WSJ.com: Bankruptcy Beat

• Another Paul Allen Company Enters Bankruptcy

  Posted: November 6th, 2009, 1:06pm PST

  Just as it appeared Paul Allen was exiting the bankruptcy spotlight, another one of his companies filed for Chapter 11 protection.

  The Microsoft Corp. co-founder’s Vulcan Ventures placed what’s left of digital video recorder-maker Digeo Inc. into Chapter 11 protection this week in Seattle.

  The filing comes weeks after a judge approved a plan for Allen’s Charter Communications Inc. to exit bankruptcy. That reorganization will see Allen’s voting stake in the cable giant cut to 35% from 91%.

  9 OM Inc., the holding company for Digeo’s remnants, listed between $1 million and $10 million in assets and owes creditors more than $100 million, according to court papers. Tribune Media Services Inc., Time Warner Cable, and law firm Fenwick & West LLP are among the company’s unsecured creditors.

  Bankruptcy “is the prudent forum for winding down a remaining business,” spokesman David Postman, a spokesman for Vulcan Ventures, told the Seattle Times. “It’s the method to do that, to take the last piece of this company and liquidate.”

  Diego made the Moxi HD DVR and related products.

  Essentially a TiVo on steroids, the $799 Moxi can store more than three days of high-definition video without subjecting users to advertisements or monthly fees.

  Most of the company’s assets were sold to ARRIS Group Inc.  for $20 million. Allen had reportedly invested more than $110 million in Digeo since the company was started in 1999.

  ARRIS plans to add the Moxi to the lineup of products it sells to providers of high-speed Internet access.

  
  

Bankruptcy Law Network - Real Lawyers, Real Solutions

• Payoff High Interest Credit Cards In 7 Easy Steps

  Posted: November 6th, 2009, 12:27pm PST by Andy Miofsky, Illinois Bankruptcy Attorney

  Here are seven easy steps to pay off high interest rate credit cards.  In fact these tips show you how to eliminate high interest accounts entirely and how to perform simple regular maintenance adjustments to keep your credit accounts within reasonable limits. 1.  Fingerprint your credit cards.  On a simple word document or piece of paper [...]

WSJ.com: Bankruptcy Beat

• Ex-Agriprocessors Exec Admits ‘Mistakes,’ Denies Guilt

  Posted: November 6th, 2009, 9:43am PST

  Associated Press Sholom Rubashkin

  As a federal jury prepares to consider his fate, former Agriprocessors executive Sholom Rubashkin admitted he “made mistakes” in his management of the Iowa kosher meat plant that last year filed for bankruptcy. But he denied that he intentionally violated fraud and immigration laws, as he’s been charged with doing.

  The Des Moines Register was there Thursday as Rubashkin, the final witness, took the stand to defend himself against the 91 counts of bank, mail and wire fraud, money laundering and other charges the government has charged him with. Rubashkin, who testified in a courtroom filled with his supporters from the Orthodox Jewish community, faces a maximum prison sentence of 1,280 years.

  Specifically, prosecutors accuse him of defrauding the plant’s lender in order to draw more under the $35 million loan. But according to Rubashkin’s testimony, any questionable financial practices were the fault of other employees or his own oversight - not a scheme he’s alleged to have orchestrated.

  “I made mistakes,” Rubashkin said. “I’m a human being. I took the information people gave me and sort of went with it without really drilling down to see if it was for real or not.”

  Rubashkin added that he was “trying hard to comply with the law” both before and after the May 2008 immigration raid that brought the Postville, Iowa, plant national notoriety. Nearly 390 illegal immigrant workers were arrested during that raid. But speaking Thursday, Rubashkin denied that he knowingly hired illegal immigrants. Pressed by Assistant U.S. Attorney C.J. Williams, Rubashkin disclosed that he did know that the plant had received letters from the federal government warning that employees there were working with incorrect Social Security numbers.

  In his questioning, Rubashkin was also asked to respond to what other witnesses said about him during the trial. Told that a plant purchasing manager declared Rubashkin an incompetent manager, Rubashkin replied “sadly, it’s true.”

  The prosecution and defense will make their final arguments in the case Monday, and then Rubashkin’s fate will be placed into the jury’s hands.

  
  

BankruptcyProf Blog

• Transcript in Schwab v. Reilly

  Posted: November 6th, 2009, 7:55am PST by Bankruptcy Prof

  I'm finally getting a chance to read it. You can access it here. Questions to the Trustee's Counsel: JUSTICE GINSBURG: The question is whether -- the question is whether the trustee had to make an objection, when it seems really...

• October Filings Up

  Posted: November 6th, 2009, 7:50am PST by Bankruptcy Prof

  Total bankruptcy filings for October, 2009 were 130,200, up 3.7% from September, 2009 of 125,500; compared to 120,000 in August; 130,500 in July; 124,800 in June; 120,400 in May; 128,700 in April, 131,000 in March, 102,000 in February and 89,000...

WSJ.com: Bankruptcy Beat

• The Daily Docket: Judge Confirms Lear Plan

  Posted: November 6th, 2009, 6:28am PST

  A judge Thursday cleared the way for Lear Corp. to exit bankruptcy protection, approving a restructuring plan that hands ownership of the auto-parts maker to its lenders and bondholders. Read the Daily Bankruptcy Review here.

  Chrysler’s bankruptcy estate wants to use $302 million in its accounts to wind down its bankruptcy, Bloomberg reports.

  A new rule to cap interest rates paid by weak banks will force them to shrink and get healthy faster, or, in some cases, accelerate their demise, according to The Wall Street Journal.

  General Motors Co. Chief Executive Frederick “Fritz” Henderson said Thursday he will pick a new management team for the auto maker’s European operations soon, WSJ reports.

  The Malibu Country Club, part-owned by former Lehman Brothers Holdings Inc. Chief Executive Richard Fuld, filed for bankruptcy protection, according to Bloomberg.

  The daughter-in-law of an Indian steel tycoon won an auction for distressed German fashion house Escada, the New York Post reports.

  A new lawsuit accuses Jeffrey Soffer of creating a “corporate shell game” to borrow nearly $3 billion for the Fontainebleau Las Vegas, which is now in bankruptcy, according to the Miami Herald.

  
  

» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law

• Credit Card Debt Collectors Ripped in Federal Report

  Posted: November 6th, 2009, 4:00am PST by Craig

  

  Many debt collectors are downright evil!

