Lions Gate Denies Bankruptcy Claim

Carl Icahn, the billionaire investor who is trying to buy out Lions Gate Entertainment Group, says that the company may be on the verge of bankruptcy. This allegation was vehemently denied by the movie studio who emphasized that they had a “strong balance sheet and ample cash” to carry out their operations and that they were in the process of negotiating with creditors to avert a potential cash default.

Icahn who owns almost 19% of the movie company that produced well-known movies like ‘Saw’ and ‘Mad Men’, accused Lions Gate of overspending. He has also made a $7 per share offer for a controlling stake in the mid-sized Hollywood studio.

Any shareholder who owns more than 20% of Lions Gate could trigger a technical default. This is in accordance to the movie company’s $340 million credit facility agreement. Icahn has received tenders for another 3.7% of the company’s shares. In addition on Thursday, billionaire shareholder and Dallas Mavericks owner Mark Cuban, who owns a 5.4% stake in the company, said he will likely tender to Icahn.

According to an open letter Icahn had recently written to the Lions Gate board, if they fail to find alternative funding or persuade lenders to waive defaults, it “may find it necessary to pursue a voluntary bankruptcy filing.” In the letter, Icahn goes on to say, “As one of the largest – and, I believe, soon to be the largest – shareholder of Lions Gate, I am extremely concerned about this possible eventuality and I would imagine that other shareholders are similarly afraid of having their equity wiped out.”

The company in its reply to Icahn’s letter, claimed that they are actively in discussions with creditors to seek a waiver or amendment to its credit facilities to prevent a default and are confident they will be successful in obtaining what they seek in the near future if necessary.

There has also been conflicting claims from both parties. Icahn claimed that he offered a bridge financing facility to Lions Gate to enable it to refinance its debt but the movie studio ignored it. On the other hand, Lions Gate denied ever coming across such an offer and stated that it would “welcome the opportunity to review the actual terms of a proposed bridge facility.”

With regards to Icahn’s $7 per share offer, Lions Gate’s stand is that it was too low. Icahn has been a Lions Gate shareholder since 2006 and has often been critical of its management seeing that the value of its stock has fallen from $12 in 2007 to around $7 today.

Many people have a wrong concept of bankruptcy and do not realize its benefits. Bankruptcy is your right under the law and it offers you protection from the hassles of creditors while you sort out your debts. Call us at (813) 200 4133 for a free consultation or visit http://tampabankruptcy.pro.

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    BP Shares Plunge Amid Bankruptcy Talk

    Shares of British Petroleum (BP) have fallen substantially since the oil spill disaster as investors deserted the British company in droves. It has lost about 50% of its value since the incident on April 20 as talk of bankruptcy gathers pace. The company is also facing increasing pressure from the US government to use the money it originally allotted for dividends for compensation and even for unemployment payments for thousands of US workers whose livelihood has been affected by the oil spill.

    Recently yet another sell-out of BP shares in New York that wiped out more than $82 billion in value from its stocks as it hit a 13 year low. BP trades in the US as depositary shares. President Obama got BP CEO Tony Hayward to put in writing BP’s commitment to pay for the cost of the entire cleanup of the Gulf of Mexico. Industry observers believe that the company would not be able to sustain paying for the lawsuits, cleanup and other expenses and would eventually file for Chapter 11 bankruptcy protection.

    However, BP itself states that it is unaware of the reasons for the loss of value in its shares. The company insists that it is able to weather the storm adding that it has assets of more than 18 billion barrels of proved reserves and 63 billion barrels of resources as at the end of 2009. Despite BP’s confidence, it is widely believed that the company is teetering. Many believe that BP will emerge out of this with a new minority equity partner and a changed ownership structure. However, there are various parties that believe otherwise. These include most analysts including those at respected global banking giant, Barclays Capital.

    BP’s total financial liability could very likely exceed $20 billion due to a slew of lawsuits and the Justice Department’s criminal probe which could result in hefty fines. Some estimates of the payout go as high as $40 billion assuming the leak continues till the end of summer and gets worse due to hurricanes.

