Harrisburg Council Rejects Plan to Address It's Debt Crisis

Aug 31 (Reuters) - Pennsylvania's capital of Harrisburg rejected a rescue plan designed to address its debt crisis on Wednesday, in a move that could prompt a state takeover of its finances. In an 4-3 vote, the Harrisburg City Council rejected a plan put forward by Mayor Linda Thompson. The vote came less than two months after the council rejected another plan presented by a state-appointed advisor.

Harrisburg -- a city of 50,000 about 100 miles west of Philadelphia -- is one of a handful of U.S. cities and counties that have teetered toward economic collapse in the wake of the 2007-09 recession. A string of failures could rattle the $2.9 trillion U.S. municipal debt market.

The mayor has said that Harrisburg could run of money next month, meaning it could miss a Sept. 15 bond payment and be unable to pay city workers.

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Posted in bankruptcy , harrisburg debt crisis

Unions Warns of Saab Bankruptcy If Wages Remain Unpaid

(RTTNews) - Swedish automaker Saab Automobile AB (SAAB-B,0GWL.L: News ) could be forced into bankruptcy if fails to pay wages by the end of this week, the Wall Street Journal reported Monday, citing one of the company's labor unions, IF Metall. Saab Automobile is owned by Dutch automaker Swedish Automobile N.V.

According to the WSJ report, a lawyer at IF Metall said that on August 26, Friday, Saab Automobile received requests for payment of 1,486 union members' wages for August.

The cash-starved company has seven days to pay its staff once it receives the requests, failing which, IF Metall could file for a Saab Automobile bankruptcy at the district court. The process will ensure state coverage of wages in the event of the automaker's failure. The union has three weeks to file for a bankruptcy, or its claims will fall.

Saab Automobile was due to pay its blue-collar employees on Thursday, August 25, and its white-collar workers the following day. However, the company said last Tuesday that it may be forced to postpone payments as "committed" funds from investors may not arrive in time. The company also said there could be no assurance that the necessary funding will be obtained or the funds collected.
Unionen, the union for Saab Automobile's white-collar workers, which has about 1,000 members, is now reportedly gathering from its members pay slips that have not been honored, and expects to send requests for payment to the company Tuesday.

August is said to be the third straight month that Saab Automobile has failed to pay wages on time to its approximately 3,600 employees. The company reportedly paid salaries to its workers about a week late in June and July.

Saab Automobile, which has halted production at its Trollhattan plant in Sweden since April this year due to unpaid supplier bills, was seeking to resume production during the week beginning August 29 at the earliest. It has been scrambling for short and medium-term funding to pay suppliers and employees as well as to restart production.


Sweden's Debt Enforcement Agency has reportedly started a collection process on August 16 after Saab Automobile missed a deadline to pay suppliers. More than 100 debt claims are said to have been filed against Saab with the collection agency.

Swedish Automobile, the owner of Saab Automobile, said last Friday that it will publish its financial results for the half year period on August 31 instead of the previously-announced date of August 26. The company said it was still in the process of finalizing the semi-annual report.

On the Stockholm stock exchange, SAAB-B closed Monday's trading at 129.00 Kronor, up 7.00 kronor or 5.74 percent on a volume of 42,377 shares.

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Posted in automobile bankruptcy , Saab bankruptcy

Number of Small Business Bankruptcies Declined in 2011

A recent study by Equifax finds that the number of small businesses that have filed for protection under bankruptcy law has dropped by 15.32 percent from the first quarter of 2010 to the first quarter of 2011.

While the drop in bankruptcy filings over the past year is good news for small business owners, the study also found that the total number of small business bankruptcies in the first quarter of this year are 30.03 percent higher than the number of filings in the first quarter of 2008, prior to the recession.

"In light of today's shifting economic conditions, bankruptcy trends serve as a valuable prism through which to evaluate the credit health of today's small business market," said Dr. Reza Barazesh, senior vice president of Equifax Commercial Information Solutions. "Our latest analysis shows that while business failures may be on the decline, conflicting trends are still making us question if the worst is behind us."

Small businesses in search of the appropriate law for which to file their bankruptcy under can typically choose from Chapter 7, or straight bankruptcy, which involves liquidation of non-exempt assets, and Chapter 11, or the reorganization plan, which allows the company to stay operational while a payment plan is formulated.

Small business bankruptcies declined in past year

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Posted in bankruptcy filings , bankruptcy law , chapter 7 , small business bankruptcies

US Bankruptcy Claims Trading Hits 12-Month High

Aug 23 (Reuters) - The value of U.S. bankruptcy claims traded in July was the highest since the same month a year earlier, according to a report released on Tuesday.
The face value of traded claims rose to $3.55 billion, the highest since $12.78 billion in July 2010, according to SecondMarket, which runs a claims trading platform.

