Category Archives: Bankruptcy

The hedge-fund enclave of Greenwich, on the Connecticut Gold Coast, is about 100 miles and a world away from the state capital.

But the fiscal crisis in Hartford, the historic center of the American insurance industry, is fast becoming more representative than mansions or yachts of the wealthiest state in the U.S. The city is edging closer than ever to the breaking point, waiting for the financially troubled state government to step in.

It may seem crazy that a place as rich as the Nutmeg State, which counts among its residents hedge-funds masters like Ray Dalio and Steven A. Cohen and legions of Wall Street bankers, could be in such fiscal trouble. Last year, the per-capita income there was $71,033, the highest in the nation, according to the U.S. Bureau of Economic Analysis.

For all that, state-worker pensions have been underfunded for decades. Tax increases aimed at closing deficits have put a strain on an economy struggling from the loss of high-paying finance jobs, leaving it among the few that still havent recovered from the recession. The hedge fund industry fell on hard times, with about 1,060 shuttering globally last year. UBS Group AG abandoned the worlds largest trading floor in Stamford after the financial crisis, and the Royal Bank of Scotland downsized its office there. Pension, debt and health-care costs just kept growing.

Theres a limit to how much you can tax and theres a limit to how much you can cut before you damage the viability and attractiveness of the city,Mayor Luke Bronin said in May. Right now, from a fiscal standpoint, you have a capital city fighting with its hands behind its back."

Like many other local governments across the country, Hartford -- city of Mark Twain and the young John Pierpont Morgan -- has been grappling with budget problems for years. On the same day that Illinois lawmakers finally scraped together a long-overdue budget, Hartford hired the law firm Greenberg Traurig LLP to evaluate its options, which include bankruptcy. It would be the first prominent U.S. municipality to seek protection from its creditors since Detroit did so in 2013.

As for Connecticut, it faces a projected two-year deficit of $5 billion that lawmakers havent figured out how to close, even though the new fiscal year began on July 1.

In Hartford, the woes have been piling up for a while. Like Puerto Rico, which filed a record-setting bankruptcy in May, or even Greece, the city came to the edge in the usual way: slowly, then suddenly. The population declined 23 percent between 1960 and 2000 and has remained stagnant ever since. A third of its residents live in poverty, a higher share than in Baltimore or Newark. From 2010 to 2014, the metropolitan area saw the fifth-biggest decline in employers in the nation, according to the Economic Innovation Group, a Washington-based public policy organization.

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Hartfords tax base of about $4.1 billion is about two-thirds that of neighbor West Hartford, which has far fewer residents, because half of the property -- state buildings, hospitals, universities, non-profit agencies -- is tax-exempt. Hartford has the highest property tax rate in the state and faces a $50 million deficit, nearly 10 percent of its budget. The citys credit rating may be downgraded deeper into junk by Moodys Investors Service.

Uninsured Hartford bonds maturing in 2024 traded at yields of more than 6 percent in late June, compared with about 4.4 percent in January, as investors jitters mounted. The city has $672 million in debt, including $228 million of uninsured bonds, according to data compiled by Bloomberg. It also guarantees about $70 million in debt for a minor-league baseball stadium downtown.

Photographer: Andrew Harrer/Bloomberg

Governor Dannel Malloy and Republican and Democratic leaders in the legislature agree the bankruptcy of the states capital isnt another negative headline they need. General Electric Co. has decamped from Fairfield to Boston, and last week Aetna Inc. said it was moving its corporate headquarters from Hartford, where it has been since 1853, to New York.About 250 jobs are going with it, though thousands will stay in town.

The state needs a budget that supports Hartford, its residents and its employers, said Chris McClure, a spokesman for Malloy. In the absence of action by the General Assembly on a budget vote, its entirely appropriate that the city explore all its options and prepare for every contingency."

Greenberg Traurigs team will be led by Nancy Mitchell, a co-chair of the firms restructuring practice, the city said in a statement. When Hartford was soliciting proposals from firms that specialize in bankruptcy, Council President Thomas Clarke told the local newspaper that looking into court protection from creditors would only be a last ditch option.

They will be working with us to examine all options for putting the city of Hartford on a sustainable path," the mayor said in a statement. As we start a new fiscal year without a state budget and with significant uncertainty, we will have the advice and counsel of an experienced and highly respected restructuring firm."

