal Reserve Bank of New York issued an updated Notice of Interest for the Municipal Liquidity Facility to reflect the expansion of eligibility for the facility.

Chapman attorney Marc Franson moderated a conversation with OCC Senior Deputy Comptroller and Chief Counsel, Jonathan Gould, on the proposed new rulemaking from the OCC.

On June 5, the Paycheck Protection Program Flexibility Act of 2020 was signed into law and made key changes to the Paycheck Protection Program just a few weeks before the program’s official termination on June 30.

On June 3, the Federal Reserve announced expanded eligibility for its Municipal Liquidity Facility. Under the new terms, a State that does not have at least two total counties or cities that meet the minimum population requirements will be able to identify a city or county to be an Eligible Issuer.

On May 29, the Office of the Comptroller of the Currency issued its final rule codifying as a regulation that the interest charged on loans that is permissible before the loan is transferred remains in effect after the loan is transferred.

This client alert will address questions about loan forgiveness under the Paycheck Protection Program for both borrowers and lenders as known at the current time, but we note that legislative efforts currently underway may change the terms of these loan forgiveness provisions.

This alert explores the three loan facilities constituting the Main Street Lending Program: the newly announced Main Street Priority Loan Facility, the revised Main Street New Loan Facility, and the revised Main Street Expanded Loan Facility.

On May 5, federal banking regulators adopted an interim final rule that neutralizes the liquidity coverage ratio impact for banks participating in the Federal Reserve’s Money Market Mutual Fund Liquidity Facility and the Paycheck Protection Program Liquidity Facility.

On April 27, the Federal Reserve issued a press release announcing changes to the Municipal Lending Facility described in previous client alerts. At the same time, the Federal Reserve Bank of New York, as sole Reserve Bank lender for the facility, issued a FAQs for the facility.

The Paycheck Protection Program and Health Care Enhancement Act was signed into law today. This alert summarizes key portions of the Act and recently released information from the Department of Health and Human Services explaining its plans to allocate and distribute the Provider Relief Fund money.

On April 9, the Federal Reserve issued term sheets for six “new” funding facilities under the CARES Act. This client alert describes in detail the Municipal Liquidity Facility.

Chapman’s "Bankruptcy and Aircraft Finance" handbook details certain special rights afforded aircraft creditors and some of the strategies employed. With the airline industry suffering devastating losses as a result of the COVID-19 pandemic, we hope this will be a useful resource for creditors.

On April 9 the Federal Reserve issued term sheets for six “new” funding facilities under the CARES Act. Three of those facilities provide for direct loans to companies. 

The Coronavirus Aid, Relief, and Economic Security Act to support individuals and businesses affected by COVID-19 pandemic was signed into law on March 27. This client alert summarizes the various tax provisions in the CARES Act.

Earlier today the Federal Reserve announced it would establish six new funding facilities supported by Treasury funding authorized by Section 4003(b)(4) of the CARES Act.

The Federal Reserve Bank of New York has posted FAQa for the Commercial Paper Funding Facility described in our March 19 client alert, and amended as described in our March 24 client alert.

The Federal Reserve has established a webpage that provides links to a FAQ and other documents for the Money Market Fund Liquidity Facility described in earlier Chapman client alerts.

Yesterday the Federal Reserve announced it was temporarily removing Treasury securities and deposits at Federal Reserve Banks from the supplementary leverage ratio applicable to Category I-III bank holding companies or US intermediate holding companies of foreign banks.  

In response to the COVID-19 pandemic, federal and state courts throughout the country are issuing general orders providing for important changes to procedures for pending and newly scheduled court hearings. This is a summary of such procedural changes for the federal courts located in Chicago and the state courts in Cook and the surrounding collar counties. 

This client alert has been updated from our March 31, 2020 client alert to reflect guidance from the U.S. Treasury Department and the Small Business Administration.

The $2 trillion stimulus bill is the largest stimulus bill in U.S. history and Congress’ third major piece of legislation to address the COVID-19 crisis. This client alert summarizes notable CARES Act provisions for Institutions of Higher Education.

The cornerstone of the CARES Act’s relief package for small businesses is the Paycheck Protection Program, under which the Small Business Administration will guarantee up to $349 billion in small business loans. 

The Coronavirus Aid, Relief, and Economic Security Act, a bill designed to provide financial support and resources to individuals and businesses affected by COVID-19 pandemic, was signed into law on March 27. This client alert summarizes notable CARES Act provisions for health care businesses, including hospitals and physician practices.

This Client Alert focuses on some major programs established by the Coronavirus Aid, Relief, and Economic Security Act to financially support, through loans or grants, (1) small businesses, (2) larger businesses, and (3) states and municipalities. 

While many questions and uncertainties exist with respect to the impact of COVID-19 on the economy, this is an overview of the prominent issues for lenders to consider regarding existing middle market credit agreements – particularly, as a spike in amendment and waiver activity is expected in coming months.

H.R. 748 better known as the CARES Act or more informally as the $2 trillion stimulus bill signed by President Trump on March 27, 2020, contains one important provision for all consumer lenders and another two provisions related to federally-backed mortgage loans.

On March 23, the Federal Reserve issued further amendments to add negotiable certificates of deposit and all short-term municipal securities to the list of eligible collateral. 

