Wednesday, September 30, 2009

Extended Stay Hotel Chain Files For Bankruptcy

By, Amy Nightingale

Extended Stay Hotels is a privately owned hotel brand that operates in the extended stay hotel market. The chain operates over 680 hotels with approximately 76,000 rooms across the United States and Canada. They cater to budget conscious travelers who are looking for value over elegance. David Lichtenstein acquired the chain in 2007 for eight billion dollars. This occurred at the peak of the real estate market and the first mortgage was estimated to be $4.1 billion dollars.

In June, it was announced that the company filed for bankruptcy projection. They proceeded by proposing a plan supported by creditors to enable them to get their money back. However, it would wipe out $4.8 billion in debt which would hurt most of the existing creditors.

Currently, the bankruptcy lawsuit is beginning. Ralph Mabey, an ex-bankruptcy judge was chosen by a New York Bankruptcy Court to investigate further into the acquisition of Extended Stay.  Starwood Capital Group, another leader in the hotel industry is attempting to take control of Extended Stay Inc. They would buy Extended Stay’s $4.1 billion dollar first mortgage which was put into commercial mortgage-backed securities. 


Six Flags Goes Bankrupt

Six Flags attracts over 25 million visitors a year to its 120 roller coasters and other attractions, yet even with these numbers the company is not doing well. Just this past June Six Flags filed for Chapter 11 bankruptcy protection. More recently, the CFO Jeff Speed announced that it will take 4 to 6 months for the full reorganization of the company to occur. Six Flags was listing assets of $3 billion and debt of $2.4 billion as of December 31. They are seeking court approval of a prearranged reorganization plan to cut its debt by about $1.8 billion and to eliminate more than $300 million in preferred stock obligations, the company said in a statement. Their shares have also dropped by 98 percent since November 22nd 2005. Six Flags was delisted from the New York Stock Exchange in April.

As a result of all this turmoil, the company plans to discount passes for 2010 in order to counteract the suffering economy. They’ve announced that their newest attraction next season, the Tornado, will be a 60-foot funnel-shaped water ride that will be part of Hurricane Harbor Water Park. Their other rides will continue to attract their customers.
By: Kelsey Hoffman

Tuesday, September 29, 2009

How Living Wills Could Help Banks

Posted by: Lily Mei

If any element of the global banking crackdown is vulnerable to being kicked into the long grass, it is “living wills.” The idea is for banks to create contingency plans for safely dismantling themselves if they were to fail in a crisis. It is a difficult project and some leaders, including Britain’s chancellor of the Exchequer, Alistair Darling, want work to start sooner rather than later.
In theory, living wills would minimize systemic risk by providing central banks with a road map for supporting, nationalizing or abandoning problem institutions, or parts of them, especially if they have operations all over the world. When Lehman Brothers collapsed, for instance, it was impossible to transfer some essentially healthy businesses to new owners. There were too many legal entities in different countries. A clearer and simpler legal structure could have reduced the pain.
Global banks need to have a fragmented anatomy to be capable of being broken up easily. But as things stand, they are so complex that any attempt at dismantling them would be like unscrambling an egg. The complications largely results from structures designed to minimize tax. But while an increase in the tax revenue from banks would be an indirect bonus of living wills for governments, it shouldn’t be the government’s sole reason to allow them.
In practical terms, the goal should be for many banks to look more like HSBC. The lender’s major subsidiaries are all incorporated entities, with their own capital bases and balance sheets. At the moment, most banks look more like Barclays. A single firm dealing with the bank might have contractual arrangements with a dozen or more legal entities in several jurisdictions, but capital is held at group level.
The shift would require many lenders to undergo substantial legal reorganization. This could take more than five years, say bankers.. There is also a risk that if living wills are transparent or easily deduced, banks could become the target of mischief from, say, hedge funds.
But these aren’t reasons to defer work on living wills.

Monday, September 28, 2009

The Bankruptcy Files: Simmons, Velocity Sold in Chapter 11

The Bankruptcy Files: Simmons, Velocity Sold in Chapter 11

By, Brian Baxter

Posted By: Amy Nightingale

Leading U.S. mattress maker Simmons Company is the latest retailer to succumb to economic pressures. On Friday, the company announced a bankruptcy reorganization plan that will result in the sale of the bedding company to a private equity consortium.

The second-largest mattress maker in the U.S. by revenue, Simmons follows smaller competitors like Dial-A-Mattress into a Chapter 11 slumber that has resulted in the company's sale to a new buyer.

Weil, Gotshal & Manges bankruptcy partner Michael Walsh, M&A partners Steven Peck and Joseph Basile, finance partner Kelly Dybala, antitrust cochair Helene Jaffe, and tax partner Scott Sontag are advising Simmons on its bankruptcy and subsequent sale to Los Angeles-based private equity firm Ares Management and the Ontario Teachers' Pension Plan.

