bankruptcy

Bankruptcy on Credit?

2009-06-06T22:00:00.000-07:00

Individuals who are facing bankruptcy are wondering how their credit score will be affected by announcing bankruptcy. Bankruptcy is a drastic action on your part since your money problems are already creating a notable impression on your credit rating. Your credit rating has been going down due to your overdue payments and huge debts.

Is there a way to control this? How can you repair your credit rating? Even though bankruptcy may appear in your credit score for sometime, it can still be rebuilt. With the declaration of bankruptcy, you will learn that it is harder to qualify for loans and the like. But it will give you the opportunity to make better your resources and try to recover because you will no longer worry in making payments for your current debts.

Furthermore, there will still be various lending institutions who shall be willing to provide you loans. They know for a fact that you have been cleared from your obligations to pay previous debts; thus giving you more financial resources to pay for new loans. Even so, you should prove to them that you are more financial stability now to fulfill obligations than you were before.

How can you repair your credit score? Why do you have to repair your credit rating? You have to repair your credit history to improve your credit rating. It will be wise on your part to begin mending whatever has been broken, recover and establish again good relationships with bankers and creditors to enable your fast recovery. This will take a few years to do of course but it shall be worth the struggle.

When qualifying for a loan, check out how is the process of assessment of credit applications is done and make use of it to your benefit. You should start by giving timely payments for all your loans. This will give you the chance to improve your credit score. This will be a significant role in the process of rebuilding/repairing your credit ratings. Lending institutions will see that you are serious in improving your credit rating and this could/would help you to apply for future loans.

Declaring bankruptcy may be unavoidable and could be a last resort for people who cannot make payments for their huge loans. It would have a big impression on your credit history but it is nice to know that you still have the chance to recover and repair your credit rating. All of us deserves a another chance in life. You just need to bear in mind that with this second opportunity, you must do better so that your recovery will be achieved.

http://ezinearticles.com/?Bankruptcy-on-Credit?&id=2429023

Company Liquidation - What is Liquidation and When Should it Be Used?

2009-05-17T04:11:00.000-07:00

If you do not want to continue running your business or you think it is in difficulty and cannot continue to trade, then you need to get good information about your possible options. One area which you will need to consider is company liquidation. The purpose of this article is to explain in simple language what company liquidation is and when its use might be appropriate.

Liquidation is simply the term used to describe the process of closing a company down. The company's trading is stopped and its assets are sold and turned into cash or "liquidated". There are different types of liquidation depending on whether the company to be closed is solvent or insolvent. There are two simple tests to see whether a business is solvent. The cash flow test and the balance sheet test. The cash flow test asks whether the company is able to pay its creditors as and when the debts fall due. If the answer is no, the company is insolvent. The balance sheet test asks if there are more assets than money owed to creditors. If the answer is no, then the business is insolvent.

If the company to be closed is solvent the liquidation procedure to be used is called Members Voluntary Liquidation or MVL for short. Simply put, the members or shareholders of the business decide to close it. The directors of the company have to make a sworn legal declaration that the company is solvent and if assets need to be sold, to pay debts, this must be possible within 12 months. The business is closed and all outstanding creditors paid. Any remaining assets or cash is then the property of the shareholders of the business to do with what they wish.

You may question why a solvent business would be closed at all. There are a number of reasons why this would happen. Perhaps the owner may simply want to close it because they no longer want to run it. May be the company is a family business where the owners / parents have retired and children or family do not want to run the business. Alternatively, a group of companies may need to be rationalized requiring a solvent business to be closed and its assets transferred into another company within the group.

If a business is insolvent and no further investment can be found or other arrangements with creditors cannot be agreed, then action must be taken to close the company. There are two possible types of liquidation procedure in these circumstances:

The first of these is Creditors Voluntary Liquidation or CVL for short. A Creditors Voluntary Liquidation will normally be started by the directors and or shareholders of the business. The shareholders appoint an Insolvency Practitioner who will call a meeting of the company's creditors informing them of the company's insolvency and allowing them to appoint a liquidator of their choice. As such, the liquidation is approved by, and works for, the benefit of the creditors. The Liquidator's prime duty is to sell the assets of the company and distribute any proceeds to the company's creditors. The Liquidator will close the company, cancel any outstanding leases make any remaining staff redundant.

The second type of liquidation where a company is insolvent is called Compulsory Liquidation - more commonly known as Winding Up. The act of Compulsory Liquidation is started by an aggrieved creditor who has not been paid. Such action can be started by any creditor who is owed more than £750 which is not paid after a statutory demand for payment has been issued. The aggrieved creditor will employ a solicitor who asks the High Court to hear the argument why the company should be wound up. This is called a Petition. Notice of the petition must be given to the company. Then if the debt is still not paid, a "hearing" is held in front of a High Court judge who then passes an order to wind up the company compulsorily. An Official Receiver (or Liquidator if appointed) will then close the company and sell any assets which will then be distributed across all of the company's creditors.

It is important to remember that the question of whether company liquidation is the most appropriate course of action can only be answered after a proper review of a company's circumstances. If as a Director, you believe that your business is in trouble, you should get further advice from an expert as soon as possible.

An important additional note for Company Directors in this area is that you must be aware that you must not continue to allow a company to trade which you know to be insolvent. If your company is eventually liquidated because it is insolvent, the Liquidator will have a duty to review the conduct of you as a Director to ensure that you have acted properly to minimize creditor's losses. If the Liquidator decides that you as a director have acted badly, they can accuse you of wrongful trading. If this is upheld, then you can be made personally liable for the company's debts from the time you knew the company was insolvent. As such, getting the appropriate advice about company insolvency is a must.

http://ezinearticles.com/?Company-Liquidation---What-is-Liquidation-and-When-Should-it-Be-Used?&id=2346857

Chrysler to File for Bankruptcy?

2009-04-25T23:11:00.000-07:00

Chrysler Bankruptcy? Chrysler may file for bankruptcy-law protection even if it reaches a deal with lenders or forges an alliance with Fiat by the Treasury-set Thursday deadline.

GM Update: General Motors is expected to announce plans to shed its Pontiac brand and close additional factories. Also, it plans to idle most plants for two months this summer.

