admin on December 31st, 2008
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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.
admin on December 20th, 2008
Bankruptcy filings have increased by 30% over the last year according to statistics from the US Bankruptcy Courts. As of November, over 1 million people have filed for bankruptcy. Although bankruptcy is not the end of the road for the person or corporation filing, it does represent a near final option for many facing financial distress.
Many of those filing bankruptcy this past year have been a direct result of the worsening US economy. Individuals and corporations file for bankruptcy to seek protection from creditors. Bankruptcy can provide a debtor some breathing room while assets are sold to pay creditors or a reorganization of finances is made to repay debts.
The three most common forms of bankruptcy are Chapters 7, 11 and 13. A Chapter 7 bankruptcy provides the filer with a “fresh start” as all debts are satisfied and limited to what can be obtained from the liquidation of the filer’s personal assets. A Chapter 13 bankruptcy is a filing process that will allow a consumer to re-organize debts to repay creditors and possibly maintain possession of various assets to include a primary residence. The Chapter 11 bankruptcy is used by companies seeking to reorganization finances whether assets are liquated or maintained.
The bankruptcy courts expect the growing trend of bankruptcy filings to continue while the nation’s economy is expected to continue to slide as the federal and state governments scramble to cure the financial markets.
admin on December 18th, 2008
The Eastern District Bankruptcy Court in Detroit is preparing itself for the possible bankruptcy filing of General Motors Corp, Ford Motor and Chrysler Motor companies. The Detroit court is reorganizing to become more attractive to the automakers should they decide to file for bankruptcy protection. The White House states its reviewing every option to bailout the top 3 automakers and employers of 2.5 million people. If a bailout is not implemented soon the automakers will be forced to turn to a bankruptcy led solution to their financial woes.
The Detroit court decision to allow the Chief Judge to decide which judge sits over each case is one of the most noticeable changes in the court. However, Detroit courts are known to be union empathetic and not favored by the automakers concerned with honoring costly union contracts during reorganization. New York and Delaware remain the top choices for corporations to file bankruptcy since these courts handle over 60 percent of corporate Chapter 11 bankruptcy filings and usually conduct relatively fast proceedings. In addition, the two jurisdictions have been known to overrule union contracts for reorganizing companies with union representation.
Detroit is the home or neighboring major city to the top 3 automakers and a proponent of the auto union’s agendas. The automakers have remained steadfast on its desire to not file for bankruptcy, but have contracted bankruptcy law firms to plan for such an event. Corporations filing bankruptcy in an area outside of its headquartered state must have a functioning unit in the state it intends to file for bankruptcy.
