Category Archives: Bankruptcy

Saying her husband, Kent Lindemuth, had interfered with attempts to sell properties to help resolve the Lindemuth bankruptcy case, Vikki Lindemuth supports a federal judges appointment of a trustee to direct his part of the couples bankruptcy.

Appointment of a Chapter 11 trustee to take control of Kent Lindemuths interests will stop Kent from disrupting the debtors business operations, Vikki Lindemuth said in a response to U.S. Bankruptcy Judge Robert Bergers preference to appoint the trustee.

Berger gave the parties 20 days to respond to the plan to appoint a trustee. He issued the decision May 25 rather than ordering liquidation to repay debts.

Berger also has issued an order granting Vikki Lindemuths motion to sever the couples joint bankruptcy case. The Lindemuths are in the middle of a divorce.

Kent Lindemuth hasnt responded to the judges plan to appoint a trustee for him. His wife, however, said appointing a trustee on his behalf will restore and preserve the confidence of the debtors creditors, vendors, lessees, potential lessees and others that the reorganized debtors will be able to meet their continuing obligations under their respective plans.

As part of the Lindemuths bankruptcy reorganization plan, James B. Lloyd, who has power of attorney, has managed the debtors businesses based on the bankruptcy reorganization plans.

But Kent Lindemuth has progressively undermined Lloyds authority by representing to the debtors vendors, lessees, potential lessees, and others that he is in control of the debtors businesses and properties, Vikki Lindemuth wrote in support of appointing a trustee.

Vikki Lindemuth contends six automotive and moving and storage businesses owned by Kent Lindemuth havent paid all the rent owed on the Lindemuth property they occupy ostensibly because they didnt have sufficient income. The rent shortfalls have caused the debtors to default on some real estate taxes, Vikki Lindemuth said.

However, income from two of the moving and storage businesses was more than enough to make their rent payments, Vikki Lindemuth said.

She also contended Kent Lindemuth has actively interfered with Lloyds attempts to market and sell some properties to reduce past taxes owed, debt and preserve the debtors remaining assets.

Kent Lindemuths pending federal criminal charges have been widely publicized, and have caused great consternation among the debtors creditors, vendors, lessees, potential lessees, and everyone else who is or may become involved with the debtors business operations, Vikki Lindemuth wrote.

Some current lessees are questioning whether to extend their leases, and the Lindemuths have lost opportunities to lease some property, Vikki Lindemuth said.

Berger scheduled June 22 as the date he would appoint a Chapter 11 supervisory trustee for Kent Lindemuth.

Kent Lindemuth is charged with 107 counts of bankruptcy fraud, six counts of money laundering, two counts of receipt of firearms, and one count each of perjury and receipt of ammunition.

Lindemuth, 65, is scheduled to face trial beginning Sept. 12 before U.S. District Judge Daniel Crabtree in Topeka.

Contact reporter Steve Fry at (785) 295-1206 or @TCJCourtsNCrime on Twitter.

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Vikki Lindemuth favors appointment of trustee to handle husband's bankruptcy - Topeka Capital Journal

The growth of home solar has been unstoppable in recent years. According to the Solar Energy Industry Association (SEIA), solar sales nearly doubled in 2016, with more than 14 GW installed. For many, the projections for stellar growth in rooftop solar and other sectors of the industry seemed unshakable.

And nothing speaks more to that growth than the cost of home solar installations. In 2016, the cost related to those rooftop gems dropped 29 percent, says SEIA, which notes that a drop in hardware sticker prices helped lead the way to cheaper prices overall.

But while the cost of solar has been plummeting, there have been troubling indications for several years now that the home solar sector may not be as resilient as say, the community sector. Since 2011, more than 100 solar-related companies have shut their doors, either restructuring, selling or going out of business altogether.

Plus, a running list on GreenTechMedia from 2015 indicates that the turnover is by no means limited to solar installers. Parts manufacturers face their own challenges, with falling prices impacting the industry across the board and industry advances making it hard for others to keep up. Consumers however, notice it most when the installer they have contracted with doesnt turn up to finish the installation and wont answer the phone.