BofA Meeting: Bank of America CEO Ken Lewis faces shareholders at the banking giant's annual meeting on Wednesday. Some want Mr. Lewis to step down, complaining that he didn't disclose the deteriorating state of Merrill Lynch, acquired at year-end.

Fed Meets: While not expected to take dramatic actions, the Federal Reserve is likely to focus on inflation worries at its meeting on Tuesday and Wednesday.

Caffeinated Earnings: Companies reporting results this week include Starbucks, Peet's Coffee & Tea, and Green Mountain Coffee Roasters.

LAST WEEK

Stress Tests: The. U.S. gave large banks their "stress test" results, with a week to appeal the findings before they are made public.

Software Slump: Microsoft posted a 32% drop in profit and the first decline in quarterly revenue in its 23-year history as a public company.

Amazon Afloat: Bucking the retail downturn, Amazon.com posted a 24% rise in quarterly profit.

Housing Crisis Continues: New-home sales in March fell a slight 0.6% from February. The median price kept sliding, though, indicating the housing crisis hasn't ended.

http://online.wsj.com/article/SB124071415259056543.html?mod=googlenews_wsj

Loans After Bankruptcy

2009-04-08T21:45:00.000-07:00

If you have gone through the process of bankruptcy before, you have probably made a resolution to run your life without credit. However, insolvency does not condemn you to a life where you cannot get access to credit facilities. In fact, you can go ahead and get a loan for buying a car, a house or other personal loans you might need.

You may need time to recover from the shock of dealing with bankruptcy. In the mean time, you need to work on rebuilding your credit and image. Avoid excessive credit facilities that you can do without. In fact if possible, make your policy to meet your financial commitments on a cash basis. Credit cards are major culprits of landing people into insolvency, so if you can, avoid them this time round, especially the secured ones

Some credit firms will require you to have a clean record of payments for not less than two years after being discharged from insolvency. This gives you perfect opportunity for you to open a new account and work on keeping the records clean. This will earn you good ratings in your credit worth and will impress your creditors.

Establish what the real problem was that led you to insolvency. Once you point a finger at it, go ahead and get the loan but be sure to avoid the same pitfalls. For example, if your problem was postponing payment, be sure to be on time this time round. Remain committed to making payments regardless of other financial commitments.

http://ezinearticles.com/?Loans-After-Bankruptcy&id=2184502

Mortgage Bankruptcy Bill 2009 - Does Obama's Bankruptcy Bill Provide Foreclosure Relief

2009-03-26T01:00:00.001-07:00

Obama's Economic Stimulus Package has come with several relieves to the home owners. He has used affordability & loan modifications to save the homes. Now the Mortgage Bankruptcy is being considered in US Government now-a-days.

Will Obama's Bankruptcy Bill provide foreclosure relief to the home owners?

. Obama's Mortgage Bankruptcy Bill 2009 is primarily helpful in helping the home owners who have already filed an insolvency or they are forced to file one in order to save their homes. Here are the key features of this bill that would help you understand it better:

. Mortgage Bankruptcy 2009 authorizes the judges in an extended way in adjusting the home owners' mortgage terms.

. Now the judges would have the ability to modify the terms in the Chapter 13 proceedings. They would also have the authority to write off or minimize some of the debts of the family or the individual.

As explained by the Federal Government official, This bill is the most tangible step that would help the US fall out from the real estate depression that is sweeping away the nation. This bill would help the working families who are willing to repay their debts. They would now be able to do so under the court supervision

The bill is yet to meet some amendments. One of the important amendments stipulates that only the mortgages entered in to before the date of enactment of the legislation would be eligible.

It has modified the laws on Chapter 13 Insolvency as a result of which the procedure would become simpler.

The Mortgage Bankruptcy Bill 2009 does not focus on promoting bankruptcy to save the homes. It is meant for the home owners who have already filed an insolvency and yet want to pay back their loans & simultaneously wish to save their home. This tips would make the things a bit simpler for the authorities dealing such cases and the people involved as well. It is sure shot step to save people's homes and lend them a helping hand!

http://ezinearticles.com/?Mortgage-Bankruptcy-Bill-2009---Does-Obamas-Bankruptcy-Bill-

Provide-Foreclosure-Relief&id=2136721

Bankruptcy Provision Stalled

2009-02-27T07:09:00.000-08:00

The House delayed a vote on legislation to allow bankruptcy judges to modify the mortgages of troubled homeowners after the measure faced unexpected opposition from some Democrats.

Under the provision, a bankruptcy judge would be able to cut the principal on a homeowner's mortgage, lower the interest rate and extend the terms, provisions known as "cramdowns."

The measure is fiercely opposed by Republicans and the financial services industry. They complain that it would drive up their losses and force mortgage rate increases. But the latest questions came from moderate Democrats who say that modifications should be negotiated between lenders and borrowers rather than imposed in bankruptcy court, congressional aides said.

A vote could be rescheduled for next week.

CONTRACTING

Decision on F-22s Postponed

The Pentagon said that it won't decide for at least another month whether to buy more of Lockheed Martin's F-22 fighter jets, leaving it unclear whether the production lines in Georgia and Texas will remain open long term.

The Obama administration was expected to decide by March 1 if it was going to buy more of the fighter jets beyond the 183 it already has under contract. But Pentagon officials said that decision will not be made final until the fiscal 2010 defense budget is released to Congress in mid-April.

Defense Secretary Robert Gates and Air Force officials have disagreed on whether more planes are needed. Lockheed Martin has been lobbying congressional leaders not to cut the program, which it says creates about 25,000 jobs in Marietta, Ga.

EXECUTIVES

Yahoo Finance Chief Is Leaving

Yahoo's chief financial officer is leaving the troubled Internet pioneer in a management shake-up that signals the company's new chief executive is preparing to roll out her turnaround strategy. Blake Jorgensen, who had been Yahoo's finance chief since June 2007, will relinquish his duties as soon as his replacement is found, the company said.

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/26/AR2009022603756.html

Drowning in debt, it may be time to think about bankruptcy

2009-02-01T07:25:00.000-08:00

I'm in mega credit card debt. I'm 50, single and make more than $130,000 a year. But I owe more than that, excluding my mortgage. I've been living beyond my means for the past few years; there's no one else to blame and no catastrophe that caused me to go into debt. I was foolish and didn't pay attention to the fact that credit card minimum payments were going to double. I now find myself owing more each month than I take home.

