Bankruptcy Filed by Reader’s Digest

August 25, 2009 · Posted by Alex

Bankruptcy attorneys for Reader’s Digest filed for bankruptcy protection under Chapter 11 of the Bankruptcy Code on Monday.  From the San Francisco Chronicle:

“Reader’s Digest Association Inc., publisher of the iconic general interest magazine that began gracing American homes in 1922 and now reaches a worldwide audience of 130 million, filed for Chapter 11 bankruptcy protection Monday as it faces falling print circulation in the Internet age and looming debt payments…

The publisher expects to emerge from bankruptcy protection 45 to 90 days after the filing, which was made at the U.S. Bankruptcy Court in New York.

The company piled on debt following a $1.6 billion leveraged buyout in 2007 by investors led by Ripplewood Holdings LLC, a New York private equity firm, to take Reader’s Digest private. In such a transaction, investors typically borrow heavily to acquire a company, betting that operations would generate enough cash to cover the debt payments.

But signs of trouble have since emerged. In June, Reader’s Digest magazine cut its circulation guarantee to advertisers to 5.5 million from 8 million, and lowered its frequency to 10 issues a year from 12.

In the Chapter 11 filing, the company’s senior secured lenders have committed $150 million in new debtor-in-possession financing that can be converted into exit financing once Reader’s Digest leaves bankruptcy protection.

Reader’s Digest, based in Pleasantville, N.Y., publishes 94 magazines and sells about 40 million books, music and video products each year. Reader’s Digest magazine has 50 editions worldwide, reaching readers in 78 countries.”

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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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Bankrutpcy Protection Sought By Another Orange County Retailer

May 29, 2009 · Posted by Alex

The worst National and Global Economy in decades has struck another Orange County retailer.  Bankruptcy attorneys filed for Chapter 11 on behalf of Anchor Blue Retail Group, Inc., a teen retailer.

From the company’s press release:

“Anchor Blue Retail Group, Inc., parent company of specialty retailer Anchor Blue and outlet store retailer Levi’s & Dockers Outlet by MOST, today announced that the company and its subsidiaries have filed a voluntary petition under Chapter 11 of the U.S. Bankruptcy Code in the Bankruptcy Court for the District of Delaware to enter a 363 sale process to facilitate a restructuring. The process will allow the company to quickly restructure and emerge stronger and more competitive.

As part of the filing, Anchor Blue Retail Group reached a stalking horse agreement with Levi Strauss & Co. regarding the purchase of the Levi’s & Dockers Outlet by MOST stores. In addition, the company negotiated a stalking horse agreement with nationally recognized financial institutions to purchase its Anchor Blue division in collaboration with the current senior management team. Both transactions are subject to an auction process and to approval from the bankruptcy court.

Anchor Blue Retail Group’s filing was largely the result of the significant and sustained economic downturn that has severely impacted California — its key market — and eroded the company’s profitability. The company expects to continue paying employee salaries and benefits as well as honor gift cards and store credits as usual.

‘After completing a detailed analysis of all our operations and conducting negotiations with a number of our landlords, we made the difficult but necessary decision to close approximately 50 underperforming Anchor Blue stores,’ Thomas Sands, CEO of Anchor Blue Retail Group, said.”

The Orange County retailer has Anchor Blue stores at Anaheim Plaza, Brea Mall, Buena Park Downtown, Laguna Hills Mall, The Block at Orange, Village at Orange, Westfield MainPlace in Santa Ana and Westminster Mall. At this point it is unclear how the bankruptcy will affect the operation of these stores, as they are not included in the aforementioned 50 stores to be closed.

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Bankruptcy Cramdown Legislation Not Likely to Pass

April 30, 2009 · Posted by Alex

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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Bankruptcy Protection Sought By Another Orange County Retailer

March 16, 2009 · Posted by Alex

From the OC Register online:

“Retail chain Everything But Water recently filed for Chapter 11 bankruptcy protection, according to a court document.

The chain has Everything But Water stores at Brea Mall, South Coast Plaza and The Shops at Mission Viejo, according to its Web site.

The company wants to close 10 stores; none of those are in Orange County, according to a court document.

During the period from late September to December 2008, the company experienced a more than 23 percent decrease in gross sales compared to the same period in 2007. Still, the company showed a profit for 2008. But recognizing that no end to the economic crisis was in sight, the company began efforts to reduce expenses and streamline operations as early Sept. 15, 2008. The company has been operating at a net loss in 2009, according to a court document.

The company is also attempting to sell the business as a going concern in Chapter 11, according to a court document.

Everything But Water has been a retailer of women’s swimwear, resort wear and accessories for 25 years. In October of 2006, Everything But Water acquired the assets of another retailer in the same line of business, Water Water Everywhere, and in February of 2007, Everything But Water acquired the stock of Just Add Water, effectively doubling the size of the business’ retail operations.

The Florida-based company has 70 stores in malls and strip malls in 26 states and Puerto Rico.

In April of 2006, Everything But Water was acquired by Bear Growth Capital Partners, an affiliate of Bear Stearns Merchant Banking, which is now a part of J.P. Morgan Chase Bank.”

Both Chapter 11 bankruptcies and Chapter 7 bankruptcies have seen a marked increase in Orange County this year, according to the bankruptcy attorneys at Curtis Law Group, a bankruptcy law firm with Orange County offices in Irvine, Mission Viejo, and Fullerton.

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