Kervin & Young, LLC » Bankruptcy

Former Saint to File for Chapter 11 Bankruptcy

admin — Tue, 06 Jul 2010 15:23:36 +0000

According to the Tribune News Services, “Three-time Pro Bowl quarterback Mark Brunell, who was paid nearly $52 million during his past 10 years in the NFL, plans to file for Chapter 11 bankruptcy protection Friday.”

Brunell was part of the Super-Bowl winning team last year, serving as the backup quarterback. He is facing multiple lawsuits over his failed real estate and business loans. His partnership, Champion LLC, had bad timing on its investments, writes Brunell in a response to the Florida Times-Union.

One of Brunell’s former partners, ex-Jaguar Joel Smeenge, has already filed for bankruptcy.

The Tribune News Services reports that Brunell has made almost $52 million in his 10 years of playing in the NFL.

If you or anyone you know faces bankruptcy, call the New Orleans Chapter 11 bankruptcy lawyers at Kervin & Young, LLC, by dialing 504-599-5906.

Liquidator named for Movie Gallery

admin — Fri, 14 May 2010 21:57:36 +0000

In early February, the second-largest movie rental company in the U. S., Movie Gallery, filed for Chapter 11 bankruptcy. Since then, downward trends in profits has led the company to move ahead with liquidation. The company named Great American WF LLC to liquidate Movie Gallery, as Great American promised $62.3 million to Movie Gallery after liquidation.

The courts approved both the motion to liquidate and a motion filed for expediency in the liquidator process. May 19 was set as the court’s decision date, and May 18 will hear all objections.

Great American will be responsible for liquidating a remaining 1,296 stores after Movie Gallery finishes closing another estimated 270 stores. In return, they will receive approximately 3 percent of sales, an unspecific sum, and a $1.75 million fee if a better offer surfaces before liquidation can commence.

The largest movie rental company in the country, Blockbuster, has also reported sales downturns, especially compared to rivals such as YouTube, Netflix, and Redbox locations.

If your business is facing extreme financial burdens, call the legal professionals of Kervin & Young, LLC, at 504-599-5906. The New Orleans Chapter 11 bankruptcy attorneys are here to help you with legal advice and the experience you need to explore your possible legal options.

National mall operator recovering from bankruptcy

admin — Wed, 28 Apr 2010 15:28:42 +0000

The national mall operating company General Growth Properties Inc. filed a motion this week in federal bankruptcy court in New York seeking consent to emerge from Chapter 11 bankruptcy.

The company, which is based in Chicago, has recently received a $6.55 billion investment from Brookfield Asset Management, Fairholme Capital Management, and Pershing Square Capital Management. This financial backing, along with a $1.5 billion debt issuance, will be used to form a new company.

According to a spokesman for the business, the new company will be called General Growth Opportunities and will oversee a portfolio of real estate assets.

If you are facing financial problems, get on the right track to recovery by contacting the New Orleans Chapter 11 bankruptcy attorneys of Kervin & Young, LLC, at 504-599-5906.

What are the immediate advantages of bankruptcy?

admin — Fri, 05 Mar 2010 16:21:03 +0000

When individuals file for bankruptcy, they often receive immediate relief from certain types of hardships. These hardships can include excessive debts and harassing phone calls from creditors.

The bankruptcy filing will also stop car dealerships from repossessing their vehicle and stopping banks from foreclosing on their homes. In many cases, a filing will put a halt on any wage garnishments.

If you have questions about filing for bankruptcy, contact the New Orleans bankruptcy attorneys of New Orleans bankruptcy attorneys of Kervin & Young, LLC, at 504-599-5906.

What is the price of a bankruptcy lawyer?

admin — Fri, 06 Nov 2009 17:29:58 +0000

Before hiring a lawyer, many people are concerned about the price of an attorney. For the most part, there is no set fee for attorneys.

Oftentimes, the price of a bankruptcy case will depend upon the complexity of the case. A case is typically more complex is the amount of debt is significant and if the type of debt is varied.

As part of the case, the attorney will also need to sort through the individual’s assets to determine which can be used to help pay off certain debts.

If you or anyone you know has considered filing for bankruptcy, contact the New Orleans Chapter 11 lawyers of Kervin & Young, LLC, at 504-599-5906.

Types of debts that cannot be discharged in bankruptcy

admin — Wed, 14 Oct 2009 18:36:40 +0000

Many people file for bankruptcy to get out of their debt obligations. While bankruptcy courts can discharge many debts, some types of debts cannot be discharged.

The types of debts that can be discharged typically vary by state. However, some common debts that cannot be discharged include tax claims, child support, student loan debts, and other debts owed to the government.