On March 23, the Federal Reserve added municipal issuers and amended the pricing for the commercial paper funding facility announced on March 17 and issued other “program terms and conditions” posted on the website of the Federal Reserve Bank of New York.

This morning, the Board of Governors of the Federal Reserve System announced sweeping actions to help the economy.

On March 18, the Federal Reserve announced a Money Market Fund Liquidity Facility to make loans to banks and certain affiliates secured by certain assets acquired from “prime” money market funds. Earlier today, the Federal Reserve issued amendments to the program.

On March 17, the Federal Reserve Board announced the establishment of two emergency funding facilities that closely mirror facilities established in 2008 during the last financial crisis in providing liquidity to both short and long term funding markets.

On September 17, the SEC announced proposed rules to update the statistical disclosures that bank and savings and loan registrants provide to investors and eliminate disclosures that overlap with other SEC rules, U.S. GAAP or IFRS.

The California Consumer Privacy Act of 2018 went into effect on January 1, 2020 and imposes extensive disclosure and record-keeping requirements on businesses that handle personal information.

Chapman attorney Marc Franson spoke at the 2019 Illinois Bankers Association Bank Counsel Conference. 

On November 22, in a fact-specific ruling, the U.S. Court of Appeals for the First Circuit held that two separate, but related Sun Capital Partners Inc. private equity investment funds were not liable for the multiemployer plan withdrawal liability of a bankrupt portfolio company that the two funds co-owned.

Chapman attorneys Dave Audley and Bryan Jacobson spoke at the November monthly meeting of the Chicago Mortgage Attorneys Association.

Chapman attorney Cari Grieb spoke at a National Football League Roundtable hosted by the Young Jewish Professionals. 

In a case of first impression, the Seventh Circuit recently held that a UCC financing statement that incorporates a description of collateral by reference to an unattached security agreement sufficiently “indicates” the collateral, such that a separate and additional description of the collateral is not required to properly perfect a lender’s security interest.

The First Circuit recently found that a UCC filing amendment naming the debtor contained an appropriate name and that, when coupled with a corrected collateral description in the amendment, the bondholders’ lien was perfected and therefore unavoidable under the “strong-arm” provisions of the Bankruptcy Code.

The US Court of Appeals for the Ninth Circuit is the latest court in a developing line of case law to find that the doctrine of equitable mootness applies to prevent an aggrieved creditor from unwinding a substantially consummated Chapter 9 municipal bankruptcy plan.

Chapman attorney Rick Cosgrove spoke at the US P3 Forum 2019. 

Having failed in attempts to accelerate the termination of a CDO, an investor group holding senior notes filed an involuntary petition against an issuer to liquidate the CDO before its stated maturity under the U.S. Bankruptcy Code.

Chapman attorneys Marc Franson and Melanie Gnazzo spoke at the 18th Annual Investors' Conference on Equipment Finance. 

This article outlines the features of proposals to adjust the applicability of certain capital and liquidity tests and certain enhanced prudential standards for bank holding companies.

A recent decision of the United States District Court for the District of Delaware has provided further support within the Third Circuit for so-called “gift” plans (i.e., plans in which a secured creditor class “gifts” a portion of its plan distribution to a junior class).

The state of Colorado initiated two lawsuits against online lending platforms. The suits alleged that the platforms had violated the state’s Uniform Consumer Credit Code by charging interest and some fees in excess of those allowed under Colorado law and that the consumer loan agreements utilized a non-Colorado governing law provision, also in violation of the law.

New treasury regulations proposed by the Internal Revenue Service on October 31 significantly diminish the sting of Section 956 for many US corporations that own stock in non-US corporations that have investments in US property.

In two recent cases, the Court of Appeals for the Seventh Circuit held that the Illinois Department of Revenue could not collect delinquent retail and sales taxes from the proceeds of assets sold pursuant to section 363 of the Bankruptcy Code.

The U.S. Court of Appeals for the Fifth Circuit recently affirmed decisions of a Bankruptcy Court and District Court recharacterizing an alleged lease to a disguised financing arrangement. The Court determined that the transaction was “per se” a financing, and therefore did not need to go on to analyze the economic realities of the transaction in detail.

On September 30, the Governor of California signed into law Senate Bill No. 1235, which amends the California Financing Law (previously known as the Finance Lenders Law) to impose new disclosure requirements on licensed commercial lenders and brokers including for online lending programs doing business in California.

This desk reference is intended to provide an in-depth analysis of the numerous issues affecting an equipment lessor when dealing with a lessee after it has filed for bankruptcy protection.

On August 22, the three federal banking agencies issued an interim final rule implementing the May 2018 banking law’s requirement that investment grade, liquid and readily marketable municipal obligations be treated as Level 2B “high quality liquid assets” under the liquidity coverage ratio rule.

The United States Court of Appeals for the Ninth Circuit issued a decision reversing a lower court’s order that designated the vote of a secured bank creditor that had purchased claims from a subset of unsecured creditors for the admitted purpose of blocking confirmation of the debtor’s plan of reorganization.

In a case of first impression, the Illinois Appellate Court has held that a condominium association does not have to first sue the prior owner of a condominium for unpaid assessments before it can seek unpaid assessments from the new owner that purchased the condominium at a foreclosure sale.