  Written by Craig D. Robins, Esq.   Two weeks ago the Government Accounting Office (GAO) issued a scathing report about the illicit practices of bill collectors.  Of course, this is a regular complaint that I hear from my Long Island bankruptcy clients.   The GAO has been asked by Congress to examine federal and state consumer protections statutes to see if they were working.  They concluded that they were not and reported back to Congress that the Fair Debt Collection Practices Act (FDCPA) should be amended to provide consumers with better protection.  Like, tell us something we don’t know!   The report, Credit Cards: Fair Debt Collection Practices Act Could Better Reflect the Evolving Debt Collection Marketplace and Use of Technology, is interesting reading and 66 pages long.   The Federal Trade Commission (FTC) receives more complaints about bill collectors and the debt collection industry than any other industry.  Last year they received  79,000 complaints on third-party debt collectors.  This is almost 19 percent of all of the complaints it received.   Ongoing abusive practices include trying to collect debt that isn’t owed or is beyond the statute of limitations, making harassing phone calls, threatening to make arrests that the debt collector has no authority to make, and collecting debt discharged in bankruptcy.   I previously wrote about efforts here in New York to deal with the problem of rogue bill collectors:  Debt Collectors Shut Down by Attorney General .   Hopefully, Congress will indeed make the debt collection laws stricter to prevent the abuse that we hear so often.

  Related posts:

  1. Debt Collectors Shut Down by Attorney General Written by Craig D. Robins, Esq. .   Andrew Cuomo...
  2. New York Commences Nationwide Investigation Into Debt Settlement Industry — Many Offers to Eliminate Credit Card Debt are False and Misleading   [caption id="attachment_2222" align="alignright" width="280" caption="Rogue debt settlement companies...
  3. How to Get Your Credit Report for Free Writtten by Craig D. Robins, Esq. It’s a great idea...

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Bankruptcy Law Network - Real Lawyers, Real Solutions

• Thinking Of Filing Bankruptcy? Don’t Give Anything Away.

  Posted: November 5th, 2009, 8:48pm PST by Douglas Jacobs, California Bankruptcy Attorney

  Thinking Of Filing Bankruptcy? Don’t Give Anything Away. “I’ll just give my car to my niece.”  I can’t tell you how many times I’ve heard that or something similar from a client about to file bankruptcy. Sometimes the client has the best of intentions: “she’s about to graduate college and I always promised her a car for [...]

» Long Island, New York | NY | Bankruptcy Lawyer | Attorney At Law

• How Does a Chapter 7 Bankruptcy Trustee Sell Assets

  Posted: November 5th, 2009, 7:55pm PST by Craig

  Written by Craig D. Robins, Esq.   If a trustee in a Chapter 7 case comes across a significant asset that is not exempt, the trustee will first solicit an offer from the debtor.  If the debtor is interested in keeping the asset, then the debtor will negotiate to purchase the debtor’s interest.   What happens if the debtor is not interested or can’t afford to purchase the asset?  Then the trustee will try to sell it.   In order to do so, the Chapter 7 trustee must give notice to all creditors and interested parties listed in the petition.   The trustee can then determine how the asset will be sold.  It can be through a broker or an auctioneer.  The trustee can also publish a notice indicating that the sale will be in his office, or that the item will be sold to the highest bid received by a certain date.   In order for the trustee to accept a bid, even if the only party making the offer is the debtor, the trustee must seek bankruptcy court approval.  In some instances, the trustee will structure the sale so that it is subject to a higher or better offer.   Once the trustee sells the asset, then he has good amount of paperwork to do.   You may be interested in a related post I wrote:  How Much Do Chapter 7 Bankruptcy Trustees Get Paid?   What are typical assets that a Chapter 7 trustee may sell?  These can be cars, jewelry, collectibles, homes, and even baseball tickets.   However, a good experienced Chapter 7 bankruptcy attorney will properly guide the client to make sure that there are no unprotected assets.  Also, Sometimes Debtors Can Keep Non-Exempt Assets in Chapter 7 Bankruptcy Cases . . Read The Back-Door Politics Behind Trustees Pursuing Non-Exempt Assets. . For those considering filing bankruptcy in New York, here is a list of the most common Bankruptcy Exemptions in New York .

  Related posts:

  1. Sometimes Debtors Can Keep Non-Exempt Assets in Chapter 7 Bankruptcy Cases Written by Craig D. Robins, Esq.   The bankruptcy laws...
  2. The Back-Door Politics Behind Trustees Pursuing Non-Exempt Assets Written by Craig D. Robins, Esq.   I recently attended...
  3. Why Consumer Debtors Can’t Transfer Assets Like a House or Car Before Filing Bankruptcy on Long Island Written by Craig D. Robins, Esq.   If every person could transfer...

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The Florida Bankruptcy Law Blog

• Bankruptcy's Effect On Employment And Security Clearance

  Posted: November 5th, 2009, 6:49pm PST by Jonathan Alper

  I often get asked about the effect of filing bankruptcy on debtors' employment. I have sometimes been asked about bankruptcy's effect on a debtor's government security clearance. I found a really good blog post on the subject by California bankruptcy attorney Michael Doan. Bankruptcy | Bankruptcy and security clearances | Bankruptcy Law Network.

WSJ.com: Bankruptcy Beat

• Reader’s Digest, Rick Warren Part Ways

  Posted: November 5th, 2009, 1:28pm PST

  Reuters Rick Warren delivers the invocation during President Barack Obama’s inauguration.

  The Purpose-Driven Connection is no more. Reader’s Digest, which is restructuring in Chapter 11, has broken off its joint publishing venture with evangelical pastor Rick Warren, according to the Associated Press.

  The announcement comes less than a year after the publisher announced its partnership with Warren, who wrote the best-selling book “The Purpose-Driven Life” and and gave the invocation at President Barack Obama’s inauguration. Subscribers to the multimedia venture, called the Purpose Driven Connection, paid $29.99 for a year-long membership, which entitled them to a quarterly print magazine, a workbook, DVD curriculum for church group meetings and access to extra online content.

  At the time the partnership was announced, Warren told the New York Times that the venture merged his message of charitable acts with the nearly 90-year-old publisher’s interest “in the practical aspects of helping people in their daily lives.” Now, Warren’s Southern California church will take over a revamped version of the endeavor. The magazine, which faced lagging subscriptions, will send it out its last issue this month and will go online in January, where content will be available for free.