    It is likely that BP would end up having part of its equity bought over by a Chinese oil company like PetroChina or Sinopec, which are state-run oil giants because a similar takeover by another Western oil company like Shell or Exxon Mobil seems out of the question. This is due to anti-trust laws and the amount of liability in question.

    The BP CEO was scheduled to hold an emergency meeting of shareholders last Friday to reassure them of the company’s balance sheet said to be worth $100 billion.

    Whether large corporations or small companies, everyone is affected by the economic crisis. If you are faced with huge debts, consider bankruptcy as a means of discharging your debts. Call us at (813) 200 4133 for a free consultation or visit http://tampabankruptcy.pro.

    Many Delaying Bankruptcy

    In 2005, the number of bankruptcies reached a record high of about 2 million. This prompted the government to pass legislature to prevent the abuse of bankruptcy. The Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) 2005 was to make it more restrictive and expensive to file for Chapter 7 bankruptcy which could cancel a majority of debts. But this legislation has brought about an unexpected result. Increasing numbers of debtors who ought to file for bankruptcy simply do not and are delaying bankruptcy.

    Although the number of bankruptcies could come up to 1.7 million this year, many Americans facing huge financial problems are trying to avoid filing for bankruptcy. Instead of filing for bankruptcy, many of these have entered a ‘shadow economy’ or informal bankruptcy. Student loan defaults, foreclosure and bank card defaulters are increasing. In March and April the percentage of credit card defaulters rose from 7.7% to 9.1% while bankruptcy filings fell by 4%.

    Those who took private student loans to fund their college studies have been hit particularly hard. Sallie Mae, the US’ largest private student loan lender projected that some 40% of $6 billion subprime private student loans will default. This works out to be 360,000 to 540,000 loan defaulters. To-date it has been very difficult for private student loan borrowers to file for bankruptcy. The law states that they have to show undue hardship. This involves a separate trial, extra costs, legal assistance and witnesses.

    Before the 2005 laws were introduced, only government issued and guaranteed student loans could be discharged by bankruptcy. But in April both the Senate and the House of Representatives introduced legislature that allowed private student loans to also be eliminated through bankruptcy.

    Aside from private student loan borrowers, why do people delay filing for bankruptcy even though they need to? One reason is the cost involved. Attorney fees and filing fees have both risen from $712 to $1,078 and from $209 to $299 respectively. Many delay until they receive their tax refunds before filing for bankruptcy. Others have drawn from their retirement funds to pay for bankruptcy related expenses.

    Another reason people delay bankruptcy is to save their homes. Bankruptcy does not protect your primary residence if it is held as security for a debt, although it can protect your summer home and yacht. As a result, home foreclosures have outnumbered bankruptcy filings with no signs of diminishing. In the first quarter of this year, the number of foreclosures rose by 16% year on year.

    More and more people are in need of bankruptcy. Is it time for a change in legislation? Many believe so.

    You can take advantage of the law that provides bankruptcy protection from your creditors and allows you the opportunity to clear your debts.  Call us at (813) 200 4133 for a free consultation or visit http://tampabankruptcy.pro.

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    4 Things You Should Prepare for if your State goes Bankrupt

    The State of Illinois is unable to pay $120.6 billion of their debts.  Here are some of their debts:

    •    Illinois bond borrowings: $29.1 billion
    •    Promised pension benefits: $62.4 billion
    •    Promised retiree health care benefits: $27.1 billion
    •    Miscellaneous (including payments to nursing homes, child care facilities, etc): $21.9 billion.

    The state Financial Comptroller Dan Hynes, said recently Illinois owes $5 billion to schools, universities, child-care centers and rehab centers around the state.  He calls it ‘obscene’, telling the New York Times: “This is not some esoteric budget issue; we are not paying bills for absolutely essential services”.

    Having overrun their budget over the years and borrowing to fund the deficits, the day of reckoning has arrived.  With billions owed in bond IOUs the state’s credit – the ability to borrow – has been depleted.  As a result, they are not able to pay their bills.

