California Bankruptcy Lawyer Blog

Redwood City Bankruptcy Attorney Discusses California-Based Ownit Mortgage Solutions Inc. Files For Chapter 11 Bankruptcy

Subprime mortgage lender Ownit Mortgage Solutions Inc. has filed for Chapter 11 bankruptcy protection at the U.S. Bankruptcy Court of San Fernando Valley in California.

The company, which makes loans to borrowers with poor credit and limited income, lists it debts as more than $100 million and assets between $1 million and $100 million. According to the LA Times, the bankruptcy filing is in response to lawsuits filed by two creditors.

Ownit Mortgage says that it owes its largest unsecured creditor, Merrill Lynch LP Holdings Inc., approximately $93 million. Merrill Lynch is also an owner of a 20% stake in Ownit Mortgage. Credit Suisse First Boston, owed $12.7 million, and Terwin Advisors LLC, owed $19 million, are also unsecured creditors of Ownit Mortgage.

The Automatic Stay

When filing for Chapter 11 bankruptcy, the debtor receives an automatic stay, which gives a debtor a period of time where all judgments, foreclosures, collection activities, and repossessions of property are suspended. Creditors cannot pursue any debt or claim from before the bankruptcy petition was filed.

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Posted In: Chapter 11

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San Jose Bankruptcy Lawyer Discusses The World Trade Club of San Francisco Files For Chapter 7 Bankruptcy Protection

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.

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Posted In: Chapter 7 Bankruptcy

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San Mateo Bankruptcy Attorney Discusses Chapter 11 Bankruptcy Case, Creditors For Delta Ask The Airlines To Consider More Than “Stand-alone” Option For Bankruptcy Reorganization

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.

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Posted In: Chapter 11

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Monterey Bankruptcy Attorney Discusses Unsecured Creditors Of Bankrupt Parkway Hospital Defend Request To Have Hospital's And Affiliate's Assets Consolidated

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.

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Posted In: Chapter 11

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