I have gone to a legitimate credit counseling organization, but the plan they developed would leave me almost nothing once utilities and basic living expenses were paid. Should I get another opinion? I hate the thought of bankruptcy and have even tried negotiating with my creditors to reduce the minimum payments so that I can get back on track. I've canceled newspaper, cable and other optional expenses. I am literally living from paycheck to paycheck. If you could point me in the right direction, I would be grateful.

Answer: If you owe more on credit cards than you make, your situation is dire indeed.

As you've discovered, even the lower interest rates available under the credit counselor's debt management plan sometimes aren't low enough to make repayment affordable.

At the same time, your high income probably precludes you from filing for a Chapter 7 bankruptcy liquidation, which would allow you to erase your credit card debt. Instead, you likely would be shunted into a Chapter 13 repayment plan, which would require you to make payments on your debt for five years, after which your remaining credit card balances would be erased. The repayment plan could be as burdensome as the one the credit counselor suggested, however.

Another option is to try to negotiate lump-sum settlements of your debts -- a perilous path that could result in your creditors suing you.

In any case, you need to consult with a bankruptcy attorney about the details of your situation and what solutions might make sense.

Ex-spouse can wreck your credit

Dear Liz: Thank you for writing about former spouses ruining people's credit. I am a living example of what can happen when your ex wants to be vindictive. My former husband was ordered by the court to refinance our joint mortgage into a loan in his own name. Instead, he decided to sell the home, but fell behind on the payments before he finally succeeded. When I went to buy a house of my own, I discovered the lender had put the late payments on my credit report as well, since the loan was in both our names. Because my credit scores have been ruined, my daughter and I must remain in rental properties for the foreseeable future. My only recourse, according to my attorney, is to file a suit for damages, which of course means spending more money with no certainty as to the judge's mood on the day. Clearly, refinancing should have been a requirement before the divorce was granted.

Answer: The good news is that the clock is already ticking on the black marks that trashed your credit. After seven years, all mention of the late payments will disappear from your credit reports, and their effect is diminishing even now. Credit scoring formulas are designed to weigh your recent behavior more heavily than your past, so paying your bills on time and using credit responsibly should help to improve your scores.

You're much better off than people whose exes simply continue to pay late without ever selling the home. Those folks are in credit jail with little hope for parole because creditors don't have to pay any attention to what a divorce decree says. What matters is what names are on the loan and whether the loan is paid on time.

Tax credit helps home buyers

Dear Liz: We just bought our first house and were told we qualified for a $7,500 tax credit. How do we find out more about it?

Answer: Search for "first-time homebuyer tax credit" on the IRS website ( www.irs.gov) for the details of this tax break, which is really more of an interest-free loan.

The credit is available for home purchases after April 8, 2008, and before July 1, 2009, but under current law the tax break must be repaid over the following 15 years. So if you got a $7,500 credit on your 2008 return, you would have to repay one-fifteenth of the amount, or $500, on 15 future returns starting in 2010. Congress is considering removing the payback requirement, but hasn't done so yet.

Liz Pulliam Weston is the author of the book "Easy Money: How to Simplify Your Finances and Get What You Want Out of Life." Questions for possible inclusion in her column may be sent to 3940 Laurel Canyon Blvd., No. 238, Studio City, CA 91604, or via the "Contact Liz" form at www.asklizweston. Distributed by No More Red Inc.
http://www.latimes.com/news/columnists/la-fi-montalk1-2009feb01,0,3057328.column

As Mergers and Other Work Dry Up, Bankruptcy Becomes Lawyers’ Oasis

2009-01-24T18:44:00.000-08:00

There sure do seem to be a lot of bankruptcy lawyers around these days.

Law firms, scrambling to keep up with changing client needs in a weakening economy, are rushing to pump up their bankruptcy departments by shifting around staff and having lawyers study up on restructuring, as more people abandon the big deals of boom times to take on desperate negotiations of companies on the brink.

At some firms, seasoned bankruptcy partners hold seminars and host brown bag lunches to introduce Chapter 11 proceedings to associates more accustomed to carefully planned mergers than to corporate fire sales. Some firms have poached bankruptcy experts from rivals in a bid to bolster business and to bring in a source of knowledge for lawyers new to dark times.

“What firms are trying to do here is provide some ability to people to move,” said Bradford W. Hildebrandt, president of Hildebrandt International, a consulting firm that often advises law firms. “Frankly they’re trying to avoid layoffs.”

The shifts happen less frequently at the level of partners. Partners command higher prices and clients may be unwilling to pay those prices when the partner is just learning the details of bankruptcy law. And the most experienced and sought-after advisers are the ones with a range of experience across different areas of law, several lawyers said.

“The people who are most successful are the counselors, who know a little bit about everything,” Said Kenneth A. Lefkowitz, a partner at Hughes Hubbard & Reed in New York.

But for the more junior lawyers being shifted around, working on bankruptcy matters should help them become advisers to corporate chiefs, said Douglas P. Bartner, head of the bankruptcy group at Shearman & Sterling in New York.

“We are adding proportionately more junior lawyers to the bankruptcy area than we did before,” he said. In addition, he said, over the last year senior lawyers who have had some bankruptcy experience have also held regular, informal meetings to discuss restructuring cases, so that when they need to be pulled into a restructuring case, they are up to speed.

A greater number of junior lawyers also want to work on bankruptcy cases, said Richard F. Hahn, co-chairman of the bankruptcy practice at Debevoise & Plimpton. Young lawyers might have more opportunities to learn in a division that is growing, as the bankruptcy area is.

“They want to be where the action is,” Mr. Hahn said. (They may also want to hang onto their jobs, Mr. Hildebrandt noted, by keeping busy.)

In November, Kirkland & Ellis, a law firm known for its bankruptcy practice, held the first in a series of seminars for its lawyers on restructuring issues, said Richard M. Cieri, a partner in the firm’s New York office.

“We know there’s going to be continuing need for additional capacity,” Mr. Cieri said. The firm has more than 100 lawyers in its bankruptcy group, making it one of the biggest in the country, but the current downturn means the firm may need to tap more of its people, he said.