To read more click here

Auto-parts maker Holley files for bankruptcy

WILMINGTON, Del., Sept 28 (Reuters) - Holley Performance Products, a maker of high-performance carburetors and automotive fuel-injection systems, filed for bankruptcy on Monday, its second filing in less than two years.
The privately held company, which is a major supporter of drag racing and NASCAR racing, said in court documents that sales have fallen as much as 40 percent since it emerged from bankruptcy last year.
In addition, the company's business supplying emission control components to vehicle makers suffered as a major customer, Caterpillar Inc, discontinued a line of truck engines.
Thomas Tomlinson, the company's co-chief executive and chief financial officer, said in court documents that Holley has been negotiating with holders of the company's first-lien secured debt to restructure its finances.
The company rejected a forbearance proposal by debt-holders including Wells Fargo Foothills Inc, as the administrative agent, and Regiment Capital Special Situations Fund IV LP, which Tomlinson said would have taken $2.5 million out of the business.

Posted by Kelsey Hoffman

Sunday, September 27, 2009

Bankruptcy Judge Clears Sale of Cubs

Posted By,

Meredith Anderson

WILMINGTON, Del. - A federal bankruptcy judge cleared the way Thursday for the Tribune Co. to sell the Chicago Cubs and the storied Wrigley Field to the family of billionaire and longtime fan Joe Ricketts.
Judge Kevin J. Carey authorized Tribune to sell the family a 95 percent stake in the team, the stadium and related sports properties for $845 million.

The deal also needs approval from three-quarters of Major League Baseball's 30 team owners. The owners have not scheduled a vote on the Cubs sale, although one could come as soon as their meeting in November.

Lehman Brothers Bankrupt, Creditors Looking for Their Money

By: Sara Sindelar

Lehman Brothers collapsed back in September 2008 at the start of the financial crisis. As we all know the impact this one company’s collapse made on the economy worldwide. With thousands of jobs lost, billions and billions of dollars lost it was a day to remember. Now, a year later, they are in court working with their bankruptcy filing.

Lehman Brothers Bankruptcy is still feeling the heat as creditors are knocking at the door for their share. After they filed for bankruptcy in September 2008 they have been working through the steps and battling in court. Last week 16,000 creditors knocked on the door for their money. Lehman is still waiting for many creditors paper work to come through making an estimated total of over $1 trillion worldwide. New York City filed for their payback amounting to over $1 billion and with the order that they would be paid first. Other companies like Morgan Stanley Capital filed for over $1 billion and Abu Dhabi Investment Authority filed for roughly $610 million as well as companies like Giants Stadium LLC.

These creditors are coming from all over the world. Many companies from Belgium filed for claims totaling over $700 million. The US Bankruptcy court set a deadline for creditors to file by September 22 though there are some exceptions with a deadline of November 2. The total amount in loss by creditors will not be known for quit some time.


Bankruptcy Judge Gives O.K. to Sale of the Cubs

POSTED BY: Sara Sindelar


A federal bankruptcy court judge in Delaware on Thursday approved the Tribune Company’s $845 million sale of the Chicago Cubs to the family of Joe Ricketts, the founder of the TD Ameritrade discount brokerage. One of his sons, Tom, will be the controlling owner.
The sale still must go through a Chapter 11 bankruptcy filing of the Cubs on Oct. 12, to divest the team of debt associated with Tribune, and a three-quarters vote of Major League Baseball owners. The team’s bankruptcy process is expected to be quick and could be approved at a hearing scheduled for Oct. 13.
In signing the approval order, Judge Kevin J. Carey said, “The evidence demonstrates” that Tribune “has a sound business reason” for the transaction. He wrote in the order that the sale “represents the best proposed transaction for the Cubs business,” and that the Ricketts family has “acted reasonably, properly and in good faith.”
Carey will also preside over the Cubs’ bankruptcy.

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Thursday, September 24, 2009

No Bankruptcy in Knowledge

Posted by Ka Lee Angel Lee

As tuition rate continues to grow, many students turn to private student loans to bridge the difference between federal student loans and school fees. This is a very risky way to pay for college. This is said to be similar to paying for tuition using a credit card.
Recently, federal bankruptcy law has adjusted bankruptcy code to provide private student loan borrowers fairer treatment during the bankruptcy process and an advantage over borrowers. This is done to protect students from financially riskier private student loans as well as predatory lending practices.
While the bankruptcy law forbids almost all borrowers from discharging their private student loan debt, student loans have fixed interest rates, flexible payment plans and consumer protections to make it easier for borrowers. This is very sensible since education is not like other consumer goods that can be repossessed or liquidated when the lender wants to collect the money lent. Knowledge and the degree earned can be reused and nobody can them away. Therefore guidelines for loans that can be discharged should be made very strict.

SunCal, Lehman Bros. fighting in bankruptcy court

Posted by: Andrew Pia

Bankruptcies can be a bittersweet breakup for even the best and most respected business partnerships. SunCal Cos. and Lehman Bros. Holdings Inc. are currently in a heated bankruptcy dispute over many assets including a development for 313 luxury homes overlooking the Pacific Ocean south of Los Angeles.