A recent decision from the U.S. Court of Appeals for the Third Circuit has created a circuit split in how the federal circuit courts have interpreted the statute of limitations as it applies to the Fair Debt Collection Practices Act.

This article discuss two recent decisions that have provided some insight into what happens when a debtor files a Chapter 13 bankruptcy petition as a means of redeeming sold real estate taxes.

Recently in Hackler v. Arianna Holding Co., the U.S. District Court for the District of New Jersey held that a real estate tax foreclosure sale can be set aside as a preferential transfer under Section 547 of the Bankruptcy Code.

Chapman’s "Defaulted Securities: The Guide for Trustees and Bondholders" advances understanding and consideration of issues related to trustees and bondholders in both corporate and municipal financings.

The question of what happens when a debtor files a Chapter 13 bankruptcy petition as a means of redeeming sold real estate taxes is being addressed throughout the country with more regularity. Recently, bankruptcy courts in Illinois and Georgia have provided some insight into how this question should be answered.

Although recent legislation commonly referred to as the Tax Cuts and Jobs Act retained Section 956 of the Internal Revenue Code (and its notorious deemed dividend issue), the enactment of other changes may reduce the impact of Section 956 on taxpayers.

In July, Andrew Bailey, the CEO of the United Kingdom’s Financial Conduct Authority, announced that the FCA and the panel banks whose submissions are used to determine the London Interbank Offered Rate will only sustain LIBOR until the end of 2021.

This article addresses the benefits to a senior secured lender of Representations and Warranties Insurance, and certain considerations financial institutions should make in documenting a middle market loan transaction when an acquisition financing utilizes RWI.

A debtor-in-possession is entitled to use cash collateral over the objections of PACA claimants so long as the debtor demonstrates that the interests of the PACA claimants are adequately protected, according to a recent ruling by Judge Dales of the United States Bankruptcy Court for the Western District of Michigan.

On November 2, Representative Brady released the “Tax Cuts and Jobs Act.” On November 9, the Senate Finance Committee released a “Description of the Chairman’s Mark of the ‘Tax Cuts and Jobs Act.’” This summary highlights four provisions in the proposed legislation that will be of particular interest to financial institutions.

Federal Rule of Appellate Procedure 4(a)(5) incorporates 28 U.S.C. § 2107(c), which provides for extensions of the notice of appeal deadline. However, Rule 4(a)(5)(C) limits the length of such extensions. The question then is if an appellant files a notice of appeal beyond the 30-day period set forth in Rule 4(a)(5)(C), does a circuit court lack jurisdiction to hear the appeal?

The U.S. Court of Appeals for the Second Circuit reversed both the district court and the bankruptcy court’s decisions in MPM Silicones, LLC, which had held that the “prime plus” formula was the appropriate method for determining the interest rate required in connection with new notes issued to secured creditors under a Chapter 11 cramdown plan of reorganization.

On September 21, a Bankruptcy Court ruled that holders of notes issued pursuant to a Note Purchase Agreement entered into by a debtor’s operating subsidiary were entitled to what the court termed an ‘enormous’ make-whole payment, post-petition interest, and recovery of related fees and expenses.

On October 3, the U.S. Bankruptcy Court for the District of Delaware granted a motion to reconsider a decision it made over a year ago in the bankruptcy of Energy Future Holdings Corp. and its co-debtors and in doing so disallowed a $275 million breakup fee to a prospective asset purchaser that it had previously approved.

The recently released “Unified Framework for Fixing Our Broken Tax Code” includes a proposed limitation on the deductibility of interest expense by corporations. Although this framework does not provide details as to the nature or scope of the proposed limitations, any such limitations will potentially affect the balance in preferences between debt and equity funding.

While many of lender's rights are self-explanatory, a question has arisen as to what it means to amend “pro rata” sharing requirements. Recently, an amendment to NYDJ Apparel, LLC’s credit agreement highlighted what a loan investor needs to look out for when reviewing protections related to pro rata sharing.

Intercreditor agreements are commonly used to define the relative rights of senior and junior lenders, especially should the borrower become distressed or file bankruptcy. Properly defining priorities between lenders is particularly important when both parties possess security interests in the same collateral.

On August 3, 2017, the Delaware district court upheld the Delaware bankruptcy court’s confirmation of a so-called “gift” plan (i.e., a plan in which a secured creditor class “gifts” a portion of its plan distribution to a junior class).

On August 3, the Delaware district court in In re Nuverra Environmental Solutions, Inc. upheld the Delaware bankruptcy court’s confirmation of a so-called “gift” plan, notwithstanding the recent Supreme Court decision in Czyzewski v. Jevic Holding Corp. that had cast doubt on the viability of such plans.

Compliance with the Telephone Consumer Protection Act has never been simple, and a number of conflicting and confusing rulings over the last several years have made it that much more difficult. The TCPA contains a confusing array of regulations depending on what kind of phone is being called, who is calling and what purpose the call serves, and whether the person being called has given permission.

This paper, published by the National Association of Bond Lawyers, identifies various issues that arise in connection with the structuring and negotiation of direct purchase transactions, and explores some of the more commonly encountered provisions present in direct purchase documents.

