Posts Tagged ‘Bankruptcy’

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Bankrutpcy Bill Not Certain to Help Orange County Homeowners

Wednesday, February 25th, 2009

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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Orange County’s John Laing Homes Files for Bankruptcy

Monday, February 23rd, 2009

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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Going down? Elevator Music Company Files for Bankruptcy

Thursday, February 12th, 2009

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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Couple That Struck It Rich In Real Estate Files For Bankruptcy

Wednesday, February 11th, 2009

Mr. and Mrs. Robert Dyson have been forced into bankruptcy. According to their bankruptcy attorney, the real estate market’s dismal state during this economic crisis was the culprit. As news about record foreclosures and Orange County bankruptcy cases filed (along with other southern California counties), it is not too surprising that the real estate market that had given this couple so much, ended up taking away as much as it gave.

From the North County Times online article:

“A couple who made a name and fortune in high-class coastal real estate have crashed into bankruptcy and are asking a court to erase more than $40 million in debt, including $625,000 that stemmed from alleged misuse of a helicopter loan.

According to court filings, property records and interviews, the couple, Robert and Loraine Dyson, shut down their Solana Beach real estate brokerage, an affiliate of Sotheby’s International Realty, in October. They also filed for personal bankruptcy and have apparently scotched plans to develop an equestrian resort and estates in central Riverside County…

The Dysons’ financial unraveling was as spectacular as their ambition. The couple own a $7 million estate in Rancho Santa Fe and —- until recently —- several other residences in the most exclusive areas of the Southern California coast and the San Jacinto Mountains.

Press releases from their real estate agency reported billions of dollars of annual sales. Their charitable foundation parceled out tens of thousands of dollars.

The Dysons’ slide into bankruptcy followed an attempt to transform themselves from high-end real estate agents into high-end developers at what may have been the worst possible time.

They put some $30 million into property in the foothills of the San Jacinto Mountains starting in late 2005, with plans for equestrian estates that would eventually ramble over nearly 2,500 acres…

They filed for Chapter 7 bankruptcy on Oct. 30, estimating their debts at $50 million to $100 million and their assets at $1 million to $10 million. A debtor who qualifies for Chapter 7 can usually keep a car and other necessities, subject to limits on their value; other assets are sold off to cover portions of the debt, and the remaining debt is wiped away.

The trustee supervising their bankruptcy recommended in December that the couple abandon the Rancho Santa Fe home that they bought in June 2005 because debt and liens account for nearly its entire $7 million value. A later filing by the trustee recommended they give up a $90,000 leased Porsche sports car and their $3.2 million home in Palm Desert, which is in foreclosure…”

Although this couple’s real estate woes lay outside of Orange County, many cities within Orange County such as Santa Ana, Irvine, and Rancho Santa Margarita, are seeing increased foreclosures and Chapter 7 bankruptcies as well.

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House Passes Stimulus Bill, But Without Bankruptcy Provisions

Thursday, January 29th, 2009

The House of Representatives passed the $819 billion stimulus bill on Wednesday, a monster bill that allots money towards major infrastructure, education, health care, & unemployment concerns. One concern it does not address, however, is stemming the tide of foreclosures. From the Colorado Independent:

“Congressional Democrats hoping to use the economic stimulus package to force lenders to refinance troubled mortgages have met an unlikely opponent: President Barack Obama.

Many Democrats, including Obama, have long-supported the strategy of empowering bankruptcy judges to alter the terms of primary mortgages to prevent foreclosures. But White House officials have said they don’t want the bankruptcy provision in the stimulus bill for fear of alienating Republicans, most of whom oppose the change…Housing advocates have long-pushed to empower bankruptcy judges to reduce, or “cram down,” the balance of primary mortgages, as well as other terms of the loans, to keep homeowners from suffering foreclosure. That legal avenue is currently available for loans on commercial property, yachts, vacation homes — almost anything but primary mortgages, which were singled out for exception under bankruptcy law.”

Although both President Obama and Speaker of the House Nancy Pelosi have made it known that bankruptcy reform is a priority, and that they will make sure to attach bankruptcy reform provisions to a bill that is a “sure-fire” pass, it is unclear how many homes will foreclose in the meantime — and how many more residents of Orange County will seek a bankruptcy attorney because of it.

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Smurfit-Stone Seeks Bankruptcy Protection

Monday, January 26th, 2009

From the Orange County Register online:

“Smurfit-Stone Container Corp., the largest producer of cardboard box materials in North America, on Monday filed for Chapter 11 bankruptcy protection as it looks to restructure a heavy debt amid a global credit freeze…The company said it expects to continue operations during the bankruptcy process and has received commitments for up to $750 million in debtor-in-possession financing to fund continuing operations. Of that $750 million, some $350 million is new incremental financing, while the remainder represents replacement of existing credit.

Earlier this month, a report said Smurfit-Stone was actively exploring bankruptcy protection and had engaged a law firm and financial advisers with expertise in bankruptcy filings.

Analysts responded positively to the filing.

‘The main thing is that this was an expected event and overall being a Chapter 11, instead of a Chapter 7 filing, it is good for the company and good for the industry longer term,’ said Longbow Research analyst Joshua Zaret.”

Smurfit-Stone had a corrugated container facility in Fullerton, Orange County until last year, when it was sold.  It is possible that some of the many Orange County bankruptcy attorneys that abound in the area were prospectively culled to represent Smurfit Stone in their case.  We can only speculate about that, however, as the Orange County Register article does not disclose the name of the bankruptcy law firm retained for Smurfit’s bankruptcy case.

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Circuit City’s Bankruptcy to End in Liquidation

Monday, January 19th, 2009

After filing for bankruptcy in November, Circuit City will now have to shut down completely and liquidate its’ stores and assets after failing to find a buyer. Only a week ago, according to the New York Times report, there were two potential buyers in talks with Circuit City, but it was not able to reach an agreement with its creditors and lenders in time.

From the New York Times online:

“The demise of Circuit City, while not surprising given its declining sales, is part of a radical shift taking place in American retailing. Weak chains — unable to weather the freeze-up in consumer spending, and choked by tight credit markets — are shuttering their doors.

Last year, a raft of retailers including Boscov’s, Sharper Image, Mervyns, Linens ’n Things, Whitehall Jewelers and Steve & Barry’s filed for bankruptcy protection. This week alone, Goody’s Family Clothing and Gottschalks Inc. also filed. Many more retailers are expected to follow suit as they run out of working capital or are unable to finance their debt. But emerging from bankruptcy is harder than ever because of changes in the bankruptcy code and vise-like credit markets.

Indeed, Wall Street analysts said in November that the prospects of long-term survival for the Circuit City were bleak. Months of declining sales during the recession sent the company over the edge, although its problems go back a decade, from buying cheap real estate leases in inferior locations to laying off its most experienced sales staff. The latter saved money but cost the company employee morale and countless customers.

When the retailer filed for Chapter 11 bankruptcy in November, its shares had lost more than 90 percent of their value since the beginning of 2008.

The company is still awaiting final approval of the liquidation from federal bankruptcy court.”

As Circuit City stores will now be shut down, Orange County residents should make those last few trips to their nearby store. Circuit City locations in Orange County can be found in the following cities: Foothill Ranch, Fullerton, Huntington Beach, Irvine, Laguna Hills, Newport Beach, Orange, Rancho Santa Margarita, and Santa Ana.

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