California Bankruptcy Lawyer Blog

Monterey Bankruptcy Attorney Discusses The U.S. Supreme Court Says It Will Not Review Bankruptcy Case Involving Crown Vantage Inc., Merrill Lynch and Company, PriceWaterhouseCoopers, And Others

Yesterday, the Supreme Court announced that it will not take a case involving Crown Vantage Inc. and its allegations that PriceWaterhouseCoopers LLP, Merrill Lynch and Co., Inc., a Credit Suisse Group unit, as well as other individuals and companies, approved a fraudulent transaction that had been executed by James River Corp., Crown’s parent company at the time. Crown Vantage says the fraudulent transaction is what caused it to file for Chapter 11 bankruptcy protection in 2001.

James River had set up Crown as a subsidiary in the transaction, which then left Crown with hundreds of millions of dollars in underperforming assets and debts. James then spun off Crown into a separate company.

According to Crown Paper Liquidating Trust, Crown’s bankruptcy trustee, the accounting firms and investment banks made false representations when they said that Crown “would be solvent and viable” after the transaction. In making these false representations, Crown Paper Liquidating Trust says, the investment banks and accounting firms helped defraud Crown Vantage’s creditors. Crown Vantage filed for bankruptcy protection five years later.

Continue reading " Monterey Bankruptcy Attorney Discusses The U.S. Supreme Court Says It Will Not Review Bankruptcy Case Involving Crown Vantage Inc., Merrill Lynch and Company, PriceWaterhouseCoopers, And Others " »

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

Posted In: Bankruptcy Law , Chapter 11

Bookmark:

San Jose Bankruptcy Attorney Discusses Debts Accrued By Deceased Mayor Helped Force Town of Moffett To File Chapter 9 Bankruptcy Protection

According to court records filed last month, one reason that the town of Moffett, Oklahoma filed for Chapter 9 bankruptcy protection was that their town’s former mayor, Billy Yandell, had acquired way too much debt for the town while in office. Yandell passed away last December from heart failure. He had served as town mayor for about a decade.

Recent reports indicate that Yandell accrued more debt than the board had been aware of and without its authority or approval. The town's debts include a number of credit purchases, including more than $4,900 in Lowe’s Commercial Services, $95, 208 for two vehicles, and over $3,200 in Dell Computers. Collection agencies are also owed money by Moffett, including $16,183.18 to AWA Collections.

An audit of the Moffett Police Department may have contributed to the town's lack of funds. It was discovered that more than half of the department's operating budget in 2003 and 2004 came from traffic tickets. The Oklahoma Department of Public Safety has indefinitely banned Moffett Police from engaging in any traffic enforcement over a four-mile strip on U.S. Highway 64.

The town filed their bankruptcy petition on December 20, 2006, and creditors are currently prevented from collecting debts owed by the town. According to court filings, Moffett has $199,396.28 in liabilities and $43,033 in assets.

Continue reading " San Jose Bankruptcy Attorney Discusses Debts Accrued By Deceased Mayor Helped Force Town of Moffett To File Chapter 9 Bankruptcy Protection " »

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

Posted In: Chapter 9 Bankruptcy

Bookmark:

Fremont Bankruptcy Lawyer Discusses U.S. Supreme Court Says Businessman Has Lost The Right To Convert From Chapter 7 To Chapter 13 Bankruptcy

The U.S. Supreme Court says that a Massachusetts man lost his right to convert from one bankruptcy chapter to another because he did not reveal all of his assets. In a 5-4 ruling in Marrama v. Citizens Bank of America, the Court reached its decision because Robert Marrama, who runs a flooring company, did not disclose that he had placed a Maine vacation house in a trust. Marrama had listed that the value of his interest in the property was zero. A bankruptcy trustee, who found out about the home, however, wanted to recover the real estate to help pay back Marrama’s creditors. Marrama then tried to change his bankruptcy case from Chapter 7 liquidation to Chapter 13, which lets a debtor pay their debts over a period of time will keeping their property.

Justice John Paul Stevens, in writing for the majority, stated that while honest debtors were entitled to convert their Chapter 7 cases to Chapter 13, a court is entitled to take away that right because of “fraudulent conduct.” Justice Samuel A. Alito, Jr. in his dissent, however, said that the U.S. bankruptcy code was unambiguous in its provision and that the debtor possesses a “broad right” to make the conversion to Chapter 13. Previous to the Supreme Court ruling, a bankruptcy judge had denied Marrama's request to convert to Chapter 13, with a bankruptcy appellate court supporting the ruling.