More than a year after the Consumer Finance Protection Bureau submitted a proposed rule to limit consumer financial services contract arbitration clauses, the CFPB sounded the death knell on July 10, 2017, when it released its long-awaited final rule.

Chapman Partner Nick Whitney joined Xtract Research’s senior covenant analyst Vince Pisano for the inaugural recording of the new Xtract Research podcast series.

On June 12, the Department of Treasury issued the first report in a series regarding regulation of the financial system. The report recommends that high-grade municipal bonds be categorized as Level 2B liquid assets instead of generally being excluded as HQLA currently.
 

On June 12, the Department of Treasury issued the first report in a series regarding regulation of the financial system in a manner consistent with Core Principles set forth in Executive Order 13772 signed by President Trump on February 3, 2017.

In a unanimous decision on June 12, the United States Supreme Court held that a purchaser of defaulted debt who pursues repayment is not a “debt collector” under the Fair Debt Collection Practices Act.

In a recent case, the Sixth Circuit held that under Michigan law a properly perfected assignment of rents bars a debtor from using the rents to fund its operations in a Chapter 11 reorganization.

The Supreme Court continues to redefine the scope of the Fair Debt Collection Practices Act, with one highly anticipated ruling issued this week and another expected before the Court adjourns for the summer in late June.

The May 2015 decision of the U.S. Court of Appeals for the Second Circuit in Madden v. Midland Funding, LLC sent shockwaves through the marketplace lending industry, and nearly two years later the questions generated by this case remain largely unanswered. These questions have been further complicated by the long-awaited remand decision from the U.S. District Court for the Southern District of New York.

This article discusses a financial institution’s obligation to manage risks of its HELOC Home Equity Line of Credit portfolio, focusing on the applicable regulatory requirements and restrictions on the ability to freeze or reduce HELOCs during the draw period.

11 U.S.C. § 1111(b)(1)(A) provides that a creditor holding a non-recourse lien on real property possesses a claim against a debtor’s bankruptcy estate upon the filing of the bankruptcy petition. But what happens to the secured creditor’s non-recourse claim when the property securing the loan has been sold via foreclosure?

The Uniform Commercial Code affects financial institutions in countless ways. From duties of care for customers to the banks’ inspection of checks, familiarity with the UCC is critical when examining legal disputes. This alert discusses recent developments in UCC law that provide insight into how courts examine these rules and financial institutions’ responsibilities under the UCC.

On April 19, the House Financial Services Committee posted a “discussion draft” of a revised version of the CHOICE Act. The discussion draft contains most of the provisions in last year’s bill with a number of important changes.

2016 was a record year for filings under the Telephone Consumer Protection Act of 1991. In 2016, litigants filed 4,860 TCPA lawsuits, an increase of nearly 32% from 2015. But what does 2017 hold? What can companies who call customers to service or collect debts expect?

On March 27, the U.S. Supreme Court granted certiorari in the case of In re the Village at Lakeridge LLC, under which an appeals court held that a claim of an “insider,” which is not counted for the purpose of creating an accepting impaired class for the purpose of “cramming down” a plan of reorganization over the opposition of a rejecting class, does not retain its status as a claim of an insider for that purpose once transferred to a noninsider third party.

On March 1, the Securities and Exchange Commission issued a release seeking comments on proposed amendments to Rule 15c2-12 under the Securities Exchange Act of 1934, as amended.

Before purchasing any debt, distressed investors need to be mindful of what unrestricted subsidiaries are and how they may impact the overall credit of a company or debt recoveries.

Chapman Partner Marc Franson participated in a panel discussion, entitled "True Lender and Madden Case: Impact on the Industry Two Years In," at the 2017 LendIt USA Conference.

In a stark reminder to the bankruptcy community of the old adage that “you can run but you can’t hide,” the U.S. Bankruptcy Court for the Southern District of New York recently denied an Austrian bank’s motion to dismiss for lack of personal jurisdiction.

On February 27, the U.S. District Court for the Southern District of New York issued its long-awaited remand decision in Madden v. Midland Funding, LLC. 

The U.S. Court of Appeals for the D.C. Circuit made headlines following its decision in the PHH Corporation et al. v. Consumer Financial Protection Bureau case. The Court found that the CFPB’s single-director, removable-only-for-cause structure was unconstitutional. However, the Court has now vacated that order in its entirety and set the case to be heard again en banc.

Investments in “unrestricted subsidiaries” are an exception to investment covenants, which have been used in an attempt to provide flexibility in restructuring a company’s capital structure.

The Supplemental Examination Procedures for Risk Management of Third-Party Relationships issued by the Office of the Comptroller of the Currency on January 24 establish detailed compliance obligations for relationships with third-party service providers.

Lenders and investors in companies often have assumed that claims related to the purchase and sale of securities are subordinated to the level of the underlying security in question. However, a recent decision has raised a serious question as to when claims for damages should be deemed “arising from” the purchase or sale of a security.

In this edition: 

• Mortgage Servicing Foreclosure Practices
• OCC Semiannual Risk Perspective 

With Republicans retaining control of both chambers of Congress and Donald Trump elected President, the prospects for financial regulatory reform have changed. Many observers point to the Financial CHOICE Act as the best indication of Republican Congressional aspirations for such reform. 

