Monday, August 31, 2009
SLX Settlement Delayed Until September 28, 2009
A proposed Settlement Agreement covering the vast majority of my clients with loans from Student Loan Xpress, as well as most other former SSH students with loans from SLX, has been delayed until September 28, 2009. This delay was caused by the ongoing negotiations between SLX and the AG Task Force.
Thursday, August 06, 2009
Silver State Helicopters Students Near Settlement With Student Loan Xpress
A proposed Settlement Agreement covering the vast majority of my clients with loans from Student Loan Xpress, as well as most other former SSH students with loans from SLX, is scheduled to be filed in United States District Court on August 31, 2009. This proposed nationwide class action settlement is to be filed in United States District Court Middle District of Florida Tampa Division Case No. 8:080cv-00305-SDM-MAP. All leading counsel representing former students of SSH have joined together to negotiate and approve the best possible settlement for our former SSH student clients. These attorneys include myself, Andrew August and Kevin Rooney of the Pinnacle Law Group in San Francisco, and Chris Casper of Tampa, Florida. Certain state Attorney Generals, including the Florida Attorney General, who have undertaken a cooperative investigation of the business practices of SSH and the events leading to its closure in February of 2008 (The AG Task Force), are reviewing the proposed settlement and using their influence to get the best possible settlement terms for former SSH students. These settlement negotiations have been ongoing for more than one year, and include three mediation sessions before retired Judge William Cahill in August, September and December of 2008 in San Francisco, California. The parties have engaged in confirmatory discovery and exchanged multiple drafts of a more than sixty page settlement agreement. Plaintiff's counsel have conducted extensive independent investigation and analysis, including obtaining a copy of SSH's computer and hard copy records. 3 separate putative class actions are pending against SLX on behalf of Student borrowers of SSH, and all of these actions may be said to have helped facilitate the proposed settlement. Most of this formerly confidential information has been set forth in pleadings filed in the above referenced District Court Case and can now be shared with you. The terms of the proposed settlement must remain confidential until the proposed agreement is filed with the Court. I will post full details regarding the proposed settlement agreement on this blog at the earliest possible time. Each client of mine with loans from Student Loan Xpress will be contacted individually regarding this settlement proposal.
Thursday, April 23, 2009
Silver State Update
Patience is a virtue. Have you heard that one before? The Silver State Helicopters case is definitely one that has required both action and patience on my behalf and on behalf of all of my clients. For my Citibank clients, I have already achieved 100% success. For all others, the work continues.
Right on Citibank
When Citibank first offered to forgive 100% of my Citibank clients’ SSH student loan debt in all states except California in exchange for an assignment of the clients’ proofs of claim in the SSH bankruptcy, there were a few skeptics. Some suggested that there must be a catch. They said that perhaps Citibank would sell the loans to a third party that would then try to collect. They asked if the students would be sent a 1099 and incur debt settlement income. They wondered aloud if the client’s credit would be trashed. Here is the reality of what has happened:
1. The Citibank offer was expanded and extended to all former SSH students with took out student loans from Citibank to attend SSH, including all of my California clients with Citibank loans.
2. All of my clients with Citibank loans took my advice and accepted Citibank’s offer of 100% loan forgiveness.
3. Citibank did not resell the loans to any third party.
4. Citibank did not send 1099s to any of my clients.
5. Citibank kept its promise to completely remove all reference to the Citibank loans from its credit reporting to all credit reporting agencies.
6. Now, in an unprecedented development, Citibank has agreed to refund all of the money that one of my Citibank clients paid on his Citibank loan prior to receiving Citbank's 100% debt forgiveness offer.
I think it is fair to say that I was right on Citibank. In saying this, I acknowledge the role of Andrew August and Kevin Rooney of the Pinnacle Law Group in helping to achieve this result.
Still Waiting on SLX
On February 18, 2009 I wrote a post on this blog entitled "SLX is Next" in which I stated my belief that SLX would be the next lender to settle with my SSH clients and told my clients with SLX loans to "look for an announcement in the next 30 days." 64 days later, we are all still waiting for this settlement offer that I can recommend to my clients. As I have stated before on this blog, settlement negotiations with SLX are covered by a written confidentiality agreement. This prevents me from discussing the settlement negotiations and the proposed terms of the settlement offer. I will use my best efforts to resolve any remaining differences and to get each and every one of my SSH clients with SLX loans the best possible settlement offer. All Plaintiffs' counsel are cooperating on this matter. Counsel for SLX is the Los Angeles office of Sidley & Austin, with attorney Jennifer Landau acting as lead counsel for SLX. I will e-mail all of my SLX clients with the details of this settlement offer as soon as the offer is made public.
Come On, KeyBank
KeyBank is firmly in last place when it comes to settling with its clients that obtained student loans to attend SSH. Nixon Peabody LLP is counsel for KeyBank on the SSH matter, with Scott O'Connel of the Manchester, New Hampshire branch of the firm serving as lead counsel. Although there have been general discussions and an unsuccessful mediation, there has not been any reasonable settlement offer from KeyBank and its counsel. KeyBank seems to want to wait and see what happens with Citibank and SLX first. With Citibank resolved and SLX well on its way, I am hopeful that real progress will be made soon with KeyBank. On a more positive note, KeyBank continues to honor its no payment while this matter is in dispute offer and has not sued any of my clients. For that matter, I have not received any reports of any lawsuit by SLX against any of my clients either.
Still Out of the Money in the SSH Bankruptcy Case
On November 4, 2008, I wrote that "For now, it appears that the SSH bankruptcy estate is administratively insolvent. This means that there is no money to pay to unsecured creditors and that administrative creditors may receive less than full payment on their claims." 1,620 separate pleading have been filed in the SSH bankruptcy since it was filed on February 5, 2008, but my analysis remains the same: There is no money to pay to unsecured creditors. There has been no indication of when, if ever, a distribution will be made to the unsecured creditors. This is true even for my clients who have made part of their claims priority claims that get paid ahead of general unsecured creditor claims. So far, the best thing that I have been able to do with my clients' proofs of claim against SSH is to trade them to the lenders in exchange for loan forgiveness, as we did with Citibank. Efforts continue on a daily basis to bring additional assets into the bankruptcy estate. If and when I believe that there will be a distribution to my clients from the bankruptcy estate, I will post further information on this subject.
Is Delay Good For You?
It's better than losing. It's better than being sued. It gives the FBI and the State Attorney Generals more time to investigate and develop a case. Public opinon and government pressure can help us. Banks that take government money may be held accountable to the government. In my opinion, delay is better than accepting anything less than the best offer that I can get for you.
Right on Citibank
When Citibank first offered to forgive 100% of my Citibank clients’ SSH student loan debt in all states except California in exchange for an assignment of the clients’ proofs of claim in the SSH bankruptcy, there were a few skeptics. Some suggested that there must be a catch. They said that perhaps Citibank would sell the loans to a third party that would then try to collect. They asked if the students would be sent a 1099 and incur debt settlement income. They wondered aloud if the client’s credit would be trashed. Here is the reality of what has happened:
1. The Citibank offer was expanded and extended to all former SSH students with took out student loans from Citibank to attend SSH, including all of my California clients with Citibank loans.
2. All of my clients with Citibank loans took my advice and accepted Citibank’s offer of 100% loan forgiveness.
3. Citibank did not resell the loans to any third party.
4. Citibank did not send 1099s to any of my clients.
5. Citibank kept its promise to completely remove all reference to the Citibank loans from its credit reporting to all credit reporting agencies.
6. Now, in an unprecedented development, Citibank has agreed to refund all of the money that one of my Citibank clients paid on his Citibank loan prior to receiving Citbank's 100% debt forgiveness offer.
I think it is fair to say that I was right on Citibank. In saying this, I acknowledge the role of Andrew August and Kevin Rooney of the Pinnacle Law Group in helping to achieve this result.
Still Waiting on SLX
On February 18, 2009 I wrote a post on this blog entitled "SLX is Next" in which I stated my belief that SLX would be the next lender to settle with my SSH clients and told my clients with SLX loans to "look for an announcement in the next 30 days." 64 days later, we are all still waiting for this settlement offer that I can recommend to my clients. As I have stated before on this blog, settlement negotiations with SLX are covered by a written confidentiality agreement. This prevents me from discussing the settlement negotiations and the proposed terms of the settlement offer. I will use my best efforts to resolve any remaining differences and to get each and every one of my SSH clients with SLX loans the best possible settlement offer. All Plaintiffs' counsel are cooperating on this matter. Counsel for SLX is the Los Angeles office of Sidley & Austin, with attorney Jennifer Landau acting as lead counsel for SLX. I will e-mail all of my SLX clients with the details of this settlement offer as soon as the offer is made public.