In 2016, Bronin, a Democrat, took over a city that had been delaying its fiscal reckoning by pushing debt payments into the future, draining reserves and resorting to one-time measures, such as selling a parking garage, while its debt swelled by 52 percent from 2011 to 2015, according to Moodys figures.

Since taking office, hes cut 100 jobs and renegotiated leases and energy contracts. Bronins been less successful in getting concessions from unions: The citys fiscal 2017 budget assumed $16.5 million of concessions, the bulk of which havent materialized.

Hartford managed to strike a deal with its firefighters that saves about $4 million a year through 2020 by freezing pay increases, increasing pension contributions, lowering salaries for new hires and requiring employees to pay more for health care.

The city could renegotiate labor contracts and cut debt and pensions in bankruptcy, as a handful of cities have done since the recession. But it would need the governors consent to file for Chapter 9.

Bronin is lobbying for the state to fully fund a program that compensates local governments for revenue lost to tax-exempt properties, which alone would provide enough money to close next years deficit, and has joined with cities pushing to raise Connecticuts 6.35 percent sales tax to 6.99 percent to provide more aid.

He also persuaded Hartford Financial Services Group Inc., Travelers Cos. and Aetna to pledge $50 million to the city over five years as part of a comprehensive and sustainable solution for Hartford."

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In America's Richest State, the Capital Flirts With Bankruptcy ... - Bloomberg

The designer jeans maker filed for bankruptcy protection on Wednesday, asking for a chance to reinvent itself as it grapples with hundreds of millions of dollars worth of debt and declining sales, according to court documents.

According to court documents, the company had $534.7 million worth of liabilities on its books, but only $243.3 million in assets.

There is some good news. True Religion said in a press release that the company has already secured a deal with its creditors to reduce its debt load by $350 million. In exchange, the company's biggest creditors will receive large ownership stakes in the company.

Related: Retail train wreck continues as sales plunge at Macy's, Kohl's

True Religion will stay afloat throughout the Chapter 11 bankruptcy proceedings, the company says, and it expects it will take three or four months for the court to approve its restructuring plan.

In order to improve its outlook, the company plans to "close or consolidate underperforming store locations, and renegotiate lease terms" in order to save money.

Another cornerstone of the restructuring plan is to "invest in growing our digital footprint," CEO John Ermatinger said in a statement.

True Religion is not the first retailer to be upended by the rise of e-commerce.

Traditional department stores and other brick-and-mortar outlets have struggled as digital giants like Amazon (AMZN, Tech30) have soared.

Related: Retail bloodbath continues as bankruptcy filings pile up

So far this year, Amazon's stock hit a new record high, while more than 300 other storefront retailers have filed for bankruptcy and the industry has seen tens of thousands of layoffs.

True Religion entered the fashion scene before online apparel sales were common. The company was founded in Los Angeles in 2002 and rose to popularity as designer jeans became a pop culture phenomenon. The True Religion brand was splayed across fashion magazines and sprinkled into the lyrics of hip-hop music.

But today, True Religion's popularity has petered out, and the company's sales have been in decline for years, according to court documents.

True Religion's chief financial officer, Dalibor Snyder, wrote in court papers that the company has worked to "aggressively cut costs," by closing stores and issuing layoffs in an effort to mitigate losses. But those measures weren't enough.

Bankruptcy protection and restructuring was the next step. Snyder says if the plan is successful, True Religion will reduce its debt load by 72%.

CNNMoney (New York) First published July 5, 2017: 12:57 PM ET

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True Religion files for bankruptcy - CNNMoney

By Tom Hals | WILMINGTON, Del.

WILMINGTON, Del. People injured by Takata Corp's defective air bags were given an official role in the bankruptcy of its U.S. unit on Thursday, allowing them to challenge restructuring plans that plaintiffs' lawyers have criticized as protective of automakers.

A seven-member official committee will represent economic loss and personal injury or tort claimants, David Buchbinder, a lawyer with the U.S. Department of Justice's bankruptcy watchdog, told a meeting of creditors of Takata's U.S. business.

Official committees receive funds from a debtor to hire professionals who can carry out investigations and test financial assumptions.

William Weintraub, a lawyer with Goodwin Procter who is not involved in the Takata case, said he expected the committee "to be active and to make sure that the claims of the car manufacturers are not treated preferentially and that tort victims are fairly compensated."

A second five-member committee of suppliers and vendors was also appointed, according to Buchbinder.

