The lawyers are gobbling away at the $100 million settlement reached in the American Business Financial Services case. Two law firms that sued on behalf of creditors this week won a $30 million contingent fee award for their work.
Now Law Debenture Trust Co. of New York and Wells Fargo Bank are badgering Chapter 7 trustee George Miller for their piece of the action - $27.6 million.
To be fair, Law Debenture and Wells Fargo presumably want to dish out some of the money to holders of $97 million worth of ABFS notes. They are, after all, trustees for that group of bondholders. So far, the faithful servants of the bondholders have received a mere $2.7 million out of the lawsuit settlements, and that all went to the fees and expenses of the trustees, their attorneys and agents.
The indenture trustees ran up some impressive legal bills in American Business Financial’s case, because Miller sued them for allegedly being paid off to stand silent while Greenwich Capital visited a ruinous Chapter 11 loan on the company at a time when it was already gurgling down the drain.
If you have decided to file for chapter 7 bankruptcy and are currently trying to sell a home via short sale, there is no reason to continue with the short sale. The purpose of a short sale is to relieve the borrower’s obligation to pay the difference between the sale price of the home and the mortgage amount when the property is “underwater” or worth less than what is owed. Bankruptcy gives the borrower the option of surrendering the property back to the bank with no continuing obligation under the mortgage and no corresponding tax liability for the forgiveness of debt (usually a taxable event). In essence, surrendering a home in bankruptcy allows the borrower to simply give back the keys and walk away, leaving the purpose behind the short sale moot. Bottom line: if you are going to file chapter 7 bankruptcy, why deal with the stress of negotiating a short sale?
The analysis is slightly different in a chapter 13 setting. Chapter 13 bankruptcy allows the debtor to surrender a home as well, however, any remaining deficiency judgment after foreclosure will be paid out as unsecured debt through the chapter 13 plan. Huh?
Even though the property is being surrendered, the bank is still obligated to foreclose to clear title. The foreclosure process will result in a sale of the property. If the sale price is less than what is owed on the mortgage, a deficiency judgment results. Subject to state law, outside of bankruptcy the borrower would be personally liable for the entire amount of the judgment. Generally, a chapter 7 bankruptcy will eliminate all unsecured debt including deficiencies after a foreclosure.
By contrast, in a chapter 13 bankruptcy, the deficiency between the foreclosure sale price and mortgage amount will be paid out as unsecured debt, at far less than 100%. Because the debtor will still be responsible to pay some of their unsecured debt through the plan, a short sale that slashes this debt before bankruptcy remains beneficial. Therefore, if a borrower can negotiate a short sale prior to filing for chapter 13 bankruptcy, she will reduce her plan payment by reducing her unsecured debt. Bottom line: completing a short sale before a chapter 13 bankruptcy has the potential to lower your plan payments.
It is always wise to consult with a bankruptcy attorney if you have questions.
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The report also contained some interesting statistics about pro se petitions (i.e., persons filing for bankruptcy without an attorney). For the calendar year 2007, the district had 1,251 pro se cases filed, or about 3.5% of total cases. For the calendar year 2008, there were 1,871 pro se cases filed in the district, or about 4.5% of our total cases. For the first 8 months of calendar year 2009, the number of pro se cases has grown to 2,333, almost 9% of the total. In Chapter 7, more than 10% of the district’s cases are now pro se. The Court noted that “[p]ro se cases require extra judicial and other resources to process through the system. They pose unique challenges to our system. The Chapter 7 Trustees have raised with the bench a number of difficulties that the processing of these cases pose for them.”