Still, it was the most recent spate of failed solar installers that made us ask: Is the problem a vast divide between what companies are promising consumers and what (they find later) it costs to run the business? Is it profit projections vs. profit reality? Or is it an indication that home solar is really unsustainable?

To get a sense of the problem, TriplePundit delved into the history of some of the most recent and largest installers that have called it quits. We bent an ear to what they said when they sent out their press announcements and took a look at what solar analysts feel is really the issue. Lastly, we took a speculative look at one company that earlier this year was struggling, but felt it had positive momentum to overcome until it went off the radar altogether.

Most of the solar installers that have unfortunately landed on the list of company closures have been forthright, letting their customers know that there would be contract changes on the horizon, whether it meant an outright sale, a bankruptcy or a shifting of corporate priorities.

But according to Mel Burns, executive director of energy concierge services at MyDomino, thats not the case with American Solar Direct, which gained a great reputation after it burst on the scene in 2009 and disappeared earlier this year without a whisper. MyDomino, based in Oakland, networks with consumers to help them with their clean energy concerns.

In 2014 they were like gangbusters. They were one of the fastest growing solar companies and now, poof! theyre gone, said Burns. They really [went] off of the radar very quickly and without notice.

And it was that lack of heads-up and follow-up that caught the attention of two solar customers, whose well-honed experience in research told them that something was amiss when their new solar installer not only didnt finish the job, but didnt file the paperwork to get paid by the loan company. Paul SanGiorgio is a physicist [his wife, Jen Boynton is the editor-in-chief of TriplePundit.]

I totally understand if they are going out of business that they dont really care about my side paneling or fixing the electrical panel, said SanGiorgio, but it just seems totally bizarre that they have shown zero interest in actually getting paid for the work that they did.

According to SanGiorgio, the couple reached out to MyDomino last September when they decided they wanted to install solar panels on their home. At their request, MyDomino sent a list of companies that had been screened and had been operating in the SanGiorgios geographic area. The SanGiorgios reviewed the choices and eventually settled on American Solar Direct. [American Solar Direct] sent some people out to look at our roof and make sure our roof was OK. They gave us the final OK sometime in October or November. So we signed the contract and they started doing the work.

But the couple soon found that the process wasnt going to be as straight-forward as it looked. SanGiorgio said the construction crew responsible for upgrading the electric box and installing the panels would turn up without the right contractor to do the work, with the wrong equipment, or with no equipment at all. In January, some three months after signing the contract, the installers announced the job was ready to be approved by a local inspector.

Thats when the SanGiorgios discovered that in order to install a new, higher grade electric panel, the installers had torn off some of the siding on their house presumably just before the record winter storms had set in, leaving the insulation exposed to rain and erratic temperatures. According to the city inspector, they had also failed to waterproof one of the electricity boxes, a requirement before the city would agree to OK the work.

SanGiorgio said the representative from American Solar Direct who was present at the inspection promised that if the inspector would sign off on the job, he would run over to Home Depot and buy a tube of calk and come right back. The inspector accepted the promise and signed off on the new solar panel array.

And thats the last time I ever saw anyone from American Solar Direct, said SanGiorgio.

According to both SanGiorgio and Burns, it was also the last time either of them heard from the company.

Burns said her first solid indication that American Solar Direct may have gone under was a phone call from Sighten, a solar quoting platform that is an essential component to large-scale solar installations. Sighten had called to let her know that the company seemed to have disappeared from the network and was no longer using their services.

Thats a telling sign, said Burns. They had been a large-volume player. Burns said it would have been virtually impossible for the company to operate without using the quoting platform.

Since our interviews with SanGiorgio and Burns, TriplePundit has learned that American Solar Direct has filed bankruptcy, adding its name more officially to those companies that couldnt compete with an aggressive market climate. According to its Chapter 7 filing, the company owed between $10 million and $50 million and by the time it called quits on June 2 had less than $60,000 in assets.

