U.S. To Export Bankruptcy Code to Mexico?

Posted on February 25, 2013 by Staff Writer

Arizona, because of proximity, is sometimes more affected by happenings in Mexico than other northern U.S. states. Yet when it comes to bankruptcy of Mexican companies, the effects are felt nationwide. In late June, Mexican glassmaker Vitro SAB, according to Reuters, is “heading to a U.S. appeals court to save its restructuring at home from an assault by U.S. creditors.” This is one of the first times that the U.S. bankruptcy code could be transported beyond the nation’s borders.

Chapter 15 is a clause in the U.S. bankruptcy code that was added by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. According to U.S. Federal Bankruptcy Court, “it is the U.S. domestic adoption of the Model Law on Cross-Border Insolvency” set out by the United Nations. Its purpose it to provide “effective mechanisms for dealing with insolvency cases involving debtors, assets, claimants, and other parties of interest involving more than one country.” It’s meant to promote cooperation and establish legal certainty for trade, among other things.

The issue with Vitro stemmed from a Dallas bankruptcy court ruling that “refused to enforce the company’s Mexican restructuring against U.S. hedge funds.” Reuters analysis purports that the “restructuring plan violated a bedrock rule of U.S. bankruptcy by rewarding shareholders before repaying creditors in full.”

In today’s global market, when a company anywhere in the world files for bankruptcy protection, ripples are felt across the market. The U.S. is, of course, affected when major international importers and exporters go insolvent. And subsequently, U.S. business markets are affected adversely as well.

If you or someone you know has been affected by an international company’s insolvency, or have questions about how the system works, contact a dedicated Arizona bankruptcy lawyer today.

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U.S. Municipal Credit Bet Cut In Half

Posted on August 29, 2012 by Staff Writer

Reuters reported a story about Berkshire Hathaway Inc. cutting $8.25 billion in credit default swap protection it has sold on municipal debt. According to regulatory filings, this amounts for more than a half of the $16 billion in protection they have sold on bonds of states, cities, and towns.

Berkshire Chairman Warren Buffet, a billionaire investor, says three municipal bankruptcies in California in such a short time have been making traditionally objectionable Chapter 9 municipal bankruptcy filings more palatable. He says this is especially true for local governments in financial crises. Buffett is one of many investors who foresee a rise in U.S. municipal bankruptcies.

Berkshire sells protection against the default of states, towns, and cities using credit default swaps, which means they would be required to reimburse the counterparty of a contract for debt losses in case of a municipal bankruptcy. Berkshire’s filing stated that it has reached an agreement with a counterparty to terminate $8.25 billion of the CDS portfolio. The portfolio references over 500 state and municipal debt issuers.

Citigroup analysts said that the $8.25 billion is likely to be remains of contracts Berkshire held with the estate of the failed Lehman Brothers bank. Lehman had bought $8.25 billion in CDS protection on bonds of 14 states before failing.

You might not be filing for bankruptcy on behalf of a city or a municipality, but every bankruptcy should be handled with care. Do not struggle with your bankruptcy alone, but get experienced legal assistance to help you find the best way to proceed. Reach for a better outcome in your bankruptcy, and contact an experienced Arizona bankruptcy attorney today.

Bankruptcy Filings Up in Phoenix

Posted on July 31, 2012 by Staff Writer

The month of June saw an increase of bankruptcy filings in the Phoenix metropolitan area, to the highest point in the past nine months. Individual, as well as business, filings have increased steadily in the past four months. The number of filings on the state level line up with the same trend, with May numbers rising steadily from April figures.

The bulk of the filings were for Chapter 7 bankruptcy, in which a business or personal assets (only those which are non-exempt) are liquidated to pay debts and creditors, with debt forgiveness after the proceeds are exhausted. The rest of the filings were primarily Chapter 13, calling for a reorganization of the debtor’s finances to structure repayments to creditors.

Situations that contribute to bankruptcy filings are unemployment and underemployment without cessation. Another issue that impacts figures is increases in foreclosures. Many homeowners file for bankruptcy after receiving notice of impending foreclosure on their homes. The number of foreclosures is directly tied to the number of new bankruptcy filings: as foreclosure numbers increase, bankruptcy filings also increase within one to two months afterwards.