The report also contained a significant discussion of reaffirmation areements. One of the many changes brought about by the BAPCPA in 2005 pertains to reaffirmation agreements. The responsibilities of debtors’ attorneys in connection with reaffirmation agreements were altered greatly. Subsequent to BAPCPA, the district adopted a Local Rule to govern practice in our Court regarding those reaffirmation agreements that contain what is described as the presumption of undue hardship under § 524(m) of the Bankruptcy Code. Without addressing each of the issues that has arisen from time to time concerning reaffirmation agreements, it is worth noting that there has been some divergence in the case law and in the practices among the bankruptcy courts throughout the country since BAPCPA regarding reaffirmation agreements and, in particular, the so called presumption of undue hardship under § 524(m). At the request of the bench, the Consumer Bankruptcy Association was asked to make a recommendation to the Court regarding best practices for a debtor’s counsel to follow in Chapter 7 cases regarding reaffirmation agreements. The Consumer Bankruptcy Association provided the bench with a detailed report on recommended best practices. Related to this issue, the Court recently adopted new procedures for reaffirmation agreements.
The report also discussed recent local court rule changes and a number of other issues. A complete copy of the report is available here.
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If your decorating tastes fall somewhere between a giant cowboy-boot armchair and a pair of antique dining-room cabinets that once stood in a French chateau, there should be plenty to choose from at this Saturday’s auction of the furnishings that used to fill the rooms of Tim and Edra Blixseth’s massive private residence at the luxury ski and golf club the couple founded.
The circa-1930 pair of American Oak telephone booths and the Biedermeier-style maple gentlemen’s dressing cabinet from 1910 were acquired in better days: before the Blixseths’ bitter divorce, before their Yellowstone Mountain Club filed for bankruptcy and was sold to the highest bidder, before Edra Blixseth herself filed for bankruptcy and was ordered to sell her assets to pay off her nearly $160 million in debts. That’s why the more-than 800 pieces are going on the block at Kamelot Auction House in Philadelphia on Saturday, giving bidders a chance to raise their paddles for a piece of the Blixseths’ former high life.
You can view photographs of all the goods up for grabs on Kamelot’s website, where it’s evident that although Blixseth wasn’t necessarily bound by a specific style or decorative era, her tastes could certainly be defined as extravagant and unique. The club’s Montana location is evident in the bunk bed frame decked in cowhide, the mounted longhorn steer horns and a life-size figure of an American Indian “in traditional garb.” And the Blixseths’ French chateau no doubt inspired the selection of a Louis XV-style parlor set of chairs and settee and a circa-1890 French giltwood bed.
In the Banking sub-sector of Financial Services, there is a process in effect which will make the Banking business substantially more profitable, although at the risk of cutomer dissatisfaction. "Check21" is a 1year old law that banks to accept checks as EFT (Electronic Funds Transfer) debits to the customer, and EFT credits to the bank. This eliminates "float" for all practical purposes (the time people writing checks had ffom paying a bill or buying something and the time when it actually posts to the customers' account.) You won't have the 1 day's grace when you write a check until it clears.
When ATMs and POS terminals were first introduced in the early 1980s, there was an insufficient infra-structure to support the wide-spread use of them and to generate their true value. Many transactions were simply captured electronically and still processed in "batch". Checks were still checks with float. Now, with the internet providing the connectivity needed, banks can move to eliminate checks as we know them. Even mail order/bill pay by check services are processing checks as EFT occurrences. With the first significant upward movement of interest rates, the issue will become moot. All transactions will be electronic.
Checks in the clearing process take 1-2 days ("float") to be processed, or possibly longer if it is a "foreign" item. For every $100 million in float, and for each 1% increase in the rates being paid or earned by a bank, for each day of float the difference amounts to $1 million dollars annually. Assuming rates move back to 5% from the current 0.5% in 2-3 years, and a large bank has $1 billion in float for 1 day, there is $45 million per year in earnings, either gained/retained or lost. Further, the cost in manpower and technology to process the incoming & outgoing checks and other items is staggering.
In the mid 1980s I wrote a paper on this issue for a Mutual Savings Bank trade publication. Remember that those were the days of 10%-15% interest. Even a $2 million per day float cost $200,000-$300,000 a year. Seems small now but it was not then. The issue preventing the change to all electronics was the lack of the internet. Every device had to be a direct connection; even the ATMs were on dedicated lines. That obstacle is gone. Add to the equation the fact that checks cannot be processed faster without them ending up shredded in the machines, and the machines need time to read the manually typed numbers that reside on the bottom of items showing the amount of the transaction.