Lenders and investors in companies often have assumed that claims related to the purchase and sale of securities are subordinated to the level of the underlying security in question. However, a recent decision has raised a serious question as to when claims for damages should be deemed “arising from” the purchase or sale of a security.

In a decision that deals a potential blow to holdout noteholders in out-of-court restructurings, the United States Court of Appeals for the Second Circuit adopted a narrow interpretation of Section 316(b) of the Trust Indenture Act.

In one of his first Presidential acts, President Trump has named Commissioner Ajit Pai as Chairman of the Federal Communications Commission. Chairman Pai has become well-known for his dissenting opinions during his time with the FCC, including his dissent to the most recent Telephone Consumer Protection Act Omnibus Ruling and Order issued in July 2015.

Considering the flurry of activity in the fintech arena, is there a place for banks and, if so, what role can banks play? Given that marketplace lending is the most developed form of fintech today, it can be analyzed to see how banks do play important roles and employ different strategies dealing with this emerging market segment.

The New York Court of Appeals issued a decision holding that when two parties agree to the material terms of a sale, the parties have entered into a binding agreement, even though the sale remains subject to the execution of a written sales agreement.

On Friday, Comptroller of the Currency Thomas Curry announced that the Office of the Comptroller of the Currency will issue limited-purpose bank charters to qualified fintech companies.

In this edition:

• Deposit Insurance Determination Rule
• FFIEC Revises Its Consumer Compliance Rating System
• Servicemembers

In a break from recent decisions, on November 17, the Third Circuit Court of Appeals reversed the District Court’s decision in the Energy Future case, finding that make-whole premiums were in fact payable upon a “redemption” even if such redemption occurred after a bankruptcy filing and the automatic acceleration of the underlying debt where the applicable indentures did not otherwise provide.

A recent bankruptcy court decision in the Aéropostale bankruptcy case pending in the bankruptcy court for the Southern District of New York may provide some comfort to secured creditors seeking to credit bid in a sale process commenced by a debtor pursuant to Section 363 of the U.S. Bankruptcy Code. 

The second edition of Chapman's book is a valuable resource for municipal debt marketplace participants, including state and local government officials, municipal credit analysts, credit enhancers, investors, legislators, and administrators.

Earlier this month, the Sixth Circuit provided to creditors of municipalities emerging from bankruptcy proceedings additional assurance that they can rely on the bankruptcy plan approved by a court.

The U.S. Court of Appeals for the D.C. Circuit heard oral argument yesterday in a consolidated case arguing that the Federal Communication Commission has overstepped its bounds in its most recent interpretation of the Telephone Consumer Protection Act.

On October 11, the U.S. Court of Appeals for the D.C. Circuit issued an important decision involving the Consumer Financial Protection Bureau. Not only did the Court find that the agency’s structure was unconstitutional, it also ruled that the CFPB violated due process, and is subject to the statutes of limitations embodied in the laws it seeks to enforce. 

Last week, the U.S. Sixth Circuit Court of Appeals provided to creditors of municipalities emerging from bankruptcy proceedings additional assurance that they can rely on the bankruptcy plan approved by the court.

Despite the Supreme Court cautioning that the “reasonably equivalent value” principle would in most cases remain similar to a market-value definition, and refusing to force its holding on other forced-sale proceedings, on Sept. 8, 2016, the Ninth Circuit became the third federal appeals court to extend BFP’s holding to real estate tax sales.

The services agreements under which midstream oil and gas companies operate are routinely structured as long-term contracts requiring a large initial expenditure. In these cases, the midstream service providers’ investment is only recouped over the life of the agreement, and early termination or rejection of such agreements can be devastating.

On September 8, 2016, the Ninth Circuit held in In re Tracht Gut, LLC v. L.A. Cnty. Treasurer & Tax Collector that California real estate tax sales are for reasonably equivalent value and cannot be set aside as fraudulent transfers.  

Federal law creates an exemption from environmental liability for lenders under the federal Comprehensive Environmental Response, Compensation, and Liability Act, which provides that a party who owns or operates a facility can be held responsible for cleaning up hazardous waste at or from the facility regardless of whether that party caused or contributed to the contamination.

On August 1, the Municipal Securities Rulemaking Board released details from its most recent quarterly meeting. Among other things, the press release from the meeting stated that the MSRB will not pursue rulemaking with regard to its concept proposal to require municipal advisors to disclose information about bank loans entered into by their municipal issuer clients. 

The Board of Governors of the Federal Reserve adopted a final rule to include certain U.S. municipal securities as high-quality liquid assets for purposes of the liquidity coverage ratio rule to which large banks are subject.

A recent decision of the Maryland Court of Appeals could require marketplace lenders and others who arrange for federal or state banks to fund consumer loans to consumers residing in Maryland to obtain licenses as “credit services businesses” and could prohibit them from arranging those loans at interest rates exceeding the applicable Maryland usury caps.

Congress has approved the Puerto Rico Oversight, Management, and Economic Stability Act, and President Obama is expected to sign the measure into law by July 1, 2016. Puerto Rico owes its bondholders a $1.9 billion debt payment on July 1 that by all accounts it cannot make.

