From the inception of the Consumer Financial Protection Bureau (“CFPB”), opponents have argued that its single-director structure is unconstitutional. The arguments focused on the executive power that the Constitution vests in the President, positing that limiting the President’s power to remove the CFPB director only for cause infringes upon the President’s executive power and therefore violates the Constitution’s separation of powers. As Dykema previously blogged, the constitutionality of the CFPB has been litigated in…

NextGen Financial Services Report

HEROES Act Includes Potentially Disastrous FCRA Amendments

By Erin A. Sedmak & Theodore W. Seitz

May 28, 2020

On May 15, 2020, the House passed the Health and Economic Recovery Omnibus Emergency Solutions Act, or “HEROES Act”, which is a 1,815-page bill that affords $3 trillion in relief to consumers and businesses impacted by COVID-19. The bill includes a number of provisions, including another round of $1,200 payments to most Americans, hazard pay for frontline workers, and funding for local and state governments. The bill also includes proposed amendments to the Fair Credit…

NextGen Financial Services Report

Credit Reporting Agencies Are Not Required to Determine What Is a “Legally” Valid Debt

By Erin A. Sedmak & Theodore W. Seitz

May 19, 2020

In a consumer class action, the United States Court of Appeals for the Seventh Circuit was called on to decide whether “consumer reporting agencies to determine the legal validity of disputed debts.” Denan v. Trans Union LLC, No. 19-1519, 2020 U.S. App. LEXIS 14930, at *1-2 (7th Cir. May 11, 2020). Joining the First, Ninth, and Tenth Circuits, the Seventh Circuit found that “a consumer’s defense to a debt is a question for a court to…

NextGen Financial Services Report

Bankruptcy On Ice III – The Freeze Extends Temporary Suspensions of Chapter 11 Cases

By Jonathan E. Aberman & Mark A. Silverman

May 11, 2020

In our latest installment of our series “Bankruptcy On Ice”, we tackle temporary suspension of bankruptcy proceedings in response to the closure of “non-essential businesses” and other critical protective measures being imposed to fight the spread of COVID-19. Last week, key decisions in the Pier 1 and Modell’s Sporting Goods bankruptcy cases extended temporary freezes and limited suspensions of proceedings as most states slowly begin to reopen. Before we get to that, it…

NextGen Financial Services Report

Are Debtors Eligible to Receive PPP Loans? Bankrupt Companies and the SBA Wage War Over Critical CARES Act Program Eligibility

By Deborah D. Williamson, Jonathan E. Aberman & Mark A. Silverman

May 5, 2020

The Paycheck Protection Program (PPP) is one of two business loan programs created under the Coronavirus Aid, Relief and Economic Security (CARES) Act to assist companies by extending potentially forgivable credit to small business employers. The PPP is designed to help cover employee-related expenses and help employers avoid layoffs. The prospect of forgivable debt, coupled with relatively favorable terms, have put PPP loans in high demand and many businesses, including some which had already sought…

NextGen Financial Services Report

Illinois Courts May Increasingly Embrace Equity Receiverships

By Steven D. Mroczkowski, Mark A. Silverman, Jonathan E. Aberman & Edward S. Weil

April 30, 2020

This article was originally published on Law360. The COVID-19 pandemic has caused, and continues to cause, massive humanitarian and economic upheaval with no clear end in sight. Borrowers are already scrambling to increase liquidity from their banks. Some will continue to operate openly, honestly, and in the best interests of the company and its stakeholders. Others will not. Notwithstanding that lenders and governments are attempting to mitigate the crisis’s effects,[1] loan defaults are anticipated…

NextGen Financial Services Report

Compliance for PPP Loans: Different Questions for Different Lenders

By Jonathan S. Feld, Andrew T. VanEgmond, Thomas S. Vaughn & Alexis J. Schostak

April 27, 2020

As all lenders know by now, the Coronavirus Aid, Relief, and Economic Security Act’s (“CARES Act”) guaranteed Paycheck Protection Program (“PPP”) loans are the key piece of economic relief for small businesses during the COVID-19 crisis. Yet, in the rush to get those loans flowing into the economy, the Small Business Administration (“SBA”) issued an interim regulation that raises substantial unanswered questions about participating lenders’ compliance policies. Business Loan Program Temporary Changes; Paycheck Protection Program…

NextGen Financial Services Report

Bankruptcy on Ice II – an Early Spring Thaw for Bankruptcy Courts?

By Jonathan E. Aberman & Mark A. Silverman

April 23, 2020

Last week, in our first of what we expect to be many articles in the series “Bankruptcy On Ice”, we wrote about the unprecedented suspensions of proceedings enacted in several major chapter 11 bankruptcies in response to the temporary store closures and critical protective measures being imposed to fight the spread of COVID-19. Decisions by the bankruptcy courts presiding over the Modell’s Sporting Goods, Pier 1 Imports, and Craftworks cases have demonstrated how…

NextGen Financial Services Report

Credit Reporting During the COVID-19 Pandemic: What You Need to Know

By Erin A. Sedmak & Theodore W. Seitz

April 20, 2020

In response to the COVID-19 pandemic, many lenders are being flexible when it comes to consumers’ making payments. The Consumer Financial Protection Bureau (“CFPB”) added some structure to those efforts by releasing a policy statement that outlines the responsibility of credit-reporting companies and furnishers during the COVID-19 pandemic. The CFPB seeks to encourage lenders to continue to work with consumers affected by COVID-19 with various forms of payment flexibility, including allowing consumers to defer or…

NextGen Financial Services Report

Bankruptcy on Ice – Retail Debtors Taking Steps to Freeze Chapter 11 Bankruptcy Proceedings Based on COVID-19 Issues

By Jonathan E. Aberman & Mark A. Silverman

April 16, 2020

Unprecedented times call for unprecedented solutions. This has never been more true than now as our world struggles through impactful changes to our lives, both at work and at play, as a direct result of the COVID-19 pandemic. As social distancing, stay-at-home orders, and sheltering-in-place have forced the closing of shopping centers and retail stores, bars and restaurants, movie theaters, and other venues, “business as usual” has largely, but hopefully only temporarily, ground to a…

NextGen Financial Services Report

News and analysis of legal issues affecting the Financial Services Industry

Blog Authors

The Battle Over the Constitutionality of the CFPB Is Finally Settled… So What Now?

HEROES Act Includes Potentially Disastrous FCRA Amendments

Credit Reporting Agencies Are Not Required to Determine What Is a “Legally” Valid Debt

Bankruptcy On Ice III – The Freeze Extends Temporary Suspensions of Chapter 11 Cases

Are Debtors Eligible to Receive PPP Loans? Bankrupt Companies and the SBA Wage War Over Critical CARES Act Program Eligibility

Illinois Courts May Increasingly Embrace Equity Receiverships

Compliance for PPP Loans: Different Questions for Different Lenders

Bankruptcy on Ice II – an Early Spring Thaw for Bankruptcy Courts?

Credit Reporting During the COVID-19 Pandemic: What You Need to Know

Bankruptcy on Ice – Retail Debtors Taking Steps to Freeze Chapter 11 Bankruptcy Proceedings Based on COVID-19 Issues

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