OC Chapter 7 Bankruptcy filings, November 2009

December 9, 2009 · Posted by admin

As we get closer to the end of this year, Chapter 7 bankruptcy filings for the month of November 2009 have not decreased.

Research done by a leading bankruptcy law firm concluded that Anaheim, Costa Mesa, Fullerton, Garden Grove, Huntington Beach, Irvine, Mission Viejo,  Newport Beach, Orange, and Santa Ana are reported as the cities with the most cases filed.

Chapter 7 bankruptcy attorneys have also seen a high number of bankruptcies filed in Westminster, Tustin, Lake Forest, Buena Park and Aliso Viejo.

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Orange County Register Owner Filing For Bankruptcy

August 31, 2009 · Posted by Alex

Orange County bankruptcy news from the WSJ online:

“Freedom Communications Inc., the owner of the Orange County Register, is expected to file for Chapter 11 bankruptcy protection this week, according to a published report.

The Wall Street Journal reported on its Web site Sunday that the privately held company has reached agreements with its lenders to restructure its debts. The report cited unnamed people familiar with the situation.

Robert Emmers, a spokesman for Freedom, declined to comment Sunday night on the possibility of a bankruptcy filing, but he told The Associated Press that the company is ‘continuing to work with its lenders to resolve (its) balance sheet issues.’

The Journal reported that Freedom’s lenders were expected to take control of the company while it operates under bankruptcy protection. The lenders — including J.P. Morgan Chase & Co., SunTrust Banks and Union Bank of California — hold about $770 million in debt.

Freedom was founded in the 1930s by R.C. Hoiles and is still majority owned by the Hoiles family. Besides its flagship Orange County Register, the company owns 32 daily and 77 weekly newspapers, plus several television stations.

Family members representing about one half of the Hoiles clan sold their stake in the company more than five years ago when private-equity firms Blackstone Group and Providence Equity Partners acquired a 40 percent share for about $460 million. The stake of the remaining family members likely would be wiped out by a bankruptcy filing, the Journal said.

Freedom’s Chapter 11 filing would be the latest in a long line of bankruptcy cases involving media companies that have struggled with a sharp drop in advertising revenue brought on by the growth of the Internet and compounded by a long recession.

‘Freedom has been affected by the same thing that all the media companies have been affected by: the decline of advertising, which has been accelerated by the downturn in the economy,’ Emmers said. ‘Freedom has been working really hard to realign its balance sheet with the reality of the media market today.’

The company announced last month that it would reduce pay across the board by 5 percent, and the Register has announced cost-cutting measures this year including layoffs, unpaid furloughs and salary freezes.”

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Bankruptcy Filed by Orange County Hotel Managment Company

June 17, 2009 · Posted by Alex

From the OC Register online:

“Debt-laden Extended Stay Inc. — which controls hotel brands that have 10 Orange County locations — has filed for bankruptcy protection.

HVM, a company that manages 684 hotels for Extended Stay — including the Extended Stay and Homestead Studio brands — says in a press release that, for hotel guests, the story is the same: the same great service, the same convenient locations, same comfortable, value-priced hotel rooms. All hotels are open and welcoming guests as usual.’

The company — primarily servicing a value-oriented customer seeking longer-term hotel stays — adds that there are no plans to close or sell any of the hotels.

The companies operate Extended Stays in Anaheim, Anaheim Hills, Huntington Beach, Newport Beach, Lake Forest, Orange and Yorba Linda plus Homestead Studio Suites in Brea, Cypress and Irvine.”

Bankruptcy attorneys in Orange County have seen many such companies file for bankruptcy protection during this economic crisis.

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One Reason Why Debt Reduction Plans Aren’t As Good As They Sound

June 13, 2009 · Posted by Alex

Like most people, when I drive to work in Irvine every morning I surf the various local radio stations. I’ve noticed a lot more advertisers for debt reduction plans, sometimes called debt elimination or debt negotiation, lately. The fact that they advertise on the radio tells me that the current financial stress is impacting everyone – whether living in Rancho Santa Margarita, Santa Ana or Newport Beach.

But debt reduction plans are not always as helpful as they might sound. Why? Debt forgiveness doesn’t eliminate as much debt as you might think. The reason: Borrowers must often pay high fees and pay income tax on the forgiveness of debt.

You see, debt forgiveness is usually considered to be a taxable event, because a taxpayer is deemed to have gained something (income) by not having to pay back the debt. So, our U.S. and California tax laws impose a tax on forgiveness of debt “income.”

The taxes are often waived if the forgiveness of debt occurs while the borrower is insolvent or bankrupt (filing a bankruptcy is not required), so it doesn’t always impact every debtor, but here’s an example of how it might affect a typical borrower:

Net Benefit of Debt Reduction Plan

$100,000 Total Debt
$40,000 Reduced Debt (expected payoff)
$15,000 Debt Reduction Fees (attorney/debt consultant fees)
$16,200 Forgiveness of Indebtedness Tax (see below)
$71,200 Total Payments After Debt Reduction

$28,800 Net Benefit After Debt Reduction

Forgiveness of Indebtedness Tax Calculation

$45,000 Taxable Forgiveness of Indebtedness (forgiveness of debt less fees)
$12,600 Federal Tax for Forgiveness of Indebtedness (assumes 28% tax bracket)
$3,600 State Tax for Forgiveness of Indebtedness (assumes CA 8% tax bracket)

In this greatly simplified example, a borrower paying a 15% fee on a $100,000 debt reduction plan and who must pay typical income tax rates on the anticipated 60% forgiveness of indebtedness “income” would only benefit by approximately $28,800. Although it is a benefit, it’s far less than the “60%” reduction amount that most people expect when they hear a radio add promising a reduction of “up to 60%.”

Something to think about before deciding to sign up for a debt reduction plan…

For more info on debt elimination, debt negotiation, or debt consolidation services, or to find out about how these services compare to bankruptcy, visit Curtis Law Group

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Ultra Stores, Inc. Files for Chapter 11 Bankruptcy

April 10, 2009 · Posted by Alex

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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