Sears Canada Inc. (NASDAQ:SRSC) filed for bankruptcy on June 22 in Canada under the Companies' Creditors Arrangement Act (CCAA). While this has only a minor direct impact on Sears Holdings Corp. (NASDAQ:SHLD), the indirect impact is significant. If Eddie Lampert is willing to throw in the towel on his equity investment in SRSC, it could indicate that he is not willing to pour more of his cash into propping up SHLD. In addition, vendors who were already nervous about dealing with Sears may stop shipping goods for the critical Back to School and Fall shopping season. In my opinion, SRSC's bankruptcy filing is just a dress rehearsal for a Chapter 11 filing by SHLD in July.

Canadian Bankruptcy Laws

Sears Canada filed under the CCAA instead of the Bankruptcy and Insolvency Act (BIA), which would have resulted in complete liquidation. There are two critical points in the CCAA that differ from Chapter 11 bankruptcy in the U.S. A monitor, in this case FTI Consulting, is appointed by the court, who has oversight authority but does not control day-to-day operations. The first critical point is that the monitor has supervision over the sale of assets, and not Eddie Lampert. The second point is that the monitor is required to report to the Superintendent of Bankruptcy when they feel creditors would be better off if the case was switched to BIA, which would mean total liquidation.

A June 22 Pre-Filing Report prepared by FTI Consulting contains a large amount of useful information. According to the report, SRSC had cash outflows of C$30-100 million per month over the last 5 months, and in May was burning C$20 million a week. The company only had C$139 million on June 19. Without new sources for cash, it was forced to file.

Its current plan entails: closing 59 stores and laying off 2,900 employees; getting a C$300 million DIP revolving loan at LIBOR+4.5% and a $150 USD equivalent term loan at LIBOR+11% which mature on December 20, 2017; trying to get the authority to suspend certain pension and retiree benefit payments; creating a C$9.2 million key employee retention plan.

A key item mentioned in the report was that the company would try to get "interest in a range of potential transactions involving all or part of the assets or businesses of Sears Canada Group". It is critical to remember that this will be done "under the supervision of the monitor", and not by Lampert.

Below are the cash flow and operational projections until September 16. According to FTI Consulting's forecast, SRSC will only have a negative C$25.7 million operating cash outflow during the 13-week period. It is only closing 59 stores, and it would seem unrealistic to expect that the current burn rate of cash would improve so significantly.

Cash Flow Forecast Until September 16, 2017

13-Week Operating Forecast

Impact on Sears Holdings Corp.

To many SHLD shareholders this information about SRSC may be interesting, but they feel it has little impact on SHLD because SHLD only owns 12% of SRSC and a loss of a few million dollars will not kill SHLD. Correct, but the indirect impact will most likely have a very significant negative impact on SHLD shareholders.

Prior to the filing, SRSC was able to arrange for about C$109 million in financing, but it needed C$175 million. Lampert did not step up and loan the company the other C$68 million. Does this indicate he will no longer be ready to step up and loan SHLD when other financing sources are not? Lampert also owns about 45% of SRSC, and there is a very real possibility that he will get no recovery.

Unlike Chapter 11 bankruptcy in the U.S., where the company/management still has almost complete control of the bankrupt company, in Canada the monitor has a major voice in the bankruptcy process. One can only speculate to conclude that Lampert has finally decided an in-court process is the better way to deal with operations that burn cash, especially since in Chapter 11 he is able wipe out unsecured creditors, shareholders, and certain pension liabilities, while using his and Bruce Berkowitz's secured debt as means to own a large portion of a "new" Sears Holdings.

Some investors are taking the opposite opinion on the SRSC filing. They assert that not proposing to liquidate, but instead to continue operating and selling just some stores, demonstrates Lampert's willingness to pursue his turnaround plans. This could explain the pop in SHLD shares on the day SRSC filed. The reality is that the above extremely low cash burn projections are unrealistic. The company was burning C$20 million per week, but now, all of sudden, this is forecast to improve. This is just another example of Lampert's unrealistic retail expectations. FTI Consulting, as monitor, decides if the operations continue or if the company liquidates going forward, and not Lampert. FTI was retained by Sears Canada last November as consultant, and its reputation as Licensed Insolvency Trustee now as appointed court monitor would dictate its need to be prudent in supervising the cash flow, and it would be quick to inform the Superintendent of Bankruptcy that a liquidation of assets is necessary to protect creditors instead of continuing to operate.

Vendors are the Achilles' Heel for SHLD. The SRSC bankruptcy filing tore this tendon. There is a very real possibility that vendors will now be even less likely to deal with SHLD after SRSC filed for protection. I would assume that many vendors supply both companies, and now they are not getting paid for goods they delivered to SRSC that were not paid for prior to June 22, because the CCAA prohibits the payment for any goods or services provided before the filing date. The unpaid vendors now need to file a claim and may get less than the full amount. Those goods delivered after the bankruptcy filing will, however, be paid (This is the same as under Chapter 11 in the U.S.)

Why would vendors deliver goods now and risk getting only partial payment under the Chapter 11 claims procedure? Why not wait until after SHLD files for Chapter 11 and get paid the full amount as a priority claim under Chapter 11. After SHLD files for Chapter 11, many vendors will be eager to do business with the company again because they know they will be paid in full.

Other Recent News

Sears is closing 20 more stores. Some view this as a positive move to reduce negative cash flow. Others view it as a negative because there are fewer stores trying to support the same amount of debt. Barron's posted an article with an interesting title: "Fraudulent Conveyance Rules May Pave Way for Sears Bankruptcy in July". An article I wrote about Sears in April had the same idea.

Conclusion

Eddie Lampert's unwillingness to lend SRSC cash as the "lender of last resort" and the bankruptcy filing of SRSC could signal that he finally realizes SHLD also needs court protection to stop the cash bleeding. At least in the U.S. under Chapter 11, he does not have to cede power to a court-appointed monitor, which will mostly likely not be easy for his ego to accept. While the current plan is for the Canadian operations to continue with a modest reduction in number of stores, continued cash flow issues could force SRSC into a formal liquidation.

