Archive for the ‘Bankruptcy’ Category

UPDATE 1-Post-bankruptcy GM posts $4.3 bln 2009 loss

* GM loss from July 10 to end-2009 totals $4.3 bln

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* GM says believes profit possible in 2010

* Fresh start accounting paves way for IPO

DETROIT, April 7 (Reuters) – General Motors Co [GM.UL] posted on Wednesday a $4.3 billion net loss from the time of its emergence from bankruptcy in July through the end of the year and said it believes a profit is possible in 2010.

GM also reported a $3.4 billion fourth-quarter net loss and said it is committed to repaying the outstanding balances on its U.S. Treasury and Export Development Canada loans by June “at the latest.”

Completing the “fresh start” accounting process lays the groundwork for GM to launch an initial public offering that would reduce the U.S. government’s majority stake in the automaker. The timing of an offering is unclear.

“Completing fresh-start accounting is an important step in that process,” GM Chief Financial Officer Chris Liddell said in a statement on the possibility of returning to public ownership.

GM said that going public would enable the automaker to invest in vehicle designs and sales, attract the best people and gain access to the capital markets. (Reporting by Soyoung Kim, David Bailey and Bernie Woodall, editing by Gerald E. McCormick)

(This report contains items about companies both in bankruptcy and not in bankruptcy. Adds Westland Devco in New Filings; Lehman and Barclays in Other Updates; Icahn’s Trump Entertainment in Briefly Noted; rental vacancy rates in Statistics; high-yield, high-risk debt issues in Commercial Debt Activity.)

By Carla Main

April 6 (Bloomberg) — Gems TV (USA) Ltd., the television retailer of gemstone jewelry products, yesterday sought Chapter 11 protection from creditors, citing as much as $500 million in debt. The television retailer of gemstone jewelry products, sought bankruptcy protection to sell its assets, after shutting down operations last month.

In papers filed in U.S. Bankruptcy Court in Wilmington, Delaware, the Reno, Nevada-based company listed less than $50 million in assets and said DirecTV was one of its largest unsecured creditors, owed $2.67 million.

DirecTV, based in El Segundo, California, the largest U.S. satellite-TV provider, asked a federal court last month to partially freeze Gems TV assets, the retailer said in a statement.

The company is seeking “an orderly liquidation of its assets,” Gems TV President Diane Schneiderjohn said in bankruptcy papers filed yesterday.

Schneiderjohn said the company’s “troubles were exacerbated this past year as nationwide economic conditions resulted in decreased discretionary spending.”

The case is In re Gems TV (USA) Ltd., 10-11158, U.S. Bankruptcy Court, District of Delaware (Wilmington).

For more, click here.

New Filings

New Mexico Developer Westland Devco Files Bankruptcy

Westland Devco LP, a New Mexico real estate developer, sought bankruptcy court protection after its lenders sued to foreclose on its assets.

The company, based in Albuquerque, New Mexico, listed assets of $361 million and debt of $198 million as of Dec. 31, in Chapter 11 documents filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.

Westland owns 55,000 acres of real estate in Albuquerque, which it planned to develop into residential lots, according to court documents. The company hoped to subdivide about 19,000 acres of that land into 40,000 parcels to sell to homebuilders over the next 20 years.

Barclays Capital Real Estate Inc., a unit of London-based Barclays Plc, sued Westland in December, seeking to foreclose on the project.

The case is In re Westland Devco LP, 10-11166, U.S. Bankruptcy Court, District of Delaware (Wilmington).

Other Updates

New York Racing Appeal from Order Allowing OTB to File Chapter 9

The New York Racing Association has filed a notice of appeal from a March 22 order by U.S. Bankruptcy Judge Martin Glenn in Manhattan that granted the New York City Off-Track Betting Corp., or NYC OTB, permission to file for relief under Chapter 9 of the U.S. Bankruptcy Code, according to court files.

The Racing Association had objected to the request for Chapter 9 p

More and more people have found it impossible the past few years to keep up with their mortgage, car payments and credit card bills. I’ve received countless e-mails about how to prioritize these bills when you can’t make ends meet.

Indeed, in 2008 and 2009, there were a total of 2.5 million personal bankruptcy filings, according to the American Bankruptcy Institute. In the 2006 and 2007, there were 1.4 million. Despite the economic recovery, defaults continue. Filings in February were up 14% over February 2009.

If you were driven to bankruptcy or are considering it, you know you’re not alone. But you’re probably also wondering how to dig yourself out. How do you wipe the slate clean and start rebuilding your credit?