This article discussed leveraged lending guidelines, unitranche facilities and the risks associated with unitranche facilities, including with respect to “agreements among lenders” as illustrated by the recent case of In re Radio Shack Corporation.

On June 3, 2016, the United States Bankruptcy Court for the District of Delaware ruled that the intercreditor agreement between first lien noteholders and junior noteholders in In re Energy Future Holdings Corp. did not require the junior noteholders to bear the cost of a previously disallowed make-whole payment to the first lien noteholders. 

On May 27, 2016, New Jersey Gov. Chris Christie signed into law the Casino Tax Property Stabilization Act in an effort to help Atlantic City get back on the path to fiscal stability.

The U.S. Supreme Court placed the final nail in the coffin of the Puerto Rico Public Corporation Debt Enforcement and Recovery Act. The Court found that Puerto Rico was not entitled to create its own restructuring process because such a process is prohibited by the Bankruptcy Code.

Over the past several years, a number of public-private partnership transactions have been financed in the domestic and cross-border U.S. private placement market. Given the need for new infrastructure both domestically and abroad, we anticipate that the number of P3 transactions entering the U.S. private placement market will continue to rise over the coming years.

New Jersey has taken steps to aid troubled Atlantic City in an apparent attempt to avoid a bankruptcy filing that may not only impact the distressed city but also other cities and towns in the State.    

It is a basic principle in bankruptcy that a secured lender is entitled to receive interest and other charges arising post-petition to the extent the lender is over-secured. A recent decision challenges this principle in cases where the value of a lender’s collateral diminishes during the course of the bankruptcy case.

In this edition:

• NACHA Operating Rules — New Unauthorized Entry Fee
• Customer Due Diligence — Beneficial Ownership Rule
• Limited English Language Proficiency Customers

A recent decision issued by a federal district court in North Carolina challenges the familiar principle that in a borrower’s bankruptcy, the lender, if it is oversecured as of the bankruptcy filing date, is entitled to receive post-petition interest, attorneys’ fees and other charges arising post-petition to the extent of the value of its collateral.

Atlantic City is in the midst of a financial crisis that has been in the making for years. Increased competition and a host of unfortunate spending and hiring decisions have led to a state of affairs that currently features the nation’s highest home foreclosure rate, junk bond credit status and an alarmingly large budget deficit. 

On April 4, the U.S. Treasury Secretary announced that the government would release regulations to curb inversions and reduce the ability of companies to avoid taxes through “earnings stripping;” those regulations were published in the Federal Register on April 8th. 

On May 10, 2016 the U.S. Department of the Treasury published a white paper entitled “Opportunities and Challenges in Online Marketplace Lending.” The White Paper follows the “Request for Information” which the Department published in July 2015 to solicit public input on various topics concerning marketplace lending.

The Board of Governors of the Federal Reserve System issued a Notice of Proposed Rulemaking re-proposing a rule that would establish credit limits for single counterparties ofU.S. bank holding companies, foreign banking organizations, and U.S. intermediate holding companies of an FBO. 

Pratt's Privacy & Cybersecurity Law Report republished a special edition of Chapman's To the Point! newsletter. 

In this edition:

• Recent Action by the OCC of Special Concern for Directors, Senior Managers, and Compliance Officers
• FDIC Provides Additional Guidance on Corporate Governance

In a widely expected ruling, the Illinois Supreme Court has upheld a Cook County state court ruling holding that a state law, Public Act 98-641, reducing annuity benefits for employees and retirees of the City of Chicago, in exchange for increased contributions to certain pension funds, was unconstitutional.

Retail bondholders recently filed two class action suits in the United States District Court for the Southern District of New York challenging exchange offers under the Trust Indenture Act.

In this edition:

• Use of Property Evaluations
• A Bank Customer’s Guide to Cybersecurity
• Certain Prepaid Cardholders Treated as Customers for CIP Requirements 

On Friday, March 18, 2016, the United States Supreme Court issued a call for the views of the Solicitor General of the United States before it decides whether to hear an appeal from a Second Circuit Court of Appeals decision rendered last May in the case of Madden v. Midland Funding, LLC.

On March 7, the CFPB announced that it is accepting consumer complaints about online marketplace lenders, giving consumers “a greater voice in these markets and a place to turn to when they encounter problems.” The CFPB also issued a bulletin to provide consumers with information on marketplace lending.

On February 16, 2016, the District Court for the District of Delaware affirmed the decision of the Delaware bankruptcy court in In re Energy Future Holdings Corp., that noteholders’ claims for make-whole premiums may be blocked by the automatic stay of the U.S. Bankruptcy Code. 

In this edition:

• Standards for Safeguarding Customer Financial Information
• HIPAA Data Breach Notification Deadline — February 29, 2016
• CFPB Issues Additional Guidance on Furnisher Obligations under Regulation V
• Court Denies Motion to Dismiss Complaint Against Compliance Officer for Bank Secrecy Act Violations

On Feb. 8, 2016,  the United States Court of Appeals for the Ninth Circuit held that a claim of an “insider,” which is not counted for the purposes of creating an accepting impaired class for confirmation of a contested plan of reorganization, does not retain insider status once transferred to a third party that is not an insider. 

Law360 republished a Chapman Client Alert.