In some cases law firms have hired bankruptcy lawyers from rivals to add to their mix of offerings. Earlier this month, Greenberg Traurig announced that it had successfully lured away Bruce Zirinsky and John Bae, senior bankruptcy lawyers at Cadwalader Wickersham & Taft.

“The addition of Bruce and John is particularly exciting now, with the challenges in the U.S. and global marketplaces and the need for major law firms to adjust rapidly to change,” said Richard A. Rosenbaum, president of Greenberg Traurig, in a statement at the time.

But law firms rushing to expand their bankruptcy practices face certain risks. If a firm hires or trains too many lawyers in a restructuring department, for example, it might find itself lacking people to handle securities offerings and mergers when the economy recovers while at the same time paying bankruptcy experts with nothing to do.

“The great challenge is coping with supply and demand and revenue expense,” said Ralph Baxter, chairman of Orrick Herrington & Sutcliffe. “You can’t overdose on one thing, and you can’t simply — because something has turned down today — abandon it, if odds are it’s going to be back.”
http://www.nytimes.com/2009/01/24/business/24retool.html?ref=business

UPDATE 1-Tarragon Corp files for Chapter 11 bankruptcy

2009-01-12T08:00:00.000-08:00

NEW YORK, Jan 12 (Reuters) - Tarragon Corp (TARR.O: Quote, Profile, Research), a residential real estate developer, has filed for Chapter 11 bankruptcy due to dropping real estate values and slower sales in its homebuilding division, the company said on Monday.

An affiliate of Israel's ARKO Holdings has committed to debtor-in-possession financing, Tarragon said in a press release.

The company said it has adequate current liquidity and it plans to continue operations as usual while it reorganizes.

Tarragon's operations are concentrated in the U.S. Northeast, Florida, Texas and Tennessee.

"Based on the discussions we have had with our unsecured note holders and the financial support of ARKO, we expect that we will be able to structure a consensual plan with our creditors structured to enable Tarragon to preserve the value of its property management and development platforms and maximize any return to creditors," Chief Executive William Friedman said in a statement.

Shareholders are expected to receive nothing for their holdings, the company said.

The company filed in U.S. Bankruptcy Court for the District of New Jersey. (Reporting by Chelsea Emery; editing by John Wallace)
http://uk.reuters.com/article/marketsNewsUS/idUKN1228355620090112

What would bankruptcy mean to GM shareholders?

2008-12-20T23:54:00.000-08:00

What happens to shareholders if General Motors files for bankruptcy? What strategy was recently arrested money manager Bernard Madoff supposedly following to produce those steady returns? What's the January Barometer and does it work? Answers to these questions and more in today's column.

Q: I am retired and invested my 401(k) in several preferred stocks, including General Motors. What happens to my preferred shares if GM files for Chapter 11 and reorganizes? Will GM keep paying the dividends? Will I lose my investment?

A: Unfortunately, if GM files for bankruptcy, it will probably stop paying dividends on its preferreds. Then, preferred shareholders will become creditors, in line behind bondholders, but ahead of common stock shareholders. While anything can happen in a specific case, preferred and common shareholders usually get nothing in a bankruptcy.

Q: I've read that busted investment adviser Bernard Madoff purportedly employed a strategy that many investors successfully use to reduce risk. Is that so?

A: Madoff, as you probably know, was arrested on charges that he orchestrated a $50 billion investment fraud. Until the end, it appeared that Madoff had devised an investing formula that produced 8 to 12 percent annual returns, year in and year out, regardless of what the overall market was doing. So what was this magic formula?

Madoff described his strategy, which he dubbed the "split-strike conversion strategy," in general terms over the years. It involved buying stocks belonging to the S&P 100 index - the largest 100 stocks of the S&P 500 - as well as buying and selling various types of options on the stocks and on the index.

You can read a detailed description of Madoff's strategy on Wikipedia ( www.wikipedia.org). From Wikipedia's home page, search for "madoff" and then select the "Bernard L. Madoff" link.

It turns out that Madoff's split-strike strategy is similar to an equity collar, a relatively well-known strategy for reducing the downside risk of owning individual stocks. The main difference is that Madoff's strategy involves an index of 100 stocks, rather than individual stocks. For more on the single-stock equity collar strategy, go to the Options Industry Council Web site ( www.optionseducation.org) and search for "collar."

Q: What's the January Barometer, and does it work?

A: The January Barometer theory says that if the market moves up in January, the entire year will end up in the plus column, and vice versa. It turns out that the barometer was on the money this year. In January, the market, as measured by the S&P 500, dropped 6 percent, the biggest January loss in recent years.

However, the barometer isn't perfect. Over the 15 years (1994-2008) that I checked, the barometer got it right 11 times. Actually, its batting average was better in up years than in down years. The barometer gave the right signal in eight of the 10 up years, but only in three of the five down years.

Some people say that the first week in January also works to predict the year. It turns out that it does, but not as well as using the whole month. The first five trading days in January correctly predicted the entire year in five of the past 15 years.

Q: What's the U.S. dollar index?

A: The index compares the value of the U.S. dollar to a basket of foreign currencies including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and the Swiss franc. Thus, the index gives you a snapshot of the value of the U.S. dollar on a global basis.

The index traded mostly in the 80-to-95 range from the 1980s through the mid-1990s. In the late 1990s, the index started moving up, meaning that the dollar was strengthening, until it reached 120 in 2000.

In late 2001, the U.S. dollar began losing value, and the index bottomed at 71 or so last summer. It started back up in August and peaked at 88 in November. Since then, the index has dropped and was trading at 80 the last time that I looked.

You can see current and historical values of the U.S. dollar index on BarChart ( www.barchart.com). From BarChart's home page, select Dollar Index in the Market Indices section. Select "chart" in the Technicals section to see the data in chart form.

Q: In a recent column, you advised sticking with firms with debt/equity ratios below 0.5. But when checking banks such as Bank of America or Wells Fargo, I see ratios of 4 and higher. What gives?

