ABI Bankruptcy Blog Exchange » WSJ.com: Bankruptcy Beat

WSJ.com: Bankruptcy Beat (4)

Going Once, Going Twice…Sold!

Posted: July 6th, 2009, 1:47pm PDT

Bloomberg News
Marc Dreier

Amid an economic downturn that’s spawned the term “staycation,” homes in the Hamptons are still hot properties, even the former beachfront getaway of Marc S. Dreier.

Dreier, as you may recall, has agreed to plead guilty to money laundering and other charges related to his alleged scheme to sell $700 million in bogus promissory notes. He faces sentencing next Monday.

A bankruptcy judge last week signed off on the sale of the disgraced attorney’s two neighboring properties on Dune Road in East Quoque, N.Y., for $10.4 million (not terrible, considering the properties’ total value was pegged around $12 million). At a public auction on June 17, Dune Road 109 EQ LLC picked up a 3,100-square-foot, four-bedroom, five-bath home for $3.8 million, while the neighboring 7,000-plus-square-foot, eight-bedroom, eight-bath home next door went for $6.6 million to 111 East Quogue LLC.

If you’re kicking yourself for missing the chance to pick up some property with some interesting history, take heart, because another public auction is coming up. And this one is for Dreier’s Upper East Side apartment, where he’s been confined on house arrest while he awaits his sentencing. Unit 34C at the Beacon Court Condominium goes on the block July 21 at the U.S. Bankruptcy Court in Bowling Green, N.Y.
¡Vive Tortillas!

Posted: July 6th, 2009, 12:14pm PDT

Tammy Young
Taco lovers, listen up. The future of the Tampa company that says it makes the “best tortillas you’ve ever tasted” is uncertain. Tammy Young, chief executive of La Bonita Olé, is fighting to retain ownership of the tortilla company she founded 17 years ago.

The tortilla maker filed for Chapter 11 bankruptcy in July 2008, dragged down by cost overruns related to the construction of its own production facility and a drop in sales.

As La Bonita faces a permanent shift in management, Young is working to create a grassroots campaign called “Save The Tortillas.” The campaign is relying heavily on social media outlets such as YouTube, Twitter and Facebook to talk about La Bonita’s plight.

“I think our situation is the face of mid-sized companies in America today,” said Young, who employs some 40 workers at La Bonita. “What is happening with us is relevant because you see how the economy affects everyone.”

Young is asking fans of “comida Mexicana” to visit the Save The Tortillas website by the end of the month to sign the “Save The Tortillas” petition.

One problem: SunTrust Bank says La Bonita owes it $5.7 million, and the bank has filed its own reorganization plan to bring the company out of bankruptcy. It says Young’s website contained “false and misleading” claims about its plan for the tortilla maker. The bank recently won a court order forcing Young to revise the language on the site.

But Young and her supporters aren’t backing down.

“This is an American entrepreneurial story,” said social media strategist Julia Gorzka, who’s helping Young get the word out about La Bonita. “People [online] have been talking about how they want to support small local businesses.”
Luxe Kids’ Clothing Store Bids Adieu To Greenwich

Posted: July 6th, 2009, 10:10am PDT

Don’t feel like spending $278 on a dress for your 2-year-old these days? You’re not alone. The drop in luxury spending has forced a slew of companies into bankruptcy court, from high-end purse designer Lambertson Truex, to jeweler-to-the-stars Henry Dunay Designs Inc. Now you can add one more: pricy children’s clothing retailer Best & Co.

The retailer – which once had stores in hedge-fund mecca Greenwich, Conn., posh vacation destination Nantucket, Mass., and even in a Bergdorf Goodman department store – dished up petite clothes at not-so-petite prices before seeking Chapter 7 protection and ceasing operations. According to the Connecticut Post, items like a cashmere baby’s blanket retailed for $375.

Despite the hefty price tags, Best & Co. attracted a following for 12 years, occupying a slice of prime real estate on Greenwich Avenue. There were signs of trouble, though – the Nantucket store was eventually shuttered and plans to expand the company into “other high-income areas such as Chicago, Palm Beach and Boston,” never came to fruition, the Post said.

Best & Co. was actually a reincarnation of a classic U.S. brand, which sold clothes in the eastern U.S. for nearly a century. It ceased operations in 1971, only to eventually be revived by Susie Hilfiger, a Greenwich resident and, yes, you guessed, it ex-wife of designer Tommy Hilfiger. But, like so many other businesses, its celebrity connection was apparently not enough to keep the enterprise out of bankruptcy court.
The Daily Docket: GM Set For Sale

Posted: July 6th, 2009, 6:37am PDT

Judge Robert Gerber approved the sale of General Motors Corp.’s assets to a new company run by the U.S. government, The Wall Street Journal reports.

GM is tapping a facility in Orion, Mich., to be the building site of its new compact car, saying that the first two criteria for a site were how it would affect unemployment and what kind of “carbon footprint” it would make, according to WSJ.

WSJ reports that Chrysler Group LLC has finalized the nine-member panel of its new board of directors, which will have its first meeting at the end of July.

Lehman Brothers Holdings Inc. is seeking to hold onto exclusive control of its bankruptcy case until March 15, 2010, saying it needs more time to wind down what was the world’s fourth-largest investment bank. Read the Daily Bankruptcy Review story here.

According to The Associated Press, states that let debt collectors seize consumers’ wages have much higher bankruptcy rates than states that do not practice such wage seizures, and by going after wages, credit card companies risk pushing consumers into bankruptcy.