  “I imagine (Reader’s Digest officials) were hoping for this to explode, and it didn’t explode,” said Brian Bird, the magazine and website’s managing editor, who added that subscriptions were between 2,500 and 5,000 per month. “But it’s had slow, steady growth. It takes a long time for anything to really grow, especially in a competitive media culture.”

  The venture wasn’t Reader’s Digest’s first connection with Warren and his Saddleback Valley Community Church. Bankruptcy court papers show the publisher donated $5,000 to the church in the year before its August bankruptcy filing.

  
  

Insolvencyblog.com

• New Insolvency Rules

  Posted: November 5th, 2009, 12:35pm PST

  Modernisation and consolidation are the focus of The Insolvency (Amendment) (No. 3) Rules 2009, which are published in draft form by the Insolvency Service and are due to come into force on 6 April 2010. Fortunately they are accompanied by...

WSJ.com: Bankruptcy Beat

• Dear Prudence

  Posted: November 5th, 2009, 11:34am PST

  One New York courtroom is about to get a lot less interesting.

  Judge Prudence Carter Beatty of the U.S. Bankruptcy Court in Manhattan, one of New York’s most outspoken and controversial judges, is retiring effective Jan. 4, 2010, according to the 2nd U.S. Circuit Court of Appeals.

  Appointed in 1982, she is the second longest-serving judge at the bankruptcy court and, without a doubt, its most entertaining.

  Beatty is notorious for her random musings and unleashing stinging criticism of those appearing before her. As one executive told The Wall Street Journal in 2005 during Delta Air Lines’ bankruptcy case, visiting her seventh-floor courtroom is like visiting the Grand Canyon: “you have to see it once, and it is worth the price of admission.”

  Beatty didn’t give a reason for her retirement, according to the 2nd Circuit, but she did take a medical leave of absence during the Delta case. The 2nd Circuit is in the process of choosing her replacement as well as a replacement for Judge Robert Drain, who is headed to the bankruptcy court in White Plains, N.Y. His replacement should be made public sometime next year, the appeals court said.

  In the meantime, here are some of our favorite Beatty remarks and exchanges, and we invite readers to share their own stories:

  – During a hearing in Delta’s case, a Delta executive was testifying about what the company did when it fell behind its financial targets, Beatty cut in: “They did what everyone else did: engage in creative accounting. It’s what Enron did, what Worldcom did.” The executive, obviously alarmed at the judge linking Delta to the two fraud-riddled companies, replied: “That’s absolutely not the case.”

  – Beatty railed against the U.S. Trustee’s office at the end of Solutia Inc.’s bankruptcy case, when the office, an arm of the Justice Department, objected to numerous fees billed by the company’s legal and financial advisers, including reimbursement for car services and expensive stays at the Ritz Carlton. But the judge didn’t see a problem, saying lawyers and investment bankers “aren’t interested in getting sweaty or dirty while they’re on the job.” A $1,000 meal for three people billed by Rothschild? No problem in Beatty’s eyes. “Wine is expensive,” she said.

  – In Quigley Co.’s bankruptcy in 2004, lawyers for asbestos personal-injury claimants asked Beatty to step down from the case, saying she had disparaged their clients and questioned the legitimacy of their claims. She told one law firm that was representing the plaintiffs: “Haven’t I seen the name of your firm on subway train ads looking for more people?”

  – That wasn’t the only time a lawyer hit Beatty with a request to step down. In the Delta case, a lawyer representing the airline’s pilots asked Beatty to recuse herself after she described the pilots’ pay as “hideously high.” “I mean, they get paid an awful lot of money,” she said. “The only good thing about them is they can’t work after they’re 60.”

  
  

Total Bankruptcy

• Senate Passes Unemployment Extension Bill

  Posted: November 5th, 2009, 8:57am PST by Chris Kramer

  Unemployed Americans will receive up to 20 additional weeks of unemployment benefits under a bill passed by the Senate this week, according to CNN.

  The Senate voted 98-0 Wednesday to provide continued relief to the estimated 15 million Americans currently drawing unemployment benefits. The bill provides at least 14 additional weeks of benefits, and 20 weeks in those states where unemployment is 8.5% or greater.

  The bill now moves to the House, which passed a similar bill in September providing up to 13 additional weeks of benefits. President Obama has shown support for extending unemployment benefits, and is expected to sign the bill.

  In the Senate bill, benefits would be extended to those who exhaust their current benefits before December 31. Those whose benefits have already run out could reapply for additional benefits.

  The additional unemployment would be funded by a supplemental unemployment tax on employers that would run through June 30, 2011.

  7,000 Unemployed Lose Benefits each Day

  CNN reports that 7,000 unemployed workers exhaust their benefits every day. And with just 3 million jobs for 15 million unemployed (a figure that doesn’t include under-employed or those who’ve given up on looking), that rate isn’t expected to slow soon—without help.

  In September, the unemployment rate reached a 26-year high at 9.8%. October’s unemployment rate, due out tomorrow, isn’t expected to decline. Most experts expect unemployment to crest above 10% in 2010.

  Unemployment and Bankruptcy

  Unemployment is also closely tied with the bankruptcy filing rate. Personal bankruptcy filings reached a four-year high in October, with 135,914 consumer filings, according to the American Bankruptcy Institute. That total is the highest since the new bankruptcy law went into effect in October, 2005.

  Update: The House passed the Senate’s unemployment benefit extension bill Thursday afternoon with a vote of 403-12. President Obama is expected to sign the bill Friday.

WSJ.com: Bankruptcy Beat

• The Daily Docket: Judge May Postpone WaMu Suit

  Posted: November 5th, 2009, 7:04am PST

  A federal trial judge here suggested Wednesday that she may postpone her consideration of a Washington Mutual Inc. lawsuit that seeks billions of dollars from the Federal Deposit Insurance Corp., The Wall Street Journal reports.

  Nokia Siemens Networks is mulling a bid for Nortel Networks Corp.’s optical-network unit, according to WSJ.

  Chrysler Group LLC says it will return to profitability by 2011 and pay back billions of dollars to the U.S. government by 2014, WSJ reports.

  J.P. Morgan Chase & Co. has reached a deal with the Securities and Exchange Commission to pay a $50 million penalty to Jefferson County, Ala., and forfeit $647 million in swap termination fees over bond deals that left the county close to bankruptcy, according to the Birmingham News.