A: The debt-to-equity ratio, a debt measure, compares a firm's long-term debt with shareholders' equity (assets minus liabilities). Companies with no long-term debt have zero ratios, and the higher the debt, the higher the ratio. Considering the tight credit markets, it makes sense to stick with low-debt firms, and in general I would avoid firms with debt/equity ratios above 0.5.

Banks, however, are a different story. They operate by borrowing at short-term rates (ideally from depositors) and lending at higher long-term rates. So, for banks, borrowed funds are their inventories and debt/equity ratios aren't very useful.

Please keep your questions coming. However, keep in mind that I can't give personal investing advice, and I can't answer questions about income tax issues.

Have a great holiday and a happy and prosperous New Year.

Harry Domash lives in Aptos (Santa Cruz County), and publishes the Dividend Detective Web site and Winning Investing newsletter. Contact him at hdomash@winninginvesting.com.
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/20/BU9H14R3GT.DTL

US Government Immorality Will Lead to Bankruptcy

2008-11-29T04:51:00.001-08:00

Bankruptcy With A Twist

2008-11-11T23:43:00.000-08:00

GM should "DIP" into the government's coffers.
All this talk about a government rescue of General Motors and other automakers is misguided, likely a waste of taxpayers' money and a potential further diminution in the creditworthiness of the U.S. government. It is time, instead, to focus seriously on the gut-wrenching question of whether this American icon should file for bankruptcy as soon as possible--or continue attempting to survive outside the protective confines of the Bankruptcy Courts.

With GM's financial profile--based on my "Z-Score" bankruptcy-prediction model--now clearly deep into the distressed-firm zone and with the global economy facing a severe and likely prolonged economic recession, the correct choice is to file for bankruptcy and seek an immediate significant liquidity boost from the post-bankruptcy debtor-in-possession (DIP) financing mechanism. This traditional option for failing companies will require a unique twist: assistance of the U.S. government as a meaningful player, but at little risk and attractive returns to the U.S. taxpayer.
The latest chapter in this continuing debate is that the current administration in Washington will likely honor its commitment to provide $25 billion in low-interest loans to the major U.S. auto manufacturers for the development of fuel-efficient cars. And there is mounting sentiment in Congress and within the president-elect's transition team to provide even more assistance.

The fuel-efficient-car component requires, however, that the Energy Department conclude that the borrower has assets that exceed its liabilities and that it is likely to be able to repay the loans. As of Sept. 30, however, GM had total assets of $110 billion but liabilities of $170 billion. GM must somehow convince Energy officials that it is solvent and creditworthy, a dubious possibility now that it has announced it will run out of cash by mid-2009 and will violate loan covenants on about $6 billion in debt very shortly.

Unless it secures new sources of capital--or the government infusion is in the form of equity--GM's liabilities will still exceed its assets. Unfortunately, some form of traditional loan guarantee or outright investment in the combined GM/Chrysler entity is destined to fail and be followed by repeated requests for more rescue funds.
As noted, these companies are facing the likely prospect of an extended, severe economic recession, not to mention the staggering weight of their own inefficiencies, huge pension and health care benefit packages, and their clear bankrupt profiles. The latter is based on GM's Z-Score of -0.17 as of September 2008--clearer in the case of GM, since Chrysler's financials are not available since it is a private company. If the government does increase the loan program for more fuel-efficient cars, GM will still need substantial interim support until any tangible benefits from this subsidy are observable.

Now comes the tricky part: What is the alternative to a highly controversial government bailout? If it were not for the potential panicked reaction in global credit and automotive markets, the answer would be clear. Both GM and Chrysler should file for protection--yes, protection-- under the U.S. Bankruptcy Code, as soon as feasible. The enormous benefits afforded to companies whose assets are protected and whose fixed payments on most liabilities are suspended, while attempting to reorganize under Chapter 11 of the Code, are clear. And another, sometimes overlooked, benefit for companies in bankruptcy is their ability to borrow substantial amounts of funds for continued operations under what is known as DIP financing.
http://www.forbes.com/opinions/2008/11/11/gm-bankruptcy-government-oped-cx_ea_1112altman.html

Bankruptcy is Not the Only Solution

2008-10-04T18:46:00.000-07:00

If you, like thousands of other North Americans, find yourself swimming in debt month after month with no end in sight, you are probably weighing your alternatives. Bankruptcy may be one of the options you've been looking at, but it should certainly be the last one you consider. A bankruptcy will stay on your record for a minimum of 6 years. This means you may be required to sell some of your assets, and it will be extremely difficult to get credit cards or loans for at least the next 6 years after you file for bankruptcy.

If you are beyond debt consolidation, but you have a regular income and are able to pay a portion of your bills every month, then you have an alternative of which many financially strapped individuals are not aware: a consumer proposal. A consumer proposal is basically a debt negotiation with your creditors. You propose paying a lesser amount instead of filing for bankruptcy.

Martin Lander, Owner of CARFCO - Car and Truck Repair Financing had this to say when asked about consumer proposals, "It really surprises me how many people don't know that this is an option. Often when people can't make payments on their loans, they think their only option is to file for bankruptcy. What they don't know, or don't consider is that many creditors would negotiate a lower payment if it would avoid the customer filing for bankruptcy. If a customer does file for bankruptcy, very often the creditors end up with little or nothing to show, so they will usually be quite willing to negotiate a settlement."

Some of the benefits of a consumer proposal are:

** Less damage to your credit rating.

** Interest stops accruing at the time of filing.

** You only pay a portion of the total amount you owe (sometimes as little as 20%).

** You won't lose your assets.

** Wage garnishment and any other collection activities are stopped at the time of filing.

If you have decided that a consumer proposal is the best course of action for you, your next steps should be to seek the help of a licensed trustee, who will prepare your proposal and send it out to your creditors. Your creditors will then vote on whether or not to accept your proposal. If 75% or more of your creditors vote in favour of your proposal, it will be approved, if not, the trustee will call a meeting of creditors to negotiate new terms.

Bankruptcy should certainly be a very last resort, especially when this option is available and has so many benefits. A consumer proposal is not only better than bankruptcy for you, it is also better for your creditors.