Come On, KeyBank
KeyBank is firmly in last place when it comes to settling with its clients that obtained student loans to attend SSH. Nixon Peabody LLP is counsel for KeyBank on the SSH matter, with Scott O'Connel of the Manchester, New Hampshire branch of the firm serving as lead counsel. Although there have been general discussions and an unsuccessful mediation, there has not been any reasonable settlement offer from KeyBank and its counsel. KeyBank seems to want to wait and see what happens with Citibank and SLX first. With Citibank resolved and SLX well on its way, I am hopeful that real progress will be made soon with KeyBank. On a more positive note, KeyBank continues to honor its no payment while this matter is in dispute offer and has not sued any of my clients. For that matter, I have not received any reports of any lawsuit by SLX against any of my clients either.
Still Out of the Money in the SSH Bankruptcy Case
On November 4, 2008, I wrote that "For now, it appears that the SSH bankruptcy estate is administratively insolvent. This means that there is no money to pay to unsecured creditors and that administrative creditors may receive less than full payment on their claims." 1,620 separate pleading have been filed in the SSH bankruptcy since it was filed on February 5, 2008, but my analysis remains the same: There is no money to pay to unsecured creditors. There has been no indication of when, if ever, a distribution will be made to the unsecured creditors. This is true even for my clients who have made part of their claims priority claims that get paid ahead of general unsecured creditor claims. So far, the best thing that I have been able to do with my clients' proofs of claim against SSH is to trade them to the lenders in exchange for loan forgiveness, as we did with Citibank. Efforts continue on a daily basis to bring additional assets into the bankruptcy estate. If and when I believe that there will be a distribution to my clients from the bankruptcy estate, I will post further information on this subject.
Is Delay Good For You?
It's better than losing. It's better than being sued. It gives the FBI and the State Attorney Generals more time to investigate and develop a case. Public opinon and government pressure can help us. Banks that take government money may be held accountable to the government. In my opinion, delay is better than accepting anything less than the best offer that I can get for you.
Continuing Bankruptcy Legal Education
Every month of the year, I take classes, seminars and programs in bankruptcy law. Every week, I read bankruptcy journals and newsletters. I go far beyond the minimum requirements for continuing my status as a Specialist in Bankruptcy Law, Certified by the California Board of Legal Specialization of the State Bar of California. On March 13,2009 I participated in an all day program put on by the American Bankruptcy Institute in Beverly Hills, California entitled, “Bankruptcy Battleground West.” Subjects covered included emerging real estate issues in bankruptcy, selling assets in bankruptcy proceedings, and the economic forecast for 2009. Many prominent bankruptcy attorneys from across the Country attended, as did the United States Trustee for Region 16 and 5 of the bankruptcy judges from the Central District of California.
On Saturday, April 11, 2009 I attended the Central District Consumer Bankruptcy Attorney Association program on Tax Issues in Bankruptcy at Southwestern Law School.
On May 15-17, I will be attending the California Bankruptcy Forum Conference at the Loews Coronado Bay Resort in San Diego, California. Every bankruptcy judge in California is invited to attend this program free of charge for both the judge and a guest, including the cost of resort lodging, food and all programs. In return, the judges help to teach the attending bankruptcy attorneys about recent developments in bankruptcy law. Most of the Judges in the Central District of California where I practice accept this offer every year. Past year’s events that I attended in Napa and in Palm Desert allowed me not only to further my bankruptcy education, but also to get to know more of the judges on a personal level. This event is always both educational and fun.
On Saturday, April 11, 2009 I attended the Central District Consumer Bankruptcy Attorney Association program on Tax Issues in Bankruptcy at Southwestern Law School.
On May 15-17, I will be attending the California Bankruptcy Forum Conference at the Loews Coronado Bay Resort in San Diego, California. Every bankruptcy judge in California is invited to attend this program free of charge for both the judge and a guest, including the cost of resort lodging, food and all programs. In return, the judges help to teach the attending bankruptcy attorneys about recent developments in bankruptcy law. Most of the Judges in the Central District of California where I practice accept this offer every year. Past year’s events that I attended in Napa and in Palm Desert allowed me not only to further my bankruptcy education, but also to get to know more of the judges on a personal level. This event is always both educational and fun.
We Do Loan Modifications Too
Loan Modification is a hot topic now. Many firms throughout the country are offering loan modification services. Often, the attorney who solicits the business is a front for others or there is no attorney involved whatsoever. They take on any client who can pay their fee, with little or no regard for the likelihood of success. Many of the firms collect illegal up front fees, do little or no work, and leave a trail of consumer complaints in their wake.
At my law office, all loan modification work is done by me and by the Senior Associate Attorneys that work for me. We do not take cases that we think are unlikely to succeed. As with our bankruptcy work, we offer a free consultation to anyone and everyone who is interested in receiving our help.
Our fee structure is simple: $2,500.00 for the first loan on any property and $1,250.00 for any second or third loan on the same property. Unlike other loan modification firms, we offer a full range of bankruptcy services when needed. Sometimes the elimination of debts in a bankruptcy proceeding can increase the likelihood of a successful loan modification after the bankruptcy case is concluded. Other times, a successful loan modification can avoid the need for a bankruptcy altogether.
At my law office, all loan modification work is done by me and by the Senior Associate Attorneys that work for me. We do not take cases that we think are unlikely to succeed. As with our bankruptcy work, we offer a free consultation to anyone and everyone who is interested in receiving our help.
Our fee structure is simple: $2,500.00 for the first loan on any property and $1,250.00 for any second or third loan on the same property. Unlike other loan modification firms, we offer a full range of bankruptcy services when needed. Sometimes the elimination of debts in a bankruptcy proceeding can increase the likelihood of a successful loan modification after the bankruptcy case is concluded. Other times, a successful loan modification can avoid the need for a bankruptcy altogether.
Boston Marathon 2009
My running friends know that I am a regular participant in the Boston Marathon. On Monday, April 20, 2009, I completed my 6th Boston Marathon, finishing in a time of 3:39:36. In addition to competing as an individual, I was part of a Men’s Masters Team for Track Club Los Angeles (“TCLA”).
The race was exciting as always and the crowd support was fantastic. The woman’s race was decided by one second. I had the pleasure of meeting many of the top finishers in the race, including the female winner of this year’s Boston Marathon Salina Kosgei, and the 2 top finishing Americans, Kara Goucher and Ryan Hall (both finished third). Shown above are some photos of me and my new friends.
Tuesday, March 10, 2009
A "Key" Victory for Flight School Students
This article should be of interest to all of my SSH clients with loans from KeyBank. It is reprinted from the Higher Ed Watch Blog where it was posted earlier today:
"It appears that KeyBank's predatory private student loan practices are finally catching up with the company.
Late last month, the bank settled a lawsuit filed by 51 former students from TAB Express International, a defunct flight school in northern Florida, who had accused the lender of colluding with the school to defraud them. The settlement puts an end to the case, which was scheduled to go to trial before a jury this week in a state circuit court in Florida.
Meanwhile, according to a U.S Senator in Florida, the FBI and a group of state attorneys general are investigating the exclusive lending arrangements that KeyBank had with TAB Express and Silver State Helicopters, a Nevada-based chain that shut down suddenly on Super Bowl Sunday last year.
As we have reported previously, there has been in recent years a proliferation of unlicensed and unaccredited trade schools that do not participate in the federal student aid programs and therefore go largely unregulated. Their growth has been fueled by lenders that have "partnered" with these institutions to provide expensive private loans to the at-risk students these schools tend to attract. The lenders have then turned around and, like subprime mortgage providers, securitized the loans, shifting these high-risk loans onto unsuspecting investors.
One of the most aggressive players in this arena has been KeyBank, which has formed exclusive arrangements with dozens of unlicensed trade schools -- particularly ones that focus on computer training and flight training. These schools have required their students to pay for the full cost of their programs up front, with tens of thousands of dollars of private loans from KeyBank. Unfortunately, many of these schools have shut down without warning, leaving their students in the lurch -- heavily indebted with expensive private loans and little to no practical training.
In case after case, KeyBank has fought vigorously (and often successfully) to force students to pay back these loans. In doing so, the lender has denied borrowers basic protections that are in federal law to protect borrowers from being scammed. For example, the bank has routinely omitted from the promissory notes for its private loans a required notice that asserts the borrowers' right to have their loans canceled if a school with which it has "a referring relationship" closes down, is not licensed, or engages in fraud. In addition, the bank has tried to prevent students whose schools have shut down from challenging their loan agreements in court.
A Big Victory for Students
In June 2005, TAB Express International shut its doors without notice after KeyBank ended its three-year relationship with the school. Prior to that, KeyBank and TAB had an exclusive arrangement in which the school required students to pay the full cost of attendance -- which was around $100,000 -- with private loans from the lender before classes even started. The bank sent the money directly to the school. According to the former students' lawsuit, the students were told that their loans would be forgiven after they completed the training and worked for TAB's airline for a period of time.
But after enrolling, students became suspicious. "The students became aware of a lack of available instructors, simulators, and aircraft at the flight school as the school continued to increase the number of enrollees," the lawsuit stated. Eventually, they realized that "TAB had no airline." The lawsuit said that the students repeatedly brought their concerns to KeyBank officials but were rebuffed, and the lender continued to help market the school to prospective students.
