California Bankruptcy Lawyer Blog

Fremont Bankruptcy Attorney Discusses Northwest Airlines Submits Bankruptcy Reorganization Plan

NWA has filed its Chapter 11 bankruptcy reorganization plan. The airline company says that it plans to emerge from bankruptcy protection during the second quarter of 2007 as an independent company. NWA also says that it plans to eliminate unsecured debt by paying its unsecured creditors using common stock in the reorganized company. Preferred and common shareholders, however, will not receive anything.

A US Bankruptcy Court gave NWA an extension until February 15 to file its disclosure statement which will detail its reorganization plan for the public.

On Friday, NWA said that the plan included new, cost-saving lease agreements with airports and other facilities, as well as purchase agreements with engine and aircraft manufacturers.

Since filing for bankruptcy protection in 2005, NWA says that they succeeded in restructuring its fleet, removing $2.4 billion in yearly costs, significantly strengthening its balance sheet, and entering into new aircraft purchase agreements. New labor accords are also expected to save the airline carrier $1.4 billion each year.

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Posted by Scott Sagaria | Permalink | Email This Post | Comments (0)

Posted In: Bankruptcy Exit Plan , Chapter 11

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Redwood City Bankruptcy Attorney Discusses Bankruptcy Court Says Furnishing Company Your Home Resort Must Liquidate Its Assets

A bankruptcy judge in the U.S. District Court in Sacramento, California, is ordering Your Home Resort, an outdoor furnishing store, to convert to Chapter 7 bankruptcy and sell its assets to pay its creditors. The company was responsible for its customers' loss of thousands of dollars last year when it abruptly shut down its showrooms in Rancho Cordova and Rocklin.

Your Home Resort owes creditors approximately $3.5 million ($2.3 million of this is owed to unsecured creditors—customers that either paid deposits for outdoor furniture or paid for them in full but never received their orders.) Unsecured creditors, however, are generally paid after secured creditors, such as credit card companies and banks, in bankruptcy proceedings. Your Home Resort owes money to about 12 secured creditors.

An auction date has yet to be set. The outdoor furnishing store had sold barbecue islands, gazebos, hot tubs, and other outdoor furniture to customers.

The company had originally filed for Chapter 11 bankruptcy last August in an attempt to stay in business while reorganizing its operation.

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Posted In: Chapter 7 Bankruptcy

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San Jose Bankruptcy Attorney Discusses Sacramento Woman Who Filed 13 Bankruptcies Pleads Guilty To Fraud

A California woman has pleaded guilty to bankruptcy fraud after filing 13 bankruptcies from July 1999 to January 2006. Martha Montoya, a Sacramento resident, sought bankruptcy protection so that she could delay the payments of past due rents and continue living in rental homes for free.

Prosecutors say that she took advantage of the Bankruptcy Code’s automatic stay provisions after her landlords acquired judgments against her for rents owed. The landlords had also won the right to evict her family. Because she was under bankruptcy protection, however, the landlords could not collect the past due rents, evict her, or execute the judgments.

When an individual or a company files for bankruptcy, an automatic stay stops actions against you filed by many creditors, including Nolo.com):

· Utility disconnections. If you're behind on a utility bill and the company is threatening to disconnect your water, electric, gas, or telephone service, the automatic stay will prevent the disconnection for at least 20 days. (Also, bankruptcy will probably discharge the past due debts for utility service.) Although the amount of a utility bill itself rarely justifies a bankruptcy filing, preventing electrical service cutoff in January in New England might be justification enough.

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Posted In: Bankruptcy Fraud

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Monterey Bankruptcy Attorney Discusses California Court Official Predicts More Bankruptcy Filings In 2007

Richard Heltzel, chief executive officer of the U.S. Bankruptcy Court for the Eastern District of California, said he thinks that bankruptcy filings will increase again. The number of bankruptcies filed in the last fiscal year had dropped after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Following the enactment of this law in October 2005, courts in Modesto, Sacramento, and Fresno only took in 8163 cases over the next year—a 79% drop from the year before.

Hetzel believes bankruptcy filings will increase because of a stalled housing market and rising interest rates.

In the Eastern District of California—due to the new bankruptcy law—people who wish to file for bankruptcy must pass a means test in order to file under Chapter 7. If they exceed the median income for this district—$43,107 for a single person or $57,237 for a married couple—they are encouraged to file for Chapter 13 bankruptcy. While Chapter 7 erases debt, Chapter 13 requires that filers repay their debts over a period of time.

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Posted In: Chapter 13 Bankruptcy , Chapter 7 Bankruptcy

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San Jose Bankruptcy Attorney Discusses Bankruptcy Exit Plan By Adelphia Is Approved By Federal Bankruptcy Judge

A federal bankruptcy judge has approved Adelphia Communication Corp.’s plan to pay its creditors and conclude one of the largest bankruptcy cases in U.S. history. Adelphia, formerly the fifth largest cable television company in the United States, had filed for bankruptcy protection from creditors in 2002.

Last July, Adelphia sold substantially all of its cable operations to Time Warner Inc. and Comcast Corp. for $17.6 billion in cash and shares in Time Warner’s cable unit. From this amount, $15 million of this will be used to pay creditors. After paying its debts, Adelphia will terminate its business. In July 2004, Timothy Rigas (the finance chief of Adelphia at the time) and his father John were convicted of securities fraud and conspiracy.

CBSnews.com offers the following timeline of key events that led to Adelphia to file for bankruptcy:

1952

John Rigas, operating a small theater in Coudersport, Pa., buys a cable franchise on a friend's advice. At the time only 60 small cable systems exist in the United States. Rigas and his brother, Gus, name their company Adelphia, Greek for "brothers."

1983

John Rigas buys out Gus Rigas' interest. Later, his sons — Michael, Timothy and James — become executive vice presidents, directors and principal stockholders.

1994

John Rigas becomes majority owner of the Buffalo Sabres hockey team with a $15 million investment.

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Posted by Scott Sagaria | Permalink | Email This Post | Comments (0)

Posted In: Bankruptcy Exit Plan

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