The Downturn in Home Furnishings

posted by Soo Yeon (Pia), Shin

Due to the current economic crisis, home related businesses facing hard times just like others industries. The housing market started to fall dramatically along with the economic meltdown. Therefore, anything related to home, including home furnishing, were affected first and worst. Warren Shoulberg, the editor of Home Furnishings News, even stated as, “Other than the auto industry, I think the home furnishings industry has pretty much gotten hit the worst.”

The Home Depot claimed that it would close all 34 Expo Design Center- the Home Depot spinoff, in 13 states, resulting in the elimination of 5,000 jobs. Domino Magazine decided to cease publications after four years of business and 28 issues. It is already the eighth major home design magazines to cease publications since November 2007. Also, the home furnishing retailer, Linens ‘n Things, already went into bankruptcy on April 2008.

The downturn of the home furnishing industry looks pretty dramatic. Ray Allegrezza, the editor of Furniture Today, said, “If you had a billion dollars, you could buy the entire portfolio of publicly traded furniture companies, including Thomasville and La-Z-Boy, and still have money left over to go to McDonald’s.” Those brands are used to be huge, so it was almost impossible to take over like that simply. So, Allegrezza’s statement above shows how extremely the home furnishing industry was affected by dreadful condition in the economic.

References:
http://www.nytimes.com/2009/01/29/garden/29industry.html?_r=1&scp=1&sq=homefurnishing&st=Search
http://www.dominomag.com/
http://www.newser.com/archive-business-news/1G1-187050592/bankrupt-home-furnishings-retailer-linens-n-things-is-closing-its-bedford-and-salem-stores-in-new.html

When is Bankruptcy the Best Option?

posted by Soo Yeon (Pia), Shin

Retail Companies on the verge of Bankruptcy

Posted by Madeleine Brooks

Goody's is Going Out of Business

Posted by: Madeleine Brooks

Goody’s is a privately owned family apparel store. The company was founded in 1953 in Knoxville, Tennessee. Goody’s is an apparel store that is located in twenty states in the Southeast and Midwest regions of the United States. The economy has deeply impacted Goody’s stores that the company filed for Chapter 11 protection in June 2008 because they were unable to negotiate and pay off their creditors. By October 2008, Goody’s shut down 74 under performing stores and filed once again for Chapter 11 protection. Goody’s officially declared they were going out of business and liquidating the 300 stores that were left. The company had approximately 25,000 to 50,000 creditors and 100 to 500 million dollars in assets and liabilities.

Goody’s planned their reorganization by liquidating and shutting down dozens of under performing stores, closing a distribution center, shutting down a corporate office, cut corporate and operating expenses and stop e-commerce business in another distribution center. Goody’s has 8,200 employees when they petitioned for Chapter 11 bankruptcy. The Christmas and holiday season hurt this family clothing chain that they could not pay off their creditors. The cause of all of this is the downturn of the economy and high unemployment rates that people cannot spend as much as they once were able to. All the business in the retail industry got hit hard during the holidays, it wasn’t just Goody’s. Other large companies such as Circuit City and KB Toys filed for bankruptcy and are going out of business as well. Hopefully the U.S. economy will start to pick up sooner than later.

References:

http://www.reuters.com/article/GCA-Economy/idUSTRE50D4MZ20090114

http://www.grundycountyherald.com/news/view_sections.asp?idcategory=3&idarticle=2617

http://www.tulsaworld.com/news/article.aspx?subjectid=298&articleid=20090122_298_0_TAHLEQ452902

Bankruptcy Means More Customers For Lawyers

By Connie Yee

The current economic crisis in the United States has led law firms to restructure their bankruptcy department. Firms are increasing this department by holding seminars to teach junior associates the basic bankruptcy laws, and luring senior bankruptcy lawyers from their rivals. While other practices have seen a decrease in business, the bankruptcy practice has increased by one-third over the past year.

