California Bankruptcy Lawyer Blog

San Jose Bankruptcy Attorney  comments on the biggest bankruptcy filings of the decade.

The first decade of the 21st century saw some spectacular bankruptcy filings among the largest corporations in the United States.  The decade began with the dot-com bust and ended with a grinding recession that took down some of Wall Street’s largest players.  The majority of the bankruptcy filings were Chapter 11 reorganizations, but there were some significant Chapter 7 liquidation proceedings.

Here is a listing of the largest bankruptcy filings of the decade that ends this week:

2001       Pacific Gas and Electric: $36.1 billion – utility was caught unable to sell energy it had purchased for more than it paid.

Enron: $65.5 billion – massive accounting fraud and insider trading scandal brought down one of the world’s leading energy companies.

2002       WorldCom: $107 billion – massive billing fraud forced the second-largest long distance company into what was then the largest bankruptcy in U.S. history.  Company changed its name to MCI and was purchased by Verizon in 2005.

Conseco: $61.4 billion – insurer branched into the mobile home financing industry which proved to be unprofitable and forced the firm into bankruptcy.

2008       Lehman Brothers: $691 billion – by far the largest bankruptcy in U.S. history was at the center of the subprime mortgage collapse.

Washington Mutual: $327 billion – the largest bank failure in U.S. history was caused by the subprime mortgage collapse and the Lehman Brother bankruptcy causing a run on the bank.

2009       Chrysler: $39.3 billion – the first U.S. automaker to file for bankruptcy since Studebaker in 1933 was aided by government intervention and was sold to Fiat.

General Motors Corporation: $91 billion – another government intervention case that resulted in the elimination of the Pontiac and Saturn brands, the sale of Hummer to a Chinese company, and the closing of the Saab unit.

CIT Group: $71 billion – lender to small and mid-sized businesses is still in bankruptcy court after losing $3 billion over two years.

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Bankruptcy Attorney  comments on another Florida casino cruise ship operator filing for bankruptcy protection.

Sun Cruz, a Florida casino ship operator that sails from Port Canaveral, has filed for Chapter 7 bankruptcy protection.  This is the second casino ship operator in Florida to file for bankruptcy protection this year, and a sign that the deepening recession is hitting the tourism economy of South Florida very hard.

In its bankruptcy court filing, Oceans Casino Cruises Inc. , the parent company of Sun Cruz, said it plans to seek a Chapter 7 liquidation and raise funds through the sale of its assets, which consists mostly of the five casino ships it owns.  The Chapter 7 liquidation process primarily involves the sale of a company’s assets and the proceeds of the sale are distributed to the company’s creditors who then relinquish their claims as part of the bankruptcy discharge granted by the court.  A Chapter 7 bankruptcy is also known as a “straight bankruptcy” since most filers are looking for a clean slate and are not trying to retain assets in the bankruptcy.  A Chapter 11 bankruptcy filing is a corporate reorganization, where a company is trying to reorganize its debts and continue operations with a restructured debt agreement.

Sun Cruz has nearly more than 1000 employees on its five ships and the last one sailed on December 13, 2009.  Since that cruise, the company has been moving its vessels from Jacksonville and South Carolina to Port Canaveral in advance of the bankruptcy filing.

Sun Cruz Files for Chapter 7 Bankruptcy, floridatoday.com, December 29, 2009

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Bankruptcy Attorney  comments on the Chapter 11 bankruptcy filing of the Palm Beach Princess casino ship.

The Palm Beach Princess has floated back into bankruptcy court, just one month after being purchased out of bankruptcy court.  Ocean Development I LLC, which purchased the company in bankruptcy court in November, has filed for voluntary Chapter 11 bankruptcy protection as it seeks to reorganize its financing with an unnamed lender.

The Palm Beach Princess carries 175,000 passengers per year on its twice-daily cruises to nowhere.  The company buses passengers in from hotels along the South Florida coast.  The company’s bottom line has been hurt by Coast Guard restrictions on the cruises imposed after the main engine died in September.  The ship has been running on auxiliary engines, but the Coast Guard has required that the ship only sail in optimum conditions and then with an expensive escort of two tugboats.  Because of these restrictions, the ship has missed more than a dozen sailing days, which has cut into revenues and forced the company to seek Chapter 11 bankruptcy protection.