THE IMPACT

Filing for bankruptcy is not, despite widespread belief, a one-way ticket to financial purgatory, said Kevin Chern, a bankruptcy lawyer and president of Total Attorneys, a legal support firm.

“Creditors and banks try to create a lot of misconceptions to scare people away from filing and tell them their credit will be ruined forever. But you have to take a more pragmatic view,” he said.

By the time most people file for bankruptcy, their credit is already trashed, they have a high debt-to-income ratio – a key indicator lenders look at – and they’ve likely defaulted on more than a few accounts.

“After bankruptcy, you have a significantly better debt-to-income ratio and no outstanding debt. You may actually look like a better risk,” Chern said.

That’s not to say it’s best to file if you can avoid it, but your ability to borrow most won’t likely be gone for good. Most people will start receiving credit card solicitations 18 to 24 months after coming out of bankruptcy.

YOUR CREDIT REPORT

You need to know where you stand and dispute any inaccurate information. You can get a free report from annualcreditreport.com; you’re entitled to one from each of the three main credit bureaus per year, so you should pull one every four months. You can also get a free score from creditkarma.com.

“You want to make sure that, after bankruptcy, the debts have been taken off,” said Steve Elias, a bankruptcy attorney and author of “How to File for Chapter 7 Bankruptcy.”

Your credit report shouldn’t say that you’re 90 days late on your Visa account; it should just say bankruptcy. The credit bureaus allow you to dispute information online, and you should hear back within 30 to 45 days.

NEW LIFESTYLE

Often, the circumstances that set us back financially are beyond our control, like layoffs, medical bills or emergency home repairs. Yet too many people were living beyond their means for years and floating the excess on credit. It’s important to pinpoint mistakes so you don’t fall back into the red. Realize that, when you buy a home, you need to budget for the mortgage plus home maintenance, insurance, taxes and more. With a car loan comes repairs, insurance, etc.

This is a good time to downsize if you’re still overextended, but it’s also a good time to build an emergency fund so you’re prepared for events beyond your control. Six to nine months worth of living expenses stashed away is ideal. You can rely on that cash – not a credit card – to get you through hard times.

Your Money columnist Jean Chatzky is financial editor of NBC’s “Today” show, a contributor to “The Oprah Winfrey Show” and the author of seven books, including, “Money 911: Your Most Pressing Money Questions Answered, Your Money Emergencies Solved.” Check out her blog and learn about her Debt Diet Online at jeanchatzky.com.

With Arielle McGowen

Pali Holdings Inc.’s failed attempt to sell its New York-based securities brokerage, Pali Capital Inc., helped force the company to seek bankruptcy protection.

The filing in U.S. Bankruptcy Court in Manhattan April 1 listed $716,300 in assets and $31.8 million in debt.

“Pali Holdings filed the instant Chapter 11 bankruptcy case to obtain protection from its creditors while it continues to liquidate and wind down Pali Capital,” Gerald Burke, a director of Pali Holdings, said in court papers.

The privately held company was in talks to sell the brokerage to former Bear Stearns Cos. finance chief Samuel Molinaro and had told shareholders it might go out of business without a sale or cash infusion.

The largest unsecured creditor named in the Pali Holdings filing was Panama-based Mandeville Holding Ventures Co.

Pali Holdings has had four chief executive officers or co- CEOs in the past 17 months and its chairman stepped down in December. The firm focused on equity and fixed-income sales, trading and research for institutional clients such as money managers and hedge funds. It had offices in London, San Francisco, Newport Beach, California, Chicago and five other U.S. locations, according to its Web site.

Bridge Financing

Pali Holdings received $3 million of “emergency bridge financing” in November and has lost about $40 million in the past two years, according to the company’s letter, signed by directors Kevin Fisher and Burke.

Molinaro, the former Bear Stearns executive, was helping Braver Stern Securities Corp. negotiate the potential purchase of Pali Capital and was to become CEO of the combined firm, overseeing about 250 people, people familiar with the talks have said. Molinaro was Bear Stearns’s chief financial officer from 1996 until 2008, when JPMorgan Chase & Co. purchased the company to save it from bankruptcy.

JPMorgan Lawsuit

Yesterday, New York-based JPMorgan filed a $4.5 million lawsuit in New York State Supreme Court in Manhattan against Pali and Reifler, alleging a loan default.

“Pali was responsible” for the debt, Reifler said in a telephone interview. “When I left in October 2008, there was $66 million in cash, and the loan should have been paid from those funds.”

