If you are anything like me, you enjoy discussing bankruptcy and litigation issues at social gatherings. It’s basically like being the Most Interesting Man in the World , except the opposite of that. Or, at the very least it will end a conversation with someone you didn’t want to speak with. With that in mind, below I have compiled the first annual Cocktail Party Talking Points. Please use them as you see fit.
The Energy Bubble. With the Saudis keeping the pedal to the metal on production while the US is in the midst of an energy boom, the cost of oil and gas has tanked. With margins burning off, the E&P firms who had been surviving of cheap liquidity may be in for a correction. Read about it on Bloomberg.
Radio Shack is still Kicking Along. The beleaguered tech retailer Radio Shack continues its attempt to not default on its various lines of credit and stave off bankruptcy. As it attempts to cut $400MM annually from the budget, the retailer must obtain lender consent to close stores. Meanwhile, the company’s credit default swap spread is at 144%. Read about it on CNBC.
East Cleveland Considers Bankruptcy. The city of East Cleveland, which is a suburb of Cleveland, is “on the verge of collapse” according to the Ohio state auditor. While the city is relatively small, the emergence of another municipality on the brink of bankruptcy is a reminder that municipalities are still in trouble and the economy has been slow to work through their financial issues. The city will decide whether to file bankruptcy in Q1 2015. Read more about it on Reuters.
The Fed Ups the Capital Requirement for 8 Largest Banks. Under the new Fed guidelines, “the eight largest U.S. banks would need to have an additional capital buffer of between 1% and 4.5% of their risk-weighted assets, based on the relative threat a bank poses to the financial system as calculated by the Fed.” According to Janet Yellen, this rule “would encourage such firms to reduce their systemic footprint and lessen the treat that their failure could pose to overall financial stability.” The biggest impact is expected to be on JP Morgan which faces an apparent shortfall of $21B. Read more about it on the Wall Street Journal.
That Argentina thing is Still Going on. Earlier this year, Argentine defaulted on bonds governed under US law and has been embroiled in lawsuits both before and after. It’s still going on. To further its troubles, Argentina made a bond offering under is local laws and raised about 10% of the $3B being offered. Notwithstanding, the Argentina Economy Minister presented the participation as evidence of investors’ confidence in Argentina. Read more about it on Bloomberg.
And finally, a palette cleanser…
California Family Judge gets mean. In California, ex-state family law judge Healy was admonished (which is a sever finger-wagging at in legal speak) for telling a mother accused of drunk driving that she didn’t “understand the beatdown that was coming…”. After discussing the drug and alcohol use by the husband and wife, the Judge wondered aloud if “they’re trying out for Jersey Shore.” The Judge summed up the wife as a “total human disaster”. Finally, in another hearing, the Judge informed the mother that her daughter would no doubt end up as a “hooker” based on the mother’s attitude. Formal document is here.
Have a happy and safe holiday. Look for my next post in January 2015.