Posts Tagged ‘Bankruptcy’

MLB May Seize Rangers To Head Off Bankruptcy – Bankruptcy Beat – WSJ

Major League Baseball could seize the Texas Rangers as soon as this week in an effort to prevent the team’s creditors from pushing the club into bankruptcy, Sports Business Journal reported.

The league could employ its rarely used “best interests of baseball” rule to take control of the team and facilitate a sale. MLB has been attempting to help sports mogul Tom Hicks sell the team after his Hicks Sports Group defaulted on $525 million in debt last year.

The trade publication said pressure to quickly sell the team has been ratcheted up as rumors fly that Hicks’ creditors may file an involuntary bankruptcy petition against the team. Such a move could force the Rangers into Chapter 11 protection and shift the power to creditors and away from MLB and Hicks.

Hicks has a tentative deal to sell the team an ownership group led by Pittsburgh attorney Chuck Greenberg. Creditors are said to be unhappy with the deal because they believe other offers are on the table that would pay them more.

MLB, however, prefers the Greenberg deal because his group includes respected Hall of Fame pitcher and current Rangers president Nolan Ryan, and Hicks likes the offer because it pays him for land near the team’s ballpark that is out of the reach of creditors, according to Sports Business Journal.

If the Rangers were to file for bankruptcy, creditors would hope a bankruptcy judge places more emphasis on repaying debt than the wishes of the league and Hicks.

That may not happen. Last year, as part of the Phoenix Coyotes’ bankruptcy, a judge allowed the National Hockey League to take over the team even though another bidder offered a higher price for the Coyotes. In that case, the would-be buyer sought to relocate the team to Canada over the NHL’s protests.

While sports bankruptcies are rare, they are not without precedent. In addition to the Coyotes, the Chicago Cubs made a brief appearance in bankruptcy in 2009 as part of the Chapter 11 case of its former owner, media giant Tribune Co.

The Federal Tax Crimes Blog has a good post about how tax fraud and bankruptcy intertwined in a recent case involving a California couple attempting to discharge their tax debts through bankruptcy.

Federal Tax Crimes: Collateral Consequences of Tax Fraud – Bankruptcy Discharge Denied

Collateral Consequences of Tax Fraud – Bankruptcy Discharge Denied
Section 523(a)(1)(C) provides the taxes are not discharged “with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax.” In Hawkins v. Franchise Board (Bankr Ct. ND CA No. 07-31394/23/10), the IRS and the California Franchise Tax Board sought to deny the debtors, husband and wife, bankruptcy discharge of their tax liabilities because (i) they had filed fraudulent returns and (ii) they had attempted to evade collection of tax “by dissipating his assets on unnecessary and unreasonable expenditures while he knew he owed taxes and knew he was insolvent.”

The husband was well-educated and earned a lot of money working in Silicon Valley (Apple and Electronic Arts). He sold a large amount of stock and perceived a need to shelter the gain. He fell in with KPMG who hawked him FLIP and OPIS shelters (two of the shelters involved in the big KPMG criminal case in NYC). He then fell on hard times but continued to live a high lifestyle, even while knowing that he owed the IRS the tax. The Court noted that he continued the high lifestyle even after they were insolvent. After the IRS assessed some $21 million, he submitted an offer in compromise to pay about 38%. He paid some of the tax but still had unpaid tax. He and his wife filed Chapter 11 bankruptcy to deal with the tax liability. The Debtors then asked the bankruptcy court to confirm the discharge of the liability (i.e., the nonapplicability of the Section 523(a)(C) exception).

The IRS argued that the couple’s returns claiming the FLIP and OPIS tax benefits were fraudulent at least as to the husband and that the their extravagant lifestyle as their finances cratered was an attempt to evade or defeat the tax…

The court held the husband had attempted to evade or defeat through his extravagant living after the tax debt accrued. The court recognized that some level of expenditures are required without constituting an attempt to evade or defeat, but the sheer extravagance in tough times (relatively) for the husband when a very large tax debt was due tipped the scale.

Clients always want to know what will happen and what is expected of them when they attend their required 341 Meeting of Creditors. Although everyone’s bankruptcy petition and circumstances are different, there are many questions that will be asked and documents that are required in every bankruptcy case.  David Leibowitz has compiled a list of do’s and dont’s for debtors when they attend their 341 Meeting of Creditors.

Bankruptcy: What Do I Do at My Trustee Meeting?

* Be on time
* Dress reasonably – not too sharp but not sloppy either
* Be neat and clean
* Bring your social security card
* Bring your driver’s license or other government issued photo identification – a passport is ok, too
* Bring any papers or documents your trustee requests from you
* Be prepared for questions which will be answered
* Answer the questions asked

Here are some things not to do at your bankruptcy meeting with the trustee.