Molly Wider is a Loan Officer at BHM Financial Group. To find out more about car repair financing and car-title loans, visit http://www.bhmfinancial.com

Article Source: http://EzineArticles.com/?expert=Molly_Wider

A bonus for bankruptcy

2008-09-18T04:11:00.000-07:00

Only in America can one man destroy a company and get a bonus: In 2007, the CEO of Lehman Brothers got a $22 million performance bonus, and, in 2008, the company is history. Some performance! When does the greed stop?
http://www.dallasnews.com/sharedcontent/dws/dn/opinion/letters/stories/thursletters6_0918edi.872795ee.html

A bankruptcy of its subsidiary

2008-08-10T08:26:00.000-07:00

The board of directors of Val Saint Lambert International SA (« VSLI »), which is a company listed on the free market of Euronext Brussels, regrets to announce that its subsidiary, La Cristallerie du Val Saint Lambert SA, decided to file for bankruptcy on 8 August 2008.La Cristallerie du Val Saint Lambert SA is a 99,9% subsidiary of Val Saint Lambert International SA. It is in charge of the production and sale of the products. It is the owner of the equipment, the production plant and the ground located in Seraing (Liège).The impact for Val Saint Lambert International SA of a bankruptcy of its subsidiary La Cristallerie du Val Saint Lambert SA is the loss of its source of supplying in products and the depreciation of the shareholding (valued at 2.000.000 € in the 31 December 2007 accounts) and on the receivable vis-à-vis La Cristallerie du Val Saint Lambert SA amounting to 3.548.521,48 € as of 30 June 2008.In September 2007, Val Saint Lambert International SA had mandated Degroof Bank and law firm Stibbe in order to find a strategic partner for the group, which would have allowed the continuation of the production activities.Contacts had been established with several interested parties but none of them was conclusive as of today. During the last few days, it appeared that none of such contacts had a chance to be successful in the short term.La Cristallerie du Val Saint Lambert SA was no longer is a position to finance the needs of the production and in particular to finance energy and raw materials.The considerable increase of the costs of raw materials, of electricity and gas had a material impact on the results of La Cristallerie du Val Saint Lambert SA, notwithstanding an improvement of its order book in an economic context which is not favourable to the production of luxury products.The French company Val Saint Lambert SARL, which is also a 99,9 % subsidiary of Val Saint Lambert International SA and which operates a shop in Paris is also at risk of filing for bankruptcy at short term.The board of directors of Val Saint Lambert International SA, which is the company listed on the free market of Euronext Brussels, considered that such company was not in the conditions of bankruptcy. Val Saint Lambert International SA is the owner of the trademark « Val Saint Lambert » as well as of the offices and of the shop of Seraing (Liège). It operates the shop of the Grand Sablon in Brussels.Given the decision of its subsidiary, Val Saint Lambert International SA requested from Euronext Brussels to suspend its listing on 8 August 2008. The listing should resume on Monday 11 August 2008.Mrs Sylvie Henquin, CEO of Val Saint Lambert International SA, added «Notwithstanding the enormous efforts invested to maintain the activity, the increase of the cost of the raw materials and of energy hugely increased our need for cash. The company did not therefore have enough time to put its new strategy in place. Since no new investor could be found and the requests raised with the public authorities having failed, the conclusion was unavoidable : the bankruptcy of our subsidiary even though many projects with luxury houses were ongoing… ». Contact Mrs Sylvie Henquins.henquin@val-saint-lambert.comTel 00 32 4 330 38 00Fax 00 32 4 336 20 25
http://www.euronext.com/news/companypressrelease/companypressrelease.jsp?lan=NL&docid=568507&cha=1721

Should You Declare Bankruptcy Now Or Do You Have Options?

2008-08-01T19:32:00.000-07:00

When is the right time to declare bankruptcy? Many studies indicate that the time to seriously consider filing bankruptcy is a long way from the point where most people take the plunge. Since bankruptcy should really be considered only as your option of last resort, why do so many people throw in the financial towel early?

There can be many reasons for this. One is the psychological impact of feeling that you are a failure. But you need to really look at this aspect from multiple perspectives, none of which would indicate that you are a failure at all. Studies of bankruptcy cases over the past years have shown that the vast majority of people who declare bankruptcy do so not because of their own financial mismanagement, but rather from being caught up as a victim of circumstances. Life happens and much of life cannot be predicted, so a major financial catastrophe like an expected job loss or layoff, high unexpected medical bills, a messy divorce, and many other things may have happened to bring you to this state, none of which indicate any type of financial mismanagement on your part.

Or perhaps it was a bit of financial mismanagement that brought you to the point of starting to declare bankruptcy. Does that mean you are a failure? No, not unless you did not learn anything about what not to do next time. If it was a solid learning experience and you will recognize the mistakes you made last time, you cannot consider it a failure.

Most people throw in the towel early before they have thoroughly investigated all their possible bankruptcy alternatives and options. A big reason for this is the stress that builds up knowing that bills are due, bills are overdue, and you are at the point where you even hate to answer the phone because you don't know if it's your sister calling or yet another creditor who is hounding you about a past due payment. This all builds stress and people just want to get on with their lives.

But understanding this aspect of it, filing bankruptcy is probably the last thing you really want to do unless you really need to, and most people have not looked at their options closely enough. The most commonly overlooked alternative to bankruptcy is debt consolidation service. This is not another loan, which is exactly what you do NOT need at this point, but rather debt consolidation is a service that will take over your bills, negotiate with your creditors, and in almost all cases, will significantly lower the mount of money going out to your creditors every month. For example, if you are paying out $4000 a month right now on your bills, after you are setup with debt consolidation, your monthly layout could be under $2000 a month. Would that extra $2000 per month give you the financial breathing room you need right now so you don't have to declare bankruptcy? In many cases, the answer to that question is a resounding yes.

You need to fully understand where you are at so that you can make an intelligent decision about bankruptcy and to know if it is the right move for you or not. With the recent changes in bankruptcy law, this is no longer the simple process it once was. Although you probably do not want to spend money on a bankruptcy lawyer, you need to consider that that might also be the smartest money you've spent all year, since a qualified bankruptcy attorney can look at your financial situation and offer advice and guidance as far as what options you should consider, or if bankruptcy is really your best option, how to go about the process. You will almost certainly save more than the bankruptcy attorney's fees by getting this sound legal advice and guidance.