Among the company’s creditors is the Port of Palm Beach, which is owed more than $250,000 in back rent.  Food service company Sysco has filed suit for the more than $50,000 it claims it is owed by Ocean Development.  Employees claim that paychecks are sometimes slow in arriving and have bounced on occasion.  Management is confident that the Chapter 11 restructuring will allow it to establish a firm financial footing.

Palm Beach Princess casino ship files for bankruptcy reorganization, The Palm Beach Post, December 25, 2009<

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Bankruptcy Attorney  comments on the rise, collapse and bankruptcy liquidation of the InkStop store chain.

InkStop, which promised to change the way Americans shopped for ink and toner, has undergone a demise nearly as spectacular as the company’s rise.  In four years InkStop went from an idea to a 14-state operation with 152 stores.  The company closed its doors on October 1 and filed for Chapter 7 bankruptcy protection.  The company listed more than $48 million in debts to more than 1,000 creditors.

The debts include more than $1.1 in wages, vacation, and expense reimbursements owed to 456 employees who are still waiting for their final paychecks.  Depending on how much the Chapter 7 liquidation process brings in, the employees have no idea when, if ever, they will see their paychecks.

The company had a simple concept that unfortunately ran into some management issues and an economic storm that dried up lending sources just as the company was supposed to become profitable.  The economic collapse of 2008 and subsequent freezing of the credit markets dried up the lending sources and made it impossible for the company to pay its vendors. Without cash flow, there was no way to keep InkStop in operation. The company gave the employees one day’s notice that the stores would not be opening the next day and filed for bankruptcy protection.

InkStop’s employees and creditors are in for an uncertain future.  And many of them are still looking for paychecks that may not ever arrive.

InkStop started with a bang and ended with a bust, www.cleveland.com, December 21. 2009

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Bankruptcy Attorney  comments on the 81% rise in small business bankruptcies in California

Small businesses continue to be hit by tight credit markets and a recession that is deeper and longer than any in recent memory.  California has been especially hard hit during the current economic downturn.  Small business bankruptcies have risen 81 percent over the previous year in the 12-month period ending September 30.  The nationwide rise in bankruptcy filings is up 44 percent, according to Equifax, Inc.

Experts estimate that the actual number is higher since many small business owners file for personal bankruptcy rather than for corporate Chapter 7 or Chapter 11 protection.  Many small business owners have self-financed and used personal lines of credit or home equity to finance their businesses, and end up seeking Chapter 7 or Chapter 13 bankruptcy protection for their personal finances.

The Obama Administration is attempting to free up capital for lending by appealing directly to banks, especially those that were given bailout funds as part of the Troubled Asset Recovery Program.  President Obama has appealed to the heads of several banks including Wells Fargo, headquartered in California, which has been especially hard hit.

California has nearly doubled the number of small business bankruptcy filings in the period that ended September, 2009.  Over the last year, the Los Angeles, Riverside/San Bernardino and Sacramento metropolitan areas have led the nation in small-business bankruptcy filings.

Small-business bankruptcies rise 81% in California, Los Angeles Times, December 22, 2009

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Bankruptcy Attorney  comments on the recent Chapter 7 bankruptcy filing of comedian Sinbad

It seems that living above your means, even when your career is on its down side or over is not limited to professional athletes and those who have lost their jobs or had their position reduced.  Comedian Sinbad, a fixture on television and in comedy clubs in the 1980s and 1990s recently filed for Chapter 7 bankruptcy protection when the U.S. government went after his home for payment of more than $8 million in back taxes.

After the government foreclosed on tax liens on a home in California believed to be owned by Sinbad, the actor/comedian filed for Chapter 7 bankruptcy.  According to the government, the home in California is titled in Sinbad’s brothers’ name, but records show that mortgage payments have been made by Sinbad’s company or from his personal checking account.  The payments call into question who is the true owner of the property, which is valued at more than $1.5 million.

Sinbad’s bankruptcy filing is evidently part of his strategy to delay the proceedings while his attorneys seek a deal with the IRS on the delinquent tax payments from 1998 through 2006, when he filed tax returns but made no tax payments.  While tax debts are not dischargeable in bankruptcy, disputed property ownership can slow the process.