If you are considering filing for bankruptcy and have questions about which debts can be discharged, contact the New Orleans bankruptcy attorneys of Kervin & Young at 504-599-5906.

Credit Cards and Legalized Usury

Admin — Mon, 17 Aug 2009 14:25:41 +0000

Harvard Law Prof and TARP Oversight Committee Chair Elizabeth Warren discusses credit cards with Bill Mahr.

This video was embedded using the YouTuber plugin by Roy Tanck. Adobe Flash Player is required to view the video.

When Debtor’s Decide to Default

Admin — Sun, 26 Jul 2009 17:31:05 +0000

New York Times

By DAVID STREITFELD

Published: July 25, 2009

Melissa Birks is being stalked. Her cellphone keeps ringing, always from a caller marked “unknown.” She says she knows it is her credit card company wondering why she stopped making payments. Ms. Birks, who owes $28,830, has nothing to say.

Those on the front lines of the debt industry say there is a small but increasingly noticeable group of strapped consumers who, like Ms. Birks, are deciding they will simply stop paying. After loading up on debt eagerly provided by the card companies during the boom times, these people now find themselves trapped in an endless cycle where they are charged interest on interest and fees upon fees while the lenders get government bailouts.

They are upset — at the unyielding banks and often at their free-spending selves — and are pre-emptively defaulting. They could continue to pay for a while longer but instead are walking away. “You reach a point where you embrace the darkness of default,” said Adam Levin, chairman of the financial products Web site Credit.com.

The lending industry term for these people is “ruthless defaulters.” In a miserable economy where paychecks, savings and expectations are all diminished, their numbers will surely grow.

“They’ve done the math on their account and they’re very angry,” said Corey Calabrese, a Fordham Law student who is an administrator of the school’s walk-in clinic for debtors at Manhattan Civil Court. Public sentiment is on their side, she added: “For the first time, Americans are no longer blaming the borrower but are looking at the credit card companies.”

(That’s certainly true in the mortgage crisis. According to a Quinnipiac University poll in February, 62 percent of those polled blamed lenders “who loaned the money to people who may not be able to pay it back.” Only a quarter blamed homeowners.)

The deteriorating relationship between Americans and their creditors has not yet reached the level of Shays’ Rebellion, the 1786 uprising by poor farmers in western Massachusetts during a recession. But the basic issues are strikingly similar, suggesting an eternal tension between creditor and consumer.

Boston merchants, who were suffering themselves, aggressively sought payment from their customers. When the folks could not pay, which was often, they were jailed. The incensed farmers sought “reforms that would permit repayment on less destructive terms,” writes Bruce H. Mann in “Republic of Debtors,” a history of bankruptcy in early America. “Creditors replied with lectures on frugality, luxury, virtue and the sanctity of obligations.”

Shays’ Rebellion provoked mixed reactions, then and now. Were the rebels trying to remedy grievous wrongs in the spirit of the Revolutionary War, or were they threatening public order and the fledgling state — acting as terrorists, in the modern parlance? Shays’ followers were quickly arrested and quickly pardoned, although two were hanged.

Ruthless defaulters today face different perils. Delinquency destroys credit scores, can prompt a lawsuit and guarantees a very large number of hostile calls from collection agencies.

Still, all that can seem the better alternative. Like many who default, Ms. Birks first asked her credit card company to lower her 19 percent interest rate. No dice, Bank of Americaresponded. After she tried to get the bank’s attention by skipping a payment, it immediately raised her rate to 25 percent. As Ms. Birks’ debt swelled, so did a sense of injustice mingled with helplessness.

Bank of America has its hands full, with a June default rate of 13.8 percent, up from 12.5 percent in May. The other major credit card companies are in a similar fix. Estimates of the total industry losses are over $100 billion for the current recession.

Collectors are noticing a shift not only in ability but in willingness to pay. “With all the bailouts the government is giving everyone, no one has any personal accountability about their own debts,” said Roger Knauf, who runs a trade group of debt-buying firms.

Many of today’s debtors were maxed out long before the recession. Much of this debt was of course in the form of junky mortgages on wildly overpriced houses, and it was here that people first began to rebel.

Countrywide Financial, the country’s biggest and most aggressive lender, surveyed its customers about why they were defaulting in the summer of 2007. One of the leading reasons was “low regard for property ownership.” In other words, people concluded that owning these houses was a bad deal.

That people would intentionally default on loans they never should have gotten in the first place took lenders by surprise. “I’m astonished that people would walk away from their homes,” Bank of America chief executive Kenneth Lewis said in late 2007.

Nineteen months later, walking away from mortgages is widespread if impossible to quantify, and no cause for embarrassment. Rather the opposite: it shows savviness. “I’ll walk away before I take a loss,” a Dallas financier recently boasted to Barron’s magazine about his efforts to sell his $6 million vacation estate.