That kind of disparity between liabilities and assets is a familiar scene these days that has been played out repeatedly over the home solar landscape, where both new and seasoned solar companies, driven by the demand to corner the market and as Burns puts it, reach the holy grail of grid parity compete with unsustainably low prices and promises of record-speed installations.

The names of failed home solar companies these days read like a whos who of solar fame: Sungevity, Solyndra, SunEdison, Verengo, HelioPower, One Roof and Vivint, some of which were forced into bankruptcy, and some of which had the better fortune to be acquired by hopeful companies, spell a troubling picture for an industry that has garnered the interest of investors and the excitement of homeowners who see affordable payments as a way to beat the increasing costs of the electricity grid.

Comments left on Glassdoor by Sungevity employees are as telling as the reasons that other companies have given for their downfall. According to Sungevity employees, cash management procedures and lack of foresight contributed to why a successful, name-brand solar company ended up being sold off for assets. The same story could be heard from its competitors like mega-giant SunEdison, which later found itself under investigation for overstating its worth.

But from Burns point of view the issue is even simpler. It has to do with managing how much you charge against how much you really need to pay your overhead.

Nine years ago, [the cost of solar] was roughly $8 or $9 a watt, explained Burns, who began made her career in clean energy working for Sungevity when if first launched. Today that cost is around $3 to $4 a watt. Thats a 60 percent drop. Thats wonderful.Thats really triggered the solar explosion and made it possible for a lot of people to get solar [for whom] that was never possible before.

Except the overhead hasnt shrunk or kept pace, said Burns. That new, basement floor price must still pay for hard costs solar panels, inverters, etc. and soft costs labor, installation, design and a staggering list of in-house expenditures, government taxes and permits that now all must be met with lower revenue.

Can a 60 percent drop in price still pay for all those things?, Burns asked.

As far as MyDomino is concerned, Burns said, the closure of American Solar Direct is a wake-up call for an industry that fervently believes in clean energy, but also relies on its partners to be transparent. She said she is taking the time to study and learn as much as she can about what caused American Solar Direct and others to become insolvent.

I still believe in residential solar, Burns reassured adamantly. It is still going to do well. It is still going to have great growth. But it is in a period of transition. And that transition may entail a few more years of growing pains.

As to the SanGiorgios, they are still waiting for American Solar Direct or someone in its stead to bill their loan company. SanGiorgio said the loan company wont start the payments until they receive a bill from the installer, which so far has been unreachable.

As far as I can tell, it has basically stopped functioning, said SanGiorgio, who echoed Burns observation that the companys bidding price and lack of operational management may have had a role to play in the companys fate, like so many before it.

I dont know why, but they [were] not bidding well and they [were] not organizing their projects well and this is the end result: They are going out of business.

Flickr images: brian kusler; Russell Neches; Wayne National Forest.

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Breaking: American Solar Direct Files for Bankruptcy - Triple Pundit (registration) (blog)

New York Times

Curtains for the Pearl, as the Theater Company Files for Bankruptcy New York Times The Pearl Theater Company, which took the old-fashioned approach of assembling a resident acting company to mount classic plays in increasingly expensive spaces in Manhattan, announced Wednesday that it had filed for bankruptcy and was closing after ...

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Curtains for the Pearl, as the Theater Company Files for Bankruptcy - New York Times

International Shipholding Corp. (ISH) expects to emerge from bankruptcy as a Seacor Holdings Inc. subsidiary by July 3.

ISH said it has received the OKs from the U.S. Maritime Administration required under its reorganization plan.

This has been a long and challenging process, said ISH CEO Erik Johnsen, noting his company would exit Chapter 11 as a stable, well-capitalized business with a bright future.