A place to start would be with a bankruptcy evaluation to find out where you are at and what options you have. A free bankruptcy evaluation is offered at our web site to help you through this very emotional and frustrating process, and it is a great way to get your head straightened out as far as what your best options are.

For more insights and additional information about whether you should Declare Bankruptcy as well as getting a free bankruptcy evaluation from a qualified bankruptcy lawyer local to you, please visit our web site at http://www.bankruptcy-data.com

Article Source: http://EzineArticles.com/?expert=Jon_Arnold

American LaFrance Exits Bankruptcy

2008-07-27T03:54:00.000-07:00

NEW YORK, July 24, 2008 /PRNewswire via COMTEX/ ----Patriarch Partners is pleased to announce that, effective July 24, 2008, American LaFrance, LLC, the 175 year old manufacturer of fire, rescue and vocational vehicles, emerged successfully from its Chapter 11 bankruptcy. Concurrent with its emergence from bankruptcy, American LaFrance has announced a significant restructure of its business and a transformation of organization, processes and a segregation of facilities to better serve its product lines in domestic and global markets.

In a major effort to improve profitability, timely delivery and to create room for soon to be announced new ventures, the fire business will be moved from Summerville, SC to the American LaFrance facilities in Ephrata, PA and Hamburg, NY, according to American LaFrance. Summerville will remain the center of excellence for commercial cab and chassis models including chassis manufactured for the fire, refuse and construction markets (street sweepers, refuse haulers, concrete pumpers etc).

"American LaFrance management is currently completing documentation for exciting new business ventures," said Patriarch Chief Executive Lynn Tilton. "These initiatives are instrumental to the decision to rationalize facilities and processes for anticipated ramp of new lines of production. The Company also plans to significantly broaden its focus beyond domestic borders into the global market," Tilton added. http://www.foxbusiness.com/story/american-lafrance-exits-bankruptcy/

GM sheds bankruptcy risk - now comes the hard part

2008-07-18T20:06:00.000-07:00

By David Bailey and Kevin Krolicki

DETROIT (Reuters) - By pledging to cut $10 billion in costs, General Motors Corp (GM.N: Quote, Profile, Research) has convinced investors and creditors that the immediate risk of bankruptcy has faded.

After touching 54-year lows, GM shares have rallied by 45 percent this week, and the cost to insure the top U.S. automaker's debt against default has eased.

Now comes the hard part: convincing millions of U.S. consumers to take another look at its more fuel-efficient passenger cars as the company attempts to break its reliance on the fast-sinking market for trucks and SUVs.

"They need to make a transition, but that isn't going to happen overnight, and the transition is going to be difficult," said Standard & Poor's equity analyst Efraim Levy, who expects GM to lose money in the U.S. market through 2009.

Analysts credit GM with taking important steps to revive its car lineup under product czar and Vice Chairman Bob Lutz. For instance, some analysts regard the company's redesigned Chevy Malibu as the best mid-sized sedan on the market.

Malibu sales have risen 31 percent and selling prices for the new car are up by several thousand dollars on average.

But Toyota Motor Corp's (7203.T: Quote, Profile, Research) flagship Camry still outsells the Malibu by an almost 3-to-1 ratio. Honda Motor Co (7267.T: Quote, Profile, Research), the only major automaker to post U.S. sales growth in the first half, sells more than twice as many Accords.

And that highlights a lingering risk with the latest, sweeping restructuring plan GM has unveiled.
http://uk.reuters.com/article/stocksAndSharesNews/idUKZWE86373820080718

Bankruptcy Law - Do You Know What the Bankruptcy Law Means For You?

2008-07-12T22:18:00.000-07:00

Are you considering using the bankruptcy law to your benefit? Do you want to know what bankruptcy will do for you? There are reasons why you would use the bankruptcy laws to help you get out of debt, but there are other options as well. Here we go.

If you have debts that are over twice your annual salary, then bankruptcy could be one of your better options. You can use a chapter 7 to clear all the debts or use a chapter 13 to have the courts put together a debt repayment plan for you. This can be the right way to go if you have way too much debt and are desperate.

However, if you are not that deep into debt, then you need to understand that there are other options out there that will cost you no more than the bankruptcy lawyer would cost you. You can use a non profit credit counseling services to help you out. They will not only help you to get out of debt, but they will also counsel you on how to stay out of debt.

You also have the option of going to your priest or pastor in order to get help. They can usually recommend someone in your church to help advise you on your finances and this is done for free. It is usually someone that is a financial advisor, an accountant, or has pulled themselves out od debt in the past. They also have a very good understanding of the bankruptcy law.
Article Source: http://EzineArticles.com/?expert=Benjamin_Robert_Ehinger

Bankruptcy Terms Explained

2008-06-28T21:38:00.000-07:00

Property of the Estate

"Property of the estate" describes the assets that, in any particular bankruptcy proceeding, are to be used to satisfy pre-filing or pre-confirmation debts and the costs of the bankruptcy proceeding. But for the bankruptcy filing, these assets would have belonged to the debtor.
Read More

Bankruptcy Lawyer

2008-06-14T04:14:00.000-07:00

Options Other Than Bankruptcy - Credit Counseling

2008-05-26T06:29:00.000-07:00

Credit counseling, despite its name, is more a type of debt management counseling. Rather than helping people use their credit, it helps people manage their current debts and, frequently, avoid filing for bankruptcy. While it is frequently seen as a type of credit education, it is really debt counseling.

The procedure of credit counseling involves a debtor creating a debt management plan (DMP). The DMP will be drawn up by a credit counselor who works with a consumer/debtor's creditors to negotiate a repayment plan. Frequently, these plans will involve a lower interest rate or longer time frame than the debtor would have if he or she worked from the original loan or statement. In addition to reducing the interest rates, a DMP will often offer reduced payments and fees.

After a debtor joins a debt management plan, the creditors will close the accounts or restrict future charges. This prohibits the debtor from incurring more debt which would also have to be paid off. A DMP's best feature is that it consolidates all of a consumer's debts into one monthly payment. While the payment might seem high, it is usually less than the amount the consumer would pay if he or she paid all bills individually.

