Archive for the ‘Bankruptcy’ Category

Bankruptcy Stinks – Bankruptcy Beat – WSJ

By Kristina Doss

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

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

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

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

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

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

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

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

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

In his YouTube video, Jolly apologized for the mess.

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

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

Old Time Pottery bankruptcy moves to reorganization plan » Knoxville News Sentinel

Old Time Pottery, which has been based in Murfreesboro since 1985, announced Wednesday that it has received approval for its reorganization plan from Chapter 11 bankruptcy in federal court.

Under the agreement, approved May 28, Old Time Pottery will exit bankruptcy with 30 store locations, down from 37 stores prior to the filing in August 2009. The Murfreesboro store was not a part of the reorganization and will remain open.

The Murfreesboro store on River Rock Boulevard, the first store in the chain which opened in 1986, was not affected by the reorganization. Neither were stores in Madison and Memphis.

Six of seven under-performing stores have already closed and the seventh is in the process of being closed. Scott Peterson, president and chief executive officer of Old Time Pottery, said it will be closed by the end of the month.

Read the full story at the Daily News Journal.

Debt Collection Supervisors Settle FTC Charges

Concluding a case that drew the largest civil penalty ever imposed on a debt collection business, the Federal Trade Commission settled with the two remaining individual defendants who allegedly misled, threatened, and harassed consumers; disclosed their debts to third parties; and deposited postdated checks early, in violation of federal law. The settlement order requires each of these senior managers to pay a civil penalty and bars them from future violations.

“The FTC wants to remind debt collectors of their responsibilities and obligations under the law. Abusive collection actions are illegal, and if debt collectors use abusive tactics they could face legal action,” said David Vladeck, Director of the FTC’s Bureau of Consumer Protection. “At the same time, we want consumers to understand their rights if their debts go into collection. Money matters, and the more people know about managing their debt and dealing with debt collectors, the better off they will be.”

According to the FTC’s complaint, filed by the Department of Justice on the FTC’s behalf, the defendants participated in, or controlled, the actions of debt collectors whose unlawful practices included false or deceptive threats of garnishment, arrest, and legal action; improper calls to consumers; frequent, harassing, threatening, and abusive calls; and unfair and unauthorized withdrawals from consumers’ bank accounts. The complaint also alleged that the defendants failed to adequately investigate consumer complaints or discipline collectors, and collectors who were terminated for violating the Fair Debt Collection Practices Act (FDCPA) often were rehired within a few months.

In 2008, Academy Collection Service, Inc. and its owner, Keith Dickstein, paid $2.25 million to settle FTC charges that Academy collectors violated the FTC Act and the FDCPA while collecting debts, and that Dickstein failed to stop the violations. The settlement order announced today, negotiated by DOJ and the FTC, imposed civil penalties of $375,000 and $300,000, respectively, on Albert S. Bastian and Edward Hurt, who oversaw Academy’s Las Vegas collection center. The judgments were suspended upon payment of $7,500 each, based on their ability to pay. The full judgments will become due immediately if the defendants are found to have misrepresented their financial condition.

The order bars Bastian and Hurt from making false, deceptive, or misleading representations in debt collection efforts, such as that nonpayment will result in garnishment of wages, seizure of property, or lawsuits, or that they or their agents are attorneys. They also are prohibited from withdrawing money from consumers’ bank accounts without their express informed consent, and from depositing or threatening to deposit postdated checks before the date on the check. In addition, the pair are barred from improperly communicating with third parties about a debt; communicating with a consumer at any unusual time or place; and harassing, oppressing, or abusing any person in connection with debt collection.

The Commission vote to authorize DOJ to file the consent decree was 4-0. The consent decree was entered in the U.S. District Court for the District of Nevada.

Texas Rangers Make Bankruptcy Play With Owner Tom Hicks – WSJ.com

The battle over the Texas Rangers baseball franchise escalated to an all-out war Monday, with the team filing for Chapter 11 bankruptcy protection in a pre-packaged effort to force a sale to Hall of Fame pitcher Nolan Ryan and his partner, Pittsburgh attorney Chuck Greenberg, after a months-long fight over the fate of the franchise.

The Rangers current owner, Tom Hicks’ HSG Sports Group, now faces an angry group of creditors, who are owed more than $540 million. They are vowing to oppose the bankruptcy, arguing that the deal proposed to the court doesn’t provide them with the money they are entitled to under the terms of their loan agreements.

The bankruptcy filing was the latest move in a 14-month fight between the creditors and Mr. Hicks, whose company defaulted on loans in March 2009, when Mr. Hicks decided he would no longer prop up the company’s operations with money from his personal fortune.

HSG Sports controls the Rangers and the National Hockey League’s Dallas Stars, both of which he has been trying to sell to pay off his debts.