When the deal finally collapsed, the lawsuit said, KeyBank officials tried to convince the students to take advantage of a "train out option" that would have required them to take on additional private loan debt and to waive their right to pursue legal action. Most of the students were not persuaded.
Instead, they decided to pursue a lawsuit against KeyBank. They won a major victory last year when the Florida State Appeals Court rejected an effort by the lender to enforce a "venue restriction clause" included in the students' private student loan promissory notes. That clause would have required them to re-file their case in KeyBank's home state of Ohio, which has much weaker consumer protection laws than Florida.
With only weeks before the jury trial was to start, KeyBank decided to come to terms with the former students. Under the settlement, the bank agreed to discharge the borrowers' private loans, which were worth about $5 million, and to pay a portion of their legal fees. The company, however, did not admit to any wrongdoing.
Under Scrutiny
Whether or not KeyBank wittingly helped schools like TAB Express and Silver State Helicopters exploit students is sure to be the focus of an investigation that the FBI is conducting of the lender's activities. Sen. Bill Nelson (D-FL) revealed the existence of the FBI probe in a letter he sent to one of the former TAB Express students last fall that was obtained by Higher Ed Watch. The letter also noted that "the Florida Attorney General's Office is also conducting a formal investigation into the matter as part of a larger multistate group of Attorneys General."
At Higher Ed Watch, we are pleased that federal and state investigators are taking these cases seriously. While justice has been served for former students of TAB Express, there are many others who are being forced to repay tens of thousands of dollars in expensive private loan debt for training they never received. Hopefully, they won't have to wait for their day in court before their debt is forgiven."
"It appears that KeyBank's predatory private student loan practices are finally catching up with the company.
Late last month, the bank settled a lawsuit filed by 51 former students from TAB Express International, a defunct flight school in northern Florida, who had accused the lender of colluding with the school to defraud them. The settlement puts an end to the case, which was scheduled to go to trial before a jury this week in a state circuit court in Florida.
Meanwhile, according to a U.S Senator in Florida, the FBI and a group of state attorneys general are investigating the exclusive lending arrangements that KeyBank had with TAB Express and Silver State Helicopters, a Nevada-based chain that shut down suddenly on Super Bowl Sunday last year.
As we have reported previously, there has been in recent years a proliferation of unlicensed and unaccredited trade schools that do not participate in the federal student aid programs and therefore go largely unregulated. Their growth has been fueled by lenders that have "partnered" with these institutions to provide expensive private loans to the at-risk students these schools tend to attract. The lenders have then turned around and, like subprime mortgage providers, securitized the loans, shifting these high-risk loans onto unsuspecting investors.
One of the most aggressive players in this arena has been KeyBank, which has formed exclusive arrangements with dozens of unlicensed trade schools -- particularly ones that focus on computer training and flight training. These schools have required their students to pay for the full cost of their programs up front, with tens of thousands of dollars of private loans from KeyBank. Unfortunately, many of these schools have shut down without warning, leaving their students in the lurch -- heavily indebted with expensive private loans and little to no practical training.
In case after case, KeyBank has fought vigorously (and often successfully) to force students to pay back these loans. In doing so, the lender has denied borrowers basic protections that are in federal law to protect borrowers from being scammed. For example, the bank has routinely omitted from the promissory notes for its private loans a required notice that asserts the borrowers' right to have their loans canceled if a school with which it has "a referring relationship" closes down, is not licensed, or engages in fraud. In addition, the bank has tried to prevent students whose schools have shut down from challenging their loan agreements in court.
A Big Victory for Students
In June 2005, TAB Express International shut its doors without notice after KeyBank ended its three-year relationship with the school. Prior to that, KeyBank and TAB had an exclusive arrangement in which the school required students to pay the full cost of attendance -- which was around $100,000 -- with private loans from the lender before classes even started. The bank sent the money directly to the school. According to the former students' lawsuit, the students were told that their loans would be forgiven after they completed the training and worked for TAB's airline for a period of time.
But after enrolling, students became suspicious. "The students became aware of a lack of available instructors, simulators, and aircraft at the flight school as the school continued to increase the number of enrollees," the lawsuit stated. Eventually, they realized that "TAB had no airline." The lawsuit said that the students repeatedly brought their concerns to KeyBank officials but were rebuffed, and the lender continued to help market the school to prospective students.
When the deal finally collapsed, the lawsuit said, KeyBank officials tried to convince the students to take advantage of a "train out option" that would have required them to take on additional private loan debt and to waive their right to pursue legal action. Most of the students were not persuaded.
Instead, they decided to pursue a lawsuit against KeyBank. They won a major victory last year when the Florida State Appeals Court rejected an effort by the lender to enforce a "venue restriction clause" included in the students' private student loan promissory notes. That clause would have required them to re-file their case in KeyBank's home state of Ohio, which has much weaker consumer protection laws than Florida.
With only weeks before the jury trial was to start, KeyBank decided to come to terms with the former students. Under the settlement, the bank agreed to discharge the borrowers' private loans, which were worth about $5 million, and to pay a portion of their legal fees. The company, however, did not admit to any wrongdoing.
Under Scrutiny
Whether or not KeyBank wittingly helped schools like TAB Express and Silver State Helicopters exploit students is sure to be the focus of an investigation that the FBI is conducting of the lender's activities. Sen. Bill Nelson (D-FL) revealed the existence of the FBI probe in a letter he sent to one of the former TAB Express students last fall that was obtained by Higher Ed Watch. The letter also noted that "the Florida Attorney General's Office is also conducting a formal investigation into the matter as part of a larger multistate group of Attorneys General."
At Higher Ed Watch, we are pleased that federal and state investigators are taking these cases seriously. While justice has been served for former students of TAB Express, there are many others who are being forced to repay tens of thousands of dollars in expensive private loan debt for training they never received. Hopefully, they won't have to wait for their day in court before their debt is forgiven."
Wednesday, February 18, 2009
Bogus Offer from KeyBank
Citibank was the first major lender to settle with the SSH students. Student Loan Xpress is likely to be next. That makes KeyBank most likely to be the last major lender to settle with the SSH students. KeyBank has not made any offer to Plaintiffs' counsel, though it has participated in discussions and agreed to participate in a mediation. Meanwhile, in January of 2009, KeyBank made individual offers to certain California SSH borrowers. In one such offer made to a Los Angeles, California client of mine, KeyBank offered to reduce my client's SSH KeyBank student loan balance by $8,763.36 from $66,763.16 to $58,000.00. This amounts to a 13% reduction for a client that received only his private pilot's license from SSH.
KeyBank wants an assignment of the student's proof of claim against SSH, a covenant not to sue, a confidentiality agreement, and a complete release. All it offers in return is a 13% discount. In my opinion, KeyBank's offer is not good enough. It is a bogus offer.
KeyBank mailed its offer directly to my client, with no copy to me. KeyBank did this despite the fact that I have previously advised KeyBank and its counsel of my representation of this client and of all the KeyBank clients that I represent. I urge all clients of mine who receive such a letter to forward said letter to me and to authorize me to reject KeyBank's offer. Together, we can do better.
KeyBank wants an assignment of the student's proof of claim against SSH, a covenant not to sue, a confidentiality agreement, and a complete release. All it offers in return is a 13% discount. In my opinion, KeyBank's offer is not good enough. It is a bogus offer.
KeyBank mailed its offer directly to my client, with no copy to me. KeyBank did this despite the fact that I have previously advised KeyBank and its counsel of my representation of this client and of all the KeyBank clients that I represent. I urge all clients of mine who receive such a letter to forward said letter to me and to authorize me to reject KeyBank's offer. Together, we can do better.
No Action Needed on SLX "Personal Information" Letter
Many of my SLX clients have contacted me about a letter that they received from SLX in late January or early February regarding the inadvertant disclosure of certain personal information and the subsequent destruction of said information. My opinion is that no action is needed on said letter. I have not had any reports of any identity theft or attempted identity theft as a result of SLX's actions. Here is what the letter says:
We recently became aware of an incident involving certain personal information related to some Student Loan Xpress, Inc. student loan data. The service provider for your loan(s), American Education Services (“AES”), inadvertently transmitted a report which contained your personal information to another student loan lender with which AES contracts. That lender has indicated that it destroyed all of the information it mistakenly received. We have no evidence that any of the information has been used in an unauthorized manner as a result of this incident. The information that AES inadvertently sent to the unauthorized recipient may have included names, addresses, Social Security numbers, dates of birth, and information specific to you student loan account. We are working with AES to take steps to help ensure that this type of incident does not happen in the future.
We regret that this incident may affect you. We take our obligation to safeguard personal information very seriously and, therefore, we are alerting you so you can take steps to protect yourself from possible identity theft. We encourage you to remain vigilant and regularly review and monitor your account statements and credit reports. The attached Reference Guide provides details on these and other steps you may wish to consider.
You are entitled under U.S. law to one free credit report annually from each of the three national credit bureaus. To order your free credit report, visit www.annualcreditreport.com or call toll free
(877) 322-8228.
To further assist you, we recommend that you register for credit monitoring, which we have arranged to provide at no charge to you. The attached Reference Guide provides information on how you can register for the credit monitoring and recommendations by the U.S. Federal Trade Commission on how to further protect yourself against identity fraud. You may also want to place a fraud alert or security freeze on your credit file.
We hope this information is useful to you. If you have questions regarding this incident, please call AES’s dedicated Customer Service staff at 1-800-2149320 between the hours of 8:00 am and 5:00 pm EST.
Again, we regret any inconvenience this may cause you.
David Harmon
Executive Vice President
Student Loan Xpress, Inc.
We recently became aware of an incident involving certain personal information related to some Student Loan Xpress, Inc. student loan data. The service provider for your loan(s), American Education Services (“AES”), inadvertently transmitted a report which contained your personal information to another student loan lender with which AES contracts. That lender has indicated that it destroyed all of the information it mistakenly received. We have no evidence that any of the information has been used in an unauthorized manner as a result of this incident. The information that AES inadvertently sent to the unauthorized recipient may have included names, addresses, Social Security numbers, dates of birth, and information specific to you student loan account. We are working with AES to take steps to help ensure that this type of incident does not happen in the future.
We regret that this incident may affect you. We take our obligation to safeguard personal information very seriously and, therefore, we are alerting you so you can take steps to protect yourself from possible identity theft. We encourage you to remain vigilant and regularly review and monitor your account statements and credit reports. The attached Reference Guide provides details on these and other steps you may wish to consider.
You are entitled under U.S. law to one free credit report annually from each of the three national credit bureaus. To order your free credit report, visit www.annualcreditreport.com or call toll free
(877) 322-8228.
To further assist you, we recommend that you register for credit monitoring, which we have arranged to provide at no charge to you. The attached Reference Guide provides information on how you can register for the credit monitoring and recommendations by the U.S. Federal Trade Commission on how to further protect yourself against identity fraud. You may also want to place a fraud alert or security freeze on your credit file.
We hope this information is useful to you. If you have questions regarding this incident, please call AES’s dedicated Customer Service staff at 1-800-2149320 between the hours of 8:00 am and 5:00 pm EST.
Again, we regret any inconvenience this may cause you.
David Harmon
Executive Vice President
Student Loan Xpress, Inc.
SLX is Next
Student Loan Xpress is the lender that wrote the most student loans for Silver State Helicopters. It is also the lender that I believe is going to be next to make an offer that I can enthusiastically recommend to all of my SLX clients. Settlement negotiations with SLX are covered by a written confidentiality agreement. These negotiations are, in my opinion, about to bear fruit. SLX has already quietly settled several SSH student loan claims with former SSH students in Georgia. Look for an announcement in the next 30 days. I will e-mail all of my SLX clients with the details of this settlement offer as soon as the offer is made public.
Citibank Settlements Are Complete
On November 10, 2008, I announced and highly recommended Citibank's 100% debt forgiveness offer to my former SSH students in every state except for California. Through my efforts and the efforts of others, this offer was subsequently extended to include my California SSH clients with Citibank loans and all former SSH students throughout the country with Citibank student loans. This offer by Citibank was met with skepticism by some who figured that there must be a catch. In December of 2008, A second settlement letter was issued clarifying the fact that in exchange for an assignment of the client's proof of claim, Citibank will cancel the debt and not assign its claims to any other company. In addition, Citibank agreed in writing to request that any reference to the Citibank SSH loans be deleted by all credit bureaus to whom the SSH Student Loans were reported. Since then, I have heard back from many of my Citibank clients confirming that the Citibank Student loan has been deleted from their credit reports. Earlier this month, I learned that Citibank has decided not to issue any 1099-C debt settlement income forms as a result of its cancellation of these disputed debts. This is a complete victory for all of my Citibank clients.
A copy of the revised Citibank Settlement letter is set forth herein:
Date
Student Borrower Name
Student Borrower Address
Re: Master Student Loan Promissory Note between you and Citibank, N.A.;
Account Number __________
Dear ________________:
Our records reflect that Citibank, N.A. and The Student Loan Corporation (collectively, “Citibank”) made the above-referenced loan to you for flight training and education at Silver State Helicopter School (the “Student Loan”). As you may know, Silver State filed bankruptcy in Bankruptcy Court in Nevada and ceased operations earlier this year.
Citibank sent funds to Silver State for your flight training tuition. It is our position that you remain obligated to repay those amounts to Citibank under the promissory note you signed. In recognition of the disputed nature of your obligation, Citibank will agree to release you of such obligation and to cancel the debt if you comply with the conditions and terms set forth below.
Specifically, if you assign to Citibank any and all claims you may have with respect to your Silver State loan, whether against Silver State, Citibank, or their present and former officers, directors and employees, Citibank will release you of the debt under the Student Loan. If such release occurs, then Citibank will not seek to transfer or assign the collection rights with respect to the debt of the Student Loan to any third party. The assignment by you of your claims with respect to the Silver State loan will enable Citibank to pursue a claim in the bankruptcy court for return of the money it advanced on your behalf.
If you do not sign and return this letter to us, we will assume that you have not agreed to assign your claims to Citibank, and you may keep and pursue any claims against Silver State in the bankruptcy court and make arrangements with Citibank for a repayment plan, as you will remain obligated for repayment of the Student Loan.
If you agree to assign your claims to Citibank in exchange for the cancellation of your Student Loan, you and any cosigner should review carefully, sign below and return this letter to Citibank at the following address by December 31, 2008:
Citibank South Dakota
Attention Executive Communications
701 E. 60th Street N.
Sioux Falls, SD 57104
If you assign your claims to Citibank, then Citibank will also request that the credit bureaus to whom your Student Loan was reported, if any, delete any reference to the transaction from your credit reporting, although Citibank cannot warrant or guarantee the timing with which such credit bureaus will comply with such request.
Please be advised that the statements herein apply only to the Student Loan and do not in any way modify, amend or otherwise relate to any other accounts you may have with Citibank or its affiliates. If you and any cosigner do not timely sign and return the enclosed assignment, then Citibank reserves all rights and remedies against you under the Student Loan.
If you have any questions or need additional information, please call Mary Bakker at 605-331-7219.
Sincerely yours,
Citibank, N.A. and The Student Loan Corporation
By signing below, the undersigned borrowers agree to assign to Citibank any and all claims we may have with respect to our Student Loan for flight training and education at Silver State Helicopter School, whether against Silver State, Citibank, or their present and former officers, directors and employees. In exchange for this assignment, Citibank (including its predecessors and successors in interest, employees, agents, affiliates and assigns, agrees to release the undersigned borrowers from the Student Loan.
___________________________ ________________________________
Borrower Signature Date
___________________________ _________________________________
Cosigner Signature Date
In February of 2008, Citibank Filed Notices of Assignment of Claim and Pending Order Thereon in the Silver State Helicopters, LLC Bankruptcy Case for the claims that were assigned to it by way of settlement. These Notices read as follows, "YOU ARE HEREBY NOTIFIED an Assignment of Claim has been filed in this case by the Assignor named above. Pursuant to Federal Rule of Bankruptcy Procedure 3001(e), you are hereby notified that unless you file your objection within 20 days following the date of this notice, the following Order will become effective without further action by the Court. Any objection filed must be set for hearing and notice sent to the U.S. Trustee, Trustee, creditors and all parties in Interest.
IT IS ORDERED that Citibank South Dakota, N.A. The Student Loan, Assignee, is hereby substituted for ____________, Assignor, as a claimant against the estate herein, effective on the 21st day hereafter, absent the filing of a timely objection."
A copy of the revised Citibank Settlement letter is set forth herein:
Date
Student Borrower Name
Student Borrower Address
Re: Master Student Loan Promissory Note between you and Citibank, N.A.;
Account Number __________
Dear ________________:
Our records reflect that Citibank, N.A. and The Student Loan Corporation (collectively, “Citibank”) made the above-referenced loan to you for flight training and education at Silver State Helicopter School (the “Student Loan”). As you may know, Silver State filed bankruptcy in Bankruptcy Court in Nevada and ceased operations earlier this year.
Citibank sent funds to Silver State for your flight training tuition. It is our position that you remain obligated to repay those amounts to Citibank under the promissory note you signed. In recognition of the disputed nature of your obligation, Citibank will agree to release you of such obligation and to cancel the debt if you comply with the conditions and terms set forth below.
Specifically, if you assign to Citibank any and all claims you may have with respect to your Silver State loan, whether against Silver State, Citibank, or their present and former officers, directors and employees, Citibank will release you of the debt under the Student Loan. If such release occurs, then Citibank will not seek to transfer or assign the collection rights with respect to the debt of the Student Loan to any third party. The assignment by you of your claims with respect to the Silver State loan will enable Citibank to pursue a claim in the bankruptcy court for return of the money it advanced on your behalf.
If you do not sign and return this letter to us, we will assume that you have not agreed to assign your claims to Citibank, and you may keep and pursue any claims against Silver State in the bankruptcy court and make arrangements with Citibank for a repayment plan, as you will remain obligated for repayment of the Student Loan.
If you agree to assign your claims to Citibank in exchange for the cancellation of your Student Loan, you and any cosigner should review carefully, sign below and return this letter to Citibank at the following address by December 31, 2008:
Citibank South Dakota
Attention Executive Communications
701 E. 60th Street N.
Sioux Falls, SD 57104
If you assign your claims to Citibank, then Citibank will also request that the credit bureaus to whom your Student Loan was reported, if any, delete any reference to the transaction from your credit reporting, although Citibank cannot warrant or guarantee the timing with which such credit bureaus will comply with such request.
Please be advised that the statements herein apply only to the Student Loan and do not in any way modify, amend or otherwise relate to any other accounts you may have with Citibank or its affiliates. If you and any cosigner do not timely sign and return the enclosed assignment, then Citibank reserves all rights and remedies against you under the Student Loan.
If you have any questions or need additional information, please call Mary Bakker at 605-331-7219.
Sincerely yours,
Citibank, N.A. and The Student Loan Corporation
By signing below, the undersigned borrowers agree to assign to Citibank any and all claims we may have with respect to our Student Loan for flight training and education at Silver State Helicopter School, whether against Silver State, Citibank, or their present and former officers, directors and employees. In exchange for this assignment, Citibank (including its predecessors and successors in interest, employees, agents, affiliates and assigns, agrees to release the undersigned borrowers from the Student Loan.
___________________________ ________________________________
Borrower Signature Date
___________________________ _________________________________
Cosigner Signature Date
In February of 2008, Citibank Filed Notices of Assignment of Claim and Pending Order Thereon in the Silver State Helicopters, LLC Bankruptcy Case for the claims that were assigned to it by way of settlement. These Notices read as follows, "YOU ARE HEREBY NOTIFIED an Assignment of Claim has been filed in this case by the Assignor named above. Pursuant to Federal Rule of Bankruptcy Procedure 3001(e), you are hereby notified that unless you file your objection within 20 days following the date of this notice, the following Order will become effective without further action by the Court. Any objection filed must be set for hearing and notice sent to the U.S. Trustee, Trustee, creditors and all parties in Interest.
IT IS ORDERED that Citibank South Dakota, N.A. The Student Loan, Assignee, is hereby substituted for ____________, Assignor, as a claimant against the estate herein, effective on the 21st day hereafter, absent the filing of a timely objection."
Wednesday, January 07, 2009
More Firepower
I am very happy to announce that we have added 2 new attorneys to our firm.
Attorney Mike Mahurin started with us today. Mike is a graduate of Pepperdine University School of Law and has 12 years of legal experience handling real estate, employment, estate planning and bankruptcy matters. Mike was previously an associate in the real estate department of Stroock & Stroock & Lavan and worked in the chambers of the Honorable Robert W. Alberts as a law student. Mike is a member of the board of directors of the Southern California Association of USA Track & Field in addition to being an accomplished runner and triathlete, having won the 2008 Tucson Marathon and competed in the 2003 Hawaii Ironman.
Attorney Donna Dishbak will be starting with us on Monday. Donna was admitted to the State Bar of California on December 4, 2008. Donna graduated from U.C. Berkeley with a major in Rhetoric and a minor in Business Administration. She then returned to her hometown of Los Angeles to attend Loyola Law School where she dedicated many hours to being trained in mediation and working at the on campus mediation clinic. Donna spends her free time painting, playing tennis, and volunteering for a local non-profit job resource center for the homeless.
Attorney Mike Mahurin started with us today. Mike is a graduate of Pepperdine University School of Law and has 12 years of legal experience handling real estate, employment, estate planning and bankruptcy matters. Mike was previously an associate in the real estate department of Stroock & Stroock & Lavan and worked in the chambers of the Honorable Robert W. Alberts as a law student. Mike is a member of the board of directors of the Southern California Association of USA Track & Field in addition to being an accomplished runner and triathlete, having won the 2008 Tucson Marathon and competed in the 2003 Hawaii Ironman.
Attorney Donna Dishbak will be starting with us on Monday. Donna was admitted to the State Bar of California on December 4, 2008. Donna graduated from U.C. Berkeley with a major in Rhetoric and a minor in Business Administration. She then returned to her hometown of Los Angeles to attend Loyola Law School where she dedicated many hours to being trained in mediation and working at the on campus mediation clinic. Donna spends her free time painting, playing tennis, and volunteering for a local non-profit job resource center for the homeless.
Thursday, December 11, 2008
Going After Airola, Pickett and Trenk
James Lisowski, the Chapter 7 Trustee in the Silver State Helicopters bankruptcy case, has filed an Application for an Order Approving Employment of Fennemore Craig, PC as Special Litigation Counsel to the Trustee. The Trustee's Application states that he "requires representation for the following services: Special Litigation Counsel to assist the Trustee in investigating and analyzing objections to claims, potential claims, and causes of action by Debtors against Jerry M. Airola ("Airola"), Steven Pickett ("Pickett"), Steven L. Trenk ("Trenk"), their family members and any companies in which Airola, Picket or Trenk are officers, directors, members, partners, or shareholders, and to prosecute those objections to claims, potential claims and causes of action, including the initiation and conduct of discovery and the filing of claims objections, adversary proceedings and other litigation as appropriate." I support this action by the Trustee. The hearing on the Trustee's Application to Employ Special Litigation Counsel is set for December 17, 2008 at 2:30 pm.
Wednesday, November 12, 2008
Notice of Filing Official Transcript
Many of my clients have contacted me regarding a notice that they received from the Bankruptcy Court in the SSH case. This notice is entitled "Notice of Filing Official Transcript" and is dated November 4, 2008. No action is required by any of my clients with regards to this notice. I used my CM/ECF and PACER logins to read the entire 61 page transcript to see if it contains any personal information for any of my clients that should be redacted. The transcript does not contain any such personal information. The transcript is entitled "TRANSCRIPT OF PROCEEDINGS OF STATUS HEARING RE: TRUSTEE'S MOTION TO SELL REAL PROPERTY IN PROVO, UTAH, NO. 1135 AND ORDER SHORTENING TIME RE: TRUSTEE'S MOTION FOR PROTECTIVE ORDER REGARDING SUBPOENA AND MOTION TO QUASH SUBPOENA ON ORDER SHORTENING TIME, NO. 1142 VOLUME 1 16 BEFORE THE HONORABLE MIKE K. NAKAGAWA UNITED STATES BANKRUPTCY JUDGE." The transcript is for a Court hearing that took place on October 22, 2008. The Trustee in the SSH bankruptcy case James Lisowski appeared, as did his counsel, counsel for the Student Loan Corporation ("SLC"), Counsel for Orix Finance Corporation, and counsel for Jerry Airola. At the hearing, the parties and the Court discussed the Trustee's request for a protective order and The Student Loan Corporation's objection to a Proof of Claim filed by Jerry Airola. Counsel for the Trustee spoke of the time, difficulty and expense in locating specific documents requested by SLC. He spoke about how the documents sought by SLC were consolidated from 35 different locations and now housed in 5 different storage facilities, intermixed with confidential student records. SLC's counsel spoke of SLC's interest not only in objecting to Airola's Proof of Claim, but possibly also in filing an Adversary Proceeding against Airola and other individuals. She referred to allegations that SSH never had the ability to provide the services that it was advertising and stated that SLC may have Nevada Deceptive Trade Practices Act claims and racketeering claims. Judge Nakagawa granted a protective order for 90 days, and set a continued status conference on the matter for January 21, 2009.
Monday, November 10, 2008
Citibank Surrenders!
On November 5, 2008, Citibank began offering 100% loan forgiveness of Citibank SSH student loans in exchange for an assignment of the student's claims against SSH and against Citibank. We highly recommend that all of our clients with Citibank loans accept this offer. 100% Loan forgiveness has always been our highest goal for each and every one of our SSH clients. It is a complete victory for each and every one of our Citibank clients. It sets the bar high for KeyBank and Student Loan Xpress, the 2 other banks that wrote the majority of the SSH student loans.
The Citbank offer is being extended to all former SSH students with Citibank loans in every state except for California. I am working with counsel for Citibank to have this offer also extended to all my California Citibank clients who specifically request it. The Citibank offer is not yet generally available to California Citibank clients, apparently due to the pendency of a class action lawsuit.
Here is a complete copy of the November 5, 2008 Citibank letter that has already been received by several of our Citibank clients:
"Re: Master Student Loan Promissory Note between you and Citibank, N.A.
Our records reflect that Citibank, N.A. and the Student Loan Corporation (collectively "Citibank") made the above-referenced loan to you for flight training and education at Silver State Helicopter School ("the Student Loan"). As you may know, Silver State filed bankruptcy in Bankruptcy Court in Nevada and ceased operations earelier this year.
Cibank sent funds to Silver State for your flight training tuition. While you remain obligated to repay these amounts to Citibank under the promissory note you signed, Citibank will agree not to seek collection of those amounts from you on the terms set forth below.