Sears's real problem in the near future is vendors, and this filing has made that problem acute. The reality is that the best way to deal with these issues is to file for Chapter 11 bankruptcy in early July, so that vendors will deliver the needed Back to School and Fall merchandise. I still expect to see a Chapter 11 filing, and therefore, rate all SHLD securities a Sell.

Disclosure: I am/we are short SHLD.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am naked SHLD call options.

Editor's Note: This article covers one or more stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.

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How Sears Canada's Bankruptcy Impacts Sears Holdings Corp. - Seeking Alpha

Buddhika Weerasinghe | Bloomberg | Getty Images

Signage for Takata are displayed at the company's Echigawa plant in Echigawa, Shiga, Japan, on Friday, Nov. 25, 2016.

The firm, whose defective air-bag inflators have been blamed for at least 16 deaths and more than 150 injuries worldwide, will file for protection in Tokyo District Court under the Civil Rehabilitation Act, Japan's version of U.S. Chapter 11 bankruptcy, said the sources, one of whom has direct knowledge of the matter and one who was briefed on the process.

Takata will then seek bridge loans from the core banking unit of Sumitomo Mitsui Financial Group, which will provide tens of billions of yen (hundreds of millions of dollars) in bridge loans, one source said.

Takata spokesman Toyohiro Hishikawa said nothing had been decided regarding any filing or financing.

Shares in Takata changed hands for the first time since sources said last week that the struggling airbag maker was preparing to file for bankruptcy.

By mid-afternoon shares had more than halved in value to 116 yen, eroding Takata's market capitalization by about 75 percent from a week ago to nearly $86 million now.

Any filing would coincide with a deal for financial backing from U.S. auto parts maker Key Safety Systems Inc. Key is expected to acquire Takata assets as part of a restructuring in bankruptcy, a source told Reuters.

Takata would stop making air-bag inflators after completing a global recall as part of the restructuring plan with Key, separate sources said.

Takata plans to begin bankruptcy proceedings in both the United States and Japan, sources have said. Such moves would culminate a long, tumultuous fall for the family-controlled company that grew to become a global supplier to most of the world's major automakers.

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Takata to file for bankruptcy Monday, SMBC to provide bridge loan: Sources - CNBC

Retail's bloodbath has spread north of the border.

Sears Canada announced on Thursday it has entered bankruptcy protection in the Great White North and will close 59 stores and slash nearly 3,000 jobs while it tries to get back on its back after a years-long slump.

The retailer, which was spun off from Sears Holdings ( shld ) in 2012, won protection from creditors under Canada's equivalent to a Chapter 11 knowns as "Companies Creditors Arrangement Act" and said it plans to exit bankruptcy "protection as soon as possible in 2017, better positioned" to executive a turnaround.

Sears Canada, which is independent of its U.S. namesake, will close 20 of its 94 full-service locations, 15 home stores, 10 outlet stores and 14 hometown locations and will cut 2,900 positions across its store fleet and at its Toronto headquarters.

The spin off in 2012 was one move made by Sears Holdings CEO and top investor Eddie Lampert to raise urgently needed cash will inflict pain on Sears Holdings: the U.S. namesake company still owns 12% of Sears Canada, and Lampert and his investment vehicles still own about 45% of its shares. Sears Holdings has also been closing stores and failing to hang on to shoppers: last week, the retailer, which also operates the Kmart discount chain, said it was cutting 400 jobs at its Chicago area headquarters in addition to a previously announced $1.25 billion cost restructuring of the company.

Its Canadian siblings said in its statement that "the continued liquidity pressures facing the company as well as legacy components of its business are preventing it from making further progress." Last week, it issued a warning that it might not be able to generate enough cash to meet debt payments and other obligations in the next year. Sears Canada has posted losses in its last three fiscal years. (Sears Holdings, which is run entirely independently, stoked its own bankruptcy chatter when it acknowledged fears in the marketplace about its longer-term viability in its annual report released in March.)

As for Sears Canada, its much-hoped for comeback involves selling more discounted designer fashions and its own house brands while also improving its e-commerce, things its rivals have been doing for years.

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Sears Canada Closing 59 Stores as It Seeks Bankruptcy Protection - Fortune

Puerto Rico opened a new "chapter" in distressed securities investing when it filed for court protection in early May. However, in this case, it is not a chapter of the bankruptcy code, such as Chapter 11 (which generally applies to companies) or Chapter 9 (which applies to municipalities). Because Puerto Rico is an unincorporated territory of the U.S., it was not eligible for traditional bankruptcy protection. Instead, it filed under a new statute that was passed last year by Congress primarily to deal with the island's problems.

After years of economic decline, Puerto Rico is now in default on an estimated $74 billion of bond debt. On top of that, the Commonwealth has approximately $49 billion of pension obligations and an ongoing need for funds to provide basic government services. Because of special tax law provisions that exempt the territory's debt from not only federal taxes but also state taxes in every state, the bonds are widely held by investors across the country. Since the legal action is under a new law that has never been tested, there is tremendous uncertainty about how much creditors will recover and how long the process will take.

Distressed bond investors seem to be favoring either the territory's general obligation (or "GO") bonds or its bonds backed by sales tax revenues (known as "COFINAs"), both currently trading around 50 cents on the dollar, and there are many other Puerto Rican bonds trading at even lower levels. But there may be opportunities for stock investors to profit from the island's restructuring as well, perhaps with less downside risk than in many of the bonds.

Our most recent newsletter details four public companies based in Puerto Rico that could benefit from stabilization in the island's finances. Those companies are detailed below, and an additional three major insurance companies with exposure to Puerto Rican debt can be found in The Turnaround Letter. Learn more about these contrarian Puerto Rico investing opportunities.