In January, Mr. Hicks reached a deal with Messrs. Greenberg and Ryan to sell the Rangers, the Ballpark at Arlington, and some 150 acres adjacent to the stadium in a deal valued at about $530 million, although the value has escalated with the rising amount of liabilities the new owners are prepared to assume. According to court filings those liabilities include almost $25 million that the team owes slugger Alex Rodriguez in deferred compensation and almost $13 million it owes pitcher Kevin Millwood. Neither player is with the team anymore.

The deal received the blessing of Major League Baseball CommissionerAllan Bud Selig, even though people involved with the process say two other groups bid more for the franchise.

“Nolan Ryan has a proven track record with MLB club owners and I am prepared to submit this to the owners promptly for their approval,” Mr. Selig said in a statement yesterday. Major League Baseball has lent the Rangers $18 million to cover its expenses since last summer and has offered another $11 million in financing during the bankruptcy proceeding.

However, the dispute between Mr. Hicks and the creditors has never been about the total price tag but rather over the division of the proceeds from the sale. Monarch Alternative Capital L.P., a New York hedge fund, is the largest HSG creditor, holding about $100 million in the HSG debt and is a leader of those creditors opposed to the deal. Andrew Herenstein, a principal of Monarch, declined to comment.

Under the current deal, Ballpark Real Estate L.P., an entity controlled by Mr. Hicks, would receive nearly $75 million for the 150 acres next to the ballpark currently used for parking. Mr. Hicks and a group of former partners had planned a major commercial development on the site, but the project collapsed after the financial crisis prevented the group from receiving financing for the deal.

A little more than $500 million would go toward the purchase of the baseball team and control of the Ballpark at Arlington, the Rangers home since 1994. However, creditors say they would receive only about $230 million from the sale, and they are seeking as much as $320 million.

During the past two months the dispute became a high-stakes game of chicken between Major League Baseball, which threatened to seize the franchise and use Mr. Selig’s powers to act “in the best interests of baseball” to force the sale, and the creditors, who threatened to force the team into an involuntary bankruptcy proceeding.

Behind the bluster, lawyers and bankers representing both sides continued to try to negotiate a settlement. According to a member of the creditor’s group, the two sides were about $10 million to $20 million apart at the end of last week but couldn’t bridge the gap.

With prospects dimming for a negotiated deal that would hand the team to the Greenberg-Ryan group, lawyers for the baseball team and Major League Baseball decided to bring the pre-packaged bankruptcy to court Monday in an attempt to maintain control of the process and pre-empt any efforts by creditors to force a sale to another bidder.

“We are proud to play an active role in resolving the deadlock in this complex sale process,” Mr. Hicks said in a statement. “Rangers fans deserve management’s full focus on baseball operations.”

Many people are driven to filing bankruptcy because they have tried paying off one credit card with another, have lived off of credit cards, or just did not realize just how much they were charging on credit cards until it was too late.  So after a bankruptcy filing one would imagine that these credit card companies would want nothing to do with you after you discharge all your credit card debt in a bankruptcy, right?  Wrong. Many of my clients tell me that they receive countless offers for credit and credit cards immediately after filing a bankruptcy.  There is an excellent law review article, authored by Katherine Porter an Associate Professor of Law at The University of Iowa, explaining this phenomenon and is worth a read. See the abstract below and follow this link to read more.

ABSTRACT: Consumer credit and consumer bankruptcy filings have
grown rapidly over the last two decades, and several researchers have
attempted to understand the relationship between these two intertwined
features of the modern American economy. Teasing out causation is almost
impossible, as consumer advocates lay blame on the industry, and the
industry responds by citing the same data to show consumer misbehavior.
Using a novel vantage point, this analysis examines what the credit
industry’s behavior toward recently bankrupt families reveals about its
internal profit models and the likely causes of consumer bankruptcy.
Original data from longitudinal interviews with consumer debtors show
that lenders target recent bankrupts, sending these families repeated offers
for unsecured and secured loans. The modern credit industry sees bankrupt
families as lucrative targets for high-yield lending, a reality that has
important implications for developing optimal consumer-credit policy and
bankruptcy law.
http://www.law.uiowa.edu/documents/ilr/Porter.pdf

Contractor At Volkswagen’s Tennessee Plant Files For Chapter 7 – Bankruptcy Beat – WSJ

A contractor working to build Volkswagen AG’s new factory in Chattanooga, Tenn., has filed for Chapter 7 bankruptcy protection.

The filing comes just months after local government officials lauded the company, Southern Fabrication Contractors LLC, as an example of an area business benefiting form the massive construction project, the Chattanoogan reported.

Volkswagen is building its first factory in the U.S. since it closed a Pennsylvania plant in the 1980s. The German auto maker says it has already spent $648 million on local and state contracts, but some residents complained that Volkswagen was not doing enough hiring in the region.

