Bankruptcy Cramdown Legislation Not Likely to Pass

April 30, 2009 · Posted by Uncategorized

Legislation aimed at allowing bankruptcy judges to modify home mortgages to stem the tide of foreclosures looks like it will not get the 60 Senate votes it would need to pass.  This legislation was seen by many bankrutpcy attorneys and bankruptcy experts alike as the best way to quickly help those debtors facing foreclosure, whether in Orange County, or in any county for that matter.

From Yahoo News:

“In February, Obama announced his plan to save some 9 million debt-ridden individuals from losing their homes by providing incentives to lenders to cut homeowners’ monthly payments or refinance loans for individuals whose home’s market value has sunk below what they owe.

As part of the plan, Obama said he also wanted to change bankruptcy laws so a judge can reduce a person’s mortgage payment based on its market value if the homeowner had otherwise been unable to modify their loan.

While cast as a last resort, the bankruptcy option would have arguably had the most immediate impact in stemming the tide of foreclosures facing the nation.

Bankruptcy judges can already reduce loans on investment properties or personal property based on the property’s current value.

Congressional Democrats championed the legislation, which passed the House in March. But the measure quickly stalled in the Senate, where a simple majority is not enough and 60 votes are needed to overcome the objections of any one senator.

Senate Majority Whip Dick Durbin has been trying to negotiate a deal with the industry under the assumption that an agreement would help secure the bill’s passage.

“If we don’t do something significant and specific then it’s going to go from bad to worse,” Durbin, D-Ill., said in an interview.

But aides acknowledged that the bill had lost momentum in recent weeks, as one association representing federal credit unions publicly rejected the measure after weeks of private talks.

Democratic leaders said they wanted to hold the vote anyway to put Republicans on record for turning their backs on Americans facing foreclosure.

The bankruptcy provision will be offered as an amendment to legislation aimed at freeing capital for banks by increasing the borrowing authority of the Federal Deposit Insurance Corp.

If it doesn’t pass, Democrats say they will try again. But Durbin predicts the Senate might not be able to act in time to stem the tide of foreclosures.

“We’d continue with what we have — more and more people falling into delinquency and foreclosure with no place to turn,” he said. “I think the banks have been derelict in their responsibility.”

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Ultra Stores, Inc. Files for Chapter 11 Bankruptcy

April 10, 2009 · Posted by Uncategorized

A jewelry retailer with a store at the Block in Orange and another store inside the Burlington Coat Factory in Huntington Beach had it’s bankruptcy attorney file for Chapter 11 bankruptcy on Thursday on its behalf.

From the OC Register online:

“The company said in the court document that sales at stores open at least a year fell 10.8 percent for the fiscal year ended Feb. 1, including a decrease of 18.9 percent from November to December 2008. Ultra said it experienced weakness in December 2007 that continued through the first half of 2008 and its sales, like those of most other retailers, declined precipitously as macroeconomic conditions worsened during the second half of the year.

Ultra, formed in 1991, said it is one of the country’s leading off-price retail jewelers with 181 locations nationwide. In addition to its stores, Ultra operates jewelry counters at three discount retail department store chains: Burlington Coat Factory, Filene’s Basement and Daffy’s.”

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Bankruptcy Trustee Sues Top Managment of Billion Dollar Payroll Company

April 6, 2009 · Posted by Uncategorized

From Yahoo news:

“The Trustee of Axium International, Inc., formerly a $1.8 billion payroll processing operation servicing prominent entertainment studios and Fortune 1000 clients, filed suit today against John Visconti, former Chairman/CEO and Ronald Garber, former Vice-Chairman/COO, for tens of millions of dollars in damages caused by years of mismanagement and misappropriation of corporate assets. Axium filed for bankruptcy protection in January 2008.

Howard Ehrenberg, the court appointed Chapter 7 bankruptcy Trustee for Axium International, Inc., Diversity MSP, Inc. and their related entities, said that under the direction of Visconti and Garber, Axium suffered from profound financial and corporate mismanagement, punctuated by wasteful spending that was ‘perhaps the worst I have seen in my experience.’

Axium’s books and records outline a pattern of reckless corporate spending that supported lavish lifestyles for Visconti and Garber including luxury cars, corporate jets, travel and entertainment, and other forms of corporate waste, all of which caused significant financial injury to the company.

Company documents also appear to show that Axium underpaid federal payroll taxes. According to claims filed by the IRS in the bankruptcy cases, Axium still owes more than $80 million in unpaid taxes.

There was also a real cost to Axium’s stakeholders which includes the more than 1,000 employees worldwide who lost their jobs and creditors who are owed more than $500 million because of the bankruptcy.

‘John Visconti and Ronald Garber simply did not know how to operate a global, multi-billion-dollar payroll operation,” Ehrenberg said. “They should be held accountable by the Courts for their actions which resulted in so many people losing their jobs and for the debt they owe Axium’s creditors.’

The Complaint, filed in the United States Bankruptcy Court in Los Angeles today, seeks damages from Visconti, Garber and various shell companies they controlled, as well as from Axium’s tax consultants. The Complaint also seeks return/repayment of property and other assets improperly funneled out of the companies.”

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