Takata filed for bankruptcy in Japan and the United States last month, facing billions of dollars in liabilities from recalls and lawsuits stemming from its air bags.

The inflator compound used in the bags becomes volatile with age, causing the devices to inflate with too much force. The air bags have been linked to 16 deaths, mostly in the United States, and hundreds of injuries.

One person appointed to the personal injury committee, Adrian Antonio Pielago, allegedly suffered a major neck laceration and nerve damage last year in an accident involving a Takata air bag, according to court records.

Takata is finalizing a $1.6 billion sale of most of its business to Michigan-based Key Safety Systems, owned by China's Ningbo Joyson Electronic Corp (600699.SS).

The deal is meant to save 14,000 jobs, provide a stable supply of replacement air bags and finance a $1 billion settlement with the U.S. government.

Personal injury lawyers said at a bankruptcy hearing last month that Takata was deferring too much to automakers, which claim they are owed billions of dollars in recall costs.

Lawyers for Takata's U.S. business said the automakers provided financing to Takata and received protections in return.

The company has set aside $125 million for injury claims, but lawyers for injured drivers said it may not be enough because millions of air bags have yet to be recalled.

The lawyers say more money could come from Takata's insurance, as well as from its sale to Key Safety.

Amazon.com Inc told Whole Foods Market Inc it would not engage in a sale process for the U.S. grocer that involved other bidders, a regulatory filing showed on Friday, shedding new light on the $13.7 billion acquisition.

Warren Buffett's Berkshire Hathaway Inc said on Friday it agreed to pay $9 billion to buy the parent of Texas power transmission company Oncor Electric Delivery Co, stepping up its pursuit of steady profits from utilities and infrastructure deals.

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Injured drivers get official role in Takata's US bankruptcy - Reuters

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Lenders Seek to Force Fyre Festival Into Bankruptcy Wall Street Journal (subscription) People who lent money to Fyre Festival before it collapsed are now trying to force the company that ran the event into bankruptcy following the arrest of William Billy McFarland, the man behind the ill-fated music festival. Hyped as the cultural ... and more »

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Lenders Seek to Force Fyre Festival Into Bankruptcy - Wall Street Journal (subscription)

Financial trouble for the Parliament House, a 40-year-old gay-themed resort on Orlandos west side, isnt letting up.

The resort itself emerged from bankruptcy last year, but fell into a foreclosure lawsuit again in December which is still pending. This week, a neighboring and related development called The Gardens LLC, a timeshare condo, has filed a Chapter 11 bankruptcy.

The Gardens declared more than $10 million in debt and liabilities, including a $3.9 million loan guaranty for the main Parliament House resort. In related news, another gay club near the Parliament House, Woodstock Orlando LLC, also filed a Chapter 7 bankruptcy on June 28.

Someone who operates the Facebook page for Woodstock (formerly Full Moon) said that bar is not necessarily closing, even though a Chapter 7 bankruptcy is a liquidation, but they declined to elaborate. A manager of Woodstock Orlando, Darryl Bernard Sheppard, filed a personal Chapter 13 bankruptcy in May.

The Gardens was built just before the Great Recession rocked the real estate and banking world. Its owners include Parliament House owners Don Granatstein and Susan Unger. Another shareholder of The Gardens is Lutfi Investments, which also owns the property that Woodstock occupies.

Unger also filed a bankruptcy earlier this year, but that case was tossed out after none of the required financial documents were filed.

Granatstein told the Sentinel in December that the latest financial trouble will be over soon and he will make the loan current. Miami-based Lion Financial foreclosed on a $3.9 million mortgage for the main resort property in December, and that case is still pending. Parliament House attorneys recently filed an answer to the foreclosure complaint.

The main resort is about 10 acres at 410 N. Orange Blossom Trail, adjacent to the Gardens property.

Granatstein has said the Pulse nightclub attack in June 2016 hurt his business too, because people avoided gay clubs in Orlando for a while, holding down his revenue, and by costing another $150,000 for extra security guards and wanding equipment.

Granatstein previously blamed the recession and the collapse of several lenders for his financial troubles. The resort recently joined a worldwide timeshare network, RCI, one of few gay resorts in the network. Granatstein was also hoping that gay tourism and gay marriage would boost business.

