Archive for the ‘Bankruptcy News and Events’ Category

Wednesday, September 10th, 2014

Trump Casinos Company Files for Bankruptcy

Five of Atlantic City’s 12 casinos could close by the end of this year when Trump Casinos Company files for bankruptcy this month.

The company owns Trump Plaza, a casino slated to close next week. Trump’s Taj Mahal could follow suit in November if the company cannot receive concessions from union workers.

According to paperwork filed with the U.S. Bankruptcy Court Tuesday, Trump Entertainment estimates its liabilities range between $100 million and $500 million and assets no greater than $50,000. The company missed last quarter’s tax payment and currently does not have enough revenue to pay lenders this month, as reported by the Washington Post.

In a statement to the New York Times, Fitch Ratings analyst Alex Bumazhny indicates the Taj Mahal closure comes as a surprise: “The property is almost breaking even and will benefit from the closure of Trump Plaza.”

Three casinos have closed since January in lieu of increased competition from neighboring states. On CNBC’s “Closing Bell,” financial researcher Frank Fatini claims new casinos in Pennsylvania and New York state have “taken away…the convenience gambler, the ‘daytripper’”from Atlantic City.

Bloomberg states that higher labor costs and real estate taxes have also hurt Atlantic City’s profits.

The closing of the Taj Mahal could leave 2,800 workers unemployed, raising the year’s total loss in Atlantic City casino jobs to above 8,000.

On Monday, New Jersey governor Chris Christie assembled a meeting of elected officials, casino executive and union leaders to discuss Atlantic City uncertain future.

“A whole bunch [of] people are getting put out of work with nothing else on the horizon,” said state senator and former city mayor James Whelan. “You now have the possibility of five empty buildings on the boardwalk.”

Trump Entertainment has struggled since its 2010 bankruptcy. Billionaire investor Carl Icahn currently holds a $289 million loan, rendering him the company’s largest credited investor.

Donald J. Trump owns a 9 percent stake in the company but has no connection with operations. Trump has a current lawsuit to remove his name from the properties.

Thursday, September 4th, 2014

Detroit Bankruptcy Trial Begins

Testimony in the historic Detroit bankruptcy trial began this morning with the city’s chief financial officer stating fiscal controls were “very, very poor” when he began last year.

John Hill Jr. was the first witness called on September 4. According to Hill, Detroit was unable to fully determine revenue flow for a myriad of reasons, but partly due to a failure to implement a “financial commuter system,” as said by ABC News.

Lawyers for the United Auto Workers, Wayne County and the American Federation of State, County and Municipal Employees are also slated to present their arguments on Thursday.

On Wednesday, lawyers argued against Detroit’s current debt modification plan, claiming it to be “illegal, unfair and dead on arrival,” according to an article in the Detroit Free Press.

Judge Steven Rhodes compelled a lawyer for Syncora Guarantee, arguably the city’s strongest critic and creditor, to state what he felt is an appropriate amount for the city to repay. Attorney Kieselstein said Syncora wants 75 cents on the dollar.

Detroit’s Grand Bargain is the foundation of the bankruptcy plan. The bargain would allow the city to accept roughly $816 million over the next 20 years from the state of Michigan, non-profit foundation and the Detroit Institute of Arts donors. The money would be used to fund city retiree pensions.

Bond insurers claim the Grand Bargain illegally discriminates against commercial creditors. Syncora claims it is owed $400 million.

Rhodes has scheduled the trial into mid-October to give enough time to determine the fairness of the Grand Bargain and what is most reasonable for all parties. City leaders, including Mayor Mike Duggan and emergency manager Kevyn Orr, are expected to testify throughout the trial.

Detroit filed for Chapter 9 bankruptcy protection July 18, 2013, claiming debts and estimated long-term liabilities totaling $18 million.

Thursday, August 28th, 2014

Crumbs Bake Shop will reopen after sale

Crumbs Bake Shop will reopen after sale to Lemonis-Fischer Enterprises in a New Jersey bankruptcy court on Tuesday.

Judge Michael Kaplan approved the sale of the famed cupcake chain to Marcus Lemonis, star of CNBC’s “The Profit,” and Fischer Enterprises, which is best known as the owner of frozen treat Dippin’ Dots. The purchase will successfully conclude Crumbs’ Chapter 11 bankruptcy case, annulling $6.5 million in debt, according to the Wall Street Journal.

Crumbs closed all 49 of its locations nationwide in July. About half of those locations will remain closed, but new ownership intends to reopen stores in cities such as New York, Chicago, Washington D.C., Boston and Los Angeles.

