All items from Total Bankruptcy

A U.S. bankruptcy judge has dismissed the case of a Colorado marijuana business owner, stating that while he is in compliance with state law, he is breeching the federal Controlled Substances Act.
Frank Arenas, wholesale distributor and producer of marijuana, was seeking Chapter 7 bankruptcy protection. According to his petition, he owes $556,000 to unsecured creditors.
He testified he owns roughly 25 marijuana plants, each valued at $250, which Arenas would have liquidated into payments in his Chapter 7 case. However, the trustee could not take control of the plants without breaking federal law.
Additionally, Arenas’ case could not be converted to a Chapter 13, which would permit him to pay off his debts gradually, because, as Judge Howard Tallman writes, the agreement would be financed “from profits of an ongoing criminal activity under federal law.”
"Violations of federal law create significant impediments to the debtors' ability to seek relief from their debts under federal bankruptcy laws in a federal bankruptcy court," Judge Tallman added.
Arenas’ case the second marijuana business bankruptcy dismissed in Colorado including a marijuana business; a least two other cases have been discharged in California.



Posted 3 weeks 3 days ago

Detroit has reached a final settlement with its greatest opponent, bond insurer Syncora Guarantee Inc., this Monday, according to a lawyer for the city.
Under the deal, Syncora will recover roughly 14 percent of money owed, which they've long claimed totals more than $333 million. Syncora will receive two sets of notes from Detroit, a lease to control a tunnel to Canada, land near the tunnel, and the possibility of leasing and controlling a parking structure.
With this settlement, Syncora is fully exiting the Chapter 9 bankruptcy case , including any future appeals.
David Heiman of Jones Day, a lawyer for Detroit, said to U.S. Bankruptcy Judge Steven Rhodes in Monday’s hearing that both parties have “laid down their swords.”
While the agreement with Syncora is an important cleared hurdle for Detroit’s bankruptcy emergence, the city still faces creditor Financial Guaranty Insurance Co., who is seeking roughly $1.1 billion from the pension debt it insured.
On Monday, FGIC asked Judge Rhodes to suspend the trial until September 22 so the company can modify its approach in the wake of Syncora’s settlement. The trial is currently on hold since last week so Detroit and Syncora could finalize their deal.
Detroit’s Grand Bargain is centered around an estimated $816 in pension debt. FGIC may be held responsible for payment if investors end up taking losses.



Posted 5 weeks 21 hours ago

Five of Atlantic City’s 12 casinos could close this year, following Trump Entertainment Resorts’ bankruptcy filing this past Tuesday.
The company owns Trump Plaza, a casino slated to close next week. Trump’s Taj Mahal could follow suit in November if the company cannot receive concessions from union workers.
According to paperwork filed with the U.S. Bankruptcy Court, Trump Entertainment estimates its liabilities range between $100 million and $500 million and assets no greater than $50,000. The company missed last quarter’s tax payment and currently does not have enough revenue to pay lenders this month, as reported by the Washington Post.
In a statement to the New York Times, Fitch Ratings analyst Alex Bumazhny indicates the Taj Mahal closure comes as a surprise: “The property is almost breaking even and will benefit from the closure of Trump Plaza.”
Three casinos have closed since January in lieu of increased competition from neighboring states. On CNBC’s “Closing Bell,” financial researcher Frank Fatini claims new casinos in Pennsylvania and New York state have “taken away…the convenience gambler, the ‘daytripper’”from Atlantic City.
Bloomberg states that higher labor costs and real estate taxes have also hurt Atlantic City’s profits.
The closing of the Taj Mahal could leave 2,800 workers unemployed, raising the year’s total loss in Atlantic City casino jobs to above 8,000.



Posted 5 weeks 5 days ago

Testimony in the historic Detroit bankruptcy trial began this morning with the city’s chief financial officer stating fiscal controls were “very, very poor” when he began last year.
John Hill Jr. was the first witness called on September 4. According to Hill, Detroit was unable to fully determine revenue flow for a myriad of reasons, but partly due to a failure to implement a “financial commuter system,” as said by ABC News.
Lawyers for the United Auto Workers, Wayne County and the American Federation of State, County and Municipal Employees are also slated to present their arguments on Thursday.
On Wednesday, lawyers argued against Detroit’s current debt modification plan, claiming it to be “illegal, unfair and dead on arrival,” according to an article in the Detroit Free Press.
Judge Steven Rhodes compelled a lawyer for Syncora Guarantee, arguably the city’s strongest critic and creditor, to state what he felt is an appropriate amount for the city to repay. Attorney Kieselstein said Syncora wants 75 cents on the dollar.
Detroit’s Grand Bargain is the foundation of the bankruptcy plan. The bargain would allow the city to accept roughly $816 million over the next 20 years from the state of Michigan, non-profit foundation and the Detroit Institute of Arts donors. The money would be used to fund city retiree pensions.