    Unlike the federal government, state governments cannot print money.  So the state has become bankrupt and in a bankruptcy, debts are discharged.  That means someone loses, whether it is a credit card company, a goods supplier, a medical care provider or mortgage lender, when an individual or company files for bankruptcy.  Now when it is a state government that goes bankrupt, the ones who lose are its citizens.

    So what should you do if your state goes bankrupt?

    1.    Save more money before you approach your retirement years.  As state funds dwindle, there will be cutbacks.  If you will draw a pension from a state agency (or most municipal agencies, school districts, etc) should expect to get less than the promised amount.  The federal government does not guarantee state pension payments.

    2.    Prepare to pay more in state income taxes.  Any government can only raise money in three ways – print it, borrow it or tax the citizens for it.  Since the first two options are out for a bankrupt state government, the only option left is the third one.

    3.    Prepare to get by on less state services.  Whether it be health services, subsidies or child care services, any one of them may be reduced or even canceled altogether.

    4.    Vote a prudent and responsible governor and leaders.  We need leaders who will cater for the needs of the people and not their own ego, leaders with the courage to say ‘no’ to grandiose projects – high-rise buildings, arts centers, mega events – that cost the state an arm and a leg simply to gain votes for themselves.

    Don’t wait for your state to run out of money and pay for the consequences.  If you yourself are struggling with debts, seek bankruptcy protection.  Call us for a free consultation at (813) 200 4133 or visit http://tampabankruptcy.pro.

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    Cooper Standard Exits Bankruptcy with Profit

    Auto supplier Cooper-Standard has exited bankruptcy in style – by making a profit. Cooper-Standard, the company that was set up as an offshoot of Cooper Tire and Rubber, emerged from bankruptcy last month with a healthy first quarter profit of $3.4 million. Now that it has exited Chapter 11 bankruptcy, it is now on the lookout for acquisitions and intends to hire workers. Its CEO, Jim McElya described the whole exercise as a ‘very successful restructuring’.

    Cooper-Standard’s exit from bankruptcy coincided with an upturn in auto production this year and this helped its transition from bankruptcy tremendously. Cooper-Standard is biggest maker of auto body-sealing systems in the world. They produce items like the seals between the doors and windows to make them watertight and keep out the dust. The company also makes tubes for the transmission of fuel, coolant and other fluids through a vehicle as well as parts for reducing vibration and noise.

    In addition, another factor that aided its emergence from bankruptcy was its cost cutting measures to withstand the economic recession. Shortly after its Chapter 11 bankruptcy filing in August 2009, Cooper-Standard had already started to restore pay that had been cut and the company’s 401(k) match.

    When it filed for Chapter 11 bankruptcy, Cooper-Standard was laden with $1.1 billion in debts, largely due to its formation in 2004 from its tire making parent company and its ownership change to the Cypress Group and Goldman Sachs. As the auto industry ground to a standstill in late 2008 and 2009, Cooper-Standard became one of many auto companies to file for bankruptcy as suppliers across the board struggled to stay current with their loan obligations.

    When it entered into Chapter 11, the company managed to reduce its debts by almost 60% to $480 million. It also paid off most of its creditors in full.

    McElya points out that the company intends to focus on expanding its business in Asia and putting more of its products on vehicles. The company’s goal is to increase its product per vehicle from about $100 to $500. At this point, the majority of Cooper-Standard’s business is made in North America and Europe with only 7% coming from Asia. The company aims to increase that figure to 25% to 30% as Cooper-Standard eyes new investment and potential acquisitions. Cooper-Standard employs about 16,000 workers worldwide, with 900 in Michigan.

    In particular, Cooper-Standard wants to shift its focus to smaller vehicles that still provide luxury as auto manufacturers producing such units would not want to scrimp on body seals and engine mounts that reduce noise.

    Bankruptcy has saved many individuals and companies from financial ruin and given them a new start.  Call us at (813) 200 4133 for a free consultation or visit http://tampabankruptcy.pro.