More people are filing for bankruptcy in the past year due to the layoffs, mortgages and the economic downfall. In 2008, Iowa saw a 14% increase (8,000 during the year) in bankruptcy filing, and more are expected for the upcoming year. Due to the number of bankruptcy filings, some lawyers see up to 5 new clients per day. In 2005, bankruptcy lawyers were nearly put out of business due to the change in laws; which made it difficult for consumers to file. Today, there are an estimated 3,200 lawyers in the United States who are members of the National Association of Consumer Bankruptcy Attorneys.

As the economy continues to suffer, the United States is expecting more people to file for bankruptcy. According to the Consumer Bankruptcy Project at Harvard, 1.3 million people are expected to file in 2009. A bankruptcy attorney who works with Chapter 13 (in Southern California) filing typically receives $4000 for the work.

References:
Attorney: Bankruptcy filings expected to rise in 2009
As Mergers and Other Work Dry Up, Bankruptcy Becomes Lawyers’ Oasis
Economic woes lead to bankruptcy boom

Back to School Again!

Back to School Again!
By Rudy Armstrong

As we fight through these hard times in America, facing one of the worst recessions of all time, there tends to be a trend when people lose their jobs. That trend is going back to school to get knowledge in another field. As I read this article titled “Going back to school to get a job” it talks about the hard times that people are going through in this economic crisis. People can’t be discouraged by losing their job, they have to keep fighting and to look forward to the future. That’s the American way, isn’t it? To fight back when times are rough? No one understands the effects of these hard times more than Alan Moniz. He worked in manufacturing for 31 years and now has to go back to school to find a new career in health care. “It takes a lot of work” said Moniz, and yes it is going to take a lot of hard work for people to excel in their careers now. As seniors in college, we have it hard as well. We hate to be the generation known as lazy and spoiled brats; we want to pursue our careers just like our parents. But with this obstacle in our way, this it will become apparent who is fit for the fight and who isn’t. If you would like to read more about this topic, click her for the link to the article.

Bankruptcy Lawyers Seek $18.50 a Minute as Creditors Get Less

By Velida Alemic

Jan. 28 (Bloomberg) -- Lawyers at Kirkland & Ellis LLP, home to former Whitewater prosecutor Ken Starr, are asking as much as $1,110 an hour for bankruptcy work while creditors are recovering less of their loans through company restructurings.

Kirkland requested a top rate equal to $18.50 a minute for advising Tronox Inc. in its bankruptcy, according to court papers filed Jan. 26. Chicago-based Sidley Austin LLP and New York’s Skadden, Arps, Slate, Meagher & Flom LLP also requested hourly rates exceeding $1,000 in the past two months in separate bankruptcy cases, as lenders’ recoveries are forecast by ratings company Moody’s Corp. to drop 22 percent in the recession.

Click to read more

How to Deal With Bankruptcy Law

By Brandon Zimerman

Bankruptcy is a very unfortunate situation and can happen even to seasoned businessman or to a new entrepreneur. To avoid falling into such a trap one should ensure to keep his or her financial health in a very good state. Filing bankruptcy is not an easy job and one has to go through a very complex process involving lot of complex court procedure. Also it badly affects your financial rating for securing loans, which you may need for business development or for your personal requirements at any future stage of your life.

One of the main purposes of bankruptcy law is to give a person, who is hopelessly burdened with debt, a fresh start by wiping out his or her debts. This is very important in today's economy. With people struggling to pay bills and other things, people should start looking at bankruptcy as a solution.

References:
http://legalcatch.wordpress.com/2008/01/17/how-to-deal-with-bankruptcy-law/

Circuit City Files for Bankruptcy

By: Bovemsa Cheung



The electronics retailer Circuit City Inc. are closing the hundreds of stores they own and selling all of its merchandise. We know that the unemployment rate has increased and this is one of the reasons why. Thousands of employees in the United States are being laid off and one of the reasons is because firms like Circuit City Inc. are bankrupt.

The judge approved Circuit City's file for bankruptcy on January 9, 2009 with the U.S. Bankruptcy Court for the Eastern District of Virginia. The firm claims that this was their final option because their creditors and lenders would not agree to give Circuit City time for payments. Circuit City Inc. has started their liquidation process and the retailer’s Web site and call center are no longer in operation.