Posted 6 weeks 5 days ago

Crumbs Bake Shop was granted permission to sell itself to Lemonis-Fischer Enterprises in a New Jersey bankruptcy court on Tuesday, August 26th.
Judge Michael Kaplan approved the sale of the famed cupcake chain to Marcus Lemonis, star of CNBC’s “The Profit,” and Fischer Enterprises, which is best known as the owner of frozen treat Dippin’ Dots. The purchase will successfully conclude Crumbs’ Chapter 11 bankruptcy case, annulling $6.5 million in debt, according to the Wall Street Journal.
Crumbs closed all 49 of its locations nationwide in July. About half of those locations will remain closed, but new ownership intends to reopen stores in cities such as New York, Chicago, Washington D.C., Boston and Los Angeles.
Scott Fischer, chief operating officer of Fischer Enterprises, states the stores will still focus on Crumbs’ famed cupcakes, but there are plans to integrate other food brands owned by the Oklahoma based investment company, such as ice cream and popcorn.
Crumbs began searching for a buyer in late 2013, but a $5 million investment from Fischer Enterprises in January 2014 temporarily halted the search. Filings show the company resumed hunting in May after an “out of court restructuring failed to take hold,” as stated by The Wall Street Journal.



Posted 7 weeks 5 days ago

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After waiting almost six years, unsecured creditors of Lehman Brothers Holdings' Inc. will finally see an initial payment of $4.62 billion next month.
Trustee, James Giddens, filed a notice August 15th regarding the distribution of owned payment to Lehman's creditors. Former employees, pension funds, banks and investment firms are among the creditors who will see money starting September 10th.
The payment denotes roughly 17% of total unsecured claims against the brokerage, according to the Wall Street Journal.
Lehman Brothers Inc. filed for Chapter 11 bankruptcy protection on September 15, 2008. The firm's filing was the largest bankruptcy in US history and is generally credited as a major turning point in the 2008 financial collapse.
Upon filing, Lehman claimed $613 billion in total debt and $639 in total assets, as well as $150 billion in outstanding bond debt according to a 2008 article on MarketWatch. The firm listed over 10,000 creditors in the filing.
The upcoming September payment has been postponed until the brokerage's customers were fully reimbursed: $105 billion to 111,000 former customers, according to Reuters. The 1970 Securities Investor Protection Act put into law that customer claims are to be fully repaid before creditors.



Posted 9 weeks 22 hours ago

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In a week that first saw fast food pizza chain, Sbarro, file Chapter 11 bankruptcy, the trend continues. Yesterday, toasted-sub chain Quizno's Subs filed for Chapter 11 as well.
The company says not to worry as they have a plan in place.
Quizno's Subs' CEO said in a statement, "The actions we are taking are intended to enable Quizno's to reduce our debt, execute a comprehensive plan to further enhance the customer experience, elevate the profile of the brand and help increase sales and profits for our franchise owners."
The restructuring is focused on a debt reduction plan that takes care of $400 million.
While Quizno's Subs is mainly a franchised chain, individual franchise owners ran into problems with the prices Quiznos was charging them for ingredients. Although many prices were eventually altered, it may not have been timely enough for some.
Included in the restructuring plan is a rebate program for franchise owners and new incentives for future franchisees.
With big competitors, such as Subway, Potbelly and Noodles and Company, Quizno's has fallen behind in the world of advertising and additional investments are planned to be made in that area as another part of the restructuring plan.



Posted 31 weeks 3 days ago

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Mt. Gox is in the hot seat as they were granted Chapter 15 bankruptcy protection by the U.S. on Monday. This move prevents traders in the U.S. from taking legal action against them for the current time, protecting their U.S. assets.
The company is fighting off fraud allegations and a proposed class action suit in Chicago. Mt. Gox, who at one time was the nation's biggest bitcoin exchange, filed bankruptcy in Japan in February.
Last month Mt. Got claimed to have been attacked by hackers which resulted in the loss of 750,000 bitcoins owned by customers. The attack supposedly was due to a glitch in bitcoin's software algorithm.
Mt. Got's founder, Mark Karpeles, has been in the spotlight throughout all of the fraud allegation talk.
Some of Karpeles actions right before the U.S. bankruptcy filing were called into question.
Attorney Jane Pearson stated, "We don't have proof yet but we do have concerns about the movement of hundreds of millions of dollars in bitcoins over the weekend, moved by Mr. Karpeles."
Attorneys for Mt. Got deny such fraudulent acts. In April, Mt. Got will be back in court as they try to get permanent stay of U.S. litigation.



Posted 31 weeks 6 days ago

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Melville, New York-based, Sbarro, has filed for Chapter 11 bankruptcy for the second time in three years. The pizza chain has struggled with debt and competition in the marketplace.
In the Chapter 11 reorganization plan, Sbarro hopes to cut down its debt by over 80 percent. Sbarro also plans to close approximately 50 locations, on top of the 180 money-losing operations they have already shut down.
Although the bankruptcy will not affect the franchise owned 582 restaurants, Sbarro as a company has 799 restaurants and employs over 2,700 people.
Sbarro has seen a drop off in mall traffic, where many of their restaurants are located. Their business model has also been called into question.
A restaurant consultant said, "Sbarro has been struck with an outdated business model...Its biggest shortcoming is that is sells food that has been sitting out for a while, and more people want food made to order."



Posted 32 weeks 22 hours ago

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Nickelodeon's Drake Bell, formerly known as "Drake" from the show Drake & Josh has filed for bankruptcy.
Drake Bell is 27 years old and has experienced an income roller coaster in the last couple of years. In 2012, Drake made $408,000, while in 2013 he brought in $14,099.
His month expenses are reportedly greater than $18,000, while his monthly income is under $3,000.
Bankruptcy documents indicate that Drake owes $1.597 million on his home. The property is valued at $1.575 million.



Posted 35 weeks 5 days ago