Archive for the ‘Bankruptcy’ Category

Judge tosses Prichard bankruptcy | al.com

MOBILE, Alabama — Prichard’s bankruptcy case was dismissed this morning, after a judge agreed that the city was not eligible for Chapter 9 under Alabama law.

A crowd of city retirees and current employees applauded when U.S. Bankruptcy Judge William Shulman read the decision.

Shulman granted a motion filed by a group of current employees whose attorney, Donald Stewart, said outside of court that they wanted to “prevent the city of Prichard from destroying the pension plan.”

An attorney for the city, C. Michael Smith, refused to comment after the ruling.

The city had filed for bankruptcy in October, a month after retirees stopped receiving pension checks.

In a plan to emerge from bankruptcy, the city had offered to pay pensioners $190,000 to divide, and then give them $200 a month for 10 years.

A group of retirees had sued the city, but that case was put on hold, along with all other civil suits against the city, during the bankruptcy. Stewart said he believed those civil cases would now be able to move forward.

After the hearing, one pensioner walked out of the courtroom and said, “We won the first round.”

Personal Bankruptcies Rise, Reversing Trend – WSJ.com

More Americans filed for bankruptcy protection in July, reversing a trend of declining filings over the previous three months and highlighting the continuing financial struggles of many consumers.

Personal bankruptcies numbered 137,698 last month, a 9% increase from the June total, according to the American Bankruptcy Institute, an organization of lawyers and other professionals. The data were supplied by the National Bankruptcy Research Center; similar government tallies won’t be released for months.

Curbs on access to credit, such as those that arose during the recent recession, tend to fuel consumer bankruptcies as individuals who encounter trouble paying debts fail to find new sources of credit. “They can no longer borrow to stave off the day of reckoning,” said Robert Lawless, a University of Illinois law professor.

Filings in July were also up 9% compared with the same month a year ago, and 2010 is on pace to record the largest number of consumer-bankruptcy filings in five years. Filings topped 1.4 million last year, the most since Congress revamped bankruptcy laws in 2005 to make it more difficult for consumers to shed debt.

So far this year there have been nearly 908,000 personal-bankruptcy filings, representing roughly one in every 125 U.S. households. At this point last year there were about 802,000 filings.

The upswing in personal filings has cast doubt on whether the 2005 bankruptcy-law change has been effective. Filings declined drastically in 2006 but resumed their increase in following years.

Consumer-bankruptcy filings are veering toward the higher levels recorded in the early and mid-2000s, before the overhaul, but have so far remained a bit lower. The number of filings could decline modestly in the next few years if less access to credit makes it more difficult to accumulate debt.

Personal bankruptcies haven’t been distributed evenly. The suburbs of Atlanta had particularly high filing rates, according to an analysis by Ronald Mann, a professor at Columbia University’s law school. Of the 10 U.S. counties with the highest filing rates, six were in Georgia.

Filings in many Southern states, however, have begun to decline compared with last year, including South Carolina, Alabama, Tennessee, West Virginia and Mississippi.

“The places that have come out of this quickly are the places that aren’t really tied to the financial centers,” said Mr. Mann.

In other areas, the number of personal bankruptcies continued to skyrocket. Filings in Hawaii, California, Arizona and Utah have jumped 30% or more compared with a year ago.

Judge Orders Rangers Manager to Win World Series – Bankruptcy Beat – WSJ

Bankruptcy Judge D. Michael Lynn handed down a hefty order to Texas Rangers manager Ron Washington when the skipper appeared Thursday to testify in the team’s bankruptcy case: Bring a World Series trophy back to the Lone Star state.

“I’ve directed that you win the pennant and the world championship,” said the Fort Worth judge, who made no attempt to hide his affection for the hometown Rangers.

Lynn said he suspected his order wouldn’t carry the same weight as Washington’s coaching in the dugout, but the manager disagreed.

“It will,” Washington said. He went on to thank the judge for his support of the team.

Washington was called to testify about how an extended stay in bankruptcy would affect the Rangers.

The first-place team’s morale is “unbelievably good” at the moment, Washington said, but he said that could change if uncertainly over ownership drags on and casts doubt over the club’s ability to renew players’ contracts or provide Major League amenities.

Lynn sought to assure Washington about the team’s finances and invited the manager and his players to come to the court with any concerns.

“The finances needed for this team to complete as well as they have will be available — I want the players to understand that,” Lynn said. “We won’t change you from (traveling in) a jet to a school bus.”

Mexican Tourism Company Files for Bankruptcy in U.S. – Bankruptcy Beat – WSJ

A Mexican provider of tourism services at a beachfront hotel in Cozumel filed for Chapter 15 bankruptcy protection Tuesday.

Cozumel Caribe SA blamed its bankruptcy filing on the “drastic” drop in foreign tourists visiting the Hotel Park Royal Cozumel, from where the company operates.