Currently there is a debate in COngress about Bnaks' fee income - overdraft charges, ATM fees, etc. Fee income is the line item all Banks are trying to get; there is no risk like there is in loans. A move to all EFT debits and credits, such as checks, deposits and charges, will result in instant profits for Banks. But then again, so have 30% interest rate credit cards.
]]>Paulson & Co. obtained court permission to pay Idearc Inc.’s creditors cash for shares of the reorganized company after the hedge fund increased its valuation of the directory publisher by $60 million. Read the Daily Bankruptcy Review story here.
A labor union wants Station Casinos’ founding Fertitta family and other insiders that profited from the company’s buyout to make “significant equity investments” to help the company emerge from bankruptcy protection, according to the Las Vegas Review Journal.
GSI Group Inc. has filed for Chapter 11 bankruptcy protection after reaching a restructuring deal with its noteholders, WSJ reports.
Executives at Freedom Communications Inc. are defending the company’s bankruptcy-exit plan, which has been criticized by a former chief executive as “wicked and immoral,” according to the Orange County Register.
Flying J Inc., which sought Chapter 11 bankruptcy protection earlier this year, has agreed to sell its insurance subsidiary, the Salt Lake Tribune reports.
More than 100 Chrysler Group LLC U.S. dealerships may be shut down if they can’t reach new financing deals with GMAC Financial Services or another lender, Reuters reports, via ABC News.
SemGroup LP is trying to emerge from Chapter 11 bankruptcy protection by the end of the month, according to the Tulsa World.
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FYI, this cartoon also appears in the Fall 209 issue of the newsletter for the Bankruptcy Section of the State Bar of Texas along with a nice profile about the Bankruptcy Bill cartoons written by Eric Van Horn, a bankruptcy lawyer with Dallas firm Rochelle McCollough LLP and the writer of the Chapter 8 humor columns in the ABI Journal. Also, thanks to Judge Alan S. Trust of the Eastern District of New York for his article in the Summer 2009 issue of the Bankruptcy Section newsletter (”From Stripes to Robes”) which provided helpful cultural background for the cartoon.
Get your BAPCPA Man and Mortgantua T-shirts, Mugs, Cards and More!*To see more of Gideon Kendall’s work go to www.gideonkendall.com. Or order yourself a copy of Dino Pets, the wonderfully illustrated children’s book written by Lynn Plourde and illustrated by BAPCPA Man’s favorite illustrator, Gideon Kendall.
One debtor and his attorney came up with a creative cram down plan in a Chapter 13 bankruptcy filed in our Orlando court. The debtor’s plan proposed that during the initial 59 months of his 60 month plan the debtor would make small monthly payments toward a cram-down mortgage secured by the debtor’s investment property. The plan provided for a large balloon payoff of the allowed secured claim at the end of the plan. This plan provided the debtor with affordable plan payments for four years, eleven months during which time he could hopefully qualify to refinance the allowed mortgage balance at the end of the plan.. The mortgage lender objected to this payback arrangement and brought the issue before the bankruptcy court.
The mortgage lender argued that the bankruptcy law requires Chapter 13 debtors to make equal payments toward a cram-down secured debt throughout a five year bankruptcy plan. The debtor responded that the Code requires the cram-down debt be paid during the five year plan without condition- there is no requirement of equal payments and no prohibition of a balloon at the end of the plan. The bankruptcy judge ruled in the debtor’s favor. The judge said that a Chapter 13 plan may provide unequal payments of a cram-down secured debt even if the plan includes a large balloon payment at the end. The judge ruled that the plan must include sufficient interest on the secured debt to make sure that the creditor receives a total amount during the plan, including the balloon, equal in value to what the creditor would have received if the allowed secured debt were paid in full at the beginning of the Chapter 13.
This court’s interpretation provides debtors opportunity to save property in a Chapter 13 where the debtor is eligible to cram down the secured debt. The case is In re Cooper 6:08-11960Download Cooper Order
]]>He lost.