Scott Fischer, chief operating officer of Fischer Enterprises, states the stores will still focus on Crumbs’ famed cupcakes, but there are plans to integrate other food brands owned by the Oklahoma based investment company, such as ice cream and popcorn.

Crumbs began searching for a buyer in late 2013, but a $5 million investment from Fischer Enterprises in January 2014 temporarily halted the search. Filings show the company resumed hunting in May after an “out of court restructuring failed to take hold,” as stated by The Wall Street Journal.

Unsecured creditors of the company now have little options for recovery of money. However, it is possible a creditor committee could attempt lawsuits against unspecified parties in an effort to recoup their losses.

CEO Edward Slezak is slated to maintain his position through the end of the year. Crumbs also expects to rehire previous employees who lost their jobs in the July closings.

"The court is pleased to see there will be employees going back to work, and that there will be certain landlords with continuing tenants," said Judge Kaplan.

Crumbs opened its doors in 2003 in a small shop on the Upper West Side of Manhattan. Jason and Mia Bauer, husband and wife entrepreneurs, quickly expanded their line of signature cupcakes throughout the continental U.S. with up to 79 stores.

After a rapid growth, the company went public in 2011 and soon faced hardship after years of losses and a decline in capital.

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After waiting almost six years, unsecured creditors of Lehman Brothers Holdings' Inc. will finally see an initial payment of $4.62 billion next month.

Trustee, James Giddens, filed a notice August 15th regarding the distribution of owned payment to Lehman's creditors. Former employees, pension funds, banks and investment firms are among the creditors who will see money starting September 10th.

The payment denotes roughly 17% of total unsecured claims against the brokerage, according to the Wall Street Journal.

Lehman Brothers Inc. filed for Chapter 11 bankruptcy protection on September 15, 2008. The firm's filing was the largest bankruptcy in US history and is generally credited as a major turning point in the 2008 financial collapse.

Upon filing, Lehman claimed $613 billion in total debt and $639 in total assets, as well as $150 billion in outstanding bond debt according to a 2008 article on MarketWatch. The firm listed over 10,000 creditors in the filing.

The upcoming September payment has been postponed until the brokerage's customers were fully reimbursed: $105 billion to 111,000 former customers, according to Reuters. The 1970 Securities Investor Protection Act put into law that customer claims are to be fully repaid before creditors.

"That such a distribution is even possible represents an extraordinary achievement that was far from certain when the liquidation began," Giddens said in a news release Friday.

Additional payments are likely in the future, Giddens stated. After the initial payment to creditors, Lehman will have paid over $110 billion; $20.4 billion in claims have been processed against the brokerage and $6.8 billion in claims are still unsettled, according to the Wall Street Journal.

On August 5th, Barclays Plc. was allowed to keep about $6 million of disputed assets after its speedy purchase of the bulk of Lehman -- money Giddens was attempting to recover.

Lehman was Wall Street's fourth largest investment bank before the 2008 Chapter 11 filing.

Saturday, March 15th, 2014

Quizno’s Files Chapter 11

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In a week that first saw fast food pizza chain, Sbarro, file Chapter 11 bankruptcy, the trend continues. Yesterday, toasted-sub chain Quizno's Subs filed for Chapter 11 as well.

The company says not to worry as they have a plan in place.

Quizno's Subs' CEO said in a statement, "The actions we are taking are intended to enable Quizno's to reduce our debt, execute a comprehensive plan to further enhance the customer experience, elevate the profile of the brand and help increase sales and profits for our franchise owners."

The restructuring is focused on a debt reduction plan that takes care of $400 million.

While Quizno's Subs is mainly a franchised chain, individual franchise owners ran into problems with the prices Quiznos was charging them for ingredients. Although many prices were eventually altered, it may not have been timely enough for some.

Included in the restructuring plan is a rebate program for franchise owners and new incentives for future franchisees.

With big competitors, such as Subway, Potbelly and Noodles and Company, Quizno's has fallen behind in the world of advertising and additional investments are planned to be made in that area as another part of the restructuring plan.

Over the past 4 or so years, Quizno's Subs has gone from approximately 5,000 operations to just about 2,000; therefore, profits have fallen accordingly and advertising has been affected as a result.

Besides investing more in advertising, Quizno's has introduced toasted pastas to their menu and gone back to their original practice of adding veggies to their sandwiches before toasting.

Tuesday, March 11th, 2014

Bankruptcy for Bitcoin’s Mt. Gox

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Mt. Gox is in the hot seat as they were granted Chapter 15 bankruptcy protection by the U.S. on Monday. This move prevents traders in the U.S. from taking legal action against them for the current time, protecting their U.S. assets.