Both sides have presented valid points to bankruptcy judge Eric A. Smith, who faces a tough decision before October 15. SunCal is questioning the validity and legality of several of Lehman's transactions as sales rather than negating the trading of bank debt.

These infractions would put SunCal in a better position to claim the enormous settlement off the sale of the lucrative asset. SunCal has argued that Lehman failed to disclose that it no longer owned the loans and that it was acting as an agent to Fenway Capital, the current owners.


Bankruptcy Laws

Posted by: Lindsey Connell

There are 94 financial judicial districts and they all handle bankruptcy matters, seeing how bankruptcy cases cannot be filed in state court. Bankruptcy laws are meant to give those in extreme debt a second chance by liquidating their assets or creating a plan for the person to repay their debt. These laws not only protect individuals, but also large companies as seen in today’s society with many companies choosing to go bankrupt due to the bad economy. In the past, bankruptcy laws were only temporary and were lifted when the economy was booming but today, these laws are set in stone. As of 2001, laws are in the works to make it more difficult to file for Ch 7 bankruptcy (complete dismissal) which would force people to create a repayment plan as stated in Ch 13. The Ch 7 laws deal with liquidation and are the most common type of bankruptcy filing because it liquidates a debtor’s assets and repays this way. Ch 11, 12, and 13 deal with rehabilitation and through this, the debtor’s future earnings are used to pay back creditors. People tend to choose to file for Ch 7 because it allows them to be out of debt quickly whereas with the rehabilitation route, they must pay back with their income over a longer period of time.

Financial Bankruptcy vs Moral Bankruptcy

By: Scott Graulich

What does bankruptcy say about a person? We only have to look at the most recent arrest of the suspected terrorist, Najibullah Zazi, the 24 year old airport shuttle bus driver from Colorado. There is a great deal of proof that he was plotting to blow up various sites in New York, murdering and maiming a lot of innocent people. Five months ago he ran up over $50,000 in credit card bills and then simply declared bankruptcy. In effect, Americans are paying for plots to blow up innocent Americans.

Zazi knew how to play the system, like many people who declare bankruptcy. It has become a game where hardworking, honest people are the losers in the end. Bankruptcy should be a temporary status that should always be paid back in full when the person recovers.

Allowing people to declare financial bankruptcy on a whim, has produced a culture of morally bankrupt individuals who share no guilt in hurting innocent people and companies who have given them products and services, trusting that they will be compensated. The intentions of allowing bankruptcy are noble, yet the results on society are


Wednesday, September 23, 2009

Tavern on the Green Files for Bankruptcy

Posted by Pete Hill

On September 8, 2009, Tavern on the Green filed for Chapter 11 bankruptcy. The CEO of Tavern on the Green stated that the decision came as a result of the extreme financial distress during this economic crisis and the city of New York not to renew their lease.

Tavern on the Green is one of the largest independently owned restaurants in the United States. It is located in Central Park and has been a landmark since it opened in 1934. The restaurant never desired to be anything more than a spectacle, which makes its bankruptcy a little more understandable.

Tavern on the Green is still open until its lease ends at the end of the year. As a result, there are determined to honor all of their obligations to employees and customers. Just four months before it was supposed to yield its license to another operator, one of the highest grossing independent restaurants has to unexpectedly file for bankruptcy.

With the United States starting to get a foot hold on this downward spiraling economy, hopefully Tavern on the Green will continue to do what it has since 1934.


Crocs Dealing with Bankruptcy

Crocs Dealing with Bankruptcy
By: Christina Dove
In 2002, Crocs emerged as a new trend following a recession. Everyone was buying them from children, parents, celebrities, older people, etc. Their stock was doing as well as their reputation, everyone wanted a pair of crocs and they were a relatively cheap investment at $30. But then the economy went south and the demand for crocs was dwindling. They tried to add a little variety with flip flops and decorations for the tops of the shoe, but all in all the company was struggling to stay afloat.
Crocs were no longer being sold out everywhere, in fact there was an overstock of the shoes and not enough demand. Knock-offs also significantly hurt their sales. Some experts are comparing the shoes to Heelies, which pretty much went extinct and the onset of the economic crisis as well.
The future does not look bright for Crocs since it is a difficult time for any business to be making a profit right now. Also, people do not need to replace their crocs very often and most likely would not be buying luxury items in this time. Crocs is going to have to significantly alter their business model if they want to have positive results in the future.

Tuesday, September 22, 2009

United States Bankruptcy Courts

Posted by: Lindsey Connell

Each of the 94 federal judicial districts handles bankruptcy matters, and in almost all districts, bankruptcy cases are filed in the bankruptcy court. Bankruptcy cases cannot be filed in state court. Bankruptcy laws help people who can no longer pay their creditors get a fresh start by liquidating their assets to pay their debts, or by creating a repayment plan.

Bankruptcy laws also protect troubled businesses and provide for orderly distributions to business creditors through reorganization or liquidation. These procedures are covered under Title 11 of the United States Code (the Bankruptcy Code). The vast majority of cases are filed under the three main chapters of the Bankruptcy Code, which are Chapeter 7, Chapter 11, and Chapter 13.