There are many things that contributed to Circuit City Inc. filing for bankruptcy. Two external factors are the recession and the credit market freeze. An internal factor is the firm’s poor management skills. There was not much that differentiated Circuit City Inc. from other electronic retailers. However the story of Circuit City’s Inc. is not over because there has been word of bidders wanting to purchase this merchant and restructure it.

Sources:
1. http://money.cnn.com/2009/01/16/news/companies/circuit_city/
2. http://www.nytimes.com/2008/11/11/technology/11circuit.html
3. http://www.istockanalyst.com/article/viewiStockNews/articleid/2784047

What Exactly is Bankruptcy?

By Velida Alemic

What is bankruptcy? According to Wikipedia, bankruptcy is a legally declared inability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a debtor ("involuntary bankruptcy") in an effort to recoup a portion of what they are owed. In the majority of cases, however, bankruptcy is initiated by the debtor ("voluntary bankruptcy"). According to Dave Ramsey, creditors have to stop their attempts to collect money and cannot call, write or sue you once bankruptcy is filed.

There are a few different types of bankruptcies. A Chapter 7 Filing which is also called a “straight bankruptcy” involves liquidating all assets that are not exempt. Exempt assets include your car, work-related tools and basic household furnishings. If you are personally filing for a bankruptcy, it does not erase such obligations as: child support, alimony, fines, taxes, and some student loan obligations. A Chapter 13 Filing is a better choice for those who are not willing to lose some of their assets but are willing to retire their debt under a less-pressured structure. Some of their debt may be discharged as well but the rest will be paid back to the creditors slowly but surely.

When you file for bankruptcy, you will have to go to a “341 meeting”, which is a meeting with your creditors and a trustee. The trustee will ask you basic questions like, “Did you list all of your assets?”, “Are the schedules accurate?”, “Have you destroyed your credit cards?”. The meeting is simple, predictable and shouldn’t cause you much stress.

Although the Chapter 7 Filing stays on your credit report for 10 years and the Chapter 10 Filing stays on your credit report for 7 years, bankruptcy is for life and should be avoided as much as possible. Loan applications and many job applications ask you if you have filed for bankruptcy before and of course you can’t lie about it. Bankruptcy is listed in the top 5 life-altering negative events that a person can go though, along with things like divorce, disability, severe illness and loss of a loved one. Bankruptcy is not the end of the world, but it should be avoided at all costs!

References:
http://en.wikipedia.org/wiki/Bankruptcy
http://www.daveramsey.com
http://www.moranlaw.net/341.htm

Alternatives to Bankruptcy

By Sarah Reilly

Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Under the U.S. Constitution, you have the ability to relieve all or part of your debts when you can no longer meet your obligations to creditors or lenders. The major types of bankruptcy are Chapter 7 and Chapter 13. Chapter 7, which allows debtors to discharge all or part of their debt, and Chapter 13 allows debtors repay all or part of their debt based on a payment plan. For many people they have a hard time making the decision to file for bankruptcy because they fear the repercussions or loss of their assets.

For these people there is hope because there are alternatives to filing for bankruptcy. One such alternative is talking to the creditors and negotiating with them to lower interest rates, increase the time between payments or even asking them to forgive some of the debt. Many creditors would be willing to work with a debtor to get their money back then have to deal with all the legal logistics of a debtor who has filled for bankruptcy.

Other options include working with a third party to design a payment plan or become a participant in a debt counseling management program. These types of programs are designed to help you come up with a plan on how to get your finances back on tract.


References:
http://www.bankingquestions.com/bankruptcy/2008/q_1121_bankruptcy.html
http://credit.about.com/od/debtmanagementsolutions/a/bankruptcytypes.htm
http://www.nolo.com/resource.cfm/catID/575C3BE9-F0C1-448E-B5F43D22FE36E9F2/213/161/176/

A Prepackaged Bankruptcy Plan Can Save You Money!