The ponytailed Sun Capital Partners Ltd. director bobbed and weaved under questioning by Baker & McKenzie’s Shima Roy, who asked over and over whether he could tell creditors how much cash is stored up at a Magticom Ltd.
Magticom is the leading mobile phone service in the Republic of Georgia. It’s also where the money in MIG, if there is any, comes from. MIG’s business, you see, is owning 46% of the company that owns 100% of Magticom.
Cash is not really the thing, Spencer-Churchill said. Working capital, surplus cash, that’s the thing a business needs to know. And it’s a tough number to get to, Spencer-Churchill said. Elusive, in fact.
Or not so much. In the end, Judge Kevin Gross noted it would behoove MIG to file the reports it is supposed to file, which will tell creditors where the cash is.
Owed some $220 million, MIG’s creditors are intent on following the money. It’s not easy, creditor attorney Carmen Lonstein told Gross. Even with a magnifying glass, she found no sign of cash in MIG’s Chapter 11 plan.
What Lonstein has spotted, however, is a poison pill that will allow MIG’s owners to wipe out all the value in the company if the equity stakeholders find themselves with no stake. Chapter 11 101, of course, is that when a company is out of money, creditors take all, and they take it first and foremost from the equity stakeholders.
Who are MIG’s equity stakeholders?
Sun Capital, where Spencer-Churchill works, and Salford Capital, which put up money from Badri Patarkatsishvili, who made billions after the collapse of the Soviet Union and died in 2008, the richest man in Georgia.
MIG says the alleged pill is a valuable protective device for the enterprise, not a booby trap. The Chapter 11 offer of debt is a good-faith effort to make nice with creditors from a company that is very busy with business.
Lonstein noted MIG’s U.S. business operates largely out of a “10-foot-by-10-foot office” in North Carolina, “with a maximum occupancy of one.”
Expect the plot to thicken in December, when creditors and MIG are scheduled for a return bout before Gross.
While the middle class's investments in higher education and real estate have typically shielded them from the hardest economic storms, that is no longer the case.
"The Vulnerable Middle Class: Bankruptcy and Class Status," a new study by Elizabeth Warren, Harvard Law School Leo Gottlieb professor of law, and Deborah Thorne, Ohio University associate professor of sociology illustrates how bankruptcy demographics have changed in recent decades.
An exclusive preview of Warren and Thorne's new book by USA Today shows how bad mortgages, rising unemployment, and the trappings of success led millions of Americans into debt.
Warren and Thorne compared annual bankruptcy filings from 1991 through 2007, and saw an increasing trend of middle class Americans, dispelling the myth that bankruptcy was a tool for the destitute or extreme spenders.
The article profiles several bankruptcy filers, including a single mother who went from earning $275,000 a year to filing bankruptcy after starting her own business, as well as a couple nearing retirement whose dropping home value left them without a safety net.
The study's authors admit that much of the data comes from recent "boom" years, and ends at the same point the recent recession began.
They expect that looking back at the past two years—and likely into the future—will show an even greater upswing in middle class Americans turning to bankruptcy protection.
]]>Denny Hecker, whose Advantage Rent A Car chain filed for bankruptcy last December and who himself filed for bankruptcy in June, was held in contempt of court Wednesday for not turning over his financial records in a timely manner.
According to the Star-Tribune, Judge Robert Kressel of the U.S. Bankruptcy Court in Minneapolis had given Hecker until Monday to produce documents including bank records, wire transfers and tax records that has been requested by his bankruptcy trustee. Hecker attorney Bill Skolnick said he was doing the best job he could under the circumstances of Hecker’s difficult bankruptcy case, 12 lawsuits and his divorce. The number of documents requested and the costs that come with copying records and thousands of emails also caused the delay, Skolnick said.
But Kressel wasn’t buying it. “The order is the order, and you have to comply with it and should have,” he said. “Standing there now saying it’s complicated is not much of an excuse.”
Hecker, who once owned fake Rolexes and a pair of German shepherds worth $30,000 each, filed for bankruptcy protection in June with $767 million in debt. Last month, the St. Paul Pioneer Press published a two-part series chronicling the rise and fall of the salesman who had acquired more than 200 businesses in his career.