The company is fighting off fraud allegations and a proposed class action suit in Chicago. Mt. Gox, who at one time was the nation's biggest bitcoin exchange, filed bankruptcy in Japan in February.

Last month Mt. Got claimed to have been attacked by hackers which resulted in the loss of 750,000 bitcoins owned by customers. The attack supposedly was due to a glitch in bitcoin's software algorithm.

Mt. Got's founder, Mark Karpeles, has been in the spotlight throughout all of the fraud allegation talk.

Some of Karpeles actions right before the U.S. bankruptcy filing were called into question.

Attorney Jane Pearson stated, "We don't have proof yet but we do have concerns about the movement of hundreds of millions of dollars in bitcoins over the weekend, moved by Mr. Karpeles."

Attorneys for Mt. Got deny such fraudulent acts. In April, Mt. Got will be back in court as they try to get permanent stay of U.S. litigation.

Monday, March 10th, 2014

Bankruptcy Protection for Sbarro

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Melville, New York-based, Sbarro, has filed for Chapter 11 bankruptcy for the second time in three years. The pizza chain has struggled with debt and competition in the marketplace.

In the Chapter 11 reorganization plan, Sbarro hopes to cut down its debt by over 80 percent. Sbarro also plans to close approximately 50 locations, on top of the 180 money-losing operations they have already shut down.

Although the bankruptcy will not affect the franchise owned 582 restaurants, Sbarro as a company has 799 restaurants and employs over 2,700 people.

Sbarro has seen a drop off in mall traffic, where many of their restaurants are located. Their business model has also been called into question.

A restaurant consultant said, "Sbarro has been struck with an outdated business model...Its biggest shortcoming is that is sells food that has been sitting out for a while, and more people want food made to order."

Thursday, February 13th, 2014

Nickelodeon Star Files for Bankruptcy

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Nickelodeon's Drake Bell, formerly known as "Drake" from the show Drake & Josh has filed for bankruptcy.

Drake Bell is 27 years old and has experienced an income roller coaster in the last couple of years. In 2012, Drake made $408,000, while in 2013 he brought in $14,099.

His month expenses are reportedly greater than $18,000, while his monthly income is under $3,000.

Bankruptcy documents indicate that Drake owes $1.597 million on his home. The property is valued at $1.575 million.

Friday, December 13th, 2013

Fisker Bankruptcy on the Fast Track

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Instead of opening their factory in the old General Motors plant in Delaware, the plug-in hybrid automaker, Fisker, found itself in bankruptcy in November and things are moving at a rapid pace.

Creditors will have until December 30th to vote on the bankruptcy plan for Fisker and the final confirmation hearing will take place on January 3rd.

Fisker has thousands of investors, many unsecured creditors, and a committee has been selected to represent those creditors. Between them, there could be about $725,000 to divvy up.

The state of Delaware is one of the secured creditors that has received collateral from Fisker.

Last month, Hybrid Technologies, LLC bought the $168 million loan from the federal government to Fisker, at a heavy discount.

The reason the bankruptcy is being fast tracked, according to one of Fisker's attorneys, is in an attempt to retain as much of the company's value as possible.

The city of Detroit's Chapter 9 bankruptcy filing was approved by Judge Stephen Rhodes Tuesday, officially becoming the largest municipal bankruptcy case in the history of the United States.

Judge Rhodes issued a 90-minute verbal ruling this morning, to be followed by a 140-page written ruling, finding that Detroit's financial woes meet the legal requirements for bankruptcy under a Chapter 9 reorganization, ending months of uncertainty following the initial July 18 filing

“It is indeed a momentous day. We have here a judicial finding that this once proud city cannot pay its debts. At the same time, it has an opportunity for a fresh start. I hope that everybody associated with the city will recognize that opportunity,” Judge Rhodes said in a packed courthouse.

In a surprise move, Judge Rhodes ruled that Detroit will be allowed to cut pension payments as part of its debt repayment. Much of the city's financial predicament is due to obligations to retired city workers. The pensions will be allowed to be cut as long as they are deemed "fair and equitable" to other creditors of the Motor City.

A nine-day eligibility trial earlier this month gave the city's creditors, particularly unions and retiree groups, opportunity to argue against the Chapter 9 filing, and against reduced pension obligations in particular. Judge Rhodes found otherwise, and with Michigan Governor Rick Snyder's authorization in place, the historic bankruptcy case will proceed.