The combination of ISHs longstanding history of excellent customer service and Seacors financial resources will ensure continued growth and success at ISH, said Eric Fabrikant, chief operating officer of Seacor, which just spun off Houma, La.-based Seacor Marine Holdings Inc., its OSV fleet trading under SMHI.

ISHs restructuring includes the issuance of new equity to Fort Lauderdale, Fla.-based Seacor in exchange for $10.5 million cash and the conversion of $18.1 million in outstanding debtor-in-possession financing claims to equity. In addition, theres $25 million in a new senior debt exit facility, much of which will be used to satisfy creditor claims, and the sale of its pure car/truck carriers to NYK Group Americas Inc.

New Orleans-based ISH, founded in 1947 as Central Gulf Steamship Corp., filed for bankruptcy protection Aug. 1, 2016 after trying to shed assets and negotiate with lenders. The company, which operated 21 U.S. and foreign-flag vessels, listed assets of $305.1 million and total debts of $226.8 million.

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ISH to emerge from bankruptcy as Seacor subsidiary - WorkBoat (blog)

Wall Street Journal (subscription)

Bebe Avoids Bankruptcy Filing With Real-Estate Deals Wall Street Journal (subscription) Bebe Stores Inc. has done what few other retailers have been able to do recentlyclose all of its stores without seeking bankruptcy protection. The mall-based retailer, which announced in April it would be closing all of its roughly 180 locations, was ...

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Bebe Avoids Bankruptcy Filing With Real-Estate Deals - Wall Street Journal (subscription)

Phillips Edison & Company, Ramco-Gershenson Properties filed with the U.S. Bankruptcy Court an objection to rue21s motion for entry of final order authorizing the Debtors to assume the consulting agreement and approving procedures for store closing sales.

The objection asserts, There should be a finite period of time within which Debtors may conduct the GOB Sales. The Motion sets for an approximate end-date. This date should be firm. The GOB Sale should be conducted within the normal operating hours of the mall or shopping center. The GOB Sale should comply with the mall or shopping center regulations or guidelines concerning security, maintenance, trash removal or any other pertinent guidelines.

Separately, multiple parties including Phillips Edison & Company, Ramco-Gershenson Properties; ARC NPHUBOH001, Aronov Realty Management, Brixmor Property Group, Centennial Real Estate Company filed with the U.S. Bankruptcy Court separate objections to rue21s emergency financing motion. Phillips Edison & Company, Ramco-Gershenson Properties asserts, Debtors continuing use and occupancy of the Premises is critical to Debtors ongoing operations including store closing sales. The use and occupancy of the Premises provides an actual, necessary, and ongoing benefit to Debtors, and the Court should require Debtors to pay Landlords Stub Rent. Authorizing use of the Premises for the benefit of the DIP and Pre-Petition Secured Lenders without payment of Stub Rent is not supported by applicable law.Landlords should not be forced to bear the risk of administrative insolvency, while all other parties in interest benefit from the ongoing sales process.

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rue21 Bankruptcy Objections Filed - Bankrupt Company News (press release) (blog)

A panel that reviews the national security implications of overseas entities doing business in the United States said it might investigate potential transactions in a bankruptcy that has put the $14 billion expansion of the V.C. Summer Nuclear Station project in doubt.

The federal Committee on Foreign Investment in the United States filed a letter late Monday with the U.S. bankruptcy court in New York stating that it could conduct an investigation into the possible sale of Westinghouse Electric Co. assets to foreign businesses. That investigation ultimately could be forwarded to President Donald Trump for further action, the letter states.

Westinghouse sought protection from creditors in March.

There are concerns that Chinese investors might make a play for the company's assets through the bankruptcy process, according to news reports. Westinghouse is a subsidiary of Japan-based Toshiba Corp., which has not announced any plans to sell its U.S. nuclear business.

Mollie Gore, spokeswoman for V.C. Summer co-owner Santee Cooper, said the state-owned utility would not be surprised by such a review, but it doesn't expect that to affect an ongoing analysis of the nuclear plant's future. A spokeswoman with SCANA Corp., parent of South Carolina Electric & Gas and the majority owner of V.C. Summer, did not respond to a request for comment.