House Bill 1058 – Effective December 1, 2009, an individual resident of North Carolina who is a debtor can retain, free from the enforcement of the claims of creditors, the debtor’s aggregate interest, not to exceed $35,000 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor.
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Taylor-Wharton International LLC, a manufacturer of bulk and portable cryogenic storage units, filed for Chapter 11 bankruptcy protection late Wednesday after reaching a restructuring deal with its creditors.
Reader’s Digest creditors are lining up against the magazine’s restructuring and say they’re eyeing a possible lawsuit over the $2.4 billion buyout of the company by Ripplewood Holdings in 2007. Read the Daily Bankruptcy Review story here.
Greektown Casino’s chief marketing executive left her post this week after deciding to withdraw an application for licensure by the Michigan Gaming Control Board, according to the Detroit News.
A bankruptcy judge has agreed to hear arguments on whether to reject a profit-sharing agreement related to Maryland’s two thoroughbred tracks slated to be auctioned early next year, the Baltimore Sun reports.
If creditors get their way, Solomon Dwek, the government informant behind this summer’s sweeping federal corruption and money laundering sting in New Jersey, will stop getting the $12,800 monthly allowance paid out of the assets of his bankrupt real estate empire, the Star-Ledger reports.
Written by Craig D. Robins, Esq.
Individual Bankruptcy filings have continued to increase this year, bringing the filings for those overwhelmed by consumer debt to new highs since the bankruptcy laws were overhauled in 2005.
Nationally, the 135,913 consumer bankruptcy filings in October represented a 27.9 percent increase over last October’s monthly total of 106,266.
The above graph, courtesy of the Calculated Risk Blog, shows consumer filings on a quarterly basis going back to 1996. We are now approaching the levels seen just prior to when the bankruptcy laws were changed in October 2005.
The filings have increased virtually every single quarter since 2006. I previously wrote about Bankruptcy Filings Returning to Pre-Amendment Levels .
Through October, there have been 1.18 million personal bankruptcy filings in the U.S.
Related posts:
- Bankruptcy Filings Returning to Pre-Amendment Levels Written by Craig D. Robins, Esq. Last month,...
- National Bankruptcy Filings See Major Increase Written by Craig D. Robins, Esq. Even though some...
- Rate of National Bankruptcy Filings Now Over One Million a Year Written by Craig D. Robins, Esq. A few weeks...
Related posts brought to you by Yet Another Related Posts Plugin.
]]>Penn Traffic is the owner of a chain of regional supermarkets on the east coast. Today, according to Reuters, they filed for Chapter 11 bankruptcy in Delaware.
This is a significant problem in our society if you haven’t already considered it. Small businesses across the country have been cut off from funding with the bankruptcy filings of Advanta and CIT. Other lenders are tightening lines of credit as well.
When a store can’t get financing to pay for orders, overhead, payroll, etc., the cash reserves dwindle and force a bankruptcy filing or outright closure and liquidation. Unfortunately, this won’t be the end of business bankruptcy filings which will continue to grow throughout the next year as the economy double dips.
Jay S. Jump
Jump Law Group
Seattle, WA
www.jumplawgroup.com
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Erickson is resisting calls to appoint a patient-care ombudsman in its Chapter 11 bankruptcy case, claiming it’s “not a healthcare business.”
The U.S. Trustee, the government’s bankruptcy watchdog, asked a judge to appoint an ombudsman last month. A 2005 law requires courts to appoint a patient representative in health-care bankruptcy cases.
Erickson claims it’s exempt from the law because separate nonprofit organizations operate its campuses and provides medical care to residents.
The nonprofits are the “licensed healthcare operators of the communities,” Erickson said in court papers filed Tuesday.
The company also said it should be exempt because only about 10% of its residents reside in assisted-living or skilled-nursing facilities, and none of its communities offer health-care services to the general public.
Those claims seem to run counter to Erickson’s advertising. Its Web site features testimonial videos that feature residents raving about Erickson’s medical facilities and doctors.