Contact me with a business news tip at pbrinkmann@orlandosentinel.com or 407-420-5660; Twitter is @PaulBrinkmann

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Parliament House neighbor 'The Gardens' files bankruptcy - Orlando Sentinel

One year has passed since a once-promising $1.9 billion taconite plant in Nashwauk folded into one of the most expensive and potentially-devastating bankruptcies on the Iron Range.

On July 8, 2016, the state of Minnesota notified Essar Steel Minnesota that it planned to terminate the companys state-owned mineral leases at 12:01 p.m. that day. But Essar effectively took a poison pill, filing for bankruptcy about a half hour before the termination would go into effect, further delaying the project and shrouding Range businesses and contractors in financial uncertainty.

In the time that has passed, the Nashwauk project underwent a mild rebranding effort under the name Mesabi Metallics, Essars ownership successor, and developed a reorganization plan to emerge from bankruptcy as Chippewa Capital Partners, led by billionaire Tom Clarke.

But optimism toward the project remains circumspect from Minnesota leaders. Clarke has no history in iron or taconite mining, and the states preferred choice to manage the project Cliffs Natural Resources announced plans to open a similar plant in Toledo, Ohio, three days after Chippewa earned court approval to lead the Nashwauk effort.

Still, the project has a path forward if Chippewa can secure needed financing for the half-built plant, which stands to be the first new taconite operation in Minnesota in 40 years.

We have no reason to believe they wont be successful, said Minnesota Gov. Mark Dayton in a phone interview Friday. Well monitor closely, but we have every reason to be optimistic. They said in court that they were going to do this, and that goes beyond any kind of assurance that Essar provided before.

Officials from Essar and Mesabi Metallics did not return requests for comments and interviews for this story. Clarke, who a spokesperson said is traveling outside the country, could not be reached for comment.

When Essar Steel Minnesota broke ground on the former Butler Taconite site in 2008, it was the darling of the Iron Range. The state, Itasca County and the Iron Range Resources and Rehabilitation Board invested dutifully into the endeavor, which was to host a steelmaking facility and taconite plant.

On the often-cyclical Range, Essar was slated to generate more than 700 construction jobs and 350 permanent jobs, when the national economy was itself headed into a downward spiral.

Stops and stalls eventually peppered the project, which in 2010 scrapped the steelmaking facility. At the time, the company was paying the state about $194,000 per year on the mineral leases, a payment plan that began in 2004.

But seven years in and the project had virtually gone nowhere.

By the end of 2015, Dayton was demanding the company pay back $65.9 million in infrastructure grants to Itasca County. Essar was missing payments to contractors and vendors on the Range, and company officials were seeking more financing from the parent company, Essar Global, to keep it afloat.

After a missed $10 million payment in 2016, despite assurances from the India-based company, Dayton moved to pull the plug.

We kept getting assurances from Essar that they were turning things around, Dayton said. Those discussions went on for virtually a year leading up to July of last year they led us on the way they led on a lot of people.

He added that the state stuck with Essar so many times because it was the only real option at the time, noting the company had the leases and ownership of the property in Nashwauk.

Dayton stopped short of saying the state should have terminated the leases sooner, calling the July notice the responsible and honorable thing to do, and slamming Essars decision to file for bankruptcy rather than relinquish the mineral leases.

Hindsight is perfect, Dayton said. Thats typical of the way they operated we just had a string of broken promises.

Days after Essars filing, Dayton was joined at a table in Nashwauk by Congressman Rick Nolan, members of the Iron Range Delegation and most importantly Lourenco Goncalves, chairman, president and CEO of Cliffs Natural Resources. The intent of the public meeting was the state announcing its intent to hand Essars mineral leases over to Cliffs, the now-preferred company to take over operations of the project.

Cliffs had a tenuous history with Essar to that point.

Goncalves and Essar CEO Madhu Vuppuluri traded numerous barbs over time about taconite projects and contracts. Cliffs was skeptical of a potential competitor coming online, but by the time Essar was forced into bankruptcy, it had lost its lengthy pellet agreement with ArcelorMittal to Cliffs.

With the state behind him, Goncalves focused in on the project for Minnesotas first direct-reduced/hot-briquetted iron facility. It was meant to be the next step for the taconite industry on the Range and a pathway to the auto industry in Detroit, the industry current pellets do not reach.

They have two choices: Help me build an iron plant, or sell it for scrap, Goncalves said at the August press conference. Either way, Im going to get it.