“The recent world recession and crisis in the Mexican tourism sector has brought about a reduction in the flows of cash required to cover the costs and expenses of operating tourism-related businesses,” Agustin Garcia Bolanos Cacho, chairman of Cozumel Caribe’s board of directors, said in court papers.

The crisis Cacho was referring to includes the devalution of the Mexican peso, he said, as well as last year’s H1N1 flu epidemic. Cacho also noted that more tourists were staying home in light of rampant drug violence, the topic of many recent U.S. news reports.

The company said that although it took such emergency steps as reducing its staff and operating costs, negotiating better trade conditions with its suppliers and trying to create new business plans, it found itself strapped for cash when its lenders decided to withhold funds.

According to Bloomberg, Cozumel Caribe reported more than $100 million in debts and assets of more than $10 million in its bankruptcy petition, filed with the Manhattan bankruptcy court.

Bankruptcy Trustee Wants Michael Vick to Return $2 Million – Bankruptcy Beat – WSJ

By Eric Morath

A bankruptcy trustee is demanding that National Football League quarterback Michael Vick repay at least $2 million he gave to friends and family as he faced mounting legal trouble stemming from his role in a dogfighting operation, the Associated Press reported.

Joseph J. Luzinski, the trustee overseeing Vick’s two-year-old bankruptcy case, says those gifts should be the property of the Philadelphia Eagles backup’s creditors.

Unwinding such transactions, called fraudulent transfers, that occur in the months leading up to a bankruptcy filing is common in both personal and business cases.

“We are not suing Mike Vick or accusing Mike Vick of fraud,” Luzinski’s attorney Ross Reeves told the AP. “This is about the proper distribution of assets Vick had before his bankruptcy.”

According the trustee, Vick gave gifts to his mother, fiance, several friends and his brother, Marcus, who also played football.

An attorney for the quarterback said Vick wasn’t trying to do anything illegal.

“He was being generous to his friends and family,” Vick’s bankruptcy attorney, Paul Campsen, told the Virginian-Pilot.

Vick, a former Pro Bowl quarterback for the Atlanta Falcons, claimed to have $20 million in debt when he filed for Chapter 11 protection in 2008.

Sam’s Club Working With SBA to Offer Loans Up to $25,000 – WSJ.com

Wal-Mart Inc.’s Sam’s Club will begin offering loans of up to $25,000 to members in an effort to set itself apart from other warehouse chains and build goodwill to bring in more business.

The loan program, which Sam’s Club calls the first of its type, is aimed at boosting business for a Wal-Mart unit that is trying to raise its profile among the small businesses that make up a good deal of its clientele.

“Access to capital is a major pain point for our members and the small business Main Street community,” said Catherine Corley, vice president of membership at Sam’s Club. “We believe this pilot program is a step in the right direction to help fuel small business growth.”

The move comes as Wal-Mart aims to reinvigorate sales gains at its Sam’s Club warehouse stores. The retailer closed 10 of the stores in January and let go of 10,000 demo staff as it switched to an outside vendor. Most of the staff was hired back by the vendor, spokeswoman Kristy Reed said. The operation is in the midst of remodeling stores, planning to complete 60 to 80 by the end of January.

The loan program will focus on minority-, women- and veteran-owned businesses, as well as very small enterprises. “It works well with us because that is who many of our members are,” Ms. Reed said. The program is structured so that Sam’s Club isn’t directly involved with banking – something its parent has made a run at – but rather, an outside lender is handling the logistics, Reed said. Sam’s Club makes $50 per funded loan.

Americans ramp up bankruptcy filings in 2010: study – Jul. 2, 2010

NEW YORK (CNNMoney.com) — It’s tough out there — no jobs, home values plummeting — and Americans are reacting by heading to bankruptcy court.

Bankruptcy filings surged 14% during the first half of 2010, according to the American Bankruptcy Institute. Filings totaled 770,117 through June, compared to 675,351 during the same period last year.

“Years of rising consumer debt and low savings rates, combined with the housing and unemployment crisis, are causing bankruptcy levels not seen since the 2005,” said Samuel Gerdano, executive director of the institute, in a press release.

In 2005 Congress amended the Bankruptcy Code, making it harder for Americans to file and sparking a rush to file by October of 2005, when the amendments kicked in. In 2005, bankruptcy filings totaled more than 2 million.

By comparison, Gerdano expects there will be more than 1.6 million new bankruptcy filings by the end of 2010.

The institute also said that bankruptcies totaled 126,270 in June, a jump of 8.5% from the same month in 2009, when they totaled 116,365.

The institute relied on data from the National Bankruptcy Research Center for its information.

Loan Guarantees Led To Brunell’s Bankruptcy – Bankruptcy Beat – WSJ

Personal guarantees of numerous business loans contributed to National Football League quarterback Mark Brunell’s Chapter 11 filing.

The former Jacksonville Jaguars star filed for bankruptcy protection in the city where he played for nine seasons on Friday. In court papers, he listed $5.5 million in assets and debts of $24.7 million.

