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San Francisco Bankruptcy Law Blog

Lessons learned from Lehman Brothers

Many in California may recall the economic recession that began in 2008 infamously started with the collapse of Lehman Brothers. Yet as many households consider debt solutions resulting from the weak economy, it may surprise a lot of people to learn that the restructuring of Lehman is still ongoing. The firm is undergoing restructuring to offload its assets and repay creditors. Once this is done, the firm will cease to exist.

So far, Lehman has spent more than $1 billion in fees while undergoing bankruptcy, including attorney fees of more than $34 million in August alone. If not pursued with due diligence, bankruptcy can be an expensive process, and Lehman is currently the most expensive bankruptcy in American history. When it filed for bankruptcy in September 2008, Lehman listed assets of well over $600 billion. It still holds cash and investments of just over $25 billion and the managers of the restructuring process hope to sell up to $65 billion in assets next year.

California clothing store files for bankruptcy, gets new owner

The recession is continually hitting a clothing store in California that recently filed for bankruptcy. Based in Ontario, California, the clothing store was a bargain basement retailer that sold their clothing for the lowest prices possible. After nearly 40 years, the company could not find the debt relief that it needed and was forced to file a Chapter 11 bankruptcy, because they were more than $5 million in debt. A Vernon, California wholesaler attempted to provide them with some debt solutions so they could keep their doors open, but to no avail.

Five months after they filed the bankruptcy, it was sold to another California retailer. The new owners plan to upgrade and change the merchandise, as well as sell some of the merchandise and equipment that came with the sale. The new owners also claim that they will take over the leases for 48  stores and for the time being, keep the original name of the store.

Medical debt overwhelms California family

When a health emergency occurs, every attempt is made to get the medical care required and families look for ways to buckle down and survive the crisis. Many are able to, but some health problems are more complicated and can last a lifetime. When that happens, everything is threatened, including the very home that provides sanctuary for the sick family member. When medical debt spirals out of control, the economic stability of the entire family is at risk.

One California couple is doing what it can to weather the storm surrounding their 10-year-old daughter. The girl was born with kidney problems, which did not allow her to grow at a normal pace. Over the past 10 years, her life has been a combination of constant medications and a search for a compatible kidney donor. It is very difficult to find a donor child for a suitable kidney. When one could not be located, the child's mother donated her own.

San Francisco nightclub moving forward thanks to bankruptcy plan

San Francisco's famed Chrome Lotus nightclub recently filed for bankruptcy, but the beat goes on - the club's owner said its bankruptcy plan will allow it to stay open and, hopefully, settle its balances with creditors in a reasonable amount of time.

Owner Bill Cutting said he understands his bankruptcy strategy to allow him up to five years to pay off his debt. He said he thinks he can settle the score in less than a half-decade, but only thanks to the debt restructuring his bankruptcy filing provided. "Everyone wants to get paid right at once, and there was no way we could do that," he said.

California solar company files for bankruptcy

Filing for bankruptcy is sometimes the best solution for a company, even a company that has received $535 million in guaranteed federal funding and more than a billion dollars in private investments. Unfortunately, the solar panel industry is under attack in the United States. In the last month alone, three major US solar manufacturers filed for bankruptcy debt relief protection. While California-based Solyndra had received a government loan guarantee as well as other investment funds, it could not escape the declining market caused by stiff competition from larger Asian rivals and a related drop of 42 percent in the price of solar panels this year alone.

While the US Department of Energy (DOE) and the White House are disappointed in the loss of its investment and the business failure of Solyndra, it pointed to several factors. First, it noted the loan guarantee was based on Solyndra's increased business revenue of 2,000 percent over three years, documented by more than 1,000 installations in over 20 countries. It also pointed out private investors flocked to support the company's efforts. The DOE further offered that these government investment efforts were directed to increasing jobs and thus improving the country's economy. While acknowledging the plan did not succeed in this instance, it said the DOE's overall strategy would more than make up for the loss.

California vineyard files bankruptcy

For some business owners, bankruptcy is a method by which to realize the materialization of a dream. This is exactly the case for the owners of the Russian River Vineyards in California. When the current owners took control of the business, the property was near foreclosure. The business owners incurred a substantial amount of debt as they returned the property to proper working order. Unfortunately, as of yet, they've been unable to get out from under that debt. Now, they're filing bankruptcy in order to keep the doors open, while restructuring their payments.