Meanwhile, a report filed with the S.C. Office of Regulatory Staff says it could be months before Westinghouse makes a formal decision on whether to honor its contract with SCANA and Santee Cooper to add a pair of reactors at the Midlands nuclear plant. The two South Carolina utilities are paying to keep construction on track under an interim agreement that expires later this month.

Southern Co. has a similar arrangement at Plant Vogtle in Georgia, where Westinghouse was hired to build two reactors. That agreement expires Friday.

If Westinghouse rejects the V.C. Summer contract as part of its bankruptcy reorganization, SCE&G and Santee Cooper would have to find a replacement contractor or build the reactors themselves. The utilities could try to recover financial damages from Westinghouse in court, but that would be costly and time-consuming.

Santee Cooper's board of directors has called a special meeting to be held in closed session Wednesday to get legal advice related to the nuclear project.

Several V.C. Summer contractors and vendors have filed liens against Westinghouse with the bankruptcy court. The Office of Regulatory Staff said there is no timeline for when creditors will be paid because there is no current deadline for Westinghouse to file a reorganization plan.

Westinghouse recently filed thousands of pages of documents outlining its financial condition. They show an estimated $5 billion in assets and $618 million in known liabilities. Breaking the construction contracts at V.C. Summer and Vogtle could cost Westinghouse billions of dollars, according to a report in the Pittsburgh Post-Gazette. The newspaper said Fluor Corp. and Bechtel Corp., among the nation's largest engineering and construction firms, might be preparing bids to take over the projects.

The federal committee looking into a potential foreign buyer of Westinghouse assets said in its letter that an investigation could delay the bankruptcy case. Its investigations can take up to 75 days, according to the letter.

"If (the committee) determines that the transaction poses national security concerns that cannot be resolved, it will refer the transaction to the president unless the parties choose to abandon the transaction," the letter states. "The president may suspend or prohibit the transaction."

The president's decision would not be subject to judicial review, according to the letter.

The committee is an inter-governmental agency that includes representatives from U.S. Treasury, Homeland Security, the Attorney General's office, the departments of defense, commerce, energy and other agencies.

The nearly decade-long V.C. Summer project has been beset by financial and construction problems. The current cost estimate for the new reactors is 21.6 percent higher than an original $11.4 billion price. According to one projection, the eventual cost could balloon to $19 billion if both reactors are built.

The construction contract between Westinghouse and the South Carolina utilities was made public in late May. It sheds little light on the cost overruns, showing nearly three dozen change orders totaling about $325 million a fraction of the $2.6 billion in overruns since the project was announced in 2008.

Construction also is years behind schedule. The latest estimate puts the first reactor online in April 2020 and completion of the second unit delayed to December 2020. They have to be in service by the end of 2020 to qualify for federal tax credits that could offset about $2.2 billion of construction costs that utility customers have been paying.

Cayce-based SCANA owns 55 percent of the V.C. Summer project. Moncks Corner-based Santee Cooper owns the rest.

Under an agreement with Westinghouse, the utilities are expected to decide by June 26 whether to complete one or both reactors or abandon the project entirely. If the expansion is scrapped, some other type of power plant would have to be built to meet South Carolina's future electricity needs.

Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_

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Westinghouse bankruptcy draws federal scrutiny as VC Summer nuclear project's future remains unclear - Charleston Post Courier

The Capitol building is seen in San Juan, Puerto Rico May 4, 2017. ALVIN BAEZ / Reuters

Puerto Rico has been under an economic recession for over 10 years, which has prompted more than 10 percent of its residents to move to the U.S. It's expected the islands recession will continue, given that the Boards fiscal plan expects to shrink the island's economy, at least for the next 2 years. This will most likely result in more Puerto Ricans continuing to migrate to the continental U.S.

