Bankruptcy Lawyer Blog

Bankruptcy Lawyers are going to have a new world to work with after the passage of this new Obama Foreclosure Prevention Program. Bankruptcy lawyers will now have the ability to “cram down” or modify loan balances for people going through bankruptcy. This will be a huge stick to try and force mortgage servicers to enter into loan modification agreements with loan owners. There is also a strong incentive program for lenders as they will get $1,000 per successful loan modification and then $1,000 a year to keep these people in their loans and in their homes.

More will come out about this in the next few weeks and the practical application will be interesting to watch unfold. Some judges may take this to the extreme and cut loan principal balances in 1/2 while others stick with tried and true measures like modifying interest rates and loan terms.

The news that Circuit City is declaring bankruptcy is quite a shocker. I knew that retail sales were going to suffer mightily in October, just wasn’t expecting this to happen quite so fast. The retail chains that can make it through the next year or so will come out on the other side that much stronger for it, but it’s going to be painful in the process.

I also saw where DHL is shutting down a big plant in Ohio and it’s going to cripple the small town that almost solely depends on the employment from DHL. I also think about Michigan and the auto manufacturers, as they get closer and closer to making massive layoffs, Michigan’s unemployment rate may rise up above 10% which is getting into dangerous territory (if it’s not there already). Hopefully the American consumer can get a little bit of energy back and start buying within their limits - at least low gas prices are saving people money at the pump.

News from BankruptcyData.com

MPC Corporation and eight affiliated Debtors, including Gateway Companies, filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware. The Company–whose primary business is providing PC-based products and services to mid-sized businesses, government agencies and education organizations–is represented by Richard A. Robinson of Reed Smith. According to documents filed with the Court, the Company’s largest unsecured creditor is Flextronics Logistics USA, which is owed $25 million.
On October 27, 2008, the Company was notified by the NYSE Alternext US of the exchange’s intention to strike the common stock and warrants of MPC from the exchange. Previously, on May 8, 2008, the American Stock Exchange had notified MPC that the Company was not in compliance with Section 1003(a) (i) of the AMEX Company Guide, in that the Company’s stockholder equity had fallen below $2 million dollars and that MPC had sustained losses from continuing operations or net losses in two of its three most recent fiscal years. MPC responded by submitting a plan for achieving compliance, which was accepted by AMEX on June 27, 2008. At that time, MPC was granted an extension until November 9, 2009 to regain compliance with listing standards, subject to periodic review of progress. The October 27, 2008 decision by NYSE Alternext US (which acquired AMEX on October 1, 2008) to file the delisting application was based on its review of publicly available information as well as information provided by MPC. In a letter to MPC, the exchange cited the Company’s failure to make progress consistent with its submitted plan, further citing that the plan no longer demonstrated MPC’s ability to regain compliance under Section 1003(a) (i) of the Company Guide.

Brought to you by BankruptcyData.com:

VeraSun Energy filed with the U.S. Bankruptcy Court a motion for debtor-in-possession financing approval. The motion asserts, “.the Debtors had made great progress towards securing longer-term debtor-in-possession financing from a single third party lender when the Debtors’ already tight liquidity situation was exacerbated on October 28, 2008 by Debtwire.com, publishing an article detailing the Debtors’ liquidity crisis and efforts to secure debtor-in-possession financing. Thereafter, the Debtors’ remaining liquidity evaporated before they were able to reach agreement on debtor-in-possession financing, resulting in commencement of the Debtors’ cases on October 31, 2008 without completion of negotiations for such postpetition financing.” Specifically, the motion seeks approval of separate D.I.P. financing facilities and/or cash collateral orders, as follows: (1) the secured noteholders will provide up to $25 million on an interim basis and up to $190 million on a final basis to fund working capital needs; (2) a cash collateral order with respect to the cash collateral of UBS to fund the VeraSun Debtors’ working capital needs; (3) AgStar will provide up to $17 million of D.I.P. financing on an interim basis and up to $30 million on a final basis to fund the working capital needs of the seven US BioEnergy Debtors presently financed by the AgStar Facilities (this will consist of seven separate loan and security agreements and D.I.P. orders-one for each Debtor, on a non-cross collateralized basis); (4) a cash collateral order with Dougherty, providing for the use by Marion Debtor of Dougherty’s cash collateral to fund the working capital needs of the Marion Debtor and (5) a cash collateral order with West LB, providing for the use by the ASA Debtors of WestLB’s cash collateral to fund the working capital needs of the ASA Debtors.

News from Bankruptcydata.com

According to a release issued by the Transportation Workers Union of America
(TWU) for Frontier Airlines, TWU members ratified a long-term labor agreement with the Company. The agreement was negotiated to extend certain earlier agreed-upon wage and benefit concessions. “I am gratified that the TWU membership continues to demonstrate, with this vote, their willingness to work hand in hand with Frontier’s management to move our airline to sustainability and future growth,” said Company president and chief executive officer, Sean Menke. “This agreement is very important in helping attract investors by contributing to our cost-reduction efforts.” “The TWU appreciates the joint effort made in reaching this agreement,” said TWU Local 540 president, David Durkin. “We believe that this agreement shows our commitment to Frontier and our belief in the long-term success of the company.”

Post taken from BankruptcyData.com:

VeraSun Energy and 24 of its subsidiaries filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, case number 08-12606. According to the Company, the filing was precipitated by a series of events that led to a contraction in VeraSun Energy’s liquidity, impairing its ability to operate its business and invest in production facilities. “Today’s filing allows VeraSun to address its short-term liquidity constraints as we navigate historically challenging market conditions while we focus on restructuring to address the company’s long-term future,” Don Endres C.E.O., said. “We appreciate the loyalty of our employees, customers and suppliers during this challenging time.”

Post from Marketwatch.com, find the full story here.

NEWARK, N.J., Oct 30, 2008 (BUSINESS WIRE) — Charles A. Stanziale, Jr., widely considered one of New Jersey’s preeminent bankruptcy lawyers, has joined the Newark office of McCarter & English along with colleagues Jeffrey T. Testa and Brian L. Baker. In addition, two associates have accompanied the three new partners, all of whom were with McElroy, Deutsch, Mulvaney & Carpenter, LLP.

“Charles Stanziale is clearly one of the top debtor-creditor lawyers practicing in New Jersey and surrounding states, and we are delighted to add him, Brian and Jeff to an already-robust bankruptcy and restructuring group with lawyers engaged in significant cases in New Jersey, New York and Delaware,” said McCarter & English managing partner Eric Wiechmann.

McCarter & English chairman Drew Berry added: “On a personal note, ever since we played high school sports against each other, I have known Charlie to be competitive, fair and team-oriented in his approach - qualities which have served him well professionally and will contribute to his future success here.”

“McCarter’s long commitment to the practice of bankruptcy law, including strong representation in the New York and Wilmington offices, among others, was a major attraction,” said Mr. Stanziale. “We look forward to working with the McCarter team, which we have known and respected for years.”