  Berkshire Hathaway Inc. and Leucadia National Corp. could face competition in their effort to buy Capmark Financial Corp.’s loan-servicing business, an attorney for Capmark said Wednesday. Read the Daily Bankruptcy Review story here.

  “Morganization” is back, according to WSJ. J.P. Morgan Chase & Co. now owns stakes in dozens of companies that have declared bankruptcy amid the recession.

  A former vice president of SK Foods, which filed for Chapter 7 bankruptcy protection earlier this year, has agreed to plead guilty to conspiracy charges in an ongoing federal probe of the tomato industry, according to the Californian.

  
  

Credit Slips

• Subprime, Exotic or "Crap?" Mortgage Industry Lingo

  Posted: November 5th, 2009, 4:00am PST by Katie Porter

  Former Credit Slips guestblogger Max Gardner is always trying to understand the real mechanics and economics of mortgage servicing. At one of his infamous bootcamps, he had an employee at a now-deceased mortgage servicer share an insider’s perspective on default mortgage servicing. The employee used some terms of art that are pretty revealing of the serious problems in the mortgage industry. For example, servicing technicians who have to load a new set of subprime or Alt-A loans into the system call those loans “Crap of the Crop,” because even on arrival at the servicer all or almost all of the loans already have major problems such as incomplete documentation, existing defaults, etc. Another popular term is “scratch-and-dent” loans. Quite a bit more colorful, then “subprime” isn’t it?

  The explanation for why homeowners can’t get reliable answers on loan modifications is that the default servicing technicians are “cab drivers,” when successful HAMP and other loss mitigation programs would require “cup drivers” in NASCAR parlance. The servicing industry doesn’t care much for “CRAMP,” their term for Hope Now and HAMP, which the former employee described as a vehicle designed for an 8-lane Interstate running on a two-lane country road. And those qualified written requests that consumers can use to get information on their mortgage loans? Those QWRS are “Quite a lot of Written Regurgitated S**t” because most consumers won’t know what to do with the information that the system spits out in response to the request. Depressing that the best legal tool consumers have may be aptly described with such acronym. If there is a bright spot here, it’s that folks like Max who are holding the industry’s feet to the fire are making a difference. In fact, Max got his own term. A “BCA” is a boot camp attorney, whose request means a lot of work and trouble for the unlucky servicing tech who gets such correspondence.

Bankruptcy Law Network - Real Lawyers, Real Solutions

• Bankruptcy and Security Clearances

  Posted: November 4th, 2009, 7:26pm PST by Michael G. Doan, San Diego Bankruptcy Attorney

  So what happens to your security clearance if you file for bankruptcy protection?  Is it revoked? Will you be terminated from your job?  Will you be demoted?  Does your salary decrease? While there are bankruptcy code provisions that regulate the public and private sector over discriminations in employment when one files for bankruptcy protection, most employers [...]

• National Association of Consumer Bankruptcy Attorneys Convention Tuscon

  Posted: November 4th, 2009, 6:51pm PST by Wayne Novick Ohio Bankruptcy Lawyer

  All my bags are packed.  I’m ready to go.  Got my code in hand and I’m leavin on a jet plane.  Don’t know when I’m coming back. Tomorrow I leave for Tuscon and the start of another National Association of Consumer Bankruptcy Attorneys Convention.  You can always tell the NACBA Lawyer when they are heading to [...]

WSJ.com: Bankruptcy Beat

• Day-Care Center Scolds GM Over Contract Mix-Up

  Posted: November 4th, 2009, 1:31pm PST

  A Tennessee day-care center says General Motors isn’t playing nice.

  Knowledge Learning Corp. doesn’t understand why the auto maker’s bankruptcy estate sent it a contract-termination notice in October, just a few months after GM said it would continue its relationship with the day-care center.

  The “old” GM can’t break the contract because it’s held by the company that emerged from Chapter 11 bankruptcy protection earlier this year, Knowledge Learning said in papers filed with the U.S. Bankruptcy Court in Manhattan.

  The conflicting notices raise questions about the future of the day-care center, which is located on the grounds of GM’s Spring Hill, Tenn., factory. GM plans to indefinitely idle that assembly plant this month, but the center says it’s not closing.

  The Spring Hill day-care center will “continue to work with GM and other families in the community,” said spokeswoman Beth Woodward. Knowledge Learning operates thousands of centers nationwide, under brand names such as “KinderCare” and “Knowledge Beginnings.”

  A GM spokesman couldn’t comment on the day-care center.

  The Spring Hill plant gained national attention as the star of 1990s Saturn-brand commercials, in which loyal car owners picnicked at the plant. More recently, the factory produced the Chevrolet Traverse, but production of that vehicle is being moved to a Michigan plant.

  
  

• Family Ties May Save Escada

  Posted: November 4th, 2009, 9:40am PST

  Bloomberg News

  The son of Escada’s founder has entered the fray of bidders competing to buy the luxury German fashion house out of insolvency proceedings.

  According to Reuters, Sven Ley, son of Escada founder Wolfgang Ley, formed a group called ZSL Partners to bid nearly EUR80 million ($118.2 million) for the troubled designer, whose red-carpet gowns have clothed Katie Holmes and Hilary Swank, among others.

  Ley’s team, which is guaranteeing a minimum price of EUR50 million, includes another investor with a high-fashion pedigree: Giacomo Santucci, the former head of Italian fashion giant Gucci and Prada veteran. If Ley’s team wins, Santucci would become the company’s chief executive. Backing Ley and Santucci are a group of wealthy families, including European department store-chain owner Borletti.

  Escada declared insolvency in August after it failed to win the support of its bondholders for a proposed debt restructuring. The company had suffered declining sales. Now under the control of an insolvency administrator, the label is looking for an investor to breathe new life into it. Negotiations remain ongoing, and the label has refused to identify the other bidders.

  
  

Total Bankruptcy

• Layoffs: Johnson & Johnson to Cut 7% of Jobs

  Posted: November 4th, 2009, 8:19am PST by Chris Kramer

  Health care giant Johnson & Johnson announced Tuesday that it would eliminate up to 8,000 jobs worldwide, or 7% of its workforce, as a cost-savings measure, according to CNN.