The rivalry between Essar and Cliffs managed to spill into the bankruptcy proceedings.

Five days after the press conference, lawyers for Essar asked the court to allow an investigation into Cliffs. Essar claimed Goncalves interfered with its ArcelorMittal contract and colluded with the state for the mineral leases. U.S. Bankruptcy Judge Brendan Shannon eventually allowed an inquiry into communications between the state and Cliffs.

For much of the next year, Goncalves remained vocal about his desire to open a new Cliffs operation on the Iron Range, where his former competitor failed.

But as support for Cliffs wavered, the rhetoric ramped up.

Range lawmakers excluding Sen. Tom Bakk, DFL-Cook wrote a letter to DNR Commissioner Tom Landwehr backing the debtor in possession, Mesabi Metallics. They were happy with the plan Mesabi was putting forward, but the act signaled a change in tide from July, when the delegation helped promote the Cleveland-based company.

Goncalves, calling out legislators, warned Minnesota that a Cliffs-run HBI plant was the states to lose.

Dayton said he called Goncalves immediately after the Chippewa bid was accepted and said the CEO expressed disappointment in the outcome, but noted the relationship was on good terms.

He expressed a desire to undertake the project, but the only bid before the judge was the Clarke group, Dayton said. It really wasnt an option.

When Essar reported its liabilities in August, the number was astounding: $1.1 billion owed to creditors, compared to about $200 million in claimed assets. The filing also confirmed the grim outlook for its vendors: $74 million owed to contractors.

More than 300 creditors ranging from overseas banks to local businesses to employees owed bonus and vacation pay made claims against the company. A list of local vendors read like a whos who of Range businesses, some teetering on the brink of insolvency without payment from Essar.

The state also joined in, launching an effort to pry the mineral leases from the company. By moving into bankruptcy, Essar was able to protect the leases under its Chapter 11 filing, despite attempts by Minnesota to convince a judge otherwise.

Shannon denied the lease extraction in November, giving Essar an extension until February, and further delaying what the state felt was an open-shut case.

It was a much more lengthy process than I would have wished, Dayton reflected. It is what it is. Its frustrating, the amount of delays.

A $35 million bridge loan in the early part of the bankruptcy effectively removed Essar Steel Minnesota from ownership of the Nashwauk project. The new owners, SPL Advisors LLC, replaced Vuppuluri as CEO with Matthew Stock, and removed Essar members from the board of directors.

This is a very, very important development for us, said Mitch Brunfelt, assistant general counsel and director of government and public relations for the company, in August when the action took place.

The company became known as Mesabi Metallics in December, and it had a mountain to climb to please the court: Work out a payment plan for contractors, and find about $800 million to finish the project, then estimated at nearly $2.6 billion to complete.

It started by suing Essar Global for $1.1 billion, claiming the parent company siphoned off money meant to help build the Nashwauk plant and put it toward operations elsewhere around the world. The suit named Vuppuluri, which according to the filing, had direct knowledge of the parent companys use of funds for non-project-related purposes.

A month later, Mesabi Metallics released its reorganization plan that the state DNR referred to as a moon shot.

In March, the court allowed Mesabi Metallics to renew labor agreements through the Iron Range Building and Construction Trades for future construction work on the project, and the United Steelworkers for potential plant employees.

Still, efforts by Mesabi Metallics to secure the critical state mineral leases were blocked by Dayton and the DNR.

When bidding opened on the project in April 2017, the usual suspects were there. SPL made its bid, and Cliffs came in with a surprising $75 million cash offer, one the Mesabi Metallics team dismissed immediately. But the real surprise was that a new bidder entered the fray: Chippewa Capital Partners.

Led by Clarke, the billionaire coal mine owner, Chippewa became the favorite and, eventually, the court approved owner of the former Essar/Mesabi Metallics operation.

It just seems to me that the United States needs to have a reliable, consistent source of iron, Clarke said in April after acquiring the site. And it just seems like Nashwauk is the perfect place to build one.

Chippewa plans to open the Ranges first hot-briquetted iron (HBI) at the ore-rich Nashwauk location, a key piece in the groups plan to jumpstart the half-built project back into existence. The company says it will begin construction by September, finish work by the end of 2019 and ship at least 3 million tons of taconite in 2020.

Dayton and the state Executive Council voted 3-1 in June to transfer the leases to Chippewa, with conditions: By Aug. 31, the group needs to show the state it has the money needed to reopen a mine and construct the iron-producing facility as promised in the bid.

