Can Bookstores Survive without filing Bankruptcy?

Amazon.com and its Kindle – and the many other versions of electronic readers – account for increasing percentages of books sold. And the Internet has become the go-to source for recipes, gardening tips and more, cutting sales of reference books. But many in the industry are surprisingly upbeat about their future, even if they temper their optimism with caution.
Book sales across all platforms in 2010 actually increased 3.6%, totaling $11.25billion, according to the Association of American Publishers.  The biggest jump in categories came in e-books, with sales of the digital books amounting to 8.32% of the market, but still new bookstores emerged, even during the recession.  “Since 2005, we’ve seen 437 new stores open,” said Meg Z. Smith of the American Booksellers Association.  “Even now, after the economy took a dip, last year we had about 30 new stores.  There are booksellers schools being conducted all the time,” Smith added.  “There’s still a lot of interest in the profession. Membership increased 15 percent in the last year. We would have been happy if it had been flat.”
The idea of being more than just a big brick box with reading material is the key to bookstores’ future.Many shop owners are starting to develop bookstores that are gathering places, with places to sit and lots of things to look at.  Bookstores now may include cafes, magazines plus a variety of other stuff.
The success of the Book Loft in German Village has been a prime example of creating a unique ‘experience’ for browsers.  Its rooms snake through several historic buildings and not only are stocked with their own book categories but also have separate sound systems to play themed music.
While much has been made of the impact of e-books on bookstores in the past decade, the big changes in the book business really began in the early 1990s, when the big chains, Barnes & Noble and Borders, began their expansion.  As a result, smaller bookstores had to go out of business.  The American Booksellers Association has about 1,700 member stores, compared with 3,200 a decade ago.
The other major challenge to booksellers was in the early 2000s, when online books became dominant.  But although sales of e-books undeniably have affected the bookstores, another aspect of the cyber world hurt was to become even more damaging to traditional bookstores.
It’s search engines.
These days instead of using a book for reference to anything you want to know about, people tend to search it out on search engines like Google, Yahoo or Bing.

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    Is the Philadelphia Orchestra Going into Bankruptcy?

    The financial crisis has not spared reputable music halls and performers like the Philadelphia Orchestra.  The Phil is in financial dire straits, and the board of directors believes bankruptcy gives us the best chance to save it.  Their financial problems did not develop overnight, but they have intensified in recent years.  The board feels bankruptcy protection is a better alternative to closing down altogether.
    There are plans to revive the orchestra, but in order to do that, the board needs some financial breathing space, free from the contractual entanglements that threaten their very existence.  Needless to say, the Phil also needs substantial support from the community of Philadelphia.
    Bankruptcy does not happen overnight.  For years, the Orchestra’s costs increased as revenues declined.  In addition, their operating deficit is expected to reach $14.5 million this year.  Due to these significant deficits, the Orchestra drew down their unrestricted endowment and, as that dwindled, raised $15 million in emergency funding from the board and a small group of donors.
    Today, their unrestricted endowment is nearly exhausted, as has their emergency fund and cash reserves have fallen to $3 million.  Money will run out soon.  Their costs are too high, coupled with falling revenue, it spells no alternative but bankruptcy. The audience is the lifeblood of the orchestra, providing ticket revenue and a vital donor pool.  But over the last two decades, attendance has declined from 250,000 to 150,000 annually, and half of that decline has been in the last five years.  As a result, ticket revenue has declined to only a third of expenses, and donations have fallen to half the level of other major orchestras.
    The Phil has appealed to the community to understand their financial problems which are beyond the capacity of the board to cure alone.  Their decision to file for bankruptcy was no clever trick to remedy a problem they could have solved outside bankruptcy.
    There has been a mistaken belief that potential major donors offered to help only if the Orchestra filed for bankruptcy.  This has been refuted by the board.  The bankruptcy decision was made by the board alone after months of consideration.
    Another myth was that the orchestra does not have $140 million in assets to meet financial obligations. The orchestra and the Academy of Music together have $140 million in restricted endowments.  But they are limited by law and donor restrictions to spending only the income from endowments, not the endowments themselves.  Furthermore, spending the endowments would not be the answer.  It would only deplete income further and their ability to attract endowment gifts.