“The medical center is great,” said Erickson resident Joan McGrath. “Say it’s snowing outside, and you’re not feeling well, you just go downstairs to the doctor.”
Of many of the discussions that our office has with prospective bankruptcy clients, the decision whether to keep the home is one of the more wrenching. This is, of course, expected, given the emotional if not financial attachment most Americans have with their home. It is recognizably one component of the American Dream, to own your own home.
In these harsh economic times, however, many times I must counsel our clients to let the house ‘go’. The reasons can be many and nuanced, but generally, there is no perceivable equity in the real property and the payments to maintain the home are, or soon will be, too high to make. Sometimes, I will counsel clients to try and keep the property, if a lien strip of a junior trust deed can be effectuated in a Ch. 13 filing.
Now, to be sure, I have counseled clients to let their undervalued and expensive automobiles be returned, to save their cash flow, and that counsel has been difficult. Therefore, advising folks to abandon their home is even more difficult, but oftentimes necessary to become financially whole.
In my view, the current economic crisis is not abating and as it relates to housing, will continue to press down on home values for 3 to 5 more years. Given that, I can see no compelling reason for families struggling with mortgage payments on undervalued homes, to keep up the fight to retain that particular house. There will be opportunities after bankruptcy, and again, if I’m right, there will be many opportunities, as home values will continue to stay depressed, interest rates will stay low, and home affordability can likely be had, even after bankruptcy.
Now, this does not mean I counsel all my clients to abandon there homes. Nor do all my clients take my advice, for that matter. As mentioned, there are nuances that must be discussed with an attorney before the decision is made to abandon the payments and allow a home to be foreclosed or a short sale is undertaken. The timing of these events, before or after the filing of a bankruptcy can be important, critical, and crucial. Please be sure to speak with a bankruptcy attorney before you decide let the house go, as that decision can make or break your ability to file a successful Ch. 7 or Ch. 13 bankruptcy.
John C. Colwell, Attorney at Law
Member, Board of Directors, NACBA
www.nacba.org
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On November 15, 2009, Champion Enterprises filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware. According to Champion's Declaration in Support of First Day Bankruptcy Motions (the "Declaration"), the company's bankruptcy is the result of an overall decline in the demand for manufactured housing and tightening of credit for potential home buyers. Based in Troy, Michigan, Champion manufacturers homes at 22 home building facilities in 13 states. At the time it filed for bankruptcy, Champion employed 1994 employees.
The Company's Financials
Champion lost $52 million in 2008, compared to a profit of $3.9 million in 2007. Sales dropped by 23% during this same time period. For the second quarter of 2009, Champion's revenues dropped over 55%, down to $129.5 million compared to $289 million in the second quarter of 2008. According to its Declaration, the company's debt structure is as follows:
- Term loans of $45 and $59 million;
- Letters of credit for $40 and $43 million; and,
- Convertible unsecured notes of $180 million.
First Steps in Bankruptcy
Champion's Declaration summarizes the various first day motions it filed at the same time that it filed for bankruptcy. One of the more significant "first day motions" is a motion to approve debtor in possession financing to fund Champion's restructuring. According to the Declaration, Champion considered seeking debtor in possession ("DIP") financing from third parties, however, Champion's prepetition lenders (with liens on substantially all of Champion's assets) rejected certain proposals for alternative financing. Champion weighed the risks associated with litigating with its prepetition lenders over third party financing and instead decided to borrow from its prepetition lenders. Under the DIP financing motion, Champion seeks $32 million in a "new money loan."
During the months leading up to bankruptcy, Champion attempted to find a suitable buyer for the company. As of the petition date, Champion had not found a buyer, but hopes to do so under the sale provisions of the Bankruptcy Code. This bankruptcy proceeding is before the Honorable Kevin Gross. Click here to review the Chamber Procedures for Judge Gross.
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Jason Cornell is a bankruptcy attorney at the law firm Fox Rothschild LLP in Wilmington, Delaware. If you have questions regarding a Delaware bankruptcy proceeding, you may contact Jason at 302 427-5512, or jcornell@foxrothschild.com.