Thats about $625 million. If it fails, the state closes on the leases and collects $4 million paid to the DNR.

Dayton said Friday he was cautiously optimistic about Chippewa, saying he spoke with Virginia Gov. Terry McAuliffe about Clarke, and received positive feedback about the businessman.

He is a new investor in this industry, and that always raises a question mark, Dayton added. They dont have a proven track record in the steel and taconite industry, but they have a very successful business track record in other sectors.

The states plan with Chippewa is now is to wait until Aug. 31 and hope Clarkes Chippewa team is successful. Thats the best course of action, Dayton said, because the company hasnt given the state a reason to doubt them.

Clarke, the lead investor in ERP Iron Ore, closed on purchasing the former Magnetation operations in 2016. He announced plans to reopen Plant 4 in Grand Rapids and a pellet plant in Reynolds, Ind.

Earlier this week, as part of the Chippewa reorganization, Mesabi Metallics laid off about 25 of its 50 workers in preparation for the ownership change. Chippewa plans to use a contractor to complete construction and share some functions with ERP.

Dayton added if the first deadline isnt met, the state will quickly huddle up to formulate a response plan. Whether that includes Cliffs is unknown, but for now the governor said the quickest path to opening a mine and processing plant, and getting people back to work, is through Chippewa.

I dont see any reason at this point to predict or prepare for something that theres no basis for right now, he continued. Were focused on success.

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One-year anniversary of Essar bankruptcy - Hibbing Daily Tribune

Events like a job loss, hospitalization, extended illnesses or divorce sometimes make it difficult to pay bills on time. Bankruptcy is a legal process through which people and businesses eliminate or repay debts under the protection of U.S. bankruptcy court.

Filing bankruptcy is a complex process with many rules that specify the types of debts covered, exceptions, requirements for filing and what property petitioners can and cannot keep.

Knowing bankruptcy basics helps people choose the best option for their situations.

In the U.S., there are several bankruptcy options available to individuals and businesses, but the most commonly used types are Chapter 7 and Chapter 13 bankruptcies.

Chapter 7 bankruptcy is a liquidation option, while Chapter 13 bankruptcy is essentially a repayment plan. For those who qualify, understanding the differences between the two choices helps people select the best option for their situations.

Chapter 7

When consumers or businesses file Chapter 7 bankruptcy, they liquidate their assets to pay all or part of the outstanding debts.

Most state and federal laws let them keep their personal property, including clothes and household furnishings as well as property the trustee doesnt want to take. In some cases, they can keep the cars they own.

Creditors sell secured items such as property and cars and apply the proceeds from the sale to the debt.

Under this type of bankruptcy, the court eliminates most unsecured debt, including credit cards and medical bills.

For this reason, the requirements for Chapter 7 are more stringent than Chapter 13, as the court wants to make sure the debtors do not have available assets to pay the bills.

Petitioners must prove that there are no other income sources available and that their disposable income is not sufficient enough to cover a repayment plan allowed under Chapter 13 bankruptcy.

Chapter 13

Chapter 13 bankruptcy is an option for people who have a reliable source of income and the ability to pay back their debts.

Under Chapter 13, the petitioners go through court-mandated credit counseling and create a detailed plan that shows how they will repay their debtors within 3 to 5 years.

Petitioners get to keep all their property and enjoy protection from repossession or foreclosure.

To create a Chapter 13 repayment plan, the petitioner and trustees evaluate the amount of the debts, calculate the amount of money unsecured creditors would have received under a Chapter 7 bankruptcy and prioritize them.

Certain debts like tax bills and child support go to the top of the list, where they receive first, and complete, payments.

The repayment plan also needs to show all available sources of income and identifies how disposable income will be applied to pay the debts owed.

Chapter 11

A third form of bankruptcy, under Chapter 11 of the bankruptcy code, also is available to consumers and businesses.

This type of bankruptcy offers protection to petitioners who want to reorganize their financial affairs. The process is time-consuming and expensive, so few consumers take advantage of this option and only do so if their debts exceed the allowed amounts for Chapter 13 bankruptcy.

Bankruptcy has positive and negative effects on the people who choose to file. It stops creditors from taking action to collect money owed to them. It prevents or delays repossessions or foreclosures. It also stops wage garnishments, providing relief to those struggling with excessive amounts of debt.