* Don’t wear flashy clothing or jewelry – but remember, your rings will leave a mark where you usually wear them
* Women, don’t wear revealing clothing
* Men and women – keep the perfume and cologne to a minimum
* Don’t bring your children
* Don’t answer questions not asked
* Don’t ramble

Here are some questions which your bankruptcy trustee will ask:

* Did you review your bankruptcy petition and papers
* Did you list all of your assets and all of your debts
* Are there any things which need to be changed
* Where do you live?
* Are you employed?
* Do you own any real estate any place?
* Do you have any claims against anybody? Any lawsuits? Any rights to a tax refund? Any other payments?

Chapter 7 is the bankruptcy choice for most. Chapter 13 is a close second. Chapter 11? Does not get anywhere near the amount of filings, but that could change. More and more small businesses are looking toward Chapter 11 as a way to reorganize their debt load and get back on track.  www.uscourts.gov has some great information for anyone considering bankruptcy.

Contact Knoxville Bankruptcy Attorney at 865-566-0125 for your FREE consultation today.

U.S. Courts | Bankruptcy | Basics | Chapter 11

A case filed under chapter 11 of the United States Bankruptcy Code is frequently referred to as a “reorganization” bankruptcy.

An individual cannot file under chapter 11 or any other chapter if, during the preceding 180 days, a prior bankruptcy petition was dismissed due to the debtor’s willful failure to appear before the court or comply with orders of the court, or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens. 11 U.S.C. §§ 109(g), 362(d)-(e). In addition, no individual may be a debtor under chapter 11 or any chapter of the Bankruptcy Code unless he or she has, within 180 days before filing, received credit counseling from an approved credit counseling agency either in an individual or group briefing. 11 U.S.C. §§ 109, 111. There are exceptions in emergency situations or where the U.S. trustee (or bankruptcy administrator) has determined that there are insufficient approved agencies to provide the required counseling. If a debt management plan is developed during required credit counseling, it must be filed with the court.

With spring training winding down and the start of this year’s baseball season only a week away, Go Pirates!, I thought it would be a good idea to check in on one of the games past all-stars.  We all know that sports stars and other celebrities often struggle with financial planning and often find themselves in bankruptcy court.  This brings me to today’s topic, which is the Chapter 7 bankruptcy of Lenny Dykstra.  I have posted some articles on what not to do in a Chapter 7 case in the past and it appears Mr. Dykstra did not take the time to read them. The Trustee assigned to administer Mr. Dykstra’s estate has some issues with the actions the former all-star has undertaken as of late.  Some of these issues are:

• Pawning World Series and All-Star rings and trophies before filing bankruptcy and not accounting for the proceeds.
• Skipping multiple meetings of creditors.
• Filing law suits while the trustee was negotiating settlements on behalf of the estate.
• Removing up to $100,000 of personal property from his home and office without trustee approval.
• And according to court papers, de-valuing his $17.5 million dollar home, purchased from Wayne Gretzky, by littering it with “empty beer bottles, trash, dog feces and urine and other unmentionables.”

Click the following link to read more.

Investopedia has published a list of the top five reasons people go bankrupt. Here they are for your reading pleasure. If you find yourself in a bind and believe bankruptcy may be in your best interest contact the Tennessee Bankruptcy Lawyers at The McKellar Law Firm for a free consultation (865) 566-0125.

top-5-reasons-why-people-go-bankrupt: Personal Finance News from Yahoo! Finance

1. Medical Expenses
A study done at Harvard University indicates that this is the biggest cause of bankruptcy, representing 62% of all personal bankruptcies. One of the interesting caveats of this study shows that 78% of filers had some form of health insurance, thus bucking the myth that medical bills affect only the uninsured.
Rare or serious diseases or injuries can easily result in hundreds of thousands of dollars in medical bills – bills that can quickly wipe out savings and retirement accounts, college education funds and home equity. Once these have been exhausted, bankruptcy may be the only shelter left, regardless of whether the patient or his or her family was able to apply health coverage to a portion of the bill or not.

2. Job Loss
Whether due to layoff, termination or resignation, the loss of income from a job can be equally devastating. Some are lucky enough to receive severance packages, but many find pink slips on their desks or lockers with little or no prior notice. Not having an emergency fund to draw from only worsens this situation, and using credit cards to pay bills can be disastrous.
The loss of insurance coverage and the cost of COBRA insurance also drain the job seeker’s already limited resources. Those who are unable to find similar gainful employment for an extended period of time may not be able to recover from the lack of income in time to keep the creditors at bay.

3. Poor/Excess Use of Credit
Some people simply can’t control their spending. Credit card bills, installment debt, car and other loan payments can eventually spiral out of control, until finally the borrower is unable to make even the minimum payment on each type of debt. If the borrower cannot access funds from friends or family or otherwise obtain a debt-consolidation loan, then bankruptcy is usually the inevitable alternative.
Statistics indicate that most debt-consolidation plans fail for various reasons, and usually only delay filing for most participants. Although home-equity loans can be a good remedy for unsecured debt in some cases, once it is exhausted, irresponsible borrowers can face foreclosure on their homes if they are unable to make this payment as well.

