Matador Legal » Bankruptcy

Managers liable for payroll even after a bankruptcy

Matador Legal — Thu, 30 Jul 2009 05:17:42 +0000

A federal appellate court in San Francisco has ruled that the managers of a company under bankruptcy, chapter 11 or 7 are still liable for employee’s unpaid wages under the federal law. The 9th US circuit court of appeals has made this ruling, overturning a lower court ruling on the issue in the case of Boucher v/s Shaw.

The case has been remanded for further proceedings. The court also affirmed the previous lower court ruling that the managers were not liable under the Nevada state law.

Chapter 7 bankruptcies rise in north Georgia

Matador Legal — Thu, 30 Jul 2009 04:54:17 +0000

During the first months in north Georgia chapter 7 bankruptcies have risen from 9,584 last year to 15,363 this year, a rise of 60%. Total bankruptcies have risen from 18,124 to 24,328, according to US bankruptcy court for the northern district of Georgia

The challenge in the coming months would be for the retailers to continue to be in business in the wake of ever tightening credit markets. CIT, a lender to small and medium business had to be infused with $3 billion from the bond holders to continue to operate.

http://www.ajc.com/business/chapter-7-filings-up-103730.html

Bankruptcies rise in Utah by 62%

Matador Legal — Thu, 09 Jul 2009 11:20:21 +0000

Bankruptcies have risen by a staggering 62% for the half year period this year compared to the same in 2008. 6,817 bankruptcy petitions have been filed in this period compared to 4,216 last year. 4,403 of these were chapter 7,while 2,378 were chapter 13’s, 34 were chapter 11 and 2 were chapter 12, a rare form of bankruptcy used in case of a family farm protection

Pro se petitions add to the stress on Bankruptcy courts

Matador Legal — Tue, 07 Jul 2009 05:40:21 +0000

As the bankruptcy filings have been rising all across US, the courts have to deal with more petitions and also more time consuming petitions. This is creating an additional stress in the bankruptcy courts.

With more debtors unable to afford attorney fees, the pro se petition preparers business is booming. Pro se bankruptcies are those petitions which are prepared by the debtor himself, with the assistance of a bankruptcy petition preparer, who may or may not be a paralegal. Sometimes pro se petitions are not complete or have some documents missing.

All this adds to the load of bankruptcy courts, where judges and trustees need to more careful with pro se petitions, especially since the amendments in Bankruptcy laws in 2005 has increased the documents that need to be provided by the debtor by approximately 50%.

What is lien stripping in Bankruptcy?

Matador Legal — Tue, 07 Jul 2009 04:13:52 +0000

In a chapter 13 reorganization plan, the second mortgage can be converted into an unsecured debt and is payable according to the plan agreed by the bankruptcy court trustee, if the property value is less than the balance owed on the first mortgage, which itself should be less than a million dollars.

For example, if the home is worth $500,000, and the amount owed on the first mortgage is $525,000 then the second mortgage on this property can be considered as an unsecured debt and will not have a lien on the property. But if the property value is more than $525,000, this will not be possible.

Bankruptcies rise in the central district of California

Matador Legal — Mon, 06 Jul 2009 13:33:11 +0000

Bankruptcies, both consumer and business rose by nearly 63% in the first four months, compared to the same period last year in the central district of California. Chapter 7 filings increase by 64%, while Chapter 13 filings increased by 40%. Compared to 3 chapter 11 filings last year, this year recorded 11 filings.

Bankruptcies rise in New Hampshire in June

Matador Legal — Fri, 03 Jul 2009 12:56:43 +0000

Commercial and Business bankruptcies have continued to rise in New Hampshire. In June, N.H. recorded 412 households and 11 business bankruptcies, an increase of 27% over the June figures, last year. For the first five years this totaled 2,475.

At this rate, it is expected that we would see around 5000 filings by the end of the year.

Bankruptcies rise the most in Lost Angeles and Chicago

Matador Legal — Thu, 02 Jul 2009 12:56:10 +0000

For the five month period from Jan to May 2009, total commercial bankruptcy filings stood at 36,106. The total filings are up from 23,829 for the same period last year, showing an increase of 52%. Compared to the same period in 2006, after Bankruptcy laws were revised to prevent abuse, the increase is 240%.

The vast majority of these filings have been filed by small business owners and entrepreneurs. The increasing bankruptcies in small businesses and fewer start ups is expected to cause a major dent to the economy. In a recession, generally more number of people are thrust into becoming self employed. But this time the tighter credit market and stringent bankruptcy laws have an adverse impact on this trend as well.

Small businesses with fewer than 500 employees make up almost half of the total gross domestic product. According to Equifax, the major run up in the small businesses is caused by transportation industry which includes automobile and airline business. After transportation, construction, manufacturing and retail industries are the major causes.

Small businesses filings have grown most in the Los Angeles and Chicago metro area, according to Equifax.

The lack of credit remains a major factor for these high bankruptcy numbers.

http://www.jaxobserver.com/2009/07/01/business-bankruptcies-up-240-since-2006/

More insights in research on bankruptcy numbers

Matador Legal — Wed, 01 Jul 2009 16:54:18 +0000

We have previously covered a research paper by Lars Lefgren and Frank McIntyre here. In this post we delve deeper into the research. The entire research paper is here.

Various researchers have found that the average amount discharged in a chapter 7 Bankruptcy varies from $30,000 to $36,000. For the year of 1997, the government expenditure and the write downs by financial institutions is as below:

Bankruptcies led to a discharge of $42 billion of consumer debt
State unemployment insurance programs paid out $20.3 billion
Temporary assistance for needy families paid out $23.2 billion
Medicaid cost for state and federal governments $160.3 billion

The broad conclusions of the study are below.

Harmonizing Garnishment laws across the states will reduce the cross state variance by a third. In the states with creditor friendly garnishment laws, the filing rates are more because a debtor is left with no other alternative than to file for a Bankruptcy.

Bankruptcies are more common where the average income varies from $30,000 to $60,000 a year and the debtor is in his late 20’s.

Bankruptcy numbers represent in large part the relative cost of formal and informal default.

http://timesandseasons.org/index.php/2009/06/explaining-the-puzzle-of-crossstate-differences-in-bankruptcy-rates/

Business Failures climb in Santa Barbara

Matador Legal — Tue, 30 Jun 2009 17:31:04 +0000

Bankruptcies in the Tri-county have risen by more than 65% this year. In the Santa Barbara Bankruptcy court, there have been 1,467 chapter 7 filings this year compared to 896 in the same period last year, an increase of 63%. The Chapter 11 filings have been 11 compared to 3 last year.The profile of small firm owners and entrepreneurs includes flooring contractor, filmmaker, chiropractor, plastic manufactures. Most of the bankruptcies can be accounted to the unavailability of credit and unexpectedly low sales.

A business chapter 7 is different from a consumer chapter 7 as in a business chapter 7 the debts are not entirely wiped away.

http://pacbiztimes.com/index.php?option=com_content&task=view&id=940&Itemid=1