The number of claims traded slipped to 1,340 in July from 1,809 in June but the number of underlying bankruptcy cases that had claims changing hands rose to 59.

Lehman Brothers Holding Inc, the largest bankruptcy in U.S. history, led both the number of claims and the value of traded claims, as it does every month.

Other active cases included restaurant chain Perkins & Marie Callender, telecoms firm Nortel Networks Inc and HearUSA Inc, a hearing-aid maker. (Reporting by Tom Hals; Editing by Gary Hill)

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Posted in bankruptcy , bonds , claims , US Bankruptcy

Bankruptcy Filings Down 8 Percent in 2011

ATLANTA - An 8 percent decline this year in bankruptcy petitions nationwide might appear to be a positive economic sign, especially for a country rocked by stock market volatility, a credit downgrade, and continued labor and housing woes.

 

Some industry experts, however, warn that optimism is not in order. The number of bankruptcies may be down, they say, because people cannot afford to file and because there is little pressure from creditors to do so.

The result may be a mass of looming bankruptcy cases, not unlike the shadow foreclosures feared in the real estate business. If the economy does not take a sharp turn for the better, those who have been teetering on the brink of bankruptcy eventually will be forced to file. What the impact of a large number of bankruptcies would be is unclear.

Jack Williams, a Georgia State University law professor who specializes in bankruptcy, said there is no indication that the number of bankruptcies is down as a result of people being better off.

“The economy hasn’t turned,’’ he said, “and, if anything, it may be going back down.’’

In the future, he added, “we’ll see a lot more people who have weathered the storm so far but cannot hold on any longer.’’ He refers to the group as “the invisible class of debtors who can’t afford to file.’’

It can cost as little as a few hundred dollars to file for bankruptcy, but the tab can jump to several thousand dollars depending on the complexities of the filing. People who have a house, for example, would pay more.

“We see people every day who can’t afford to file,’’ said Matthew Berry of Berry & Associates, an Atlanta bankruptcy law firm.

The number of bankruptcy petitions likely will rise when the employment situation improves, Berry said. When they are back at work, financially troubled individuals will be able to pay the price to file, and they will have the income to pay their creditors.

“As they go back to work,’’ Berry said, “collectors become more aggressive, and that will force them into bankruptcy.’’

Just how many bankruptcy cases are lurking in the shadows is unknown. Experts who suspect a large number of dormant cases base their assessments on the state of the economy and the number of filings at this time, which is lower than what would be expected given the dire condition of the economy.

Shadow bankruptcy cases are a concern in the business world, too, particularly for small companies. In some case, troubled firms do not file for bankruptcy, Williams said.

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Bankruptcy Minute - Making Headlines

Court rules Mexico's Vitro can vote on inter-co debt

MEXICO CITY, Aug 15 (Reuters) - Mexican glassmaker Vitro on Monday said a court in Monterrey ruled it can vote on its own inter-company debt, a sticking point that has mired the company's bankruptcy plans in court battles with creditors.

 

UPDATE 3-U.S. solar company Evergreen files for bankruptcy

* Company struggled with falling prices on solar products

Extended Stay creditors file amended complaint against lenders

Aug 15 (Reuters) - A trust representing creditors of the bankrupt hotel chain Extended Stay America Inc has filed a complaint against Lightstone Holdings and other parties to avoid obligations arising from the loans made by them to fund the 2007 leveraged buyout (LBO) of the hotel chain.

UPDATE 3-China plays down local govt debt risks, but concerns remain

* Paper says a third of such debt to be re-booked as general corporate loans

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Posted in china debt , evergreen bankruptcy , extended stay america creditors , local govt risks , Mexico Vitro bankruptcy

National Enquirer, Not For Sale

Aug 15 (Reuters) - American Media Inc, publisher of the National Enquirer and Star supermarket tabloids, is no longer up for sale, after the company's owners rejected an offer from Apollo Global Management, the Wall Street Journal reported.
The company, which also publishes body-toning magazines such as Men's Fitness had informally explored a sale earlier this year, the Journal reported citing people familiar with the matter.

WSJ cited people close the matter as valuing the company at between $500 million and $720 million.

The Journal also said the company's owners are happy with the job Chief Executive David Pecker is doing and are content to remain on the sidelines for now as far as deals are concerned.

The company -- which went through a "prepackaged" bankruptcy last year -- and Apollo Global could not be immediately reached for comment.

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Posted in National Enquirer bankruptcy , WSJ