Filing for Bankruptcy
Bankruptcy basics provides basic information to debtors, creditors, court personnel, the media, and the general public on different aspects of the federal bankruptcy laws. It also provides individuals who may be considering bankruptcy with a basic explanation of the different chapters under which a bankruptcy case may be filed and answers some of the most commonly asked questions about the bankruptcy process.

Click here to read more

Doll & Doll files Chapter 11 bankruptcy

Posted by: Scott Graulich

Financially troubled Doll & Doll Motor Company, which operates Rob Doll Nissan in Columbus, filed for Chapter 11 bankruptcy protection late last week.

The company listed between $10 million and $50 million in estimated liabilities and between $1 million and $10 million in assets, according to documents on file with the U.S. Bankruptcy Court, Middle District of Georgia.

It was filed Thursday. Chapter 11 bankruptcy is often used by businesses to restructure debt.

Doll & Doll Motor President Rob Doll said Monday morning he doesn’t know where his companies go from here, but he added, “We’re still in business. We’re still servicing cars.”

Click here to read more

Life After Bankruptcy is Uphill Battle for GM

Posted by Kenny Hernandez

General Motors' rapid trip through bankruptcy is done. Now comes the hard part.

To start, the automaker has to stem a decades-long slide in U.S. market share.

Despite having made significant progress closing the labor cost gap, GM still faces significant costs, such as those for underfunded pension plans, not faced by its nonunion Asia rivals.

Click here to continue reading

Top issues unsettled in casino bankruptcy
Creditors question Greektown's value as process nears end

posted by Ka Lee Angel Lee

Greektown Casino's bankruptcy is headed into its final stretch, yet some key issues remain unresolved.

Its unsecured creditors and bondholders have questioned how the casino's worth of $540 million -- which leaves them with nothing -- was calculated. Bondholders alone are owed $185 million that would not be recovered.
Meanwhile, the legal bills keep mounting and the casino's valuation may count on revenue that doesn't materialize in the recession, said turnaround expert Ken Dalto of Farmington Hills.

Monday, September 21, 2009

Why do so many NFL players go bankrupt?

Posted by: Andrew Pia

Within two years of retirement, 78 percent of NFL players are bankrupt or in severe financial distress. Unlike Rocket Ismail, most of those players can't blame it on the negative karma associated with getting a bear hug from Michael Irvin.

How is this possible? The minimum salary for rookies in 2009 is $310,000. That jumps to $460,000 for two year veterans. How can men who earn so much have so little after retirement?

The Business Insider looked at that question today and listed 10 ways that sports stars destroy their finances. Most of the reasons fall under the umbrella of one of the ways, "Act Dumb." (These include "Do Drugs", "Fight Dogs", and "Have Too Many Children". Two outta three ain't bad, Michael Vick).

Written by: Chris Chase

A Grand Spectacle Frozen In Time

Posted by Pete Hill

Everything is exactly the way you remember it. The horse-drawn carriages still idle by the awning, although now they share the driveway with pedicabs. The grand and goofy topiary circus animals still loom over the patio. The psychedelic funhouse hall of mirrors and colored glass still slinks its way past the gift shop before disgorging you into the soaring glass-enclosed Crystal Room. And when you get there, you still stop and stare.

After more than three decades in this incarnation, Tavern on the Green remains a sight to behold. But the restaurant never bestirred itself to become more than a spectacle, even as a gastronomic revolution gripped the United States, which makes its startling collapse into bankruptcy last week a little easier to fathom.

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Star Tribune to emerge from bankruptcy, no new publisher named

Posted by: Christina Dove

A federal bankruptcy judge on Thursday approved a plan for the Minneapolis Star Tribune to exit Chapter 11 bankruptcy later this month. But owners of the Minneapolis paper haven’t named a CEO or publisher yet.
The plan, approved in U.S. Bankruptcy Court for the Southern District of New York, has the Star Tribune emerging from bankruptcy on or around Sept. 28. The paper’s senior secured lenders will hold approximately 95 percent of the stock to be issued by the post-bankruptcy company. The company’s debt will be $100 million, down from $480 million at the time of its filing.

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Saturday, September 19, 2009

Corporate Bankruptcy is Stealing

By: Scott Graulich

Lawyers have figured out a way to steal money from hardworking Americans and congress has helped them. Let's take two examples of what recently happened in two well known bankruptcies. Washington Mutual Bank executives made some very bad decisions, giving loans to undeserving customers which forced the bank into bankruptcy. Shareholders, pension plans and investors were conveniently wiped out completely. The bank was then purchased by JP Morgan Chase who continues to operate the bank and make money. Therefore the brand and all its assets are alive and well while everyone who put money into the stock has suffered greatly. It just does not make any sense.

The second example is General Motors. Suppliers, creditors and investors were all wiped out and General Motors can start a new without any obligation to previous individuals and companies who helped them succeed. These two examples send a horrible message to America about responsibility. It will have terrible implications, not only financially, but morally in our society.