Bankruptcy also carries negative financial consequences that affect the petitioners for years. A Chapter 7 bankruptcy appears on credit reports for 10 years, and a Chapter 13 bankruptcy stays for seven years.

During this time, creditors may not approve loans, insurance premiums may rise and landlords may refuse rental applications. The bankruptcy also lowers credit scores, but most people who file for bankruptcy do so after their credit scores already have been damaged.

For many people, bankruptcy is the final solution for gaining control over debt, and it is not a perfect solution for everyone.

Some debts, like child or spousal support, tax debt, and student loan do not qualify for discharge in bankruptcy, so individuals with substantial amounts of those debts may not see much relief.

Alternatives to bankruptcy include debt negotiation and consolidation, which involve making an agreement with creditors to lower the balance owed or combining all debts into a single payment.

Could a home equity loan help you avoid bankruptcy? Compare home equity rates.

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Bankruptcy Definition | Bankrate.com

Overview

Bankruptcy law provides for the reduction or elimination of certain debts, and can provide a timeline for the repayment of nondischargeable debts over time. It also permits individuals and organizations to repay secured debt--typically debtwith real estate orpersonal property like vehicles pledged as collateral--often onterms more favorable to the debtor.

Federal bankruptcy law is contained in Title 11 of the U.S.Code. Congress passed the Bankruptcy Code under its constitutional grant of authority to "establish... uniform laws on the subject of Bankruptcy throughout the United States." See U.S. Constitution Article I, Section 8. States may not regulate bankruptcy, butthey may pass laws that govern other aspects of therelationship between the debtor and creditor. A number of sections of Title 11 incorporate the debtor-creditor law of the individual States.

Bankruptcy proceedings are supervised by and litigated inBankruptcy Court, which is part of the Federal District Court system. Congress established the U.S.Trustee Programto oversee theadministrationof bankruptcy proceedings, and authorized the U.S. Supreme Court to promulgatethe Federal Rules of Bankruptcy Procedure.

Chapter 7 provides for the discharge of unsecured debt, such as debt from credit cards and personal loans. Secured debt is typically unaltered, meaning that the collateral securing the debtremains in the debtor's possession as long as timely payments aremade.Chapter 7 is always available to corporations and individuals with primarily business debt. Otherwise, individuals cannot file a Chapter 7 petition unless they meet certain income requirements.

Chapter 9 governsthe reorganization of municipalities and related local entities, such ascounty-owned hospitals and school districts. Individuals and corporations cannot file for bankruptcy under Chapter 9.

Chapter 11 is the most comprehensive chapter of the Bankruptcy Code; it provides myriadoptions to reorganize debt, e.g.by repaying some debts, discharging others and restructuring the remainder. Although individuals may file for Chapter 11 relief, the relatively high filing fees and administrative costs lead most individuals to favor Chapter 7 or Chapter 13 bankruptcy proceedings.

Chapter 12 provides for the restructuring of debtfor family farmers.Only family farmers (as defined in Sec. 101 of Title 11)are eligible and, though not analogous, it shares many characteristics with aChapter 13proceeding.

Chapter 13 permits the discharge of some debt, as well as the repayment of otherdebtover a period of three to five years.It may also permit a reduction in principal owed on secured debt, or the elimination of these debts altogether. It can also be used to structure a repayment plan for debtthat cannot be discharged in bankruptcy. Only individuals may file under this chapter, and there are some limited income and debt qualifications.

Typically, recent tax debtas well as child support, criminal restitution, and student loans will not be discharged in bankruptcyunless they are repaid in full by the debtorduring the course of the proceeding.

Individuals are permitted to keep certain assets without regard to the type of bankruptcy sought. For example, Individual Retirement Accounts (IRAs)are protected under 522(d)of Title 11 and thus cannot be involuntarily used to repay creditors in a bankruptcy.Varying levels of home equity are also often protected, asarepersonal vehicles in varying amounts.

In Czyzewski v. Jevic Holding Corp., the U.S. Supreme Court held that "when a bankruptcy court orders a Chapter 11case dismissed, it can't also order the distribution of the debtor's assets in a way that contradicts the order of payment in a bankruptcy liquidation." This is an affirmation of the Chapter 11 absolute priority rule, which stipulates the order of payment in a liquidation. Compare to the 2009 Chapter 11 bankruptcy filing of General Motors, in which the absolute priority rule was not followed.