Another feature is the reduction of interest rates. The bank or other creditor feels that he or she has a much better chance of getting money back and so will view a consumer as less of a risk. This allows them to lower the interest rate they charge the consumer. Lowering an interest rate, which on credit cards can be near 30%, allows the consumer to be debt free in 3 to 6 years rather than the 20+ years it could take with normal interest rates.

When a consumer creates a DMP, he or she benefits by having formerly delinquent accounts marked as current. Banks will frequently do this after a consumer makes three monthly payments. It is a show of good faith in the consumer to repay the debt. In addition, this helps a consumer's credit rating. Bills that were listed as "late" or "delinquent" will still appear on a credit report but they will be balanced by "on time" payments.

Bankruptcy - The Ultimate Debt Solution?

2008-05-09T22:48:00.000-07:00

At first glance, bankruptcy may appear to be an easy way out of debt problems, but is it the only answer? What is the real cost of bankruptcy? Before considering bankruptcy, there are a multitude of factors that must be considered, many of which are best explained by a specialist debt management company.

The process of going bankrupt is actually quite simple:

• Complete declaration forms available from your local county court.

• Provide details of all assets you own and all debts you owe.

• Pay the associated court fee and administration deposit.

Bankruptcy can be a same-day service! But should you consider it at all?

Following the above steps, you will be issued with a Bankruptcy Order. You will then need to meet the Official Receiver in your area. Their role is to review your circumstances and ensure you meet the conditions of the bankruptcy. This will involve discussing your debts. Once the bankruptcy takes effect, you will be unable to acquire any other kind of debt solution, such as debt management, a consolidation loan, or an IVA.

The duration of bankruptcy usually lasts one year. In 2004 this was reduced from three years. Once you are discharged from your bankruptcy you are able to start again debt free.

Sounds easy doesn't it? Many people think it is an easy option for those in serious debt. However, the negative, long lasting consequences of bankruptcy need to be taken into account as they can have a lasting impact on your life.

You and Your Home

The trustee associated with your bankruptcy has three years to deal with your home or any property you own. During these three years the trustee can:

• Put your property up for sale.

• Have a charging order issued. This means that any money generated by the property, through rent or sale, will got to the trustee.

• Arrange terms for you to buy the trustee's interest in the property. These terms can be arranged with those with whom you share ownership of the property.
http://www.ezinearticles.com

The Basics of Consumer Bankruptcy

2008-04-26T22:14:00.001-07:00

The rules of consumer bankruptcy were subject to changes under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). This act resulted in substantial changes to the bankruptcy code. These changes, while they are broad, apply mainly to bankruptcy cases filed on or after October 17, 2005.

The Bankruptcy Code is codified as Title 11 of the United States Code. It has been amended multiple times since its enactment. The code allows for a uniform federal law which governs all bankruptcy cases. This means that it, mostly, does not matter in which state one files for bankruptcy, the rules will be the same.

The procedures for bankruptcy are governed by the Federal Rules of Bankruptcy Procedure. These rules are frequently called the "Bankruptcy Rules". These rules contain a set of official forms for use in bankruptcy cases. The Code and Rules set out a formal legal procedure for dealing with the debts of individuals of businesses.

A large portion of the bankruptcy process is conducted away from the courthouse. There typically is not much time spent in court. A debtor generally won't even appear once the process is underway unless there is an objection raised to some part of the arrangement.

Chapter 7

Chapter 7 bankruptcy is known as Liquidation. It is an orderly, court-supervised procedure involving a trustee. The trustee takes over the assets of the debtor's estate, reduces the assets to cash, and distributes the cash to creditors. The debtor, however, has the right to retain certain exempt properties and the rights of secured creditors.

Generally, there is little non-exempt property in chapter 7 cases. Because of this, there may be little actual liquidation of the debtor's assets. These are known as "no-asset cases."

A creditor holding an unsecured claim will get money from the bankruptcy estate only if the case is an asset case and the creditor has filed a proof of claim with the bankruptcy court.

In chapter 7 cases, the debtor will generally receive an immediate discharge of debts.

Chapter 13

Chapter 13 bankruptcy is known as Adjustment of Debts of an Individual with Regular Income. It is specifically designed for a debtor who has a regular source of income, like a job. It is also used for people who do not qualify for chapter 7 bankruptcy due to the means test.

This form of bankruptcy is frequently preferable to chapter 7 because it allows a debtor to keep a valuable asset like a house and because it allows a debtor to repay creditors over time. The time is determined by income and other factors but is generally between 3 and 5 years.

A chapter 13 debtor retains possession of property in the estate and makes payments to creditors, via the trustee, based on the debtor's anticipated income over the life of the plan. This form of bankruptcy does not allow for an immediate discharge of debts. Instead, the debts are discharged after the debtor completes the payments required under the plan.
http://www.ezinearticles.com

Bankruptcy Law

2008-04-13T06:41:00.000-07:00

What is bankruptcy? Bankruptcy is a federal statutory law, created to remedy the need for a basic structure of laws that cover the area of bankruptcy through out the United States. All bankruptcy cases are under taken by the United States bankruptcy courts, which is a branch of the district courts system.

What kind of bankruptcy is right for me? Bankruptcy covers a wide variety of proceedings. The most common form of bankruptcy is liquidation under a chapter seven filing. What is liquidation? Liquidation is the appointment of a trustee who will gather non-exempt properties of the debtor. They will then sell those properties and give the proceeds to the creditors. The other chapters of bankruptcy are a bit more complex. (chapter eleven, chapter twelve, and chapter thirteen). These types of bankruptcy allow the future earnings to pay of creditors. Also, we have chapter nine bankruptcy. Chapter nine bankruptcy is offered only to municipals. It is more like a reorganization then a liquidation. Chapter twelve and thirteen are very much the same except that chapter twelve is only available to farmers.

Are there any exceptions/ loop holes? Some properties ( equity in a home, equity in a car, tools of the trade, and some amount of personal effects) are exempt from being sold to pay bankruptcy debt. Personal effects with little value are exempt, because they do not promote any desirable economic result. Not all debts can be discharged under every chapter of bankruptcy. ( taxes owed to federal, state or local government, support obligations, and government guaranteed student loans. The main purpose of bankruptcy is to ensure orderly and reasonable management of debt.