IRS wants Sinbad to walk plank, The Detroit News, December 18, 2009

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Bankruptcy Attorney  explains how a change in job status can affect a bankruptcy repayment agreement.

Many people who file for Chapter 13 bankruptcy protection come out of the agreement with a repayment plan that must be completed in order to receive the bankruptcy discharge of their debts.  But what do they do if they lose their job during the repayment plan?  That is what happened in this story.  A couple filed for Chapter 13 protection and the husband lost his job shortly after the repayment agreement was put into place.

The tale of Douglas and Sandra Richards is instructive to show how life events can interrupt the best laid plans. It also shows that the bankruptcy courts are responsive to those events.  In the Richards’ case, the court has granted them a 21 day stay so that they can renegotiate their repayment plan with their creditors.  Mr. Richards’ job loss is tied to his pleading guilty to accepting a bribe from a contractor related to his employment as a county human resources director.

Richards’ bankruptcy attorney is renegotiating the couple’s repayment plan with their creditors during the 21 day stay.  The couple previously agreed to a $250 per month repayment for 44 months.  They were less than 1 year into the plan when Mr. Richards pled guilty to the federal bribery charge.  If you have agreed to a Chapter 13 repayment plan and have had a significant job situation change, consult your bankruptcy attorney and see if renegotiating your repayment plan is an option.  In this weakened economy, job losses and job reductions are a daily occurrence.  It is far better to reopen your repayment plan with the creditors and court than to default on your plan and be denied the bankruptcy discharge of your debts.

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Bankruptcy Attorney  comments on the decline in November bankruptcy filings.

Bankruptcy filings were down in November, but 2009 is still on pace to post a four-year high in bankruptcies, and may reach a total of 1.5 million for the year.  The number of bankruptcies is the highest since the 2.08 million bankruptcies filed before the 2005 bankruptcy reform law went into effect.

The number of bankruptcies was down 12 percent from October, but up 26 percent from November, 2008, according to Automated Access to Court Electronic Records, which is part of Jupiter eSources LLC in Oklahoma City. Total bankruptcy filings for 2009 are at 1.33 million, up 21 percent from 2008.

Commercial bankruptcies declined 13 percent from October and are seven percent below the yearly average of 6,424 per month.  According to AACER, From January to November this year, 71 percent of U.S. bankruptcy filings came under Chapter 7, while 28 percent came under Chapter 13 and most of the rest under Chapter 11.

The total number of bankruptcy filings for the third quarter rose 33 percent over the third quarter of 2008.  The 45,510 business bankruptcies recorded during the first three months of 2009 already exceed the total for 2008, and the number of consumer bankruptcies is 33 percent higher than the same time period in 2008.

Given that bankruptcy is a lagging economic indicator, the number of consumer and business bankruptcy filings may continue to climb for a year or more after any economic recovery takes hold.

US bankruptcies dip in Nov, may hit 1.5 mln in '09, Reuters.com, December 4, 2009

TOTAL BANKRUPTCY FILINGS UP 33 PERCENT IN THIRD QUARTER, Abiworld.com, November 25, 2009

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Bankruptcy Attorney  explains how the mortgage cram-down legislation on Capitol Hill can benefit those filing for bankruptcy protection.

The House of Representatives is moving forward with a mortgage “cram down” bill that has been attached to a larger financial services industry regulation bill.  If the bill is signed into law, it will significantly expand the ability of a bankruptcy court judge to alter the length of a mortgage, the interest rate, and the size of the mortgage on their primary residence for those who have filed for Chapter 7, Chapter 11 and Chapter 13 bankruptcy protection.

The mortgage industry has fought these changes, claiming that they will create even more uncertainty in an already uncertain mortgage industry still reeling from the decline of housing value, the 2008 credit crunch and the recession that has cost millions of American’s their jobs and ability to make their mortgage payments.