4. Divorce/Separation
Marital dissolutions create tremendous financial strain on both partners in several ways. First come the legal fees, which can be astronomical in some cases, followed by a division of marital assets, decree of child support and/or alimony, and finally the ongoing cost of keeping up two separate households after the split. The legal costs alone are enough to force some to file, while wage garnishments to cover back child support or alimony can strip others of the ability to pay the rest of their bills. Spouses who fail to pay the support dictated in the agreement often leave the other completely destitute.

5. Unexpected Expenses
Loss of property due to theft or casualty, such as earthquakes, floods or tornadoes for which the owner is not insured can force some into bankruptcy. Many homeowners are likely unaware that they must take out separate coverage for certain events such as earthquakes. Those who do not have coverage for this type of peril can face the loss of not only their homes but most or all of their possessions as well. Not only must they then pay to replace these items, but they must also find immediate food and shelter in the meantime. Furthermore, those who lose their wardrobes in such a catastrophe may not be able to dress appropriately for their work, which could cost them their jobs.

The Bankruptcy Code got an extreme makeover in October of 2005 and now many people are asking if it is time to re-work the Bankruptcy Code again.  In my opinion, there were both good and bad revisions to the code in 2005 and it could not hurt to tweak it a little to reflect the reality of how the bankruptcy system functions in the real world.  Read the following article from the New York Times to learn more, and for help with your bankruptcy situation, call the Knoxville Bankruptcy Lawyers at The McKellar Law Firm today at 865-566-0125.

Op-Ed Contributor – A New Chapter for Bankruptcy – NYTimes.com

The problem is that our bankruptcy system is too difficult and expensive for the people who use it. The system has always been complicated, but in 2005 Congress made things worse by changing the rules to make it harder for bankrupt people to avoid paying their outstanding bills. Now that the recession has exposed the flaws of the system, Congress should go back to the drawing board and drastically simplify the bankruptcy system.

At the heart of the existing process is a strategic choice between liquidation under Chapter 7 or rehabilitation under Chapter 13. Under Chapter 7, households give up all of their nonessential assets (as determined by the law of the state where they live), but pay nothing out of any future income to clear their debts; those debts are simply erased. Under Chapter 13, households make payments out of future income, but are more likely to retain their homes and automobiles.

More and more big name businesses may be looking to Chapter 11 bankruptcy protection as a way to restructure. Click on the link below to read more.

bankruptcy-is-blockbusters-only-hope: Personal Finance News from Yahoo! Finance

Still, a voluntary bankruptcy, while painful, may be its only way out, Needham analyst Charles Wolf says.

Blockbuster has provided little confidence that it will be able to recover on its own. Last month the video rental company reported a fourth-quarter loss of $434.9 million, or $2.24 a share, as same-store sales fell almost 16%.

But no one can say Blockbuster isn’t trying. Over the past several years, the company has shuttered underperforming stores, cut costs and rolled out kiosks in an effort to compete with Netflix (NFLX) and Coinstar’s (CSTR) Redbox.

If you need a Knoxville Bankruptcy Attorney or a Chapter 11 Bankruptcy Attorney, contact the attorneys at the McKellar Law Firm, PLLC at 865-566-0125.

Many senior citizens I speak to regarding debt issues are “judgment proof.” Meaning they have no un-exempt assets and their only source of income is a monthly Social Security check. Social security income is off limits to almost all creditors.  I say almost all because a provision in the 2008 Farm Bill lifted the ten–year statute of limitations on the government’s ability to withhold Social Security benefits in collecting debts other than student loans.  Read the following article to learn more.

defaulted-loans-may-haunt-seniors: Personal Finance News from Yahoo! Finance

A little–noticed law could soon result in smaller Social Security checks for hundreds of thousands of the elderly and disabled who owe the U.S. money from defaulted loans and other debts more than a decade old.

Social Security benefits are off–limits to creditors, such as credit–card companies and banks. But the U.S. can collect debts to federal agencies by “offsetting,” or withholding Social Security and disability payments.

The Treasury currently withholds benefits of 3.1 million Social Security recipients to recover defaulted student–, farm– and small–business loans, unpaid income taxes, amounts veterans owe for health care, and other debts to the government.

If you need assistance with your debt or bankruptcy issues, contact Knoxville Tennessee Bankruptcy Lawyer Ian Agster today at 865-566-0125 for a FREE consultation.

Filings were up 31% for the year 2009. See article below.

http://www.abajournal.com/news/article/bankruptcy_filings_up_31/

Chart courtesy AOUSC.

The number of bankruptcy filings in the federal courts has been on the the rise for years and jumped 31.9 percent in 2009.

The Administrative Office of the U.S. Courts released data Tuesday that shows that bankruptcies filed in the 12-month period ending December 31, 2009 totaled 1,473,675, up from 1,117,641 bankruptcies filed in 2008.

Data covers business and non-business debt, with the majority of bankruptcy filings involving non-business debts.

In 2009, the non-business debt filings totaled 1,412,838, up 32 percent from the 1,074,108 in 2008.

Business filings totaled 60,837 in 2009, up 40 percent from the 43,533 business filings in 2008.

For a Knoxville Bankruptcy Attorney, click here.