  Many of the cuts will come from management levels as the company revises its corporate structure. As a result, Johnson & Johnson expects to save between $800 million and $900 million this year.

  Johnson & Johnson manufacturers household health and beauty products, like soaps and mouthwash, along with pharmaceuticals and medical devices. The recession has impacted both sides of J&J’s business.

  The majority of the job cuts will occur outside of the U.S., according to CEO Bill Weldon, and will occur across all aspects of the business.

  Johnson & Johnson’s restructuring has been occurring over the past few years, as it attempts to fight off competing drug manufacturers and generic versions of its own drugs. In July, 2008, J&J cut 4% of its workforce. In April, 2009, about 900 U.S. sales jobs were eliminated.

National Bankruptcy Forum

• Fraudulent Transfers and Intent

  Posted: November 4th, 2009, 7:47am PST by Jeffrey Herrick

  Does actual intent need to be proven in order to be held responsible for a fraudulent transfer prior to a bankruptcy filing. A trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of filing of the petition. Actual intent does not need to be proven by direct evidence or by an admission. There are instances when circumstantial evidence, evidence where one can infer or dra

WSJ.com: Bankruptcy Beat

• The Daily Docket: Delphi Overhauls Board

  Posted: November 4th, 2009, 6:37am PST

  Four weeks after emerging from bankruptcy protection, auto-parts supplier Delphi Automotive LLP is overhauling its board of directors, The Wall Street Journal reports.

  General Motors backed out of a deal to sell the company’s European operations to Magna International Inc., and now plans to spend billions to restructure the money-losing business itself, according to WSJ.

  Chrysler will unveil its five-year revival plan Wednesday, the New York Times reports.

  Jefferson County, Ala., commissioners voted Tuesday to pursue claims against Wall Street firms involved in investments that have soured and left the county on the brink of bankruptcy, according to the Birmingham News.

  CIT Group Inc. won court approval Tuesday to take steps to continue operating as it began what it hopes will be a quick trip through bankruptcy court. Judge Allan Gropper of the U.S. Bankruptcy Court in Manhattan set a Dec. 8 hearing to consider approving CIT’s restructuring plan. Read the Daily Bankruptcy Review story here.

  Tribune Co. said it will likely terminate its ill-fated employee stock ownership plan when it emerges from bankruptcy protection, the Los Angeles Times reports.

  Confirmation hearings on Greektown Casino’s bankruptcy-exit plan have been postponed to allow the company and its creditors to resolve a dispute over the value of the company’s three casinos, according to the Detroit Free Press.

  
  

Georgia Bankruptcy Blog

• Chapter 11 Cases Files In October and November 2009

  Posted: November 4th, 2009, 5:53am PST

  Foreclosure Day in Georgia was yesterday, November 4, 2009.  Below are the Chapter 11 cases filed over the last few weeks.

   