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    Dismal Bankruptcy Figures

    Bankruptcy figures continued to soar despite many big US corporations reporting positive financial results.  The number of filings jumped to 1.57 million (1,572,597 to be exact), up by 20% in the year ended June 30, 2010.  This figure is the highest in four years when the number of cases was 1.48 million in 2006.  At the same point of time last year, the number of bankruptcies stood at 1,306,315 cases, according to the Administrative Office of the US Courts.  The number of cases in July this year were up 9% over last July.

    Bankruptcy continues to be the last resort for many Americans seeking financial relief from household debt, unemployment and the economic downturn.  Bankruptcy attorneys say that many people who were laid off at the start of the recession nearly three years ago are now filing for bankruptcy after failing to find work, depleting their savings and retirement funds and accumulating credit card bills to pay for their expenses while they hunted for jobs.  Small businesses especially those in the financial and construction sectors have failed resulting in more middle- to upper-income families seeking bankruptcy protection.

    After two years in which the bankruptcy filings dipped below a million, in 2009 the number of filings rose to 1.31 million.  At this rate, the American Bankruptcy Institute predicts that the number of bankruptcies could rise above 1.6 million by the end of this year.

    As for business bankruptcies, the numbers rose by 8% to 59,608 in the year ended June 30, 2010 compared to 55,021 year on year.  On the other hand, personal or non-business bankruptcies as at June 30, 2010 came up to 1,512,989 cases compared to 1,251,294 cases at the same period last year.  this represents a rise of 21% according to the Administrative Office.

    At the same time, U.S. Labor Department figures indicate that claims for unemployment benefits rose unexpectedly over the past few weeks.  This data that shows the pace of a national economic recovery may be slowing despite the government’s stimulus packages and indicates many employers are still hesitant to add new workers.

    The biggest obstacle to economic recovery is unemployment that results in loss of income.  The national unemployment rate is currently 9.5%.  Besides this, the other two most common reasons people file for bankruptcy are divorce and high medical bills.

    Nevertheless, many people have found bankruptcy to be a blessing that saved their homes from foreclosure and discharged many if not all of their debts.  You can enjoy the benefits of bankruptcy, too.  Call us at (813) 200 4133 for a free consultation or visit http://tampabankruptcy.pro.

    Hedge Funds, Banks set to Control Bankrupt Newspaper Companies

    Bankrupt newspaper companies will soon be dancing to a new tune – that of their new bosses, hedge funds and banks. Over the last year, bankrupt newspaper companies including Tribune Co. that owns the Los Angeles Times, KTLA-TV Channel 5 and other news organizations, have been largely acquired by a cluster of ‘distressed debt’ hedge funds. Some of these funds include the New York based Angelo, Gordon & Co. and Alden Global Capital, and Oaktree Capital Management of Los Angeles. These hedge funds have been buying up delinquent debt on the cheap and then negotiating in bankruptcy court over control of these publishing companies.

    It is common to find these hedge funds combining their resources with banks like JP Morgan Chase & Co. who have themselves also come into ownership of many financially troubled newspaper companies. How these new owners will manage the newspapers remains to be seen. Industry observers predict that these hedge funds will be trying to recoup their investments as soon as possible with ventures such as spinoffs, acquisitions, public offerings and other transactions.

    In Southern California in particular, newspaper deals may be rife. One example could be Tribune Co. and Freedom Communications that both filed for Chapter 11 bankruptcy in 2008. Prior to that, Tribune and Freedom Communications Inc. held talks about the possibility of Los Angeles Times buying Freedom’s Orange County Register. But now that Angelo, Gordon and JPMorgan are set to become majority owners of both companies, such talks probably will probably resume. In addition, other options for merging newspaper assets will also be likely discussed. But all such talks can only be carried out after Tribune Co. emerges from bankruptcy (Freedom already has).

    Freedom Communications has a new Chairman of the Board in James Dunning Jr. who had been tasked with looking into ways to boost company value in order to monetize the investments of their new owners.