Closing prices on May 31, 2017

Ambac (NASDAQ:AMBC) - At the most strategic level, the Ambac story is straightforward: an insurer of municipal bonds with an impressive new CEO who is strengthening the company's balance sheet, working off its obligations following its 2010 bankruptcy, reducing risks and building book value. Underneath is a highly complicated financial and legal structure that even most of Wall Street avoids, as only a few analysts cover the stock. The shares trade at 63% of adjusted book value and near their post-emergence lows. Much of the concern is related to Ambac's $276 million of exposure to the Puerto Rico General Fund debt and $2.1 billion in current exposure to Puerto Rican municipal debt. While the eventual costs to Ambac are unknowable, the company has established reserves that would cover the most likely outcomes. There could be an interesting opportunity developing in Ambac.

Assured Guaranty (NYSE:AGO) - Assured Guaranty is probably the strongest player in the bond insurance business. Its exposure to Puerto Rico is relatively modest, and it could buy up competitors if they falter. Management has been aggressively working to boost shareholder value through stock buybacks. The stock has performed well over the past few years, but it could rise a lot further.

EVERTEC (NYSE:EVTC) - EVERTEC, with sales of nearly $400 million, is a full-service transaction processing business similar to The Turnaround Letter recommendation First Data Corporation (NYSE:FDC), with operations in 18 countries across Latin America. The company was created in 2004 as a unit inside of Popular, Inc. (NASDAQ:BPOP) (the Puerto Rico bank), which still owns a 16% stake. Apollo Management bought a 51% stake in 2010 and then exited following EVERTEC's IPO in 2013. Despite the weak local economy, EVERTEC continues to grow its revenues and profits through both organic expansion and acquisitions. The company's debt is moderately elevated at 3.3x EBITDA, but management is committed to reducing this. Management appears capable and brings considerable experience from larger industry peers. At an attractive 9.7x EBITDA, this underfollowed stock is worth a closer look.

First Bancorp (NYSE:FBP) - With $12 billion in assets, First Bancorp is Puerto Rico's second-largest local bank. Loan quality is a struggle, as nonperforming loans are over 5% of its loan book, but this is largely offset by a high level of capital (its Tier 1 common equity ratio is 18.2%). First Bancorp's net interest margin is wide, at nearly 4.5%, compared to less than 2.5% at most U.S. banks. Several major shareholders have been selling, including the U.S. Treasury, which completed its sale under the TARP program, as well as private equity firms Oaktree and Thomas H. Lee, and this has been weighing on the stock price. While there are definitely risks here, the stock's valuation at 67% of tangible book value (many banks trade at 100-200%) and 11.9x this year's expected earnings appears to be a bargain.

Disclosure: I am/we are long AMBC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Continued here:

Puerto Rico Bankruptcy: Uncertainty, But Also Stock Profit Opportunity - Seeking Alpha

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LAKELAND, Tenn. Some parents and employees are upset after a day care abruptly closed its doors and filed bankruptcy on payday.

"The person who is most heartbroken is me because not only did I lose my business my job, I lost people who I thought were my friends," owner Lisa Naquin said.

She said overnight her dream went up in smoke she was forced to close the doors at the business she built, turning clients and workers away.

She said she filed for Chapter 7 Monday but kept the center open and continued to take tuition payments up until Wednesday.

"We found out we were going to be filing on Sunday night around 9:30," said Naquin.

Naquin claims she was hoping to sell the day care and kept that quiet because she did not want to alarm anyone, but she says that deal fell through.

"We had to make the hard decision to just let it go and file bankruptcy."

Sandra Mays worked at the day care just over a year and says the closing came just as they were supposed to get paid.

"If you knew this you could have let us know, told us we are going through changes but trying to work it out so we could have been prepared," she said.

She said filing for bankruptcy on payday without letting anyone know about financial problems just doesn't sit well with her.

"We expected to work and get paid and we did neither."

Naquin showed WREG a text message explaining why she didn't pay her workers, saying her attorney advised her giving out paychecks without the funds could land her in trouble. That has left some workers feeling taken advantage of.

"That's not how the process works, it's like she tricked us, and knowing she may never see the fruits her labor really strikes a nerve."

Through the liquidation process, the employees could get paid, but may not.

Continued here:

Lakeland day care files for bankruptcy without paying workers - wreg.com

Implant Sciences and the U.S. Trustee assigned to the case filed with the U.S. Bankruptcy Court separate objections to the official committee of equity security holders motion to retain D.F. King & Co. to provide plan solicitation services.

The Company asserts, Simply put, the retention of D.F. King & Co. is unnecessary and not in the best of the Debtors estates, shareholders or other parties in interest.Prior to this (self-created and purported) emergency filing, the Equity Committee made no effort to discuss with the Debtors either the necessity of D.F. Kings proposed retention, or the nature and scope of services it seeks to have D.F. King provide in light of the services that KCC, who is the Debtors previously engaged noticing and claims agent, would be providing in connection with solicitation of the Plan.

In addition, The Application lays bare the fallacy of the Equity Committees supposed concern for the administrative burn in these chapter 11 cases it proposes an entirely unnecessary and unreasonable expense to be borne by the Debtors estates and ultimately the common shareholders, which is fraught with the potential to create even more unnecessary costs in the future. The Debtors cannot agree to for the needless expenditure of estate resources for a superfluous, targeted campaign that, as demonstrated by the Equity Committees proposed Plan Support Letter, could potentially be rife with misstatements and mischaracterizations of fact, as well as unfounded, irresponsible personal attacks against the Debtors management team.

Read more bankruptcy news.

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Implant Sciences Bankruptcy Objections Filed - Bankrupt Company News (press release) (blog)

Foundation Healthcare (f/k/a Graymark Healthcare) and subsidiary University General Hospital (UGH) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Northern District of Texas, lead case number 17-42571. The Company, which owns and operates surgical hospitals, is represented by Vickie L. Driver of Husch Blackwell.

According to documents filed with the Court, As of June 30, 2016, FHI had extensive accumulated and working capital deficits.FHI was unable to address the cash flow shortage either through the sale of assets, increase in revenues, decrease in expenses, or by reaching additional modifications or extension agreements with the Senior Lenders.

The Company also notes, Without access to the funds provided for in the proposed cash collateral and DIP budget, the Debtors will be unable to continue with the orderly wind-down and liquidation process, including the Debtors proposed joint liquidating plan, which seeks to appoint a liquidating trustee to administer various assets to creditors as appropriate through a liquidating trust.