By Tsu-Han (Ina) Chang

Legal fees, accounting fees, and time are just some of the costs incurred by the debtor when filing for bankruptcy. However, in a time of financial distress, how can a “prepackaged bankruptcy plan” help save the company from spending more money?

When a debtor is in financial trouble(s), they can file for bankruptcy. However, before this occurs, the debtor can negotiate a prepackaged bankruptcy plan with the lender/creditor. The purpose of the plan is to essentially allow the company to reorganize the company as to quickly return to operations and hopefully generate revenue once more. Although the plan may fail, it is a risk-free extension of time given to the company in trouble. This plan is considered to be risk-free in that it serves to eliminate the costs and delays often associated in a bankruptcy case. However, the prepackaged bankruptcy plan also protects the lender/creditor by returning the title back to the lender/creditor in the case reorganization fails.

There are eight basic parts to a prepackaged bankruptcy plan:
1. The lender is to be released from all lender liability claims.
2. Any and all cash flow will be handled in a manner previously agreed upon by the lender and the borrower.
3. Under Chapter 11, the borrower is given a set period of time to attempt to sell off its assets in order to pay the lender/creditor.
4. If no sale occurs during the period, the lender will have the option to conduct a foreclosure sale.
5. If after the foreclosure sale, the lender has yet to be fully paid off, the title to the remaining property will be transferred the lender.
6. The borrower cannot delay any foreclosure proceedings.
7. A compensation agreement executed by a third party then becomes effective after the foreclosure proceedings in order to assure the lender receives the title on the final date.
8. The lender is responsible for costs generated during this process.

It is important to remember that the prepackaged bankruptcy plan must be voted on by the company’s shareholders prior to filing for bankruptcy.


References:
http://www.firstam.com/content.cfm?id=3148
http://investopedia.com/terms/p/prepackagedbankruptcy.asp?viewed=1
http://www.newyorker.com/online/blogs/stevecoll/2008/11/prepackaged-ban.html

Money makeover for Couples

By Rudy Armstrong

I found this article while I was scrolling through CNNmoney.com; it is about personal finance while in a relationship. The article talks about a couple’s decision making while trying to fulfill their own personal goals and how they have to compensate for one another as for being in a relationship.

Full link is below

(Money Magazine) -- There are certain things that Charlie and Sandy Hicks love to do together - like ski, hunt and hike with their two sons near their Livermore, Colo. home. Then there are things the Hickses hate to do as a couple - like invest their money.

Sandy, 48, notes that she and her husband "have completely different mind-sets" when it comes to managing their portfolios. "I'd rather buy mutual funds," says Sandy, who used to keep 100% of her 401(k) in equities.

Under most circumstances, "Charlie would rather keep everything in a checking account," she says. Well, that's a bit of an exaggeration, though Charlie, 49, does hold about two-thirds of his 401(k) plan in fixed income.

http://money.cnn.com/2009/01/22/pf/makeover_opposites.moneymag/index.htm?postversion=2009012206

Smurfit-Stone Container Files For Bankruptcy Protection

By Brandon Zimerman

Smurfit-Stone Container Corp. (SSCC) said Monday that its U.S. and Canadian units have filed for bankruptcy protection as the packaging and containerboard company looks to restructure its debt and improve profitability.

The company had warned lenders earlier this month that it could file for bankruptcy amid weakening sales and a cash crunch.

Chief Executive Patrick Moore said the company's performance hasn't reflected its potential "due to higher cost operations and burdensome debt levels dating back to the original formation of the company."

click below to read more
http://money.cnn.com/news/newsfeeds/articles/djf500/200901260651DOWJONESDJONLINE000159_FORTUNE5.htm

From Loans to Bankrupt

By: Bovemsa Cheung

















When KB Toys filed for bankruptcy on Dec. 11, the troubled chain didn't even bother to try to stay in business. Management already had realized it would be impossible to borrow money to pay suppliers, retool the merchandise mix, and fund day-to-day operations--all critical for the company's survival. A week later the retailer moved to shut down and close its 461 stores.