  Case No. Related Case Info	Ch	Party Info	Dates	Other Info
  09-86091-crm	11	Atlanta Rug Gallery, Inc. and Persian Galleries, LLC	Filed:  10/04/2009 Entered:  10/04/2009	Office: Atlanta Assets: Yes Fee: Paid County: Fulton
  09-86092-crm	11	Persian Galleries, LLC	Filed:  10/04/2009 Entered:  10/04/2009	Office: Atlanta Assets: Yes Fee: Paid County: Fulton
  09-24216-reb	11	The Boring Group, LLC	Filed:  10/05/2009 Entered:  10/05/2009	Office: Gainesville Assets: Yes Fee: Paid County: Hall
  09-86263-jem	11	BW Conyers, LLC	Filed:  10/05/2009 Entered:  10/05/2009	Office: Atlanta Assets: Yes Fee: Paid County: Rockdale
  09-86290-mhm	11	7171 Jonesboro Road Realty Group LLC	Filed:  10/05/2009 Entered:  10/05/2009 Dismissed:  10/22/2009	Office: Atlanta Disp: Dismissed for Other Reason Assets: Yes Fee: Paid County: Clayton
  09-86381-crm	11	In His Image Ministry, Inc	Filed:  10/05/2009 Entered:  10/05/2009	Office: Atlanta Assets: Yes Fee: Paid County: Cobb
  09-86392-pwb	11	Phyrell Rose Mills	Filed:  10/05/2009 Entered:  10/05/2009	Office: Atlanta Assets: Yes Fee: Paid County: DeKalb
  09-13602-whd	11	Hiram Development Group, LLC	Filed:  10/06/2009 Entered:  10/06/2009	Office: Newnan Assets: Yes Fee: Paid County: Fayette
  09-86516-jem	11	Iron Horse Group, Inc.	Filed:  10/06/2009 Entered:  10/06/2009	Office: Atlanta Assets: Yes Fee: Paid County: Fulton
  09-86563-jem	11	Dennis D. Williams	Filed:  10/06/2009 Entered:  10/06/2009	Office: Atlanta Assets: Yes Fee: Paid County: Cobb
  09-86632-crm	11	HotSauce Technologies, Inc.	Filed:  10/06/2009 Entered:  10/06/2009	Office: Atlanta Assets: Yes Fee: Paid County: Gwinnett
  09-86645-mhm	11	The Nemesis Group, LLC	Filed:  10/06/2009 Entered:  10/06/2009 Dismissed:  10/23/2009	Office: Atlanta Disp: Dismissed for Failure to File Information Assets: Yes Fee: Paid County: DeKalb
  09-86943-pwb	11	Boundless Entertainment LLC	Filed:  10/09/2009 Entered:  10/09/2009	Office: Atlanta Assets: Yes Fee: Paid County: DeKalb
  09-13699-whd	11	Christian Ministries Hospice, Inc.	Filed:  10/13/2009 Entered:  10/13/2009	Office: Newnan Assets: Yes Fee: Paid County: Pike
  09-24349-reb	11	Barry Grant, Inc.	Filed:  10/13/2009 Entered:  10/13/2009	Office: Gainesville Assets: Yes Fee: Paid County: Lumpkin
  09-87296-pwb	11	Hampton Homes, Inc.	Filed:  10/15/2009 Entered:  10/15/2009	Office: Atlanta Assets: Yes Fee: Paid County: Cobb
  09-87361-pwb	11	Commons at Ponce, LLC	Filed:  10/15/2009 Entered:  10/15/2009	Office: Atlanta Assets: Yes Fee: Paid County: Fulton
  09-87458-jb	11	The Boulevards Shops and Offices at Scenic, LLC	Filed:  10/16/2009 Entered:  10/16/2009	Office: Atlanta Assets: Unknown Fee: Paid County: Gwinnett
  09-87487-mhm	11	Richard C. Mattison, M.D., P.C.	Filed:  10/16/2009 Entered:  10/16/2009	Office: Atlanta Assets: Yes Fee: installments completed County: Fulton
  09-87521-crm	11	Lingerie Mart Corporation	Filed:  10/18/2009 Entered:  10/18/2009	Office: Atlanta Assets: Yes Fee: Paid County: Fulton
  09-87527-jem	11	Scores All Star Sports Bar, Inc.	Filed:  10/18/2009 Entered:  10/18/2009	Office: Atlanta Assets: Yes Fee: Paid County: DeKalb
  09-87777-mgd	11	Lilburn Marketplace, LLC	Filed:  10/21/2009 Entered:  10/21/2009	Office: Atlanta Assets: Yes Fee: Paid County: Gwinnett
  09-88198-pwb	11	DTJ Properties, LLC	Filed:  10/26/2009 Entered:  10/26/2009	Office: Atlanta Assets: Yes Fee: Paid County: Clayton
  09-24559-pwb	11	Kingwood, LLC	Filed:  10/28/2009 Entered:  10/28/2009	Office: Gainesville Assets: Yes Fee: Paid County: Rabun
  09-88556-jb	11	Drilling & Blasting Systems, Inc.	Filed:  10/28/2009 Entered:  10/28/2009	Office: Atlanta Assets: Yes Fee: Paid County: Rockdale
  09-88610-mhm	11	Agg Properties LLC	Filed:  10/29/2009 Entered:  10/29/2009	Office: Atlanta Assets: Yes Fee: Paid County: DeKalb
  09-13959-whd	11	Fourth Quarter Properties XLVII, LLC	Filed:  11/02/2009 Entered:  11/02/2009	Office: Newnan Assets: Yes Fee: Paid County: Coweta
  09-13960-whd	11	Fourth Quarter Properties 118, LLC	Filed:  11/02/2009 Entered:  11/02/2009	Office: Newnan Assets: Yes Fee: Paid County: Coweta
  09-13961-whd	11	Fourth Quarter Properties 140, LLC	Filed:  11/02/2009 Entered:  11/02/2009	Office: Newnan Assets: Yes Fee: Paid County: Coweta
  09-13962-whd	11	Fourth Quarter Properties 161, LP	Filed:  11/02/2009 Entered:  11/02/2009	Office: Newnan Assets: Yes Fee: Paid County: Coweta
  09-13963-whd	11	Fourth Quarter Properties 162, LP	Filed:  11/02/2009 Entered:  11/02/2009	Office: Newnan Assets: Yes Fee: Paid County: Coweta
  09-13964-whd	11	C.J. Williams Family Partnership, LP	Filed:  11/02/2009 Entered:  11/02/2009	Office: Newnan Assets: Yes Fee: Paid County: Carroll
  09-13968-whd	11	Fourth Quarter Properties V, INC.	Filed:  11/02/2009 Entered:  11/02/2009	Office: Newnan Assets: Yes Fee: Paid County: Coweta
  09-24704-reb	11	Gainesville Hospitality, Inc.	Filed:  11/02/2009 Entered:  11/02/2009	Office: Gainesville Assets: Unknown Fee: Paid County: Hall
  09-89085-crm	11	Terry Bradford Cox	Filed:  11/02/2009 Entered:  11/02/2009	Office: Atlanta Assets: Yes Fee: Paid County: Fulton
  09-89130-jb	11	N43EF, LLC	Filed:  11/02/2009 Entered:  11/02/2009	Office: Atlanta Assets: Yes Fee: Paid County: Fulton
  09-89133-jb	11	Lynn Ann Celestin	Filed:  11/02/2009 Entered:  11/02/2009	Office: Atlanta Assets: Yes Fee: Paid County: Fulton
  09-89263-mgd	11	Bible Believers Ministries Inc	Filed:  11/02/2009 Entered:  11/02/2009	Office: Atlanta Assets: Yes Fee: Paid County: DeKalb
  09-89270-mhm	11	Jagirdar, Inc.	Filed:  11/02/2009 Entered:  11/02/2009	Office: Atlanta Assets: Yes Fee: Paid County: Douglas
  09-89296-reb	11	ALBERT SCALES	Filed:  11/02/2009 Entered:  11/02/2009	Office: Atlanta Assets: Yes Fee: Paid County: DeKalb
  09-89331-jem	11	Edgewater Realty, Inc.	Filed:  11/02/2009 Entered:  11/02/2009	Office: Atlanta Assets: Yes Fee: Paid County: Rockdale
  09-89439-jem	11	Chugh Shopping Center, Inc.	Filed:  11/03/2009 Entered:  11/03/2009	Office: Atlanta Assets: Yes Fee: Paid County: Newton

  Scott Riddle’s practice focuses on bankruptcy and litigation. Scott has represented Chapter 7 and 11 debtors, creditors, trustees and other interested parties in bankruptcy cases and bankruptcy litigation.  For more information, click here.

Credit Slips

• Evans and Wright on the CFPA: Round 2

  Posted: November 3rd, 2009, 8:34pm PST by Adam Levitin

  A couple of weeks ago I wrote a short critique of one piece of a long study written by David Evans and Joshua Wright about the Consumer Financial Protection Agency and funded by the American Bankers Association.  The related blog post is here.  Evans and Wright have responded.  

  There's a lot that I thought was objectionable or questionable in Evans and Wrights study, but most of it was well within the bounds of reasonable argument.  I have no problem intellectually with arguments that any particular regulation could impose costs that outweigh its benefits.  Instead, I was was moved to write because Evans and Wright were making precise numerical claims about the cost impact of the CFPA, and that these claims were based on either (1) a highly questionable comparison to dissimilar regulation or (2) pure conjecture.  

  In their reply, Evans and Wright spend a good deal of time arguing about things that are really beside the point to my critique.  For example, Evans and Wright emphasize that I have not proved the affirmative case for the CFPA's positive impact (a passing point I made to show that the economic impact of regulation is susceptible to multiple predictions) and that I have "disputed virtually none of [their] findings that the CFPA Act would impose high costs on lenders and ultimately result in denying borrowers choice."  Let's be clear.  My critique was about three spurious numbers.  I didn't set out to prove a positive case in the critique and don't need to do so to make my central point.  And to imply a concession from silence about other issues is ridiculous in this context.  This sort of logical move is, however, consistent with the problems with Evans and Wright's statistical claims.  

