California Bankruptcy Lawyer Blog

After filing for Chapter 7 bankruptcy last month, the World Trade Club of San Francisco will hold a liquidation auction on January 7.

Founded in 1957, the club closed its doors on October 29, 2006 because of financial problems. Membership had dropped to 800 from 2000 after it had moved from the San Francisco Ferry Building on the Embarcadero to One Ferry Plaza.

The World Trade Club owes over $2.7 million to secured and unsecured creditors, with assets at approximately $575,000. Among the debts the club owes:

· A disputed $158,476.20 owed to City National Bank.
· $1,108.75 in trade debt owed to A Touch of Class Entertainment of San Jose.
· $50 in membership credit owed to the Hon. Richard Collier Sears of the New Zealand Consulate General.

Ferry Plaza, LP, the club’s landlord, is expected to be the estate’s largest creditor in these bankruptcy proceedings.

Continue reading "The World Trade Club of San Francisco Files For Chapter 7 Bankruptcy Protection" »

Delta Airlines’s unofficial committee of unsecured creditors are asking the airline to consider other options besides the “stand-alone” option the company had presented earllier this month when announcing their reorganization plan. Delta has said that it plans to emerge from bankruptcy as an independent airline carrier.

The unofficial committee is separate from the official committee of creditors who must approve any reorganization plan by Delta if the plan is to be executed successfully. While the official committee says that they currently support Delta’s stand-alone plan, they are asking the company to consider other options also.

Delta filed for Chapter 11 bankruptcy protection in 2005.

Ideally, each class of creditors must approve of the plan by a 2/3rds majority. If at least one class of creditors disapproves of the plan, Delta could still get the plan approved by a “cramdown”—where Delta must then prove to the bankruptcy court that the dissenting creditor group would get more under the desired reorganization plan than if the company were to file for Chapter 7 bankruptcy.

Continue reading "In Chapter 11 Bankruptcy Case, Creditors For Delta Ask The Airlines To Consider More Than “Stand-alone” Option For Bankruptcy Reorganization" »

The unsecured creditors of Parkway Hospital Inc.—which filed for Chapter 11 bankruptcy in July 2005, listing assets of $29.3 million and debts of $30 million—are standing by their request to consolidate the bankrupt hospital’s assets with Parkway Hospital Associates. The committee of unsecured creditors claims that to do so would help them recover more of what they are owed and wouldn’t jeopardize the bankrupt hospital's efforts at reorganization.

While the Parkway Hospital Associates owns the hospital and the land it sits on—valued at over $20 million—these assets are not part of the hospital’s bankruptcy estate. The creditors therefore requested that it be able to sue to get PHA “substantively consolidated” with the hospital's bankruptcy estate. Substantive consolidation lets courts merge the assets and liabilities of two or more debtors that are related into a single pool that can be used to pay creditors. Both PHA and Parkway Hospital Inc. have opposed the request. The hospital believes such a move would prevent it from being able to secure the financing it needs to reorganize itself and reemerge from bankruptcy.

Role of a Creditors’ Committee in a Chapter 11 Bankruptcy case:
Creditors' committees can play a major role in chapter 11 cases. The committee is appointed by the U.S. trustee and ordinarily consists of unsecured creditors who hold the seven largest unsecured claims against the debtor. 11 U.S.C. § 1102. Among other things, the committee: consults with the debtor in possession on administration of the case; investigates the debtor's conduct and operation of the business; and participates in formulating a plan. 11 U.S.C. § 1103. A creditors' committee may, with the court's approval, hire an attorney or other professionals to assist in the performance of the committee's duties. A creditors' committee can be an important safeguard to the proper management of the business by the debtor in possession.

Continue reading "Unsecured Creditors Of Bankrupt Parkway Hospital Defend Request To Have Hospital's And Affiliate's Assets Consolidated " »

Granite Broadcasting filed for Chapter 11 bankruptcy last week. The Company, an owner of television stations in California and New York, says that it has already made plans to reorganize itself while under bankruptcy protection. Granite has listed $100 million in assets and $100 million in debt.

The Company says the plan it has negotiated with creditors will cut its corporate debt to $230 million—that’s a $275 million reduction, according to the company. A judge and the creditors must formally approve the plan before it can go into effect. Granite Broadcasting says it has less than 200 creditors.

Granite Broadcasting Corporation owns and operates, or provides programming, sales and other services to 23 channels in the following 11 markets:

· San Francisco, California;
· Detroit, Michigan;
· Buffalo, New York;
· Fresno, California;
· Syracuse, New York;
· Utica, New York;
· Binghamton, New York;
· Elmira, New York;
· Fort Wayne, Indiana;
· Peoria, Illinois;
· and Duluth, Minnesota-Superior, Wisconsin.

Continue reading "Granite Broadcasting, Owner of California TV Stations, Files for Chapter 11 Bankruptcy" »

A number of investors who lost money when trusting East Bay investment executive Francis "Bill" Reimers to make investments for them are angered by the decision of a federal trustee to get money from them as part of the bankrupty proceedings involving Reimers and his companies. At least 20 individuals say they collectively lost $10 million dollars in investments because of Reimers. Yet bankrupty trustee John Kendall may have grounds to collect payment from them for the money that Reimers owes because these investors became creditors the moment Reimers filed for bankruptcy. The trustee has claimed in court records that the transfers of money up to one year prior to Reimers filing bankruptcy were "preferential" or "fraudulent."

Attorneys for Kendall have filed complaints asking for a combined total of $5 million from at least 36 parties. 30 of these parties are individual investors. Six of them are companies. The trustee is demanding about $828,000 from one local Benicia investor.The trustee is also demanding $693,000 from American Express Credit, $258,000 from First USA Bank, $58,000 from Bank of America, $16,000 from MBNA America, and $6,200 from Banc One Credit Card.

Reimers had filed for involuntary bankruptcy.

There are three types of trustees in bankruptcy cases.

Continue reading "In California’s East Bay, Efforts By Bankruptcy Trustee To Collect Money Angers Creditors" »

Compared to 2005, the number of bankruptcy filings from January to September 2006 was 1/3 less. This is believed to be due to the enactment of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. In the past year, the new law has made it harder for individuals to have their debts excused and was the biggest U.S. bankruptcy overhaul since 1978. While credit card issuers have championed the law, saying it is a way to prevent bankruptcy filing abuse, critics of the law say that the people who file for bankruptcy protection usually do so not to get rid of their debt, but because they have lost their jobs, gotten divorced, can’t afford to pay their medical fees, or they can’t pay the high interest rates and fees on their debts.

According to data collected from the Administrative Office of the US Courts:
· There were 1.113 million personal and business bankruptcies in the fiscal year ending September 30, down 37.6% from the record 1.783 million the prior year.
· Personal bankruptcies fell 37.9% to 1.085 million.
· Business bankruptcies fell 20.1% to 27,3333.

Because the people who earn more than the median income in their states cannot file under Chapter 7 bankruptcy, they must now file under Chapter 13. Overall, the amount of bankruptcy filings was the lowest since September 1996.

Top 5 States with the highest number of bankruptcy filings in the fiscal year ending September 2006:

California: 85,223
Ohio: 72, 403
Texas: 65,474
New York: 57,686
Illinois: 57,023

Continue reading "Bankruptcy Filings In 2006 Are The Lowest In 10 Years" »

The U.S. House of Representatives voted “Yes” on a bill that protects a person’s rights to continue making reasonable charitable contributions, such as tithing, even while under consumer bankruptcy protection.

The bill was sponsored by Senator Barrack Obama (D-IL) and Senator Orrin Hatch (R-Utah). According to Hatch, “this bill clarifies the law so that those who tithe can continue to live their faith while in bankruptcy.

The Hatch-Obama bill, S. 4044, was drafted after a bankruptcy judge ruled that Chapter 13 filers could not tithe while still in the process of repaying their debts under bankruptcy protection. Under this new bill, all individuals regardless of income can continue to tithe to a religious organization or make charitable donations. To tithe is to give 10% of your income first before even paying bills.

Continue reading "Chapter 13 Bankruptcy Filers Can Tithe, Votes U.S. Congress" »

Electricity supplier Calpine Corp. now has until June 20, 2007 to develop a reorganization plan without creditor interference. The San Jose-based company, which declared Chapter 11 bankruptcy in December 2005, was granted a six month extension to come up with the plan. Manhattan’s U.S. Bankruptcy Court Judge Burton R. Lifland also gave the company until August 2007 to garner creditor support.

Calpine Corp. began its bankruptcy organization two months after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 came into affect. The Act requires that Chapter 11 filers come up with an reorganization plan within 18 months of filing for bankruptcy protection. Following that "exclusive," 18-month period, creditors are free to submit their own plans for reorganizing the company.

The electricity company, which provides power to about 27 million U.S. households, says that it is trying to live within” the new bankruptcy law's mandate, but is not sure whether that is possible.

What Calpine has accomplished since filing for bankruptcy protection:

· Raised 2 billion in debtor-in-possession financing.
· Eliminated $1 billion of the $18 million debt it owes.
· Low levels of conflict in creditor negotiations.

Debtor-in-possession financing (DIP) is the credit that is given to a company after it files Chapter 11 bankruptcy.

Continue reading "San Jose-based Calpine’s Chapter 11 Bankruptcy Reorganization Plan Now Due In June" »

Symphony Silicon Valley, a smaller organization that emerged after the San Jose Symphony filed for Chapter 7 protection in 2002, is growing as it hits its fifth season this year. It's success is due in large part to a new business model.

Rather than hiring famous conductors to reside at the symphony, Symphony Silicon Valley is only working with guest conductors, with each show presided over by a different conductor. The new model is a cost saver, as celebrity conductors are very expensive to have in-house. The reduced budget now goes toward paying the musicians’ salaries. In addition, the orchestra’s 12-week seasons are two-thirds shorter than the old orchestra’s seasons. There are only four members on staff, and a musicians’ committee decides which conductors should join the orchestra.

Symphony Silicon Valley’s slow-growing success has started to draw national attention, especially since 9 out of 250 American Symphony Orchestra League orchestras have filed for bankruptcy protection since 2002.

When a company becomes bankrupt and there is no way they can continue in operation, they may file under Chapter 7 bankruptcy. This means that the company ceases operations immediately and must work with a court-appointed trustee to liquidate their assets to pay legal and administrative expenses, as well as their creditors. Secured creditors will be paid first. If there isn’t enough money to pay secured creditors, then secured creditors will join the ranks of the unsecured creditors. Unsecured creditors can then file claims to be paid in case any money remains at the end.

Continue reading "Emerging After San Jose Symphony's Chapter 7 Bankruptcy Filing, Symphony Silicon Valley Strikes A Positive Note With New Business Model" »

A recent bill passed in the U.S. Senate earlier this fall protects a debtor’s right to tithe to a religious organization, even while this person is under bankruptcy protection. The bill was drafted by Senator Orrin Hatch and Senator Barrack Obama, after New York Bankruptcy Judge Littlefield’s ruling in August that a couple under Chapter 13 bankruptcy could not continue paying their parish $100 a month while they were under this protection before repaying creditors.

Since October 2005, debtors filing for bankruptcy have had to first undergo a means test, and if their annual incomes were above their state’s median income, they could only file for Chapter 13 protection (and repay their debts over a period of time) instead of Chapter 7 (which wipes out most of their debts).

Under a Chapter 13 filing, only certain reasonable expenses are allowed. Anything else must be used to repay creditors. Before the new bankruptcy law went into effect, and under the Religious Liberty and Charitable Donation Protection Act, debtors were allowed to exempt up to 15 percent of their annual income from creditors during Chapter 13 bankruptcy proceedings for tithing and charitable contributions.

The new bill must still be reviewed by the House of Representatives.

Continue reading "Tithing Debate Asks Question Of Whether Chapter 13 Bankruptcy Protection Should Make Room For Religious Donations" »

Two years after seeking bankruptcy protection under Chapter 11, Books Inc. is once again profitable and growing. The nation’s oldest independent bookseller now has 11 locations in California, has paid off all former creditors, and is in the process of launching a new e-book project with Ingram Book Company. The 155-year old bookseller says it will make a profit of $24 million this year.

Allbusiness.com offers the following insights on what to focus on to make your Chapter 11 bankruptcy reorganization as successful as possible:

1) Keep your investors informed regarding what is going on.
2) Identify what your company does well and build around them.
3) Discontinue, outsource, or sell whatever doesn’t work well.
4) Take immediate and decisive action rather than spending a lot of time debating as to what to do to save your company.
5) Slash overhead.

Continue reading " After Filing Chapter 11 Bankruptcy In 2005, Books Inc. Creates Fresh Start " »