The case is In Re Pali Holdings Inc., 10-11727, U.S. Bankruptcy Court, Southern District of New York (Manhattan)

http://prlog.org/10609613

Germantown Settlement, one of Philadelphia’s most venerable social-service agencies, has filed for bankruptcy, overwhelmed by mounting debt brought on by fiscal mismanagement.

Financed largely by taxpayer dollars for decades, Settlement’s debts include about $2 million in unpaid taxes and millions more in government loans. By its own estimation in August, it was $38 million in debt.

Settlement and a key subsidiary, Greater Germantown Housing Development Corp. (GGHCD), filed for Chapter 11 protection Thursday. They follow another Settlement subsidiary, Greater Germantown Education Development Corp., which filed for bankruptcy March 18.

“Faced with significant debts and obligations, the organizations have decided to reassess and restructure their assets in order to raise the needed capital to support a five-year plan of recapitalization of the organizational family,” according to a statement released by Settlement.

“. . . Working with its existing boards, senior staff, outside advisers and legal counsel, the two organizations expect to emerge from the Chapter 11 as much leaner organizations with renewed and strategic focus.”

Emanuel V. Freeman, Settlement’s president, declined comment, directing questions to Settlement’s attorneys. Freeman, who has served as Settlement’s leader for 28 years, faces criminal charges, filed in August, accused of failing to make $11,668.83 in payments to the state unemployment compensation fund.

“This entity and its community mission has been around for a very long period of time,” said Albert A. Ciardi III, Settlement’s bankruptcy attorney. “We are going to restructure it and reorganize it. It will come out stronger and better financed than it is now.”

Ciardi said the bankruptcy filing would halt a planned sheriff’s sale of the Germantown YWCA Building, which Settlement bought in 2006 with a $1.3 million loan from the city’s Redevelopment Authority. The sheriff’s sale, which was set for Tuesday, was intended to recoup the RDA’s money.

Settlement’s lawyers were still trying to determine how the bankruptcy filing will affect the U.S. Department of Housing and Urban Development’s foreclosure action against two apartment complexes for the elderly owned by the nonprofit.

Elders Place and Elders Place II were built largely with HUD funding. HUD audits of the operations of both identified $956,000 in expenditures that could not be properly accounted for.

A HUD recommendation to foreclose on the properties cited the $956,000, five years of unsubmitted audits, and “gross mismanagement of project funds.”

HUD calculates Settlement owes U.S. taxpayers $11.1 million for loans to build the properties.

HUD first notified Settlement of its intent to foreclose in November 2008. Freeman did not respond for seven months. When he did, he wrote that he had missed HUD notices because he was on vacation and later jury duty.

The debts to HUD represent just a piece of what Settlement and its subsidiaries owe taxpayers. The organizations are delinquent on four loans from the Philadelphia Industrial Development Corp. totaling $3.2 million. Beyond the $1.3 million loan for the YWCA, Settlement owes the RDA an additional $925,000. And the Pennsylvania Housing Finance Agency is owed $3.43 million.

Settlement is also delinquent on a $7 million loan from Parke Bank, which is secured by the Burgess Center at 200 W. Chelten Ave.

In announcing its bankruptcy filing, Settlement released a resolution by the GGHDC’s board of directors that stated the organization would consider selling the Burgess Center, a commercial office building, to resolve its debts.

The bankruptcy filing represents a new low in a long downward spiral of one of the city’s oldest and most respected agencies delivering social services.

Founded in 1884 by Quakers to aid newly arrived German immigrants, Settlement grew over the next 126 years to become the premier broad-based, community-service group in the Germantown area.

As recently as the mid-1990s, it was routinely touted as a model for such groups.

Over the last decade, however, it has been perennially behind in its debts and routinely sued to recover back taxes. Its primary source of funds has been government grants. Its 2007 tax return, the last on record, shows it received $4.8 million in government contributions.

The last audit it submitted to the city, for the 2005 fiscal year, showed it was then operating with a $4.7 million cash shortfall.

The city has canceled all its contracts with the nonprofit organization. The U.S. Attorney’s Office is reportedly conducting an investigation of Settlement.

In an interview in January, Freeman blamed his organization’s troubles on miscalculations he had made as it regarded Settlement’s ability to improve the financial condition of the people it aimed to serve.

“Many of our projects were predicated on the assumption that the income of people in the community would grow over time,” he said. “In fact, the opposite happened. And the need for our services grew and grew. Operating costs increased, our reserves got depleted.”