With credit cards, this type of chest-pounding seems less evident, at least so far. Ms. Birks, 43, readily admits that no one forced her to use her cards. “Some people are good with money,” she said. “I was stupid.”

Still, just about everyone made mistakes during the boom — regulators, Congress, Wall Street. If Bank of America got a bailout for making bad loans, Ms. Birks figured, she deserved a bailout for accepting them.

“You have to start looking at the future,” says Ms. Birks, who has been a writer and editor for various publications. “I already feel horrible because I can’t find a good job.” She earns $15 an hour as a copy editor for a magazine and does other part-time work.

In previous downturns, Ms. Birks’ only recourse would have been a debt management plan, where she would restructure her payments with the help of a counselor, or bankruptcy. Now there is a third option: debt settlement. This means going on strike until the lender accepts a partial payment.

Ms. Birks asked Bank of America about a settlement this spring. Since her account was up to date, she was told she didn’t qualify. She stopped paying, the bank started calling.

When Bank of America finally got her on the phone, it agreed for the first time to drastically reduce her interest rate. She did not take the deal, but considered it progress.

Bankruptcy, TARP, and Elizabeth Warren Study Developments

Admin — Sun, 07 Jun 2009 17:03:10 +0000

TARP watchdog Elizabeth Warren has played an important role in fighting abuses of the federal handout, but the knock on her is that she’s too much of an ideological activist, and that she’s in over her head in the role.

Warren is a bankruptcy lawyer and Harvard professor, with a particular interest in how the financial system hurts the “little guy.”

That’s fine, and it’s not a bad thing to look at how the maze of insurance and mortgages and all that stuff look to the person signing their name on the dotted line — where they’re getting confused, etc. That being said, a professor’s work should strive towards some kind of dispassionate “truth”, whatever that means.

And it seems in her latest work — a study claiming that medical costs now account for a stunning 70% of bankruptcies, up from 50% last time she looked — is just pure nonsense.

Megan McArdle (who you may know from dropping the hammer on Edmund Andrews) rips it to shreds, noting that what Warren ignores it that bankruptcies on the whole have come down (significantly) over the last 6 years, and then 70% of the new number would still be 50% of the old number, so even medical-related bankruptcies have been coming down.

Says McArdle:

Are Warren, et. al. unaware that bankruptcies fell by half? No bankruptcy analyst could possibly be unaware of this fact; it has been the most talked-about phenomenon in the bankruptcy area since the 2005 law was passed. Moreover, they’re clearly familiar with the filings data, because they use it to make their point:

The number of filings spiked in mid-2005 in anticipation of the new law, then plummeted. Since hten, filings have increased each quarter. They are likely to exceed one million households in 2008, representing about 2.7 million people.

What’s left out here? That in 2001, 1.45 million households filed for bankruptcy. In 2007, that number was 727,167. Had their paper done the basic arithmetic, readers would easily have seen that their own numbers imply a decrease in medical bankruptcies, from about 750,000 to slightly over 500,000. Yet their paper does not merely ignore this fact; it uses language that seems deliberately designed to conceal it. I invite any of my readers to scan the paper for any hint that medical bankruptcies had fallen significantly over 6 years.

This is elementary social science. A huge change in the composition of your sample needs to be noted. It certainly should not be artfully disguised. If the 2005 bankruptcy form made it more difficult to file bankruptcy, the people who still file bankruptcy will largely be those who are forced to it by events totally beyond their control. Medical bankruptcies seem to fill that bill.

Yet even so, their own work shows medical bankruptcies falling in the years between 2001 and 2007, which would seem to invalidate, not support, the claim that half of all bankruptcies in 2001 were driven by medical events beyond the household’s control.

Now, some might defend Warren and say, that, well if her numbers are correct, it still shows that medical costs are the dominant contributors to bankruptcy, even if they’ve fallen along with the total number of filings. That may be so, but it’s not actually saying that much. Because the problem she’s trying to address is bankruptcy — the issue is the devastating financial impact from medical bills (not the same thing). The latter is definitely concerning. Bankruptcy is symptom. But by taking misleading bankruptcy numbers, she can overstate how bad the medical bills situation is.

McArdle also did a followup post here, which is worth reading, emphasizing just how significant the question is, particularly coming from the person who’s also playing such an important role in the bailout.

On the other hand, does TARP really matter anymore? Most of the banks are paying it off, and beyond that, did you notice how little attention was paid to the hearings of the new Neel Kashkari, Herb Allison? That’s right: None. Nobody cares anymore. TARP: RIP.

Warren’s study is embedded below:

Bankruptcy 2009

What’s the Matter With Bankruptcy?