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      Pelican Pools Bankruptcy Raises Ire

      Pelican Pools has filed for bankruptcy, leaving its clients with uncompleted pools and raised tempers.  The exact cost to the pool owners is possibly in the hundreds of thousands of dollars in work that was paid for and not done, subcontractors placing liens on their properties and payments to other pool makers to finish the work.
      According to Howard White, building services director with St. Johns County, there were no “tell-tale signs” of problems at Pelican Pools.
      The announcement of Pelican Pools’ bankruptcy also left subcontractors, like Paul McKinney of McKinney Electric LLC, empty- handed.  In March, Pelican Pools paid McKinney $6,800 out of the $17,000 it owed the company for electric work on local pool installations.  In the month of April, McKinney worked on 14 more pools for Pelican but never received a single cent.
      The ripple effect touches pool owners.  McKinney said he was forced to place liens on the pool owners because of the thousands of dollars he owes to suppliers.  McKinney said it was not what he wanted to do, but felt he had no choice.
      For the owners of pools that Pelican Pools had been building, it means that they not only have paid Pelican, they will have to pay the subcontractors whom Pelican Pools had not paid, as well as pay another pool company to finish the work.
      To safeguard yourself from these problems, Howard White, Building Services director for the St. Johns County Building Services Department, offers these tips to help find a reliable contractor:
      1. Do your research
      Check out different company advertisements and ask around town to check on the builder’s reputation.  Call the county building services department and ask about complaints filed against the company with the Department of Business and Professional Regulation and their construction history.  Building services department officials can tell you if a company has moved forward on a job without a proper inspection, or even if they postpone county inspections.  You can also call the local Better Business Bureau chapter to see what kind of rating the company may have.
      2. Thoroughly understand the contract before you sign
      If a contractor is asking for 50% or more of the cost of the job up front, be wary.  Look at those percentages and decide what looks logical and fair and then negotiate.  Once you sign a contract you’re bound by those terms no matter what it says. 3. Communication is important
      Once a job is started, keep in touch with your contractor as often as possible.  You can ask your contractor if they have already paid for the materials and subcontractors who are working on your property.  Ask to sign a “release of lien” form through your contractor that releases you from any responsibility of late or unpaid subcontractors.

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        Is Bankruptcy the Answer to Cash-strapped Local Governments?

        About 3 years ago, the city of Vallejo declared Chapter 9.  Recently the New York Times highlighted the city’s plight –  40% of the police and city workforce has been cut and 50% of the firefighters are gone.  Fire calls needs to be answered by neighboring departments and only the most serious crimes are investigated.  So many prostitutes have descended on Vallejo, Time magazine characterized the influx as a ‘plague.’
        Now, after years of negotiations between interested parties like unions, retirees, bondholders and unsecured creditors spending more than $10 million on legal fees, Vallejo is finally hoping to reach agreements with its creditors.  Even the city’s lawyer called bankruptcy proceedings a ‘waste of time and money.’
        Filing for bankruptcy protection does not wipe the slate clean.  Under Chapter 9 bankruptcy, the judge can either dismiss the case or try to herd the creditors while the case is pending.
        It is extremely difficult to bring local groups together to find common ground.  What is needed is for a municipality to engage in mediation with its creditors, employees and stakeholders before filing a bankruptcy petition.  California is one of only 10 states that allow municipalities to file for bankruptcy without first having some form of intervention.
        But if mediation is required and facilitated by an independent third party mediator it would help parties identify alternatives to bankruptcy that would satisfy all concerned.  Unlike Chapter 9, mediation provides for constructive communication and an exchange of information.  It allows all significant creditors and employee groups to devise a plan of rehabilitation without the costs of going through this process in a formal bankruptcy proceeding.  This new approach would not prohibit municipalities from filing Chapter 9, nor would it create a new bureaucratic system requiring state approval.
        Vallejo council member Stephanie Gomes summed it up nicely when she said, “It’s best to negotiate your way out of the fiscal problem, before you go into bankruptcy.”  Municipal bankruptcy may not always be the answer or the cure for all financial ills.  Mediation will provide a chance for better negotiations that protect the taxpayers and communities.