The good news indicated by these numbers is that bankruptcy filings for the Phoenix metropolitan area have leveled off, with the past sixteen months coming in at lower rates than the same months in 2010 and 2011.

Becoming faced with job loss or an inability to secure employment that pays what your financial circumstances require is not an easy situation. For legal and emotional support through this difficult time, contact an empathetic Arizona attorney who specializes in bankruptcy. This expert can assist you in navigating through what can otherwise be a stressful, humiliating and almost impossible turn of events, and can assist with recuperating financially afterward the case is resolved.

Desert Landscaping Company Files for Bankruptcy

Posted on July 16, 2012 by Staff Writer

A palm tree and desert citrus landscaping company filed for bankruptcy in mid-July, “blaming a slowdown in demand for landscaping from builders,” according to Bloomberg News. Cocopah Nurseries of Arizona is based in California, and had already once tried to restructure the company to no avail. Duane Young, the company vice president, reported in court papers filed in Yuma that “Cocopah and its bankrupt affiliates remain caught between, and impacted by the prepetition lenders’ intercreditor disputes to some degree.”

Cocopah is one of the many businesses indirectly affected by the housing market that have been forced into financial insolvency because of it. The U.S. Department of Commerce released a report in conjunction with the Census Bureau in June that new home sales have slowly but surely increased. Overall home sales in the U.S. increased nearly 20 percent from May 2011 to May 2012. This is good news for homebuilders, but it might be too soon for American homeowners to invest in expensive landscaping for these new homes. This puts companies, such as Cocopah Nurseries, on the chopping block.

According to IBISWorld reports, landscapers experienced a sharp decline in relation to the failing economy, but as job availability has increased, so has discretionary income for aesthetics like landscaping. While the Southeast of the country accounts for nearly 23 percent of the industry’s revenue, the additional challenges (and revenues) of landscaping in the Southwest keep the region a good place to business. According to the report, “in 2012, a marginal increase in the value of residential and non-residential construction is expected to boost [landscaping] industry revenue a meager 1.2 percent.”

If you or someone you know has been affected by the recession or your industry has experienced decline, it could be a difficult time for personal finances as well. Don’t go through it alone. Contact a dedicated Arizona bankruptcy attorney today.

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American Airlines Bankruptcy Could Affect Arizona Residents

Posted on April 30, 2012 by Staff Writer

Over 1,000 Tucson-area residents may be affected by a recent development in American Airlines Chapter 11 bankruptcy restructuring plan. The company filed for bankruptcy in November of 2011, and according to abc15, will likely be closing a Tucson reservations center as part of their plan to reduce their labor costs by over $1 billion.

As the airline was unable to renegotiate contracts with its numerous unions, they will now ask the bankruptcy court to let them void their current union contracts. Some of the reservations agents will be offered the chance to move or work from home, while others may lose their jobs – the total number of positions eliminated under the restructuring plan is estimated to be around 14,200.

According to an SFGate.com article, the airline may consider a merger as part of its bankruptcy restructuring plan. During testimony at the U.S. Bankruptcy Court in New York, where the bankruptcy case is filed, David Resnick stated that a merger is likely because “American is obliged to get the highest value for stakeholders.” Tempe Arizona-based US Airways is also hoping to gain support for a potential takeover of AMR Corp, American’s parent company.

When large corporations go bankrupt, this can have wide-spread bankruptcy implications. For instance, it’s certainly possible that some of the over 14,000 American Airlines employees who lose their jobs will end up considering bankruptcy. Arizona residents who are facing financial difficulties and wondering if bankruptcy is the right option for them should contact an experienced Phoenix, Arizona bankruptcy lawyer for advice.

Companies Use Chapter 11 Bankruptcy to Reorganize

Posted on April 14, 2012 by Staff Writer

Large corporations often use bankruptcy protection when restructuring or when faced with significant drops in the economy. On Thursday, well-known Dallas based corporation Reddy Ice filed for Chapter 11 bankruptcy protection with the support of its lenders and creditors. The filing will not affect the day to day business of Reddy Ice, the largest packaged ice producers in the country.