The adversary actions filed in both Pope and Specialty Motors are before the Honorable Christopher S. Sontchi. In prior preference actions, Judge Sontchi entered scheduling orders similar to the form scheduling order attached here. A copy of Judge Sontchi's Chamber Procedures are attached here.
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Jason Cornell is a bankruptcy attorney at the law firm Fox Rothschild LLP in Wilmington, Delaware. If you have questions regarding a Delaware bankruptcy proceeding, you can reach Jason at 302 427 5512, or jcornell@foxrothschild.com.
AFL’s shift to viewing rival league Arena Football One LLC as a friend, not a foe, took place within the span of a month. On Oct. 6, AFL sued Arena Football One in bankruptcy court, seeking to enjoin the rival league from using any of its trademarks or other intellectual property. At the time, Arena Football One had recently announced its formation, as well as the news that several former AFL teams had agreed to join its ranks and that several others were in negotiations to do so. According to AFL, the rival league violated trademark protection by picking a name that was very close to its own and by allowing the defecting teams to keep the names they had as AFL members.
Arena Football One didn’t have nice words for AFL, either. According to the Associated Press, the new league’s commissioner, Jerry Kurz, didn’t hold back from criticizing AFL.
“There has been arena football before,” said Kurz, a former commissioner of AFL offshoot arenafootball2. “It’s been done well but not as good as it’s going to be done this time.”
Yet on Nov. 6, the leagues changed their tunes. AFL notified the Chicago bankruptcy court that it hoped to sell most of its assets to Arena Football One for $2.5 million, subject to higher bids at a Nov. 25 auction. The deal, AFL said, was in the best interests of it and its creditors. And court papers show that a bankruptcy judge Tuesday approved Arena Football One’s bid as the floor price for AFL’s assets.
AFL filed for Chapter 11 bankruptcy protection on Aug. 26, several weeks after creditors tried to force it into Chapter 7 liquidation. The filing followed AFL’s decision to cancel what would have been its 23rd consecutive season in 2009 amid financial troubles tied to the labor agreements covering its union workers. The league had hoped to resume play in 2010.
H.R. 3310, introduced by Rep. Spencer Bachus (R-AL), is called the Consumer Protection and Regulatory Enhancement Act, and would create a Chapter 14 bankruptcy under which institutions to file bankruptcy without disrupting the nation's financial stability.
The bill is in response to the government's inconsistent reaction to the collapses of financial holding companies such as Lehman Brothers, Bear Stearns and AIG.
At the American Bankruptcy Institute's 2009 Legal Symposium in Washington, D.C., this week, Congressional staffer Daniel Flores spoke on a panel about the need for the new chapter, according to Reuters.
"No one trusts the bankruptcy bar and the courts. That's the problem," said Flores. "We don't need to abandon bankruptcy, we need to abandon government intervention that can seem inconsistent and panicky."
Most importantly for taxpayers, he bill would completely remove the option for government bailouts, leaving troubled businesses with no other safety net besides bankruptcy.
Rep. Bachus' bill, which is currently under committee consideration, would have no effect on consumer bankruptcy laws.
If passed it would be the first amendment to U.S. bankruptcy laws since the Bankruptcy Abuse Prevention & Consumer Protection Act of 2005.
]]>Mr. Tromberg is currently the Florida state chair for the National Association of Consumer Bankruptcy Attorneys (NACBA) and has an active consumer law practice in Ft. Lauderdale.
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In fact, if you stop and think about it for a moment, most employers will view your filing bankruptcy as the responsible thing to do. This is because you will put a stop to all of the at work collection phone calls, the garnishments, and the work interruptions. You will be dealing with the situation rather than ignoring it and this always makes your employer happy.
The text of 11 U.S.C. sec. 525 is set forth below.
Jay S. Jump
Protection against discriminatory treatment:
(a) Except as provided in the Perishable Agricultural Commodities Act, 1930, the Packers and Stockyards Act, 1921, and section 1 of the Act entitled “An Act making appropriations for the Department of Agriculture for the fiscal year ending June 30, 1944, and for other purposes,” approved July 12, 1943, a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.