  But let's get to the heart of the matter.  My issue with Evans and Wright is about the numbers, not about their priors regarding regulation.  There are three numerical claims in Evans and Wright's piece with which I took issue. First, Evans and Wright claim that a CFPA would result in a 160 basis point increase in the cost of credit and a derivative 2.1% decrease in credit demand.  These assertions were based on a comparison with a study of non-analogous regulations that have been found to have an 80 basis point impact.  Evans and Wright argue that even though the regulations are different, they are less invasive, so therefore at least twice the impact would be the lower bound. Why twice?  Just because.  Evans and Wright still have no justifiable basis for doubling, as opposed to tripling the number, etc.  It is not as if 160 basis points is within some statistical confidence interval or the like.  While a 160 basis point number appears to have the imprimatur of social science, it is just conjecture, or, to be charitable, a very rough guesstimate.  

  In a cost-benefit analysis, however, precision matters.  A CFPA might be worthwhile at 120 basis points, but not at 160 basis points, for example.  The problem with Evans and Wright's methodology is that they can no better defend a 160 basis point number than a 120 basis point number or a 700 basis point number.  Evans and Wright emphasize that there were merely setting a lower bound, but that hardly makes their number more defensible.  Evans and Wright simply do not and cannot know the impact, including what the lower bound would be.  Of course, precision is beside the point if the goal is to produce a scare statistic, rather than a rigorous cost-benefit analysis.  

  The third spurious statistic in Evans and Wright is a claim that a CFPA would result in 4.3% slower job creation.  They achieved this number by taking a statistic about the role of small startups in job creation and then "supposing" that a CFPA would inhibit five percent of this.  I noted there were problems with their job creation statistic (namely that it failed to account for the spectacular failure rate of small startups after their first year, when they result in net job loss, not creation).  But that was a side point.  The critical problem was that they "supposed" a impact number without any basis whatsoever for their supposition. 

  Evans and Wright take issue with my statement that "The key point here, however, is the impact of the legislation is speculative and certainly not susceptible to precise statistical predictions.”   They state, "That is a nihilistic approach."  Actually, it is an intellectually honest approach.  A debate that is poisoned by spurious statistical claims, rather than their debunking, are what will engender nihilism.  It'd be great to have an empirically informed policy debate.  But that's not license to make up numbers.  Policy debates have to function within our epistemological limitations.  There's a constructive debate to be had about the CFPA.  But constructive doesn't mean making things up.  

WSJ.com: Bankruptcy Beat

• Frank Floats Warren To Head Consumer Agency

  Posted: November 3rd, 2009, 1:51pm PST

  Getty Images Rep. Barney Frank, chairman of the House Financial Services Committee, talks with Elizabeth Warren, chair of the TARP Congressional Oversight Panel, during a hearing on Capitol Hill in July.

  Fresh off the heels of Elizabeth Warren’s selection as one of the 50 most powerful figures in the nation’s capital, a key House Democrat is proposing to add her name to another list – as one of the candidates to head up a proposed consumer financial protection agency.

  Dow Jones Newswires reported Tuesday that Massachusetts Rep. Barney Frank said he’d support the Harvard Law and consumer bankruptcy expert to head the agency, which the Obama administration is proposing as a watchdog for consumer financial products including credit cards and mortgages. Warren has been an advocate for such a regulatory body, arguing that federal financial regulation should shift its focus from the firms selling these products to the products themselves.

  “The product itself should not be the source of the danger,” Warren said in December 2008, according to Dow Jones Newswires.

  Frank, chair of the House Financial Services Committee, disclosed his choice in response to a question about a proposed amendment to keep Warren from taking the proposed agency’s reins. Warren is already leading Congress’ watchdog panel on the Troubled Asset Relief Program, handpicked by Senate Majority Leader Harry Reid to oversee the $700 billion bailout program.

  Frank’s move comes as Warren is facing criticism from conservatives, who’ve branded her as an Ivy League elitist. Warren’s critics say a consumer financial protection agency would kill jobs.

  
  

Credit Slips

• October Bankruptcy Filings Set New Post-2005 Record

  Posted: November 3rd, 2009, 11:16am PST by Bob Lawless

  The daily bankruptcy filing rate in October hit 6,200, setting a new record since the 2005 changes to the U.S. bankruptcy law. There were about 130,200 total filings spread over the 21 business days in October. The October filing rate is a 3.7% increase from September and a year-over-year increase of 25.3%. As always, these data are courtesy of Automated Access to Court Electronic Records (AACER) There are two ways to receive this news, both of which have some validity.

  First is the "glass is all the way empty" approach, that the rise in the bankruptcy rate reflects the poor health of the economy, results from rising unemployment, and is a sign that the U.S. consumer is not as healthy as recent figures showing GDP growth might suggest. Although I continue to think that the primary short-term driver of ups and downs in the filing rate is the availability of consumer credit, there is no way to look at record bankruptcy filing rates and not see problems for the U.S. consumer.

  It also right to look at these data as saying the "glass is only half empty." This is not the same as saying the most recent data should be interpreted optimistically, that is the glass is half full. Rather, it is a subtle and complex story trying to draw a distinction between "dire" and "not good."

  The graph to the right shows the month-to-month change for the past three years. (I have omitted 2006 because, and especially for the early months that year, its bankruptcy filing trends were greatly affected by the 2005 changes to the bankruptcy law.). The graph shows seasonality in the bankruptcy filing data -- sharp rises early in the year and a decline toward the end of the year. Part of the seasonality has been an increase in the fall of each year, and the October 2009 figures fit that pattern.

  Another data point is to consider the 25.3% year-over-year increase that the October 2009 data represents the second smallest year-over-year increase in the monthly filing data over the past three years. (The smallest is 21.3% in January 2008.) Yes, bankruptcy filings went up as compared to the same time last year, but they have been on a steady trend back toward their pre-2005 levels ever since the changes to the bankruptcy law. In fact, the rate of increase in that trend appears to be slowing.

