Bankruptcy Judges Take on “Inane” Credit Counseling Requirements

While bankruptcy judges are obliged to apply and uphold the rule of
law as specifically set out by Congress, some have chosen to publicly
air their misgivings about the lack of discretion left to  judges to
administer bankruptcy cases by the 2005 amendments to the Code. A
recent order by Judge Monroe of the Western District of Texas has
gained widespread attention for its scathing attack on the credit
counseling requirement. [1] It remains to be seen whether bankruptcy
judges and practitioners will be able to prompt review of this
provision, but the frustration evident in Judge Monroe's decision has
sent Congress a clear message.

The
credit counseling prerequisite to filing a bankruptcy petition is just
one example of how the 2005 Bankruptcy Abuse Prevention and Consumer
Protection Act has made bankruptcy relief more expensive, time
consuming, and restrictive than before. One initial study suggests that
the credit counseling industry … Read the rest

Out with the Old, In with the New: NYSE Group, Starting a New Tradition

March 7, 2006 will mark the end of a 213 year old tradition, but it will also be the start of new era.  If
all goes according to schedule, tomorrow the New York Stock Exchange
(NYSE) will complete a merger with Archipelago Holdings Inc. (Arca). [1]  The
merger will create a new publicly held corporation, NYSE Group Inc.
(stock symbol: NYX) making the NYSE a for-profit public company. [2]  The
merger has been a long time in the making and is not only significant
for the Big Board, but is also a major milestone in the corporate world
as once again new standards have been set. [3]  The
transaction will give the NYSE, already the world’s biggest exchange,
high tech trading capabilities and 49% of the stock trading market. [4]

 

The Old NYSE

 

It was less than three years ago that the future of Read the rest

Purchasing Beachfront Property in Mexico: How Americans Circumvent Mexico’s Constitutional Prohibition

Because of the high-cost of real estate in the most desirable areas of the United States, especially southern California, many Americans are searching for a cheaper, less crowded alternative both for vacation homes and for primary residences.  With thousands of miles of undeveloped coastline, and beachfront property costs at a fraction of those in the United States, Mexico has recently become a hot market for Americans wanting a laid-back atmosphere and an affordable vacation home with warm weather throughout the year.  Though Mexico is the perfect place to build an affordable beachfront home, there is one slight problem for foreigners wishing to re-locate there:  Article 27 of the Mexican Constitution prohibits ownership of beachfront property by foreigners and foreign corporations.  Only persons born in Mexico or corporations established in Mexico can gain title to property within Mexico's "Restricted Zone."  [1] 

How do Americans get around this prohibition?  The answer is

Read the rest

Illegal Long-Distance Tax Continues To Be Enforced

Despite the invalidation of communications excise tax, I.R.C. §
4251, by numerous federal courts the IRS is demanding that collection
of the tax continue. [1] The three percent communications excise tax
was originally imposed in 1898 as a temporary luxury tax to help fund
the Spanish-American war. [2] The tax applies to a number of
communications services among which is long-distance or “toll
telephone” service and is paid by everyone, both individuals and
businesses, who makes long-distance calls. [3]

For
purposes of the communications excise tax, the IRS defines toll
telephone service as “a telephonic quality communication for which . .
.there is a toll charge which varies in amount with the distance and
elapsed transmission time of each individual communication.” (emphasis
added) [4] The IRS contends that the word “and” in the statute should
be read as “either,” while those fighting the tax contend that “and”
should be read … Read the rest

The Windfall Profit Tax – A Legislator’s Hamster Wheel

I. Introduction

Surprise! 
In 2005, Big Oil[1] again turned one of the larger profits it has seen
in recent years, with companies like Exxon Mobil boasting fourth
quarter numbers 27% greater than last year's profits (which, by the
way, were nothing to sneeze at).[2][3]  And why shouldn't we be
surprised?  After more than a year of paying a sky-high premium at the
pump and in the home, it is plain to see that the oil industry is not
sharing the burden of the high price of fuel with the consumer.  Led by
Senate Democrats, a bill has been proposed to impose a one-time-only $5
billion windfall tax on big oil to help offset the country's more than
$300 billion deficit.[4]

II. Implications

There is no question that Big Oil can afford the hit.  Five billion
dollars is chump change spread among corporations who routinely keep
tens of billions of dollars

Read the rest

Stakeholders and the Corporate Boardroom: Can Trade Unions help promote Corporate Social Responsibility?