(b) No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt–
(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;
(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or
(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.
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Many times defendants respond to the summons and complaint with an “Answer” and dispute the allegations in the Complaint.
The result is a ‘Summary Judgment’ motion. A summary judgment motion is a motion that says – “There are no facts in dispute between the plaintiff and defendant. The defendant is liable on the debt based upon the fact that a contract was signed, payments were required, payments were made, and therefore, the defendant is liable on the debt.”
It is the short cut to avoid a trial.
If you receive a summary judgment motion in the mail, you have a certain amount of time to respond. It will typically state how much time you have on the front of the documents. If you do not respond, then the court will issue a judgment against you as you did not dispute the motion.
If you do respond, you must have an actual factual dispute against the creditor. For example, if it was not your account, this would put a central fact of the case in dispute. If you can dispute any material fact, then the summary judgment motion must be denied and a trial granted.
Whether you respond to these legal proceedings or not is up to you. When planning for a bankruptcy filing, most bankruptcy attorneys prefer to file before a judgment is entered by the Court in the collection proceeding.
Jay S. Jump
Seattle, WA
www.jumplawgroup.com
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Fontainebleau Las Vegas Holdings LLC wants to sell its stalled hotel-and-casino project to an affiliate of Penn National Gaming Inc. for $50 million in cash, plus the assumption of various liabilities, pending higher bids at a bankruptcy court-supervised auction. Read the Daily Bankruptcy Review story here.
Shopping-mall owner Simon Property Group Inc. is considering a bid for General Growth Properties Inc., according to Bloomberg.
A Birmingham, Ala., businessman is challenging local political and business leaders to rally around his plan for Jefferson County to avoid bankruptcy, the Birmingham Business Journal reports.
The curators of failed Dutch bank DSB expect the bankruptcy process to last up to 10 years, according to Reuters.
The cost of insuring the debt of Residential Capital LLC, the mortgage-lending arm of GMAC, indicates an acute level of distress, WSJ reports.
A federal appeals court has halted the auction of Philadelphia Newspapers LLC’s assets until Dec. 15, when it will decide if the company’s lenders have the right to credit bid the more than $300 million they’re owed for the newspaper publisher, the Philadelphia Inquirer reports.
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Written by Craig D. Robins, Esq.
Law Firm of Bill Collectors Dissolves Amid Law Suits Alleging that the Collection Firm Engaged in Fraud
I previously wrote about debt collector law firms in New York that had gotten in trouble with the law. Debt Collectors Shut Down by Attorney General .
Now it is coming to light that a large regional collection firm in Georgia crashed and burned amid allegations that the firm failed to file collection law suits on behalf of their clients and also used funds for those suits to pay the firm’s own expenses.
The firm, Trauner, Cohen & Thomas, located in Sandy Springs, Georgia, dissolved after operating for more than 30 years.
What led to the firm’s demise? Several of the firm’s clients, who are banks and credit card companies, sued the firm, alleging various gross improprieties.
NCO Financial Systems, (a company I regularly deal with on behalf of my Long Island bankruptcy clients as they purchase massive amounts of delinquent debt), brought suit against the Trauner collection firm alleging that it gave the firm more than $1.3 million to reimburse the firm for filing fees and other expenses of collection suit litigation relating to more than 15,000 lawsuits the firm was to handle on NCO’s behalf. Instead, the collection firm used the funds for its own operating expenses and inflated it reimbursement requests according to the pleadings.
Midland Credit Management brought another suit on similar grounds, alleging that they were defrauded $1.7 million. A third suit alleges that the Trauner collection law firm is affiliated with a collection company, National Asset Recovery Inc., and that this company and the law firm defaulted on $1.7 million in loans. There are even more similar law suits filed by Zenith Acquisition Corp. and Northstar Capital Acquisition.
One wonders if the financial pressures that many of these debt collection firms are suffering from encourages them to take shortcuts and violate consumer rights. Congress recently issued a scathing report about the illicit practices of bill collectors: Credit Card Debt Collectors Ripped in Federal Report .
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