In Midland Funding, LLC v. Johnson, the Court ruled "that debt collectors can use bankruptcy proceedings to try to collect liabilities that are so old the statute of limitations has expired." This result, however, is dependent on state law. In this case, the relevant state law provides that a creditor has the right to payment of a debt even after the statute of limitations has expired, according to the Court's opinion.

Stern v. Marshall was a complex and high-profile case involving the estate of the defendant's late husband, and eventually her own bankruptcy. Anna Nicole Smith, a.k.a. Vickie Marshall, filed for bankruptcy in California while the estate case was open in a Texas probate court. The bankruptcy court's decision included a judgment on a counterclaim that Marshall made against the plaintiff, which was otherwise unrelated to the bankruptcy. Although state law allowed the bankruptcy court jurisdiction in this situation, the U.S. Supreme Courtheld that it was an unconstitutional exercise of jurisdiction. That is, bankruptcy courts have very limited jurisdiction.

TheSternprecedent was relevant years later in Executive Benefits Insurance Agency v. Arkison, in which the Court held that, underStern'sreasoning, it is unconstitutional for a bankruptcy court to enter a final judgment on a bankruptcy-related claim.It may, however,issue proposed findings of factand conclusions of law, which are to be reviewed de novo by the district court.

Last updated in June of 2017 by Stephanie Jurkowski.

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Bankruptcy | Wex Legal Dictionary / Encyclopedia | LII ...

You can apply to make yourself bankrupt if you cant pay your debts.

Your application will be looked at by someone who works for the Insolvency Service called an adjudicator. Theyll decide if you should be made bankrupt.

You can only apply for bankruptcy online. It costs 680.

If the adjudicator makes you bankrupt:

You can apply to have your address removed from the Individual Insolvency Register if publishing it will put you at risk of violence. This wont affect your bankruptcy.

After 12 months youre usually released (discharged) from your bankruptcy restrictions and debts. Assets that were part of your estate during the bankruptcy period can still be used to pay your debts.

You might be able to cancel (annul) your bankruptcy before youre discharged.

Read the following:

You can also contact the National Debtline for bankruptcy advice.

You cant apply to make yourself bankrupt in England or Wales if you live in Scotland or Northern Ireland.

You might be able to apply if you live anywhere else - talk to a debt adviser.

You must not break the bankruptcy restrictions in England or Wales. These might also apply outside England and Wales - check the laws of the country you live in.

See the article here:

Applying to become bankrupt: Overview - GOV.UK

Troverco, a St. Louis-based distributor of packaged sandwiches and other foods to convenience stores in 22 states, has filed for bankruptcy.

The privately held company plans to lay off about 130 of its 230 employees, CEO Joseph Trover Jr. told the Post-Dispatch on Monday. Affected employees, including about seven in St. Louis, have been notified, he said.

Troverco filed the Chapter 11 bankruptcy in federal court in St. Louis on Thursday, listing between $1 million and $10 million in both estimated assets and liabilities.

Its creditors include Cincinnati-based AdvancePierre Foods, which has a $350,171 claim, Miami-based Ryder, which has a $245,384 claim, and Maryland Heights-based trucking company Hogan, which has a $146,994 claim, according to court filings.

After selling its Landshire sandwich brand a few years ago to AdvancePierre Foods, Troverco expanded its distribution routes to more than 100 and added new products including parfaits, salads and fruit cups. Food giant Tyson acquired AdvancePierre and its portfolio of food brands last month for $3.2 billion.

Trovercos rapid expansion and addition of new fresh foods two years ago prompted the bankruptcy, Trover said. We grew too fast, he said, adding the new fresh foods requested by some customers didnt lead to higher sales.

David Leavitt, a former executive at Hostess that joined Troverco as president and chief operating officer last fall, is no longer with the company.

Founded in 1966, Troverco had $50 million in revenue in 2016. After trimming its distribution routes to 52 this year and cutting its customer count from 10,000 to a few thousand, the company will have between $25 million and $30 million in revenue this year, Trover said.

As part of the reorganization, Troverco may stay based on Lacledes Landing, Trover said, or move to facilities the company operates in south St. Louis County or Belleville.

Editor's note: David Leavitt served as president and chief operating officer. His title was incorrect in an earlier version of this story.

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St. Louis sandwich distributor Troverco files for bankruptcy - STLtoday.com