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          How Bankruptcy Affects your Credit Score

          If you wish to consider filing for Chapter 7 or Chapter 13 bankruptcy, you need to know how it affects your credit score.  Nearly 50% of consumers do not understand the purpose of their credit score according to a survey by Consumer Federation of America and Fair Isaac Corporation.  A consumer’s credit scores is used by financial institutions to decide whether to extend or deny credit to that consumer.  In addition, it can also affect the interest rates and amount of loan you receive.  So a poor credit score can make borrowing more costly.
          The most commonly used formula to determine a person’s credit score is the FICO score, developed by Fair Isaac using 22 pieces of data from 3 major reporting agencies namely TransUnion, Equifax and Experian.  Scores range from a low of 300 to a high of 850, with the average score being 723 according to Bankrate.com.  In addition there are five other data points that make up the bulk of the FICO score:1. Payment history (35% of the rating)2. Length of credit history (15%)3. New credit (10%)4. Types of credit used (10%)5. Debt (30%)
          If you have filed for bankruptcy, your credit score can fall.  A foreclosure can result in an 85-160 point drop and bankruptcy taking a score down 130-240 points.
          Accounts discharged in a bankruptcy will remain on your credit report for a maximum of seven years.  The bankruptcy itself, however, can remain on the credit report longer depending on which chapter you file.  If filing under Chapter 13, the bankruptcy can remain noted on your credit report for 7 years.  If filing a Chapter 7, 11 or 12, the designation can remain for up to 10 years.
          But you can improve your long term credit score by taking several steps:1. Pay bills on time.  This is the most weighted factor in FICO scores.  If you are always late, your score can drop as much as 100 points.2. Keep credit balances low.  FICO scores calculate your score based partly on your available credit to your outstanding balances.3. Close your credit accounts.  Creditors like to see consumers with established and lengthy credit histories.4. Use discretion when applying for credit.  When you apply for credit, lenders request a copy of your report.  This request is noted on your credit report and can reduce your score.
          Perhaps the most important thing to do when rebuilding your score is to be patient.  It can take some time to rebuild credit, but by living within a budget and paying your bills on time your score will gradually improve.
          Bankruptcy is a complex process, but can give people the fresh start they need. If you are considering bankruptcy or concerned about how it will affect your credit and your future, call us at (813) 200-4133.

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            Blenko Glass files for Bankruptcy Protection

            The last remaining factory that makes mouth-blown, hand-pressed glass products in the US, the Blenko Glass Co. in Milton has filed for Chapter 11 bankruptcy protection.  Its financial problems come from the garnishing of its funds by a former gas supplier, Big Two Mile Gas Co. to whom Blenko owes more than $500,000, according to the bankruptcy file.  Charleston philanthropist Ed Maier is part owner and president of Big Two Mile Gas.
            Blenko employs 49 workers and plans to reorganize while continuing normal operations under bankruptcy.  The company does not intend to lay off any of its employees.
            Blenko Vice President Katie Trippe said, “Blenko Glass has encountered many operating difficulties in recent years, including the current economic recession.  Blenko has been working to improve its operations and to become more efficient, as well as to increase its sales.”
            Many observers are of the view that the bankruptcy filing wasn’t unexpected when in 2009 Blenko temporarily stopped production because of a legal dispute with Big Two Mile.  The gas company had sued Blenko four years earlier.  But Blenko lost the case and was ordered to pay more than $500,000.Blenko found a new gas supplier and resumed production a short time later.
            However, Blenko never paid off the $514,000 owed to Big Two Mile Gas, according to the bankruptcy filing.  It actually owes Big Two Mile Gas more than $900,000 which is made up of $514,000 plus $400,000 in interest.  On Wednesday, a Cabell circuit judge lifted a temporary restraining order that allows Big Two Mile Gas to start tapping Blenko’s bank account to collect the outstanding bill.
            Blenko owes money to 58 creditors.  It has assets worth $500,000 to $1 million, and liabilities at $1 million to $10 million.  According to bankruptcy papers, Blenko also owes $1.16 million to Blenko President Walter Blenko, and $1.135 million to Don Blenko Jr, a former vice president, the Cabell County Sheriff’s Office ($153,898), Huntington filmmakers Witek and Novak ($83,451), current gas supplier Teavee Oil and Gas ($76,973) and Mountain State Blue Cross ($435,868).
            Having not invested money to improve its plant is one of Blenko’s major undoings.  For instance, the factory continues to use old gas ovens.  Newer electric ovens would lower production costs while still producing high-quality glass products.  The Blenko family also has shown reluctance to pursue state government grants and low-interest loans to raise capital and turn the factory around.
            Nevertheless, Blenko’s financial struggles have not hurt the company’s sales.

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