A.G. Ferrari Food goes Bankrupt

One of the country’s oldest delicatessens, A.G. Ferrari Food has filed for bankruptcy protection.  Founded almost a century ago, the San Leandro-based Italian market filed for bankruptcy at the US Bankruptcy court in Oakland, citing between $1 million and $10 million in assets and about the same amount in liabilities.

Chief Executive Officer Paul Ferrari confirmed that despite the bankruptcy filing, there would not be any changes to the company operations.  He said, “Filing Chapter 11 will improve our cash flow and allow us to stabilize the business,” adding that the bankruptcy filing, “will help secure a strong future for the company.”

However, last week Ferrari Food closed its North Berkeley store in Solano Avenue, the only East Bay store to be closed.  All the other 12 stores will remain in operation.  According to bankruptcy records, the North Berkeley store employed 6 workers.  CEO Ferrari said the company will do its best to relocate affected workers.

The company also intends to renegotiate terms of some of its leases which are presently above market value.  Depending on the outcome of discussions with landlords, this may lead to closure of several other stores outside of the East Bay area.  There are five East Bay stores that include two in Oakland, one in Lafayette and one in Berkeley besides the one that was closed.

Outside of the East Bay area, Ferrari Food has three stores in San Francisco, and one each in Belmont, Corte Madera, Los Altos, Palo Alto and Sunnyvale.

Experts believe that Ferrari Food is an example of retailers that could be severely affected by the economic downturn because of their high rentals in small locations leading to high costs of operations.  In addition, many shoppers are tightening their belts due to the economy resulting in stiff competition for business from other rival companies.

Ferrari Food had its humble beginnings in San Jose in 1919 when Annibale Giovanni Ferrari opened his first store there.  Modeled after the family store in Italy, Ferrari made and sold pastas sauces, olive oils, vinegars and other offerings chosen to represent items from all 20 of Italy’s food regions.  Before long, Ferrari moved his store from San Jose to Berkeley’s Elmwood district as many of his customers were from UC Berkeley.

Paul Ferrari represents the third generation of Ferraris keeping the tradition of running the family store.

If you or your business wishes to file for bankruptcy protection, call us at (813) 200 4133 for a free consultation.

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American Apparel Bankruptcy Likely

American Apparel Bankruptcy Likely

American Apparel, the trendy clothing company, has announced that it may be soon filing for bankruptcy after massive losses amounting to $86 million last year.  In addition, its CEO Dov Charney, who has allegedly called women ‘sluts’ and the ‘c’ word, is facing sexual abuse charges by several store employees.

The clothing company has been unpopular of late especially with women’s groups not only because of Charney’s sexual abuse charges but also of using scantily-clad women in their marketing campaigns.  Most people believe that American Apparel’s advertisements of practically nude women and Charney’s sexual assault charges have played a major role in the company’s poor business performance and potential bankruptcy.  Bad publicity spread by word of mouth and coupled with the reports of Charney’s bad behavior have significantly contributed to the company’s downfall.

The company has a tainted history of questionable and sexist marketing strategies like their Best Butt contest last year.

Allegations of sexual harassment by female store workers have also hurt the company’s reputation.  Former American Apparel employee Kimbra Lo filed a lawsuit against Charney alleging he he told her to visit his home and then “violently kissed her” once she arrived.  She also alleges that Charney started sending her “sexual text messages” in July 2010.

Earlier this year, Irene Morales, a former American Apparel sales clerk accused Charney of keeping her as his sexual prisoner.  She also alleged that Charney told her he couldn’t wait for her to reach the age of consent so they could have intercourse.  But Charney’s lawyer Stuart Slotnick dismissed Morales’ claims and pointed to a series of naked photos of her and e-mails that “show she was stalking Mr. Charney and acted inappropriately by offering him sex acts in exchange for material possessions and money.”  However, whether or not Morales is to be believed, Charney has years of sexual harassment and abuse charges to face.

If you would like to find a way out of your financial difficulties, consider filing for bankruptcy protection.  This is your right under the law.  Call us at (813) 200 4133 for a free consultation.

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Bankruptcy the only Remedy against Deficiency Judgments

There is a little-known danger most homeowners are not aware of.  It’s the danger of deficiency judgments.  A deficiency judgment is a decision by a judge to award a creditor the right to claim the shortfall between what was owed and the amount that was appraised on a property.  For instance, if your mortgage is outstanding by $300,000 but the appraised value of your house at the time of foreclosure is only $180,000 your lender can apply to the court for permission to claim the shortfall (called a ‘deficiency’) of $120,000 plus interests from you.  This is what is known as a deficiency judgment.