Among Brunell’s largest debts is a more than $5 million guarantee of a loan to JWB Owner LLC and more than $4 million in personal loan guarantees to his defunct Champion LLC business. Both companies were involved in real-estate investments.

Brunell and his wife also owe nearly $2.9 million on their home in Ponte Vedra Beach, Fla.

While Brunell earned more than $50 million in his NFL career, including $1.6 million for throwing 30 passes for the New Orleans Saints last year, a string of failed real-estate investments caused the three-time Pro Bowler’s financial woes.

Brunell filed for Chapter 11 protection, meaning he intends to craft a plan to repay his creditors. It’s not clear if he intends to sell off any of his assets as part of that plan, but he did list some of his most valuable possessions in court papers.

Among those were his Super Bowl ring won in February, rings from his three appearances in the Rose Bowl as a member of the Washington Huskies and his National Championship ring.

Brunell also listed a small collection of guns, including a 12-gauge Remington shotgun and a Winchester 45, and three vehicles, the most valuable of which is a 2008 Ford F-250 pickup truck.

Brunell and his wife each listed a $5,000 monthly salary from Mark Brunell Enterprises Inc. as their primary source of income. The company operates youth football camps. Brunell, 39, is not currently on an NFL roster.

Among the quarterback’s monthly expenses are a $5,627 monthly mortgage payment, $1,292 in food expenses for his family of six and a tithe to his church that “will vary as it is 10% of gross income.”

Bidders Snap Up Polaroid Images – Bankruptcy Beat – WSJ

Bidders turned out in full force for this week’s auction of Polaroid images, shelling out millions of dollars to snap up the 1,000-plus photos and setting new records in the process.

The two-day auction, held in connection with Polaroid Corp.’s bankruptcy proceedings, raked in $12.4 million, about $2 million more than was expected, according to the Associated Press.

That includes the record-setting sale of Ansel Adams’s mural-sized print of Yellowstone National Park for $722,500, surpassing a previous auction record of $609,600 set in 2006. Adams’s print, depicting the park’s rugged terrain in winter, was expected to sell for no more than $500,000.

Another bidder broke the record for an Andy Warhol photograph, “Self-Portrait (Eyes Closed),” which sold for $254,500.

All in all, 14 new artist records were set at the auction, including records for Robert Rauschenberg, Harry Callahan, Lucas Samaras, Chuck Close and David Hockney.

The sale of the images, handpicked from Polaroid’s collection of 16,000 photographs, will go toward paying off creditors of the company’s bankruptcy estate.

Now known as PBE Corp., the company sold the Polaroid name and other assets out of bankruptcy last year to a joint venture of Hilco Consumer Capital Corp. and Gordon Brothers Brands LLC.

Bankruptcy Stinks – Bankruptcy Beat – WSJ

By Kristina Doss

Clint Jolly’s food store in Sparks, Nev., may have sought bankruptcy protection in 2008 and eventually closed. But he still felt compelled to issue an apology recently to local residents that have had to put up with a “pretty funky” smell oozing out of a freezer full of rotting meat located right outside the store.

Jolly posted a statement and YouTube video on his website Monday, explaining that the freezer was used to store game meats that his store – known as Butcher Boy – would process for hunters. But since handing the reigns of the store to a bankruptcy official, the power has been shut off to the outside freezer and the meat stored in there has since spoiled “to the point that the Environmental Health Services Department is talking about having a HazMat team come in and clean it up.”

As local residents struggle to deal with the situation, Jolly offered in his YouTube video “big apologies to people whose animals got destroyed that way, and big apologies to anyone who is living in that trailer park behind the shop.”

Butcher Boy, which was also operated by Jolly’s father, provided groceries and deli and catering services to the Sparks community. Since its founding in 1974, the store became a popular place for local families in search of fine foods such as prime rib and ham.

But by 2008, a new store Jolly and his father opened in Reno struggled to reach sales goals and brought on a set of managerial challenges Jolly and his father weren’t prepared to face.

Butcher Boy filed for Chapter 11 protection on July 25, 2008, hoping to reorganize its debts and “keep the business moving forward,” according to court documents. But after the company’s financial situation failed to improve, the court last year dismissed the bankruptcy case.

Jolly said that their “only choice was to turn over everything we owned to the bank” and the trustee in the Chapter 11 case. The locks to the property were changed, and Jolly and his father haven’t had any access for the past five to six months, Jolly said.

They did their best to explain to the trustee what they thought needed to be done. “Of course, they don’t have to listen to us and apparently they didn’t,” Jolly said.

A local television station recently showed maggots swarming around the outside freezer and interviewed residents living nearby complaining of the smell.

In his YouTube video, Jolly apologized for the mess.

“Apparently, they let the power get shut off and it’s all spoiled,” Jolly said. “So huge apologies from me and my dad, Ken. (It’s) not the way we wanted it to end up.”

Jolly said he wishes there was something they could do, because the “smell of it is pretty funky and hopefully it gets cleaned up quick.” But with no access to the property or bank accounts to pay the power bill, “I’m kind of powerless,” he said.