Bankruptcy judges are currently allowed to modify mortgages on vacation and second homes, but under the 2005 bankruptcy law, they are not allowed to modify the mortgages of primary residences. Borrowers are first required to seek a mortgage modification directly from the lender.  Under the  “Making Home Affordable Program” lenders are encouraged to reduce the mortgage monthly payment on the borrower to 31 percent of gross income by first reducing the interest rate, lengthening the mortgage term, and then reducing the mortgage amount if necessary.  This legislation gives the bankruptcy court the authority to enact these changes during a bankruptcy discharge if the borrower has already pursued a mortgage modification.

Frank Backs Mortgage Cram-Down in Finance Reform Bill, Bloomberg.com, December 8, 2009

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Bankruptcy Attorney  explains how a short sale or foreclosure can create an unexpected tax bite that a Chapter 7 bankruptcy can prevent.

Given the current state of the economy and the drop in housing values, may people are pursuing short sales to avoid the stigma of a foreclosure on their credit report.  What many of them do not realize is that both a short sale and a foreclosure can lead to unexpected tax hits from the IRS if they used home equity loans when the value of their home is high. If the home equity loan, is forgiven in the short sale or foreclosure, you can owe taxes on the amount forgiven from the second mortgage as taxable income.

This is not the case in a Chapter 7 bankruptcy filing.  In a Chapter 7 bankruptcy, the estate is liquidated, and any erased debts are not taxable by law.  In a Chapter 13 bankruptcy filing, the estate is “reorganized” and the debtor is allowed to pay back some of the debts based on his or her income.  Your bankruptcy attorney can help you sort through the options available to you and can explain any possible tax consequences of a Chapter 13 bankruptcy.

Bankruptcy is not the end of the world financially, nor should it be used lightly.  To that end the 2005 bankruptcy reform law set guidelines on how long a filer must wait before he or she can file for bankruptcy following a Chapter 7 or Chapter 13 bankruptcy filing.

Equity loans come back with a bite, The Press Democrat, December 5, 2009

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.

San Jose Bankruptcy Attorney  comments on the approval of General Growth Properties’ preliminary Chapter 11 bankruptcy plan.

General Growth Properties, one of the nation’s largest shopping center owners, has received preliminary approval of its Chapter 11 bankruptcy reorganization plan. The plan calls for General Growth to restructure its $9.7 billion in mortgage debt on its 92 shopping centers and office buildings.

The terms of the plan call for General Growth to repay all of its debt by extending the terms of the loans for 5.2 years and waiving all fees and the lender’s right to accelerate the debt.   The plan expands on an agreement reached last month to restructure 70 loans with more than $8.9 billion in debt.  The company has properties with $6 billion in debt that will remain under Chapter 11 bankruptcy protection as it seeks to renegotiate its mortgage agreements.

General Growth filed the largest real estate bankruptcy in U.S. history in April with more than $27 billion in debt that was accumulated during an acquisition spree that allowed the company to acquire more than 200 shopping malls and numerous office buildings.

The bankruptcy debt restructuring may make General Growth an attractive acquisition target for one of its rivals, including Simon Property Group Inc. and Westfield Group, both of whom are rumored to be interested in part or all of General Growth Properties.

The Chapter 11 restructuring process will allow the properties that have not yet reached agreement with lenders to use the approved plan as a model for their negotiations.  If the lenders do not agree with the plan, the company has the option of pursuing a “nonconsensual agreement” in the bankruptcy process.  But the already negotiated deals will put a great deal of pressure on the lenders who have not yet reached agreement with General Growth.

General Growth Wins Interim Approval of Debt Plan, Bloomberg, December 2, 2009

If you have a question regarding Bankruptcy in San Jose please contact us at 408.279.2288 or visit www.bkanswers.com and we can connect you with one of our experienced San Jose Bankruptcy Attorneys.  After you have spoken with one of our San Jose bankruptcy attorneys we can schedule you a free face to face appointment in our office location nearest you.  Our team of San Jose Bankruptcy Lawyers can assist you with all aspects of your case. If you are have questions about filing a chapter 7 bankruptcy, a chapter 11 bankruptcy, a chapter 13 bankruptcy, lien stripping, cram down,  stopping a foreclosure or wage garnishment, discharging debt, etc. we can help! We have bankruptcy attorneys located throughout California who can assist your financial needs.  Please feel free to complete our free bankruptcy evaluation and we can quickly determine if you are a qualified candidate for bankruptcy.