Chapter 7 Bankruptcy
Chapter 7 bankruptcy, also called liquidation bankruptcy, allows a debtor to have his or her debts become liquidated. Essentially, a bankruptcy discharge under Chapter 7 frees the debtor from being personally liable for discharged debts while preventing creditors from collecting payments or taking other action against the debtor, such as eviction, foreclosure, or shutting down utilities. A court-appointed bankruptcy trustee then liquidates certain assets owned by the debtor.

In order to qualify for personal bankruptcy under the Chapter 7 bankruptcy code, a debtor must pass the means test- meaning that their current income must be less than or equal to the median in their state. If a debtor does not pass the means test, he or she may have to file under Chapter 13 bankruptcy instead.

Continue reading " Fremont Bankruptcy Lawyer Discusses U.S. Supreme Court Says Businessman Has Lost The Right To Convert From Chapter 7 To Chapter 13 Bankruptcy " »

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

Posted In: Chapter 13 Bankruptcy , Chapter 7 Bankruptcy

Bookmark:

Redwood City Bankruptcy Attorney Discusses Chapter 11 Bankruptcy Protection May Be The Only Option, Says The Diocese of San Diego In California, In The Wake Of Sexual Abuse Claims Potentially Costing Over $200 Million

The Roman Catholic Diocese of San Diego is considering filing for Chapter 11 bankruptcy, rather than going to trial regarding the 150 allegations by individuals claiming that they were sexually abused by diocese priests and church officials.

According to a letter by Bishop Robert Brom to parishioners, the bishop said that Chapter 11 could be the only option if the abuse victims could not be fairly compensated without "jeopardizing our overall mission…” he also expressed concern for the “betrayal of trust” experienced by the victims and begged for their forgiveness. He is expected to provide more extensive detail regarding his announcement later this week.

A lawyer for a number of the San Diego plaintiffs, however, says that the diocese has more than enough insurance and assets to settle the claims of clergy abuse. He also claims that the bankruptcy alternative would be one done in bad faith—not because the diocese is insolvent, but because the filing would automatically stay the upcoming trials.

The first case against the San Diego diocese that will go on trial—scheduled for the end of this month—was brought by a Colorado woman who is accusing Reverend Patrick O’Keeffe of persuading her to have sex with him at his parish office when she was just 17 in 1972. Three more trials involving multiple victims who claim that the priests who abused them were moved by diocese officials to different parishes in order to avoid the abuse incidents being exposed to the public are pending.

Continue reading " Redwood City Bankruptcy Attorney Discusses Chapter 11 Bankruptcy Protection May Be The Only Option, Says The Diocese of San Diego In California, In The Wake Of Sexual Abuse Claims Potentially Costing Over $200 Million " »

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

Posted In: Chapter 11

Bookmark:

San Jose Bankruptcy Lawyer Discusses Northwest Airlines Files Its Disclosure Statement As It Prepares To Exit Bankruptcy Protection

Northwest Airlines says it is on schedule to exit Chapter 11 bankruptcy protection during the second quarter of this year. The airline carrier filed its disclosure statement, as well as provided the amended details of its reorganization plan, which values the company at close to $7 billion. The plan needs to be approved by the U.S. Bankruptcy Court for the Southern District of New York, as well as by Northwest’s unsecured creditors.

Northwest is the 5th largest carrier company in the U.S. It filed for bankruptcy protection last September. A court hearing regarding its disclosure statement is scheduled for March 26.

According to Northwest’s proposed plan, holders of general unsecured claims would receive stock valued at 66% to 83% of the claims, which are estimated at anywhere from $8.75 billion to $9.5 billion. Northwest would sell new common stock worth $750 million and let unsecured creditors decide first whether they wish to buy new stock. $1.5 billion/distributions would be given to employees. Current shareholders would not receive any distribution, and current shares would be cancelled.

Chapter 11 bankruptcy
Even when a company manages to successfully exit bankruptcy, the bondholders and creditors usually become the new owners and existing equity shares are usually cancelled.

Continue reading " San Jose Bankruptcy Lawyer Discusses Northwest Airlines Files Its Disclosure Statement As It Prepares To Exit Bankruptcy Protection " »

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

Posted In: Chapter 11

Bookmark: