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News

Especially considering the recent economic crisis and weak housing market, it is more important than ever to keep abreast of current bankruptcy laws, bankruptcy rates, and bankruptcy cases. This Missouri and Illinois bankruptcy news section will help those considering bankruptcy learn more about the most current and relevant happenings in the world of bankruptcy law. Taken from trusted sources such as the Chicago Tribune, Associated Press, and St. Louis Business Jounral, these news briefs are meant to educate, inform, and enlighten.

NFL Star Michael Vick's Bankruptcy Trouble

A bankruptcy trustee has demanded that NFL quarterback Michael Vick repay at least $2 million he gave to friends and family as he faced mounting legal trouble stemming from his role in a dogfighting operation, according to a report from the Associated Press.

The trustee overseeing the former Atlanta Falcon and now Philadelphia Eagle’s two-year-old bankruptcy case, Joseph J. Luzinski, says that the gifts should be the property of Vick’s creditors.

Unwinding such transitions, which are referred to as fraudulent transfers, that occur in the months leading up to a bankruptcy filing is a common incidence in both personal and business bankruptcy cases.

According to what Luzinski’s attorney told the AP, they are not filing suit against Vick or accusing him of fraud. Rather, the demand regards “the proper distribution of assets Vick had before his bankruptcy.”

Luzinski said that Vick gave gifts to his mother, his fiancé, several of his friends, and his brother, Marcus, a former football player.

Vick’s attorney said that he wasn’t trying to do anything illegal, he was simply “being generous to his friends and family.”

Upon his 2008 Chapter 11 bankruptcy protection filing, Vick claimed to have $20 million in debt.

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More Than Suburban Tears for Real Housewife's Teresa

Teresa Giudice has found a new adversary, and it isn’t any of her fellow “Real Housewives of New Jersey” cast members.

According to court documents, the Bravo reality TV star and her husband, who filed for bankruptcy protection in the fall of 2009, are faced with a lawsuit that would prevent them from taking advantage of the debt discharge available to individuals under the Bankruptcy Code.

Chapter 7 trustee John Sywilok, tasked with rounding up the couple’s assets and distributing the proceeds to creditors, alleges that the couple concealed key documents about their finances and business transactions.

Allegedly, the Giudices concealed assets including a pizza parlor, a Laundromat, Teresa’s TG Fabulicious clothing and accessories company, and the “Skinny Italian” cookbooks Teresa authored. He also says the couple made false statements under oath about their assets, income, and expenses.

The suit is not the only reason the couple may be unhappy with Sywilok. In August, he aims to hold a public auction of the contents of the family’s recently built mansion in Towaco, New Jersey.

 

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Hostess Closes Wonder Bread Thrift Stores In Missouri After Bankruptcy

As part of a post-bankruptcy strategy, bread and sweets maker Wonderbread is closing several Missouri-area Hostess outlets. Wonderbread closed a number of stores around the country in the past weeks and months – either stores that had high leases or stores that were not making a significant profit for the company.

In Missouri, bakery outlet stores were closed in Farmington and Brentwood. In St. Louis area itself, stores were closed in Edwardsville, Collinsville, Belleville and Swansea. The store in Edwardsville had been open since the 1960s, with many local residents remembering the Wonderbread store from the time that they were children.

Hostess has an operating center in Kansas City, Missouri, and has an eight-decade history of producing breads, crackers, cookies, cakes, and other sweets. However, the company declared bankruptcy at the end of 2008 and emerged from bankruptcy in February 2009. Company executives said that their popular baked goods were not so popular when Americans started to choose whole grains and stay away from some of their sweeter products, such as Twinkies and Hostess cupcakes.

Now, emerging from bankruptcy, the company is trying become more efficient and to offer customers a larger selection of healthier products. In addition, they plan on focusing more on convenience store sales and better understanding the new and changing market. However, it will be a long and tough road to re-band such a well-known line of products.

Interstate Bakeries has 30 factories across the country and over 500 bakery outlets.

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Will Unemployment Extension Delays Mean More Missouri Bankruptcy?

For millions of Americans, jobless benefits are running out. While the economy is slowly improving after the recession, many across the country have been out of work for more than six months and are facing harsh months ahead, especially if the Senate continues to struggle passing an unemployment extension. While some argue that extending unemployment for those who have been without work for over six months is a poor idea that will lead to a lethargic workforce, others believe that extending unemployment will allow millions of Americans to keep their houses and their savings while they continue to look for new jobs.

One single mom from Missouri wrote that after she lost her job during the recession, she burned through her savings and her 401k before losing her home and then declaring bankruptcy. She now lives with her parents. She believes that not extending unemployment benefits will continue an unhealthy cycle of loan defaults and foreclosures – not to mention break up families.

The Senate could pass the unemployment extension as early as today – a move that many say could save 2.5 million people from falling behind on their mortgage payments or declaring bankruptcy. While the economic recovery is seeing improvements in many ways, such as the housing market, stock market, and consumer spending, the lack of jobs continues to be an issue for many in Missouri and Illinois. While the government provides those experiencing tough times to collect unemployment for six months after losing their jobs, the seriousness of the recent recession has government officials lobbying for more support for out-of-work Americans.

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Tronox Inc Changes Loan to Allow Reorganization

A judge has given approval to bankrupt chemical maker Tronox Inc. to amend a loan agreement after missed deadlines that could have opened the way for lenders to force the company into liquidation.

At a hearing on June 24, U.S. Bankruptcy Judge Allan Gropper ruled that Tronox could make the changes it sought in the $425 million loan that funds operations as it reorganizes. The changes push the maturity date back to September 24. Without them, the loan would have been payable on June 24 and the lenders could have required the company to sell all of its assets, which would have brought lower recoveries to stakeholders.

Also under the agreement, Tronox is allowed to engage in “certain currency hedging activities” and fees are required to be paid to Goldman Sachs Lending Partners LLC, the administrative agent to the loan, and the lenders. Tronox, which filed for bankruptcy in January 2009, defaulted on its initial “debtor-in-possession” operating loan, and won court permission for the $425 million replacement loan in December. The changes were requested on June 15.

In its request, Tronox, which is based out of Oklahoma City, said that it has not filed a “disclosure statement” setting out the terms of a Chapter 11 reorganization or reached a settlement of government environmental claims, which would make compliance with current deadlines impossible.

The U.S. Trustee, the arm of the U.S. government that monitors bankruptcy cases, had objected to Tronox’s request, arguing that it intentionally failed to disclose documents and fees.

The objection from the government was resolved after Tronox submitted court papers disclosing a $2.13 million fee to the lenders, and a $250,000 administrative-agent fee to Goldman Sachs was revealed.

Tronox manufactures chemicals used in paints, coatings, plastics, paper, batteries, toothpaste, sunscreen, and shampoo.

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Foreclosures Still on the Rise in Missouri and Kansas

According to statistics from RealtyTrac, foreclosure activity in Missouri and Kansas saw a significant increase in the first half of 2010 in comparison to the first half of 2009.

The report said that 17,242 properties in Missouri received some sort of foreclosure notice, which was 0.65 percent, or one out of every 155 properties. That number was an increase of 24.22 percent from the first half of 2009. However, Missouri was ranked No. 30 among states, meaning that 29 states had a worse rate.

There were 6,602 properties receiving a foreclosure notice in Kansas, which was 0.54 percent, or one out of every 186 properties. That number was an increase of 41.67 from the first half of last year. But Kansas’ foreclosure rate was ranked better than Missouri’s, at No. 34 among states.

Across the U.S., there were more than 1.65 million properties in foreclosure during the first half of the year, an increase of 8.26 percent from the first half of 2009.

The states with the worst ratings for foreclosure were Nevada, Arizona, Florida, and California. Nearly six percent of housing units in Nevada, or one out of every 17, received at least one foreclosure filing in the first half of 2010. Arizona’s rate was 3.35 percent, or one out of every 30, Florida’s was 3.15 percent, or one out of every 32, and California’s was 2.54 percent, or one out of every 39.

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Home Loans Becoming Harder to Pay

Americans are finding home equity loan rates to be more and more difficult to pay. In order to make their monthly mortgage payments, more and more people in the U.S. are attempting to cut their costs by renting space in their home, cutting things line phone service, or canceling insurances. Some find solutions such as these to pay their home equity loan rates, but it hasn’t been easy for everyone.

Because of the difficult times, it is believed that more than one million American households could potentially lose their homes to foreclosure, as lenders have a large number of borrowers who have fallen behind on their loans. During the first six months of 2010, nearly 528,000 homes were taken over by lenders and foreclosures continue at that rate, we could see that number increase to 2010 to more than 900,000 homes, which was the number of homes repossessed in 2009, according foreclosure listing service RealtyTrac Inc.

RealtyTrac senior vice president Rick Sharga said such a climb “would be unprecedented,” adding that lenders have historically taken more than 100,000 in a year. Recent signs of economic recovery have been seen in the past few months, but this surge reflects that the crisis still exists. Many homeowners have been struggling to pay their home equity loan rates, but in order to make their monthly payments, they had little success in negotiating more deals.

RealtyTrac said the number of homeowners receiving legal warning that they could lose their home rose by eight percent in the first half of 2010 from the same period in 2009. Between January and June, nearly 1.7 million homeowners received foreclosure-related warnings, which is one of several steps in the foreclosure process. That means that one out of every 78 homes nationwide receive a foreclosure warning.

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Home Loans Becoming Harder to Pay

Americans are finding home equity loan rates to be more and more difficult to pay. In order to make their monthly mortgage payments, more and more people in the U.S. are attempting to cut their costs by renting space in their home, cutting things line phone service, or canceling insurances. Some find solutions such as these to pay their home equity loan rates, but it hasn’t been easy for everyone.

Because of the difficult times, it is believed that more than one million American households could potentially lose their homes to foreclosure, as lenders have a large number of borrowers who have fallen behind on their loans. During the first six months of 2010, nearly 528,000 homes were taken over by lenders and foreclosures continue at that rate, we could see that number increase to 2010 to more than 900,000 homes, which was the number of homes repossessed in 2009, according foreclosure listing service RealtyTrac Inc.

RealtyTrac senior vice president Rick Sharga said such a climb “would be unprecedented,” adding that lenders have historically taken more than 100,000 in a year. Recent signs of economic recovery have been seen in the past few months, but this surge reflects that the crisis still exists. Many homeowners have been struggling to pay their home equity loan rates, but in order to make their monthly payments, they had little success in negotiating more deals.

RealtyTrac said the number of homeowners receiving legal warning that they could lose their home rose by eight percent in the first half of 2010 from the same period in 2009. Between January and June, nearly 1.7 million homeowners received foreclosure-related warnings, which is one of several steps in the foreclosure process. That means that one out of every 78 homes nationwide receive a foreclosure warning.

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Donald Trump's Entertainment Company Turns to Chapter 11 Bankruptcy

On July 16, Trump Entertainment Resorts, the Atlantic City casino company founded by celebrity developer Donald Trump, said that it emerged from Chapter 11 reorganization – for the third time.

The operator of three casinos in Atlantic City, New Jersey, said that $225 million in new equity had been injected into the company, including $125 million intended to be used to reduce pre-petition debt, in accordance with its reorganization plan.

The company also noted that it has reduced its debt load by about $1.3 billion and will continue using the Trump brand. The company’s statement said that the required approvals had been granted by the New Jersey Casino Control Commission earlier in the week.

In February 2009, Trump Entertainment filed for bankruptcy protection due to a heavy load of debt and a decline in gaming revenue. Trump resigned as chairman shortly before the bankruptcy.

The bankruptcy case became a battle between billionaires. Marc Lasry of Avenue Capital Group was the largest bondholder for the company. He was at odds with Andy Beal, a banker from Texas who held the company’s secured debt.

When Trump changed his allegiance from Beal to Lasry, Beal brought another billionaire, Carl Icahn, on his side.

In the end, the judge sided with Trump and Lasry, who became the reorganized company’s chairman.

During the reorganization, Trump’s pre-bankruptcy stake was wiped out. However, he will acquire up to 10 percent as part of the group investing in the reorganized company’s equity.

The largest stake of Trump Entertainment is owned by Avenue Capital, which invests in financially hobbled companies.

Trump Enterprises was originally founded in the 1980s. The company’s first bankruptcy filing came in the early 1990s. The company emerged with a new Trump name, but filed for bankruptcy a second time in 2004, emerging in 2005 as the current company.

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The State Of Missouri’s Bankruptcy Troubles

Technically speaking, states can’t declare bankruptcy although cities can. However, the state of Missouri fits the definition of being bankrupt – not only is the state government struggling to pay even basic bills, new research shows that each Missouri resident would have to fork over $5,000 to get their home state in the black again. All in all, according to the Institute for Truth in Accounting, Missouri needs $9.1 billion to pay off debts and get out of financial trouble.

In many ways, the state of Missouri is reflecting the tough financial times that many Missouri residents are suffering from. Missouri personal bankruptcies are higher than they have been since bankruptcy laws changed in 2005 – and business bankruptcies in Missouri and St. Louis are up from last year by double-digits.

However, although the state of Missouri is technically bankrupt – it does not have the assets available to pay its debts – Missouri officials are working hard to shrink debt and balance the budget. Missouri Governor Jay Nixon has already cut almost $1 billion in spending in order to tighten the state’s belt, though he has been concerned recently about finding money to pay state teacher pension plans and other bills. 

Perhaps a spot of good new is that although Missouri is struggling financially, many other states in the union are faring even worse – some states would need to collect up to $60,000 from each of its residents in order to clear out their debt.

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Is The State Of Illinois Going Bankrupt?

Unlike individuals, cities, or companies, states are not able to file for bankruptcy with the federal government. However, if a state is not able to pay its bills because of a lack of assets, that state may be considered technically bankrupt. Unfortunately, this seems to be the case with the state of Illinois. According to the Institute for Truth in Accounting, each resident of the state of Illinois would have to pay the local government $25,000 in order to get the state out of debt and back in business.

Currently according to Illinois’ comptroller Daniel Hynes, the state owes over five billion dollars to state-run organizations, including schools, rehabilitation centers, and child care centers. Overall, Hynes says that the state is $12 billion in debt and has stopped paying important and even essential bills. At the same time, however, state government officials have been slow to make difficult budget cuts or to raise taxes in order to alleviate the problem. While the state legislature has agreed to borrow billions of dollars simply in order to keep pension payments coming to state employees, interest rates are getting higher and higher – and borrowing could result in further debt down the road.

On a smaller scale, businesses and individuals in Illinois are also struggling with debt and bankruptcy. Bankruptcy rates in Illinois are the highest they have been in five years – and economists believe that rates will not return to normal for several years to come. The unemployment rate is also not dropping at an acceptable rate, with many unemployed workers losing homes, spending their retirement funds, or declaring bankruptcy.

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FairPoint Communication Seeks to Review Bankruptcy

Utility regulators in Maine are deliberating the bankruptcy reorganization plan of FairPoint Communications and its request to modify an agreement it entered into with the state when it took over the landline and Internet operations from Verizon.

On June 24, the Public Utility Commission met on FairPoint’s petition seeking approval of its bankruptcy plan and changes to the commission’s 2008 order approving FairPoint’s $2.3 billion purchase of Verizon’s Maine, New Hampshire, and Vermont properties.

Among other things, FairPoint wishes to delay its broadband expansion plans in the three states.

FairPoint, which is based out of North Carolina, seeks similar approvals in New Hampshire and Vermont. The company filed for Chapter 11 bankruptcy protection in October 2009.

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Philadelphia's The Inquirer's Parent Company Seeks Bankruptcy

On June 24, a hearing was planned for a federal bankruptcy judge to be asked to approve a reorganization plan that would surrender the parent company of Philadelphia’s The Inquirer to a collection of the firm’s creditors.

The decision of Chief Bankruptcy Judge Stephen Raslavich would conclude the contentious 17-month case.

The plan has some detractors, but has the support of the vast majority of the company’s creditors.

According to an attorney for Philadelphia Newspapers LLC, Raslavich is expected to approve the plan. The lead attorney for the senior lenders also expected confirmation.

On June 23, the plan received further support from the committee of unsecured creditors, which offered its support through a court filing.

Under the reorganization plan, Philadelphia Newspapers, owner of The Inquirer, the Philadelphia Daily News, and the website Philly.com, would become the property of Philadelphia Media Network Inc.

The plan would end the four-year ownership of a group of local investors led by Brian P. Tierney, the chief executive officer of the company. Knight Ridder Inc. owned the papers for more than 30 years prior to the McClatchy Co. purchasing them in 2006. They were then quickly sold to the Tierney group.

The new owner primarily consists of 16 banks and investment firms that held the bulk of Philadelphia Newspapers’ $318 million in secured debt. They won the company at an April auction, bidding $139 million.

The largest ownership shares belong to Alden Global Distressed Opportunities Fund (18.6 percent), Credit Suisse (18.1 percent), and Angelo, Gordon & Co. (17.2 percent).

The plan’s main opposition comes from employee pension funds and a number of individuals with pending libel suits against the papers and their reporters.

The pension funds are in opposition because the plan does not require the new owners to assume liability for the funds. The unions want assurances that, at the very least, the new owners will cover payment of the “withdrawal liability,” which is a portion of a pension fund’s shortfall created when an employer pulls out. The estimated withdrawal liability for the company is $150 million.

The individuals with pending libel suits oppose the plan because it limits which suits may go forward against the company or its reporters.

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Chicago Tribune's Bankruptcy Continues

In the spring of 2009, it appeared as if The Tribune Company was nearly done with its year-long bankruptcy ordeal. However, a report in the Wall Street Journal reveals that the newspaper and TV station owner’s hopes of finishing its reorganization soon have been placed on hold.

The delay comes from Tribune’s April settlement with bondholders. Upon reaching that agreement, Tribune believed a path had been paved for a clear emergence from Chapter 11 under the existing management. However, bank lenders, led by Oaktree Capital Management, complained that the bondholders’ deal would have resulted in them paying more than $400 million while Chairman Sam Zell and his original backers wouldn’t have to pay anything. Oaktree, which holds approximately 25 percent of Tribune’s debt, has mounted a legal challenge that could result in Tribune remaining in bankruptcy court well past the summer.

Creditors continue to give the Chicago-based company trouble and have filed court papers requesting the right to file suit against the parties involved with the company’s $8.2 billion leveraged buyout, which placed Zell, a Chicago real estate mogul, in the company’s chairman seat.

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Personal Bankruptcy Up 14% In First Six Months Of 2010

The national bankruptcy rate numbers are in for the first six months of 2010, and the news is not great. According to the American Bankruptcy Institute (ABI), the personal bankruptcy rate in the United States is up 14 percent compared to the first six months of 2009 – a rate that is almost as high as in 2005, when federal bankruptcy laws changed, causing a surge in filings.

Financial experts say that the increasingly high personal bankruptcy rates are caused by a confluence of recent problems, including the current unemployment rate, the bottoming out of the housing market, and the recent economic crisis. Generally, large amounts of debt paired with record low personal savings rates have also been a significant cause of bankruptcy. However, recent studies have also shown that a majority of bankruptcies has been caused by medical bills and medical emergencies – whether or not individuals were covered by health insurance plans.

While some would like to blame consumers for the rise in bankruptcies – saying that many irresponsible spending has factored into the problem – others say that years of predatory lending have finally had an effect on everyday families. In either case, bankruptcy experts say that the higher rates of bankruptcy will not subside any time soon. Many families who probably choose bankruptcy are still delaying the decision, while other families who wish to declare bankruptcy can’t afford the legal fees associated with the procedure. Currently, declaring Chapter 7 bankruptcy can cost a family roughly $1,500.

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Smurfit-Stone Container Co to Move Out of Bankruptcy

A reorganization plan for Smurfit-Stone Container Corp. that will allow the company to emerge from bankruptcy protection on June 30 has received approval from a federal bankruptcy judge.

On June 21, Judge Brendan Shannon of the U.S. Bankruptcy Court in Wilmington, Delaware entered an order to confirm the “Joint Plan of Reorganization and Plan of Compromise and Arrangement” filed by Smurfit-Stone, its subsidiaries, and affiliates acting as debtors under Chapter 11 of the federal bankruptcy code, according to a news release from the company.

The Missouri-based company, which manufactures containerboard and packing materials, entered Chapter 11 in January 2009.

The company’s debtors include Canadian subsidiaries and parties to the companies’ Creditors Arrangement Act in Canada.

The judge’s action follows similar relief previously granted in Canada and positions Smurfit-Stone to emerge from Chapter 11 in the U.S. and from CCAA protection in Canada, according to the company.

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Horst Co Owners Leave Uncompleted Contracts and File for Bankruptcy

The owners of a business in Greeley, Colorado that shut down earlier in June without completing thousands of out-of-state orders have filed for Chapter 7 bankruptcy protection.

Husband and wife Tracy and Kristine Cantrell filed for bankruptcy two days after they vowed to complete the remaining orders in order to fulfill Horst Co.’s outstanding contracts, one including 11 cat condos secured by an $11,000 deposit on the work by an animal shelter in Ottawa, Kansas.

The bankruptcy notice was filed on June 10 in U.S. Bankruptcy Court and says that the couple had debts of more than $1.26 million owed to local and out-of-state businesses and agencies. That total includes over $533,000 in business loans and lines of credit with Advantage Bank. Last fall, Advantage was placed under a federal order to correct its unsound banking practices. The Cantrells inherited Horst, an animal enclosure manufacturing company, within the past few years from Dan and Martha Horst, the founders and parents of Kristine Cantrell.

In their filing, the Cantrells list more than 20 pages of business debts. The debts range from small items like a $30 speeding ticket in a rental car to utility, tax, and accounting bills to thousands in disputed claims and unfinished contracts. Also included in the filing are two pending lawsuits against the company from the Humane Society of Weld County for $25,000 and Tubular USA Inc. of Missouri for $67,867.

Two years ago, the Humane Society of Weld County paid Horst an upfront fee of $30,000 for some dog kennels. Executive Director Elaine Hicks says the Humane Society filed suit due to the kennels not having been completed in time and were in terrible condition upon the arrival of a partial order. She also said the kennels did not pass state inspection as the inspector said they were dangerous to the animals. Hicks said a $25,000 settlement had been reached, which they returned to court to try to enforce.


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St. Louis Business Bankruptcies See 20% Increase

According to a report released on June 8 by Hoffman Clark, a Clayton, Missouri-based accounting firm, bankruptcy filings for St. Louis businesses for the 12-month period ending March 31 saw an increase of 20 percent to 409, up from 341 fillings for the previous 12-month period, which ended March 31, 2009.

The total represents the highest number of St. Louis business bankruptcies since the 12-month period that ended March 31, 1992.

The firm said that filings for the most recent 12-month period were an increase of nearly three times the 133 filings for the same period in 2007, just prior to the beginning of the recent economic decline.

Bankruptcy filings for St. Louis businesses increased at a slower rate than U.S. total business bankruptcy filings for the same period. Nationwide, the number of filings saw an increase of 25 percent to 61,148 in the period ending on March 3 from 49,091 during the previous 12-month period.

The data are basing on filings with the U.S. Bankruptcy Court for the Eastern District of Missouri, with divisions covering St. Louis, Cape Girardeau, and Hannibal. The majority of the filings took place in St. Louis.


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Cape Girardeau County Ridden with Foreclosures

Foreclosures have reached record highs across the U.S., and Cape Girardeau County is no exception to that.

Janet Robert, who has served as the county’s recorder of deeds for the past 33 years, called the problem “broad and widespread,” saying, “It’s affected all subdivisions and segments of the population, no matter their income.”

So far in 2010, there have been 104 foreclosures filed in Cape Girardeau County, a number that is on pace to easily break the record number 186 set last year, Robert said. Foreclosures have increased in the county over the past four years, from 149 in 2007, to 170 in 2008, to 186 in 2009.

Dawn Dauer, senior vice president of Bank of Missouri in Cape Girardeau, cited job losses, lost profits for business owners in the down economy, and divorce situations where the partner who gains possession of the home is unable to continue making payments on just one income as some of the reasons for the recent spike.

Statistics from the Mortgage Bankers Association say that more than 4.6 percent of homeowners were in foreclosure in the first quarter of 2010 across the U.S. In the state of Missouri, 2.12 percent of homeowners were in foreclosure during the first quarter. Alaska had the lowest foreclosure rate among states, with 1.34 percent, and Nevada had the highest, with 14.03 percent.

The Mortgage Bankers Association also said that during the first quarter of the year, 8.5 percent of Missourians with mortgages were at least 30 days behind in their payments, near the national average of 9.4 percent.

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Kansas and Missouri Higher than US Average in Foreclosures

A June 10 report from RealtyTrac shows that foreclosure activity in Kansas and Missouri remained higher than the national average in May. There were 1,200 households in Kansas in foreclosure actions in man, an increase of 37 percent from May 2009, and 3,800 households in Missouri in trouble with lenders, also an increase of 37 percent from May 2009.

One possible reason is that the housing crisis struck both the Pacific and Atlantic coasts early in the economic decline and those regions are beginning to show improvement. But in the Kansas and Missouri area, households continue to work through foreclosure problems.

The report says that across the U.S., the number of people faced with foreclosure was nearly flat from a year ago.

One-third fewer people are receiving legal warnings that they could lose their homes. Foreclosures are also receding in some of the hardest-hit cities.

However, the number of foreclosures continues to be extraordinarily high. Experts believe a major reason for the stabilization is banks allowing delinquent borrowers remain in their homes longer, instead of adding to the glut of foreclosed properties on the market. New consumer protection laws, which vary by state, also have led to borrowers being allowed to remain in their homes for a longer period of time.

In RealtyTrac’s report, it said that nearly 323,000 households, or one out of every 400, received a foreclosure-related notice in May, a 0.5 increase from May 2009, but a three percent decrease from April.

However, in a sign that the crisis is not yet over, the number of homeowners losing their homes to foreclosure reached a record high of nearly 94,000 in May.

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NBA Star Antoine Walker Files for Bankruptcy

Former NBA star Antoine Walker has filed for personal bankruptcy, citing $1.27 million in casino debts, 20 foreclosures, and other property-related lawsuits.

The former forward for the Boston Celtics and Miami Heat filed for Chapter 7 protection at the U.S. Bankruptcy Court in Miami earlier in May, citing a debt of $12.7 million and assets of $4.3 million. Chapter 7 means that he plans to liquidate assets in order to repay creditors. A report from Yahoo Sports said that Walker earned more than $110 million during his 12 years in the NBA.

Walker filed for bankruptcy on May 18, not long after he was served with a $2.3 million foreclosure suit on a suburban Chicago mansion he purchased for his mother, according to a report from Crain’s Chicago Business. The house was one of four properties worth a combined $4 million that Walker listed on his bankruptcy filing. He faces foreclosure suits on those properties and on some of his business holdings.

Among the largest of Walker’s unsecured liabilities, he listed a gambling debt of $770,000 owed to Harrah’s Entertainment in Las Vegas and a $500,000 gambling debt owed to Ameristar Casino in East Chicago, Indiana.

Walker owes more $750,000 in restitution to the Las Vegas District Attorney after he was arrested for allegedly writing bad checks a year ago. However, charges were deferred when he agreed to a payment plan. He also owes $458,000 to sports agent Mark Bartelstein.

According to court papers, Walker said that he and his family spend an average of $78,000 per month. That amount includes $1,000 on clothing, $400 on pool maintenance, and $1,200 on housekeeping. He said that he currently has no income.

Among the items Walker may make available for creditors are a 2008 Range Rover, a $20,000 designer watch, and his 2006 NBA Championship ring, which he values at $6,000.

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Illinois Governor Keeps Military Personnel's Foreclosures to a Minimum

Pat Quinn, governor of Illinois, has signed legislature to aid members of the military with keeping their homes from foreclosure.

Quinn signed the measure on May 29 and it will go into effect in January 2011.

The measure received the support of members of the Illinois House and Senate.

The new law grants a 90-day delay in foreclosure proceedings for active-duty members of the military.

Those who are eligible to receive the extension will have to apply in writing.

According to Quinn, the law will ensure that members of the military are supported while they are away from their homes while on active duty.


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Loan Modification Scams on the Rise, Missouri Warns Residents

Federal and Missouri state officials are issuing warnings to homeowners facing the possibility of foreclosure of the growing scam of loan modification offers.

As foreclosure activity reaches close to record highs in the St. Louis area and elsewhere, the number of cases of homeowners being scammed into modifying their loans is also on a rapid rise.

According to the Federal Trade Commission, more than 6,000 people filed complaints in 2009 about these scams, in which homeowners can be coerced into paying an upfront fee to companies claiming that they will help with refinancing. According to Missouri Attorney General Chris Koster, complaints have seen a 1,000 percent increase since 2008.

At a June 11 press conference at the St. Louis Federal Reserve, Koster said that the consumer simply receives no services once the upfront fee is paid. He said that these companies, which are typically out of state and on the coasts, will draw consumers from Missouri in and “simply abandon them as soon as they have the consumers’ money.”

Koster said that his office is currently prosecuting approximately a dozen cases and conducting investigations into a dozen more.

Illinois Attorney General Lisa Madigan referred to the modification scams as being among the worst she’s seen.

"Whether these folks call themselves loan mod consultants or mortgage rescuers, these are truly con artists and they are nothing more than opportunistic predators," Madigan said.

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St. Louis Owner of TGI Friday's Talks Bankruptcy with Employees

On June 12, Steve Bell, President of Chesterfield-based Tricorp management company, which owns five TGI Friday’s restaurants in the St. Louis area, met behind closed doors with the employees of the Friday’s located in Creve Couer to clear recent talks of bankruptcy. Employees in attendance at the meeting would not give specifics about what was discussed and said they had been advised to not speak with any media.

The meeting’s purpose was to clarify the situation concerning the recent Chapter 11 Bankruptcy protection filing by Tricorp. The company filed for bankruptcy under the name BiState Bistro LLC.

According to what an anonymous source close to Tricorp corporate offices told Globe-Democrat.com, the troubles started when TGI Friday’s began requiring franchises to remodel their restaurants. That was confirmed by documents in the U.S. Bankruptcy Court for Eastern Missouri. The documents say that the remodeling expenses came around the same time revenue at its restaurants began dropping and the economy declined.

The anonymous source said that the belief was that the “revitalization of the restaurants” would result in a 15 percent increase in sales. But the return on the investment did not occur.

According to the source, Tricorp filed for bankruptcy under the names BiState Bistro and Primrose Properties because they wished to keep the situation from reaching public light. Reportedly, the general managers of the restaurants were kept informed, but they were told to remain silent in order for employees to not find out.

Another situation that harmed the Friday’s corporation was the closing of a Fayetteville, Arkansas restaurant due to a new 20-year-lease with Slevin Capital Investments Inc. BiState Bistro closed the location after being unable to renegotiate the lease’s terms.

Due to the sudden closing, Slevin Capital Investments filed suit against BiState Bistro. The ensuing lawsuit from the landlord contributed to the Chapter 11 filing.

Bell said business would continue as usual during the proceedings.

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St. Louis Business Bankruptcy Rates Highest In 18 Years

The St. Louis Business Journal has more bad news for Missouri companies and those waiting for the economy to completely recover: the rate of St. Louis business bankruptcies over the past 12 months is higher than it has been since 1992.

There were 409 business bankruptcy filings in the past 12 months, ending at the end of March. That is up 20 percent from the period ending on March 31, 2009, when 341 businesses filed for bankruptcy protection. This year’s numbers are three times higher than in 2007, before the recession began, when only 133 companies in the St. Louis, Missouri, went to bankruptcy court to either liquidate or reorganize their assets and debts.

There is some good news: St. Louis’ rate of business bankruptcies is lower than national business bankruptcy numbers. Across the country, the rate of business bankruptcies rose 25 percent, from 49,091 bankruptcy filings last year to 61,148 bankruptcy filings in the last 12 months.

While the economy is recovering in many ways, businesses are still struggling as consumers slowly regain confidence and return to shops and stores. Financial experts expect these conditions to improve over the next year or two, though improvement will be a slow process.

These St. Louis bankruptcy numbers were compiled by Hoffman Clark, a Clayton, Missouri, accounting firm. They collected their data from the U.S. Bankruptcy Court for the Eastern District of Missouri, which includes St. Louis and the surrounding area.

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Thomas Motors Of Moberly Wins Case After General Motors Bankruptcy

A Moberly, Missouri General Motors car dealer will stay open despite an earlier letter that asked the dealer to wind down sales in the wake of GM’s bankruptcy.

According to Kansas City Daily Business News, Thomas Motors of Moberly successfully petitioned an earlier order from GM to stop sales of their cars in an effort to cut back on car dealerships throughout the country. General Motors filed for bankruptcy in June of last year and part of their bankruptcy plan included scaling back on dealerships. However, many dealerships, including Thomas Motors in Missouri, asked for closer consideration.

The arbitration hearing included testimony from Moberly leaders regarding the importance of Thomas Motors to the local economy. Moberly City Manager Andy Morris, Randolph County Commissioner Wayne Wilcox, Moberly Area Economic Development President Corey Mehaffy and area businessman Chas Wheeler all spoke at the hearing. At the conclusion of the hearing, Arbitrator Bob Russell of Sedalia issued the decision to allow Thomas Motors to renew its franchise agreement.

The owner of the Missouri car dealership said that he was pleased with the outcome and that he looked forward to continuing to serve the area.

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BBB Warms Missouri Residents About Debt Settlement Companies

After receiving over 3,500 complaints since the economic crisis began in 2007, the Better Business Bureau (BBB) suggests that Missouri and Illinois move forward with extreme caution when dealing with debt settlement companies. Present and CEO of the BB Michelle Corey advises consumers struggling with debt to be wary of debt settlement companies that ask for large upfront fees, that make promises that are too good to be true, or make claims to completely deplete your debt.

The St. Louis Globe-Democrat told the story of Hazelwood, Missouri, nurse that spent over $1,500 with The Consumer Law Group, a debt management company with a history of scamming their customers out of their last few dollars. The nurse said she made monthly payments to the company, who did little more than send cease and desist letters to her debtors. Legitimate debt settlement companies negotiate with creditors and help their customers create a plan to pay down their debt. However, many companies do no more than a consumer could do themselves – and many ask for high monthly payments.

With the recent recession, housing crisis, and economic crisis, more Americans than ever are struggling with debt, and few know how to solve the problem. Many debt settlement companies prey on these struggling debtors, who are often looking for an easy way out of their problems. Many of these debt settlement companies use aggressive marketing techniques and leave their customers with little information and less money.

Both Missouri and Illinois officials are working towards better regulating these debt settlement companies and raising consumer awareness.

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Illinois Businessman Files For Personal Bankruptcy

Dan Gustafson, an Illinois businessman and a local politician, has filed for Chapter 7 liquidation bankruptcy just one year after his businesses failed in the poor conditions created by the economic recession.

Gustafson owned a freight company based in Illinois called Concert Group Logistics, but last July, the parent company took over control of the company after almost ten years. Now, Gustafson has an estimated $1.2 million in debts – all of which the man says is a result of his failed small business. Gustafson also says that the poor economy is to blame for his business failings and personal finance failings. He told reporters that before the recession hit in 2007, he was making $4 million a year, a number that dropped to under $1 million just a year later. He said that he couldn’t downside his business fast enough, landing both his company and him in debt. Finally, he suddenly lost a client that made up the majority of his remaining business.

The Illinois businessman’s biggest creditor is Concert Group Logistics, which he owes $266,000. Other debts include credit card balances and almost $100,000 in federal and state taxes. He has filed an exemption to keep his large house, one of his few remaining assets. He also says he is actively looking for work in addition to his job as a city councilman. He is looking forward to a new start after his bankruptcy.

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Experts: Many Of Those In Need Not Taking Advantage Of Bankruptcy

The new bankruptcy laws that were enacted in 2005 made it harder and more expensive for families to file for personal bankruptcy – new rules that are now making it more difficult for families who are truly in need to file for bankruptcy and get a new start. Even with a near-record number of personal bankruptcy filings – almost 2 million people are expected to file in 2010 – many bankruptcy experts believe that many millions of families who would benefit from filing a bankruptcy petition are not doing so. This, in turn, could slow the country’s economic recovery.

A recent USA Today article reported that just a fraction of those who would benefit from bankruptcy are filing for bankruptcy – either because they can’t collect enough money to file or because they’ve heard that bankruptcy is not a fair way out. In reality, declaring bankruptcy could help speed the country’s overall financial recovery. Others believe that they could lose their home if they file for bankruptcy – something that is certainly not fact. What do experts think? The problems are not going resolve themselves anytime soon.

The bottom line is that the 2005 bankruptcy laws that were put in place to stop bankruptcy abuse are now stopping many honest Americans from making a fresh start. At the same time, consumers might be under the false impression that declaring bankruptcy is too expensive or too difficult for them to move forward with the process.

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The "Soup Nazi" May Need to File Bankruptcy

Soup Kitchen International Inc., a business that grew out of the well-known “Soup Nazi” character from popular television sitcom “Seinfeld,” is facing an attempt to force it into bankruptcy.

On May 18, five creditors filed a petition for involuntary Chapter 7 bankruptcy against the Staten Island, New York-based company in Brooklyn bankruptcy court, seeking $398,654.71. The company was founded in 1984 and has also done business as the Original SoupMan. The Original SoupMan, which purchased some assets from Soup Kitchen International, is not involved in the Chapter 7 proceeding, according to Original SoupMan spokesman Ronn Torossian.

The Original SoupMan, which is based out of the same Staten Island address as Soup Kitchen International, currently has restaurants or retail locations in several states across the U.S. and one in Windsor, Ontario, Canada, according to its website.

According to Torossian, the Original SoupMan purchased some of the assets of Soup Kitchen International in December, in addition to secured debt of $3.5 million. He said that the Original SoupMan no longer owns the company and is expanding with a line of frozen soups and new stores.

A Manhattan store became world-famous due to founder Al Yeganeh’s rules commanding customers to order soup in the most efficient manner inspiring an episode of “Seinfeld.” That location, which has been closed since 2006, will soon be reopened, according to Torossian.

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Texas Rangers Investor May Be Forced into Bankruptcy

A group of lenders to the Texas Rangers filed suit on May 28 in order to force the baseball team’s equity owners, controlled by private equity investor Thomas Hicks, into bankruptcy.

The petition for involuntary bankruptcy was filed in Forth Worth, Texas against Rangers Equity Holdings LP and Rangers Equity Holdings GP by four hedge funds and comes just days after the team placed itself into voluntary bankruptcy in order to ease a proposed $575 million sale to a group led by team president and Hall of Fame pitcher Nolan Ryan.

The Rangers’ equity owners, controlled by Hicks’ HSG Sports Group, were not part of the prepackaged bankruptcy the team filed on May 24. Hicks group lenders declared default on $525 million worth of loans in April of last year. HSG acquired the Rangers in 1998.

The May 28 court action could be an indication that some of the Rangers’ lenders are not satisfied with the proposed sale’s terms.

According to a spokesman for the lender group, the intention of the petitions is to “ensure that the bankruptcy proceedings meet the objective of maximizing value for all creditors. He said the lenders notified the court on May 25 that they might take such an action.

The petitioners claim they were owed a collective $144.4 million. Included in the group are hedge funds Kingsland Capital Management ($12.2 million), Monarch Master Funding LLC ($119.8 million), Sankaty Advisors LLC ($9.1 million), and Stonehill Offshore Partners LTD ($3.3 million). All say their claims are secured.

Major League Baseball, Ryan’s group, and Hicks have all said they support the sale. However, earlier in May the New York Times said that Monarch told baseball owners that lenders would not agree to a sale for a price “below fair market value.”

The Rangers are the second MLB team to seek a bankruptcy-court-approved sale within the past year. In October, Chicago Cubs owner Tribune Co., which had been in bankruptcy itself for nearly a year, filed for court protection for the team during an $845 million sale of the team to the family of TD Ameritrade Holding Corp founder Joseph Ricketts and his son, Tom Ricketts.

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Settlement Offered to Midway Games Owner Sumber Redstone

The creditors’ committee for video game company Midway Games Inc. has agreed to take $1 million in order to settle remaining claims against owner Sumner Redstone and companies he controls. The settlement is set for approval in bankruptcy court on June 23.

Midway, which once owned and developed such hit games as the “Mortal Kombat” series, recently confirmed its Chapter 11 liquidation plan. The settlement would generate more cash for distribution to creditors. Prior to the agreement, unsecured creditors of the parent company were informed that they could recover 16.5 percent, while unsecured creditors of subsidiaries are in line for 25 percent.

The creditors’ committee was largely unsuccessful in the suit against Redstone and his companies. They argued that Redstone carried out a “disastrous and ill-advised” $90 million transaction in February 2008 that saddled the company with a new debt of $70 million that it was unable to satisfy.

In late January, the bankruptcy judge dismissed the majority of the claims, but allowed the committee to continue prosecution of claims aimed at recharacterizing parts of the transaction as secured lending, rather than so-called true sales.

The judge said that if the committee were to have won on recharacterization, they could proceed with claims of preference and constructive fraudulence. Redstone is paying $1 million to resolve the recharacterization-related claims.

Midway sold assets in order to generate $43 million in cash, leaving no substantial secured claims unpaid. A unit of New York-based Time Warner Inc. purchased the majority of the assets in July for $33 million plus accounts receivable. The non-bankrupt European subsidiaries were sold in August for a nominal consideration.

Midway, a Chicago-based company, filed for Chapter 11 bankruptcy in February of last year, listing assets of $168 million and debt of $281 million. Including foreign subsidiaries not in bankruptcy, the asset and bankruptcy totals were $178 million and $337 million.


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US Fidelis Coming to Agreement with Attorney General

The company that now operates bankruptcy auto warranty marketing firm U.S. Fidelis and the Missouri Attorney General’s office have reached an agreement to work towards an agreement on claims against the company.

Amherst Partners, in an agreement that the goal is to get the most return possible for U.S. Fidelis’ creditors, will provide access to the firm’s records and personnel. The two sides are forming a committee to provide the attorneys general of Missouri and other states with some oversight during the bankruptcy proceedings.

According to Missouri Attorney General Kris Koster, the deal provides protection for Missouri creditors from suits filed against the former owners of US Fidelis, brothers Darain and Cory Atkinson and their wives, by allowing them to see if corporate money wound up in the pockets of the Atkinsons.

The judge is providing the attorneys general and Amherst Partners with 90 days to show progress before ruling on a motion to appoint a new trustee.

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Debt Settlement Bill Passes In Illinois – Needs Governor Signature

House Bill 4781 has passed the Illinois General Assembly and is waiting to be signed by Illinois Governor Pat Quinn. The bill is meant to better regulate debt settlement companies – companies that often leave their customers deeper in debt and closer to bankruptcy.

Backed by dozens of consumer advocacy groups, the debt settlement consumer protection bill hopes to lessen deceptive business practices, large start-up fees, and false advertising in debt management and debt settlement companies. While many agree that debt settlement companies prey on desperate people who suffer from large amounts of credit card debt, medical debt, or debt after divorce, no state before Illinois has passed measures to curb the abuse debt settlement companies wrecks on unknowing debtors. Especially with the recent economic crisis and recession, millions of people are looking for solutions for their debt problems and often turn to debt settlement companies with poor track records malicious practices.

The AARP is one of many Illinois organizations backing the bill. According to a press release, seniors are often plagued by debt – and may be more susceptible to unfair debt management companies and debt settlement companies than younger debtors.

The debt settlement regulations bill would outlaw up-front and monthly fees to customers and allow only a $50 application fee. In addition, the law would make it illegal for debt settlement companies to recommend to customers to stop paying creditors and for companies to make cancellation complicated or impossible. Finally, the bill would require debt management companies to be licensed.

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Personal Bankruptcies Down In April Nationally

When it comes to the rate of personal bankruptcies in the United States, do you want the good news or the bad news first?

According to the National Bankruptcy Research Center’s April 2010 Bankruptcy Filings Report, the rate of personal bankruptcy filings in America went down one percent in April 2010 in comparison with the rate of bankruptcy filings in March 2010. However, the rate of bankruptcy filings for April was up 17 percent in comparison to April 2009 filing numbers.

While bankruptcy rates are slowly decreasing, bankruptcy experts don’t expect the numbers to return to “normal” rates any times soon. Why? Until jobless rates decrease and until the housing market stabilizes, families across America will still be struggling with unemployment, upside-down mortgages, and resetting mortgage rates. Especially in areas where the value of housing has decreased significantly, bankruptcy professions are predicting that rates of bankruptcy will continue to be high for many months or even years to come.

It is also worth noting that personal Chapter 7 liquidation bankruptcy is on the rise while personal Chapter 13 reorganization bankruptcies are less popular. In April, three out of four bankruptcies were Chapter 7 while only 25 percent were Chapter 13.

The last time national bankruptcy rates were as high as they are today was in 2005, when the bankruptcy rate surged just before new bankruptcy laws made it more difficult for families to file for Chapter 13 and Chapter 7 bankruptcy.

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Injured Illinois Farms Struggles Against Bankruptcy

Did you know that the majority of Illinois personal bankruptcies are caused by a single adverse event, such as an injury, a job loss, a divorce, or an illness? While many people want to believe that most bankruptcies are caused simply by financial irresponsibility, the truth is that most bankruptcies happen to regular families who are suddenly faced with an emergency. Unfortunately, even though with health insurance can be stuck with expensive medical bills when their insurance company refuses to pay their claim.

This was exactly the case for Illinois farmer 37-year-old Jason Haas, who fell from a grain bin and incurred $87,000 in medical bills, not to mention lost wages. When his insurance company refused to pay for his worker injury costs, Haas’ was forced to consider bankruptcy even though he had insurance, according to the Chicago Tribune.

In October, Haas fell 15 feet from a grain bin ladder, compressing his vertebrae and breaking his left leg. Why won’t his insurance company pay his bills? They say he was working a for-profit job when he was injured and should be covered by workers’ compensation – but farmers aren’t covered by workers’ compensation in Illinois.

While Haas has continued a fight for his insurance claim, his bills continued to pile up. Soon, he was receiving calls from creditors and struggling to keep up with the most basic payments. His next options are tough ones: sell his farming equipment, sell his farm, or declare Illinois bankruptcy.

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Bankrupt Illinois Chemical Maker Tronox Struggles With Waste Cleanup

U.S. Bankruptcy Judge Allan Gropper has approved a settlement between a bankrupt Illinois chemical maker and the US government regarding the handling of a toxic waste cleanup.

Tronox Inc., an Illinois chemical manufacturer that is the world’s third largest maker of the whitening pigment titanium dioxide used for paint, paper, and plastics, recently declared chapter 11 reorganization bankruptcy while at the same time seeking money from the federal government for toxic waste cleanup that it funded during the last 30 years. The settlement reached this month is $25 million, which Tronox plans to set aside along with $115 million for environmental cleanup costs white the company goes through the bankruptcy process.

When the company filed for Chapter 11 bankruptcy in November, the company reported $1.6 billion in assets and $1.2 billion in liabilities. The bankruptcy largely concerned legacy debts from former company Kerr-McGee, which has been blamed for contaminating a number of West Chicago properties with radioactive waste in the 60s and 70s. Tronox has spent millions cleaning up the issue without the help of the government and cleanup is thought to continue into the future. During the bankruptcy process, the company plans to continue operations as usual.

“Before the health risks associated with radioactive materials were recognized, these mill tailings were available for use as free fill material by residents and contractors in the West Chicago area. Accordingly, the soil at many properties in the West Chicago area became contaminated with radioactive materials,” lawyers for Tronox wrote.

The company made $1.43 billion in sales in 2007.

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Illinois Court Approves RathGibson Bankruptcy Plan

Illinois’ Chicago Daily Herald reports that RathGibson Inc. has had their reorganization bankruptcy plan approved both by a judge and by their creditors as of May 21, 2010. In the approved Chapter 11 bankruptcy plan, the steel tube manufacturer will pay its creditors over $80 million in secured debt. At the same time, the company that is over $300 in debt will pay off 1.2 percent of its unsecured debts. The approved plan is based on a sale of the business for $93 million cash to a group including some of the existing secured lenders and holders of 70 percent of the $209.5 million in 11.25 percent unsecured notes.

None of RathGibson’s creditors approved their Illinois bankruptcy plan. The original plan was rejected earlier this year.

The Lincolnshire, Illionis, maker of steel tubes filed for Chapter 11 reorganization bankruptcy in August of 2009, with the manufacturing company listing as many as 5,000 creditors and an estimated $319 million in debts. The IL business bankruptcy was blamed on economic problems across the board which led to a lower demand of steel tubes. As orders dropped, the company found itself with cash flow problems and then mounting debt.

"The debtors have been continuously exploring their options for addressing their liquidity and capital structure issues with their lenders, noteholders and other constituents," said RathGibson CEO Jon Smith in court papers filed with the U.S. Bankruptcy Court.

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Two Jamestown LLCs in Need of Chapter 11 Protection

Jamestown LLC filed for Chapter 11 bankruptcy protection one day before the Rogersville development by the same name was headed into a trustee’s sale for default on a $5.05 million loan.

The bankruptcy filing took place in the U.S. Bankruptcy Court of the Western District of Missouri on May 17 and allowed developer American Equities of Missouri Inc. to avoid a foreclosure sale of two tracts at the 200-acre mixed-use property east of Springfield at U.S. Highway 60 and Business Route 60 that was to occur on May 18.

Chapter 11 bankruptcy protection allows for a corporation or partnership, such as Jamestown LLC, to reorganize, according to www.uscourts.gov. A debtor seeking Chapter 11 bankruptcy protection typically proposes a reorganization plan to keep its business alive and pay creditors over time.

According to an April 30 legal notice, Cincinnati, Ohio-based Fifth Third Bank called its $5 million loan on Jamestown

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Kansas City Foreclosures Down for the Month, Up for the Year

The home foreclosure rate in the 15-county Kansas City area saw a decline in April after seeing a dramatic surge in March, according to a new report from RealtyTrac Inc. However, the number was a substantial increase from April 2009.

A (Thursday before article) report from RealtyTrac said foreclosure actions, including default notices, scheduled auctions, and bank repossessions, were taken against 2,021 homes in April. That number is a 44.5 percent decrease from the 3,643 foreclosure actions in March, but an increase of 61.5 percent from the 1,251 actions in April of last year.

The total number for April means that one out of every 429 households in the Kansas City area received a foreclosure filing, in comparison to one out of 238 households in March.

The largest number of foreclosure filings, 1,101, or one out of every 289 households, took place in Jackson County. The next most took place in Johnson County, with 430 filings, or one out of every 505 homes. Wyandotte County was third, with 179 filings, or one out of every 379 homes.

The entire state of Missouri ranked 29th in foreclosure rate, with 3,635 filings in April, or one out of every 733 homes. That number was an increase of six percent from March and an increase of 34.7 from April of last year.

RealtyTrac reported that 333,837 filings, or one out of every 387 homes, occurred nation-wide. That total was a decrease of nine percent from March and a decrease of 2.4 percent from April 2009.

The top three foreclosure rates were in Nevada, Arizona, and Florida. Nevada had the highest rate for the 40th month in a row, with one out of every 69 housing units receiving a foreclosure filing for April, which is more than five times the national average.

While fourth in foreclosure rate for the nation, California had the largest number of foreclosure filings in the U.S., reporting 69,725 filings in April.

 

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One in Seven Households Ends Up Behind or in Foreclosure

According to a statement from the Mortgage Bankers Association, one out of every seven households in the U.S. with a mortgage ended the first quarter of 2010 either behind on payments or in foreclosure. However, the association says that a peak in unemployment could mean that repayment stress is easing.

The national rate of foreclosure has slowed, but the stockpile of loans that are seriously delinquent or in foreclosure indicates a long recovery path for the U.S. housing market.

MBA chief economist Jay Brinkman said the situation is “like shutting off the oil leak, but you still have a lot of oil in the Gulf to deal with.”

Loans that are past due by 90 days or more or are in foreclosure are at a historical high of 68 percent of all mortgages. The high rate of unemployment is overwhelming efforts by lenders to alter loan terms to borrowers.

Mark Zandi, chief economist for West Chester, Pennsylvania-based Moody’s Analytics, said that looming foreclosures and short-sales indicate that there will continue to be a decline in housing prices in which “we’ll see a bottoming of the price decline very late this year into early next year.”

According to the MBA’s National Delinquency Survey, the combination of loans in foreclosure and loans that are at least one payment past due saw a decrease to 14.01 on a non-seasonally adjusted basis from a record 15.02 percent in the fourth quarter.

The MBA reported that new claims for unemployment insurance in the first quarter were higher than expected, stymieing improvement in the 30-day delinquency rate. Brinkmann said that the rate has stabilized, but “a bad situation that is not getting worse is still bad.”



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Washington Mutual Files Latest Reorganization Plan

Nearly a day late and billions of dollars short, on May 21, Washington Mutual Inc. filed its latest reorganization plan with the U.S. Bankruptcy Court for the District of Delaware.

The filing, which was reported four minutes prior to midnight, covers terms of a revised global settlement representing the third and final version of a deal settling fights over the collapse of its thrift subsidiary, Washington Mutual Bank, aka WaMu.

On the day of the filing, Washington Mutual gave the U.S. Bankruptcy Court in Wilmington, Delaware a promise of filing a final settlement and the final version of a Chapter 11 exit plan.

According to Washington Mutual, it is billions of dollars shy of what is necessary to cover all of its debts and take care of shareholders.

The proposed WaMu settlement will form the basis of a Chapter 11 plan establishing how former parent Washington Mutual plans to distribute the approximate $7 billion it expects to amass in Chapter 11.

In a bankruptcy court hearing that occurred on May 19, the expected pact would be among WaMu’s former owner, Washington Mutual, its new owner, J.P. Morgan Chase & Co., and the Federal Deposite Insurance Corp. (FDIC).

In September 2008, the FDIC brokered the $1.9 billion sale of WaMu to J.P. Morgan as the housing market collapse was draining value from its portfolio of risky home loans.

The settlement will grant Washington Mutual $4 billion in cash that was in its bank accounts at the thrift when it was taken over.

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Examiner to Review Buyout of Tribune Co in Chapter 11 Case

On May 10, the judge in the Chapter 11 bankruptcy case of Tribune Co. appointed an independent examiner to conduct a review of the 2007 leveraged buyout of the media conglomerate and the potential claims arising from it that could be brought on behalf of the bankruptcy estate.

The U.S. trustee’s selection of California bankruptcy attorney and UCLA law professor Kenneth Klee received the approval of Judge Kevin Carey. He will review what is possibly the core issue in the bankruptcy case.

In spite of the appointment’s approval, attorneys in the case continue to dispute over whether and how information give to Klee by parties in the case should be considered confidential or privileged.

Carey granted Klee the authority to meet with anyone he desires without inviting other parties and to share privileged information with outside parties, if necessary.

The buyout, which was engineered by real estate mogul Sam Zell and left Tribune Co. with a massive debt load, is to be Klee’s primary focus.

On December 2008, Tribune, which owns the Los Angeles Times, Chicago Tribune, The (Baltimore) Sun, and other daily newspapers along with 23 TV stations and formerly the Chicago Cubs, filed for bankruptcy due to dwindling advertising revenue and a debt load of $13 billion, a majority of which stems from the buyout.

A group of bondholders represented by Wilmington Trust Co. filed suit in March against JPMorgan Chase and other banks financing the buyout, alleging that the ensuing debt load would leave Tribune insolvent. The bondholders claim the deal was fraudulent due to loading up the company with too much new debt that was used to cash out Tribune stockholders.


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Movie Gallery to Close Remaining Stores

Movie Gallery Inc. has decided to close its remaining stores and liquidate as consumers are increasingly renting films through the mail, vending machines, and high-speed Internet connections.

The company, which is the No. 2 rental chain behind Blockbuster Inc., filed a notice with the U.S. Bankruptcy Court for the Eastern District of Virginia in Richmond that it plans to terminate its business operations after it defaulted on a loan from one of its creditors.

In an agreement filed with the court, the company said the decision to shut down the more than 1,900 remaining stores across the U.S. is in the company and its creditors’ “best interests.” The agreement doesn’t provide a time line and still requires a bankruptcy judge’s approval.

The Wilsonville, Oregon-based company filed for Chapter 11 in February, citing increasing competitive pressure from movies-by-mail service Netflix Inc., DVD kiosk company Redbox, and delivery of movies and TV shows over the Internet.

The filing does not include the company’s operations in Canada.

The filing was the company’s second time filing for bankruptcy within the past three years.

In October 2007, the company filed for bankruptcy because it could not sustain the debt it took on after acquiring rival Hollywood Entertainment Corp. in 2005 for $850 million. Movie Gallery agreed to assume approximately $350 million of Hollywood’s debt under the deal.

The purchase resulted in Movie Gallery becoming the second-largest rental chain in the U.S., but within the past three years, the company has been forced to close more than 2,400 stores, according to court filings. It had since announced that it planned to close more stores under a restructuring plan.

The company said that it continued seeing “significant” losses in 2009, despite the move to close unprofitable locations. Movie Gallery’s annual revenue decreased a total of $546.3 million, or 28 percent, to $1.4 billion.

In its filing, the company listed debt between $500 million and $1 billion and assets between $10 million and $50 million.

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Northwest Missouri Biofuels to Be Auctioned Off

A federal bankruptcy has issued an order for a northwestern Missouri-based biofuels company to be sold at auction.

According to the decision by the U.S. Bankruptcy Court for the Western District of Missouri, Northwest Missouri Biofuels must be auctioned off. According to a report from the St. Joseph News-Press, the company was forced into bankruptcy in 2009.

The company opened its biodiesel plant in 2007. In 2008, Northwest Missouri Biofuels completed an expansion in 2008 that allowed it to produce 15 million gallons of biodiesel each year.

The plant is capable of producing biodiesel through the use of several kinds of feedstocks, including animal fat.

The auction of the company has been set for June 16 and will take place in Kansas City.

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Large Percentage Increase for Mid-West Foreclosures

The 9,080 home foreclosures in Missouri during the first quarter of 2010 represent an increase of 9.5 percent from the fourth quarter of 2009 and a 24.5 increase from the first quarter of 2009, according to a report from RealtyTrac, an Irvine, California-based online marketplace for foreclosure properties.

Across the U.S., home foreclosures saw a 7.2. percent increase during the first quarter, which is a 16 percent increase from the first quarter of 2009. Missouri ranks 30th in the U.S. for foreclosure rates.

New foreclosure numbers on homes in Springfield also saw a spike from the previous month, according to the report. In March, there were 178 new foreclosures in Springfield, a 62 percent increase from 110 in February. There are 873 homes in foreclosure in Springfield.

RealtyTrac CEO James J. Saccacio said that foreclosure activity in the first quarter of 2010 followed a similar trend to the first quarter of 2009. There was a shallow trough in January and February and a significant increase in March in both 2009 and 2010, he said.

A difference in the numbers for 2010 is that the increase took place more in the final stage of foreclosure. The number of real-estate owned properties increase nine percent year-over-year in the first quarter of 2010, in comparison to a 13 percent quarterly decrease in REOs during the first quarter of 2009.

Saccacio said that the subtle shift in numbers means the highest quarterly total of REOs ever seen in a RealtyTrac report and could be further evidence of lenders beginning to make a dent in the backlog of distressed inventory, which built up over the past year due to foreclosure prevention programs and processing delays slowing the normal foreclosure timeline.

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U.S. Concrete Files for Chapter 11Bankruptcy

On April 29, U.S. Concrete Inc. filed for Chapter 11 bankruptcy protection as part of a pre-arranged restructuring deal with bondholders to decrease its debt by $272 million.

U.S. Concrete shares decreased more than 42 percent in morning trade on the day of the filing, but later pared some losses and were down 35 percent at 55 cents in afternoon trading on Nasdaq.

The proposed restructuring would convert the company's 8.325 percent senior subordinated notes due in 2014 into equity in the reorganized company.

Existing shareholders are to receive warrants to purchase 15 percent of the reorganized company's stock.

According to the company, its joint operations in Michigan are not a part of the bankruptcy filing.

U.S. Concrete also sought to receive the approval of the bankruptcy court for an $80 million debtor-in-possession (DIP) financing led by JPMorgan to continue operating under bankruptcy protection.

The company, which listed 43 affiliates in its filing, said it expects for the bankruptcy process to conclude within a period of 90 days.

The Houston, Texas-based company listed assets of $389.2 million and debt of $399.4 million in court papers.

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West Virginia Man Sues for Wrongful Foreclosure

A man from Cross Lanes, West Virginia has filed suit against Countrywide Home Loans, Bac Home Loans Servicing, and Federal National Mortgage Association, alleging that the companies participated in predatory lending and loan servicer abuse that caused his home to be wrongfully foreclosed upon.

According to the suit Bradford Corder filed in West Virginia’s Kanawha County Circuit Court on April 13, he purchased a home in September of 2002 for $185,000.

Following a divorce, Corder submitted loan modification information to the defendants in January of this year and on March 11, he was informed that the modification had been approved, according to the complaint.

Corder says that on March 16, the defendants informed him that foreclosure on his home had been postponed until they received the loan modification package. However, Corder says that the defendants proceeded with the foreclosure on March 17 anyway.

Corder claims economic loss, property loss, and considerable stress, worry, and fear in the suit. He seeks actual damages and appropriate civil penalties.

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Watch Out for Forensic Mortgage Loan Artists

If you are faced with default on your mortgage or foreclosure on your home, be wary of the latest scam: fake “forensic mortgage loan artists.”

In this scam, the con artists claim that if you pay an upfront fee, their audits can help you hang on to your home. Don’t fall for it.

The Federal Trade Commission recently released a new consumer alert entitled Forensic Mortgage Loan Audit Scams: A New Twist on Foreclosure Rescue Fraud, in which it provides consumers with information and legitimate resources to help save their homes.

The alert can be found at: http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt177.shtm.

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More MO and KS Homeowners Facing Foreclosure

According to a new report from RealtyTrac Inc., the number of homeowners facing foreclosure action in Kansas and Missouri increased during the first three months of 2010.

The report said that within the first quarter, foreclosure actions saw an increase of nearly 61 percent in Kansas in comparison to the same period of 2009. Nearly 4,000 properties were affected.

RealtyTrac noted that the actual increase in Kansas may not be as high due to data collection changes or improvements.

The foreclosure rate for the first three months in Missouri saw an increase of 25 percent from the first quarter of last year. The number of properties involved in some form of foreclosure action rose above 9,000 for the quarter.

Across the U.S., the number of homes taken over by banks saw an increase of 35 percent from the first quarter of 2009 to the first quarter of 2010. Additionally, households facing foreclosure saw a 16 percent increase in the same period.

In March alone, foreclosure actions in Kansas saw an increase of 22.5 percent from March of last year and 24.5 percent from February.

In Missouri, foreclosure actions saw a 26 percent increase from March 2009 to March 2010 and a 14 percent increase from February 2010.

Both states had a large number of properties in the final stages of foreclosure.

RealtyTrac said that the trend could be further evidence of lenders beginning to make a dent in the backlog of distressed industry.

 

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Attorney Generals Encourage Separate Trustee for US Fidelis Bankruptcy

Attorneys general from 11 states have joined a Missouri-led effort urging a bankruptcy judge to appoint an independent trustee to run US Fidelis, the Wentzville, Missouri-based company that was once the largest seller of extended auto service contracts in the U.S.

In March, Missouri Attorney General Chris Koster requested that U.S. Bankruptcy Judge Charles E. Rendlen III appoint the trustee. Koster claims the company’s owners, brothers Darain and Cory Atkinson, plundered the company through illegal transfers of the firm’s assets in order to put them out of reach of creditors, including several hundred consumers.

Turnaround consultant Scott Eisenberg of Birmingham, Michigan-based Amherst Partners now runs US Fidelis.

Eisenberg has stated on multiple occasions that he has had no direct contact with the Atkinson brothers since he took over the company in March. Under the leadership of Eisenberg, the company has threatened to file suit against the brothers in order to recover nearly $65 million he believes they and companies they control owe US Fidelis.

On April 14, Washington state Assistant Attorney General Mary Lobdell backed Koster’s accusations in court filings. She led a multistate investigation of US Fidelis that examined widespread allegations of consumer fraud and telemarketing violations.

A filing from Lobdell noted that the Atkinson brothers have not resigned from their executive positions, meaning they could still interfere with the running of the company. Darain Atkinson was the president and Cory Atkinson was the vice president.

Other attorneys general joining the call for a trustee to be appointed are from Ohio, Iowa, North Dakota, Arkansas, Oregon, Maryland, Wisconsin, North Carolina, West Virginia, and Tennessee.

A hearing has been scheduled for May 26.

 

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Bankruptcy Filings Increase 32% for 2009

The upswing in bankruptcy filings shows no evidence of slowing down as filings saw a 32 percent increase in 2009.

Last year, bankruptcy filings across the U.S. rose to more than 1.47 million, an increase from 1.17 million in 2008, according to the Administrative Office of the U.S. Courts.

Recently, the pace accelerated, as bankruptcy filings across the U.S. rose to the highest monthly total since bankruptcy laws were overhauled by Congress in 2005. Alexandria, Virginia-based American Bankruptcy Institute said that in March, the 149,268 filings were an increase of 23 percent from the total in March 2009.


In February, consumer bankruptcy filings increased 14 percent from February 2009, suggesting that the recession may technically be over, but the financial effects remain.

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Shares for Palm Go Up after Hewlett Packard Announces Purchase

Shares of struggling Sunnyvale, California-based smartphone manufacturer Palm increased more than 20 percent in trading on April 29 after the news broke that Hewlett Packard would purchase the company in a deal valued at $1.2 billion dollars.

Reportedly, HP plans to use Palm's proprietary platform in its forthcoming tablet computer, the HP Slate.

Over the past year and a half, shares of Palm have been a roller coaster ride. In early 2009, they nearly bottomed out at $3 per share, rose to $18 per share by October, and fell to below $5 per share in recent months.

Meanwhile, the acquisition of Palm by HP poses a minor victory for the single largest investor in Palm, Menlo Park, California-based Elevation Partners.

According to the estimates of analysts, Elevation has invested nearly $460 million in Palm since 2007. Because of the acquisition by HP, the firm stands to walk away with nearly $25 million in profits.

Elevation was recently named the worst-performing venture capital firm in Silicon Valley after it lost hundreds of millions of dollars on a series of bad tech investments.

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US Fidelis Gets Closer to Bankruptcy Plan

US Fidelis’ attorney, Rob Eggman, says that he hopes to have at least a preliminary agreement on a bankruptcy plan by late May.

According to Eggman, he is discussing a plan to liquidate the company with the creditor’s committee and financing committee. He said that he has just begun to work on a draft plan and hope to have it in the hands of creditors to receive approval by May 26, which is the next court date, at the latest.

Eggman says that admittedly, it will be difficult to have a deal completed by then due to the number of consumers holding contracts. He said that the inclusion of multiple states’ attorneys general should not be an issue, since they all have the same goal as Missouri’s attorney general.

On May 26, Judge Charles Rendlen is scheduled to hear several motions, including a request from the company to be allowed to sell the names of 50,000 individuals who inquired about service contracts or purchased one in the past. The company estimates the lists to be valued at more than $20,000.

In the meantime, Rendlan has approved the $1.4 million sale of one of the homes of US Fidelis co-owner Darain Atkinson, which Rendlen referred to as the small one near the “compound” at Lake St. Louis. That money will be held in escrow, pending the outcome of the case.

The company ceased the sale of car service contracts in 2009 amid mounting complaints, lawsuits, and investigations. A call center remains in operation to service existing customers.

On April 22, Rendlen approved an extension of interim financing for the firm through the end of May.

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Las Vegas Monorail Seeks Extension on Bankruptcy Plan

The Las Vegas Monorail is seeking three more months from a federal bankruptcy judge to file a bankruptcy reorganization plan.

The nonprofit monorail wishes to file its reorganization plan under Chapter 11 bankruptcy by August 17.

The current deadline fore the plan to be filed is May 19, the same day U.S. Bankruptcy Judge Bruce Markell in Las Vegas is due to consider a request for a deadline for the plan’s approval to be set on October 18.

The monorail filed for bankruptcy protection in January, citing debts between $500 million and $1 billion. However, monorail officials say the system earns enough to continue operations on a 3.9-mile route linking several hotels and the Las Vegas Convention Center.

The system began service in 2004 after floating $650 million in construction bonds.

In court filings, Monorail President and CEO Curtis Myles said that the system has attempted to stabilize its business since filing for bankruptcy, adding that it is cooperating with creditors.

Motions from Wells Fargo and an insurance company arguing that the system should file for a different type of bankruptcy due to it acting more like a municipality than a normal business have not yet been ruled on. The Wisconsin-based insurance company, Ambac Assurance Corp., insured tax-exempt bonds issued by the state of Nevada for the transport system’s construction.

According to Myles, the motions “imposed significant burden” on the monorail, including depositions of five monorail employees and producing documents for opposing lawyers. He says that this has caused the monorail to not have sufficient time to produce a reorganization plan.

 

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Chemical Company Lyondell Gets Through Bankruptcy

On April 23, a plan for Lyondell Chemical Co. to emerge from bankruptcy received the approval of Manhattan Federal bankruptcy court Judge Robert Gerber, signaling the near-end of a 15-month process during which the chemical manufacturer fought off a takeover and settled hundreds of environmental claims and a creditor lawsuit.

Under the approved plan, Apollo Management, Ares Management, and Access Industries will provide financing.

Lyondell filed for bankruptcy protection in January of last year, citing a debt of around $24 million.

When Lyondell asked Gerber if he would approve the plan in front of a packed courtroom, he responded that he would before quipping that he felt a bit like he was taking part in a marriage.

Lyondell presented its plan in March, around the same time it rejected a takeover bid from India-based Reliance Industries Ltd, which valued the company at $14.5 billion. Lyondell said the takeover bid was not high enough.

According to court documents, the company’s investment bankers value it at between $14.2 billion and $16.2 billion.

Under Lyondell’s stand-alone plan, the details of which were released in March, the company plans upon emerging from bankruptcy as Netherlands-based LyondellBasell, with debt of $7.2 billion and $2 billion in cash.

The company will also shed most environmental liabilities, many of which were settled in a $250 million agreement with the U.S. government and state governments. Gerber also approved that settlement on April 23.

After emerging from bankruptcy, which Lyondell plans on doing by April 30, partial ownership of the company will go to private equity firms Apollo and Ares and Access, an industrial holding company owned by investor Len Blavatnik, who will together back a $2.8 billion rights offering.

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Detroit Pistons Star Rick Mahorn Files for Chapter 7

Former Detroit Pistons star Rick Mahorn and his wife have filed for Chapter 7 bankruptcy, citing failed investments, decreased value of a home they purchased, and efforts to repay an IRS debt.

The case, which was filed on December 8, is pending in U.S. Bankruptcy Court in Detroit.

Mahorn, 51, was a member of the 1989 NBA-champion Pistons, in a time referred to as the “Bad Boys” era. He was the coach of the WNBA’s Detroit Shock prior to the team’s relocation to Tulsa, Oklahoma. He now works as a radio announcer for the Pistons.

In an April 22 story in The Detroit News, Mahorn said that he is looking for more work.

According to public records, the IRS has filed liens for nearly $214,000 in delinquent taxes against Mahorn since 2006. His attorney says the tax debt has been repaid.

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TIME: Chapter 7 Personal Bankruptcies Continue To Rise In Midwest

TIME Magazine has published an in-depth story on the rising number of personal bankruptcies across the country and in the Midwest.

While the economy has begun to recover from the recent national economic crisis, bankruptcy experts are still seeing an upward trend of personal bankruptcies, including Chapter 7 bankruptcies and Chapter 13 bankruptcies. In addition, the number of business bankruptcies continues to rise in most states. Midwestern states like Illinois and Missouri are seeing especially large increases – not as large as states suffering from the worst foreclosure rates, but much larger than parts of the Northwest, South, and Northeast.

The continuing increase in bankruptcies – at a time when some believed we would start to see numbers leveling off – has much to do with the availability of credit in modern times, according to law professor Robert Lawless, an expert on bankruptcy at the University of Illinois. Other bankruptcy experts add that many families will struggle with their debt for two years before finally realizing that bankruptcy is the best route for them.

It is also important to note that Chapter 7 bankruptcies, or liquidation bankruptcies, are rising faster than Chapter 13 reorganization bankruptcies. While Chapter 13 bankruptcies used to make up for 35% of all bankruptcies, they now only make up for 25% of bankruptcies. What does this trend suggest? That more people are deciding to walk away from their underwater mortgages or give up their homes in order to find a fresh start. According to bankruptcy judges across the country, families struggling with mortgage problems and foreclosure are finally opting for bankruptcy as a way to escape their financial problems.

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St. Louis Business Bankruptcies On The Rise – But Increase Is Slowing

As housing woes lessen, new construction begins, and the stock market begins to improve, many are harboring hope that the worst may be over when it comes to the recent national economic crisis. However, while many indicators point to improvements in the economy and an end of the recession, other signs tell a different story: a story of slower recovery and continued struggles.

The new statistics regarding business bankruptcies in St. Louis is an example of the latter. While the numbers are still shocking, and while the rate of bankruptcies has grown in comparison to last year, the number of business bankruptcies is lower than it has been recently.

According to the St. Louis Business Journal, the rate of Missouri business bankruptcies in the St. Louis area increase four percent in the first quarter of 2010 in comparison with the rate of St. Louis bankruptcies recorded in the first quarter of 2009. The numbers were released in a report written by Hoffman Clark, a Clayton, Mo., accounting firm, who said that there were 85 business bankruptcies in January, February, and March of this year in St. Louis.

While it may appear that bankruptcies are still on the rise, and while the numbers are still very inflated from bankruptcy statistics of a few years ago, the news is generally good. In fact, St. Louis business bankruptcies were down 22 percent from last quarter – the fourth quarter of 2009 – when 109 St. Louis businesses either decided to liquidate or reorganize with government help.

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Burr Oaks Cemetery Auctioned As Part Of Bankruptcy

After months of financial problems, an unthinkable scandal, and dozens of lawsuits, Burr Oak Cemetery in Chicago will be auctioned off to a new – and hopefully more responsible and moral – owner.

The cemetery was the center of an unbelievable scam last year in which old bodies in the Illinois cemetery were dug up to make room for new bodies. After the scandal was exposed, by Cook County Sheriff Tom Dart, and after an estimated 300 bodies were removed from their final resting places, the Cemetery operator Perpetua-Burr Oak Holdings of Illinois LLC was forced to declare bankruptcy and liquidate its holdings.

Now the bankruptcy judge presiding over the case, U.S. Bankruptcy Judge Pamela Hollis, is overseeing the auction of both Burr Oaks Cemetery and sister cemetery Cedar Park Cemetery in Calumet Park. Although a pulblic auction is being held, there is already an offer on the properties, from Cemecare, a partnership between Gatling Community Development Inc. and Restvale Cemetery in Alsip, for $25,000 for Burr Oak in Alsip and $650,000 for Cedar Park. While the Illinois bankruptcy judge approves of this offer, she would like to confirm that no one else is willing to offer more for the wrought cemeteries.

The judge made clear that anyone  buying the properties would not be involved in the estimated 50 civil suits facing Burr Oaks filed by the families of those affected by double burials and the destruction of some remains.

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Judge: Tribune Co. Has Exclusive Right To Pursue Bankruptcy Plan

Bankruptcy proceedings regarding the Chapter 11 bankruptcy of Tribune Co. continues this week, as everyone struggles to find compromise and draw up a settlement plan that works for all parties involved. The large media company, which has its headquarters in Chicago, Illinois, declared bankruptcy in December of 2008 as a number of newspaper businesses struggled against the decline of print journalism and a lack of willing advertisers. At the same time, a economic recession hit the company, shrinking profits, creating cash flow problems, and ultimately leading to bankruptcy protection. 

This week the judge in the Chapter 11 Chicago bankruptcy reorganization case, Judge Kevin Carey, made the decision not to consider an alternate reorganization plan offered by the Tribune’s creditors. However, to keep the disgruntled creditors happy, the judge also committed to letting an independent examiner investigate the possibility that the 2007 leveraged buyout of Tribune Co. was improper. Creditors, who include hedge fund Oaktree Capital Management, Goldman Sachs Loan Partners and Marathon Asset Management, claim that they are owed an estimated $3.6 billion.

"The judge just wants to make sure nobody has a possible basis to object to a plan at confirmation," said the lead attorney for the committee of unsecured creditors in the case.

Tribune Co. is an employee-owned media company based out of Chicago, Illinois, that is the second-largest publisher of newspapers in the country.

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Chicago Frozen Yogurt Company Berry Chill Declares Bankruptcy

The frozen yogurt trend that has been sweeping metropolitan centers across the country might be cooling off – the latest victim of the winding down trend may be Berry Chill, a Chicago fro-yo company, has filed for Chapter 11 reorganization bankruptcy in tough times.

As the sweet treat enjoyed a recent bump in popularity, at least four frozen yogurt chains sprung up in the Chicago area in 2008. Now, however, many are struggling financially. The frozen desert company’s founder and CEO Michael Farah says that they need to get out a few bad leases and reorganize their efforts before clearing up their financial issues and meeting with success.

Berry Chill has a flagship location at 635 N. State St. In addition, its locations include 132 N. LaSalle St., and Ogilvie Station at 500 W. Madison. Farah says that too many of its locations don’t make sense for a business trying to attract evening and weekend business. He is actively looking for new investors.

The U.S. Bankruptcy Court in the Northern District of Illinois says that Berry Chill has between 50 and 99 creditors and that the frozen yogurt business reported $1 million to $10 million in assets and $1 million to $10 million in liabilities. The company owes creditors for start-up costs, taxes, legal services, rent, and operating expenses. The company made $3 million in 2009 and hoped to expand the business to four other cities and make $6 million in 2010.

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Publisher of Philadelphia Inquirer and Daily News Fights Court Ruling

Lenders to the bankrupt Philadelphia Newspapers have filed an appeal of a court decision that prevents them from bidding what they are owed in an auction of the publisher’s business, according to a report from Reuters.

The company, which publishes The Philadelphia Inquirer and Daily News, owes nearly $300 million to the financial institutions. The institutions had sought to make an auction bid that didn’t include a large cash component, instead relying upon the debt they hold to determine their offer’s value. However, earlier in March, a three-judge panel of the U.S. Court of Appeals for the Third Circuit ruled against them, stating that the law “contains no statutory right to credit bidding.”

According to court documents Reuters cited, the lenders have requested a hearing with the full panel of the court’s judges to review the 2-to-1 ruling.

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Missouri and Kansas Foreclosures Still on the Rise

In February, the home foreclosure action in the states of Kansas and Missouri moved in the opposite direction from the national trend.

According to monthly data released on March 11 by RealtyTrac, foreclosure filings across the U.S. (default notices, scheduled auctions, and bank repossessions) saw a decrease of two percent from January to February. However, the numbers were a six percent increase from February of last year.

In Kansas, the foreclosure rate for February was a 12.15 percent increase from January, but a 32 percent decrease from last February. The numbers represent 794 properties being affected.

In Missouri, the foreclosure rate was 2.34 higher than in January, with 3,014 properties being involved. However, the rate was a decrease of 3.68 percent from February of last year.

The data seems to indicate that while the foreclosure wave was slow affect the Kansas/Missouri region, the troubles continue to ripple through communities.

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Attorney General Koster Fights Fraud in Foreclosure Rescue Industry

According to a March 30 statement from Missouri Attorney General Chris Koster, he won a judgment against two foreclosure rescue companies. The firms were allegedly taking money from distraught homeowners, but failed to provide the services they promised.

Koster said that his office has a zero tolerance policy towards “any mortgage modification firm that preys on and cheats desperate homeowners. He said that his office would use “all its powers” for the investigation and prosecution of business involved in schemes “to defraud Missouri consumers.”

Gateway Mortgage Modification, owned by Richard R. Reichert Jr., and Palm Beach Gardens, Florida-based First Universal Lending LLC are named under the judgments.

Koster alleged that Gateway was unlawfully charging up-front fees for foreclosure and mortgage modifications and making false promises to consumers that attorneys would negotiate loan modifications on their homes.

Under the court’s judgment, Gateway and Reichert have been ordered to pay fines of $65,000 and have been barred from charging up-front fees for their services and falsely representing to consumers that modifications would be negotiated by attorneys. The ruling also prohibits the company from violating Missouri’s merchandising practices and foreclosure consultant laws. They were also ordered to pay attorney fees and costs. Another $10,000 penalty will be imposed if the company fails to pay the ordered restitution.

Koster alleged that First Universal marketed its services to homeowners facing difficulty paying their mortgages or facing foreclosure. The company also allegedly promised customers lower house payments or lower interest rates and advised some clients to stop making mortgage payments while the modification process proceeded.

The court ordered First Universal to pay more than $51,000 in restitution and $23,000 in civil penalties. They are additionally banned from charging up-front fees, advising homeowners to cease making mortgage payments, and promising loan modifications that are not delivered.

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Overland Park Man Pleads Guilty in Bank Fraud Scheme

U.S. Attorney for the Western District of Missouri Beth Phillips announced that a man from Overland Park, Kansas has pleaded guilty in federal court to actions taken as part of a bank fraud scheme which caused several low-income homeowners into bankruptcy after the scheme saddled them with more debt than they were able to repay.

On March 18, 62-year-old Harris Poulikidis pleaded guilty to causing an individual to travel across state lines as part of a fraud scheme before U.S. District Judge Ortrie D. Smith.

Poulikidis confessed to causing a homeowner to obtain a $61,500 loan from Fremont Investment and Loan in order to refinance a mortgage and provide approximately $19,350 in home improvements by Roofing & Siding Plus, a company owned by Poulikidis. On that same day, he caused the homeowner to obtain a second mortgage, a $9,000 loan from his company. The second mortgage was later sold to another financial company.

Poulikidis assured the homeowner that under the re-financing, her new payments wouldn’t be any more or less than what she was previously paying. However, the monthly payments actually increased to a level that caused her to be unable to afford them and have to file for bankruptcy.

The loan application for the initial mortgage failed to disclose the second mortgage loan being sought from the homeowner. Fremont Investment and Loan would not have made the loan if it had been aware of the second mortgage.

Under federal statutes, Poulikidis is subject to a sentence of up to 10 years in federal prison without parole, in addition to payment of a $250,00 and restitution to six homeowners.

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FTC Catches Two Fraudulent Foreclosure "Rescue" Companies

According to the Federal Trade Commission (FTC), two companies selling mortgage relief services have been barred from offering foreclosure “rescues” falsely claiming an 85 percent success rate and illegally charging upfront fees.

Under a settlement order with the FTC and the states of California and Missouri, an $8.6 million judgment was called for against George Escalante and his two companies, U.S. Foreclosure Relief and H.E. Servicing. The judgment will be suspended with the exception of $980,000 in cash, jewelry, and vehicles and Escalante and his companies have surrendered to lenders or the court-appointed receiver.

Also under the order, a $3.3 million judgment was imposed against co-defendant Cesar Lopez and a $3.4 million judgment was imposed against co-defendant Adrian Pomery. The FTC said those judgments will be suspended because of their inability to pay. If it is discovered that they have misrepresented their financial condition, the full amount will immediately become due.

The companies were accused by the FTC of falsely boasting a “proven track record” and the “highest standards of business ethics” in being able to get mortgages reduced to save borrowers from foreclosure.

The FTC said the companies were also allegedly in violation of state laws that prohibit upfront fees being charged for foreclosure consultation services. The practices were immediately barred by the court and the defendants’ assets were frozen.

Under the settlement order, the companies are banned from the sale of mortgage loan modifications and any other foreclosure relief services. They are also barred from making misrepresentations about financial goods and services.

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"Octomom" May Be Facing Foreclosure

Nadya Suleman, the infamous mother of 14, including the octuplets whose 2009 birth thrust the family into the national spotlight and brought her the nickname “Octomom” may soon be among the ranks of Americans who have lost their homes to foreclosure. According to Amer Haddadin, who holds the mortgage of the Suleman family’s $565,000 home in La Habra, California, says that he plans to move to foreclosure proceedings due to the family not keeping up with their payments.

In 2009, Haddadin signed the home over to Suleman’s father. Ed Suleman was supposed to pay $4,000 per month and a final balloon payment of $450,000 that was due earlier this month. However, the family has been late making recent payments and has yet to pay the balloon payment. Suleman was given an ultimatum to pay the $450,000 or face a foreclosure lawsuit.

All 14 of Suleman’s children were conceived through artificial insemination. The octuplets were conceived while she was unemployed and living with her parents and first six children. Reportedly, she used money paid out for disability claims for three of her older children for the in-vitro fertilizations. The Medical Board of California has accused her doctor, Michael Kamrava, of neglect for implanting excessive numbers of embryos on multiple occasions, including Suleman’s case.

Last year, Suleman signed her family up for a reality show produced by England’s Eyeworks, the third largest television producer worldwide. The show, which she and the children were paid a collective $250,000 for, has been described as more documentary than reality show. Though the show did not air on U.S. television, the Sulemans have been featured on several U.S. television specials.

Suleman said on a recent appearance on “The View” that she might consider having one more child.

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Affiliated Media Emerges from Bankruptcy

According to a report from the Associated Press, Affiliated Media, the publisher of 54 newspapers including the San Jose Mercury News, said on March 22 that it had emerged from bankruptcy protection.

On March 4, the bankruptcy plan of Affiliated Media, the holding company for the MediaNews Group, received approval. The entity filed for Chapter 11 protection on January 22.

Under the approved plan, Affiliated will reduce its debt from $930 million to around $165 million, but in exchange will relinquish ownership to dozens of lenders, led by Bank of America. The lenders will hold 89 percent of Affiliated’s common stock. Affiliated’s president, Joseph Lodovic IV, and chief executive, William Dean Singleton, will own the remaining stake.

 

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MGM Under Crushing Amounts of Debt, Delays Paying Creditors

It appears that Metro-Goldwyn-Mayer Inc. will be getting another reprieve.

The trouble movie studio has been granted a six-week extension on a looming due date for interest payments on its $3.7 billion debt load as its banks and bond holders debate the company’s future.

The company confirmed that its more than 140 lenders have agreed to push the deadline back from April 2 to May 14. This is the fourth extension MGM has received since October of last year. Additionally, JPMorgan Chase has agreed to delay the due date for payments on a $250 million revolving credit facility from April 8 to May 14.

The expected move allows the company’s stake holders to have more time to decide whether they will accept a $1.5 billion offer from Time Warner or a competing bid from Access Industries, the holding company of industrialist Len Blavatnik. Both bidders came in below the $2 billion-plus MGM’s creditors were seeking. MGM’s other options are to pursue a restructuring plan that would keep it as an independent company, or enter bankruptcy proceedings.

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Extended Car Warranty Company Files For Bankruptcy In St. Louis

In St. Louis, an extended car warranty company has filed for bankruptcy after months of being under fire. Reports say that the Wentzville, Missouri company US Fidelis petitioned for Chapter 11 bankruptcy this week and announced extensive short-notice layoffs.

The company had been under a significant amount of financial trouble for some months. In December of last year, the company stopped all sales and marketing and cut its workforce from 1,100 to 200. In January, the company’s headquarters in Wentzville was auctioned off.

The ethics of the extended warranty company has been in question since 2009, when the Better Business Bureau reported that 33,000 people had enquired about the company and 1,100 had complained. Further investigation has found that the owners of the company, brothers Darian Atkinson and Cory Atkinson, had been using the company’s funds to pay for their lavish lifestyles, including a sprawling $17 million mansion in Lake St. Louis. Between the two brothers, they owe US Fidelis almost $50 million.

To add to the company’s woes, a class action lawsuit has been filed against the company by consumers for using illegal telemarketing strategies, for high-pressure sales tactics used against the elderly, and for selling worthless warranties.

It is unclear how this bankruptcy will affect the remaining workers at US Fideli or the lavish lifestyles of the company’s owners. The company made$264.5 million in gross revenue from service contract sales in 2008. The company has an estimated 1,500 creditors who may or may not be able to access the Atkinson brothers’ personal wealth.

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More Consumers File For Bankruptcy In February 2010

Although the stock market is showing improvements and although many economists have said that the recession has come to an end, personal bankruptcy filing rates continue to soar across the country as well as in Missouri and Illinois. Although recovery may have begun, it may be a long and tough road for millions of Americans who are still reeling from job losses, upside down mortgages, and broken retirement plans.

The rate of consumer bankruptcies soared 14 percent as compared to consumer bankruptcies in February 2009, with 111,693 people filing for Chapter 7 bankruptcy or Chapter 13 bankruptcy. This is also a nine percent increase in the number of people who filed for bankruptcy in January 2010 – numbers higher than we have seen since new bankruptcy laws were enacted in 2005. Economic experts believe that many families may have been borrowing money to see themselves through hard times – but now cannot pay back their loans.

Another interesting trend is that Chapter 7 bankruptcy is increasing significantly when Chapter 13 bankruptcy has only increased by three percent. While Chapter 7 bankruptcy allows families to erase much of their debt, Chapter 13 bankruptcy reorganizes debt and allows families to save their houses from foreclosure.

Unfortunately, consumers are not the only ones still being affected by the recent recession – business bankruptcies were also up this month with 6,557 business bankruptcy filings this February, compared with 6,390 business bankruptcy filings in February of 2009. Economists expect the rates of bankruptcy to rise even further in coming months.

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Aurora Ethanol Plant Emerges From Bankruptcy, Resumes Building Plant

All too often consumers are lead to believe that bankruptcy is a financial decision that never goes away and that you can never recover from. But this week an Illinois company proved that bankruptcy is sometimes a necessary choice that you can recover from – and that can actually help you recover.

After filing for Chapter 11 bankruptcy in February 2009, an Aurora, Illinois, Ethanol company has emerged from bankruptcy and is continuing work on a new plant. Aventine Renewable Energy of Pekin, Ill., will restart work on their Aurora West ethanol plant and finish the project by fall of 2010. In addition, the company, which was struggling with finances last year, will also finish a second plant as soon as it can.

While the company did not give an official date for completion for either ethanol plant, the company’s grain supplier, Aurora Cooperative, told reporters that it has worked out a plan to begin delivering grain to the Illinois plant in September of this year. Both plants were within a few months of completion when the company filed for bankruptcy last year.

After emerging from bankruptcy, the company appointed Thomas Manuel as its new chief executive officer and chief operating officer. Aentine is one of the country’s largest producers of ethanol.

Following a number of years of success, the ethanol industry faced a number of difficulties in recent years stemming from high corn prices and low petroleum prices.

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Loan Modification Company Admits To Fraud In Missouri, Pays $1 Million

The government’s new “Operation Loan Lies” has led to a $1 million settlement after the state of Missouri accused two loan companies of fraudulent behavior. The companies, U.S. Foreclosure Relief Corp. and H.E. Servicing Inc., told customers that they could help them stay in their homes, avoid foreclosure, and modify their mortgage loans.

Although the companies boasted an 85 percent success rate, the federal and state investigation into the loan modification company revealed that the company had only negotiated 311 loan modifications – not the 10,000 that they claimed.

Those involved in the loan modification business will be punished harshly. One million dollars will go back to the homeowners who were scammed by the foreclosure assistance companies while the owners, George Escalante, Cesar Lopez, and Adrian Pomery will be banished from the industry forever. Although the federal courts asked more millions more, the $1 million settlement came after it became clear that the defendants did not have the funds. As it stands, the $1 million will come from the three men selling their assets, including cars and jewelry. Lopez declared personal bankruptcy last year.

None of the men admitted to committing fraud during the settlement.

Fraudulent loan modification companies, foreclosure assistance companies, and debt settlement companies have become more and more common, especially as tough economic times make for millions of potential victims. These companies often ask for upfront fees and other payments while rarely helping families reduce or pay off their debts. Both Missouri and the federal government are working towards shutting these companies down and creating greater awareness among consumers.

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Top Five Reasons People File Bankruptcy Released on Yahoo!

The following is a list of the top five most common reasons individuals file for bankruptcy protection:

1. Medical Expenses

According to a study conducted by Harvard University, people who file for bankruptcy due to medical expenses account for 62 percent of all personal bankruptcy filings. The study also bucked a popular myth that medical bills only affect the uninsured by revealing that 78 percent of filers had some sort of health insurance.

Rare or serious diseases or injuries can easily cause hundreds of thousands of dollars worth of medical bills to accumulate. Said bills can rapidly wipe out savings and retirement accounts, college funds, and home equity. With those exhausted, bankruptcy could be the only option left, regardless of whether or not a patient or his or her family was able to apply health coverage to a portion of the bill.

2. Job Loss

Whether it is due to layoff, termination, or resignation, losing income from a job can be equally devastating. Some are fortunate enough to receive severance packages. However, many will receive pink slips with little to no prior notice. Not having an emergency fund to draw from in place only makes the situation worse, and the use of credit cars to pay bills can result in disaster.

Losing insurance coverage and the cost of COBRA insurance can also put a drain on the already limited resources of a job seeker. Those unable to find similar gainful employment for an extended period of time could also be unable to recover from the lack of income in time to keep creditors at bay.

3. Poor/Excess Use of Credit

Some people are simply unable to control their spending habits. Credit card bills, installment debt, and car and other loan payments can eventually spiral out of control under the borrower is finally unable to access funds from friends or family or otherwise obtain a debt-consolidation loan. At that point, bankruptcy typically becomes the inevitable alternative.

According to statistics, the majority of debt consolidation plans fail for various reason and usually only delay filing for most participants. Though home-equity loans may be a good solution to unsecured debt in some cases, once exhausted, irresponsible borrowers may face foreclosure if they are unable to make this payment as well.

4. Divorce/Separation

There are multiple ways in which marital dissolutions can create tremendous financial strain on both partners. First, there are legal fees, which can sometimes be astronomical, followed by a division of martial assets, a decree of child support and/or alimony, and finally, the continual cost of maintaining two separate households after the split. For some, the legal costs alone are enough to prompt a bankruptcy filing, while wage garnishments to cover back child support or alimony can strip others of the ability to pay the remainder of their bills. Spouses failing to pay the support dictated in the agreement can often leave the other completely destitute.

5. Unexpected Expenses

Property loss because of theft or casualty, such as earthquakes, flood, or tornadoes, for which the owner is not insured can cause some to be forced into bankruptcy. Many homeowners are likely to not be aware of being required to take out separate coverage for certain events such as earthquakes. Those without coverage for this type of peril may face not only the loss of their homes, but also the loss of most or all of their possessions. Not only do they then have to pay for these items to be replaced, they must also fine immediate food and shelter in the meantime. Furthermore, those who lose their wardrobes in such a disaster could no longer be able to dress appropriately for their work, which could cause them to lose their jobs.

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Bluffs at Brush Creek Apartment Project Backers File for Bankruptcy

Tailor Made Enterprises LLC of Lee’s Summit has filed for Chapter 11 bankruptcy protection for its Bluffs at Brush Creek apartment project in Kansas City.

In the petition, which the company filed in the western Missouri district of U.S. Bankruptcy Court on March 16, Tailor Made lists assets of approximately $5.6 million, including the 60-unit apartment complex, which the petition values at $5.6 million, and a $1,000 deposit at a local bank.

The petition also reports liabilities of $3.2 million, including $3 million owed on a $5.6 million mortgage held by Litton Loan Servicing of Houston and $50,000 owed on a second mortgage held by AWM Real Estate Fund in Overland Park.

 

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Illinois Man: Should I Walk Away From My Home Or Declare Bankruptcy?

With high rates of job loss and underwater mortgages, it is no surprise that millions of middle class American families are stuck between a rock and a hard place when it comes to making difficult financial decisions. This week, The Wall Street Journal answered a letter from an Illinois man struggling to decide between walking away from their home and declaring Chapter 7 bankruptcy.

The family has two mortgages – both with adjustable-rates that readjust in the spring of next year. They know that they will not be able to make the new payments, but are unsure how to extract themselves from the situation. On one hand, the family could allow their house to go into foreclosure while paying off other debts. On the other hand, they could try to declare bankruptcy and get a new start altogether.

The Wall Street Journal columnist responded to the problem with a plan – though, unfortunately, none of the options are easy ones. He suggested that the family should first check and see if they qualify for help from the government’s Making Home Affordable Program. Next, they should talk to a specialized bankruptcy lawyer about their bankruptcy options in Illinois – noting that Chapter 7 bankruptcy is probably the easiest way to clear their debts and move forward. Finally, the expert suggested looking into a Chapter 13 bankruptcy that could provide them with a sustainable debt repayment plan.

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First English Premier Soccer Team to Seek Bankruptcy Protection

On February 26, Portsmouth became the first English Premier League soccer team forced to seek bankruptcy protection from its creditors. The move is expected to enable the insolvent business to restructure financially.

The High Court placed the bottom club in the world’s richest league into administration less than two years after it won the FA Cup. Balram Chainrai, the club’s fourth owner this season, failed to clear debts of approximately $105 million.

Portsmouth will continue operation, but will nearly certainly be relegated to the second-tier, with the nine-point penalty that administration brings leaving manager Avram Grant’s team 17 points from safety.

Court-appointed Andrew Andronikou has asked that the Premier League allow the club to sell one or two players and advance a $16.7 million parachute payment that would be due after relegation to the League Championship.

Everyone in the club, from manager Avram Grant to the players, are likely to see their wages slashed. Chief executive Peter Storrie said that he plans to leave once the club’s future is secured.

Chanrai seeks to recover a loan of $25.8 million he made to the previous owners. The Hong Kong businessman took over the club in February as a short-term arrangement to protect his investment after he became frustrated by several loan repayment deadlines were missed.

FIFA plans to discuss the 112-year-old club’s plight at its next executive committee meeting on March 18.

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Olympic Ski Venue Avoids Foreclosure

It seems that Whistler-Blackcomb, considered one of the greatest ski resorts in the world, will avoid foreclosure and continue being owned by Fortress Investment Group. During the 2010 Winter Olympics, rumors have been swirling that lenders, including Lehman Brothers, were taking advantage of a missed payment from Fortress to take back the resort and put it up for sale on the open market.

Many insiders believed that Vail Resorts would likely purchase Whistler, where several Olympic events were held. Vail owns some of the ski resorts considered to be the best in the world, including Vail, Beaver Creek, Breckenridge, Keystone, and Heavenly.

Supposedly, the terms include Fortress making a payment of $150 million, receiving an extended maturity date, and writing down a couple hundred million dollars and a higher interest rate. The specific details are expected to emerge soon.

The situation was the result of Fortress taking out debt when it acquired Intrawest and was solely related to timing and environment, rather than the performance of the ski resort.

 

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Greece to Face Bankruptcy?

On February 26, George Papandreou, the prime minister of Greece warned of a national bankruptcy unless public spending is slashed as German banks vowed to shun Greek debt and the government was said to be readying a critical bond issue.

Papandreou asked lawmakers in Athens, “Are we going to let this country go bankrupt or are we going to react?”

According to a report in The Wall Street Journal, Greece delayed a major bond issue due the same week Papandreou spoke to lawmakers that was aimed at raising 3-5 billion euros due to turbulence after a general strike on February 24 and warnings of potential credit rating downgrades. The report said the issue was delayed until the following week.

The report said that many view the new bond as a “test of the Greek government’s ability to raise money in the capital markets to finance its operations and retire old debt.”

In another development that has caused concerns, several major German banks, Commerzbank subsidiary Eurohypho, Hypo Real Estate, and Postbank, said on February 26 that they would shun Greek government bonds.

The Bank of International Settlements, the so-called central bank’s central bank, said that German banks have been among the largest buyers of the Greek government’s debt.

The German banks’ remarks are likely seen as significant in that they signal a belief that bonds issued by Greece have become took risky for some investors in high-class sovereign debt.

However, Greek bonds rallied on February 26 on a report of Germany considering coming to the country’s aid.

Late on February 25, the yield on the 10-year Greek sovereign bond fell from 6.64 percent to 6.379 percent. Bond prices and yields move in opposite directions.

Greece has the largest public deficit in the eurozone and its fiscal woes have brought the euro’s value down and raised concerns for bloc’s cohesiveness.

Analysts at Goldman Sachs say that Greece has raised approximately 14 billion euros ($19 billion) of an estimated 55 billion euros in financing needs this year. It also has 20 billion euros in debt service payments due in April and May.

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Catalina Lighting Inc Files for Chapter 11 Bankruptcy

Catalina Lighting Inc., a manufacturer of residential lighting products, has filed for Chapter 11 bankruptcy protection, citing the recession as the reason.

In documents filed on February 25 in U.S. Bankruptcy Court in Miami, the company lists assets as high as $10 million and debt as high as $50 million. Catalina Industries, an affiliate of Catalina Lighting, also filed for protection.

According to what Catalina Chief Executive Officer A. Corydon Meyer said in court papers, Catalina and several other consumer lighting industry companies were hit particularly hard by the recession. He said that the slowdown in building and remolding has negatively impacted sales.

Catalina, a Miami-based company, distributes to retailers such as Wal-Mart, Lowes, OfficeMax, Sears, Staples, Kmart, and Bed Bath and Beyond.

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Ohio Man Finds His Own Way to Avoid Foreclosure

A man from Ohio says that he bulldozed his $350,000 home in order to prevent a bank from foreclosing on it.

According to Terry Hoskins, he has struggled with the RiverHills Bank over his Moscow, Ohio home for several years and has had problems with the Internal Revenue Service. He said the IRS put liens on his carpet store and commercial property and the bank claimed his home as collateral.

Hoskins said that he owes $160,000 on his home. He said that he had finally had enough and bulldozed the home.

 

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Kansas City Foreclosure Rate Decreases, Still High for the Year

According to a February 11 report from RealtyTrac Inc., home foreclosure activity in the 15-county Kansas City area saw a decrease of 13.3 percent from December to January, but were still 66.9 percent higher than January 2009.

RealtyTrac, which is based out of Irvine, California, reported foreclosure actions, including default notices, scheduled auctions, and bank repossessions, against 1,596 in January. That was a decrease from 1,841 homes in December, but an increase from 957 a year ago.

The January total means that one out of every 544 households in the 15-county area received a foreclosure filing in January.

The most foreclosure activity took place in Jackson County, with reported filings against 962 homes, or one out of every 331. Wyandotte County was next, with 221 filings, or one out of every 307. Johnson County was third, with 195, or one out of every 1,113.

Missouri was the 32nd ranked state for residential foreclosure activity in January. Kansas was ranked No. 40.

Foreclosure actions were filed against 2,945 homes in January, a decrease of 6.9 percent from December, but an increase of 19.3 percent from January 2009. The most recent number represents one filing per every 905 homes.

In Kansas, foreclosures were filed against 708 homes, one out of every 1,733, which was a decrease of 33.1 percent from December, but an increase of 7.5 percent from a year ago.

Across the U.S., RealtyTrac reported January foreclosure filings against 315,716 homes, which is one out of every 409. That’s a decrease of nearly 10 percent from October, but an increase of 15 percent from January 2009.

Nevada remains the state with the highest foreclosure rate for the 37th month in a row. One out of every 95 Nevada housing units received a foreclosure filing in January, which is more than four times the national average.

The second-highest rate was in Arizona, with one out of every 129 homes, and Florida and California were next, each at one out of every 187 homes.

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Giants Player Plaxico Burress Faces Foreclosure

Plaxico Burress, the embattled former wide receiver for the New York Giants, could be without a Florida home to return to once he emerges from prison.

On January 22, the imprisoned Super Bowl hero and his wife, Tiffany, were hit with a $3.3 million foreclosure suit from Deutsche Bank National Trust Co., as a trustee for a mortgage-backed securities fund, according to Broward County Circuit Court records.

The suit was filed over the $2.9 million mortgage signed by Burress in 2005, covering his Lighthouse Point home, just north of Fort Lauderdale.

Burress purchased the 6,872-square-foot waterfront home for $4 million in 2005. Two years later, he moved his official residence from New Jersey to Florida.

Burress caught the game-winning touchdown in the final minute of Super Bowl XLII, when the Giants defeated the previously unbeaten New England Patriots. He was given a two year contract extension by the Giants in 2008 worth $7 million per year.

That fell apart in November 2008, when Burress went to the Latin Quarter nightclub in Manhattan with a gun tucked in his pants. The unlicensed weapon slid down his leg and fired a bullet into his thigh. He was released by New York at the end of the season.

Burress was charged by New York authorities with two counts of criminal possession of a weapon and one count of reckless endangerment in August 2009. He signed a plea deal to a lesser firearms charge and received a two year prison sentence.

Since being imprisoned, Burress has said in media interviews that he would like to return to the NFL after he emerges from prison in 2011. It is unclear if that would be enough to save his home.

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Tribune Co. Gets Extra Time for Bankruptcy Plan

On February 18, Tribune Co. was granted an extension on its exclusive right to file a reorganization plan in its Chapter 11 case by a U.S. Bankruptcy Court judge in Delaware. The extension was until March 31.

The extension provides Tribune Co. more time to attempt to reach a compromise between an increasingly belligerent set of senior and junior creditors representing nearly $13 billion in claims against the Chicago-based media conglomerate.

In his decision, Judge Kevin Carey also delayed until April 13 consideration of a motion by the Official Committee of Unsecured Creditors in the case seeking permission to bring a complaint of “fraudulent conveyance” against Tribune Co., which owns the Chicago Tribune and formerly owned the Chicago Cubs. He also pushed off consideration of a separate motion by a group of deeply subordinated bondholders calling for the appointment of an independent examiner to investigate the fraudulent conveyance claims.

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Former InBank CEO Files For Personal Chapter 7 Bankruptcy

A Chicago business woman has filed for Chapter 7 bankruptcy shortly after her troubling banking business failed last fall. The Chicago Tribune reported that Cynthia Grazian filed for Chapter 7 liquidation bankruptcy on January 22, 2010. She reported $2.2 million in assets and $4.3 million in debts when filing for Illinois bankruptcy.

Grazian is the former CEO of the troubled InBank, the company located in Oak Forest, Il, that was seized by the Federal Deposit Insurance Corp. in September of 2009. The bank began to deteriorate after Grazian wrote off $13 million in bad loans and lost millions more. As the bank’s troubles worsened, an August cease-and-desist order set by the Federal Deposit Insurance Corp. and the Illinois Division of Banking asked the bank to fire Grazian and to raise a sufficient amount of capital. InBank had been in business since 1970.

Most of Grazian’s assets are tied up in a posh Lake Shore Drive condo valued at $2.2 million. She made $272,501 at Inbank in 2008. It is not clear who her creditors are. 

Chapter 7 bankruptcy is a form of liquidation bankruptcy in which a person sells their assets in order to pay off some of their debts. In Illinois, there are a number of exemptions when it comes to the liquidation of assets and property. If you think Chapter 7 bankruptcy may be an option for your family’s financial situation, contact a specialized Illinois bankruptcy lawyer today.

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Missouri House Struggles To Save President Casino From Ruin

What will be the fate of the troubled President Casino, which has struggled trough the last year of tough economic times? The Missouri House may have a chance to decide the business’ fate with a new bill.

Although the Missouri Gaming Commission seems intent on stripping the President Casino of its gambling license, Missouri lawmakers may create a law that would allow the struggling casino to stay open. Why do MO politicians want to keep the facility open despite its many downfalls? Representative Tishaura Jones, who is presenting the bill, and St. Louis Mayor Francis Slay both say that keeping the doors of the casino open would save jobs and keep the city’s economy more stable in a time of great need for employment and business.

The bill, House Bill 1826, would make it illegal for the Missouri Gaming Commission to close a casino for economic purposes and is specially tailored to save the President Casino from its current predicament. At the beginning of the year, the gaming commission voted unanimously to close Present Casino.

Many Missouri lawmakers questioned the MO commission’s ability to say that President Casino didn’t meet standards when no standards were initially provided. At the same time, those who oppose the bill say that the new law would basically render the gaming commission powerless.

President Casino went bankrupt in 2006 and was bought by Pinnacle Entertainment. The casino has struggled for a number of years financially.

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Kansas City Star: Should Underwater Homeowners Walk Away From Mortgage

The latest real estate news is not heartening: home prices are dropping to new lows and an estimated 25% of all homeowners are underwater on their mortgages. If a family is in financial trouble and looking for a way out, how does having a home with a large mortgage and no equity factor into a solution?

According to the Kansas City Star, some homeowners are turning to strategic default: in which they walk away from their mortgage and their home and simply stop paying their bill. This decision, which ultimately ends in foreclosure, is a drastic one.

While recent reports show that most people are continuing to make payments on houses that are worth a fraction of what they were two years ago, others are deciding to break their promise to the bank and move on with their lives without their property. While some choose to honor the contact they hold with the bank, others can’t understand paying for something for the next thirty years that isn’t worth the money.

An added complication is that Missouri and Illinois law states that banks can take other property from you if you default on a loan, such as a car, your wages, or your savings. However, since mortgages are defaulting at record rates, banks often do not have the time to act.

Economists add that the cost of moving – both financial and emotional – may be higher than you think if you chose to strategically default on your mortgage loan. And that defaulting could make it significantly more difficult to buy a home in the future.

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Chicago Workers Protest After Duraco Files Chapter 7 Bankruptcy

Protests have broken out at the closed Duraco Products Plant near Chicago as workers demand to be paid wages for work already completed.

Duraco Products declared Chapter 11 bankruptcy in 2008 after the plastic injection molding company faced serious financial difficulties. The company’s factory is located in Streamwood, where roughly 20 workers manufactured planters and birdfeeders for the business. Now the company has been ordered by the US Bankruptcy Court to go into Chapter 7 bankruptcy following a rough two-year financial struggle.

When Duraco originally filed for Chapter 11 bankruptcy, the company listed its assets at around $50,000 and its liabilities at between $1 million and $10 million. While Chapter 11 reorganization bankruptcy allows companies to continue to function, Chapter 7 liquidation bankruptcy usually involves closing a building and selling its assets in order to pay its debts – Duraco has closed its doors.

Community organization Chicago Workers' Collaborative says that the non-union workers who are protesting are owed an estimated $150,000. Many of them had been working without pay for many months and some have lost savings, cars, and even houses while waiting for the fortune of the company to improve.

It is unclear how and if the workers will receive their lost wages, though many are planning to file lawsuits against the owners and to file claims with the bankruptcy court.

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Movie Gallery Closes Stores in Missouri During Bankruptcy

As a part of the national chain’s bankruptcy, Movie Gallery stores in Jefferson City and Fulton and one store in Columbia will be closed. In all, the company plans to close more than 2,000 video rental stores across the U.S.

Movie Gallery Inc., which is owned by Hollywood Entertainment Inc., filed for Chapter 11 bankruptcy protection on February 3. The action will allow the firm to continue operations as it restructures its debt. Included in the restructuring is the closing of multiple Movie Gallery, Hollywood Video, and Game Crazy stores across the U.S.

Across the past two years, the firm has closed several hundred underperforming stores across the U.S. However, that was not enough to keep the company from filing for bankruptcy. The firm plans to retain about 900 stores around the country, but as the process continues, others could be added to the closing list.

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Missouri Lawmakers Discuss Bill for Debt and Injured Workers

On February 15, lawmakers in the Missouri House considered a bill that would stave off bankruptcy in a state fund for injured workers.

The Second Injury Fund, which pays claims for workers with pre-existing injuries who are injured a second time on the job, has been in dire shape since 2005, when a cap was instituted on its revenues.

The bill the House heard would not boost the cap, but would move one class of injuries from the fund’s responsibility to be covered by employers’ workers’ compensation insurance.

Approval of the bill would result in increased employers paying increased workers’ compensation premiums, in turn increasing Second Injury Fund revenues, as the Fund is funded by a surcharge on workers’ compensation premiums.

During the committee hearing, unions and groups representing employers were tentatively in support of the bill, but others questioned whether it would eliminate the fund’s insolvency.

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Bankruptcy Rates Skyrocket 20 Percent In Missouri Ozarks

It is interesting to examine national bankruptcy statistics as the economy struggles to improve, but what is happening locally in regards to personal bankruptcy rates? According to the Springfield Business Journal, Western Missouri’s economy is still badly damaged and bankruptcies are up for both individuals and businesses in 2009.

In Springfield, Chapter 7 bankruptcies were up 18 percent while Chapter 13 bankruptcies were up 13.4 percent over 2008. Business bankruptcies were also up, by 90 percent, with 40 businesses seeking reorganization bankruptcy in 2009 as compared to 21 in 2008. All in all, according to the U.S. Bankruptcy Court in the Western District of Missouri there were 3,014 bankruptcies in 2009 as compared with 25,53 in 2009.  These are the highest rates of bankruptcy seen since the bankruptcy reforms of 2005.

Economists say that the recent recession is still tallying casualties in the Ozarks, with the poor real estate market and the poor job market contributing to a high rate of bankruptcies. In addition, the difficulty of securing credit is also harming both families and businesses in the area. Experts say that small real estate businessmen were also hit hard in the last few years. In other cases, some of those who have lost their job have not been able to find work before their unemployment benefits run out. 

The U.S. Bankruptcy Court Western Division includes Springfield, Joplin, Carthage, Jefferson City, Kansas City, St. Joseph, and surrounding areas.

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Host of Winter Olympics Ski Events Postpones Foreclosure

The owners of the Whistler-Blackcombe ski resort, site of many of the events of the 2010 Winter Olympics, have received a reprieve. Lenders had threatened to foreclosure on the resort on February 19 due to the owners being hundreds of millions of dollars behind in their payments.

The foreclosure date has now been postponed until February 26, two days before the closing ceremonies. Lenders, including now closed Lehman Brothers, have been attempting to put more pressure on the owners, Intrawest, to produce the past due payments ($500 million due in December 2009) as the Olympics are still taking place.

Intrawest, a company that owns other ski resorts besides Whistler, has been in deep financial trouble since the housing market crash. They had been counting on sales of properties adjacent to ski resorts to aid them with payments on the financing for the resorts. However, due to economic decline, housing sales have been slow and properties have lost value, creating a financial crisis for the company.

The lenders granted Intrawest a week’s reprieve on the foreclosure auction and talks continue to find a way to work around the problem.

Some analysts believe the foreclosure threats to be nothing more than simply threats and that foreclosure will not be the ultimate outcome. The Winter Olympics taking place at the resort has brought the story into the headlines. Other ski resorts have gone to auction during the current ski season and more could follow until the economy turns.

There are potential buyers for the resort, so a sale prior to foreclosure auction is still a possibility. Another potential option being discussed is bankruptcy, which would give the current owners additional time to seek a buyer or renegotiate the current loans.

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Electric Scooter Maker Vectrix Corp Relaunches after Chapter 11

Vectrix Corp., a company that manufactures electric scooters, has been relaunched under new ownership after entering Chapter 11 bankruptcy in the fall of 2009.

The new company, which is incorporated in Delaware, has made New Bedford, Massachusetts its headquarters in the U.S. and has leased space in the New Bedford Business Park that was occupied by the former incarnation of Vectrix, as well, according to the park’s executive director Thomas Davis.

Vice President of Sales and Marketing Brian Buccella said that the company has already placed a small team of development, operations, and sales staff in the New Bedford office and the needs for additional employees would be evaluated over the following 90 days.

Buccella says the New Bedford facility will eventually expand to include engineers and test facilities, sales offices, and a multi-product vehicle assembly line.

The former Vectrix Corp. filed for Chapter 11 protection in September and then reached a deal to sell the majority of its assets to New Vectrix LLC, which was sponsored by New York-based GH Venture Partners LLC. Court records say EVB Technology Limited, an affiliate of Hong Kong’s Gold Peak Industries, also holds an interest in New Vectrix LLC.


 

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FairPoint Communication Finalizes Bankruptcy Plans

The Associated Press says that after delaying for two months, FairPoint Communications Inc. has finally filed its plans for reorganization under bankruptcy in U.S. Bankruptcy Court in New York on February 8.

The North Carolina-based company originally was to file in December. However, the company delayed filing three times, saying it needed more time to negotiate with lenders and unions.

The company’s plan would reduce its debt load by nearly two-thirds, from nearly $2.8 billion to $1 billion, and would provide secured creditors with a 92 percent ownership stake in the restructured company. Unsecured creditors would be paid 17 cents for every dollar they’re owed.

In 2008, FairPoint purchased Verizon’s landlines in northern New England, but filed for bankruptcy in October 2008. The telecommunications company recently reached a tentative accord with two unions that represent more than 75 percent of its employees.

 

 

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Movie Gallery Finds Itself in Bankruptcy, Closing More Stores

Movie Gallery, the second-largest video store chain in the U.S., has retreated back into bankruptcy proceedings and plans to close 805 more stores.

The announcement was not much of an event at Hollywood Video in Boise, Idaho, which has been closing since January 20. Movies at that store have been marked all the way down to 70 percent off and likely will drop to 80 percent. The store is closing for good on February 14, according to a store employee.

The news hit harder in Emmett, Idaho, where the local Movie Gallery store’s closure will make a significant dent in the rental options of residents. Manager Ann Smith says she’s heard several concerns from her customers and they are unable to believe the news.

The Movie Gallery chain, which is based out of Wilsonville, Oregon, emerged from a 2007 bankruptcy eight months ago. But the chain recently filed for Chapter 11 bankruptcy protection from creditors, this time in Richmond, Virginia. The company warned that more stores will close after the first batch as the company continues to use the courts to restructure finances.

The 805 store closings represents approximately one-third of the chain’s stores. The company peaked at more than 4,600 stores across the U.S. in 2005. After this round of closings, the collection of Movie Gallery, Hollywood Video, and Game Crazy locations left will total around 1,900.

Just a decade ago, video stores were a ubiquitous part of the retail landscape. However, in the past few years, new competition from mail-order DVD rental services suck as Netflix and $1-a-night kiosks maintained in supermarkets and discount stores by RedBox or Blockbuster Video have caused them to battle for survival.

In the fourth quarter, Movie Gallery reported a $129 million operating loss after seeing its sales plummet to $1.4 billion in 2009, down from $2 billion in 2008.


 

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Two Downtown St. Louis Properties Sell Due to Foreclosure

Two former Pyramid Cos. properties in downtown St. Louis were sold on February 3 due to foreclosure.

The sole bidder for the One City Centre office tower was SCR Investments, led by Environmental Operations Inc. chief executive Stacy Hastie, for $12.7 million. Hastie as an individual was the lone bidder for the Arcade building for $9 million.

The St. Louis Development Corp. is working with SCR and Hastie on the rehab of the 25-story One City Centre building. Hastie called the purchase “a big step forward” for development plans.

The Missouri Development Finance Board approved a $5 million loan on February 2 for a $29 million overhaul of One City Centre.

Lewis, Rice & Fingersh signed a 12-year lease for 100,000 square feet of space at the 375,000-square-foot building with plans to move its 250 attorneys and staff there later in February.

A Cardinal Realty Group associate, Lina Galinurova, was in attendance at the auctions on behalf of a prospective California-based buyer for the Arcade. She wouldn’t disclose the buyer’s identity, but did say that the company would initiate talks to pursue ownership of the Arcade.

Plans by Pyramid Cos. to rehab One City Centre and convert the 15-story Arcade building fell apart in 2008 after the development company led by John Steffen closed.

 

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Obama Calls for Change in Loan Modification Program

President Barack Obama’s administration recently overhauled its struggling foreclosure avoidance program, saying that it would require homeowners seeking to ease their mortgage terms to document their financial situation before being granted a trial modification.

Previously, borrowers were able to have their interest rates lowered and the terms of their loans extended on a trial basis without providing pay stubs and other financial documents. Banks and other mortgage customer-service providers were supposed to collect that information during a three-month trial period, with the modification becoming permanent if the borrower made three lowered payments and submitted the required paperwork.

However, few permanent modifications were yielded by the program. Servicers say a significant number of borrowers failed to properly document their situations. Homeowners say banks were unreasonable and lost documents.

Between the time the program began in the spring of 2009 and the end of December, servicers extended nearly 1.2 million offers to modify mortgages on a trial basis. However, only 66,465 troubled home loans were permanently modified, according to the U.S. Treasury Department.

The new procedure, which loan servicers are to adopt by June 1, would provide troubled borrowers with what the Treasury Department called a “simple, standard package of documents” to complete in order for servicers to determine whether the borrowers qualify to receive a loan modification.

With that determination made in advance, any borrower who made three payments at the modified rate would automatically have the modification made permanent.

The purpose of the program was to provide billions of dollars in government subsidies to encourage lenders to forestall foreclosures.

In order to obtain said subsidies, servicers are required to cut interest rates, extend the terms of loans to 40 years, and suspend payments on part of the amount owed.

 

 

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Car Dependency Linked to High Foreclosure Rates

According to a recent report by the Natural Resources Defense Council (NRDC), homeowners in car-dependent areas without transit options have a higher risk of foreclosure. The NRDC has called for mortgage underwriting standards to start taking so-called “location-efficiency” into account.

The report is focused on the impact of location efficiency, a concept NRDC and other groups pioneered in the 1990s, on mortgage performance in three key cities: Chicago, San Francisco, and Jacksonville, Florida. The report shows that vehicle ownership is key to predicting mortgage performance and suggest that mortgage underwriters, policymakers, and real estate developers should take it into account.

Transportation costs account for approximately 17 percent of the average American household’s income. The report discovered that if driving is your only choice, you have considerably less economic flexibility. Said flexibility could protect homeowners from foreclosure in rough times.

 

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Reader's Digest Sells CompassLearning in Bankruptcy

According to Reader’s Digest Association Inc., the sale of its CompassLearning unity has received the approval of a bankruptcy judge and the publisher has reached an agreement with a pension group on claims that it may have forced the closing of its U.K. business.

Marlin Equity II LP won CompassLearning, which creates interactive teaching materials for schools and libraries, beating out four other bidders in an auction that took place on January 7. Marlin, which is run by El Segundo, California-based private equity firm Marlin Equity Partners, has agreed to pay $31.8 million, an increase from its initial offer of approximately $20.3 million in November.

According to Reader’s Digest spokesman William Adler, on January 12, the sale was approved by U.S. Bankruptcy Court Judge Robert Drain in White Plains, New York. Drain is scheduled to hold a January 15 hearing to consider confirming the Chappaqua, New York-based publisher’s reorganization plan to emerge from bankruptcy.

Under Reader’s Digest’s reorganization plan, the publisher’s $2.2. billion debt would be reduced by 75 percent to $550 million.

Reader’s Digest filed for Chapter 11 bankruptcy protection in August, citing a decrease in advertising spending and a high debt load incurred in its 2007 acquisition by Ripplewood Holdings LLC for $1.6 billion.

 

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Foreclosures Decrease in Polk County

In 2009, the home foreclosure rate in Polk County saw an improvement over figures from 2008, according to information from the office of the Polk County Recorder. In 2008, one out of every 86 homes was foreclosed upon, but in 2009, one out of every 91 was foreclosed upon.

Polk County fared better than the national average, which saw and increase from one out of every 54 homes in 2008 to one out of every 45 homes in 2009, or 2.2. percent, according to information from RealtyTrac Inc. The state of Missouri also saw an improvement from one out of every 84 in 2008 to one out of every 93 in 2009. The figures for total housing units are based on data from the 2008 U.S. Census Bureau.

The value of homes foreclosed upon in Polk County in 2009 totaled $12.1 million, approximately $2.5 million less than the $14.6 million in 2008. The value in 2007 was approximately $15.4 million and included the $5.5 million foreclosure of Springhill Falls apartments, the largest foreclosure in Polk County history.

According to Recorder Carol Poindexter, the decrease in foreclosure activity is evident in the smaller number of documents handled by her office in 2009. She says there were 5,599 documents last year and since she began keeping track in 1994, there have only been two years with a lower number.

 

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Illinois Auto Dealers Fight GM & Chrysler Bankruptcy Cutbacks

GM has been tallying profits and showing signs of new growth in the beginning of 2010. In addition, its cars have won several awards and it may well profit from the Toyota recalls of the last two months. However, following the auto company’s summer bankruptcy, in which the carmaker closed 12 auto factories and cut 20,000 jobs, GM is still facing issues with the hundreds of auto dealers that the company let go in 2009.

In Illinois alone, 107 car dealers are appealing the car company’s decision to close their outfits. Only one other state in the county has such high numbers of appeals filed.

The appeal proceedings will be handled by the American Arbitration Association. At this time, according to the Illinois Automobile Dealers Association, individual dealers are not yet discussing the appeals with the media. Many of the dealers remained opened, but have suffered without new car models coming in from GM and Chrysler. Other dealers closed their doors when dealer cutbacks were announced this summer.

The date of the car dealership appeals hearings have not yet been set.

General Motors filed for bankruptcy on June 1, 2009, and received roughly $50 billion in government stimulus funds to help them recover. The car company has staged a comeback since then, but is still facing a number of administrative woes.

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Muzak's Bankruptcy Plan Approved

According to a January 12 statement from music and entertainment company Muzak Holdings LLC, the company’s bankruptcy reorganization plan received the approval of a U.S. judge, paving the way for the company to emerge from bankruptcy later in January.

Muzak, best known for providing background music in stores, hotels, and elevators, filed for bankruptcy protection in February 2009 in order to restructure maturing debt.

The plan allows for the company’s lenders to trade debt in the company for equity, reducing the company’s outstanding debt to $230 million. The company’s debt was more than double that amount when it filed for bankruptcy.

Also on January 12, the company’s $108.75 million senior secured exit financing facility from GE Capital, Silver Point Finance, and MFC Global Investment Management received the approval of a U.S. bankruptcy judge in Delaware.

The company expects to exit bankruptcy by the end of January.

The company’s roots trace back to the 1930s, when it sold re-recorded music for factories, elevators, and passenger ships. Muzak was owned by private equity fund ABRY Partners LLC when it filed for bankruptcy protection.

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New Study: Women More Often Victims Of Predatory Loans

Predatory lending has led to major country-wide economic issues and left thousands of families on the brink of foreclosure and bankruptcy. While some research has shown that predatory lending took advantage of the poor and the uneducated, a new study has found that subprime loans and predatory mortgage lending victimizes women more often than men. Latina and black women were four to five times more likely to receive subprime loans in comparison to white men between 2005 and 2008.

In-depth research funded by The Nation Institute and conducted by National Institute of Computer-Assisted Reporting at the Missouri School of Journalism in Columbia, Missouri, has found that while many are still suffering from the effects of a predatory loan that they can’t afford payments on, the majority of those people are women. After crunching the number from Home Mortgage Disclosure Act data, researchers found that Women whose loan debt amounted to a smaller-than-average percentage of their income were more likely to get bad or dangerous loans in comparison to men who had similar financial histories.

Why would this be the case? Some think that perhaps mortgage brokers thought that they could pull subprime loans off more successfully with women. Other point out that minority women, single women, and elderly women were preyed on more than other groups. Now many women are facing bankruptcy and foreclosure, especially since women tend to concentrate most of their assets into their homes. Women now make up 25% of all homebuyers.

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St. Louis Area Business Bankruptcies Skyrocket In 2009

While some signs point to a recovery economy and an end to the recession, other trends in St. Louis continue to worsen with no signs of recovery. In a new report release by Clayton, Missouri, accounting firm Hoffman Clark, it seems that St. Louis business bankruptcies are at their worst yet, with high number of bankruptcies in 2009 and shocking fourth quarter numbers that show the worst rate of business bankruptcies since the recession began in 2008.

All in all, the study reports that the rate of St. Louis area business bankruptcies has increased by 19 percent in comparison to the rate of business bankruptcies recorded in 2008. The accounting firm found that 398 St. Louis, Missouri, businesses filed for bankruptcy in 2009, compared with 334 bankruptcy filings in 2008.

A shocking 108 bankruptcy filings happened in the final fourth quarter of 2009, making it the worst three months of business bankruptcy filings in years. St. Louis bankruptcy rates rose 6 percent in the fourth quarter of 2009 from the third quarter of 2009 and 26 percent from the fourth quarter of 2008.

The numbers for this report were taken from the U.S. Bankruptcy Court for the Eastern District of Missouri with divisions covering St. Louis, Cape Girardeau and Hannibal, Mo.

While individual or personal bankruptcies were not included in this report, other studies have confirmed that personal St. Louis bankruptcies are at their highest point since the 2005 bankruptcy reform laws.

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One Missouri Woman’s Story Of Chapter 7 Bankruptcy

This week the St. Joseph, Missouri, News-Press covered some shocking Missouri bankruptcy statistic for 2009 and shared the story of one local woman’s struggle with credit card debt that ended in a petition for Chapter 7 liquidation bankruptcy.

The article tells the story of a young woman who because of the subject matter is going by the alias Angie. She is a single mom with a steady job and a solid credit score, but a high maximum on her credit cards makes her think it’s okay to spend a little extra and carry a balance. Soon, though, her life expenses began to pile up and she began spending more than she made. After she slowly spent her savings, she slowly began running up and maxing out four credit cars. Before she knew it, she was in debt $40,000 and had $700 monthly minimum payments.

Thousands of families find themselves in Angie’s position – single parents or families who simply spend a few hundred dollars a month more than they make can soon find themselves under a mountain of debt – and with quickly-rising interest rates into the 20s. Angie said she didn’t go crazy buying things she couldn’t afford, but that she simply bought an occasional item for herself or charged her children’s daycare costs.

Angie found that the best solution for her situation was filing for Chapter 7 bankruptcy in Missouri. She is now slowing rebuilding her credit with a credit card with a very low limit and is making sure to live within her means.

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Japan Airlines to File Bankruptcy Soon

Japan Airlines, the largest air carrier in Asia, is prepared to file for bankruptcy protection as early as January 19, according to media reports out of Japan.

The move, which is similar to a Chapter 11 filing in the U.S., would be one of the largest corporate failures in the history of Japan. Under provision of the law, JAL shares would be removed from the Tokyo Stock Exchange. The government-backed Enterprise Turnaround Initiative Corp. would then officially announce a restructuring plan for the airline involving pre-packaged court-backed rehabilitation, including a $3.3 billion injection from the fund.

Delta Air Lines and American Airlines are believed to be two major U.S. companies in the running to invest in the troubled Japanese airline.

 

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Yellow Pages Publisher Makes Final Push to Emerge from Bankruptcy

Yellow pages publisher R.H. Donnelly has cleared the final obstacle on its path to emerge from bankruptcy by winning court approval for its reorganization plan.

On January 12, the plan received the approval of U.S. Bankruptcy Judge Kevin Gross at a hearing in Delaware. The plan also has the overwhelming support of creditors.

David Swanson, the CEO of the Cary, North Carolina-based company, believes the decision will allow them to be able to complete their restructuring within the next few weeks. He believes the company will emerge from bankruptcy protection as a stronger business “with a more management capital structure and a stronger financial foundation.”

Most of the plan was negotiated with creditors prior to Donnelly filing for Chapter 11 bankruptcy protection in May 2009.

The plan will reduce the company’s debt by $6.4 billion, in turn reducing its annual interest expenses by $500 million. Creditors to which the company owes approximately $6 billion in unsecured debt will receive virtually 100 percent ownership of the business, wiping out the last vestiges of shareholder value. The unsecured creditors will also receive approximately $300 million in debt.

Donnelley publishes directories in 28 states.

 

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Several Loan Modification Scammers Indicted in San Diego

A group of four people, including a convicted felon and two real estate brokers, has been indicted on charges of running an investment scam preying on Filipinos in San Diego, California.

The group, which initially was investigated by The San Diego Union-Tribune in March 2009, is faced with more than 54 charges, including foreclosure consultant fraud, grand theft, and securities fraud. The group allegedly persuaded families to transfer ownership of their homes to two trusts, with the promise that the group would help them modify and lower their mortgages.

The defendants are 52-year-old Edmundo Rubi, 59-year-old Joseph Encarnacion, 51-year-old Ben Hebron, and 53-year-old Gloria Hebron.

The FBI and the San Diego County District Attorney’s Office conducted the investigation. The grand jury handed down the indictment on December 21, but it was sealed until January 11.

 

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St. Louis Business' Bankruptcy Filings See Big Increase

According to a recent study, the number of businesses in the St. Louis area that have filed for bankruptcy saw an increase of 19 percent in 2009.

In a report released by Hoffman Clark, an accounting firm out of Clayton, Missouri, on January 11, 398 St. Louis businesses filed for bankruptcy in the year ending December 31. That number is an increase from 334 in 2008 and 176 in 2007.

The number of businesses that filed for bankruptcy in the St. Louis area in the fourth quarter of 2009 was 108, the highest quarterly number since the recession began. That represents an increase of six percent from the third quarter of 2009 and 26 percent from the same quarter in 2008.

The Hoffman Clark Business Bankruptcy Trends Report focuses on bankruptcy filings involving business debts. Non-business bankruptcy filings, also called personal or consumer bankruptcy filings, are not included in the report.


 

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A Sinkhole In Battlefield, MO – Family Declares Bankruptcy

Many people have the misconception that those who file for bankruptcy in Missouri simply don’t understand how to manage their money or simply spend more than they make. However, more often than not bankruptcy is used as a solution to an unforeseeable emergency. This was certainly the case for the White family, who filed for bankruptcy in Battlefield, Missouri, after their house literally sank into the ground.

Kasey and Kandice White were enjoying their new home in Greene County when their five-year-old son Danny discovered an enormous hole near the foundation. The sinkhole meant that their home was built on a rock joint – common in the Ozarks. Although the family could fix the hole for tens of thousands of dollars, the home’s value would plummet. And although the home had house insurance, sinkholes are not covered because they are considered an act of god.

In the end the best option for the Whites was to walk away from their home and the $50,000 of equity they had in it. The family declared bankruptcy and got a fresh start in a new home built on a solid foundation.

Your home is your biggest asset – and if it is irreparably damaged by an unforeseeable cause not covered by your home insurance, you could lose almost everything you have in one fell swoop. In times like these, bankruptcy may be the best option for you and your family. Especially if you are suffering from other financial strains – the Whites also had an unexpected surgery and a job loss – bankruptcy could be the answer for you.

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Florida Courts Hope to See an End to the Foreclosure Crisis

The chief judge of the court Pinellas-Pasco court system in Florida is hoping 2010 will bring relief for judges, consumers, and lenders caught in the growing morass of the worst foreclosure crisis in the U.S.

According to Pinellas-Pasco Circuit Court Chief Judge J. Thomas McGrady, the caseload is nearly 2,000 foreclosure cases per judge. And with 2009 coming to an end, McGrady says the cases continue to stack up twice as fast as judges can resolve them. The workload for judges handling all kinds of civil cases has nearly tripled because of the rapidly increasing number of foreclosures, which has roughly doubled each year for the past three years or so.

McGrady says that if you add in foreclosures to other civil matters, judges in Pinellas and Pasco are struggling to keep up with their dockets and are falling behind in many cases. He says the total now reaches more than 3,400 cases per judge.

Recently, the Supreme Court of Florida offered one solution in a court order essentially calling for mandatory mediation for homesteaded properties before the legal process of foreclosures can begin. Said order establishes a system of mediation management and shifts the cost burden to lenders to encourage homeowners to renegotiate loans instead of simply giving up and walking away.

As of now, McGrady says in Pinellas and Pasco counties alone, there are more than 23,000 open foreclosures. The Supreme Court estimates the number in Florida to be more than 456,000, placing the state at the epicenter of the nation’s foreclosure crisis.

McGrady says the situation will only grow worse until the foreclosure situation is resolved.

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Brown’s Chicken & Pasta Inc. Files for Chapter 11 Bankruptcy

A chain of chicken restaurants that made headlines across the U.S. in 1993 when seven employees at one of its stores in suburban Chicago were killed has filed for Chapter 11 bankruptcy protection.

On December 29, Brown’s Chicken & Pasta Inc. filed for bankruptcy, two months after the company was ordered by a DuPage County judge to pay more than $800,000 to a former vice president and minority shareholder who filed suit for wrongful termination.

According to the company’s attorney, Brown’s was unable to pay the judgment. He said $300,000 of that amount was due on the day the company filed. He says it would have made them “insolvent.”

The company’s filing listed assets between $100,000 and $500,000, liabilities of as much as $10 million, and 50 to 99 creditors.

The filing is the latest in a series of setbacks for the company. The franchise once had as many as 150 stores, but that number has declined to approximately three dozen since the murder of seven employees at one of its restaurants in 1993. Their bodies were discovered in a walk-in cooler.

The company’s attorney said the incident and the “constant barrage” of negative publicity had a significant impact on the company. The story was front page news across the nation for several days and in the Chicago area for several months. The story continued making headlines for years due to the hunt for the suspects, the arrest of two men years later, and their convictions on murder charges, the first years ago and the second two months ago.

The company successfully defended a number of lawsuits in the years following the murders, but the money and time spent on the suits left an impact on the company.

Brown’s plans to keep its restaurants, all but three of which are owned by franchisees, open as the company restructures. The company’s attorney says the three stores the company owns are to be closed or sold within the next 30 days.

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Tiger Woods' Sponsor to File Chapter 11 Bankruptcy

TLC Vision Corp., the eye-care service company that sponsors pro golfer Tiger Woods, has filed for Chapter 11 bankruptcy protection in order to restructure its debt.

In the documents the company filed in U.S. Bankruptcy Court in Wilmington, Delaware on December 21, the company listed assets and debt of $100 million to $500 million. Affiliates TLC Vision (USA) Corp. and TLC Management Services Inc. also sought bankruptcy protection.

According to TLC Vision, it reached an agreement to restructure debt with some senior lenders prior to the filing. In order to expedite the process, a pre-arrange plan was included. The plan provides for conversion of some debt to 100 percent of new equity of TLC Vision (USA), which will emerge as a private company, according to TLC.

A spokesman for the company, Stephen Phillips, said that the company’s relationship with Tiger Woods would continue with no changes.

The Chesterfield, Missouri-based company seeks approval of $15 million in debtor-in-possession financing, authority to use of cash collateral, permission to pay critical vendors, and employee wages and benefits.

TLC Vision operates laser vision-correction centers in the U.S. and Canada. No other affiliates including TLC Laser Eye Centers are involved in the filing.

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US Fidelis Headquarters to Be Sold in Foreclosure

One Wentzville, Missouri-based company will not remember 2009 as a banner year.

US Fidelis, which had more than 1,000 employees at the beginning of 2009, announced hundreds of layoffs earlier in December and recently said that it had stopped selling extended-service contracts.

Now word has come that the company’s headquarters will be sold in a foreclosure auction.

Frontenac Bank is publicizing the January 14 trustee’s sale. They say the brothers who began the company, Darian and Cory Atkinson, defaulted on their payments.

US Fidelis is also faced with legal scrutiny due to consumer groups and government regulars accusing the company of selling expensive after-market coverage offering limited value. The state of Missouri is also investigating claims of deceptive practices.

In spite of all the bad news, the company says the sale will not affect customer service operations.

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Foxland Harbor Marina Files for Bankruptcy to Prevent Foreclosure

An entity owning land off Old Hickory Lake in Gallatin, Tennessee planned for a marina has filed for bankruptcy protection in order to stave off foreclosure, according to a spokesman.

On the morning of December 28, Foxland Harbor Marina LLC filed for bankruptcy in the U.S. Bankruptcy Court in Nashville in advance of the foreclosure sale that lender American Security Bank & Trust had planned.

Included in the filing is an estimate of $1 million to $10 million in assets and liabilities.

Foxland is seeking approval from the Army Corps of Engineers to construct a full-service marina at Station Camp Creek.

American Security is also a lender to another company that filed for bankruptcy in December: Fairvue Club Properties, the owner of the Club at Fairvue at Fairvue Plantation.

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Maker of “Equal” Files Gets Approved for Chapter 11 Bankruptcy

On December 16, Chicago-based Merisant Worldwide Inc., the manufacturer of the artificial sweetener Equal, announced that a court had approved its reorganization plan under Chapter 11 bankruptcy.

The company is predicting that it could emerge from bankruptcy as soon as January 8, nearly a year after the company filed for Chapter 11, citing declining sales, a large load of debt, and the global credit crisis as factors.

Under Merisant’s plan to reorganize, the company would reduce its debt from $567 million to $147 million, dropping its annual cash interest expense from $36 million to $11 million. As a result of the restructuring, Wayzata Investment Partners, a private equity firm, will become Merisant’s majority and controlling shareholder.

Merisant had previously been largely owned by Pegasus Capital Advisors, another private equity firm.

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Employee Bonuses Get Approved in Lehman Brothers Bankruptcy

A bankruptcy judge has approved the plan of Lehman Brothers Holdings Inc. to pay $50 million in bonuses to employees handling derivatives contracts. The judge said the payments provide essential incentives to employees with “unique skills.”

In November, Lehman, the investment bank liquidating in bankruptcy, asked U.S. Bankruptcy Judge James Peck in New York for permission to pay the bonuses to approximately 230 full-time employees unwinding the contracts. On December 16, the judge sanctioned the payments as bankers, under attack after two years of failures and bailouts, risk more public ire by awarding year-end bonuses, according to a Bloomberg National Poll earlier in December.

In a November 25 filing, Lehman told Peck that the derivatives team had brought in more than $8 billion in cash and settled 17 percent of the contracts while under bankruptcy protection. The filing said that a bonus pool “designed to motivate and reward employees” in the group would help maximize the value of the remaining contracts.

Also during the court hearing, the judge informed Barclays Plc it could not have documents it sought from Lehman creditors and the trustee for Lehman’s brokerage, according to a spokesman for the trustee who declined to be named.

In September 2008, Lehman filed the largest U.S. bankruptcy with assets of $639 billion. Lehman’s creditors include UBS AG, the New York Giants, Abu Dhabi Investment Authority, and individual bondholders. The creditors have filed $824 billion in claims against the company.

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New York Governor Takes Steps to Protect Homeowners from Foreclosure

On December 15, New York Governor David Paterson signed into law stronger foreclosure regulations for the intended purpose of protecting New Yorkers from losing their homes, such as requiring better notice to homeowners faced with foreclosure and mandating settlement hearings with banks.

The law expands a package of regulations adopted in 2008 that mostly dealt with homeowners caught in the sub-prime mortgage crisis. The new laws require that banks provide a 90-day pre-foreclosure notice on all home loans, not just sub-prime loans.

Paterson and state lawmakers say the goal is to allow homeowners additional time to work with lenders in order to prevent foreclosures. Another regulation will expand to all homeowners mandatory settlement conferences with their lender, not just borrowers with sub-prime loans.

During the first three quarters of 2009, there were 39,923 foreclosure filings in New York, a decrease of 11 percent from the same period in 2008.

In spite of the decline, however, Paterson says that the new law was necessary in order to ensure that all homeowners were protected, not just homeowners who undertook risky loans.

According to Josh Zinner, co-director of the Manhattan-based Neighborhood Economic Development Advocacy Project, New York is the first state to require settlement conferences for all pending foreclosures.

Other components of the law include:

-Requiring lenders who serve a 90-day foreclosure notice on a homeowner to file with the state Banking Department within three days, allowing the state to provide assistance to distressed homeowners.

-Establishing protections for tenants in foreclosed properties by requiring that they receive written notice of a change in ownership and be permitted to remain in their home for the remainder of their lease term or a period of 90 days, whichever is longest.

-Enhance consumer protections to prevent homeowners from falling prey to scams and prevent brokers who perform distressed property consulting services from accepting upfront fees.

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Maryland Women Get Restitution in Foreclosure Rescue Scheme

As part of a settlement, two mortgage firms based out of Owings Mills, Maryland accused of running a “foreclosure rescue scheme” have agreed to pay $110,000 in cash restitution as part of a settlement that saved the homes of two elderly women in Ellicott City, Maryland, one of whom has died since becoming a victim.

In 2006, the two women fell behind on their mortgage payments due to poor health and related bills. They responded to a refinancing offer contained in packets labeled “Your Best Hope has just arrived.” However, instead of the rescue from the brink of foreclosure they were promised, the women learned that they had unwittingly signed away the titles to their homes and were facing eviction.

At that point, Howard County, Maryland consumer protection officials stepped in by filing a lawsuit against Stewart D. Sachs, president of Bay Capital Corp., which sent the letters, and Heavyweight Title Co. They also obtained a temporary restraining order preventing the eviction of 63-year-old Betty J. Bullock, who was legally blind at the time she signed the mortgage papers, and 68-year-old Griselda Mason. In October 2008, Bullock died due to a stroke.
Both women had been told they could get out of debt in two years, but were then charged rents so high they were unable to afford staying in their homes.

On December 15, county officials announced that a final settlement had been reached. The agreement restored ownership of the homes to Mason and Bullock’s granddaughter, who was living with Bullock. Sachs and Heavyweight agreed to no longer conduct any commercial lending in Howard County for a three year period and never use “unfair deceptive trade practices” again, according to officials.

Additionally, Sachs must pay $10,000 in investigation costs and restitutions and Heavyweight must pay $100,000 to the victims.

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Chicago Business Bankruptcies Increase By One Third In Third Quarter

As 2009 draws to a close, many consumers and business owners are looking for the signs that the recession is over – and signs that it may continue to affect our lives, our jobs, and our finances. While housing purchases are on the rise and the foreclosure rate is dropping, others look at the number of bankruptcies around the country and wonder if we are exiting our time of crisis.

For example, as personal bankruptcies skyrocketed this year, Chicago-area business bankruptcies also continue to increase. According to the Chicago Tribune (which has faced its own recent bankruptcy issues), the number of businesses filing for bankruptcy in Chicago, Illinois, increased by 36 percent this quarter compared to the same quarter last year. The Administrative Office of the U.S. Courts reported that Northern Illinois recorded 14,529 bankruptcies in the last three months, roughly 500 business bankruptcies and 14,000 personal bankruptcies. These numbers rival the high numbers of bankruptcies filed in 2005 before the bankruptcy laws were changed.

In the last three months nationally, business bankruptcy rates have risen 33 percent. While the November 2009 numbers are down 18 percent from October 2009, they are up 12 percent in comparison to November 2008. All in all, economic experts predict that 1.4 million Americans will declare bankruptcy this year.

The high numbers of bankrupt individuals and business is being tied to high unemployment rates, a poor housing market, weak consumer confidence, and the recent difficulty in procuring credit.

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Attorney General Chris Koster Holds Florida Company Responsible in Mortgage Scam

According to Missouri Attorney General Chris Koster, he is filing suit against a Florida company that took money from distressed Missouri homeowners, but failed to provide and meaningful mortgage-modification service. Koster is joined by the Federal Trade Commission and the State of Iowa.

Since Koster began his campaign against mortgage fraud in April, this is the eighth lawsuit he has filed against a fraudulent mortgage business.

Koster said his office has “instituted a zero tolerance policy for any mortgage modification firm that preys on and cheats desperate homeowners.”

According to Koster, First Universal Lending, LLC, is based out of Palm Beach Gardens, Florida, but transacts business throughout Missouri. He says that the company markets itself as providing services for homeowners who are struggling to pay their mortgages or are faced with foreclosure and promising them lower house payments or interest rates. However, he said they appear to do little or nothing for the majority of its customers.

Additionally, he says, representatives from the company have told some clients to stop making payments on their mortgages while the modifications process was proceeding, which harms the customers’ credit rating and results in higher late fees, penalties, and interest payments and increases the likelihood of foreclosure.

Koster says that the business requires an up-front fee before providing services, which is illegal for mortgage modification companies according to Missouri law.

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Missouri’s TLC Vision Corp. Seeks Bankruptcy Protection

One of Tiger Woods’ sponsors, TLC Vision Corp., has filed for reorganization bankruptcy – a move which will allow lenders to own the company and take current shareholders out of the picture. The company, which has continued to support Tiger Woods, is an eye surgery outfit that is based out of Chesterfield, Missouri.

The company, who has dealt with financial difficulties for over a year, is seeking approval of $15 million in debtor-in-possession financing and permission to pay employee wages, employee benefits, and key vendors. The company will also pay certain secured and unsecured creditors. The company’s Chapter 11 bankrupty filing announced between $100 and $500 million in assets and between $100 and $500 million in debts.

A company spokesperson said that despite the bankruptcy reorganization and other issues, their organization’s relationship with Tiger Woods had not changed. The company has continued to operate during the bankruptcy proceedings – care for patients will continue and employees would not see changes.

"We expect to emerge swiftly from Chapter 11 with a stronger balance sheet and able to better capitalize on our industry leadership position," Chief Operating Officer of TLC Vision Jim Tiffany told the media.

Since laser surgery vision correction is not normally covered by health insurance, laser vision companies have seen record losses during the recent recession. TLC Vision share trades have been very low over the last week, with shares hovering between 4 and 15 cents.

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Pace of Home Foreclosures Continues Decline in Missouri and Kansas

According to the latest market report from RealtyTrac, the pace of home foreclosures in Kansas and Missouri continued to decline during the month of November.

According to the report from the California-based institute, foreclosure actions in Kansas saw a decrease of 5.49 percent from October to November. The state reported a total of 878 foreclosure proceedings in November, down 0.03 percent. The report said the state ranks 37th nationwide.

The report said that Missouri reported a total of 3,217 proceedings during the month of November, which ranked the state 27th nationwide.

The report also said that the foreclosure rate in Kansas for November was a decrease of 24 percent from November 2008. In Missouri, the rate had decreased 11.5 percent from November 2008.

Across the U.S., November was the fourth straight month in which the foreclosure rate declined after hitting a record high in July, according to the report. Foreclosure filings nationwide for November decreased eight percent from October, but were still an increase from November 2008.

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Illinois Foreclosures Decreasel; Missouri Isn't as Likely

According to new data from Irvine, California-based RealtyTrac, the number of St. Louis-area properties at some point in the foreclosure process increased 15 percent from October to November and increased 10 percent from November 2008.

A total of 2,040 properties, or one out of every 604 homes, were in the foreclosure process in November, according to the report, which was released on December 10.

The metro area examined by the report included the City of St. Louis and the surrounding 16 counties in Missouri and Illinois.

Foreclosure activity in Illinois saw a decrease of nearly 18 percent from a record high in October, but the 16,422 properties in foreclosure in November was an increase of nearly 108 percent from November 2008 and the third-highest nationwide.

In Missouri, foreclosure filings held steady at 3,217 in November in comparison to October, but that was still an increase of 11.5 percent from November 2008.

Across the U.S., foreclosure filings were reported on 306,627 properties during November, which was a decrease of nearly eight percent from October. However, that number was still an increase of 18 percent from November 2008.

According to RealtyTrac chief executive James Saccacio, November was the fourth consecutive month in which U.S. foreclosure activity declined after reaching an all-time high in July.

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How Could The Medical Bankruptcy Fairness Act Help?

Currently, the Medical Bankruptcy Fairness Act is an amendment to the health care bill and could soon be a stand-alone bill. But what would this act mean for those facing financial difficulty due to medical bills, and what would this act mean for taxpayers?

The Medical Bankruptcy Fairness Act would make it somewhat easier for families facing bankruptcy because of a medical emergency to go through the bankruptcy process and return to their lives. The act has come into the spotlight after a recent study that appeared in The American Journal of Medicine revealed that 62 percent of bankruptcies involve medical bills and that even families with thorough health care coverage can go bankruptcy during a medical emergency because of copays, premiums, deductibles, lost wages, and other related reasons.

Under the new act, those declaring bankruptcy because of a medical emergency would not have to attend the same mandatory credit counseling sessions that others must pay for – since the sessions are meant for those who do not have a satisfactory understanding of finances, they are not geared for and are sometime insensitive toward those who have declared bankruptcy because of a sick loved one. The act would also make the process easier, give the filers greater flexibility and give filers a better chance of keeping their home.

In theory, the new act would not cost the taxpayers anything – it would simply create a slightly different bankruptcy process for those who have survived medical emergencies, but who have not survived financially intact.

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Arcade Building Downtown St. Louis Faces Foreclosure

According to media reports, a foreclosure sale for the Arcade building in downtown St. Louis has been scheduled for December 31.

Deputy Mayor for Development Barbara Geisman called the planned sale “a step toward getting the property back into circulation and get it redeveloped.”

A plan by Pyramid Cos. to convert the 15-story building into condominiums fell apart when the development company led by John Steffen shut down in April 2008. Pyramid, through an affiliate called Arcade Owner Inc., is still the owner of the building, one of several commercial properties Pyramid owns that have yet to be transferred to successor owners.

The Arcade project’s lender was Bank of America.

St. Louis’ Land Clearance for Redevelopment Authority approved a resolution in October that approved a resolution to declare the historic building blighted and to authorize 10-year tax abatement and the search for a redeveloper for the half-million-square-foot building.

At one time, the Arcade housed dozens of jewelers and other retailers, but has been shuttered for several years. Many of the windows on the building are either boarded up or covered in tattered plastic.

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Shakira Claims Bankruptcy As Part of Her Success

Colombian pop star Shakira, whose hit single “Hips Don’t Lie” is the most played record in American radio history, says she became a musical sensation and global philanthropist due to her family filing for bankruptcy when she was 8-years-old.

At the age of 18, Shakira founded the Barefoot Foundation, a charity to aid poor children in her native Colombia receive an education. She later expanded her reach to become a UNICEF goodwill ambassador.

And all of that began when she had the rug pulled out from under her as a child in Barranquilla, Colombia.

In a recent interview with CNN, Shakira said she vividly recalled the day “which I entered our apartment and my dad had sold all the furniture we had and the air-conditioning. We lost both our cars.” She said she was “very upset.”

“I couldn't believe my eyes, I couldn't believe how my parents allowed such a failure in business,” she said.

Shakira said because she was struggling to embrace the bankruptcy, her parents took her to the park, where she saw “many kids who were orphans and barefoot and sniffing glue.” She said her parents wanted “to show me another reality that was much worse than mine to make me gain perspective on things.”

The Grammy Award-winning singer said that it was that visit to the park that changed her life. She said she made herself a promise that day to “someday succeed to vindicate my parents’ social and economic position.” But she said she also wanted to do something about children like the ones she saw that day.

Shakira, who is a singer-songwriter, musician, producer, dancer, and philanthropist, described herself as being “obsessed” with child education and its contribution to national and global security.

Shakira, who has sold more than 50 million albums worldwide, said that she believes education “not only boosts economic growth, but also guarantees national and global security.

She described education as being “without a doubt” the best strategy for fighting poverty.

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Foreclosure is Next for Family After Their "Extreme Makeover"

The team from the popular ABC reality series “Extreme Makeover: Home Edition” might provide worthy families with a new home, but yet another family who appeared on the show has learned that they don’t guarantee you’ll keep that new home forever.

Five years ago, the Wofford family of Encinitas, California received their new home. However, they now say that after struggling to pay their bills for two years, they’re now faced with foreclosure. Dr. Brian Wofford, a widower and father of eight, said that many people believe that you get the mortgage when you get the house, but that isn’t the case.

The Woffords are not the first family to appear on the show that has faced serious financial troubles after their home makeover. Last year, the Harper family of Atlanta, who received the biggest house to date on the show, along with the money to pay taxes on it for 25 years, faced foreclosure after taking out an ill-advised $450,000 loan using the house as equity. At least four other families featured on the show have either had to sell or lose the homes they received. ABC may be considering changing the rules to the show in order to prevent future disasters.

There is still hope for the Wofford family. Their bank, OneWest, has promised them loan modification papers. But if they don’t go through, the bank will auction off the house.

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Home Foreclosures Decrease for Missouri and Kansas Overall

According to the latest market report from RealtyTrac, the pace of home foreclosures in Kansas and Missouri continued to decline during the month of November.

According to the report from the California-based institute, foreclosure actions in Kansas saw a decrease of 5.49 percent from October to November. The state reported a total of 878 foreclosure proceedings in November, down 0.03 percent. The report said the state ranks 37th nationwide.

The report said that Missouri reported a total of 3,217 proceedings during the month of November, which ranked the state 27th nationwide.

The report also said that the foreclosure rate in Kansas for November was a decrease of 24 percent from November 2008. In Missouri, the rate had decreased 11.5 percent from November 2008.

Across the U.S., November was the fourth straight month in which the foreclosure rate declined after hitting a record high in July, according to the report. Foreclosure filings nationwide for November decreased eight percent from October, but were still an increase from November 2008.

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Popstar Shakira Learned Life Lesson From Family Bankruptcy

Though she is a millionaire world music entertainer now, Shakira grew up surrounded with poverty and in a home where her parents decided to declare bankruptcy. Now Shakira looks back on the bankruptcy with thankfulness.

Though many know Shakira for her top-of-the-chart hit songs and clear voice, the Columbian pop sensation is also known for her philanthropy. Just months after she became a world-famous performer and singer, Shakira began the Barefoot Foundation, which works to educate impoverished Columbian children receive an education. Currently, she also works as a UNICEF goodwill ambassador.

However, the musical artist was not always in the position to help. When she was eight years old, her parents declared bankruptcy and sold most of what they had in order to clear their debts, including the furniture and air conditioning. When Shakira became visibly upset, her parents took her to a public park, where real poverty existed – children without food, families, appropriate clothing, or roofs over their heads. It was then that she understood that although her family was struggling, they were not at rock bottom.

Today, Shakira’s lesson about bankruptcy and poverty has turned her into an adult concerned with education and schooling for all children. She believes that education does not only help communities but also decreases gang violence and increases equality between the sexes. Shakira herself is perusing her dream of a college education at the University of Southern California.

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Business Bankruptcies In St. Louis Soar In Third Quarter Of 2009

According to the St. Louis Business Journal, the end of the recession has not meant the end of business bankruptcies in Missouri or St. Louis. Just as the rate of personal bankruptcies in Missouri rose in the third quarter and for the year, local businesses are following the same trend.

Hoffman Clark, a Clayton, Missouri, accounting firm has released a new report on the number of St. Louis business bankruptcies – a report that says in the last year 378 St. Louis, Missouri, businesses declared bankruptcy. This is an increase of 19 percent over the number of bankruptcies recorded in 2008. It is an increase of 250 percent from the number of business bankruptcies in 2007, before the recent economic recession began.

Petitions for bankruptcies by businesses reached 104 in the third quarter. This is an increase of 16 percent over the number of bankruptcies filed in St. Louis by businesses in the same quarter of 2008. In comparison to the same quarter of 2007, bankruptcy filings for St. Louis businesses were two and a half times higher. The report does note, however, that the number of business bankruptcies declined in the third quarter in comparison to the second quarter of 2009 – a trend that may mark the end of the worst of the recession.

The data used in the report was taken from the U.S. Bankruptcy Court for the Eastern District of Missouri, which mostly covered St. Louis and the surrounding area.

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Credit Card Delinquencies Decrease According to TransUnion

According to an analysis by TransUnion, one of the three U.S. credit bureaus, credit card delinquencies in the third quarter saw a decrease of six percent in comparison to the previous quarter.

The highest rates of delinquency were seen in Nevada (1.98 percent), Florida (1.47 percent), and Arizona (1.35 percent). Those three states are also among the four states with the highest rates of foreclosure. Adding in California, the four states had 43 percent of all foreclosures started in the third quarter, according to the Mortgage Bankers Association.

TransUnion said that the credit card delinquency rate, borrowers 90 days or more delinquent on one or more of their bank-issued credit cards, across the U.S. saw a decrease to 1.10 percent in the third quarter of 2009, which was a decrease of 5.98 percent from the previous quarter. In the year-to-year comparison, however, credit card delinquencies remained flat from 1.09 percent in the third quarter of 2008.

Average credit card borrower debt, the total owed on all bank-issued credit cards for an individual, slightly decreased across the U.S. 1.87 percent to $5,612 from $5,719 in the previous quarter and decreased 1.71 percent from $5,710 in the third quarter of 2008.

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Borders May Face Bankruptcy

In the wake of British chain WHSmith backing out of a deal with Borders, the U.S. megastore bookseller is desperately seeking to fight off bankruptcy and Chapter 7 liquidation.

Some don’t believe WHSmith being involved in the bidding made sense to begin with, as Borders is a bookseller and WHSmith is more of a news agency.

The situation with Borders could be seen as similar to Linens ‘N’ Things, another potentially viable company that was sunk by leverage in an overpriced equity deal. They ran into funding problems right as the credit crunch struck. Starved for capital, they were liquidated.

According to a report in The Telegraph, Borders is believed to be holding discussions with groups including HMV as the threat of collapse draws nearer.

In July, Channel 4 chairman Luke Johnson’s Risk Capital Partners purchased Borders in a management buyout backed by private equity firm Valco.

But competition from supermarkets and the continued growth of online retailers as the recession continues reducing consumer spending has hit Borders. The company also has suffered from the tightening in the credit insurance market, which has made it difficult to obtain stock from suppliers.

The company’s management is now uncertain that it does not have enough cash to trade successfully during the busy Christmas period.

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Florida Has Highest Rate of Foreclosure

Being in first place isn’t always a good thing. For example, Florida currently holds the distinction of being the state with the highest rate of foreclosures in the U.S.

According to a report in The Palm Beach Post, nearly one out of every five home loans in the state was delinquent in payments by 90 days or more, or was somewhere in the process of foreclosure during the most recent quarter.

Florida has nearly 3.5 million outstanding loans across the state and more than 13 percent of those are in trouble. This type of economic behavior does not bode well for a recovery. It also indicates that another large group of foreclosed homes is soon to crash into the real estate market with a resounding thud.

This somewhat alarming statistic is not helped by another problem: Florida’s 11.2 percent unemployment rate. Experts are not expecting employment to alleviate before the second quarter of 2010, by which time projections show the rate having risen to 11.4 percent.

Florida’s foreclosure numbers may seem high, but according to the Mortgage Banker’s Association, nearly one out of every seven loans in the U.S. is in foreclosure, an increase from one out of every 10 at the beginning of 2009.

Nevada, California, and Arizona closely follow Florida in foreclosure rate. Combine, the states are responsible for 43 percent of the new crop of foreclosures due to hit the market.

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Attempted Block on Charter's Emergence From Bankruptcy

Lenders, stockholders, and bondholders are attempting to block St. Louis-based Charter Communications Inc.’s emergence from Chapter 11 bankruptcy while they appeal a judge’s approval of the cable company’s reorganization plan.

On November 20, a group of lenders led by JPMorgan Chase & Co., stockholder R2 Investment LDC, and Law Debenture Trust Co. of New York, a trustee for holders of $479 million in bonds, filed motions with the U.S. Bankruptcy Court in the Southern District of New York asking that Judge James Peck hold off on his order approving the bankruptcy plan while they appeal.

The lenders say the confirmation order “compels financial institutions to lend a post-bankruptcy reorganized company $8.4 billion, on pre-bankruptcy terms, over the lenders’ objection.”

Charter and Chief Executive Neil Smit said they anticipated objectors filing an appeal to the confirmation. However, they expect the plan will take effect even if an appeal is still pending.

Attorneys for Charter said that any delays in the company’s emergence from bankruptcy could result in the loss of “hundreds of millions of dollars of additional interest,” and place the entire plan in danger.

According to Charter, it has paid more than $37.9 million per month of default and incremental interest and more than $129 million in legal and adviser fees during the bankruptcy process.

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Good News on Foreclosures in Missouri and Kansas

There is some encouraging news on the rate of home foreclosures in Missouri in Kansas. Financially troubled homeowners are not out of the woods yet, but the worst may be over.

According to a report from RealtyTrac, in October Kansas reported a 27 percent decrease in home foreclosures in comparison to September. Though the number is up from the rate in October 2008. With a total of 1,313 foreclosure actions, Kansas ranks 37th overall for October.

In Missouri, home foreclosures saw an increase of 2.03 percent from September to October. However, the number was a decrease of 12.36 percent from October 2008, Irvine, California-based real estate firm RealtyTrac said. With a total of 3,218 foreclosure actions, Missouri ranks 30th overall.

Foreclosures across the U.S. saw a decrease for the third consecutive month in October, another sign that the worst of the housing crisis could be over.
 

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More Renters Left With Foreclosed Properties

A new wave of foreclosures could harm people who may have never even taken out a mortgage: renters. In cities like New York, Chicago, and Los Angeles, where many investors are carrying upside-down mortgages on large rental buildings, some tenants are seeing their homes fall apart along with the financing.

In the first three quarters of 2009, 475 foreclosure proceedings were begun against multifamily rental or cooperative homes in Washington D.C., according to NeighborhoodInfo DC, a partnership between the Urban Institute and the D.C. Local Initiatives Support Corp. That figure already eclipses the 458 foreclosures for all of 2008.

In Cook County in Illinois, 328 multifamily rental buildings were in foreclosure by the second quarter of 2009, in comparison to 185 in 2008, according to a study by the Institute for Housing Studies at DePaul University, which has not yet been released.

In Los Angeles, foreclosures for buildings with five or more units totaled 78, encompassing 1,344 units, within the first three quarters of the year, in comparison to 49 buildings and 432 units last year during the same time period and 13 buildings and 239 units in 2007.

New York housing analysts estimate the number of apartment units in the city that are at risk of default due to upside-down loans (property is worth less than is owed on the loan) to be between 50,000 and 100,000.

During the first nine months of 2009, Fannie Mae foreclosed upon 74 multifamily properties, in comparison to 25 during the same period in 2008.

The pattern has also showed up in smaller cities such as Lexington, North Carolina and Des Moines, Iowa.

The impact upon tenants is uneven. According to officials in New York City, the owners of the vast majority of buildings in foreclosure are likely to maintain decent standards of living. However, of the 200 properties on the city housing agency’s 2008 list of buildings with the most severe maintenance problems, at least 77 had been in foreclosure.

In buildings with a struggling landlord, maintenance will typically be the first thing to go. Garbage can pile up, lists of overdue repairs lengthen, and vermin multiply.

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Case on Loan Modifications May Appeal Ruling

In Minneapolis, Minnesota, a federal judge has dismissed a lawsuit filed by a group of Twin Cities homeowners claiming that charged loan service companies are improperly implementing the federal government’s loan modification program.

The suit, which a public interest group in St. Paul, Minnesota filed this summer, also asked that U.S. District Judge Ann Montgomery issue an injunction preventing bank foreclosures in Minnesota from going forward. In an order issued on November 9, Montgomery said the request had been denied.

Mark Ireland, the attorney who brought the suit by the Foreclosure Relief Law Project, said that the group was reviewing the decision in order to determine if it would file an appeal.

The suit targeted the federal Home Affordable Modification Program, which the Obama administration introduced in the spring in an effort to fight the high number of bank foreclosures in the U.S.

In a separate release on November 10, the Treasury Department released the latest performance numbers on the program, which provides loan servicers with incentives to modify loan terms for struggling borrowers.

According to the Treasury Department, the cumulative number of trial modifications provided through the program stood at 650,994 at the end of October, an increase of nearly 34 percent from the 487,081 trial modifications that had been initiated as of September 30.

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Medical Bankruptcy Rate Increases – Even For Those With Health Insurance

In November, we are focusing on the common causes of bankruptcy filings. Unlike many may assume, the vast majority of bankruptcies are not due to overspending, but rather due to an unexpected life emergency or life event. While bankruptcy experts knew that medical emergencies were a common reason that families go bankrupt, a new study from Harvard University has revealed that even more people than previously thought file bankruptcy because of medical bills. Even more shockingly, many of these families in medical emergencies have some form of health insurance coverage.

In Kansas City, Missouri, Tonni Brende of Independence and her family looked torward bankruptcy after a string of medical problems. A son with cerebral palsy and a Hepetitis C diagnosis for Brende broke the family’s bank even though they had Medicaid and other health insurance coverage.

Another person, Jim Trinidad of Liberty, Missouri, cares for his 29-year-old son, who has been in a vegetative state since a car accident 12 years ago. While Medicaid covers some costs, Jim has to turn down work and spend much of his day caring for his son’s medical needs – needs he will have for the rest of his life.

Both Missouri families turned to bankruptcy after facing medical bills and other related financial challenges that they were simply not a match for. They are just two examples of MO people who were responsible with their money – but unprepared for the unexpected medical tragedies that affected every aspect of their lives.

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Missouri Bankruptcy Filings Continue to Soar – 23% This Federal Fiscal Year

Just as economists and bankruptcy experts predicted, bankruptcy rates are up again this year in the state of Missouri, with more than five out of every 1000 people across the state filing for bankruptcy during the 2009 federal fiscal year. This number is a 23 percent increase from the 2008 filings. The federal fiscal year ended on September 30 and the bankruptcy statistics were released last Wednesday by government officials.

Both personal bankruptcy filings and business bankruptcy filings increased this year – an increase that is blamed on the continuing high unemployment rates, the struggling housing market, and the economy as a whole. Bankruptcy rates in Missouri have not been this high since the bankruptcy reform laws took effect in 2005.

In fiscal year 2009, 30,025 people across Missouri filed for bankruptcy in the state’s federal court districts. Last year, 24,216 people petitioned for bankruptcy in Missouri.

Nationally, the number of bankruptcy filings was up 33 percent – with 1.4 million people declaring bankruptcy across America. Last year, just over 1.1 million people petitioned for bankruptcy. Business bankruptcies jumped 32 percent this year, with 45,510 companies filing so far in 2009.

Chapter 7 bankruptcies rose a shocking 42 percent, with 265,721 individuals filing in the third fiscal quarter. Chapter 13 bankruptcies, also known as reorganization bankruptcies, rose 15 percent, with 107,142 individuals filing in the third fiscal quarter. Nevada led the country in most bankruptcies per capital. 

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National Foreclosure Rate to Rise Through 2010 Experts Say

Many economists and organizations are saying that the recession is over – but does that mean that the rate of foreclosures and other housing woes will soon disappear? The Mortgage Bankers Association says that the answer is no. In all likelihood, foreclosure rates will rise, not drop, throughout 2010 even as other aspects of the economy are expected to improve. Currently, one in seven homes in America are either overdue or delinquent when it comes to their mortgage – the highest levels since 1972.

What are some of the reasons for this continued foreclosure plague? There are a number of factors:

•    The struggling housing market. Although the first time homebuyers tax credit and other incentives have helped the housing market, home prices are still down in many areas and one in four homeowners are upside-down on their mortgage.
•    Some adjustable rate mortgages (ARMs) have yet to adjust. A large number of the foreclosures that have already taken place came about because of ARMs that adjusted to rates far beyond what the homeowner could ever pay. Even more ARMs are set to adjust in the next year – which will prove to be bad news for a significant number of homeowners.
•    Unemployment is still high. As Americans continue to struggle to find work, deal with pay cuts, or lose their jobs, mortgages that were once easy to pay are now impossible. With job prospects projected to remain weak in 2010, it is likely that many out-of-work families will face issues with foreclosure.
•    Too many houses on the market. Because of the foreclosures and short sales already flooding the market, and because of a hesitant group of homebuyers, housing prices have fallen across almost all markets, lessening the value of most homes.

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Herbst's Post-Bankruptcy Layoffs

On November 9, bankrupt gaming giant Herbst Gaming confirmed that it had laid off workers throughout the company. The announced layoffs come less than two weeks after a bankruptcy court judge in Reno, Nevada approved a plan that will hand the company over to its secured lenders sometime in 2010.

According to Herbst general counsel Sean Higgins, the layoffs accounted for less than five percent of the company’s workforce.

Upon its filing for Chapter 11 bankruptcy in March, Herbst reported that it employed approximately 5,400 workers, which was down from total of 6,450 employees the company reported to the Securities and Exchange Commission on December 31.

The company’s current employee numbers were not available.

On October 31, U.S. Bankruptcy Judge Gregg Zive approve a plan to hand the 15 casinos and 600-location, 6,400-machine Nevada slot route to a group of lenders that holds $876.5 million in debt.

Twelve of the casinos the company owns are in Nevada, two of them are located in Missouri, and one is in Iowa. The company also owns the 275-room Terrible’s hotel and casino in Las Vegas.

The company also owns three casinos in Primm, Nevada – Whiskey Pete’s, Buffalo Bills, and Primm Valley Resort – which it acquired in 2007 from MGM Mirage.

Under the company’s reorganization plan, the lenders will receive 100 percent of the company’s casinos and slot routes. The new company will issue $350 million in new senior secured bank loans as part of the reorganization.

The reorganization will wipe out the equities of Timothy P. Herbst, Edward J. Herbst, and Troy D. Herbst. The brothers remain directors of the company, with Troy Herbst as chief executive officer.

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United Commercial Bank Shut Down by FDIC

In addition to the $3.2 billion the federal government lost earlier in November due to CIT filing for bankruptcy, another $1.7 billion is lost because of United Commercial Bank’s collapse.

San Francisco-based United Commercial Bank is the first financial institution that received TARP bailout money to be shut down by the Federal Deposit Insurance Corporation (FDIC). The so-called “healthy bank” received TARP funds of $299 million and its failure will result in a $1.4 billion loss for the FDIC.

Also on November 6, the FDIC seized institutions in Georgia, Michigan, Minnesota, and Missouri, bringing the total in 2009 to 120 and still rising. The total represents the most failures since 1992, when 181 banks were shut down by the FDIC.

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Fannie Mae Gives People in Foreclosure Chance at Leasing

On November 5, mortgage giant Fannie Mae announced a plan to allow people losing their homes to foreclosure to lease those properties back for up to a year at market rental rates.

The move is the latest in a series of steps by lenders attempting to manage inventories of foreclosed homes on their books in an attempt to keep a wave of properties from slamming a housing market that has shown recent signs of recovery.

The announcement came alongside a report that Fannie Mae suffered a third quarter net loss of $18.9 billion, in comparison to a second quarter $14.8 billion loss and a loss of $29.4 billion in the third quarter of 2008.

The most recent loss pushed the mortgage giant’s government regulator to request $15 billion from the Treasury Department on November 5. It was the fourth time the company had drawn on its federal financial lifeline since it and sister firm Freddie Mac were seized and placed under government stewardship.

According to analysts, Fannie Mae’s Deed for Lease Program would add to other efforts the federal government is making to aid the housing market by reducing the supply of cheap foreclosures on the market.

According to Fannie Mae vice president of equity investments Jay Ryan, the program would help stabilize neighborhoods. According to the firm, only borrowers who had exhausted other options, such as loan modification, would qualify for the program.

The program would also allow Fannie Mae to produce some income from the properties, many of which are underwater, while waiting for home prices to recover.

The company did not have estimates as to how many homeowners would qualify. In order to participate, borrowers must agree to convey all interest in a property to the lender. According to a November 5 filing with the Securities and Exchange Commission, the company recorded a total of 1,996 people agreeing to such a transaction within the first nine months of 2009.

The program requires that the home be a borrower’s primary place of residence. A borrower-turned-tenant would be required to document that the new market rental rate is no more than 31 percent of his or her gross income and be released from any subordinate liens on the property.

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Former Nebraska Football Star Goes Through Bankruptcy After Business Venture

Former Nebraska Cornhusker star Aaron Taylor may have seen a great deal of success on the field, but the failure of his Cornhusker-themed restaurant in Omaha and his subsequent bankruptcy are hitting him hard.

While at Nebraska, Taylor was a part of three national championship teams, was an all-American at center and guard, and won the Outland Trophy as the nation’s best interior lineman in 1997.

On (Saturday before story), it only took approximately 30 minutes to lose possession of some of the tangible evidence of his accomplishments.

A court-ordered auction saw the sale of Taylor’s Outland Trophy and seven championship rings. The Associated Press reported that the trophy was sold for a total of $6,800 and the diamond-encrusted rings sold for $2,000 to $5,900. In total, the auction brought in $28,500.

According to Philip Kelly, the bankruptcy trustee in the case, the identities of online bidders were not immediately available, but it did not appear that Taylor had submitted any of the winning bids. Some Nebraska fans upset with the situation donated money in an attempt to aid Taylor in purchasing some of his items.

Taylor attempted to exclude the memorabilia from bankruptcy liquidation, but his attorney informed him that under Chapter 7 bankruptcy law, the championship rings and trophy could not be excluded. Taylor’s case did not qualify for another type of bankruptcy that could have allowed him to keep the items.

In Taylor’s initial bankruptcy filing during the summer of 2008, he noted that he owed at least $109,543 and listed assets worth $5,300. That sum did not include the value of the rings and Outland Trophy.

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Pork Producer Goes Bankrupt; Some Blame on Swine Flu

A major pork producer in North Carolina recently filed for bankruptcy, citing complaints from unpaid vendors and declining consumption of pork due to fears over swine flu as reasons.

According to a report in Raleigh, N.C.’s News & Observer, Coharie Farms of Clinton, N.C., with a court appearance scheduled for November 10. According to Coharie owner Anne Faircloth, she plans upon liquidating the company and some of the 170 employees will be laid off.

Earlier in November, as many as 30 farmers complained of not being paid by Coharie for grain deliveries. Coharie’s debts to various vendors exceed $3 million.

The company blamed its losses on an increase in grain prices in 2008, a $20 decrease in hog prices, and unwarranted fears of swine flu driving down pork consumption. In 2009, Coharie has lost $17 million.

North Carolina’s pork industry is the second largest in the U.S.

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October Bankruptcy Rates Continue To Soar

While many economists claim that the most significant recession in recent history is officially at an end, the rate of bankruptcy filings across the United States is still skyrocketing. In addition, some are predicting even higher number next month and on into 2010.

Why are the bankruptcy numbers still going up, for both consumers and companies? Bankruptcy experts point to continued high rates of unemployment as well as the continued weak housing market that has left many families with upside-down mortgages. Many are still just one or two paychecks away from losing their house, keeping food on the table, and keeping their bills paid – while others are struggling with adjustable rate mortgages, medical emergencies without healthcare coverage, or other financial issues. The American Bankruptcy Institute predicts that 1.4 million people in America will file for Chapter 7 or Chapter 13 bankruptcy by the end of the year.

According to data collected by Jupiter ESources LLC, the October 2009 bankruptcy rates were higher than they have been since 2005, when bankruptcy laws were made stricter. In comparison to October 2008, 25 percent more people filed for bankruptcy, for a total of 131,200 bankruptcy petitions in just one month. Since the beginning of the year, 1.2 million people filed for bankruptcy – more than all of the 1.1 million bankruptcy filings in 2008.

Bankruptcy lawyers believe that while the economy on the whole is indeed recovering, certain sectors, such as real estate and finance, are still suffering – and that those involved in hurting industries are still struggling to keep their houses and their financial security.

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St. Louis Woman Charged With Concealing Assets In Chapter 7 Bankruptcy

This week we covered an important topic that all people considering bankruptcy should know about: What Happens When You Don’t List Everything in Your Bankruptcy? The answer, as you might guess, is that you can be charged with bankruptcy fraud and may face severe consequences including prison time.

Just last month, the American Chronicle reported on the bankruptcy fraud case of 45-year-old Julie Lynn Wagman, a St. Louis, Missouri, woman who filed for Chapter 7 Bankruptcy in August of 2005. When listing her assets as part of her bankruptcy petition, the MO woman tried to hide several assets from the courts, totaling over $50,000. According to United States District Judge Catherine D. Perry, the woman failed to list several expensive pieces of jewelry, including a Rolex watch, a tennis bracelet, and her wedding ring. While she did not list her expensive items, she did list several items under $300.

During her divorce proceedings two years later, the property was discovered and Wagman admitted that she had purposefully omitted her expensive items during the bankruptcy proceedings. She later pleaded guilty to making false statements during a bankruptcy proceeding. She has been ordered to serve five months in prison and five months of house arrest. In addition, she must pay $54,400 in restitution for her bankruptcy fraud.

The lesson here is simple: as with all things, honesty is the best policy – and in a bankruptcy procedure, anything less than honesty could end in prison.

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Foreclosure Filings Up in Missouri in the Third Quarter

According to a report released on (Thursday before story) by Irvine, California-based RealtyTrac, the number of home foreclosure filings in Missouri saw an increase of 8.3 percent in the third quarter, as the recession bested efforts to aid struggling borrowers with holding on to their homes.

The report showed that during the July-September period, 7,892 foreclosure filings took place in Missouri. The number is a decrease of 11.2 percent from the third quarter in 2008, but RealtyTrac noted that some of the records had stopped being collected in January.

Filings include default notices, auction-sale notices and bank repossessions.

One out of every 335 Missouri housing units was foreclosed upon during the third quarter. That rate is considerably lower than the national average of one out of every 136 households, ranking the state 30th nationally.

RealtyTrac said that in September alone, foreclosure filings in the state saw an increase of 26.3 percent from August, putting the number at 3,154. That was also 8.8 percent higher than the September 2008 total.

Across the U.S., the number of September filings decreased four percent from August, but was still the third-highest month since RealtyTrac’s report began in 2005.

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CIT Group May File for Prepackaged Bankruptcy

CIT Group Inc., the 101-year-ld commercial lender attempting to avoid collapse, could soon file for a prepackaged bankruptcy after reaching agreements with billionaire Carl Icahn and Goldman Sachs Group Inc.

Under the agreement, Icahn will supply a $1 billion loan for “supplemental liquidity” that could be used as bankruptcy financing, according to the New York-based company. Goldman Sachs will keep a credit line open, should the lender file for court protection.

The accords were disclosed one day after a deadline passed for CIT to solicit votes in support of either a $30 billion out-of-court debt exchange or a prepackaged bankruptcy. CIT seeks to reduce its debt by at least $5.7 billion after being locked out of credit markets it relies on for funding and posting nine quarters of losses totaling more than $5 billion.

The prepackaged plan would give CIT bondholders 70 cents on the dollar in the form of new notes and equity in the reorganized company. If CIT is forced into a “free-fall” bankruptcy, unsecured claims could fetch as little as six cents on the dollar, according to CIT chief executive officer Jeffrey Peek.

On October 28, CIT said that it had arranged a $4.5 billion term loan that can be used in bankruptcy.

If the prepackaged plan receives approval, the company plans upon filing for bankruptcy before $800 million of bonds mature, according to people familiar with the situation who declined to be identified.

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Missouri Forgives Debts for Students at Bankrupt Helicopter School

Under the terms of a settlement between Student Loan Xpress, Missouri, and 11 other states, the company will forgive nearly $113 million in debt for students who obtained loans to attend a now-bankrupt helicopter training school.

According to an October (Tuesday before story) statement from Missouri Attorney General Chris Koster, the state’s victims will be entitled to more than $2.9 million in student loan forgiveness.

Las Vegas-based Silver State Helicopters began operation in 2002 as a training school to train small helicopter pilots. The company ultimately operated 34 flight schools across the U.S.

For a period of at least two years, Student Loan Xpress was the preferred student lender for Silver State, providing an approximately total of $172 million to more than 2,800 students across the U.S., according to Koster’s office.

Koster’s office said that records revealed that only a small percentage of students actually graduated from the school and the school had an exceptionally high drop-out rate.

Silver State had ceased operations and filed for bankruptcy by 2008, leaving students up in the air.

Koster’s office received a total of 53 complaints about the school going into bankruptcy and the student loans still owed.

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St. Charles Homebuilder Files for Bankruptcy

St. Charles, Missouri-based homebuilder Whittaker Builders has filed for bankruptcy protection. On October 15, the company, led by President Greg Whittaker, filed for Chapter 11 in the U.S. Bankruptcy Court for the Eastern District of Missouri.

In 2008, Whittaker was the fifth-largest homebuilder in the St. Louis metro area. However, the struggling real estate market did a great deal of damage to the company.

Whittaker’s revenue was $93.3 million in 2006, but decreased to $82.7 million in 2007 and $29.2 million in 2008. Nearly half of the company’s workforce was laid off, reducing the number of employees from 288 in 2007 to 150 in 2008.

According to the company’s Web site, Whittaker cites changes in the credit market as a driving force in the company’s decision to reorganize.

Whittaker said that he plans to personally invest $1 million to provide capital to the company during the reorganization period.

Whittaker says the company will remain open and continue to provide customers with warranty, service, and customer support.

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Leader of Waterford Speedbowl Staves Off Foreclosure

For the second time within the past three years, Terry Eames, the leader of the ownership group of Connecticut’s Waterford Speedbowl, has staved off foreclosure on the racetrack.

On (Friday before story), Eames and his group filed for Chapter 11 bankruptcy in Federal Court, effectively canceling a foreclosure auction at the facility that had been scheduled to take place on (date of story).

The action grants the group a chance to reorganize under the protection and supervision of bankruptcy court. According to Eames, all business affairs, including preparations for the 2010 racing season, would continue.

Eames said a giant multinational corporation made him an offer that would’ve turned the track into an industrial park, but he is “in love with this place as a racetrack and the community of people that make it that,” and is “determined to see this survive.”

Eames and his ownership group were received a loan from Southbury businessman and racing supporter Rocco Arbitell and business associated Peter Borrelli to avoid foreclosure by former mortgage holder Washington Mutual Bank.

Arbitell foreclosed on the ownership group in May 2008 after former track operator Jerry Robinson failed to pay property taxes. Eames and his group owe a debt of more than $750,000 to Arbitell and Borrelli.

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Real Housewives Star Adds to Rising Rate of Foreclosure

The Real Housewives of New Jersey star Teresa Giudice may be regretting the decision to build her lavish new home from scratch.

Giudice and her husband, Joe Giudice, are now facing foreclosure on their newly built Lincoln Park, New Jersey home after their mortgage company filed a complaint in New Jersey Superior Court on October 9, according to an October 23 report from E! News.

DLI Mortgage Capital Inc.’s complaint seeks to recover the family’s home because of the amount of owed money the family failed to pay.

On the popular show’s first season, Giudice said she decided upon a custom-built 12,000 square foot home because she believed buying a pre-owned home to be “unclean.” She paid for tens of thousands worth of furnishings in cash.

The show was renewed by Bravo for a second season earlier in October.

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Senator Durbin and Others Protest ABA for Rising Number of Foreclosures

On October 25, United States Senator Dick Durbin and nearly a dozen protestors issued calls for banks that received billions in bailout money to aid consumers who have fallen victim to bad loan practices and are losing their homes to foreclosure.

Durbin specifically referenced a Chicago, Illinois neighborhood called Marquette Park, which is near Midway Airport, noting that, despite the nice appearance, each block has a foreclosed home.

Durbin says the neighborhood is no different from others across the nation, during his speech at a downtown Chicago hotel conference room in from of approximately 500 protestors who had come to the city to protest the annual American Bankers Association meeting.

According to the accusations of Durbin and the protesters, the ABA lobbied against banking reform despite members receiving billions in federal bailout money.

The Obama administration has proposed cutting executive pay and bonuses for people who received the most bailout money. The administration has also proposed the creation of the Consumer Financial Protection Agency, which would be able to establish rules for consumer protection and prohibit business practices it deems unfair, dishonest, or abusive, among other things.

Several banking and business groups are in opposition to the proposed agency, saying that it would harm consumers by imposing so many new rules that companies would have to charge more for loans and credit, or not offer them at all.

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Foreclosures Continue to Rise in Missouri and Kansas

According to statistics released on October 15 by RealtyTrac Inc., home foreclosures in Missouri and Kansas both saw an increase in September as the pace of foreclosures across the U.S. continued at a near-record pace.

RealtyTrac said that in September, foreclosure activity in Missouri saw an increase of 8.8 percent in comparison to September 2008. Foreclosure activity for September in Kansas was up 22.4 percent from September 2008.

Missouri was ranked 29th in the U.S. for foreclosure activity in September with a total of 3,154 filings, including default notices, scheduled auctions, and bank repossessions. Kansas was No. 33 with 1,272.

September foreclosure activity for Missouri was an increase of 26.3 percent from August. Kansas’ was an increase of 20.5 percent.

Foreclosure activity across the U.S. was down four percent from August with 343,638. However, it was up 29 percent from September 2008. In spite of the decrease, the total for September was still the third-highest monthly total since RealtyTrac’s report began in January 2005. The highest was July 2009 and second was August 2009.

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City of New York Claims Right to "Tavern on the Green" Name

The city of New York has filed suit against the operators of bankrupt Tavern on the Green, claiming the city has the sole right to use the historical restaurant’s name.

According to the suit the city filed on October 21, the trademark, valued at $19 million by the operators of the restaurant, was the single largest asset in the bankruptcy estate.

The city is attempting to prevent the Leroy family, which owns the Tavern on the Green name, from opening or operating other establishments under the same moniker.

According to the Leroy family, they have owned the trademark since 1978.

Earlier in October, the operators filed suit against the city, seeking more time to auction the restaurant’s assets. The family has also argued that any new concessionaire could make much more profit by operating under the “Tavern on the Green” name.

The restaurant filed for bankruptcy protection in September after a new lease for the property was granted to another restaurateur.

The current operators have held a lease since 1974, but that least expires at the end of the year.

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"Terminator" Franchise Up for Grabs

The production company that owns the rights to the “Terminator” film franchise is seeking a buyer for the film rights after filing suit against a hedge fund firm and filing for bankruptcy.

Halcyon Holdings Group has retained FTI Capital Advisors to look into strategic alternatives, which likely means selling the intellectual property rights, according to FTI Senior Managing Director Kevin Shultz.

Halcyon’s version of the science fiction series, “Terminator Salvation”, which starred Christian bale, was released earlier in 2009.

However, despite big name stars and a powerhouse franchise, Halcyon encountered financial woes. The company’s principals, Derek Anderson and Victor Kubicek, filed suit against Kurt Benjamin, a former business executive with California hedge fund firm Pacificor. They allege that Benjamin had arranged for a $30 million loan to finance the film, but did not inform them that a hedge fund was the source of the money.

The filmmakers also allege that Benjamin encourage the company to develop a video game subsidiary, which accounted for much of the production company’s losses.

After filing for hedge firm, the producers filed for bankruptcy, alleging that they were forced into it by the hedge fund’s insistence on being paid back.

The bankruptcy court would have to approve and sale of rights.

According to Shultz, a sale could come in well over the $30 million that Halcyon paid to purchase the rights in 2007. He says there has already been a great deal of interest.

 

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Jolt Energy Drink Company Files for Chapter 11

Jolt Co Inc, the manufacturer of the famous Jolt Cola energy drink, has filed for Chapter 11 bankruptcy protection due to a dispute with drinks can manufacturer Rexam. The filing was on September 28 in Manhattan, New York.

According to Jolt’s court filings, the company agreed to purchase 90 million 23.5 ounce resealable cans from Rexam between January 2007 and December 2009. But due to the recession, Jolt has only been able to purchase 27 million as of the date of the filing.

Jolt has said that it must launch non-resealable cans to compete in the market, because Rexam’s resealable cans cost three times as much as non-resealable cans.

The company also said that it is not likely to secure additional capital to pursue the non-resealable can strategy due to Rexam’s claims and asserted liabilities.

In the bankruptcy filing, Jolt, doing business as Wet Planet Beverages, listed assets and debt between $1 million and $10 million. Rexam, which is owed approximately $2.1 million, was listed as the company’s largest unsecured creditor.

In 1985, Jolt Cola was created by C.J. Rapp as a highly caffeinated beverage. The energy drink is sold across the U.S., Canada, and Europe.

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Adams Dairy Development LLC Declares Bankruptcy In Western Missouri

A large, multi-purpose real estate project in Blue Springs has ended in the bankruptcy of the developer, according to the Kansas City Business Journal and KansasCity.com. The bankruptcy is freezing the foreclosure of the property in question, which is off of Interstate 70, while the company developing the land seeks new financial support.

The company, Adams Dairy Development, LLC, began a new project called Lake Ridge Village. The planned 104-acre real estate project would consist of a number of commercial and residential buildings, including 200,000 square feet of commercial space, over 400 residential units, and a nursing home. However, the mix of lofts, condos, shops, and offices did not develop as expected in the last two years. Only a few lots were sold.

Adams Dairy Development has one secured creditor, Heartland Bank. According to proceedings following the company's Chapter 11 bankruptcy petition, the developer owes the bank $11.4 million. A handful of unsecured creditors are also owed money, including the Jackson County Collector, who is seeking real estate taxes.

The company's Missouri bankruptcy lawyer said that the company is looking for a way out of their money trouble - a solution that might include finding new investors, building a joint venture, or using the land for a different development project altogether.

Other real estate developers are also breaking ground in the Blue Springs area around the Interstate 70-Adams Dairy Parkway interchange, but with more success.

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Charter Extends Bankruptcy

Bankrupt St. Louis-based U.S. cable operator Charter Communications Inc. has changed its debt restructuring deal with chairman Paul Allen, extending its bankruptcy until as late as December 15.

The agreement, which has been amended for the third time, to restructure debt held by Allen, a co-founder of Microsoft Corp. and other noteholders, was filed in bankruptcy court in Manhattan on October 13.

The amendment agreement allows for Charter to have until November 2 to emerge from bankruptcy, or until December 15 if the company has not been able to obtain the necessary permits and regulatory approval in connection with the reorganization plan by November 2.

According to attorneys for Charter, the company must get the required permits that cover areas serving at least 80 percent of its basic subscribers.

In March, Charter filed for bankruptcy protection due to a debt of $21.7 billion. However, at the time, the company said that it had reached agreements with key stakeholders that would allow it to emerge from bankruptcy within a matter of months.

The company originally reached the agreement with Allen and some of the noteholders in February. It called for Charter to reinstate $11.8 billion in debt at the same terms after the bankruptcy.

However, lender JPMorgan, on behalf of itself and other holders of $8.5 billion of Charter’s senior debt, opposed the bankruptcy plan, alleging that the company had violated its loan agreements.

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Toni Braxton Hit with Foreclosure

Singer Toni Braxton was recently hit with a foreclosure notice on her home in Century City, California.

The 40-year-old singer owes a total of $12,503.20 on a defaulted mortgage payment based on a loan from Bank of America. She recently defaulted on a City National Bank loan worth $900,000, which she pledged to repay in November. The bank says they haven’t received a check since April.

Braxton’s loan balance was renegotiated to $657,567.54 and she now owes $44,000 in interest. She says she took out the loan because of “financial difficulty.”

This isn’t the first time Braxton has fallen onto rough times financially. In the late 90’s, she fell nearly $4 million in the hole, forcing her to file for bankruptcy.

Braxton’s foreclosure notice was filed in September.

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Filing Bankruptcy in St. Louis - New Median Income Amounts

Under the Bankruptcy Law passed in 2005, to qualify for a Chapter 7 bankruptcy, you must first pass the Means Test.  The first step to see if you qualify for a Chapter 7 bankruptcy is to determine if your gross income for the last 6 months is above or below the Median Family Income for your household size in the state you live in.  The Median Income numbers are updated by the U.S. Census Bureau periodically which changes the initial qualification numbers for bankruptcy purposes.

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Chicago's Burr Oak Cemetery In Bankruptcy Court

After a plot to dig up bodies and resell graves was exposed earlier this year, Burr Oak Cemetery in Chicago has faced a number of problems, including debt. The fraught cemetery has been attempting to go through the process of Chapter 11 bankruptcy and sell off what assets it has, but now a number of lawsuits involving the recent plot-selling scandal could multiply the cemetery's financial problems. Allegedly, at least 300 bodies were dug up and discarded in the recent past from the troubled cemetery.

Cemetery operator Perpetua-Burr Oak Holdings of Illinois LLC had been planning to escape its money woes through a debtor-in-possession loan from Pacesetter SBIC Fund Inc., for almost half a million dollars. However, now the families of some of those buried at Burr Oak as well as the state of Illinois are filing lawsuits that will complicate financial matters and prevent any short sale of assets.

Perpetua Holdings of Illinois has already given control of their company to independent chief operating officer to run the cemetery in a court order approved by U.S. Bankruptcy Judge Pamela Hollis. In addition, Roman Szabelski of Catholic Cemeteries will act as an unpaid consultant in the matter.

Still, there is not a good idea of when the cemetery will reopen or how the roughly 50 civil suits filed against the company will be resolved. The clean-up and reopening was halted when the company declared bankruptcy - but now acting COO Howard Korenthal is expected to manage the crisis and return the cemetery to normalcy.

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Adams Dairy of Blue Springs Files Chapter 11

On October 1, the developer of a retail project in Blue Springs filed for Chapter 11 bankruptcy protection.

Adams Dairy Development LLC made the filing in U.S. Bankruptcy Court for the Western District of Missouri in order to protect it from creditors during reorganization.

The company is developing the Lake Ridge Village project in Blue Springs. The plan for the mixed-use project was to include 405 residential units ranging from high-rise estates to lofts, in addition to nearly 200,000 square feet of commercial space, according to Blue Springs Community Development Director Scott Allen.

The company’s lender, Heartland Bank, holds an $11.4 million claim on the development property, which is Adams Dairy Development’s only secured creditor.

Heartland was scheduled to foreclose on the property on October 2.

The company owes more than $100,000 in unsecured priority claims to multiple other unsecured creditors, in addition to a $2,218 claim by the Jackson County Collector for real estate taxes due December 16.

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Chicago Cubs File for Bankruptcy

On October 12, the Chicago Cubs filed for Chapter 11 bankruptcy protection, a move made so that their owner can sell the team in an $845 million deal. The filing was made in Wilmington, Delaware, was expected and the Cubs are only anticipated to spend a brief time under Chapter 11.

The bankruptcy filing is part of the plan of Cubs’ owner Tribune Co. to sell the team, Wrigley Field, and related properties to the family of TD Ameritrade founder Joe Ricketts.

In December, Tribune, which owns the Chicago Tribune and Los Angeles Times, filed for bankruptcy protection. However, the Cubs were not part of that filing. According to one bankruptcy attorney, the team’s period under Chapter 11 could be mere days, enough to protect the new owners from potential claims by Tribune creditors.

In 1981, Tribune purchased the Cubs for $20.5 from candy maker Wm. Wrigley Jr. Co. The company announced plans to sell the team in 2007, but the recession and credit market collapse hindered that plan.

Tribune has agreed to sell a 95 percent stake to the Ricketts family in a deal that tops the record $600 million paid for the Boston Red Sox and its related properties in 2002. Tribune will keep the remaining five percent.

The sale has been approved by the other MLB owners.

The Cubs are not the first baseball team to file for bankruptcy. In 1993, the Baltimore Orioles were sold after owner Eli Jacobs filed for Chapter 11. In 1969, the same happened to the Seattle Pilots, whose new owners moved the team to Milwaukee and changed the name to the Brewers.

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Bankruptcy Judge Okays Sale Of Chicago Sun-Times

On October 8, 2009, a US Bankruptcy Judge approved the sale of the Chicago Sun-Times to a group of local investors, securing the newspaper's continued existence. James Tyree, chief executive of Mesirow Financial, will take over control of the Sun-Times Media Group, which includes both the Chicago Sun-Times as well as over fifty other newspapers and news websites in Illinois. Tyree will also become responsible for about $20 million in the papers' remaining debt.

The sale was for $5 million. The sale involving Tyree and a handful of other Illinois investors has been in talks for several weeks as employees of the Sun-Times worked through contract changes and other compromises from union leaders. The concessions made by union members would include significant pay cuts for many working for the troubled media group.

"We are confident that they will vote in favor of this deal by the end of this week," the Sun-Times attorney told Judge Christopher Sontchi at Thursday's hearing.

Both the Sun-Times and the Chicago Tribune have filed for bankruptcy protection in the last year - making both of Illinois' major print papers struggling to get back on to their feet. Many print newspapers are hurting currently, due both to hard financial times and due to dropping advertising revenue as many companies are pouring money into online marketing. The newspaper was also struck by scandal in 2007 when former CEO Lord Conrad Black was accused of taking millions of dollars from the company.

The Chicago Sun-Times has published a paper since 1844. At the time of bankruptcy, the Sun-Times declared $801 million in debt and $479 million in assets.

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Illinois To Crack Down On Predatory Debt Settlement Companies

Especially in times of economic hardship, a number of debt settlement companies will try to take advantage of those desperate for help. Now the Illinois state treasurer will seek better regulation regarding predatory debt settlement companies in his state.

Alexi Giannoulias said on Monday that many debt settlement companies do not help their customers reduce their debt. Not only that but that these unfair and predatory companies will also ask their customers to stop paying their bills and instead pay debt settlement fees. His speech was not only a warning to consumers to closely examine any debt settlement company they are thinking of using, but also to say that he plans on further regulating the companies in Illinois to protect consumers against scams.

Among the proposed regulations, Giannoulias would like to require state licensing of valid debt settlement companies, prevent the companies from suggesting that customers stop paying their bills, and prevent the companies from collecting more than $80 a month from their customers. The $80 would consist of a $50 upfront fee and $30 a month in continuing costs.

In many cases, those struggling with large amounts of debt often turn to debt settlement companies instead of seeking alternate means of paying off debts or declaring bankruptcy. However, many who turn to unscrupulous debt settlement companies end up damaging their credit scores even further - without escaping from their financial problems.

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Chrysler Moves Assets in Bankruptcy

According to a report filed on September 20, the old assets of Chrysler LLC remaining in bankruptcy lost $12.1 billion in three months.

The report, which was filed in Manhattan bankruptcy court, shows a net loss of $344 million for the month ending July 31. Revenue of just $2 million was outweighed by $235 million in reorganization costs as the company, now known as Old Carco LLC, winds down what remains of its assets after a sale.

On April 30, Chrysler filed for bankruptcy protection and sold essentially all of its assets to a group led by Italy’s Fiat SpA in June, creating the world’s sixth-largest automaker.

According to attorneys for the bankrupt estate, “these entities are no longer engaged in any significant operations. The papers the attorneys filed with that statement were signed by Chief Executive Officer Ronald E. Kolka.

According to the company, the Fiat transaction caused debtors to lose $12.08 billion. The company added that it continues revising the loss amount recorded as of the transaction closing date of June 10.

The operating report said that cost of sales was $11 million in July, and loss before reorganization costs was $20 million. Total current assets are $2.28 billion, and total current liabilities are $3.86 billion.

In the three months since filing for bankruptcy, Chrysler has also seen a $600 million gain from a settlement with the Pension Benefit Guarantee Corp. from June 5, under which Daimler agreed to assume the $600 million obligation owed by Chrysler.

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Office Depot Sued During Bankruptcy Filing

A former supplier has filed suit against Office Depot for $217, claiming that the company breached its contract in order to obtain supplies without paying. The supplier says the breach was a factor in its bankruptcy filing.

According to the complaint, which was filed in U.S. Bankruptcy Court in Nashville, Tennessee, the Boca Raton, Florida-based Office Depot “engaged in a cynical effort to defraud a long-time, loyal vendor through a pattern of deception.”

Nukote International, the Plano, Texas-based supplier that filed the claim, filed for bankruptcy earlier this year. The suit claims Office Depot’s breach of contract was partially responsible for the bankruptcy.

The complaint says that between late 2008 and May 2009, Office Depot created a scheme to fraudulently obtain Nukote’s most profitable product, private brand imaging supplies, with the smallest possible cash outlay.

The suit says that after being dropped as an Office Depot vendor, Nukote’s cash flow and borrowing capacity saw a dramatic decrease, resulting in the company being forced to enter Chapter 11 bankruptcy.

Office Depot denied the claims, saying that Nukote had been “significantly past due” on money owed to the company and that Office Depot “still holds a significant balance” from Nukote.

Office Depot claims that in April, Nukote ceased to ship its products, resulting in Office Depot being left short on stock and forced to find another vendor.

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Increase in Foreclosure Rescue Scams

With foreclosure filings on the rise in Kansas City, housing counselors warn that there is also an increase in foreclosure rescue scams.

This is the simplest advice to avoid being ripped off: Never send your mortgage payment or any payment concerning your loan to anyone other than your mortgage lender.

You could receive a letter promising hope to homeowners facing foreclosure. It says that the company can renegotiate your mortgage and that cash-strapped borrowers won’t have to pay as much as they now owe.

However, when one woman, Marjorie Major, contacted one such company in Florida, she learned that she would be required to pay upfront fees ranging from $1,000 to $5,000. The practice of charging upfront for foreclosure relief is illegal in several states, including both Kansas and Missouri.

Legitimate federally-certified housing counselors say that desperate homeowners continued to be lured into these scams, despite warnings to the contrary.

Here are a few tips for avoiding scams:

- Never use any ad, person, or company that approaches you claiming to be able to “stop foreclosure now” for a fee.
- Never divulge financial information online or over the phone to a company you know nothing about.
- Never send your mortgage payment, or any payment, to a company other than your mortgage lender.
- Contact your mortgage lender. Despite what a scammer will say, you should contact your lender when you have trouble making monthly payments.
- If you suspect you have been approached or victimized by a scammer, contact your local Better Business Bureau, a state attorney general’s office, and/or the Federal Trade Commission.

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Herbst Gaming Inc. Plan to Exit Bankruptcy Criticized

According to a report from the Las Vegas Sun, key creditors and lenders that are owed hundreds of millions of dollars have harshly criticized a plan for Herbst Gaming Inc. to exit bankruptcy.

According to the critics, Herbst and its subsidiaries involved in the bankruptcy case engaged in dubious casino acquisition deals that overwhelmed the company with debt, along with improperly placing the interests of senior lenders ahead of junior lenders and other creditors.

Earlier this year, Herbst Gaming filed for Chapter 11 bankruptcy. The company runs a route business that owns and operates over 6,800 gaming machines in grocery stores, drug stores, convenience stores, bars, and restaurants across Nevada. The company also runs a casino business that owns and operates 12 casinos in Nevada, two in Missouri, and one in Iowa, employing a total of 5,400 people. The gaming division is a sister company to the more than 100-unit Terrible Herbst convenience stores, also based in Las Vegas.

In a July filing with the court, the unsecured creditors claim that Herbst, which is controlled by the Herbst family, was harmed by a pattern of breaches of fiduciary duty, misconduct, and mismanagement by the debtors’ officers and directors, and involved excessive salaries to Herbst officers and improper deals involving Terrible Herbst.

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Irwin Financial Corp Files Liquidation Bankrutpcy

Irwin Financial Corp. has filed a liquidation bankruptcy after federal and state regulators seized the company’s main banking assets on September 18.

The Columbus, Indiana-based financial holding company filed for Chapter 7 bankruptcy in federal court in Indianapolis, listing assets of $10 million to $50 million and debts of more than $100 million.

According to the publicly traded company, it is not expecting to receive any recovery upon completion of the receivership and conservatorship process with its seized banks.

Irwin Union Bank and Trust, based out of Columbus, and a smaller savings and loan based out of Louisville have been placed under the receivership of the Federal Deposit Insurance Corp. and assets were sold to Ohio-based First Financial Corp., which has taken over all of the bank’s branches and assumed control of deposits.

The government’s takeover of the banks, on the grounds of insolvency, leaves little to no assets remaining under the holding company, essentially eradicating the company’s value for shareholders and bondholders.

According to Irwin Financial, it has outstanding debentures of $234 million, which are due and payable to holders due to the bank takeover. However, very little money apparently exists to pay them.

According to the government, the cost to its public Deposit Insurance Fund from the company’s failure could reach $850 million.

This marks the first failure of a bank in Indiana during the current economic recession.

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Chicago Bankruptcies Still On Rise – With No End In Sight

Despite some signs that the recession is coming to the end, personal Chicago bankruptcies are still on the rise - with a 38% increase in individual bankruptcy filings from this September in comparison to last September.

Bankruptcy experts and economists say the trend will continue as jobless rates rise and as many still struggle with mortgage payments. Bankruptcy filings in 2009 have more than doubled since 2006.

In Chicago, Illinois, alone, 4,302 new bankruptcy petitions were filed, compared with just over 1,500 filed in 2006 and 3,121 last year. While the number of Chapter 7 liquidation bankruptcies increased dramatically, the number of Chapter 13 reorganization bankruptcies decreased somewhat. Many believe that this is because most lost jobs mean fewer wage-earner bankruptcies.

The numbers also looked bad for corporations and Chapter 11 bankruptcy, with numbers steadily increasing. In fact, this September's Chapter 11 filings doubled in comparison to last year's, with 34 businesses seeking bankruptcy protection. This, too, may be a red flag that the economy is still weak in the wake of last year's financial crisis.

The last time that bankruptcy filings were this high was in 2005, just before the bankruptcy laws changed, making it harder to declare bankruptcy. While many feel that the reason that bankruptcy rates continue to climb is extremely complex and even impossible to fully understand, the majority of experts agree that the rising bankruptcy rates will not taper off any time in the near future.

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10 Ways Sports Stars Ruin Their Finances

The Business Insider recently compiled a list of the 10 ways sports stars ruin their finances and end up in bankruptcy and/or foreclosure.

- Ponzi Schemes: For some reason, professional athletes seem to be especially susceptible to these schemes. Here are a few recent examples:

A woman who once advised Michael Vick and several other football players has been charged by federal prosecutors with the theft of $3 million from eight victims in a Ponzi scheme, according to the Associated Press. Vick, who recently entered bankruptcy, is filing suit against the woman to recover $2 million.

The Washington Times reported that MLB stars Greg Maddux, Bernie Williams, Johnny Damon, J.D. Drew, Andruw Jones, Carlos Pena, and several other current and former players invested with Allen Stanford.

There are seven former and current NFL players listed among the 3,000 investors who were allegedly fooled into investing $100 million in a Canadian-based Ponzi-type scheme – a pyramid allegedly run by two men who had prior encounters with the law, according to reports from the Vancouver Sun.

- Bad Investments: It could be due to tangible business ventures being more fun than stocks and bonds. However, due to most athletes having very little business background, they have made some terrible investments. Here are some examples Sports Illustrated has provided:

In May of 2007, Drew Bledsoe, Rick Mirer, and five other NFL retirees invested at least $100,000 each in a now-defunct start-up company called Pay By Touch, which said that its “biometric authentication” technology would help replace credit cards with fingerprints, despite the company being wracked by lawsuits and internal dissent.

Rocket Ismail squandered a great deal of money funding various projects, including an inspirational movie, the music label COZ Records, a cosmetics procedure in which oxygen was absorbed into the skin, a plan for nationwide phone-card dispensers, a Rock N’ Roll Café theme restaurant in New England, and three shops called It’s in the Name, in which tourists could purchase calligraphy of names and proverbs.

Michael Vick put $6 million in bank loans towards a car-rental franchise in Indiana, real estate in Canada, and a wine shop in Georgia.

- Divorce – Divorces have proved costly for many people, but they especially seem to hit pro athletes hard. According to the New York Times, polls, studies, and anecdotal evidence show high divorce rates for professional athletes. The report included reasons such as infidelity, women targeting athletes, trophy wives, lifestyles not suited for marriage, and entourages that discourage intimacy. In one example, PGA legend Greg Norman’s 2008 divorce cost him $103 million, according to the Associated Press.

- Attempting To Run A Business – Not every athlete can be like Magic Johnson, who has found success with his urban development company Magic Johnson Enterprises. In fact, the majority of athletes who attempt to run their own business are met with poor results.

Sports Illustrated recently listed the examples of Saints all-time leading rusher Deuce McAllister, whose Jackson, Mississippi car dealership went into bankruptcy and Panthers receiver Muhsin Muhammad, who put his Charlotte, N.C. mansion up for sale on eBay a month after Wachovia Bank filed suit against his entertainment company for overdue credit-card payments.

The most noticeable example in recent history is former MLB All-Star Lenny Dykstra, who was forced to sleep in his car after his magazine, The Player’s Club, proved to be a miserable failure. He filed for bankruptcy in July, reportedly owing between $10 million and $50 million.

- Drug Abuse – In some cases, lots of money leads to lots of partying. In particular, drugs can spell bad news for athletes. Here are some examples:

According to Maxim, Texas Rangers star Josh Hamilton began his career by burning through a signing bonus of $4 million by doing coke and crack and drinking a bottle of Crown Royal a day.

NBA player Chris “Birdman” Andersen spent a great deal of the $289,000 signing bonus in 2001 by partying. In 2006, he was kicked out of the NBA for two years for unspecified drug use and lost his $3.5 million per year salary, according to ESPN.

In 2004, NFL star Ricky Williams lost millions in salary when he left the league after failing multiple drug tests due to marijuana use. He was also forced to pay $8.6 million for breach of contract upon his departure and when he returned in 2006, he still had to serve a 1-year suspension.

- Having Too Many Children – Everyone has the right to have as many kids as they wish. However, not all athletes are responsible parents. Some of them even have multiple children with multiple women. In simple terms, that costs a lot.

One example is former NFL player Travis Henry. According to a recent report in the New York Times, the 30-year-old former running back has nine children, each from a different mother, some born as closely as a few months apart. Henry says that he’s broke and is unable to pay the estimated $170,000 per year he owes in child support.

According to the Atlanta Journal-Constitution, former boxing champion Evander Holyfield has grossed more than $248, but nearly lost his Atlanta, Georgia home due to child support payments believed to total $500,000. That comes in addition to two divorces and multiple failed business endeavors.

- Using The Wrong Advisors – Many players know they need financial help, but choose the wrong people to provide that help.

Whether it was friends from home or predatory scammers, the NFL Players Association says that between 1999 and 2002, at least 78 players lost a total of over $42 million due to trusting financial advisors with questionable backgrounds.

Sports Illustrated listed some examples of such advisors, such as Luigi DiFonzo, a former felon who defrauded such players as Hall of Fame running back Eric Dickerson by claiming to be an Italian count before committing suicide in August 2000. Another example was William “Tank” Black, a disgraced agent who built up a pyramid scheme that took nearly $15 million from at least a dozen players. Another was Kirk Wright, a hedge fund manager convicted of 47 counts of fraud and money laundering for a scheme involving more than $150 million. He had a client list that included at least eight NFL players. He committed suicide in prison.

- Investing Too Much In Real Estate – This seems to be one of the biggest things players put too much money into.

Former Morgan Stanley senior vice president Ed Butowsky told Sports Illustrated that the number one problem for athletes in terms of financial meltdown was “chronic overallocation into real estate and bad private equity.” Butowsky said athletes came to him about these deals more so than anyone else.

CNBC says some stars faced with foreclosure after the housing market collapse include NBA players Latrell Sprewell and Vin Baker and MLB star Jose Canseco.

- Dog Fighting – Spending 18 months in prison for fighting and killing dogs wasn’t the only consequence for Michael Vick’s actions. He also went broke.

In addition to the millions he lost in salary, Vick also spent a great deal of money on legal fees, fines, and supporting family and friends, according to The Smoking Gun. Recently, a judge approved a plan for Vick to repay creditors $20 million after he filed for bankruptcy.

- Stupidity – This seems like an obvious cause of financial woes: acting dumb.

Some recent memorable moronic decisions include Michael Vick’s dog fighting, Plaxico Burress 2-year prison sentence for illegal gun possession and shooting himself at a New York night club  in November right after signing a 5-year, $35 million contract, Adam “Pacman” Jones’ multiple run-ins with the law, including his infamous involvement in a brawl and shooting at a strip club, and Michael Phelps being caught smoking a bong, resulting in the loss of his endorsement deal with Kellogg’s and financial support from USA Swimming.
 
Global Gaming Factory, the company seeking to purchase embattled file-sharing hub The Pirate Bay, is now faced with a claim from a creditor that could force the company to file for bankruptcy protection, according to a report in Sweden’s The Local.

According to a court filing from Advatar Systems, Global Gaming has owed them more than $200,000 since July 25. The filing from Advatar Systems managing director Johan Sellstrom, a former member of the board of Global Gaming Factory, says that Global Gaming Factory is unable to legally pay its debts and “this incapacity can not be regarded as temporary.”

This is not the first obstacle Global Gaming Factory has faced will attempting to acquire The Pirate Bay for $7.8 million and turn it into a legitimate site that pays artists and copyright holders.

On August 21, trading in Global Gaming Factory shares was halted, and the company was recently delisted from the exchange.

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What Companies Have the Highest Likelihood of Filing Bankruptcy This Year?

A recent report from Audit Integrity has identified some high-profile names with the highest likelihood of filing for bankruptcy protection among publicly traded firms.

This is a list of the ten companies that appear to be the worst off:

1. Hertz – With a great deal of debt financing the auto rental company’s fleet of vehicles, decreasing rental demand does a great deal of damage. The company got some breathing room in May by raising new capital, but Fitch and Moody’s actually cut their ratings for the company in July. Currently, the company’s shares have seen a rally and are more than five times the low of $2 in March.

2. Textron – In the current financial climate, selling business jets is not an easy endeavor. The company said it had a backlog of $2.3 billion this year after canceling a new jet design and seeing severely decreased demand for its other aircraft-related offerings. The company has been able to push back some debt maturities, but the company’s leasing arm has seen a decline in credit quality.

3. Sprint Nextel – The cell phone providers could see a loss of as many as 4.4 million post-paid subscribers during 2009. The problem is made worse by the fact that the company has large amounts of maturing debt over the next few years. Rumors of Deutsche Telekom acquiring the company sparked some hope, but that seems to have faded.

4. Macy’s – Department stores in general seem to have seen a decline. Macy’s will likely continue to see a decline in same store sales. The company has $2.4 billion of maturing debt over the next five years and is attempting to cut costs and has already reduced its dividend.

5. Mylan – Mylan greatly overpaid when it purchased Merck’s generic business in 2007 and the company is now saddled with $5 billion of long-term debt as a result. Between 2007 and 2008, the company saw a loss of more than $1.3 billion, which had a great deal to do with goodwill write-downs. The company could earn $300 million in 2009, but will have to earn much more in the future for its debt to become manageable.

6. Goodyear – Goodyear tires have seen a dramatic decline in demand and the company has a great deal of debt and pension obligations. Further compounding matters is the company’s inability to have proper cost control due to factories being forced to stay open by the United Steelworkers union.

7. CBS – Weak advertising and decreasing license fees have caused the network to see a dramatic decrease in earnings this year. If the trend continues, the company could find it difficult to refinance $3.2 billion of debt coming due over the next five years. It really depends on whether or not the earnings collapse is simply cyclical, or caused by a structural trend in which traditional TV is dying.

8. Advanced Micro Devices – The question of whether or not AMD will ever see a profit again becomes increasingly important each day, as it carries more than $5 billion in long-term debt. The company lost nearly $3 billion between 2007 and 2008 and analysts predict more losses to come in 2009 and 2010. The company’s shares rallied from their February $2 low, but seem to be stuck in a long-term down trend from $40 highs in 2006.

9. Las Vegas Sands – Over the past several years, Las Vegas Sands has over-expanded and over-levered and is now faced with more than $10 billion in debt. Despite now being 13 times their March low, the company’s shares still have an uphill battle. Las Vegas conditions are terrible, Asian expansion is insufficient, and if this trend continues for too long, LVS will find itself in bankruptcy court seeming as if it bit off more than it could chew.

10. Interpublic Group – IPG is one of the largest advertising and marketing companies in the world and has seen a large impact from the global recession. The company’s CEO recently noted that the economic downturn is “proving steeper and more lasting than expected.” The company’s revenues have seen double digit declines and the company’s exposure to General Motors as its largest client hasn’t helped.

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Falling Gas Prices Lead Natural Gas Company to Bankruptcy

On September 10, PNG Ventures Inc. filed for Chapter 11 bankruptcy protection in a Delaware bankruptcy court, making it the second liquefied natural gas company to file within the same week. The pressure to file is believed to be due to falling gas prices.

In the company’s filing, it said that it was confronted with losses from operations and default under a $36.3 million secured credit facility.

Due to bearish domestic fundamentals, natural gas prices have been forced into 7-1/2-year lows. However, crude, which is more heavily impacted by international factors, has been bolstered during 2009 by increased economic optimism.

Earlier in the week, on September 8, Trident Resources Corp. and its affiliates filed for Chapter 11 bankruptcy, citing similar reasons.

In PNG Ventures’ filing, the company listed assets of approximately $40 million and debt of approximately $44.6 million. The company’s filing also included five affiliates.

 

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Chicago’s Bankrupt Sun-Times Likely To Continue Under New Management

After the Sun-Times Media Group petitioned for bankruptcy in March of this year, many were concerned about whether or not the paper would continue and, if so, how. Now, six months later, the Chicago Sun-Times is out of bankruptcy and making plans for continuing to print the city's paper. The second-largest print paper in Chicago will be under new leadership but still retain Jeremy Halbreich as its chairman.

Halbreich has said that Chicago can and will be a two-newspaper town, and that both the Sun-Times and the Chicago Tribune can thrive together, since each publication is very different from the other and that each paper has different audiences. In an interview Wednesday, the chairman said that the Sun-Times was the heart and soul of the Chicago people, while the Chicago Tribune was a drier, more official paper of record.

The media group not only consists of the Sun-Times, but also 57 other local or regional newspapers. The group of Illinois newspapers was purchased by Chicago businessman James along with a small group of investors. The papers are still losing money under new management, but cutbacks are slowing the financial troubles for now. The paper hopes to take in a positive cash flow by the end of the year, even while paying for expenses related to its bankruptcy.

One new strategy the Sun-Times is considering in the wake of its bankruptcy is cutting back the number of issues in smaller suburban daily papers - some of which are circulated quite close to one another.

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August Foreclosure Rates Fall

According to a report from RealtyTrac released on September 10, the rate of home foreclosures in Missouri continued falling in August, in comparison to August 2008, while the rate increased in Kansas.

In August, the total number of Missouri properties with foreclosure filings saw a decrease of 33.5 percent from August of last year, placing the state 31st in the U.S. in terms of foreclosure activity. The total number of properties facing action was 2,498.

RealtyTrac’s stats also showed that the rate was a 21 percent decrease from July.

The number of properties in Kansas faced with foreclosure saw an increase of 45.7 percent from August of last year to August of this year. The state ranked 35th in the U.S. with 1,056 properties in foreclosure.

The number of foreclosures in Kansas may have been higher than in the previous year, but that total was 19.94 percent lower than it was in July.

RealtyTrac’s nationwide stats showed that foreclosure activity was essentially flat in August from July; however, it was still an increase of 18 percent from August 2008.

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Missouri Auto Industry Struggles After GM Bankruptcy Reorganization

What happens when a company as big as GM declares bankruptcy? In many ways, it affects all of us - and even the government. In smaller ways, it can hurt the local auto industry in significant ways. In the case of Missouri, a recent report conducted by the Missouri Automotive Jobs Taskforce has revealed that over the last five years the state has lost 60 percent of its car production and 35 percent of its workforce.

Missouri Governor Jay Nixon was formed and commissioned to file this report in January as a way to better understand Missouri's auto industry and hopefully attract more auto industry jobs. Indeed, the group recommended that Missouri needs to create an environment that is conducive to auto industry needs, such as a "Missouri Center of Automotive Excellence" that would coordinate all state programs and policies related to the auto industry.

However, Missouri also wants to move forward with caution, especially considering the recent GM and Chrysler bankruptcies badly harmed states with economies based in the auto industry. Specifically, the group reported on the affects of the failing auto industry on bigger car-based cities like Detroit, which has perhaps suffered from the hard economic times more than any other metro area. Nonetheless, despite these recent bankruptcies, Missouri wants to continue to be a leading player in the auto industry and make future policies and decision that would attract even more industry jobs.

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Foreclosure Prevention Efforts Doing Better

The Obama administration has put $75 Billion into a foreclosure-prevention program that seems to be making progress. The program is based on a lender-borrower incentive program that has included more than 570,000 trial modifications with a reported 360,000 modifications still in the works.

However, America is still seeing an increase in mortgage defaults with nearly one of every 12 borrowers delinquent on their mortgage. The program also relies on the big banks, Chase, Citigroup, Wells, and Bank of America, to do their part. They are only offering the trial modifications to a small amount of their mortgagees—25% at best.

America will be watching the credit and banking industries as the plan continues on throughout the country.

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Ethanol Maker VeraSun Sells Property After October Bankruptcy

After struggling with the rising prices in corn, the main ingredient in making ethanol, the largest publicly traded ethanol company declared bankruptcy in October of 2008. VeraSun  filed for Chapter 11 bankruptcy on Oct. 31, after eight years of business, affecting 17 ethanol plants and many workers, including those in the states of Illinois and Missouri.

Now the St. Louis Business Journal reports that VeraSun Energy Corp. has sold 1,600 acres of farmland for $10.5 million in order to fulfill what is outlined in their bankruptcy agreement. Sale manager Schrader Real Estate and Auction Co. Inc. of Columbia City, Ind., did not say who the buyers of the farmland were.

The land involved with the sales included 380 acres in Granite City, which sold for $2.9 million. The land was sold to a local family farmer, thought it was not said who. In Litchfiled, 487 acres of farmland were sold near St. Louis for $3.3 million to three different buyers. The land was also close to I-55. In Danville, Illinois, 733 acres sold for $4.3 million, bought by a neighboring landowner looking to expand their holdings. Those buying the land were a mix of farmers and future investors. Some of the land was located in Madison County and Vermilion County.

Also recently, five plants owned by VeraSun were sold to their producers.

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Bankruptcy Filings for Wealthy Families on the Increase

Wealthy families’ bankruptcy filings rose 73% according to the National Bankruptcy Research Center. The increase in filings is due to a failing real estate market that has left many individuals unable to use a loan modification or move their assets. Many have found themselves upside down in their mortgage and facing a possible foreclosure.

It seems that the risk of moving all of their money into investments has left these individuals with little to fall back on. From July 2008 to July 2009, sales of homes with a sale value of between $1 million and $2 million decreased 23%.

Perhaps America has further evidence that the recession has humbled everyone—and bankruptcy has been there to help every step of the way.

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Bankruptcy Up 22% In August From 2008

If you are thinking about declaring bankruptcy, you are certainly not alone. The national bankruptcy statistics have been released for August, and rates are up again from last year. The Automated Access to Court Electronic Records show that consumer bankruptcy rates are up by 22 percent in August of 2009, as compared with bankruptcy rates from August of 2008. There were 954,911 bankruptcy filings in August of this year, compared to 703,732 in August of last year.

Robert Lawless, a professor of law at the University of Illinois, predicts that 1.45 million individuals will file for bankruptcy this year, numbers that have not been seen since the bankruptcy reform that took place in 2005.

The reasons for the significant increase in bankruptcy filings continue to be tied to the weak economy and the housing crisis. More than anything else, job loss, layoffs, and the loss of regular income has lead to a growing number of those petitioning for bankruptcy, although other common reasons still include divorce, medical emergencies, failed business ventures, and other unexpected events. Job loss can also lead to the loss of health insurance - a loss that could lead to bankruptcy in the event of a medical emergency. Still, the states suffering from the highest numbers of bankruptcies are also the states suffering the worst housing issues.

Lawless expects that bankruptcy filings will continue to be high even after the economy continues to improve.

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Annie Leibovitz: Is Bankruptcy An Option?

When is bankruptcy the best option? Currently, some are wondering if it might not be the best option for famed celebrity photographer Annie Leibovitz, who has been plagued with a number of stressful and public financial problems.

Leibovitz has been known for her stunning portrait photos for decades, including cover shots for Rolling Stone, Vanity Fair and Vogue magazines. However, she has been faced with a lawsuit involving possible copyright infringement and has also lives an extravagant lifestyle, with at least four expensive properties in her name, including three in Manhattan. Having two children later in life using a variety of non-traditional fertilization techniques might have also added to her debt, while the recent recession surely hurt her portfolio.

Recently, Leibovitz has defaulted on a loan for $24 million from Art Capital, putting her entire art collection and her estates at stake. Many are wondering, should Annie Leibovitz choose bankruptcy? According to Gawker, her creditors could take control of her $50 million photo archive, her homes in Rhinebeck, N.Y., her home in Greenwich Village, as well as 12 percent interest on the loan and 25 percent commission on the sale of the archive. And - Leibovitz's creditors may be able to file for involuntary bankruptcy.

For now, lending agency Art Capital and Leibovitz have decided to extend the life of the loan and give Leibovitz another chance to do well by her loan, saying that they have decided on the "withdrawal of the suit... filed against Ms Leibovitz on July 29, 2009 and extends the maturity date for the 24 million dollar loan."

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Historic New York Restaurant Files for Bankruptcy

Historic New York restaurant Tavern on the Green, which is considered a Central park landmark, has filed for Chapter 11 bankruptcy protection.

The 75-year-old restaurant’s filing comes just four months before the license is to be handed over to a new operator.

Jennifer Oz LeRoy, chief executive for the restaurant, blames the filing on the current economic conditions and the decision of New York City to give the license to another operator.

The new license is to be handed over to Dean J. Poll, who runs the Central Park Boathouse restaurant.

A total of 20 creditors are listed in the federal bankruptcy filing.

Poll, who will take control of the restaurant on January 1, plans to renovate with green technology. Originally, the restaurant building, which dates back to the 19th century, housed sheep.

LeRoy’s father, Warner LeRoy, took over the restaurant in 1976. He died in 2001.

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Samsonite Co. Stores Luggage Maker Filing for Bankruptcy

Samsonite Co. Stores has started on its path to bankruptcy protection. They currently have $233 million in assets and $1.5 billion in debts. The court papers show a reported $920,301 owed to 20 of the largest creditors.

The parent company, Samsonite Corp, is bringing in less in revenue than the store unit owes in debts. Their revenue for 2007 was $1.07 billion. Samsonite Corp, however is not filing for bankruptcy protection.

According to their chief financial officer, the decline in sales has been attributed to the economy. The recession has caused a slow in travelers and, thusly, a decline in the need for luggage and travel items.

Samsonite has been guaranteed a 105% recovery of the value of the merchandise that has yet to be sold.

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Michael Vick's Bankruptcy Plan is Approved

Michael Vick’s bankruptcy plan for him to repay his creditors $20 million has been approved. The bankruptcy had come as a result of years of overspending with no budgeting. With his Chapter 11, he must retain a financial planner to help him with his finances.

Vick said he was relieved to be able to start his life again. He seemed pleased with his counsel, the courtroom, and the outcome. Everyone in the court room also seemed confident that Vick would be able to keep up with his payments and not find himself in financial trouble again.

Vick is one of a number of celebrity cases of bankruptcy. This case, like the others, just proves that regardless of your stage in life, operating without a clear idea of your finances and your budget can lead you to financial disaster.

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Crestwood Developer Responsible for Over 15 Foreclosures

Joseph Baumeister, the owner of a Crestwood development company, was sentenced to jail after pleading guilty to bank fraud. He confessed to using straw purchasers and false information to collect homes and commit mortgage fraud.

From January 2007 to October 2008, Baumeister bought 16 homes under false pretenses. His company, Prophet Development, used inflated prices and fibbed about improvements on homes in order to charge buyers more money—and he put the extra money right in his pocket.

He was sentenced to 37 months in federal prison. He also has to repay $364,504 of the debt that he owes.

Crestwood Development Company Owner Gets Caught Committing Fraud

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Charter Continues through November with Bankruptcy Plan

Charter Communications Inc filed for Chapter 11 bankruptcy protection back in March with plans to emerge from the proceedings in late August or early September. It seems that Charter will continue to control its own bankruptcy until November 22nd after a controversy called for an extension in their reorganization plan.

Charter, a St. Louis based company, will continue under the oversight of their turnaround specialist and adviser but must come to a conclusion that is approved by its principal lender, JP Morgan Chase. The bankruptcy was filed in an attempt to cut $8 billion out of a $21 billion debt.

When asked for any comments, Charter only had positive things to say about the restructuring. The bankruptcy is regarded as good news and an opportunity to be everything that they can be for their customers, which is further evidence that the common conceptions about bankruptcy turn out to be untrue. There are also continuing employee benefits and customer discount programs in an attempt to maintain their business motto.

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Foreclosures Are Declining In Parts of Missouri Despite a National Increase

According to a report from RealtyTrac, foreclosure filings continue across Christian County, Missouri, but are not as prominent as they were in 2008.

For the first half of 2009, there were 79 foreclosure filings in the county, which is a decrease of 28 percent from the 100 the county had during the same period in 2008.

That accounted for one filing out of every 375 households in the county, which ranked it 11th in Missouri for foreclosures.

Across the entire state of Missouri, foreclosures saw a decrease of 17 percent at 13,880 for the first half of 2009, in comparison to the first six months of 2008, in which there were 17,594 filings. Nationally, filings saw an increase of nine percent from 2008.

While foreclosures may be down, short sales are increasing. See our blog for more information and to post your opinion.

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Kansas City Man's Golf Club Sold in Foreclosure

Quintero Golf & Country Club in Phoenix, Arizona’s West Valley, the dream development of Gary McClung, a businessman from Kansas City, Missouri, is scheduled to be sold in a foreclosure auction on October 7.

In 2001, McClung and his wife, Leona, entered the golf scene in West Valley with the completion of a Rees Jones-designed golf course. By 2002, they were working closely with golf legend Greg Norman to build a second course and had sold more than 200 invitation-only memberships and a few dozen lots priced up to $2 million.

McClung, who had been the president of Midway Ford/Sterling Truck Center in Kansas City, the largest Ford truck dealership in the U.S., said in 2006 that he and his wife had created the 828-acre Quintero in celebration of their financial success and love for golf. They recruited colleagues from Ford and friends from the Midwest to help them.

The endeavor seemed to be heading in the right direction. Travel & Leisure magazine named Quintero one of the Top 100 Golf Course Communities and Golfweek magazine named it one of the Top 100 Resident Courses. McClung had been named to an exclusive advisory committee of the Environmental Institute for Golf, alongside such professional golfers as Sergio Garcia, Greg Norman, and Vijay Singh.

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Smurfit-Stone Container Corp Files Chapter 11, Closes Plants

According to a report in the Hartford Courant newspaper, under its Chapter 11 bankruptcy filing, packaging company Smurfit-Stone Container Corp. plans to close box making plants in Portland, Connecticut, St. Joseph, Missouri, and Mansfield, Ohio.

The report said that employees had already been informed of the planned closing. Currently, the plan is for the Portland plant to close in September with the work transferred to a Mansfield, Massachusetts plant. The employees of the closing plants will receive severance.

The company filed for Chapter 11 bankruptcy protection in January of this year.

Smurfit-Stone is a mainly St. Louis-based manufacturer of corrugated container and containerboard that operates facilities for recycling corrugated containers, folding cartons, and recovered paper in the St. Louis area.

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Kansas City Personal Bankruptcies Jump 25 Percent, Missouri 22 Percent

Across the country in July bankruptcy filings skyrocketed an unbelievable 34 percent - but how are Missouri and Kansas City faring in these difficult financial times as far as personal bankruptcies are concerned? The answer is: better, but not that much better. According to the Kansas City Star and kansascity.com, personal bankruptcy filing rates have increased 25 percent in Kansas City and the surrounding Missouri area.

In the last eight months in the Western District of Missouri there were 7,539 bankruptcy filings compared with 6,179 during the same period last year - and increase of 22 percent.

The last time that bankruptcy rates have been so high in Kansas City and in Missouri was just before the bankruptcy reforms four years ago and the implementation of the Bankruptcy Abuse Prevention and Consumer Act in October 2005. Economists blame a few different current events for the surge in Chapter 7 and Chapter 13 personal bankruptcy filings, including the recent recession and economic crisis, the housing crisis and the rise in foreclosures, the increasing number of upside-down mortgages, the average American's increasing amount of debt, the rising rate of unemployment, and the consumer's general lack of confidence.

Nationwide, according to the American Bankruptcy Institute, consumer filings numbered 126,434 in July, an 8.7 percent increase since June and a 34 percent increase in comparison to July of 2008. It is also interesting to note a disproportionate number of individuals filing for Chapter 7 liquidation bankruptcy in comparison to Chapter 13 reorganization bankruptcy.

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Missouri-based Spectrum Brands Exits Bankruptcy

In February of 2009, company Spectrum Brands petitioned for Chapter 11 bankruptcy following a missed loan payment that amounted to $24 million. The troubled company, which makes Remington shavers, pet supplies, personal products, lawn care products, and batteries as well as a number of other consumer products, declared just over $10 billion in assets and $4.4 million in debts. The company blamed the ongoing global recession on their money woes and decision to file bankruptcy.

"Our businesses have attractive growth prospects that have been encumbered by the level of debt the parent company is carrying," said Spectrum Chief Executive Kent Hussey. "After careful consideration, we decided that the approach announced today would be the most effective and expedient path for us."

Now, however, just eight months later, the company that has operations in Overland, Missouri, and Bridgeton, Missouri, is exiting bankruptcy. The exit was aided by $242 million from a number of banks and financial institutions including GE Capital, who helped the troubled company meet the closing demands of their bankruptcy reorganization plan.

The company will issues an estimated three million shares of a new common stock to debtors-in-possession, while another 27 million shares of new stock will be traded on the Pink Sheets. Its former shareholders will get nothing from the bankruptcy reorganization and its former common shares will be canceled.  

Spectrum told reporters that it eliminated $840 million of subordinated debt in the Chapter 11 reorganization, and exits with substantially improved capital structure.

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Eastern Missouri Developer Made Responsible for Foreclosures

A real estate developer from eastern Missouri convicted of mail and bank fraud has been ordered to pay $34 million to more than 100 people, some of whom had their homes go into foreclosure.

The order was part of the sentence handed down in federal court on August 6 against 47-year-old O’Fallon, Missouri resident Robert Hartmann, who also received a sentence of two years in prison.

In 2005, Hartmann’s real estate business collapsed, causing banks and investors to be left with properties in the St. Louis area that never got redeveloped or went into foreclosure.

According to the prosecution, Hartmann claimed he would aid one woman with keeping her home, but instead he increased the loans on the woman’s property. He required that she pay him in a rent-to-own arrangement. However, she was forced out of the home anyway because he failed to continue putting money toward her mortgage.

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Lincolnshire IL Steel Tube Maker RathGibson Files For Bankruptcy

According to Bloomberg.com, steel tube maker RathGibson has filed for reorganization bankruptcy following months of financial troubles at the Lincolnshire, Illinois company. The bankruptcy petition is backed by the company's lenders. Lenders own about three-fourths of the company and will receive the majority of the company's stock during the bankruptcy reorganization process.

Court records show that RathGibson may have up to 5,000 creditors and debts that amount to $319 million. The company has roughly $305 million in assets. The plan, according to CFO Jon Smith, is to file quickly, make a realistic plan, and quickly emerge from Chapter 11 bankruptcy. The financial troubles were blamed on microeconomic conditions.

"The debtors have been continuously exploring their options for addressing their liquidity and capital structure issues with their lenders, noteholders and other constituents," Smith said in court papers filed Monday with the U.S. Bankruptcy Court.

With the approval of the bankruptcy court, RathGibson will borrow up to $80 million from affiliates of Wayzata Investment Partners LLC, Eaton Vance Corp, and BlackRock Inc. This money will help with operation costs as the company finds its bearings in this difficult economy.

Troubles started for RathGibson earlier this year when a drop in demand for steel tubes created cash flow problems and then credit line issues. In May of 2009, the company was in danger of defaulting on a $55 million line of credit.

RathGibson was founded in 1999 and sold in 2007.

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Hannibal: Historic Rockcliffe Mansion Owner Declares Chapter 13 Bankruptcy

The historic Rockcliffe Mansion, which was built by lumber barons at the beginning of the 20th Century, has had a troubled past of late and will be passing hands once again after its recent owner declared Chapter 13 bankruptcy.

According to US Bankruptcy Court records, Rockcliffe Mansion owner Rick Rose filed for Chapter 13 bankruptcy protection on April 30. Among his assets were the famed Hannibal mansion, a bed and breakfast, a rental property, and a list of personal property. The personal property listed included between $80,000 and $120,000 worth of Rockcliffe Mansion antiques, including bed linens, quilts, and clothing.

The historic contents of the house were set to be auctioned off earlier this month by St. Louis antique dealer John Robinson III of Finches by Robinson, but the bankruptcy proceedings led to a cease and desist letter from Palmyra State Bank.

In 2005, Rose took out a $325,000 loan from Palmyra State Bank in order to buy the Missouri mansion, which is on the National Register of Historic Places. There is also a second mortgage on the property for $60,000 with Raible and Brown Insurance of Hannibal.

Recently, a man from the suburbs of St. Louis, Kenneth Marks of Maplewood, Missouri, has made an offer to buy the large house and everything inside of it for $700,000. A hearing about the proposed purchase has been set for September 1, and, if it is approved by the bank, the closing would take place within 60 days.

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Washington Park: Entire Southwestern Illinois Town Files For Bankruptcy

A small village in St. Clair County, Illinois, with a population of about 6,000 is seeking bankruptcy protection in light of mounting debts. Bankruptcies for towns, villages, and cities are very uncommon, but the recently economic downturn has led to several municipal bankruptcies and reorganizations in the last year.

In the village of Washington Park, the problem seems to stem from decades of mismanagement and poorly kept records as well as a lost lawsuit involving the town's $30,000 strip club licenses. The judge ruled the licensing practices unconstitutional. Now, the town is struggling with $80,000 in lawyer fees as well as $30,000 less in income each year. The small town also owes money for a number of government investigations.

The village also suffered from two different embezzlement issues. Dorothy Triplett, the town's former payroll clerk, stole almost $144,000 from the town and pled guilty to the offense last spring. Linda Connor, a former assistant to the mayor, admitted to stealing more than $300,000 of the town's money.

According to its bankruptcy filing, Washington Park owes creditors over $1 million and has less than $50,000 in assets. Some of their creditors include the Illinois Municipal Retirement Fund, Illinois Department of Employment Security, and Johnny "Chico" Matt, who sued the town 2004 for discrimination based on political affiliation.

"Every time I turn around, they're hitting us with suits," Mayor John Thornton said. "And on top of the lawyers, we got people stealing from us and the feds raiding."

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Chicago Cubs To Benefit From Declaring Bankruptcy?

A national baseball team has not declared bankruptcy for decades - but the corporate owner of the Chicago Cubs is considering filing for Chapter 11 bankruptcy in order to speed the sale of the team and smooth the transition from owner to owner. Legally, the move to petition for bankruptcy would make buying the Chicago Cubs a simpler and safer idea, as a Chapter 11 bankruptcy would protect a future owner from old claims by old creditors moving forward.

Presently, the Chicago Cubs are owned by Tribune Company, which filed for bankruptcy protection last December and which also owns the Chicago Tribune. As part of their reorganization plan, the Cubs are being sold to pay off other Tribune debts. The entity who buys the Cubs in the wake of the bankruptcy would not suffer any effects of the bankruptcy filing.

Although declaring bankruptcy is not vital for the Cubs' survival, and although the popular Chicago baseball franchise as a whole is not in financial trouble, the one-to-two day petition for Chapter 11 bankruptcy would hasten a sale and help Tribune Co.'s continued survival. As a pre-packaged bankruptcy, the Cubs would be able to reemerge from their bankruptcy in a few short weeks.

Currently, the Ricketts family is interested in buying the cubs, Wrigley Field, and other related Chicago Cubs assets for a rumored $900 million.

The Seattle Pilots (now the Milwaukee Brewers) declared Chapter 11 bankruptcy in 1970.

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Illinois Chrysler Plant Reopens In Belvidere After Bankruptcy

The Illinois Associated Press and the Rockford Register report that a local auto assembly plant owned by Chrysler is re-opening its doors as part of the company's reorganization in the wake of a Chapter 11 bankruptcy in May. The auto plant, which makes Dodge Calibers, Jeep Patriots and Jeep Compasses, is expected to boost the local economy, increase morale, and start a new chapter for the troubled American car company, although about 1,000 workers at the plant will not return to work.

The Illinois car assembly plant shut its doors earlier this year on May 1 - just a day after Chrysler LLC filed for Chapter 11 bankruptcy protection. Over the next few months, the car company reorganized and streamlined its business, cutting jobs, changing ownership, and transitioning to bare-bones dealerships and management.

The Boone County plant employed 2,700 people in Belvidere, and the abrupt closing of the plant and bankruptcy was a blow to the already-struggling Illinois economy. Now 1,700 people will return to work this week, starting on Monday, July 27. At the initial closing of the plant after bankruptcy, some older workers were offered retirement packages while others were transferred to nearby plants, such as from St. Louis.

The closed plant even affected those not associated with the auto industry, such as the owner of a gas station along U.S. 20 near the factory. In addition several supplier operations employing over 1,000 people can also resume business.

Jerry Butitta, owner of Jerry Butitta Automotive Services in Belvidere, said, "It's not just Chrysler going back to work, it's the whole community."

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The Granite Source of Missouri Files For Chapter 7 Bankruptcy

According to the Springfield Business Journal, Springfield, Missouri, is still seeing a 20 percent increase in business bankruptcy filings - both filings for reorganizations and filings for liquidations. A case that perhaps best illustrates the bankruptcy troubles for Misosuri businesses may be The Granite Source of Missouri, LLC, which has been troubled by bankruptcy since the beginning of the economic crisis.

Founded by Scott and Tracy Hardwick in 1999, the Missouri granite company began its life as Springfield Granite. However, a reorganization bankruptcy at the end of 2006 saw the company's assets sold to Sheila Collins. However, just a few years later, the newly-named Springfield Granite-Plus is once again in financial trouble. Collins decided to file for Missouri personal Chapter 7 bankruptcy in June and sold the assets of the company back to the Hardwick family in February.

Why is this granite company having trouble finding success? Although Collins had initial business and received several awards for her business, the drop in new construction left her high and dry - and leaving bankruptcy to be her best last choice. There simply wasn't enough demand for her product. And like many small business owners, Collins dipped into her own personal assets in order to try and save her operation. Her personal bankruptcy cites "primarily business debts" of more than $1 million with assets between $100,000 and $500,000.

In Spingfeild, MO, Chapter 7 liquidation bankruptcy filings are up 33 percent from last year. Experts point to a weak economy and job loss as two main factors in the increase.

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Automatic Stay Lifted, Plaza Square Apartments Facing Foreclosure In St. Louis

According to the St. Louis Business Journal, the largest apartment complex in downtown St. Louis, Plaza Square Apartments, is again facing foreclosure. Taking up four acres of land, the building lies with Chestnut Street to the south, Olive Street to the north, 15th Street to the east and 17th Street to the west. It is made up of five building that hold well over 900 apartments. The apartment building, which is owned by Urban Developers, LLC, was originally facing foreclosure in October of 2007 - a foreclosure that was halted by an automatic stay after the company filed for bankruptcy just 24 hours before.

Now, however, the automatic stay has been lifted as of June 22 by U.S. Bankruptcy Judge Charles Rendlen, and foreclosure looms again. This time, the foreclosure sale will take place on the steps of the Civil Courts Building in St. Louis at noon on July 28.

The automatic stay was lifted after Urban Developer's lender, Natixis Real Estate Capital, Inc., asked the court to move the process out of bankruptcy. Urban Developer did not object to the request.

Urban Develop bought the property in 2004 for $22 million - and still owes approximately $21 million. Since 2004, the building owners have dealt with a number of issues with the complex, including failed building inspections and troublesome elevators.

The large apartment buildings are being marketed actively and have been since roughly May. Early reports say that at least two prospective buyers are interested in buying the property, although bids amounts are unknown.

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Evanston, Illinois, Developer Files Individual Chapter 7 Bankruptcy

Struggling to survive the housing crisis, fighting multiple lawsuits, and deep in debt, real estate developer Thomas Roszak has filed for individual Chapter 7 bankruptcy. In addition, some of his businesses are also filing for Chapter 7 liquidation bankruptcy.

According to the Chicago Sun-Times, the Evanston builder has a number of unfinished constructions on his hands, from an unfinished Sienna Court Condominium complex at 1720 to other structures at 1415 Sherman Avenue, 1210 Chicago Avenue and 1572 Maple Avenue. In some of the cases, construction has not been finished on the buildings, while in others, condos are simply not selling like they were a handful of years ago.

In addition, Roszak is facing a number of lawsuits related both to his building businesses and to his debt. Two years ago, one of his parking garages collapsed under one of three finished Sienna condominium buildings - and now Federal Insurance Company is seeking $1 million in damages. Finally, an unfinished condo on one of his properties is making access to three other buildings difficult to residents, especially those with disabilities.

In a written statement from Roszak, he praises his company's completed projects and points to dropping housing prices and home values as the cause of his troubles. In his personal bankruptcy, Roszak claimed between $50 and $100 million in debts and between $1 million and $10 million in assets. His business, Roszak/ADC, claimed between $10 and $50 million in debts and less than $50,000 in asserts.

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RiseUp Magazine Files For Chapter 7 Bankruptcy In Missouri

Facing multiple lawsuits, the short-lived RiseUp magazine company, RiseUp Publications, has filed for Chapter 7 bankruptcy in Kansas City, Missouri. The magazine, which focused on race relations, only appeared for six weeks in 2008 before running into financial difficultly.

The magazine, which is owned by Frank and Janice Ellis of Ellis Management Marketing Group Inc., was published and inserted into local newspapers such as the Kansas City Star, and reached 4 million readers at one point in its existence. The Washington Post, New York Daily News, Chicago Tribune, and other papers briefly carried the magazine.

However, two different lawsuits earlier this year solidified the fact that the publication was in trouble: the Kansas City Star claimed that RiseUp owed them $2.2 million while a California newspaper chain is seeking the $93,000 that they are owed.

When RiseUp filed for bankruptcy on Wednesday in the US Bankruptcy Court of the Western District of Missouri, the company claimed liabilities between $1 million and $10 million, assets of less than $50,000, and fewer than 50 creditors.

Some contend that the magazine was briefly popular when Barack Obama's presidential nomination was top news, and that RiseUp also suffered many of the same problems facing print publications across the country.

Janice Ellis, a businesswoman who once ran for Mayor in Kansas city, had this to say of the magazine: "I started RiseUp because I wanted to provide a readily accessible tool to help us solve some of the problems we face as a society when it comes to race relations."

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Knight-Celotex Files For Chapter 7 Bankruptcy In Northfield, Illinois

Although building products manufacturer Knight-Celotex originally filed for Chapter 11bankruptcy, which would allow the Northfield, Illinois, company to reorganize and remain open, the company has now switched to a Chapter 7 bankruptcy filing, which involves liquidation.

Knight-Celotex, which makes fiberboard insulation sheathing and sound-deadening materials, originally declared bankruptcy on April 6, 2009, after defaulting on a $34 million dollar loan from Bank of America. At the time that they filed, the company had $357,000 in cash and inventory valued at $7.2 million. Revenue in 2008 was $79 million.

The case was filed in Chicago, Illinois at the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. The case is being overseen by US Bankruptcy Judge Pam Hollis. This week, Hollis fielded an emergency request by Bank of America to switch the bankruptcy proceedings from Chapter 11 to Chapter 7 after it was discovered that Knight-Celotex CEO James Knight was resigning from his position. Bank of America also told Hollis that $1 million in unauthorized expenses were incurred.

The Court appointed Mr. Barry A. Chatz, Attorney at Law with the firm of Arnstein & Lehr, LLP as Trustee. Chatz believes that there is strong interest in the company and hopes that Knight-Celotex will be sold soon. The Knight-Celotex plant in Danville has suspended operations, as officials wait and hope to find a buyer. The company's vice president has told workers that they would work out payroll and benefits issues in the coming days.

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Illinois Foreclosures Up 54% From A Year Ago

For those in Illinois affected by the recent economic crisis or for those in Illinois who are in upside-down mortgages or in danger of losing their houses, the news from RealtyTrac is mixed this month.

RealtyTrac, the largest online real estate marketplace, reported that an estimated 13,647 homes across Illinois went into foreclosure in April of 2009, a drop of a little over ten percent from the numbers in March, when over 15,000 houses received a foreclosure filing in Illinois. However, although the number of foreclosures dropped over the last month, rates are still through the roof, up 54 percent from last April.

Compared to the national numbers, Illinois is also doing worse than the country as a whole on average. Foreclosure rates were static between March and April of 2009, and up about 32 percent in comparison to April 2008. One in 374 homes across the United States received a foreclosure filing in April of this year, the highest rate ever seen since RealtyTrac began recording foreclosure statistics and rates.

The state suffering the most during the recent foreclosure crisis is Nevada, where the rate of foreclosures is a staggering one in 68 homes.

What caused the foreclosure crisis? Over the last few years, mortgage companies began to loosen their standards for issuing home loans - to the point where many people who would not normally be qualified to buy a home did. The greed of the financial industry left many families in houses they couldn't afford. At the same time, the economic crisis caused a rise in unemployment and a stranglehold on credit - two problems that are causing many families to fall behind on their mortgage payments and declare bankruptcy.

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John Deere Home Faces Foreclosure In Moline, Illinois

In the recent economic crisis, it is not just middle-class families who are struggling with their mortgage and struggling to keep their homes - this June, two historic buildings in Moline, Illinois are also facing foreclosure due to the current financial times. On July 5, Sauk Valley Bank will take repossession of a former home of John Deere as well as the home of his granddaughter, located on 11th Avenue in Moline, Ill.

The home was purchased by Roger Colmark of Sterling, Ill., for $100 in 1996. During the sale of the property, it was agreed that Colmark would renovate the home as a bed-and-breakfast on the bluff. However, more than a dozen years later, the renovations have never been completed and the home is in foreclosure.

Moline Mayor Don Welveart is determined to keep the project going under a different contractor, saying that the house has improved with the addition of new windows and a new roof, and that the space could be turned into a functioning property with a little more work.

Colmark is in debt due to a number of related loans as well as a number of fines from the city because of his use of unlicensed contractors. When asked, he cited red tape, delays, and a fire as some of the many reasons he ran out of money and could not complete the project as promised and avoid foreclosure. Colmark claims that it took him seven years to gain approval of the State Board of Historic Preservation in order to install an elevator in the building.

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May Bankruptcies Reach 6000 Per Day

If the pace continues as predicted, commercial and consumer bankruptcies could reach a staggering $1.5 million in 2009 - according to an Automated Access to Court Electronic Records report earlier this month. This number would be much higher than in previous years - with the exception of 2005, when many rushed to declare bankruptcy before changes in the bankruptcy laws took place. Just over one million people declared bankruptcy last year.

The Automated Access to Court Electronic Records report may be showing the affects of recent job losses across the country, with a rising unemployment rate that could see double digits and that could easily affect bankruptcy filings. These job losses paired with other recent economic woes such as hard-to-get credit, a poor housing market, upside down mortgages, and shrinking retirement accounts will not bode well for the already overwhelmed bankruptcy courts in Illinois and Missouri.

Robert Lawless, professor of law at the University of Illinois, told the media that while credit cards used to help families through rough financial patches, that support is no longer there.

In May, bankruptcy filings were taking place at a break-neck rate of 6,000 per day across the United States, with almost 400 commercial filings per day. Many economists are concerned that consumer bankruptcy filings will lead to more commercial bankruptcy filings in future months. Still, filing for bankruptcy may be the best choice for families and individuals facing insurmountable debt, pressure from creditors, and few options.

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Homeowners Lose In Senate Bankruptcy & Mortgage Modification Vote

After months of debate, the United States Senate vot