I. Introduction

A meeting
at the UNEP headquarters in Nairobi, Kenya is focusing on the global
trend to include more stakeholders in the corporate governance
structure. The aim of this meeting is to promote links between
environment sustainability, trade unions, and corporations. These
trends are being followed in the U.S. as evidenced by the Securities
and Exchange Commission proposal to allow large shareholders a direct
voice in the nomination of board of directors.

II. Issues

On
January 15-17th 2006, at UNEP Headquarters in Nairobi, the first annual
Trade Union Assembly on Labor and Environment took place.[1] The aims
of the conference were to reinforce the social and labor dimension of
environmental conservation and sustainable development and to
strengthen the relationship between UNEP and the world of labor.[2]
This gathering recognizes that trade unions have a huge role to play in
helping corporations achieve their goals of becoming socially
responsible citizens.

Read the rest

The Bankruptcy Exception to State Sovereign Immunity

On January 23, 2006, the U.S. Supreme Court handed down its decision in Central Virginia Community College v. Katz
[1], holding that a state cannot assert its sovereign immunity as
grounds to block the avoidance of a preferential transfer to a state
agency under § 547(b)
of the Bankruptcy Code [2]. At the heart of the matter was whether
Congress overstepped its constitutional power when it enacted § 106(a) of the Code, which waives state sovereign immunity in bankruptcy.

However fair the outcome may be, the rationale of the Court cannot
be reconciled with its prior decisions addressing Congress's ability to
waive state sovereign immunity under its Article I powers. Indeed the
Court's theory of implied waiver does little to justify why there
should be a "bankruptcy exception" at all. On its face, Katz
may be expected to open the door to broader Congressional abrogation of
state sovereign immunity in … Read the rest

Executives are Getting the Green and Shareholders are Seeing Red

The beginning of 2006 usually gives pause to look back on the past year and reflect.  When CEOs look back on the past year their vision may be obscured by the stacks of cash that were bestowed upon them.  It was reported last week that despite small stock gains and slowing growth executive pay continued to swell in 2005. [1]  Always
a hot topic, and often over 400 time the amount earned by rank-and-file
employees at large companies, executive pay is on the top of many
people’s watch lists for 2006.[2]  This article
will take a look at how some justify executive pay, what recourse
shareholders have to stop executives being paid too much and the
proposal the SEC has made regarding disclosure of executive
compensation.

Compensation On the Rise

 

Although
much of the data of 2005 executive pay will not become available until
March
Read the rest

Where Have All the CEOs Gone?

As the year comes to a close, 2005 will be marked as a leading year of Chief Executive Officer (CEO) turnover.[1]  With
1,100 CEOs having already left this year, departures have already
exceeded the previous high set in 2000 when the dot-com bubble burst.[2]  The
trend is a bit surprising as the economy and corporate profits have
both been on an up swing this year. While it might be easy to attribute
the exodus rate to the impact to the pressures of compliance with
Sarbanes-Oxley, there are other factors that seem to provide a better
rationale for this year’s trend.

It should be noted that the majority of CEO departures this year have been voluntarily.  In October, one of the highest departure months with 96 exits, only 5 CEOs left as a result of corporate scandals.[3]  Hence, the majority of this year’s increased rate is not Read the rest

D&O Insurance Coverage: What is it good for?

Corporate scandals over the past few years have been numerous and high-profile.  As a result, the conduct of directors and officers of corporations have become subject to a high level of scrutiny.  In
addition to the public keeping a keener eye on the activities of
corporations, the Sarbanes-Oxley Act of 2002 has increased the
potential liability of directors and officers. [1] The Act, having
established new fines and penalties for the corporate board, has had
the incidental effects of causing the price of director and officers
(D&O) liability insurance to rise dramatically and of creating a
need for more sophisticated D&O insurance.  While
D&O coverage does exist, albeit it with higher deductible and
limited coverage, a recent case demonstrates how directors may still
bear the costs of litigation even with a policy. [2]

In
a recent case from the U.S. district of Arizona dismissed the bad faith
Read the rest