Specifically, if you assign to Citibank any and all claims you may have with respect to your Silver State loan, whether against Silver State, Citibank, or there present and former officers, directors, and employees, Citibank will not seek to collect these amounts from you. This assignment will enable Citibank to pursue a claim in the bankruptcy court for return of the money it advanced on your behalf.
If you do not sign and return the letter to us, we will assume that you have not agreed to assign your claims to Citibank, and you may keep and pursue any claims against Silver State in the bankruptcy court and make arrangements with Citibank for a repayment plan.
If you agree to assign your claims to Citibank in exchange for Citibank's agreement not to pursue any amounts from you related to your Silver State loan, you and any cosigner should review carefully, sign below and return this letter to Citibank at the following address by November 21, 2008:
Citibank South Dakota
Attention Executive Communications
701 E. 60th Street N.
Sioux Falls, SD 57104
Please be advised that the statements herein apply only to the Student Loan and do not in any way modify, amend or otherwise relate to any other accounts you may have with Citibank or its affiliates. If you and any cosigner do not timely sign and return the enclosed assignment, then Citibank reserves all rights and remedies against you under the Student Loan.
If you have any questions or need additional information, please call Mary Bakker at 605-331-7219
Sincerely yours,
Citibank, N. A. and The Student Loan Corporation
By signing below, the undersigned borrowers agree to assign to Citibank any and all claims we may have with respect to our Silver State loan, whether against Silver State, Citibank, or other present or former officers, directors, and employees. In exchange for this assignment, Citibank agrees not to pursue collection of the Student Loan from the undersigned borrowers.
________________________ ______________
Borrower Signature Date
________________________ _______________
Cosigner Signature Date
What This Offer Means
This offer means that former SSH students with student loans from Citibank can now walk away from 100% of their loans. They are being made whole. Students who owed $23,300.00, $46,600.00 and $69,900.00 + interest can now pay nothing to Citibank and move on with their lives. No principal, no interest, no attorneys' fees, no costs, nothing of any value whatsoever with the exception of the assignment of their claims against SSH and Citibank and its present and former officers, dirctors and employees. The most famous of these ex officers and directors is, of course, Jerry Airola. The assignment of these claims in exchange for 100% debt forgiveness seems 100% fair to me. Former SSH students are not entitled to a double recovery, and were never going to get one anyway. As discussed in my last post to this blog on November 4, 2008, unsecured creditors in the SSH bankruptcy are likely to recover much less than the full value of their claims. Trading these claims to Citibank for 100% debt forgiveness is a deal that I highly recommend -- it cannot be beat.
Why Is Citibank Doing This?
Why is Citibank making such a good offer? That is an interesting question on which there can be many different opinions. Is it a response to the pending lawsuits against Citibank and the additional threatened lawsuits? Is it due to political and public pressure? Is it the result of a cost benefit analysis in which giving in to the demands of its borrowers and their attorneys is seen as less costly than litigating and possibly losing and setting a precedent that would be bad for Citbank? Is it simply Citibank deciding to do the right thing?
The Citbank offer is being extended to all former SSH students with Citibank loans in every state except for California. I am working with counsel for Citibank to have this offer also extended to all my California Citibank clients who specifically request it. The Citibank offer is not yet generally available to California Citibank clients, apparently due to the pendency of a class action lawsuit.
Here is a complete copy of the November 5, 2008 Citibank letter that has already been received by several of our Citibank clients:
"Re: Master Student Loan Promissory Note between you and Citibank, N.A.
Our records reflect that Citibank, N.A. and the Student Loan Corporation (collectively "Citibank") made the above-referenced loan to you for flight training and education at Silver State Helicopter School ("the Student Loan"). As you may know, Silver State filed bankruptcy in Bankruptcy Court in Nevada and ceased operations earelier this year.
Cibank sent funds to Silver State for your flight training tuition. While you remain obligated to repay these amounts to Citibank under the promissory note you signed, Citibank will agree not to seek collection of those amounts from you on the terms set forth below.
Specifically, if you assign to Citibank any and all claims you may have with respect to your Silver State loan, whether against Silver State, Citibank, or there present and former officers, directors, and employees, Citibank will not seek to collect these amounts from you. This assignment will enable Citibank to pursue a claim in the bankruptcy court for return of the money it advanced on your behalf.
If you do not sign and return the letter to us, we will assume that you have not agreed to assign your claims to Citibank, and you may keep and pursue any claims against Silver State in the bankruptcy court and make arrangements with Citibank for a repayment plan.
If you agree to assign your claims to Citibank in exchange for Citibank's agreement not to pursue any amounts from you related to your Silver State loan, you and any cosigner should review carefully, sign below and return this letter to Citibank at the following address by November 21, 2008:
Citibank South Dakota
Attention Executive Communications
701 E. 60th Street N.
Sioux Falls, SD 57104
Please be advised that the statements herein apply only to the Student Loan and do not in any way modify, amend or otherwise relate to any other accounts you may have with Citibank or its affiliates. If you and any cosigner do not timely sign and return the enclosed assignment, then Citibank reserves all rights and remedies against you under the Student Loan.
If you have any questions or need additional information, please call Mary Bakker at 605-331-7219
Sincerely yours,
Citibank, N. A. and The Student Loan Corporation
By signing below, the undersigned borrowers agree to assign to Citibank any and all claims we may have with respect to our Silver State loan, whether against Silver State, Citibank, or other present or former officers, directors, and employees. In exchange for this assignment, Citibank agrees not to pursue collection of the Student Loan from the undersigned borrowers.
________________________ ______________
Borrower Signature Date
________________________ _______________
Cosigner Signature Date
What This Offer Means
This offer means that former SSH students with student loans from Citibank can now walk away from 100% of their loans. They are being made whole. Students who owed $23,300.00, $46,600.00 and $69,900.00 + interest can now pay nothing to Citibank and move on with their lives. No principal, no interest, no attorneys' fees, no costs, nothing of any value whatsoever with the exception of the assignment of their claims against SSH and Citibank and its present and former officers, dirctors and employees. The most famous of these ex officers and directors is, of course, Jerry Airola. The assignment of these claims in exchange for 100% debt forgiveness seems 100% fair to me. Former SSH students are not entitled to a double recovery, and were never going to get one anyway. As discussed in my last post to this blog on November 4, 2008, unsecured creditors in the SSH bankruptcy are likely to recover much less than the full value of their claims. Trading these claims to Citibank for 100% debt forgiveness is a deal that I highly recommend -- it cannot be beat.
Why Is Citibank Doing This?
Why is Citibank making such a good offer? That is an interesting question on which there can be many different opinions. Is it a response to the pending lawsuits against Citibank and the additional threatened lawsuits? Is it due to political and public pressure? Is it the result of a cost benefit analysis in which giving in to the demands of its borrowers and their attorneys is seen as less costly than litigating and possibly losing and setting a precedent that would be bad for Citbank? Is it simply Citibank deciding to do the right thing?
Tuesday, November 04, 2008
What Is Happening In The SSH Bankruptcy
It has now been 9 months since Silver State Helicopters, LLC ("SSH") filed bankruptcy in United States Bankruptcy Court, District of Nevada, Case No. 08-10936-mkn. This case is being jointly administered with the related case Silver State Services Corporation, 08-10935-mkn. To date, 1078 different documents have been recorded on the docket in the SSH case. Documents filed include, but are not limited to, Debtor’s original bankruptcy petition and schedules and amended schedules, Motions for Approval of Procedures, a Motion to Limit Notice, Verified Petitions Designating Local Counsel, Notices of Appearance and Requests for Special Notice filed by Creditors, Applications to Employ Counsel, Accountants, Real Estate Brokers and Auctioneers, Applications for Administrative Claims/Expenses, Motions for Order Shortening Time, a Motion to Use Cash Collateral, Motions to Assume or Reject Leases and Executory Contracts, Motions for Examination, Motions for Relief From Stay, Motions to Compel, Motions to Quash, Motions for a Protective Order, and Motions for Sale/Use/Lease of Property. SSH assets sold to date include helicopters, airplanes, cars, real estate, office furniture and office equipment.
United States Bankruptcy Court Judge Mike Nakagawa has conducted dozens of hearings in this case and has generally given the Trustee James Lisowski and his counsel Anthony Zmaila ("Tony Z") and Victoria Nelson what they want. The big winner to date has been secured creditor Orix Finance Corp which has been getting paid regularly out of the ongoing asset sales while the former students of SSH and all of its other unsecured and priority creditors wait and receive nothing.
The Proofs of Claim
3,417 Proofs of claim have been filed in the SSH case. The total amount claimed is $515,697,336. This is far more than is likely to be recovered in this case. Here is the breakdown for the proofs of claim: $463,723,615.62 unsecured, $41,759,763.95 Secured and $4,885,143.87 Priority. The largest secured proof of claim is from Orix Finance Corp for $33,117,417.20. The most interesting secured proof of claim is from Jerry Airola for $1,502,388.18 based on an Assignment of a Deed of Trust for a property in Provo, Utah which was owned by the debtor and has now been sold in the SSH bankruptcy proceeding.