Thursday, September 17, 2009

Airline, media and auto companies risk bankruptcy

Posted by: Scott Graulich

NEW YORK (Reuters) - U.S. companies in the airline, automobile, television and publishing industries are about four times more likely to file for bankruptcy in the next year than companies in other industries, according to a study.

The study by Audit Integrity, which usually analyzes accounting risks, used a quantitative model to track liquidity, debt levels, profitability, market prices and governance and fraud risk measures at more than 2,500 companies.

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Bankruptcies have made us stronger

Posted by Kenny Hernandez

A lot of questions have been asked about where the economy is right now. Whether it is healthy and whether we are out of the recession seem to be the most prevalent questions. Ben Bernake, Chairman of the Fed, has said that he believes we are no longer in a recession and the economy is growing. How fast the economy is growing and challenges that lie ahead of us, however, are still very unclear.

Warren Buffet has been quoted as praising the US government and their actions to weather the financial storm that was caused by the meltdown of many banks and large financial services companies. Buffet also went as far as to say that Ken Lewis may have inadvertently helped save the financial system when Bank of America bought Merrill Lynch.

Nevertheless, with all these events that occurred, it can be said the economy will come out better than it was before the recession. It is hard to believe with the unemployment being around 9.7% but one thing that the economy has now that it didn’t really have before is fear. Fear will allow us to save more in anticipation of another catastrophic market meltdown as well as better mitigating risk, even when times are going well.

Bankruptcy is Not the Way Out

by Ka Lee Angel Lee
In the state of jobs drying up and increasing mortgages rates, more people are taking on credit card debt to bridge these gaps. As debts accumulate, people are having a hard time paying their creditors back. To get out of debt, a lot of people will look to file bankruptcy hoping to get rid of their debts. However, this is a deep hole you are stepping in and you never know when you can get out of it.
The reason why we should avoid bankruptcy is that bankruptcy can badly hurt our credit score by about 200-250 points and stay on our credit report for 7 to 10 years which make us almost hopeless getting new loans or credit in the near future. Even worse, you may not even be able to rent a car. Nevertheless, you may lose your properties and creditors may repossess properties that they hold a lien unless you have federal/state exemption. Last but not least, your retirement savings may be taken to pay off your debts because there is a limit to how much retirement savings is protected under the laws.
Declaring bankruptcy is not a way out when we are in debt. It is more like letting others to control and reassign our assets from then on. It is not going to get us more freedom. In the situation of deep debt, we should seek debt help services like debt settlement and consolidation programs. Look for experts’ advice and make decisions appropriately.


Wednesday, September 16, 2009

Airline, media and auto companies risk bankruptcy

Posted by: Andrew Pia

Nearly a year after the downfall of our economy, bankruptcies continue to become very prevalent. Auditing studies have shown that the industries with the highest risk of bankruptcy within the next 12 months are primarily the auto, airline, and media industries. In a study done by Audit Integrity, the companies with the highest risk of future bankruptcy include Rite Aid Corp at 10.5 %, Sirius XM Radio Inc. at 9 %, and American Airlines at 8 %.

General Motors has however served as a model for the avoidance of bankruptcy in the auto industry. While may auto makers are in danger of filing for Chapter 11, the mistakes made by GM have seemingly not helped fellow automakers deal with threatening situations. Mercedes and BMW are currently at a high risk of losing many of their valuable assets. Germany's premier automakers have been hit hardest by the economic slump due to declining sales of luxury cars and an increasing shift to more compact vehicles. Mercedes' management is currently under fire; mirroring similar managerial moves to that of General Motors.

Factors That May Increase Personal Bankruptcy

Posted by Lindsey Connell

Bankruptcy filings have continued to rise year after year but the numbers in 2009 indicate a downward spiral. There are many factors that may increase personal bankruptcy such as natural disasters, high income rates, and mass layoffs. Natural disasters occur all around the world but a recent disaster occurred with Hurricane Katrina, resulting in a devastating amount of people left homeless. Because of occurrences like this and others, people may choose to file for bankruptcy to in a sense “start over” because what they had before was now gone. Bankruptcy may not even be a choice for those who were forced to take out another mortgage loan, keep up with the interest payment of credit cards, and medical expenses.

Also, interest rates on credit cards are continuously increasing causing many individuals and companies to either rethink their current situation of look to bankruptcy. Another factor is with mass layoffs, and this is seen especially in the past two years. With the economy so down today, many companies are making cost cuts by laying off current employees. This results in workers losing their jobs and having no source of income. Some other factors that could lead to bankruptcy are reduction of personal savings, increase in consumer debt, and changes to bankruptcy law.

