admin on January 12th, 2009
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In a recent caucus by Congressional Democrats to discuss an economic stimulus plan, a former Labor Secretary said that homeowners should be able to write down the value of their primary residence in bankruptcy court. Currently, only leased investment properties may be devalued by the bankruptcy courts and re-amortized to meet the market’s current conditions and the borrower’s ability to pay.
The nation’s homeowners have seen their property values drop as much as 40% since the start of the economic decline nearly 2 years ago. Over a million homeowners lost their homes in 2007, while bankruptcy courts adjusted the mortgages, to an affordable level, on investment properties for real estate investors. Banks are steadfastly against such a measure in bankruptcy courts, but may agree if the measure includes financial assistance from the remaining $350 billion TARP bailout fund.
Last month, Chairman of the House Financial Services Committee, US Representative Barney Frank (D-MA), threatened to hold up allocation of any additional TARP funds if at least a portion of the funds were not used to aid defaulting homeowners
admin on January 6th, 2009
Lehman Brothers employees and retirees have suffered a loss in a stable-value fund within their retirement plan because of a lack of fund insurance. Lehman Brothers filed for the largest bankruptcy in US history in September of last year. As a consequence of the bankruptcy filing, Lehman had to drop insurance it held against losses within its retirement plans.
Lehman holds approximately $2 billion in retirement funds and $239 million of that fund was invested in stable-value funds offered by Invesco Ltd. Although the loss was relatively low at 1.7%, it was the first time in 14 years a stable-value fund had loss money. Additionally, the lack of fund insurance will not protect investors against the fund’s loss. Stable-value funds are viewed as conservative security holdings and over $400 billion dollars are currently held in US retirement funds. Lehman Brother employees and retirees are the only investors affected by the fund loss.
admin on December 31st, 2008
Circuit City filed bankruptcy last month and has since suffered a 50 percent decline in its gross sales. This decline in sales comes on the heels of the busiest shopping time of the years. The bankrupt electronics and appliance retailer projected a 28 percent decreased in sales after filing bankruptcy. Although the larger decline in sales was unexpected, the holiday shopping was a huge disappoint for retailers across the nation attempting to bolster sales numbers before the year’s end.
The bankruptcy court has approved a $1.1 billion line of credit for the Circuit City during its reorganization. However, some critics believe the company’s task of rising out of bankruptcy is too difficult because of the financing terms and the even tougher economic times ahead.
admin on December 30th, 2008
KB Toys has received permission from the New York Attorney General’s office to honor the over $2million in gift cards this year with its New York consumers. KB Toys recently filed bankrupt and had to receive permission to honor the cards through the holiday season. Although $2 million gifts cards had been sold this year, KB Toys has $12 million in unclaimed gift cards.
The Attorney General’s office is allowing KB Toys to honor the gift cards until January 12th, but is not requiring the toy retailer to accept the gift cards. KB Toys is headquartered in Massachusetts, but operates over 50 stores in the state of New York. KB Toys is closing all of its stores through its Chapter 11 bankruptcy plans.
admin on December 29th, 2008
Polaroid Corp has filed for Chapter 11 bankruptcy protection from its creditors. Seven years ago the instant photograph industry pioneer filed for bankruptcy protection and was later acquired by Petters Group. Polaroid is reported to have over $200 million in debt, but claims its current financial issues stem from it’s parent company’s legal matters.
The founder of Petters Group was arrested in October on mail fraud and money laundering charges allegedly totaling more than $2 billion dollars. Polaroid is also disputing its total debt reported by its parent company.