Southern Fabrication, which is based in Chattanooga, was lauded as an example of Volkswagen’s commitment to local companies. The paper reported that the company added 35 jobs after it landed the contract to work on the factory’s paint shop.

Now Southern Fabrication will shut down. Under Chapter 7, a company liquidates its assets in order to repay creditors.

In Friday’s filing with the U.S. Bankruptcy Court in Chattanooga, the company listed assets and debts of between $1 million and $10 million each. Southern Fabrication built machinery, pollution-control systems and duct work for clients in the automotive, paper and metal industries.

Volkswagen Chattanooga spokesman Guenther Scherelis said Southern Fabrication was as a subcontractor to another company working on the plant. He said auto maker is still assessing the consequences of the bankruptcy filing.

“So far there has been no damage and no delay,” he said.

Volkswagen intends to open the plant next year to build a mid-size sedan

Washington pushes for free credit scores – May. 17, 2010

NEW YORK (CNNMoney.com) — People who are denied credit or a job because of their credit history may soon be able to get their credit score free of charge, thanks to an amendment passed by the Senate Monday evening.

The measure, part of the massive Wall Street reform bill being debated in the Senate, would expand an existing law that, in December 2003, gave consumers the right to one free credit report every year from each of the top three consumer reporting agencies — Equifax, Experian, and TransUnion.

The credit score is a numerical representation of the information in a consumer’s credit report, which covers a consumer’s entire credit history — all debts, payment habits, and jobs held. The credit score is widely used as a shortcut by lenders, so monitoring it is crucial.

But options for getting a credit score have been limited to many “for-fee” sites. Some have lured consumers in by offering a “free” score in return for signing up to a credit monitoring service that could cost $14.95 a month or more, if consumers don’t opt out before the end of the trial period.

The amendment “dramatically increases the number of people getting this critical piece of information,” said Jennifer Talhelm, a spokeswoman for Sen. Mark Udall, D-Colo., who is sponsoring the effort.

A recent survey from the National Foundation for Credit Counseling found that some 65% of adults have not checked their reports in the past year. And nearly one-third of adults don’t know their credit score.

See Below for a well written article regarding credit card charge-offs and the what happens with these accounts down the road.

If you are worried about old credit card debts coming back to haunt you, contact a Knoxville Bankruptcy Attorney at The McKellar Law Firm at 865-566-0125 for your free consultation today.

Does a Credit Card Charge-Off Mean You’re Off the Hook?

Credit card companies wrote off a record amount of debt last month according to a recently-released report from Moody’s Credit Card Index.

The amount of Americans’ credit card balances that banks wrote off in May 2009 as being uncollectible increased to a whopping 10.6% of the total $900 billion in outstanding balances. This is the highest charge-off rate in the twenty-year history of the index.

What is a Charge-Off?

When a credit card issuer is unable to collect on an account after a certain period of time, it is obligated to write the debt off its books as being uncollectible. This is called charging-off the account. Sometimes this is reported on one’s credit report.

If Your Account is Charged Off, Does that Mean that the Bank Will Not Bother to Collect?

Absolutely not! Charging-off is merely an accounting notation that the credit card company makes for the purposes of balancing its books and records.

What typically happens is that the bank will sell the account to a collection company for about five or ten cents on the dollar. That collection company will aggressively try to collect by calling you, harassing you, and eventually suing you.
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A charged-off account also remains on your credit report for the same period of time as any other delinquent account — seven years.

No Matter what company ends up owning your charged-off account, it is still a legal liability. However, you can eliminate charged-off credit card debts with Chapter 7 bankruptcy, assuming that you are eligible. You can also negotiate rather reasonable settlements with the holder of the account. See Now May be the Time to Settle Debts with Your Credit Card Company.
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One thing is certain. — if you have many charged-off accounts, then you have a serious enough debt situation to warrant immediately meeting with a qualified Long Island attorney who can advise you as to your bankruptcy and debt negotiation options.

North Myrtle Beach hot dog vendor guilty of bankruptcy fraud | SCNow

COLUMBIA – United States Attorney William N. Nettles stated that Anthony Randall Simmons, age 44, of North Myrtle Beach, pled guilty in federal court in Florence to bankruptcy fraud, a violation of Title 18, United States Code, Section 152(1).

United States District Judge R. Bryan Harwell accepted the plea and will sentence Simmons after he has reviewed a pre-sentence report which will be prepared by the U.S. Probation Office.

Evidence established that Simmons filed for bankruptcy in April 2007, and was required under federal law to list all of his assets and the value for each.

Simmons listed as an asset a hot dog stand he operated in North Myrtle Beach, valuing it at $1,500.00.

However, while his bankruptcy was still pending, he sold the business for $95,000.00.

Nettles stated the maximum penalty Simmons can receive is a fine of $250,000.00 and imprisonment for five years.

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

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

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

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

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

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

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

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

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