Admin — Sat, 23 May 2009 17:36:36 +0000

Megan McArdle, the economics editor of The Atlantic, has a great article on bankruptcy policy in the the June 2009 issue: Sink and Swim:

McArdle writes:

Our leniency toward those with unsustainable debts helps not only profligate debtors, but the rest of us as well. Less onerous bankruptcy procedures boost rates of entrepreneurship: reduce the cost of failure, and people become more willing to take risks. America’s business environment is much more dynamic than that of Europe or Japan, for many reasons—and our generosity to capitalism’s losers is one of them…

It isn’t fair. But by the time someone is in bankruptcy, the time for fairness is already long past. Bankruptcy is the legal recognition that someone lacks the resources to meet financial obligations. Our system works so well precisely because it mostly sets aside our instinct for just deserts, and instead focuses on minimizing the costs to everyone. It lays out clear and predictable rules for lenders and borrowers, so that they can plan for disaster, and escape as quickly as possible if it arrives. Still, it’s plain as day that, in the current crisis, a whole lot of people are getting help they haven’t earned. As a result, commentators, academics, and legislators presiding over hearings have diverted much time and energy away from hashing out the ugly details of rescue efforts and toward making the one point on which we can all agree: these relief measures don’t seem fair…

Look at entrepreneurs. All of the business literature indicates that starting a business is a phenomenally stupid thing to do. Most new businesses fail, and not simply because most would-be entrepreneurs are actually no-hopers. Even people who have founded successful companies in the past still have a 70 percent chance of failing. All those business failures are costly—but the successes are the difference between us and Tanzania. We want people to take these kinds of risks, even if that means we write off a lot of bad debt.

Tougher bankruptcy laws don’t necessarily curb the kind of behavior we want to discourage: borrowing money you have no way to repay, in order to buy unnecessary consumer goods. The amount that households put on their credit cards didn’t fall after the 2005 reform; over the next two years, it rose 12 percent. According to Michelle J. White, an economist at the University of California at San Diego, many bankrupts are what economists call hyperbolic discounters—people who pay a lot of attention to current pleasures, and very little to future costs. That’s why a person’s debt, not unemployment or divorce, may be the best predictor of bankruptcy.

If you’re the kind of person who buys now and worries later, the idea that government is making your inevitable bankruptcy filing slightly more annoying won’t discourage you. Actually, a higher hurdle to bankruptcy will make things worse, because banks will offer to lend you more money if getting the debt discharged is harder for you—money that you will happily, and irresponsibly, borrow and spend. The people who are most likely to be deterred from borrowing are the people who are taking the rationally contemplated risk of starting a company or buying their first home.

Of course, we’ll at least squeeze a little extra cash out of the real deadbeats. Maybe. Most repayment plans set up under Chapter 13 fail. People who weren’t previously good at living on a budget don’t magically get better at it with a court order. Moreover, job losses or other unexpected events can derail the highly structured payment plans. And the costs of administering an ongoing plan are much higher than for a simple discharge and write-off.

Meanwhile, those payment plans lash people to their old lives, even though those lives weren’t working all that well; it’s hard to move, or get training, for a better job if a court has to approve the expense—and why bother, if a trustee might seize the extra income? In the worst case, the failed Chapter 13 proceeding leaves the most-vulnerable people mired even deeper in debt they can’t repay. Such outcomes start to sound less like “fairness” and more like “throwing good money after bad.” Look around. Do the banks seem sounder because we made it harder for people to shed their debts?

These problems are simple compared with the questions raised by the current crisis. Existing bankruptcy law has no easy formula for dealing with a behemoth like Citi, or even GM, that has international subsidiaries, and where any punitive action we take could have massive unintended consequences. But we can look to the bankruptcy law we’ve evolved for some principles about what works. And what it seems to tell us is that, regarding insolvents, we too often ask the wrong question: Who should pay? rather than Who can?

Bankruptcy’s greatest boon is orderly liquidation of past failures so that banks and borrowers and insolvents can trust in their futures, invest in them. Yet listen to the public commentary on the bailouts, and you’d think that half of America would happily gut the rule of law if doing so would let them punish a single undeserving executive. Is penalizing the traders at AIG really more important than upholding a long-standing liberal democratic tradition?

In ordinary times, we maintain a sort of society-wide doublethink about the problem of insolvency. We all agree that it is a very terrible thing that should be avoided at all costs—but once it has actually happened, we try to forget about the past as quickly as possible, and we focus mostly on providing a predictable and relatively painless way for the insolvents to get back on their feet. That strategy, developed over time through trial and error, has served us well for most of our history. Why is it now a piece of the past that we’re only too willing to abandon?