In light of the current economy, Chapter 11 bankruptcy protection is the ideal option for business owners hoping to keep their dreams alive. Chapter 11 seeks to stop harassment by creditors, while debt is restructured in such a manner so as to provide manageable payment options. For business owners trying to rescue a failing business, only to end up facing insurmountable debt, the task can prove to be disheartening. Thankfully, Chapter 11 bankruptcy protection can offer the help they need.

Filing for bankruptcy, lumberyard closes after 65 years

Filing for bankruptcy is not an easy decision for a California company that has been in business for many years. Some businesses are able to seek Chapter 13 protection, allowing the opportunity to present a plan for keeping the company open. A Chapter 13 petition must still make sense, the idea being to devise a strategy to keep things afloat, while demonstrating how creditors will be repaid the debts already owed. But sometimes the need for debt relief is too great and the expenses too substantial to justify continued operation. In that instance, filing for bankruptcy by a Chapter 7 petition may make more sense.

One of northern California's largest family-owned lumberyards closed its doors in August, having filed a petition for Chapter 7 liquidation. The news saddened many people, even their competitors. The company first opened in 1946 when the grandfather of the current owner came out of the service and said he never wanted to work for someone else again. The business thrived for many years, at one point having more than 200 employees. It was named 2nd Assembly District Small Business of the Year in 2006. Unfortunately, as the housing market went south, so did the lumber business.

Debt relief: keeping the lights on at the Starlight Theatre

Keeping your business by filing for bankruptcy is a viable option for those victimized by the economic downturn here in California. The last few years have impacted virtually all levels of business and society. Caught in a sinking vortex of increased expenditures and diminished income, many have struggled to stay afloat. Increased awareness has helped emphasize the potential debt relief a bankruptcy can provide to a business fighting to overcome its problems and remain in operation.

The Starlight Theater is a cherished San Diego musical theater company that has been around in Balboa Park since 1946. Citing poor economic conditions, the company recently filed for bankruptcy protection to give itself time to submit a plan to stay in business and pay its obligations. Delays in announcement of its summer theater schedule led the public to understand the company was experiencing difficulty. A pending lawsuit brought by a stagehand's union concerning contributions to its pension fund has added to the problems. Starlight will now have the opportunity to submit a plan for approval to a "trustee" appointed by the Bankruptcy Court.

Debt solutions sought by popular restaurant chain

Often, businesses filing for bankruptcy protection do so in order to help the company stay in operation. The financial crisis of the past few years in California and across our country has hit different industries in different ways. Chain restaurants, for example, have had to cope with families eating out less often as well as rising costs of ingredients and other materials. Faced with the need to reorganize or shut their doors forever, some businesses have decided a bankruptcy filing just might be the best way to keep their business. Those are not easy decisions, but a well thought-out and carefully executed plan to create debt solutions is sometimes necessary to stay in the ballgame.

In June, popular restaurant chain Marie Callender's filed for bankruptcy protection. Restaurant executives wanted to stay in business and needed to obtain temporary debt relief so they could help the company regain a more solid financial footing. As a result of the planned reorganization in bankruptcy court, the parent company closed 31 of its U.S. restaurants. Thirteen of those restaurants were in California. As the company continued to work through its financial issues with a bankruptcy trustee, it was announced on July 21 that four more restaurants were to close.

Borders to liquidate for debt relief after bankruptcy

Most of the time, people don't consider the effects the poor economy can have on industries considered to be "big business." Unfortunately, no company is immune to the ebb and flow of the country's current economic state. In fact, one of the nation's most prominent names in book sales will begin the process of liquidating retail locations as a measure of debt relief in the very near future. The Borders' liquidation will also include massive price cuts at the company's 18 remaining stores in southern California.

Recently, a bankruptcy judge in New York signed off the liquidation plan, and approved a "sell off" that will be conducted by Hilco Merchant Resources and Gordon Brothers Group. The debt relief measures come as a shock to many people because, up until very recently, Borders appeared to be holding its own.

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