Tuesday, September 15, 2009

A Year After Lehman's Collapse, Banks Try New Path

Posted By Pete Hill

It was just a year ago that Lehman Bros. filed for bankruptcy. The claim for bankruptcy by Lehman Bros. was said to be an important factor in the upending of the financial world. In just one year the banks have experienced financial terror and now record profits. If one thing is for sure, it is that the financial system is vital to the operation of the economy.
It is said that the move to let Lehman Bros. go bust was the single biggest mistake made during the crisis. Although nobody realized it at the time, Lehman Bros. had to die in order to have the rest of Wall Street to survive.
One year later, the banking system is back on track. Some banks like J.P. Morgan Chase and Bank of America have recorded record profits. Although more regulations could mean that banks earn fewer profits, it will mean that the next time around, they are more stable. Banks will have less to put to work because they will be required to hold more capital so they do not weaken again.
Although the collapse of Lehman Bros. sent the economy into frenzy, it may have been the best thing that happened to the financial systems. It will allow them to live through the recession and come out stronger.


Lessons learned from Lehman Brothers' Demise

Lessons Learned from Lehman Brothers' Demise
By: Christina Dove

It has been one year since Lehman Brothers went bankrupt and started the chain of several huge players in the financial world following in their footsteps and also filing for bankruptcy. It was a crazy time for Wall Street when many companies were losing billions of dollars due to bad mortgage finance and bad real estate investments. These events could have been foreseen by many different people in the financial world, as more and more risk was being diversified and bought up by large investment banks.

The main lesson that can be learned from the debacle of not only Lehman Brothers, but also from many other financial companies is that the problem does not lie in one specific area. For instance, we can not place the sole blame on sub-prime mortgages. The root of the problem lies in all of the banks and lenders, having too much confidence and creating too large of a credit surge that ultimately put America's financial system out of balance and made us think that our country was in much better shape than what was revealed underneath. The mistake of Lehman Brothers as with several other companies was that they thought that they were invinsible and that buying up all of these bad mortgages and selling them would never erupt into such a huge collapse of the economy.

It is going to take a lot of time for the economy to heal itself from this financial crisis and the mindset of America must be adjusted to living within your means and not trying to get something that you are not entitled to and cannot afford.

Indiana expects jobless fund troubles until 2015

Posted by: Andrew Pia

Indiana will take longer to resolve money troubles with the state's bankrupt unemployment insurance fund than expected when a law aimed at fixing the system was enacted in April, officials said Wednesday.

Lawmakers enacted a hike in unemployment taxes on employers, which is set to take effect next year, and made operational changes in the system that are designed to help make the fund solvent. It has borrowed $1.1 billion so far from the federal government to stay afloat, a figure expected to climb to $1.7 billion by year's end and $2.7 billion by the end of next year.

The Indiana Department of Workforce Development said Wednesday that the state had been expected to stop borrowing from the federal government by 2012. But newer, less optimistic unemployment projections predict it will now be 2015 before the state can stop borrowing, and then it will take several more years to pay back the federal loans.

"The picture is much worse," Josh Richardson, the agency's director of government affairs, told a new committee -- comprised mostly of legislators -- which was created to help oversee the department.

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Tips for considering bankruptcy

posted by Ka Lee Angel Lee

Monday, September 14, 2009
W hen should one file for bankruptcy, what is protected and how do you go about it? Unfortunately, there is no formula, but an overall position of being financially stuck with no end in sight from consumer and medical debt is a starting point.
A readily apparent trigger is being consistently behind on mortgage payments while facing the threat of foreclosure. A more subtle one is only being able to make minimum payments on unsecured credit cards and other debts.

Monday, September 14, 2009

The Truth About Bankruptcy

Posted by Lindsey Connell

Myth: I'll just file bankruptcy and start over; it seems so easy.
Truth: Bankruptcy is a gut-wrenching, life-changing event that causes lifelong damage.

Bankruptcy. That word sends chills up the spine. If you're facing the prospect of bankruptcy or in the middle of it right now, you know it's a living nightmare. It can devastate your job, destroy your marriage and steal your peace of mind.

Kathy called my radio show ready to file bankruptcy. Her debts were overwhelming, and her cheating husband had left with his girlfriend. The house was in his name, as was all the debt except $11,000. Kathy was 20 years old, and her brilliant uncle - a lawyer from California - told her to file bankruptcy. Kathy was beat up, beat down, and deserted without help, but she was not bankrupt. When her soon-to-be ex-husband ends up with all the debt in his name, he may be bankrupt, but Kathy won't be.

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Bankruptcy becomes America's growth industry

Bankruptcy becomes America's growth industry
From The Times
March 10, 2009
By: Michael Herman

Lawyers who specialise in representing failed businesses are a hot commodity

Law firms across the United States may be dismissing partners and staff, cutting bonuses and freezing salaries, but every cloud has a silver lining: experienced bankruptcy and restructuring lawyers are hotter than ever as the number of corporate failures surges.
According to in January and February this year 36 publicly traded companies filed for bankruptcy in the US, up from 17 last year and 11 in 2007. The companies involved were also larger, with a combined value of $66.5 billion, compared with $10.6 billion last year.

According to in January and February this year 36 publicly traded companies filed for bankruptcy in the US, up from 17 last year and 11 in 2007. The companies involved were also larger, with a combined value of $66.5 billion, compared with $10.6 billion last year.

Posted by: Christina Dove

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Reader's Digest Files for Bankruptcy

Posted by Pete Hill

Reader's Digest Association Inc., publisher of the iconic general interest magazine that began gracing American homes in 1922, on Monday filed for Chapter 11 bankruptcy protection as it faces falling print circulation in the Internet age and looming debt payments.

Known for its heartwarming stories about American life as other publications moved toward edgier fare, the company's flagship Reader's Digest magazine has seen its U.S. circulation drop from a peek of more than 17 million in the 1970s to just above 8 million last year.

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Triple Crown Media Files for Bankruptcy

Posted by Kenny Hernandez

Triple Crown Media Inc. (TCMI), an operator of daily and weekly newspapers in Georgia, filed for bankruptcy protection Monday after striking a deal with some of its lenders to restructure its debt.

The deal calls for second-lien lenders, owed $35 million, to get $10 million in new notes and 90% of new common stock in the reorganized company.

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Thursday, September 10, 2009

Why Athletes Go Bankrupt

A reoccurring theme that I see in the news that was brought up by Dr. Boyce Watkins is that athletes who made several million dollars in their career end up being bankrupt within 10 years of their retirement. A general theme as to why these athletes lose all of their money is due to trusting the wrong people and making poor business decisions. Also, having to keep up with the high profile celebrity lifestyle takes its toll when not having any source of income after retiring.

Others say that there is a psychological reason as to why bankruptcy occurs. With the loss of celebrity status, name recognition, income, and perks such as free meals and support staff, many athletes fill the void with frivolous spending. Also, it is mentally difficult to accept a job with such an extreme pay cut when retiring after being accustomed to having multimillion-dollar contracts and bonuses.

The prevalent theory, however, is that athletes spend too much on money houses, cars, and jewelry. They also give money away to too many friends and family members, as well as suspicious business ventures.


Wednesday, September 9, 2009

General Motors attempts to change its identity since bankruptcy

Posted by Peter Hill

Recently, General Motors has declared bankruptcy and received billions of dollars of government and tax payer money. Now that General Motors is slowly reviving itself since declaring bankruptcy, a few different ideas and solutions are being incorporated to turn the corporation around.
According to Fortune Magazine in an article titled “General Motor’s Second Chance,” General Motors is making efforts to reconstruct its past mistakes. General Motors is starting to change its strategy in ways it never has before in efforts to revamp its identity, out of bankruptcy. For example, General Motors is releasing new models that will not be available until 2012. In addition, first the first time, they are talking directly to their customers. (Taylor)
According to Time Magazine, an article written by Joseph Szczesny helps prove the point about General Motors trying to turn their company around. Despite General Motors Bankruptcy, the number of new car buyers willing to consider a General Motors vehicle has increased by six percent. (Szczesny)
The last way that General Motors is planning on protecting itself for when it improves its financial position, is by weighing options of what to do with empty factories. According to an article published by the USA Today, General Motors’ board is deciding whether they want to keep the operation, let it slide into bankruptcy protection, or sell it. (Associated Press)
General Motors is trying to persuade its customers that, post bankruptcy, it is a new company with a whole new attitude.


Injured and Bankrupted
By Ka Lee Angel Lee
“Bankruptcy is a federal law whereby a person’s assets are turned over to a trustee and used to pay off outstanding debts; this usually occurs when someone owes more than they have the ability to repay.” According to recent researches, the states personal bankruptcy filings this year totaled 1.4 million to 1.5 million. Major studies in these years indicated that medical bills contributed most in personal bankruptcies in the US. Data indicated that about 62 percent of these filings would be medical. However among these victims, 75% of them owned health insurance in the first place.
Fallouts of bankruptcy are impacting severely families and businesses financially. The status is printed on credit reports and this jeopardizes obtaining housing and getting jobs. In the long run, these victims are suffering from loss of medical care, utility shutoffs and starvation even.
The researches called on health care reform because the high health care costs are crushing many families and small businesses. Health care costs rise about twice the rate of inflation. It was also said that many people’s medical insurance was not sufficient and efficient enough to cover appropriate costs to prevent bankruptcy. Nevertheless, insurance costs also rise while benefits offered went down these years. Related departments should take a serious look at the insurance policies and govern the efficiency of health insurance to protect the public.


The Forgotten Bank Failure

NEW YORK (Fortune) -- Washington Mutual is long gone, but its lax lending could haunt us for years.

The Seattle-based institution collapsed in the largest-ever U.S. bank failure last September. WaMu ran out of cash after business customers, unnerved by the implosion of Lehman Brothers, withdrew their uninsured deposits.

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Bankruptcy is Unfair

By: Scott Graulich

I have a great deal of compassion for poor people. However, people who file for bankruptcy are overwhelmingly not poor. Generally, people who allow their spending habits to get out of hand are the ones who declare bankruptcy. They run up their credit card bills with vacations, clothing, and many other purchases that are usually unnecessary.

When reality hits, people realize that they can no longer make their payments-- so they declare bankruptcy. Bankruptcy has become a much to easy outlet for those who cannot exercise self control. It was originally intended to help people, but it actually winds up hurting many people who don't get paid for items that were literally stolen by the bankrupt party. It is important to have laws that protect all of our citizens. However, bankruptcy has become a convenient tool for people with very poor spending habits.


Tuesday, September 8, 2009

Trump Casino, US Airways and Circuit City: Experiences with Bankruptcy

Trump Casino, US Airways and Circuit City: Experiences with Bankruptcy
By: Christina Dove

During this economic crisis, there are several companies that are struggling to stay afloat and maintain open for business. However, there are also some companies that cannot survive the blow to the economy and are forced to file for bankruptcy. One of these companies is the Donald Trump Casinos. Donald Trump has had to file for bankruptcy three times, and this past time in February, he was forced to sell the business. There were not enough people coming to the casinos and staying in his hotels and condos to keep the Trump business flourishing. However, Trump tells FOX News that he has several other projects in Washington and New Jersey that he is working on and will still be making profit other ways.

Another company that is having difficulty in the economic crisis is US Airways. They have filed for bankruptcy and are in the process of devising a new business plan to reorganize the business. However, if this plan does not work out, then they will be forced to liquidate the business. A huge challenge for US Airways is that during an economic downturn, many people are not flying and trying to save money, putting a heavier burden on US Airways to try and get back on track.

Finally, Circuit City has been one of the most recent major companies to file for bankruptcy. Some people think their downturn began ten years ago with their technology the DVX, which tried to compete with the DVD and failed miserably, costing the company a lot of money. In addition, in 2007 just before the economy went bad, Circuit City laid off many of their highest paid and best employees, which put them behind in customer service and allowed companies like Best Buy to reel in more customers.

Insured, but Bankrupted Anyway

Posted by Ka Lee Angel Lee

New York Times -September 7, 2009, 11:30 am
By Anne Underwood
Dr. David Himmelstein is an associate professor of medicine at Harvard Medical School and a primary care doctor at the Cambridge Hospital in Massachusetts. Dr. Himmelstein is also a founder of Physicians for a National Health Program. In 2005 and 2009, he helped write major studies finding that medical bills were a leading contributor to personal bankruptcies in the United States. He spoke to the freelance writer Anne Underwood.
How many medical bankruptcies are there annually in this country?
The forecast for this year is that there will be 1.4 million to 1.5 million total bankruptcy filings. Our data say 62 percent of those will be medical. That works out to around 900,000 cases, and each one affects about 2.7 people. That makes roughly 2.4 million people who will suffer from new medical bankruptcy filings in 2009 alone.

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Medical bills are biggest cause of bankruptcy

Posted by: Scott Graulich

Approximately 60 percent of the personal bankruptcies in the United States are due to medical bills beyond the financial ability of the individual or families to pay, according to Fifth District Congressman Tom Perriello.

Most of those filing for bankruptcy had health insurance coverage, but it did not cover sufficient costs to prevent bankruptcy. Perriello said health care reform is needed because of the financial impact that the current health care costs is having on families and businesses, although he said he can't vote for the current health care reform legislation.

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Monday, September 7, 2009

Five more banks fall-89 so far in 2009

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Posted by Pete Hill

NEW YORK ( -- Five small regional banks were closed by regulators on Friday evening, pushing 2009's tally so far to 89 institutions. Of the five failures, two were in Illinois, and there was one each in Arizona, Iowa and Missouri.

Customers of the banks, however, are protected. The Federal Deposit Insurance Company, which has insured bank deposits since the Great Depression, covers each customer account up to $250,000.

Donald Trump's Casino Company Files Third Bankruptcy

Posted by Christina Dove

Donald Trump's Casino Company Files Third Bankruptcy

Author(s): Katherine Butler
May 2009

You may have heard that business mogul Donald Trump has filed for bankruptcy. Again.

While this isn't a personal filing, Trump is no stranger to bankruptcy. In February 2009, Trump's casino company, Trump Entertainment Resorts, Inc., filed for bankruptcy for the third time. But this time, Trump and his daughter Ivanka quit before the actual filing.

Since the second bankruptcy filing in 2004, Trump has only owned about a quarter of the casino operation, although he continued to serve as Chairman of the Board until February. According to the court filing, the company had $2.06 billion in assets and more than $1.74 billion in liabilities. In order to save the company, Trump made an offer to buy the company and take it private. But he claims that bond holders and "their allies on the board" refused his offer. When the offer was refused, the Trumps walked.

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GM and the Changes after Filing Bankruptcy

Posted by Lindsey Connell

General Motors emerged from bankruptcy this morning, with chief executive Fritz Henderson promising that the fallen corporate giant will be reformed and that "business as usual is over."
The announcement signals the substantial completion of one of the largest bankruptcies in U.S. history and the next step in what has become a landmark government bailout.
The new GM will have fewer brands, fewer plants and fewer workers. The number of U.S. executives will be cut by 35 percent. But as important as this shrinking, Henderson said, is the need to revive the automaker's culture, long criticized as insular and slow-moving. Once the world's largest automaker, General Motors has been losing market share for decades.