Pratt's Journal of Bankruptcy Law republished a Chapman Client Alert.

A recent decision of the U.S. District Court for the Eastern District of Pennsylvania has highlighted once again the regulatory risks that the so-called “true lender” doctrine can create for internet-based lenders who partner with banks to establish exemptions from applicable state consumer protection laws.

On November 2, 2015, the Delaware bankruptcy court ruled that where a majority of bondholders direct an indenture trustee to withdraw its confirmation objections, the remaining minority who did not file independent objections to confirmation may not step in to press the indenture trustee’s objections. 

A recent decision of the Maryland Court of Special Appeals could impact marketplace and other lenders who arrange for federal or state banks to fund consumer loans in Maryland at rates in excess of the applicable Maryland usury caps. 

In a decision that may ease the resolution of future bankruptcy proceedings, the Third Circuit Court of Appeals affirmed a bankruptcy court’s approval of a sale of substantially all of a debtors’ assets based on a settlement in which the secured creditors gifted funds to general unsecured creditors.

In this edition:

• CFPB Guidance on Private Mortgage Insurance Cancellation
• FDIC Announces Settlement with Credit Card Issuer Related to the Sale of Add-On Products 
• Servicemember Updates
• Eleventh Circuit Rules on Applicability of FDCPA to Bank

The Banking Law Journal republished a Chapman Client Alert.

Pratt's Journal of Bankruptcy Law republished a Chapman Client Alert.

In the case of Madden v. Midland Funding, LLC, the Second Circuit narrowly interpreted the scope of federal preemption of state usury laws under the National Bank Act as such laws apply to certain non‑bank loan assignees.

Though the RadioShack proceeding sheds light on how bankruptcy courts may interpret an agreement among lenders, unfortunately, it still remains unclear as to whether U.S. bankruptcy courts will assert jurisdiction to consider arguments arising under an agreement among lenders.

On July 13, 2015, the United States Court of Appeals for the Eleventh Circuit reversed lower court orders that had precluded a lender from collecting accrued default interest from a debtor as a condition for reinstatement of the loan under a confirmed plan of reorganization. 

In this edition:

• Telephone Consumer Protection Act Declaratory Ruling
• CFPB First Monthly Complaint Report
• Treasury Department Inquires about Marketplace Lending

In a move intended to fortify the rights of holders of California municipal general obligation debt as well as lower borrowing costs for California municipalities, California Governor Jerry Brown signed SB 222 into law earlier this month.

Recently, before awarding bondholders any amounts on account of a make-whole provision upon a debt prepayment, courts have repeatedly insisted on clear language in the credit documents requiring such payment notwithstanding a bankruptcy filling and a related automatic acceleration.

Pratt's Journal of Bankruptcy Law published an article written by Chapman attorneys. 

In a decisive opinion, the U.S. Court of Appeals for the First Circuit affirmed a lower court ruling that the Puerto Rico Public Corporations Debt Enforcement and Recovery Act is preempted by the U.S. Bankruptcy Code and therefore unconstitutional. 

On May 20th, the IRS released draft updates to the U.S. Model Income Tax Convention.

A recent decision in the Southern District of New York interpreting the Trust Indenture Act will likely provide bondholders additional leverage in out-of-court restructurings.

In this edition:

• Servicemembers Update
• CFPB Consumer Complaint Narratives
• Private Student Loans and Cosigners

The U.S. Supreme Court’s 6-3 split decision in Baker Botts LLP v. Asarco LLC will have long standing implications for all bankruptcy professionals’ compensation, potentially making it much more costly for all professionals retained in chapter 11 cases.

In Delaware, arms-length negotiations may no longer be sufficient to protect an unwitting lender from a derivative claim brought by a borrower’s shareholder with respect to certain change of control defaults contained in credit agreements.

Under current law, affiliated creditors holding debt arising from the same loan transaction will not likely be lumped together when determining the number of creditors that have voted to approve or reject a plan, particularly where such affiliates held such debt prior to a bankruptcy filing and assert their claims through separate proofs of claim.

To kick off the Memorial Day weekend, the Federal Reserve Board announced a proposal to include certain state and municipal general obligation bonds in the calculation of High Quality Liquid Assets, the numerator of the new Liquidity Coverage Ratio requirement to which large banks are subject. 

On December 8, 2014, the American Bankruptcy Institute Commission to Study the Reform of Chapter 11 released its Final Report and Recommendations for amendment to the current Bankruptcy Code. The proposals are significant, and on the whole, largely harmful to the rights of secured creditors.

The United States District Court for the Southern District of New York recently affirmed the Bankruptcy Court’s decision in In MPM Silicones, LLC, establishing Judge Drain’s “prime plus” formula as the appropriate interest rate required in connection with new notes issued to secured creditors under a cramdown plan of reorganization in the Southern District of New York.

This is the fifth installment of Chapman and Cutler LLP’s discussion of the proposals contained in the Final Report and Recommendations of the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11.