Reddy Ice will use the Chapter 11 filing as an opportunity to recover from a $33.3 million loss this quarter and to shoulder an increase in production costs. The Chapter 11 claim will also secure the company’s footing in negotiations in a buy-out of one of its top competitors. A press release cites three significant factors in the decision to file the Chapter 11 in the United States Bankruptcy Court for the Northern District of Texas. The company faces heavy debts, higher commodity costs, and a weak economy.

The Chapter 11 filing is a “Voluntary Plan of Reorganization.” These types of claims allow businesses to receive the automatic stay, which gives businesses the time and protection they may need to restructure when faced with uncertain economic factors, including those outside of the company’s control. Basically, the Chapter 11 claim includes a list of all debts, incomes, expenses, assets, and liabilities, in addition to a statement of reorganization. However, the details of the claim and how it can be filed will be determined based on the type of business filing the Chapter 11 claim with the bankruptcy court. In cases where corporations file for Chapter 11 bankruptcy, the personal property and assets of shareholders is protected, but businesses with sole proprietors may include these items.

Individuals can also make a Chapter 11 bankruptcy claim and receive the automatic stay. If you are considering a restructuring of your personal finances or your business debts, you may be eligible for bankruptcy protection under this claim in Arizona. Consult with one of our Tucson bankruptcy lawyers to help you navigate bankruptcy claims court.

Parents of College Students Face Financial Struggles; May Consider Bankruptcy

Posted on March 31, 2012 by Staff Writer

According to a Tucson Citizen article, parents of college students are among those more frequently filing for bankruptcy. In fact, the increase in the number of students and parents seeking help with debt has risen, based on the results of a survey of bankruptcy attorneys. And the National Association of Consumer Bankruptcy attorneys has stated that college student loans could be the next financial crisis for the United States.

There are many reasons for this increase. First, the cost of attending college is rapidly rising – not only tuition, but room and board. Many parents may have counted on scholarships or an increase in family income, but with the unsteady economy, they more often faced a job loss, tanked investments, or another decrease in incoming money. On top of these factors, students aren’t finding jobs as easily or quickly as in the past, upon graduating from college – making it harder for them to pay back their student loans (for which parents are often a co-signer) themselves.

Some parents have even resorted to using credit cards to fund a portion of their child’s college education. A Sallie Mae survey showed that 3 percent of parents did this, with the average amount charged being nearly $5,000. While running up credit card debt is rarely a good thing, there is one potentially beneficial aspect of using a credit card to pay for college: student loans are nearly-always exempt from being discharged due to a bankruptcy filing – while credit card debt is generally wiped clean by filing for bankruptcy.

Filing for bankruptcy no longer holds the stigma that it once may have. For many who are struggling with overwhelming debt, bankruptcy is the best available option. If you’re considering filing for bankruptcy in Arizona, contact a top Mesa, Arizona bankruptcy attorney for advice.

What Is Bankruptcy?

Posted on March 14, 2012 by Staff Writer

Bankruptcy is a legal means of eliminating or repaying debts through the federal court system. Bankruptcy cases are exclusively handled in federal courts, and never take place within the state court system.

Individuals most commonly file for either Chapter 7 or Chapter 13 bankruptcy. In a Chapter 7 bankruptcy, the debtor is required to sell all or some of their assets to back pay their creditors. After this is done, they are relieved from their debts. In Chapter 13 bankruptcies the debtor arranges a payment plan through the bankruptcy court in order to pay off some of all of their debts.

Bankruptcy proceedings are initiated by filing a petition with the U.S. Bankruptcy Court. The debtor is then required to complete several forms and provide detailed documentation regarding their income and debts. For the bankruptcy to be approved, the bankruptcy court will need to determine that the debtor’s income is insufficient to pay your debts (this is called the “means test.“) You will also need to attend a credit counseling class.

Filing for bankruptcy is very complex, and even a small mistake or oversight could result in major delays or problems. If you are considering filing for bankruptcy in Arizona, it’s best to consult an experienced Glendale bankruptcy lawyer. An attorney who concentrates their practice on bankruptcy can answer your questions and guide you through the process. Although there are can be some downsides to choosing to file for bankruptcy, the impact of bankruptcy may not be as bad as you think. Bankruptcy is the best choice for many people who are drowning in debt. Don’t hesitate to contact a Glendale, Arizona, bankruptcy lawyer to discuss if it’s the right decision for you.