There are now over 1 million Puerto Ricans living in the state of Florida alone, and it is almost certain that Florida and other states will see many more residents from the island arriving to their jurisdictions in search of work and a fresh start.

The U.S. Virgin Islands, another U.S. territory with just over 100,000 residents, is under a $2 billion debt. Consequently, they will be watching how Puerto Ricos court process unfolds to determine if it is in their interests to seek Congressional protection. Furthermore, states with high debt or pension obligations might look to Puerto Ricos Title III process to see if they can eventually have a similar remedy made available to them.

May 17 was a historic day for both Puerto Rico and the United States, as the U.S. District Court there held its first hearing on the island's bankruptcy, thus officially starting the first case under the

This law created a process combining elements of traditional Chapter 9 and 11 bankruptcies that will permit U.S. owned territories to adjust their debts. Previously, U.S. law did not give territories the remedy used by state municipalities such as Detroit to restructure their debts.

Puerto Rico, an island obtained by the United States after the 1898 Spanish American War, is the first territory to use this process, expected to have far reaching implications not only for the island and its inhabitants, but also across the U.S. financial markets and pension systems.

This process is regulated in Title III of PROMESA, and it's presided by New York district judge Laura Taylor Swain. She was appointed to the case by Supreme Court Chief Justice John Roberts, who, under PROMESA, is the person authorized to select the Judge.

The Title III process differs from a traditional bankruptcy case in several aspects. PROMESA establishes that a 7-person Oversight Board, whose members were recommended by Congress and officially selected by President Obama in 2016, will act as the islands representative.

However, this does not mean that the Board is required to act in the islands best interests, as PROMESA does not impose any fiduciary duties to it. It mainly requires the Board to develop a plan that helps Puerto Rico achieve fiscal responsibility and eventually regain access to capital markets.

Furthermore, PROMESA gave the Boards members immunity for all actions they carry under the Act, and they can override Puerto Ricos laws and elected officials.

Under Title III, the Board will work with Puerto Ricos creditors to renegotiate the islands debts. Once this is done, they will present a Debt Adjustment Plan to the court for approval. This Plan will be approved if it complies with the requirements set in Section 314 of PROMESA.

One requirement of note is the one in Section 314(b)(6), which establishes that the plan will be approved if it is feasible and in the best interests of creditors, which shall require the court to consider whether available remedies under the non-bankruptcy laws and constitution of the territory would result in a greater recovery for the creditors than is provided by such plan.

This section is likely to give Judge Taylor Swain more power over Puerto Rico than she would have in a traditional Chapter 9 bankruptcy process, under which a similar plan would be approved if it is in the best interests of creditors and is feasible. It is unknown why this additional requirement was added to Title III.

In order to protect the best interests of the creditors, the Court is authorized to allow the Oversight Board to interfere with Puerto Ricos political or governmental powers and alter its properties, revenues or the use of its income producing properties.

This Section gives powers to the Board that are unique in U.S. law, as, they appear to give it the ability to, for example, potentially dispose of Puerto Ricos assets and properties and have a say in the way the island government provides basic services to its 3.5 million residents, even though it was not elected to do so by the Puerto Rican people. Judge Swain seemed to be aware of this power during the hearing, when she remarked that this case must lead to a better future for Puerto Rico.

Judge Swain scheduled hearings through December. In addition, the Judge issued an order yesterday requiring Puerto Rico to file a Creditor Matrix by June 30, 2017, and to file a list of all its creditors by August 30, 2017.

However, this process is expected to last several years and become the largest municipal bankruptcy in U.S. history, easily surpassing Detroits $20 billion dollar default, and perhaps come close to matching Argentinas historic 2001 default of over $150 billion dollars.

Who will pay for this bankruptcy process estimated to cost tens of millions of dollars? It will come out of Puerto Rico's pockets, in a process that will fundamentally transform the future of the island, its obligations towards its residents and its relationship to the United States.