Read more medical bankruptcy news.

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Foundation Healthcare Chapter 11 Bankruptcy - Bankrupt Company News (press release) (blog)

Sears Canada, which has more than 200 stores and about 17,000 employees, was spun-off as an independent company in 2012. But the filing is still bad news for Sears Holdings (SHLD), which owns both the Sears and Kmart brands in the United States. Sears Holdings still owns 12% of its shares.

Sears Holdings CEO and principal shareholder Eddie Lampert, who has been struggling to keep the company afloat amid its own mounting losses, owns a total of 45% of Sears Canada both personally and through his hedge fund.

The bankruptcy filing was not a surprise. Sears Canada said a week ago that it was in danger of running out of the cash it needed to fund operations. Thursday's filing said that it expects to remain in business.

Related: Retail bloodbath - Bankruptcy filings are up

Sears Canada said that recent changes to its stores are starting to resonate with consumers, but it had to file for bankruptcy to give it the time it needed to let those changes take hold. In the last quarter alone, Sears Canada burned through about 30% of its cash and maxed out its existing credit lines. It said it had planned to borrow 175 million Canadian dollars to fund operations, but after negotiations with lenders it found it could only secure only C$109 million in additional loans.

Sears Canada said it hoped to be able to restructure and emerge from bankruptcy later this year. It did not give any details about store closing plans or staff cuts it might make as part of its restructuring.

In March, Sears Holdings also issued a warning about there being "substantial doubt" it could stay in business. But that warning, as serious as it was, did not paint the dire picture of a company running out of cash in the near term as did Sears Canada's warning last week.

Sears and Sears Canada are hardly the only struggling retailers. In the United States, retail bankruptcies are up about 30% so far this year, according to BankruptcyData.com. Well known names including RadioShack, Gymboree, Sports Authority and Payless Shoes have all filed for bankruptcy within the last year. Total store closings across the U.S. are likely to reach record levels this year.

By some estimates, 25% of U.S. malls could close within the next five years. Department stores have shed 46% of their workers since 2001, a greater percentage of their jobs than coal mines or factories have lost over the same period.

CNNMoney (New York) First published June 22, 2017: 8:41 AM ET

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Sears Canada files for bankruptcy - CNNMoney

TOKYO Takata Corp (7312.T) will seek bankruptcy protection from creditors on Monday, two sources said, as the Japanese company faces billions of dollars in liabilities stemming from the biggest recall in automotive history.

The firm, whose defective air-bag inflators have been blamed for at least 16 deaths and more than 150 injuries worldwide, will file for protection in Tokyo District Court under the Civil Rehabilitation Act, Japan's version of U.S. Chapter 11 bankruptcy, said the sources, one of whom has direct knowledge of the matter and one who was briefed on the process.

Takata will then seek bridge loans from the core banking unit of Sumitomo Mitsui Financial Group Inc (8316.T), which will provide tens of billions of yen (hundreds of millions of dollars) in bridge loans, one source said.

Takata spokesman Toyohiro Hishikawa said nothing had been decided regarding any filing or financing.

Shares in Takata changed hands for the first time since sources said last week that the struggling airbag maker was preparing to file for bankruptcy.

By mid-afternoon shares had more than halved in value to 116 yen, eroding Takata's market capitalization by about 75 percent from a week ago to nearly $86 million now.

Any filing would coincide with a deal for financial backing from U.S. auto parts maker Key Safety Systems Inc. Key is expected to acquire Takata assets as part of a restructuring in bankruptcy, a source told Reuters.

Takata would stop making air-bag inflators after completing a global recall as part of the restructuring plan with Key, separate sources said.

Takata plans to begin bankruptcy proceedings in both the United States and Japan, sources have said. Such moves would culminate a long, tumultuous fall for the family-controlled company that grew to become a global supplier to most of the world's major automakers.

(Reporting by Taro Fuse and Maki Shiraki, writing by Thomas Wilson; Editing by Himani Sarkar)

American Airlines' chief executive said on Thursday the company is not "particularly excited" about Qatar Airway's interest in buying up to 10 percent of the U.S. carrier's shares, in a letter to employees following disclosure of the state-owned Gulf airline's overture.

WASHINGTON The new U.S. Securities and Exchange Commission chairman wants to reverse the steep decline in initial public offerings and give individual investors more access to smaller, successful companies, according to a speech he is scheduled to deliver on Thursday.

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Takata to file for bankruptcy Monday, SMFG to provide bridge loan: sources - Reuters

After five years that brought major changes to San Bernardino, the struggling city is officially out of bankruptcy.

The citys plan for emerging from bankruptcy which was approved earlier this year by U.S. Bankruptcy Judge Meredith Jury became effective June 15, officials said this week. The city, facing a $45-million budget shortfall, had declared bankruptcy in August 2012.

In the years-long process since, San Bernardino has seen its fire department and other services outsourced, its staff cut by hundreds and its public services neglected. Meanwhile, it has struggled to cope with increased violence that officials have attributed in part to an under-resourced police department.

Here are some things to know about the end of the bankruptcy process, what it means for the city and what might be next.

The citys plan of adjustment became effective June 15. That means the city can begin paying its creditors under the terms outlined in that plan, which was negotiated over several years.

Its details have been known for some time.

Most significantly, the plan preserves pension benefits for employees and retirees, though employees will have to contribute more to their pension plans, benefits were modified for new employees and retirees will lose some health benefits they were promised.

Some bondholders and unsecured creditors will be paid only 1% of what they were owed.

In a memorandum on the citys most recent proposed budget, City Manager Mark Scott put it this way: While the citys momentum has improved significantly, it would be overly optimistic to suggest that decades of decline can be reversed overnight.

The bankruptcy plan, Scott noted, is very realistic in showing only modest budgetary growth over a 20-year period.

The citys poverty rate is high about 33% of its residents live in poverty and its average household income is low, making it difficult for San Bernardino to generate the revenue it needs to pay for years of backlogged services.