The Trustee has not objected to any proof of claim yet, and appears to be waiting to see if there are any funds to distribute to creditors before deciding to review all of the proofs of claim filed and determine which claims if any should be objected to.
For now, it appears that the SSH bankruptcy estate is administratively insolvent. This means that there is no money to pay to unsecured creditors and that administrative creditors may receive less than full payment on their claims.
One thing that could put substantial additional cash into the SSH bankruptcy is the institution and successful prosecution of Adversary Proceedings against third parties that received preferential payments from the Debtor or for other reasons are liable to the debtor. Only one Adversary Proceeding has been filed so far -- an Adversary Proceeding filed against the Trustee and against Orix Finance Corp by AICCO, Inc. for Declaratory Relief and Turnover of Property. A Summary Judgment hearing is set in that case for December 11, 2008.
My Conversations With Tony Z
I spoke at length with The Trustee's lead counsel Tony Z last month in an effort to increase the level of our mutual cooperation to benefit all former students of SSH. Tony Z informed me that he has sent out "hundreds of letters" threatening to sue individuals and companies that received preferential payments from SSH prior to the filing of the SSH bankruptcy, but has not filed any Adversary Proceedings to date. He also shared with me his opinion that the ongoing governmental investigations of SSH and its former principals are likely to result in governmental prosecution.
I spoke to him about my ongoing efforts to help my clients reduce or eliminate their outstanding loan balances to KeyBank, Student Loan Xpress, and Citibank, and discussed with him certain strategies. Tony Z encouraged my efforts and promised to cooperate with me.
I have been working closely with Andrew August and Kevin Rooney, 2 attorneys who have filed actions in California on behalf of California residents who obtained loans from KeyBank, Student Loan Xpress, or Citibank to attend SSH and were still enrolled at SSH at the time that it filed bankruptcy. While the proposed class outlined in their actions is narrower than my nationwide group of former SSH student clients, we share the same objectives -- to eliminate or reduce as much as possible the loan balances for our clients. I am attempting to facilitate cooperation between these 2 attorneys and the trustee and the trustee's counsel -- something that appears to be on the verge of breaking down now. After several weeks of trying to get access to the relevant documents from the Trustee on a voluntary basis, Andrew and Kevin were forced to get a Court Order for a Rule 2004 Examination of the Trustee with document production. Now the Trustee and his counsel have filed a Motion for a Protective Order and asked the Court to quash the examination. A hearing on the Trustee's Motion is set for November 19, 2008.
Confidential Settlement Negotiations
Settlement negotiations with the lenders are subject to a written confidentiality agreement, but are still going forward. I hope to have something positive to report about this before the end of the year.
The SSH bankruptcy case itself appears likely to continue all through 2009 and well into the future.
United States Bankruptcy Court Judge Mike Nakagawa has conducted dozens of hearings in this case and has generally given the Trustee James Lisowski and his counsel Anthony Zmaila ("Tony Z") and Victoria Nelson what they want. The big winner to date has been secured creditor Orix Finance Corp which has been getting paid regularly out of the ongoing asset sales while the former students of SSH and all of its other unsecured and priority creditors wait and receive nothing.
The Proofs of Claim
3,417 Proofs of claim have been filed in the SSH case. The total amount claimed is $515,697,336. This is far more than is likely to be recovered in this case. Here is the breakdown for the proofs of claim: $463,723,615.62 unsecured, $41,759,763.95 Secured and $4,885,143.87 Priority. The largest secured proof of claim is from Orix Finance Corp for $33,117,417.20. The most interesting secured proof of claim is from Jerry Airola for $1,502,388.18 based on an Assignment of a Deed of Trust for a property in Provo, Utah which was owned by the debtor and has now been sold in the SSH bankruptcy proceeding.
The Trustee has not objected to any proof of claim yet, and appears to be waiting to see if there are any funds to distribute to creditors before deciding to review all of the proofs of claim filed and determine which claims if any should be objected to.
For now, it appears that the SSH bankruptcy estate is administratively insolvent. This means that there is no money to pay to unsecured creditors and that administrative creditors may receive less than full payment on their claims.
One thing that could put substantial additional cash into the SSH bankruptcy is the institution and successful prosecution of Adversary Proceedings against third parties that received preferential payments from the Debtor or for other reasons are liable to the debtor. Only one Adversary Proceeding has been filed so far -- an Adversary Proceeding filed against the Trustee and against Orix Finance Corp by AICCO, Inc. for Declaratory Relief and Turnover of Property. A Summary Judgment hearing is set in that case for December 11, 2008.
My Conversations With Tony Z
I spoke at length with The Trustee's lead counsel Tony Z last month in an effort to increase the level of our mutual cooperation to benefit all former students of SSH. Tony Z informed me that he has sent out "hundreds of letters" threatening to sue individuals and companies that received preferential payments from SSH prior to the filing of the SSH bankruptcy, but has not filed any Adversary Proceedings to date. He also shared with me his opinion that the ongoing governmental investigations of SSH and its former principals are likely to result in governmental prosecution.
I spoke to him about my ongoing efforts to help my clients reduce or eliminate their outstanding loan balances to KeyBank, Student Loan Xpress, and Citibank, and discussed with him certain strategies. Tony Z encouraged my efforts and promised to cooperate with me.
I have been working closely with Andrew August and Kevin Rooney, 2 attorneys who have filed actions in California on behalf of California residents who obtained loans from KeyBank, Student Loan Xpress, or Citibank to attend SSH and were still enrolled at SSH at the time that it filed bankruptcy. While the proposed class outlined in their actions is narrower than my nationwide group of former SSH student clients, we share the same objectives -- to eliminate or reduce as much as possible the loan balances for our clients. I am attempting to facilitate cooperation between these 2 attorneys and the trustee and the trustee's counsel -- something that appears to be on the verge of breaking down now. After several weeks of trying to get access to the relevant documents from the Trustee on a voluntary basis, Andrew and Kevin were forced to get a Court Order for a Rule 2004 Examination of the Trustee with document production. Now the Trustee and his counsel have filed a Motion for a Protective Order and asked the Court to quash the examination. A hearing on the Trustee's Motion is set for November 19, 2008.
Confidential Settlement Negotiations
Settlement negotiations with the lenders are subject to a written confidentiality agreement, but are still going forward. I hope to have something positive to report about this before the end of the year.
The SSH bankruptcy case itself appears likely to continue all through 2009 and well into the future.
Saturday, September 20, 2008
Harward & Associates Dissolve and Drop SSH Matter
Rumors began circulating last week that James Harward and Spencer Robinson of Harward & Associates were no longer doing any work on behalf SSH students. I spoke to Andrew August of Pinnacle Law Group and Dan Reed formerly of Harward and Associates and confirmed the truth of these rumors.
Dan Reed told me that Harward & Associates has dissolved, that Mr. Harward and Mr. Robinson will not be doing any more work on behalf of SSH students, and that he is attempting to take over representation of the approximately 300 former SSH students that paid Harward and Associates to represent them. Dan Reed's new engagement letter requires that his clients pay him a contingent fee that ranges between 30% and 50%.
Dan Reed posted this information on his website: "The relationship between Dan Reed Law and Harward & Associates has been discontinued effective September 2008. Mr. Dan Reed has been designated the primary point of contact with former Silver State Helicopter students. Mr. Reed has been an attorney since the fall of 2007."
In February, March and April of 2008, I competed with Dan Reed and James Harward for clients, and suggested that I was better qualified to help former SSH students. Now James Harward is gone, and I have reached out to Dan Reed to try to help him and his clients. Dan told me that this SSH matter was his first case right out of law school, and that he joined with Harward & Associates in an effort to help his clients. Unfortunately, Mr. Harward did not deliver what Dan and his clients expected from him. I will be meeting in person with Dan Reed in Utah after the St. George Marathon to discuss how we can cooperate with each other to help our SSH clients.
Dan Reed told me that Harward & Associates has dissolved, that Mr. Harward and Mr. Robinson will not be doing any more work on behalf of SSH students, and that he is attempting to take over representation of the approximately 300 former SSH students that paid Harward and Associates to represent them. Dan Reed's new engagement letter requires that his clients pay him a contingent fee that ranges between 30% and 50%.
Dan Reed posted this information on his website: "The relationship between Dan Reed Law and Harward & Associates has been discontinued effective September 2008. Mr. Dan Reed has been designated the primary point of contact with former Silver State Helicopter students. Mr. Reed has been an attorney since the fall of 2007."
In February, March and April of 2008, I competed with Dan Reed and James Harward for clients, and suggested that I was better qualified to help former SSH students. Now James Harward is gone, and I have reached out to Dan Reed to try to help him and his clients. Dan told me that this SSH matter was his first case right out of law school, and that he joined with Harward & Associates in an effort to help his clients. Unfortunately, Mr. Harward did not deliver what Dan and his clients expected from him. I will be meeting in person with Dan Reed in Utah after the St. George Marathon to discuss how we can cooperate with each other to help our SSH clients.