In sum, Puerto Rico finds itself in uncharted legal waters. As this case unfolds, it will be important to see how Judge Swain and the Board protect the islands residents and ensure that Puerto Rico can develop a sustainable economic plan to transform and grow its economy without jeopardizing its residents.

Furthermore, it will be essential that Judge Swain orders a full audit of the debt as part of this process, so there can be a clear understanding of which individuals, elected officials and businesses were responsible for this financial catastrophe so they can be held accountable.

Finally, in order to protect the best interests of both Puerto Ricos and US residents, it's vital that this process and the audit of the debt moves authorities to enact legal reforms that end any unscrupulous, unethical or illegal financial practices that led to this tragic situation.

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Posted: Jun 05, 2017 11:15 AM

The Financial Oversight and Management Board for Puerto Rico, a federal board tasked with managing the island commonwealths course out of fiscal emergency, declared failure onMay 3, filing paperwork to begin court proceedings restructuring the government debt.

Territory government agencies, such as the Puerto Rico Electric Power Authority, are likely to follow the government into bankruptcy court,leaving investors to potentially lose as much as 65 percent of their original investments.

In 2015, Puerto Rico Gov. Garca Padilla warned of an impending death spiral if territory lawmakers did not make pro-growth reforms. They did not, and Padillas warning has come to pass.

Puerto Rico is circling the drain, financially speaking, but its not too late for mainland lawmakers to learn from the islands mistakes.

Puerto Rico owes creditors about $70 billionabout $19,729 per residentin debt to creditors and investors, more than five times larger than the 2013 Detroit, Michigan bankruptcy filing.

Over the past 10 years, people have been exiting Puerto Rico in droves, leaving rock-bottom economic prospects behind for more opportunities and lower taxes in the mainland.Between 2004 and 2016, the islands population declined by about 400,000, or about 11 percent.

Its easy to see why: Prospects for prosperity on the island are dismal. In March,115 out of every 1,000 Puerto Rican adults were unemployed, an unemployment rate of 11.5 percent, according to the U.S. Department of Labors Bureau of Labor Statistics. Of the 880,800 Puerto Ricans who had jobs, about one out of every four individuals were employed by the government, and about 1.37 million people receive food stamps from the federal government.

In other words, there are many more takers than makers on the island.

One of the causes of Puerto Ricos meltdown is the excessive cost of doing business in the territory, leading to crippling dependency on government handouts.

The litany of mandatory fringe benefits for employees, treated as bonuses elsewhere in the United States, encourages businesses to relocate to other states, because labor costs exceed the value of employees productivity.

Puerto Rico is a precautionary lesson for states that are pursuing similar policies. States such as Connecticut have taken on a massive amount of public debt. Adding up the cost of postponed payments to pension and health care programs, public bonds, government deficits, and spending liabilities, Constitution State lawmakers have racked up about $36 billion in debt, or about $10,025 per person in the state.

Unsurprisingly, many Connecticut residents are deciding to become ex-residents, moving to regions with friendlier tax policies. Between July 2015 and July 2016, 29,880 more people packed up and left the state than moved in.

As demonstrated by Puerto Rico and Connecticut, higher taxes chase away new business investments and encourage companies and entrepreneurs to leave. They also incentivize other people to move to states with a better tax environment, because of the lack of available jobs and high levels of public debt.

It may be too late for the Island of Enchantment, but it is not too late for states to stop treating taxpayers like ATMs and to start enacting pro-taxpayer, pro-growth reforms that encourage in-migration and economic prosperity.

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Puerto Rico Bankruptcy Storm Heading for Mainland America ... - Townhall

Rooster Energy Seeks Bankruptcy Protection Amid Lender Fight Wall Street Journal (subscription) Rooster Energy LLC, embroiled in a squabble with one of its lenders, has sought bankruptcy protection. The oil-and-gas company said in court papers filed Friday that it is in the midst of liquidity crises caused by plummeting commodities prices and ...

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Rooster Energy Seeks Bankruptcy Protection Amid Lender Fight - Wall Street Journal (subscription)