In this edition:

• U.S. Supreme Court Will Not Hear CashCall Case – Uncertainty for Marketplace Lenders?
• FinCEN Current Priorities
• Guidance on Youth Savings Programs
• Overdraft Update – CFPB Enforcement Action

In order to avoid future intercreditor disputes, investors can learn from past mistakes and draft or revise their intercreditor agreements accordingly. In this Client Alert, we attempt to highlight a number of specific considerations that may improve intercreditor agreements, to better achieve their intended purpose of delineating the respective priorities and rights of senior and junior secured creditors while avoiding intercreditor conflict.

In this issue: 

• CFPB Arbitration Study: First Step to Restricting their Use?
• 7th Circuit Requires Servicers to Credit Payments on the Day Authorized
• Target Data Breach Settlement

Out-of-court debt restructurings may face greater hurdles to success in light of two recent federal court decisions out of New York broadly expanding dissenting bondholders’ rights under the Trust Indenture Act.

Pratt's Journal of Bankruptcy Law recently published an article based on a recent Chapman Client Alert.

The Banking Law Journal published an article based on a recent Chapman Client Alert.

On February 6, 2015, the U.S. District Court for the District of Puerto Rico issued a decision holding Puerto Rico’s Public Corporations Debt Enforcement and Recovery Act unconstitutional, noting that it was “not a close case.”

As discussed in our previous client alert on this subject, litigation over whether $1.5 billion in prepetition loans to GM were secured or unsecured has been pending before the Second Circuit Court of Appeals. The Second Circuit recently issued a decision upholding the termination. 

As part of its charge to promote a fair and efficient municipal securities market, the Municipal Securities Rulemaking Board issued regulatory notice 2015-03 on January 29, 2015, calling for timely disclosure of bank loans extended to municipal borrowers, whether in the form of the direct purchase of bonds or notes, a loan agreement, or any other type of financing with the municipal borrower.

This is the fourth installment of Chapman’s discussion of the proposals contained in the American Bankruptcy Institute’s Final Report and Recommendations to amend the Bankruptcy Code. 

One of the well-known benefits of bankruptcy is that assets can be sold free and clear of claims and interest in the property. But unknown future claims have presented difficulties for purchasers of assets in bankruptcy sales and courts have struggled to devise a clear rule for dealing with such claims.

As discussed in our first two installments, the American Bankruptcy Institute released its Final Report and Recommendations containing proposals to modify the Bankruptcy Code, many of which will have significant and negative implications for secured creditors. 

In this edition:

• Student Loan Servicing—Unfair or Deceptive Acts or Practices
• OCC Revises Its Truth in Lending Handbook
• FFIEC Releases Revised BSA/AML Examination Manual
• NACHA Same-Day ACH Processing Proposal

As discussed in our first installment, the American Bankruptcy Institute released its Final Report and Recommendations containing proposals to modify the Bankruptcy Code, many of which will have significant and negative implications for secured creditors.

Pratt's Journal of Bankruptcy Law published an article based on a recent Chapman Sidebar.

Can a lender use evidence outside the four corners of a security agreement to prove that it has a valid security interest against the bankruptcy trustee?

Last week, the American Bankruptcy Institute Commission to Study the Reform of Chapter 11 released its Final Report and Recommendations for amendment to the current Bankruptcy Code.

Certain compliance issues related to a bank’s use of social media data in its business are identified in this briefing for consideration and potential action.

The Consumer Financial Protection Bureau has issued its 800+ page proposed rule (with commentary) on prepaid cards.

On October 15th, the IRS proposed a change to the regulations which would eliminate the requirement of a creditor to report cancellation of debt income on Form 1099-C after not receiving payment for 36 months.

The Consumer Financial Protection Bureau has issued a proposed rule that would bring prepaid products under the Electronic Fund Transfer Act and make the protections currently afforded to credit cardholders under Regulation Z applicable when credit features are obtained in connection with a prepaid account.

In this issue:

• Department of Housing and Urban Development 2013 Disparate Impact Rule is Vacated
• FFIEC Cybersecurity Guidance
• 2014 Federal Interagency Fair Lending Hot Topics Webinar

In this issue:

• Qualified Mortgage Points and Fees Cure
• Posting Privacy Notices Online
• National Survey of Unbanked and Underbanked Households

The Delaware Supreme Court ruled recently that a secured party’s security interest in collateral can be terminated upon the filing of a UCC termination statement even though there was a mistake in the document.

Chapman and Cutler attorneys have been monitoring decisions and developments with respect to creditors' rights and have compiled the client alerts published to date that provide important insight regarding the implications of these decisions for holders of secured debt and highlight what every creditor should know in order to effect rights under its credit agreement.

“Acquisition Financing,” or the funding of capital for the purpose of acquiring a target company, is a growing specialty area among bank lending attorneys.

In this issue:

• FinCEN Proposed Rule on Customer Due Diligence Requirements

• CFPB Issues First Enforcement Action for Mortgage Servicing Rules

• Cordray Speaks about Checking Account Issues

In an important bench ruling in the MPM Silicones case, Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has provided debtors with a potentially coercive tool to use as leverage against their secured creditors.

As prices for distressed loans have risen, holders of secured claims are focusing not only on the recovery of principal but also on repayment of interest, fees and pre-payment-premiums or “make whole” payments.

A Nebraska bankruptcy court recently upheld the longstanding principle that a creditor filing a proof of claim may seek the entire amount due despite amounts collected from other obligors who may be jointly and severally liable for the debt.