With the economy rapidly deteriorating, thousands of companies are rushing to bankruptcy court in a last-ditch attempt to reorganize and improve their fortunes. Trouble is, their main source of cash is quickly evaporating. Loans to companies in bankruptcy, known as debtor-in-possession financing, have dropped from $7.9 billion in the second quarter of 2008 to $2.9 billion in the fourth quarter, according to data provider Deal Pipeline.

Without that financial lifeline, more businesses will abandon revival plans in favor of liquidation. While some purging is necessary, the worry is that the corporate contraction will be more painful than in past downturns and will only exacerbate the economy's woes. "Numerous bankrupt companies are just going to go away," says Stephen J. Czech, chief investment officer at hedge fund SJC Capital Partners, which makes corporate loans.

Click to read more

How to File Bankruptcy

Posted by Sarah Reilly





Filing for bankruptcy involves choosing between a Chapter 7 or Chapter 13 bankruptcy and should be done with the aid of a lawyer. Consider credit counseling before filing for bankruptcy with tips from a certified public accountant and credit counselor in this free video on debt management.

Bankruptcy Myths

Connie Yee

Are you Eligible to file for Chapter 7 Bankruptcy?

By Madeleine Brooks

What is Chapter 7 Bankruptcy? For individual persons, Chapter 7 Bankruptcy allows you to liquidate your assets. For a business, Chapter 7 is when the business is heavily in debt and cannot pay off its creditors. As a result, the business must liquidate its assets and dissolve the operations of the business. Chapter 7 Bankruptcy is the most common filing in the United States.

There are eligibility rules for individuals filing for bankruptcy. The test measures your “current monthly income” against a median income for a family of the same size in your state. The current monthly income is an average of the income you bring in over the last six months. If your current monthly income is less than or equal to the median income, you are eligible to file for Chapter 7 bankruptcy.

If your current monthly income is more than the median income, you must pass the “means test”. The objective of a “means test” is to determine if you have enough disposable income after deducting allowed expenses and required debt payments. This is for you to be able to repay a part of your debts over a five-year time frame. Click this link and you will be able to use a “means test calculator” to see if you are qualified to file for Chapter 7.

Sources:

"Chapter 7, Title 11, United States Code." Wikipedia. 19 Jan. 2009. 24 Jan. 2009 .

"Nolo's Bankruptcy Means Test Calculator." Nolo. 24 Jan. 2009.

"Who Can File for Chapter 7 Bankruptcy?" Nolo. 24 Jan. 2009.

Managed Bankruptcy for the Auto Industry

Posted By: Tsu-Han (Ina) Chang

After Chrysler decides to take a month off, U.S. suggests a prepackaged filing may be the way to go.

It's like a game of poker where you can't figure out who is bluffing. The U.S. government on Thursday indicated it was considering managed bankruptcy as an option for the auto industry, a day after Chrysler said it would close all of its factories for a month, idling 46,000 workers.

Chrysler's move may in part be a ploy to gain public sympathy and government funding, but it makes itself look too pathetic, other solutions might present themselves.

"There's an orderly way to do bankruptcies that provides for more of a soft landing--I think that's what we would be talking about. That would be one of the options," said White House spokeswoman Dana Perino on Thursday.

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People Going Bankrupt

Here is a video clip from CNN.



posted by Madeleine Brooks

Bankruptcy impacts Divorce

The New Bankruptcy Law and Its Impact on DivorceAs anyone who has been married knows, financial difficulties put a lot a stress on a marriage and are often the catalyst for a divorce. For that reason, I've turned to a colleague, T. J. (Tim) Mullin, a highly regarded attorney who specializes in representing individuals wishing to file for bankruptcy.Not surprisingly, Tim speaks enthusiastically about the benefits of bankruptcy.

As Tim sees it, going bankrupt relieves the financial stress and could save your marriage, or at least straighten out your financial house so everyone has a clean slate after the divorce. As Tim proclaims, why put your marriage under such pressure when bankruptcy "can shift the debt burden back on the banks and credit card companies who are in a much better position to handle it"?

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Bankruptcy may ruin your credit

posted by Boyce Watkins