Bankrutpcy Bill Not Certain to Help Orange County Homeowners

February 25, 2009 · Posted by Uncategorized

Relief for Orange County homeowners under President Obama’s cramdown bill is far from certain.  Today there is an indication that leading Republican representatives, mortgage industry trade groups and mortgage lenders have joined forces to oppose relief for homeowners provided by the cramdown bill expected to be introduced Thursday of this week.  If Republic representatives and mortgage lenders successfully oppose the Democrat-led relief effort, Orange County bankruptcy attorney practitioners will not have the additional relief offered and will only have limited ability to help homeowners reduce their mortgage debt in bankruptcy.

From the Hill online:

“The financial services industry and House Republicans are fighting back against a bill pushed by House Democrats that would empower bankruptcy judges to write down mortgage interest rates and principal.

The bill could be up for a vote on Thursday and is part of a broader effort to invigorate the housing market and re-brand a federal program begun last year to reduce foreclosures that has had scant results…

The industry says the bill is “overly broad” in allowing too many homeowners to head to bankruptcy courts; it also does not limit the size of a mortgage that can be reduced.

“The housing market is already unstable and enacting cramdown legislation would make things worse by adding even more risk to the mortgage market, effectively undermining efforts by Congress and the administration to stabilize the housing market,” said a dozen trade associations in a letter to House Speaker Nancy Pelosi (D-Calif.) and Minority Leader John Boehner (R-Ohio).

The American Bankers Association, Mortgage Bankers Association and Financial Services Roundtable sent individual letters on Monday to Congress and the administration.”

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Bankruptcy Bill on Loan Modifications by Bankruptcy Judges Introduced

February 24, 2009 · Posted by Uncategorized

Orange County bankruptcy attorneys will be able to help save the homes of more of their bankruptcy clients, if the new Bankruptcy Bill introduced in Congress today is passed.

Press Release from the House Financial Services today:

“The House Judiciary Committee and the House Financial Services Committee today released details of the combined housing bill the House may consider this week. The measure will combine the Judiciary Committee provisions to allow bankruptcy judges to modify mortgages on primary residences, and the Financial Services Committee legislation which provides a servicer safe harbor, Hope for Homeowners improvements, FHA changes, and reforms to the FDIC insurance fund. The new bill, H.R. 1106 could be on the floor as early as this week.”

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Orange County’s John Laing Homes Files for Bankruptcy

February 23, 2009 · Posted by Uncategorized

Attorneys for Orange County companies filing for bankruptcy are having a busy 2009.

From the OC Register online:

“Troubled O.C. builder John Laing Homes — owned by a Dubai-based real estate empire — entered bankruptcy today with what court papers say was an estimated $977 million in liabilities and $1.3 billion in assets at the end of fiscal 2008, a year in which the Irvine-based luxury home builder sold $287 million worth of homes.

The company issued this statement:

John Laing Homes, one of the largest privately held homebuilders in the United States, announced today that it, along with certain of its affiliates, have elected to file Chapter 11 petitions in the US Court for the District of Delaware. John Laing Homes anticipates that the Chapter 11 process will allow it to significantly reduce debt from its balance sheet while facilitating a strategic reorganization of the company, which will place it in the strongest possible position to sustain its momentum despite extremely challenging market conditions. In conjunction with the Chapter 11 filing, John Laing Homes intends to utilize a debtor in possession line of credit that has been organized to maintain operations. As well, the company has filed motions to support its planned operations during the reorganization process.

Laing Homes sold for $1.05 billion in 2006 to Dubai-based Emaar Properties PJSC, a deal made at the peak of the housing market. Court papers show that Emaar invested another $600 million in Laing since the acquisition. The company’s origins date to 1848 when James Laing, father of John, built his first home in the English countryside.

Laing has five ongoing projects in Orange County: Sendero at Portola Springs, Stone tree Manor at Woodbury and Four Quartets at Woodbury, all in Irvine; Lucia at Talega in San Clemente and SeaPoint at Crystal Cove in Newport Coast. It also has developed communities at the former Tustin Marine Air Corps Station and Forster Ranch in San Clemente.”

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Obama’s New Housing Plan Doesn’t Address Bankruptcy Law

February 18, 2009 · Posted by Uncategorized

Although President Obama’s new housing plan may be “loaded with incentives for homeowners, mortgage servicers, lenders and banks” to modify the loans that are leading so many Orange County residents to foreclosure and bankruptcy, what the plan does not do is address the so-called “cramdown” proposal — that Bankruptcy judges be allowed to modify home loans. This change in bankruptcy law would be a boon for the clients of Orange County bankruptcy attorneys; it would help many Chapter 7 bankruptcy clients keep their Orange County homes. This is not only an issue for homes in lower income Orange County areas like Santa Ana, but also in areas like Irvine and Newport Beach, where homes with outrageously high mortgage payments have been forcing even high income earners into seeking a bankruptcy attorney or leading to foreclosure. The best that can be said about this housing plan, at least with regard to bankruptcy law, is that it does not “rule out” the possibility that a future bill might tackle this issue.

Orange County has been waiting for such a bill for a long time and it looks like the wait shall continue…

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Going down? Elevator Music Company Files for Bankruptcy

February 12, 2009 · Posted by Uncategorized

This is one bankruptcy that Orange County residents may be ambivalent about, depending on their taste in music.  Musak, whose music fills elevators and “on hold” messages for phone systems, is filing for Chapter 11 bankruptcy.  Apparently, the global economic crisis that has led many Orange County residents to seek a bankruptcy attorney is not the culprit this time.  Musak’s CEO said that debt from a decade ago is the true source of their need to file for bankruptcy protection.

From CNN online:

“Muzak, the company that put pop, string-filled arrangements of rock songs in your elevator, filed bankruptcy papers Tuesday after it missed a $105 million payment to creditors.

The pipeline of easy listening will continue to flow as Muzak restructures its debt during the Chapter 11 process, the company said.

“Muzak is a solid business with an outstanding customer base, but we are burdened with substantial debt obligations established over a decade ago,” Muzak CEO Stephen Villa said.

Muzak’s cash flows doubled in the last three years, Villa said, “demonstrating that our business continues to perform well even in today’s challenging environment.”

Along with its ubiquitous elevator offerings, Muzak and its 14 affiliates — all privately owned — produce on-hold messages and install sound systems, digital signs and drive-thru systems for retail businesses.

Bankruptcy documents showed Muzak owes its largest creditor — U.S. Bank, as indentured trustee — about $370 million, nearly all of it due this year.

Muzak spokeswoman Meaghan Repko said the filing was voluntary and in cooperation with the creditors.

The weakened global economy was not a factor, she said, noting the company’s profits have been rising in recent years.

The Chapter 11 protections will allow Muzak time to restructure the debt, which was incurred a decade ago, she said.”

Orange County, with cities such as Irvine, Santa Ana, and Newport Beach that abound with commercial buildings and offices, has many elevators and phones that have been using Musak for years.

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