SSH Confidential Settlement Discussions
Settlement discussions with the lenders have not resulted in any offer that I can recommend to my clients. Still, all parties are talking and all parties say that they are interested in a fair settlement. Settlement discussions will soon be entering a critical phase during which I will not post further information about these discussions unless and until they are resolved one way or the other.
It is interesting to note that not one of my SSH clients has been sued by KeyBank, Student Loan Xpress or Citibank for his or her unpaid loan balance. To me, this indicates that these lenders are not eager to file thousands of individual collection lawsuits and that they may in fact be interested in trying to resolve these claims in a more economical manner.
Pending Motions to Dismiss against the pending class actions have also been postponed to give more time for settlement discussions.
Many of you know that my Senior Associate Georgeann Nicol and I enjoy running Marathons. My next Marathon will be on October 4, 2008 in St. George, Utah. Keep in mind that this SSH matter is much more like a Marathon than a sprint. We will continue to work on all aspects of this matter and to do everything that we can to help each and every one of our SSH clients. This matter is sure to go on to 2009 and may continue for years after that. As in a marathon, and as in life, the important thing is not how you start, it's how you finish.
It is interesting to note that not one of my SSH clients has been sued by KeyBank, Student Loan Xpress or Citibank for his or her unpaid loan balance. To me, this indicates that these lenders are not eager to file thousands of individual collection lawsuits and that they may in fact be interested in trying to resolve these claims in a more economical manner.
Pending Motions to Dismiss against the pending class actions have also been postponed to give more time for settlement discussions.
Many of you know that my Senior Associate Georgeann Nicol and I enjoy running Marathons. My next Marathon will be on October 4, 2008 in St. George, Utah. Keep in mind that this SSH matter is much more like a Marathon than a sprint. We will continue to work on all aspects of this matter and to do everything that we can to help each and every one of our SSH clients. This matter is sure to go on to 2009 and may continue for years after that. As in a marathon, and as in life, the important thing is not how you start, it's how you finish.
Friday, August 22, 2008
Multi-State Group of Attorney Generals Investigating SSH And Its Lenders
I have been carefully following the ongoing separate and joint efforts of 16 different states to investigate SSH, its owners, and its lenders KeyBank, Student Loan Xpress, and Citibank. The Attorney General's Offices for 15 different states have joined together to form a multi-state group to investigate SSH and its lenders. The 14 states that have agreed to be part of this joint effort are Arizona, California, Florida, Georgia, Idaho, Illinois, Nevada, New York, Missouri, Montana, Oklahoma, Oregon, Texas, Utah and Washington. 2 additional states, North Carolina and Colorado, were asked to participate in this group, but have so far declined to do so. All parties to the multi-state investigation have signed on to a Common Interest Agreement agreeing to share documents and strategies. I am attempting to get permission to publish a copy of this Common Interest Agreement on my blog. I believe that as a part of this multi-state effort, one or more lawsuits will be filed by the different State Attorney Generals' Offices against KeyBank, Student Loan Xpress, and Citibank. Details of the ongoing investigations are confidential. All of this is good news for all former students of SSH. I will continue to cooperate in every way possible with all government agencies investigating SSH, its owners and its lenders, and I urge my clients to do so as well. In that regard, I wrote to Associate Attorney General Andrew Shull of the Oregon Department of Justice earlier today and gave him and his investigators permission to speak directly to my Oregon clients who attended SSH. I spoke earlier today with an Associate Attorney General in a different state who is considering writing a letter to Citibank urging it to forgive the student loans that Citibank made to students that attended SSH in that state. This is based in part on the fact that the SSH school established in that state was never licensed to operate, and is also based on the fact that Citibank failed to adequately investigate the operations of SSH.
Thursday, August 07, 2008
Sue The Lenders Now Or Try To Settle First?
Sue the Lenders now or try to settle first? This is the choice that I have to make on behalf of our SSH clients. Three separate class action lawsuits have been filed against one or more of the lenders that SSH referred its students to. Pinnacle Law Group, LLP of San Francisco, California filed class actions in California and Nevada against Student Loan Express and KeyBank on behalf of students from those two states who were enrolled at SSH at the time of the SSH bankruptcy. James Harward of Salt Lake City, Utah is co-counsel on the Nevada action. Chris Casper of James, Hoyer, et al. of Tampa, Florida filed a national class action in Florida against Student Loan Express only. I am carefully monitoring all of these actions, and am in regular contact with Andrew August and Kevin Rooney of Pinnacle Law Group. These class action lawsuits face serious obstacles, including, but not limited to, pending Motions to Dismiss and a certain fight over class certification. Many of my clients are not covered by any of these class actions, which do not include in their class definitions students who obtained loans from Citibank, students who obtained loans from Student Loan Express but do not reside in Nevada or California, and all students who were not enrolled at SSH at the time of its bankruptcy filing.
In addition to monitoring the existing actions against KeyBank and Student Loan Xpress, I have been carefully researching prior actions against the lenders by or on behalf of students who attended schools that closed before they could graduate. I want to learn everything that I can about what has worked for Plaintiffs and what has not worked.
While all of this has been going on, I have initiated contact with counsel for Student Loan Xpress and KeyBank and begun my exploration of all settlement possibilities. I want to see if fair settlement agreements can be reached for my clients. These agreements would take into account the amount of education received by my clients and the amount of education that they were promised and paid for, but never received. They might also take into account the current financial condition of the student and any cosigner. Class counsel has been involved in similar discussions. I want to see what results I can achieve for my clients by way of settlement. All of us are working both separately and together in an effort to determine whether or not we can get these lenders to agree to enter into fair settlement agreements that we could all recommend to our clients. Counsel for the lenders and class counsel have asked that the specifics of these discussions remain confidential until there is something more concrete to report.
Settlement negotiations are expected to continue over the next two to three months, at which time I will be in a position to convey detailed information regarding the best specific settlement proposals that I can obtain for my clients and either recommend the acceptance or rejection of these settlement proposals. I hope to get Citibank actively involved in these settlement negotiations. If a good settlement appears to be unlikely, I will have plenty of time to institute my own litigation against the lenders. Meanwhile, I believe that my clients will benefit by my monitoring how the other litigation against the lenders proceed, and by giving more time to the various ongoing civil and criminal investigations of SSH.
Student Loan Xpress, the lender that made the most loans to SSH students, stopped writing new student loans in April and went out of business in May, 2008. My typical SSH client borrowed $69,900.00 from Student Loan Xpress to attend SSH, and incurred origination fees and high interest rates that push the total repayment amount over $200,000.00. The lenders and their counsel are well aware of the risks that their clients face, and I am well aware of the risks that each and every one of my clients faces. I ask that you all be patient during this settlement negotiation period. Please understand that not everything that I do on behalf of our SSH clients can be put on the blog. I want to help all former SSH students, but my first allegiance is always to my clients.
In addition to monitoring the existing actions against KeyBank and Student Loan Xpress, I have been carefully researching prior actions against the lenders by or on behalf of students who attended schools that closed before they could graduate. I want to learn everything that I can about what has worked for Plaintiffs and what has not worked.
While all of this has been going on, I have initiated contact with counsel for Student Loan Xpress and KeyBank and begun my exploration of all settlement possibilities. I want to see if fair settlement agreements can be reached for my clients. These agreements would take into account the amount of education received by my clients and the amount of education that they were promised and paid for, but never received. They might also take into account the current financial condition of the student and any cosigner. Class counsel has been involved in similar discussions. I want to see what results I can achieve for my clients by way of settlement. All of us are working both separately and together in an effort to determine whether or not we can get these lenders to agree to enter into fair settlement agreements that we could all recommend to our clients. Counsel for the lenders and class counsel have asked that the specifics of these discussions remain confidential until there is something more concrete to report.
Settlement negotiations are expected to continue over the next two to three months, at which time I will be in a position to convey detailed information regarding the best specific settlement proposals that I can obtain for my clients and either recommend the acceptance or rejection of these settlement proposals. I hope to get Citibank actively involved in these settlement negotiations. If a good settlement appears to be unlikely, I will have plenty of time to institute my own litigation against the lenders. Meanwhile, I believe that my clients will benefit by my monitoring how the other litigation against the lenders proceed, and by giving more time to the various ongoing civil and criminal investigations of SSH.
Student Loan Xpress, the lender that made the most loans to SSH students, stopped writing new student loans in April and went out of business in May, 2008. My typical SSH client borrowed $69,900.00 from Student Loan Xpress to attend SSH, and incurred origination fees and high interest rates that push the total repayment amount over $200,000.00. The lenders and their counsel are well aware of the risks that their clients face, and I am well aware of the risks that each and every one of my clients faces. I ask that you all be patient during this settlement negotiation period. Please understand that not everything that I do on behalf of our SSH clients can be put on the blog. I want to help all former SSH students, but my first allegiance is always to my clients.
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