  Again, I feel compelled to reiterate that I am not saying everything is peachy-keen. It's just that if you are looking for "sky is falling" economic indicators, then you are looking in the wrong place if you are using the bankruptcy filing numbers. What would be really meaningful are bankruptcy filing statistics that do not follow the season patterns of the past few years. Watch to see whether bankruptcy filings drop in November and December and then rise sharply in January and February. That will tell us whether the bankruptcy filing rates are extraordinary or part of the usual patterns.

  With only two months left in the calendar year, the projected 2009 total bankruptcy filings is starting to look like it will come in right around 1.45 million. Back in December 2008, I predicted total 2009 bankruptcy filings would be a little under 1.4 million with an upper bound of around 1.6 million. That was not too bad as far as predictions go. For 2010, I think 1.6 million bankruptcy filings might be a good lower boundary of an estimate for projected total bankruptcy filings--more on that later. In the meantime and for the record, here is where the 2009 projections stand:

  • 1,448,000 filings if bankruptcy filings continue for the rest of the year at the same daily rate (5,769 per day) as they have averaged for the first ten months of 2009
  • 1,455,000 filings if bankruptcy filings continue at the same daily rate (6,200 per day) as they have averaged for October
    
  • 1,461,000 filings if bankruptcy filings for the remaining two months of 2009 constitute the same proportion of total filings as the last two months of 2008 constituted for total filings that year (about 17.1%)

Total Bankruptcy

• Commercial Bankruptcy Filings Jump 7% in October

  Posted: November 3rd, 2009, 10:36am PST by Chris Kramer

  On the heels of bad news for small businesses with the bankruptcy of CIT Group Inc. comes news from The Wall Street Journal that business bankruptcy filings rose 7% in October, after falling for several consecutive months.

  A total 7,771 businesses filed for bankruptcy protection in October, up from the 7,271  in September. The increase continues a yearly trend of rising bankruptcies from the same time last year, despite what had been a drop in filings from month-to-month in August and September.

  A report from the business information company Equifax Inc. suggests that, from the third quarter of 2008 to the third quarter of 2009, commercial bankruptcy filings among small businesses increased by 44%.

  The Wall Street Journal cites the same tight credit market and decreases in consumer demand for products fueling the wider recession as continued causes for businesses going into bankruptcy.

  Retail, Real Estate Hardest Hit

  Retail businesses and real estate are the industries that continue to lead in bankruptcy filings. The impact of flagging success in these areas, however, can lead to a trickle-down effect with a much broader reach and negative financial impact on industries like home building and manufacturing, according to Georgia State University College of Law bankruptcy professor Jack Williams, who spoke to WSJ.

  Bankruptcy filings are a lagging economic indicator so it’s likely that we’ll see bankruptcy filings increase for the next several quarters, Williams told the journal.

  The bankruptcy of CIT Group Inc., one of the largest lenders to small- and medium-sized businesses, will only serve to tighten credit markets, many believe, in an already troubling environment for small businesses. CIT finances a wide array of businesses, from retail operations like Dunkin’ Donuts store operators, to energy companies.

  In a positive turn, the Equifax report did note that bankruptcy rates seem to be improving in some metropolitan areas like Charlotte, North Carolina, New York-White Plains, and Atlanta, also indicating that the East Coast may be experiencing an earlier recovery from the recession than the West Coast.

  According to the report, California continues to be the state hit hardest with bankruptcy filings, with eight of the top 15 metro areas in terms of bankruptcy filings.

WSJ.com: Bankruptcy Beat

• Colbert Nation To The Rescue

  Posted: November 3rd, 2009, 10:35am PST

  Associated Press Olympic gold medalist Dan Jansen, left, and host Stephen Colbert on the set of “the Colbert Report” Monday night in New York.

  For the past few weeks, the U.S. Speedskating team has looking for a hero to help it cover the $300,000-plus budget shortfall it faced in the wake of key sponsor DSB Bank NV’s bankruptcy. It found one in Stephen Colbert, the Comedy Central talk-show host whose screaming eagle mascot should serve the team well in the upcoming 2010 Olympic Winter Games in Vancouver.

  Colbert, who lampoons right-wing talking heads on his show “The Colbert Report,” on Monday announced that his show would sponsor the team, a move that would see “Colbert Nation” added to the team’s uniforms.

  “On their enormous, billboard thighs, it will say, ‘Colbert Nation,’” Colbert said in an interview with the Associated Press before the show’s taping. “Be looking for that logo as it comes around the final turn. It will be easy to see because it will be in first place.”

  The show isn’t forking over any dollars itself, instead pledging to raise funds from fans’ online donations.

  Of course, the speedskaters aren’t the only ones who bear Colbert’s name. The team joins a bald eagle, a junior hockey team’s eagle mascot, NASA’s treadmill at the international space station and pints of Ben & Jerry’s ice cream.

  Here’s a clip from last night’s show (which also featured legendary speed skater Dan Jansen). Stay tuned as Colbert continues to feature the team on upcoming shows.

  
  

• The Daily Docket: Bankruptcy Filings Rise

  Posted: November 3rd, 2009, 6:21am PST

  Business bankruptcy filings jumped in October, reversing two consecutive months of declining commercial filings and indicating that bankruptcies could continue to rise as the economy struggles to stabilize. Read the Daily Bankruptcy Review story here.

  General Motors used $2.8 billion in federal bailout money to help parts maker Delphi emerge from bankruptcy protection, The Wall Street Journal reports.

  Meanwhile, GM’s board of directors will meet Tuesday to discuss plans to sell its Opel and Vauxhall operations in Europe, according to WSJ.

  FairPoint Communications bondholders are asking the bankruptcy court to appoint an examiner to conduct a probe in the company’s Chapter 11 case, the Burlington Free Press reports.

  The Boston Globe profiles TARP watchdog and Harvard Law Professor Elizabeth Warren, who responds to her conservative critics.

  A bankruptcy judge on Monday approved the sale of the Phoenix Coyotes to the National Hockey League, according to Reuters.

  Freedom Communications, which filed for Chapter 11 protection in September, said it will close award-winning East Valley Tribune in suburban Phoenix on Dec. 31, the Arizona Daily Star reports.

  
  

Insolvencyblog.com

• HMRC fast track Time oo Pay Scheme

  Posted: November 3rd, 2009, 2:18am PST

  The HMRC Business Payment Support Service is responsible for running the Time to Pay Scheme to assist businesses with temporary cash flow difficulties.