    Should Tribune emerge from bankruptcy sometime this year, just about the entire Southern California newspaper market will be owned by owners having financial interests more focused on ‘creating value’ than respecting corporate boundaries. Angelo, Gordon and JP Morgan Chase & Co. will be the major shareholders in both Tribune Co. and Freedom Communications. In like manner, Alden Global Capital also has part ownership of Freedom and the parent company of MediaNews Group, owners of the Los Angeles Daily News and eight other area papers. And another private equity fund Platinum Equity owns the San Diego Union-Tribune.

    Bankruptcy can be a very daunting affair if you are not given the right advice.  To take advantage of the protection the law gives you from your creditors through bankruptcy, call us at (813) 200 4133 for a free consultation or visit http://tampabankruptcy.pro.

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    Bankruptcy Expenses Soar for Washington Mutual

    The expenses that bankrupt Washington Mutual has incurred in the bankruptcy process have exceeded $100 million. The exact figure through April 30 billed by 26 court-approved professional companies came up to more than $102.8 million, according to the regulatory filing made by Washington Mutual Inc. (WMI) recently.

    Sadly, this huge amount of money will not be going to the now bankrupt mutual fund company’s ex-employees or clients who have lost money when it collapsed. Instead, the bulk of the money will go to WMI’s many creditors.

    The bankruptcy, which has now gone into its 20th month, has been fought over by attorneys from every side. These attorneys are handsomely paid to fight over a company that has insufficient funds. Attorneys representing several contending groups are paid out of the bankruptcy estate from which all claims are reimbursed. The fact is that fees for bankruptcy professionals have gone up by 8 to 10% per annum over the last 10 years. This growth represents four times the rate of inflation.

    For example, the estate pays for both WMI’s main legal firm which is wants to finish the case quickly and for the legal firm that represents shareholders who want more time to arrange to file lawsuits against federal regulators and JP Morgan Chase. But the biggest chunk of expenses goes to the firm that runs the now defunct WMI, Alvarez & Marsal that was paid $36 million through March for providing a chief restructuring officer and staff.

    As it is, only a small proportion of the WMI bankruptcy money is being spent in the Northwest, more specifically, the law firms Perkins Coie and Davis Wright Tremaine are paid $1.6 million and $676,000 respectively whereas the consulting and actuarial firm Milliman’s fees come up to only $27,000.

    It is the East Coast firms such as Weil, Gotshal & Manges who represent WMI and Akin, Gump, Strauss, Hauer & Feld who are the attorneys for the unsecured creditors who take the lion’s share of the legal fees at $18.9 million and $10.3 million respectively. Besides these two big firms there are also at least three smaller ones giving legal advice on tax law in addition to intellectual property consultants. These top lawyers’ fees in the WMI bankruptcy are $925 an hour.

    The total fees and expenses are estimated to hit $189 million if the bankruptcy continues throughout 2010. An attorney for WMI stated that for every month the bankruptcy process carries on, the debts owed to bondholders grow by $30 million.

    Bankruptcy expenses do not have to cost you an arm and a leg if you have the right legal advice.  In fact, bankruptcy actually saves you money that you would otherwise have to pay in the form of debts.  Call us at (813) 200 4133 to find out more about bankruptcy or visit http://tampabankruptcy.pro.

    Flying J to Exit Bankruptcy

    Fuel stop chain owner and oil refiner Flying J plan to exit bankruptcy this year after 19 months under Chapter 11 bankruptcy since December 2008. Flying J cited falling oil prices and an inability to obtain credit as its reasons for filing bankruptcy. The company is also seeking FTC approval for its proposed merger with long-time rival, Pilot Travel Centers. Ogden-based Flying J owns 270 travel centers and fuel stops have submitted their reorganization plan to the bankruptcy court.