But city officials say they are slowly making progress toward some of their goals.

The City Council is expected to approve a $160-million operating budget for the coming fiscal year at its meeting Wednesday evening, along with a $22.6-million capital improvement budget, which will help with street repairs, city park improvements and other much-needed projects.

The operating budget also allows for some additional staff in various departments.

San Bernardino has long been affected by high levels of violence, and last year it recorded its worst homicide rate in decades. So officials have focused on boosting the police department, which saw significant staffing cuts in recent years.

Under the citys proposed budget, about $76 million has been dedicated to funding the department up from about $70 million last year.

Were gearing up to have a police department thats better resourced, Scott said in an interview Wednesday.

The city is in the process of replacing about one-quarter of an aging fleet of police vehicles, Scott said. And it is hoping to fill a large number of vacant officer positions but that is no easy goal, given the time and resources it takes to recruit and train new police officers.

The departments resources have been boosted by a number of grants, including a federal grant announced late last year to offset the cost of hiring 11 officers.

The city is also in the process of implementing a new violence reduction program, and officials are in the late stages of recruiting someone to administer it, Scott said.

City officials would like people outside the city to see its potential rather than its troubles. They tout the the fact that it is home to Cal State San Bernardino and San Bernardino Valley Community College, its relatively low-cost housing and lower costs of doing business.

As the citys proposed budget this year stated:

Opportunities for first-time home buyers, entrepreneurs, investors and employers are vast; one only needs to see the potential.

But bankruptcy has cast a cloud over many of the citys aspirations. Now that its lifted, officials are hoping outsiders will take a new look at the city.

The thing Ive run into is that people have not understood how they are going to do business with a city in bankruptcy, Scott said. They ask, Will you keep your staff? Will you be able to follow through on your obligations?

Now, he said, were able to say to people, Were like any other city.

He added: Its time for us to show off that we can be a reliable place to do business. Its up to us now to perform.

paloma.esquivel@latimes.com

Twitter: @palomaesquivel

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After five long years, San Bernardino is officially out of bankruptcy. What's next? - Los Angeles Times

(WEAR)

This number might surprise you: Personal bankruptcy filings are down 50-percent over the past six years. Some of that decline is due to the Affordable Care Act. Consumer Reports is out with a new analysis that looks at how the ACA may have helped millions of Americans from taking the extreme step of filing for bankruptcy.

Courts never ask people why they are filing, but many bankruptcy and legal experts Consumer Reports spoke with agree on this: Medical bills had been a leading cause of personal bankruptcy before health insurance expanded under the ACA. Medical bills are often unexpected and large and unavoidable, so people who dont have insurance can run up massive debt in a relatively short period of time.

Since 2010, personal bankruptcy filings have dropped by about 50%. Experts say some of that is due to an improved economy and laws passed in 2005 that make it harder to declare bankruptcy. But nearly all the experts CR interviewed also point to expanded health insurance as a major driver of the decline.

CRs reporting found that the ACAs provisions for mandatory coverage of pre-existing conditions and against annual and lifetime payout caps has helped consumers especially Americans with serious medical issues avoid bankruptcy.

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Medical bankruptcies - WEAR

Fourteen retailers are on the brink of bankruptcy, according to a recent report from Moodys Investor Service, putting thousands at risk of losing their jobs.

As more people turn to online shopping, traditional brick-and-mortar retailers are at risk of having to close their doors. While 1.5 million jobs have been created in retail since 2010, most of these are on the web, according to the National Retail Federation.

"We believe the kind of competitive challenges that have weighed on the recent earnings performance of the bigger retailers such as Amazon, Walmart, Best Buy, and Target will have potentially devastating ripple effects for the smaller, more challenged retailers the next several quarters," the Moody's report stated. "That doesn't mean all of retail is under siege, however. Distressed issuers make up around 15 percent of the 148 rated issuers in our industry group. In other words, the majority of the industry remains fundamentally healthy.

Take a look at these stores that could be on the brink of bankruptcy.

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These 14 Stores May Be on the Brink of Bankruptcy | NBC Southern ... - NBC Southern California

Shares in the Japanese auto parts company plunged 17% on Monday following multiple reports that its exploding airbags scandal may soon drive it into bankruptcy.

The stock was suspended Friday in response to the reports, which said the troubled company plans to file for bankruptcy protection as soon as this week.

Analysts have long warned that Takata may be forced into bankruptcy due to the huge cost of the deadly scandal, which resulted in the recall of tens of millions of vehicles around the world.

The company's defective airbag inflators, which can explode and send shrapnel into drivers and passengers, has been blamed for 11 deaths in the U.S. and several others elsewhere.

Related: Have an exploding airbag? You might get $500

As the crisis has mounted, Takata has been trying to figure out a way to survive and still keep supplying replacement parts to affected carmakers, such as Honda (HMC) and Toyota (TM). The process of making all U.S. vehicles safe again could last until 2023.

Takata said in February it was negotiating the sale of its business to Detroit-based Key Safety Systems, which is owned by a Chinese company.

According to Friday's reports in Japanese and international media, Takata would file for bankruptcy protection in Japan and then in the U.S. The sale of its business operations to Key Safety would take place after that.

In a statement late Friday, Takata said that "all options are being considered" for its restructuring and that "no decision of any kind has been made."

Related: U.S. firm is frontrunner to buy troubled airbag maker

The company's shares have lost more than half their value so far this year. They're worth only about an eighth as much as they were in early 2014.

In January, Takata pleaded guilty to corporate criminal charges in the U.S. and agreed to pay a $1 billion fine. Most of that money went to carmakers who have been handling the airbag repairs.

Three former Takata executives have been charged in the U.S. with wire fraud and conspiracy in relation to the sale of the faulty airbags.

CNNMoney (Hong Kong) First published June 19, 2017: 4:56 AM ET

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Exploding airbags: Takata shares plummet 17% on bankruptcy reports - CNNMoney

by Rachel Droze, Fox Illinois

Its now been 719 days since the state has had a complete budget.

We are two days away from the start of a special session called by Gov. Bruce Rauner.

While many remain hopeful a deal can be brokered, some fear the state may soon reach its breaking point.

An American state has never filed bankruptcy, but in May, Puerto Rico sought what's essentially bankruptcy relief. This is the first time in history an American territory has done so.

Its leaving some to question if the state of Illinois could do the same.

Its now been 719 days since the state has had a complete budget.

According to the state comptroller's website, the bill backlog as of Friday is above $15.1 billion.

Under current law, Illinois cannot file for bankruptcy, but Congress could amend federal law to give Illinois this option.

"You would have to have Congress pass and the president sign an amendment to the federal bankruptcy law allowing states to declare bankruptcy," said Kent Redfield, a political science professor emeritus at the University of Springfield.

U.S. Rep. Rodney Davis, R-Illinois, said instead of this, hed like to see lawmakers work together toward a compromise.

"Come up with a solution because that's what I think we are going to try and do for our problems in Washington D.C., Davis said. That's a message I'm sending in Washington, and a message I continue to send to our leaders in Springfield and I hope they can come up with that compromise."

Bankruptcy could also potentially be unconstitutional.

"There is a provision in the U.S. Constitution, Article 1, Section 10, that prohibits states from impairing contracts, Redfield said. And then you'd probably get into a long court battle about exactly does that specifically apply to things like pensions, like bonds."

Redfield said even if bankruptcy is the route chosen in the future, the case would likely have to be decided in the Supreme Court.

He said the state would be better off raising taxes and cutting programs now, rather than dragging out a long court proceeding.

Tune into Newschannel 20 Tuesday to find out how state pensions would be impacted if the state were to go bankrupt.

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Could Illinois file for bankruptcy? - FOX Illinois

A worker demonstrates a pyro-electric wheel airbag initiator during a presentation for journalists at the international automotive supplier Takata Ignition Systems in 2014(Photo: Jens Meyer, AP)

Corrections and clarifications: This story originally misstated the parties that settled economic-loss claims involving Takata air bags.

Troubled auto supplier Takata is tumbling toward a widely expected bankruptcy filing following a costly scandal that has killed at least 16 people worldwide.

The Japanese supplierrecently pleaded guiltyin a U.S. court to criminal charges for its handling of the scandal, which involved exploding air bags.

The company agreed to pay $1 billion in penalties, including funds for people injured as a result of the fiery shrapnel hurled from its air bags. The defect has been blamed for more than 100 injuries and 16 deaths.

Morethan 42 million vehicles were equipped with the potentially defective parts, triggering the largest recall in U.S. history.

With reports circulating that the company could file for court protection as early as this week, here are several factors to watch:

1. Repairs won't stop: Although bankrupt companies can sometimes seek to sever obligations such as warranties, Takata will be required to prioritize the production of replacement parts.

Automakers have contributed hundreds of millions of dollarsto accelerate the repairs, ensuring that the recall campaign will continue unimpeded after the bankruptcy filing occurs.

As of May 26, automakers had replaced 38.1% of air bags affected by the recall, according to the National Highway Traffic Safety Administration.

2. Takata likely willget new ownership:Chinese-owned Key Safety Systems is widely expected to acquire Takata as part of the company's bankruptcy restructuring plan.

Key Safety Systems, whose U.S. headquarters is in Sterling Heights, Mich., would become the world's second-largest air bag manufacturer if the deal goes through, according to Evercore ISI analysts. The company would have market share of 20% to 25% following the deal, trailing only Autoliv's 40%.

3. Victims will still get compensation: People hurt by Takata air bags and families whose loved ones died because of the defect are eligible for compensation through a $125 million fund established as part of the company's criminal settlement.

Bankruptcy filings can disrupt previously pledged payments to third parties, but the victim compensation fund pledged as part of the government settlement is expected to take priority over other debts.

Former FBI director Robert Mueller had been appointed to administer the victim compensation funds, but he recently relinquished that post to take over as special counsel investigating Russian influence in the U.S. presidential election. His replacement is Kenneth Feinberg, who administer victim compensation funds for 9/11 and the General Motors ignition switch.

4. Current vehicle owners might get paid: Owners of nearly nearly 16 million Toyota, Mazda, Subaru and BMW vehicles equipped with Takata's defective air bags recently reached a deal with those four automakers for $553 million in compensation to cover the economic losses they've incurred because of the scandal.

The deal, which must still be approved by a federal judge, will cost Toyota $278.5 million, BMW $131 million, Mazda $75.8 million and Subaru $68.3 million. It will not be affected by the bankruptcy.

The accord leaves open the possibility that consumers will reach similar agreements with other automakers, which willremain in place even following the bankruptcy filing.

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What to expect in defective air bag maker Takata's looming bankruptcy - USA TODAY

SAN BERNARDINO >> The citys exit from bankruptcy, which Judge Meredith Jury approved months ago, is now official.

The effective date of the bankruptcy exit June 15 means the city has 30 days from then to start making payments to its creditors under the terms laid out in its bankruptcy exit plan. Those obligations had been halted since August 2012, when the city filed for bankruptcy and began the long process of crafting and negotiating approval for the exit plan.

Payments to creditors have already started, the city said in a news release Monday.

Mayor Carey Davis said in a statement that he appreciated the hard work by many people during the nearly five-year bankruptcy process.

Due to the patience and commitment of San Bernardino employees, citizens and businesses, and the sacrifices of creditors, we have come to the Citys momentous exit from that process, Davis said. The proceedings guided us through a process of rebuilding and restructuring, and we will continue to rebuild and create systems for successful municipal operations. We will continue to dedicate our attention to improving service delivery, quality of life, and attracting business investment to our community.

Five years ago, San Bernardino faced a $45 million deficit for the 2012-13 year, forcing an emergency bankruptcy filing.

While the court stopped creditors from collecting their debts or suing the city from then until now, officials made major changes to its operating structure, annexed into the county fire protection district and contracting out for refuse services.

Now, the City Council is set to pass a balanced budget that increases staffing in key departments including police in addition to the Violence Intervention Program, the citys name for their planned version of the Ceasefire program that dramatically reduced homicide in other cities and new street rehabilitation, street light and traffic signal repair and maintenance for storm drains and medians.

Thats in large part thanks to a plan that pays many creditors as little as 1 cent for every dollar they would have been entitled to without the bankruptcy. All told, the citys savings from the bankruptcy amount to $350 million, according to the city.

Attorneys and consultants working on the bankruptcy cost close to $25 million since 2012, a number that will grow much more slowly now but not stop completely, City Attorney Gary Saenz said Monday.

Two alleged victims of police misconduct, who would receive only 1 percent of what a jury might award them, are appealing the bankruptcy, and other creditors will go through an alternative dispute resolution process to determine what the city will pay them.

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In addition to beginning payments under the plan and the removal of a stay that had blocked lawsuits against the city during the bankruptcy, Saenz said he expected the official end of bankruptcy to improve the citys image.

One of the greatest effects is the perception, Saenz said. Being in bankruptcy is a cloud over the city, if you will. Notwithstanding that filing for bankruptcy can be beneficial for a city that reached the point where we were, there is a cloud. ... Now, I think people should give San Bernardino a second look and see that it is an ideal place and has a lot of potential.

While a large majority of creditors voted to approve the citys bankruptcy plan, this isnt a day to celebrate, said Jeff Breiten, president of the City of San Bernardino Retired Public Employees Association.

The city may not have a cloud hanging over anymore, but those retirees who had their retirement benefits impaired in the bankruptcy will never have those benefits restored, Breiten said Monday. We hope that our elected official do not return to the spending habits that resulted in the city filing bankruptcy, but we have already seen expenditures approved by the council such as positions in City Managers Office and the call center that may not be really necessary while the city should be creating a reserve funds for unexpected events.

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San Bernardino officially out of bankruptcy - San Bernardino County Sun

By Julie Takahashi, Chron.com / Houston Chronicle

Photo: Diana Haronis/Moment Editorial/Getty Images

David's Bridal-Wedding and prom dresses, formal wear.

>>Here is a list of chains that Moody's says are at serious risk of bankruptcy...

David's Bridal-Wedding and prom dresses, formal wear.

>>Here is a list of chains that Moody's says are at serious risk of bankruptcy...

TOMS Shoes - footwear company.

TOMS Shoes - footwear company.

Fairway Group Holdings - food retailer.

Fairway Group Holdings - food retailer.

Velocity Pooling Vehicle - does business as MAG, Motorsport Aftermarket Group.

Velocity Pooling Vehicle - does business as MAG, Motorsport Aftermarket Group.

Boardriders SA - sporting subsidiary of Quiksilver.

Boardriders SA - sporting subsidiary of Quiksilver.

Bon-Ton Stores - parent of department store chain.

Bon-Ton Stores - parent of department store chain.

Evergreen AcqCo 1 LP - parent of thrift chain Savers.

Evergreen AcqCo 1 LP - parent of thrift chain Savers.

Tops Holding II - supermarket operator.

Tops Holding II - supermarket operator.

Indra Holdings - holding company owner of Totes Isotoner.

Indra Holdings - holding company owner of Totes Isotoner.

Gymboree - children's clothing retailer.

Eddie Bauer - clothing.

Eddie Bauer - clothing.

Neiman Marcus - Department store.

Neiman Marcus - Department store.

Claire's - Jewelry and accessories.

Claire's - Jewelry and accessories.

Cole Haan - Men's and women's shoes and accessories.

Cole Haan - Men's and women's shoes and accessories.

True Religion - Clothing.

True Religion - Clothing.

Charming Charlie - Women's clothing, jewelry and accessories.

Charming Charlie - Women's clothing, jewelry and accessories.

Charlotte Russe - Women and teen girl clothing.

Charlotte Russe - Women and teen girl clothing.

Vince - Men's and women's clothing and accessories.

Vince - Men's and women's clothing and accessories.

J.Crew - Men's, women's and children's clothing and accessories.

J.Crew - Men's, women's and children's clothing and accessories.

Sears -Department store.

Sears -Department store.

99 Cents Only Stores - Price point retail.

99 Cents Only Stores - Price point retail.

Nine West - Women's clothing, accessories, shoes.

Nine West - Women's clothing, accessories, shoes.

22 retailers that are at serious risk of bankruptcy

The brick-and-mortar retail world continues to crumble around the United States as Amazon and online stores continue to boom. Many companies are seeking bankruptcy protection to reduce debt and reach long-term viability.

Moody's Investors Service listed 22 U.S. retailers with troubled financials that could be heading to potential bankruptcy.

BANKRUPTCY NEWS:Where to find the RadioShacks still open in Texas

"The majority of retailers remain fundamentally healthy," said Moody's Lead Retail Analyst Charlie O'Shea, "But as select groups of retailers continue to deteriorate -- in particular department stores and specialty retailers -- we believe the distressed ranks will keep growing, fueled in part by distinct vulnerabilities within the B2/B3 retail population."

(Story continues below...)

A B2/B3 rating is in reference to a speculative grade in Moody's Long-term Corporate Obligation Rating. Obligations rated B2 are considered speculative and are subject to high credit risk. Rating one notch lower is B3.

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22 retailers that are at serious risk of bankruptcy - Chron.com

The assets of Mode Media, a once high-flying womens lifestyle digital media company that crashed into bankruptcy oblivion last year, have been acquired by BrideClick, an ad network catering to the wedding industry.

Terms of the deal, negotiated through a blind auction conducted by a firm representing Mode Medias creditors, were not disclosed.

New York-based BrideClick plans to merge Modes assets including some of the 100,000 archived pieces of content from Mode.com into a new company, to be renamed Glam Inc.

BrideClick has a passionate team with a track record of building long-term partnerships with bridal bloggers, social-media influencers and advertisers, said chairman Henry Chamberlain. Glam.com provides us with the opportunity to launch into other content areas and cater to a wider audience.

Mode Media abruptly shut its doors and laid off its entire staff last September after failing to secure additional capital. The company, founded in 2004 as Glam Media, had raised roughly $225 million and was valued at one point at around $1 billion as the company geared up for an IPO that never happened.

The intellectual property acquired by BrideClick includes the domain names Glam.com, Mode.com, Foodie.com, Bliss.com, Brash.com and Tend.com, along with videos and other content and Modes property ad-serving technology. The deal did not include Mode Media Japan, which relaunched earlier this year under the auspices of a new investment group and leadership team that includes Samir Arora, founder and ex-CEO of Mode Media.

As Glam Inc., the company will expand its scope into new categories including fashion, beauty, food, parenting, and health and wellness, according to Chamberlain. BrideClick currently has 10 employees and plans to double headcount by the end of 2017 as it relaunches Glam.com this fall, director of operations Marisol Perez said. The company is searching for an editor-in-chief to run Glam.com, and plans to hire other editorial, sales and technology staff.

BrideClick was founded in 2010 by former media buyer Manny Ben-Or and has worked with clients including Kleinfeld Bridal, Allure Bridals, Mens Warehouse, Apple Vacations, Cayman Islands, Shutterfly, and Crate and Barrel. The companys consumer-facing brand, BridalPulse, aggregate feeds of content contributors.

U.K. native Chamberlain, prior to leading the financing for BrideClick, had launched wedding-planning site OurWeddingDay.com, which he subsequently sold to bridal-apparel chain Davids Bridal. BrideClick is backed by individual investors and hasnt received any venture-capital or private-equity funding. The company is profitable, Chamberlain said, and isnt looking for additional financing as it prepares to relaunch as Glam Inc.

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Mode Media Assets Acquired by Wedding Ad Network BrideClick in Bankruptcy Deal - Variety

Spraying pesticides for hire requires a license.(Photo: fotokostic, Getty Images/iStockphoto)

MUNCIE, Ind. Delaware County Surveyor Tom Borchers this month started paying off a $3,000 fine related to his former pesticide application business.

Borchers, a Republican who was elected as surveyor last November, was cited in 2016 for intentionally altering his pesticide application license and for 12 counts of falsely professing to have a pesticide business license, according to a report released by the Office of Indiana State Chemist recently.

The state chemist launched an investigation of Borchers after his firm, Shideler Spray Service, Eaton, submitted bids to the Vanderburgh County Surveyor to apply pesticides along ditch banks.

Borchers' and a Shideler employee's pesticide applicator licenses indicated expiration dates of 12/31/2016, but the expiration dates were typed with an unusual font.

When confronted by compliance officers for the state chemist, Borchers explained that as the bidding deadline approached, he realized he had not renewed his pesticide business license or the pesticide applicator licenses for himself and the employee.

The applicator licenses had expired in 2015, about three months before Shideler Spray bid to spray 12 ditches in Vanderburgh County.

"Mr. Borchers admitted he signed and submitted the bid packet prior to becoming licensed for 2016," compliance officer George Saxton wrote in a report. "He indicated he recently sent the (license) renewal and the fees to the OISC. Mr. Borchers later provided a typed statement indicating he 'included a false license' in submitting the bid packet."

In addition, Borchers' license indicated he also was certified to apply pesticides on agricultural crops, when in fact, that certification had expired in 2012, according to the state chemist.

As a result,, Borchers' pesticide certification was revoked.

"To apply pesticides for hire, you must be certified and work for a licensed business," Saxton told The Star Press. "Revocation means you cannot apply pesticides for hire. Revocation is for five years and then an individual can start the certification process again."

Borchers, who did not return telephone and email messages from The Star Press, arranged to pay the $3,000 fine in monthly installment of $100, the first of which he made on June 12, according to Saxton.

Shideler Spray, which had been in business since the 1980s, began facing lawsuits starting in September of 2016 from Crop Production Services and Star Financial Bank for non-payment on an account and on promissory notes totalingmore than $90,000.

This past May 9, Borchers filed a petition for bankruptcy, two weeks before the Indiana attorney general brought a lawsuit against Shideler Spray for non-payment of $15,000 in unemployment insurance taxes.

Contact Seth Slabaugh at (765) 213-5834.

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Surveyor dealing with fine, bankruptcy - Muncie Star Press

by

June 18, 2017, 6:00 PM EDT

Indias central bank plans to use insolvency laws against more corporate defaulters to speed up resolution of the countrys bad loans that have swelled to $180 billion.

The clocks already ticking -- some cases are already before the National Company Law Tribune," said Sanjeev Sanyal, principal economic adviser to the finance ministry. "More lists will be out in the next few months." Cleaning up Indias stressed loans is the biggest priority of Prime Minister Narendra Modis government, Sanyal said in an interview in New Delhi.

The Reserve Bank of India last week notified 12 large debtors against whom it had ordered banks to use bankruptcy lawsto resolve 2 trillion rupees ($31 billion) or almost a fourth of the countrys bad debts. The process in these cases will be completed within a period of 90 days compared with 180 days in other cases, the government said.

Read more: Indias RBI Said to Order Lenders to Take 12 Debtors to Court

For Modi, getting rid of the bad loans is crucial to reviving investments in Asias third-largest economy to meet his election pledge of adding jobs before the 2019 elections.

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As concerns about slowing growth grow louder, India needs to resolve its debts mess and strengthen its lenders. Last month, the government gave the RBI new powers by amending the Banking Regulation Act. That enabled the central bank to order lenders to initiate insolvency proceedings against defaulters and create committees to advise banks on recovering nonperforming loans. Using the bankruptcy law will ensure company founders and lenders renegotiate terms to resolve stressed loans within 180 days.

Resolving troubled loans will help the government plan capital infusion into state-owned lenders, Sanyal said. India plans to inject at least 100 billion rupees of capital into state-controlled lenders in the year ending March 2018 as it seeks to ratchet up credit growth.

State banks will require about 800 billion rupees in equity capital over the next two years to support credit growth and to comply with global Basel III norms, ICRA Ltd., the local unit of Moodys Investors Service said in February.

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Clock is Ticking on India's Bad Bank Debts Under Bankruptcy Laws - Bloomberg