What a deficiency judgment means is that your worries are not over the moment you hand over the keys to your foreclosed house to your bank.  In addition, a deficiency judgment can be brought against you not only by your primary mortgage holder but by the secondary mortgage holder, the mortgage insurer or even government entities like Fanny Mae and Freddie Mac.  Also, bear in mind that in Florida the lenders do not have to file for deficiency judgment straight after a foreclosure.  The court grants them up to five years to do so and once the deficiency judgment is granted, the lender has up to twenty years to collect the debt.  Even if you move to another state, you are still liable.  Imagine, even if you are short of cash now, your lender can still claim from you years from now after you have become more financially stable.

But how does a lender claim money from you through a deficiency judgment?  This can be done in several ways.  A deficiency judgment gives the right to the lender to access your bank account information, tax returns, salary statements and other financial information.  This means the lender can garnish your wages and/or take money from your bank accounts to recoup the debt you owe them.  Furthermore, they can also seek sanctions like bench warrants and contempt of court orders against you as well as seize your assets like vehicles, valuables, jewelry, rental properties etc.  The only types of assets they cannot touch are your primary residence, 401(k)s, IRAs and income below a certain amount.  Anything other than these is fair game.

If you fail to pay up your dues in the deficiency judgment, you could end up in jail.

If your address with your lender is not updated, you should update it immediately.  This is because if the deficiency judgment is held by the same party that forecloses your property, you will be notified by mail.  If you have not updated your address with the court, you might miss the deficiency judgment notice and thereby lose the chance to challenge it.

With the plummeting prices of real estate, it is clear that the number of deficiency judgments can only rise.  Last year, courts in Florida granted more than 210 deficiency judgments in several counties like Fort Myers and Cape Coral.  This was five times more than in 2008.  This year in February alone, 33 deficiency judgments were granted, more than double in the same month last year.

Is there a solution?

Yes, there is.  It’s called bankruptcy.

Filing for bankruptcy protection is the only means for you to avoid paying deficiency.  A deficiency judgment is so threatening because of its long shelf life and unrestricted geographical reach.  But if you are under bankruptcy protection, the bankruptcy court either gives you the chance to pay off your debts in installments or forgives certain debts entirely.

If you wish to file for bankruptcy protection whether it is to avoid a deficiency judgment or for other reasons, give us a call at (813) 200 4133 for a free consultation.

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Jesuit Diocese in Bankruptcy Compensates Abuse Victims

The Northwest Jesuits and their insurers have agreed to a $166.1 million settlement to compensate more than 500 victims of sexual and physical abuse in five states.  Some accounts of abuse date back as far as the 1940’s and originate from dioceses from Alaska to Montana.

The agreement to make compensation came 766 days after the region’s Jesuit leadership filed for Chapter 11 bankruptcy.  The filing came after a long series of payouts by the Portland-based Society of Jesus (Oregon province) amounting to about $25 million in abuse claims dating back to 2001.

Lawyers representing a total of 534 creditors said most of their clients were sexually abused by Jesuit priests across the province, which encompasses Oregon, Washington, Montana, Idaho and Alaska.  About 25 creditors said they were subjected to physical abuse by priests and nuns.

This latest settlement of $166.1 million is the highest payout by a Catholic order or diocese since the US Catholic church’s sex abuse scandals broke out in 2002 in the Archdiocese of Boston.

The settlement agreement stipulates that the province will pay $48.1 million and its insurer, Safeco, will pay $118 million.  About $6.4 million of that money will go into a pool to settle future claims.  Up to 40% of the settlement money will be used to pay attorneys and settle legal fees.

None of the Jesuit properties, including Beaverton’s Jesuit High School, Seattle University or Spokane’s Gonzaga University will be affected by the settlement.  However, the settlement agreement does not annul 37 lawsuits filed last month against Jesuit High, Gonzaga University and other organizations.  In these lawsuits, plaintiffs are claiming about $3.1 million that the province paid out before filing for bankruptcy last year.  There are also up to 7 other claims lawyers are pursuing from two of the Jesuits’ insurers apart from the settlement.

The Society of Jesus Oregon province’s top official, Rev. Patrick Lee declined to comment on the settlement, saying, “Due to the Society of Jesus, Oregon Province’s current Chapter 11 Bankruptcy status, as well as out of respect for the judicial process and all involved, we will not comment on today’s announcement.”

Although none of the 1,245 students presently studying at Jesuit High is affected, the school’s president, John Gladstone said the settlement gave him a sense of satisfaction for victims.  Others who were beneficiaries of the good works of the Jesuits were gutted to hear the news about the settlement.

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