    Upon exiting bankruptcy the company will be a smaller but debt-free one that Forbes magazine once rated as a top 20 private company in the US with total turnover of $18 billion in 2008. Bankruptcy has resulted in Flying J reducing its number of plants and associated companies. Its oil refinery in Bakersfield, California was sold for $40 million to Paramount Petroleum Corp., a subsidiary of Alon USA Energy together with the value of the refinery’s inventory. Another company that was sold was Flying J Insurance Services that underwrote insurance policies for truckers and the companies they worked for. The buyer was The Buckner Company, an insurance broking company based in Salt Lake City, Utah and the sale took place in November.

    In July last year, the Longhorn Partners Pipeline subsidiary company was sold to Magellen Midstream Partners for $250 million including the value of Longhorn’s petroleum products in its conduit that was 700 miles in length between Houston and El Paso, Texas. It was in July also that Flying J agreed terms to sell its fuel stop business to Pilot Travel Centers that operate 300 travel centers in the US. On its part, Pilot agreed to provide $100 million to Flying J as ‘debtor in possession’ financing to help it through its bankruptcy process.

    Another refinery in North Salt Lake was originally put on the market but Flying J decided to keep it at the end. Other companies retained include Transportation Alliance Bank that provides financial services to truck drivers and their companies, Transportation Clearing House (TCH), a credit card issuing company and a stake in the merged Pilot-Flying J travel center company. How much equity Flying J will own in the newly-merged company has yet to be determined.

    In another related matter, Flying J has settled a lawsuit it initiated against Comdata Corp, an electronic payment processor. With this settlement, TCH’s fleet cards will now be accepted at the point of sales by Comdata’s devices.

    If you are faced with huge debts, consider filing for bankruptcy.  Bankruptcy enables you to either discharge your debts through liquidation or pay off your debts progressively through a scheduled payment plan.  Call us at (813) 200 4133 for a free consultation or visit http://tampabankruptcy.pro.


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    American Apparel heads for Bankruptcy

    American Apparel heads for Bankruptcy

    American Apparel Inc., a garment retail company that popularized the hipster, is struggling in financial deep waters. It’s maverick CEO and chairman, Dov Charney owns 53% of its stock and is known to be a very hands-on leader, personally evaluating fabrics and choosing designs in his LA factory. But he is not known to be as meticulous when it comes to financial matters.

    The garment manufacturer lost its auditor, Deloitte & Touche LLP when the firm quit stating that American Apparel’s 2009 financial statements might not be reliable. The Federal Securities and Exchange commission requested for documents used to prepare the financial statements. An American Apparel’s lawyer said the files would be submitted as requested. The company was also subpoenaed by the US Attorney’s Office over the irregularities in its auditing after Deloitte & Touche quit.

    Following reports of a preliminary second quarter loss, the company’s shares plunged into penny stock territory. Lenders are withdrawing their support and the company might not have enough reserves to last another year. Store-wide sales figures have fallen by double digits and the company’s debts amount to $120 million as at June 30, if company figures can be believed in the first place. All these are typical signs of a company heading for bankruptcy.

    What may prove to be the last nail in the coffin might be the Immigration department’s raid on American Apparel’s factory in Los Angeles recently that resulted in the arrest of 1,500 factory workers. It was a deemed to be an inevitability according to observers. Two years ago, Charney displayed an American Apparel print advertisement that featured two Guatemalan-born employees likening the US immigration laws to an apartheid system.

    The loss of the factory workers resulted in delayed order fulfillment, shortages in key products and further worsened the company’s financial problems. American Apparel might now be delisted from the New York Stock Exchange Amex because it could not submit its second quarter financial statements after Deloitte & Touche’s departure.

    It is also desperately in need of a new funding source after it was revealed that the company might default on a $75 million loan from Lion Capital LLP, a private equity fund based in London. But any new investor coming in would almost certainly change the entire management of the company, pushing Charney out of the hot seat of the company he built from the ground up.

    If you or your company face financial problems too big for you to handle, consult us for advice on bankruptcy. Bankruptcy is your right under the law and will protect you from your creditors giving you time to sort out your finances and repay your debts. Call us at (813) 200 4133 for a free consultation or visit http://tampabankruptcy.pro.

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