Bankruptcy Judge Grants Philadelphia Orchestra Approval for Labor Agreement

Bankruptcy Judge Grants Philadelphia Orchestra Approval for Labor Agreement

After lengthy negotiations, a federal bankruptcy court judge has approved a new labor agreement between the Philadelphia Orchestra Association board and its musicians’ union. The agreement will last for four years and comes into effect November 1.

In a written order last Thursday, bankruptcy judge Eric Frank confirmed he would approve the deal. Under the renewed terms of the agreement, the number of musicians will be reduced from 105 to 95 through retirements and attrition and musicians’ salaries will be cut by about 15%. At present, the minimum salary for Philadelphia Orchestra musicians is about $125,000 a year.

There will also be amendments to current pension benefits. Presently, the musicians enjoy a guaranteed monthly benefit upon retirement under a defined benefit plan. This will now be changed to a defined contribution plan which shifts retirement planning and investing to workers but doesn’t guarantee a specific amount of money based on years of service. Under the new agreement, the pension change will now go for approval by Pension Benefit Guarantee Corp, a federal agency that insures the pensions of more than 44 million US citizens.

The Philadelphia Orchestra Association board estimates the new agreement will bring about a savings of about $38 million over the four years.

The renowned Philadelphia Orchestra became the first major US orchestra to file for Chapter 11 bankruptcy protection in April this year. The 111-year old orchestra has been facing financial difficulties for a long time due to shrinking attendances, an aging audience, fewer donations, high labor costs and the effects of the recession.

Last month, the bankruptcy judge granted the Orchestra approval to terminate its business relationship with Peter Nero and Philly Pops, which was going on for the last 6 years but which the Orchestra claimed was detrimental to its finances.

But the Orchestra is not out of the woods yet. The next step in reorganization will be to renegotiate terms of its rental agreement with the Kimmel Center. The Kimmel Center says the Orchestra owes it about $1.4 million in unpaid rental.

The developments augur well for the continued running of the Orchestra. Although it is not good enough to meet its initial goal to emerge from bankruptcy by the end of the year, it should be able to do so by early next year.

If you are struggling financially, consider filing for bankruptcy as a means to start afresh. Call us at (813) 200 4133 for a free consultation.

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    Kodak Teetering towards Bankruptcy, May Sell Patents

    Kodak, the brand name that has become almost synonymous with photography, is almost bankrupt. In its 131-year history, Kodak popularized photography and marketed the world’s first flexible role of film in 1888. Eastman Kodak Co. also invented the first digital camera in 1975 and developed cell phone photo technology. Now the photography giant intends to sell its patent in 1,100 digital imaging inventions to raise funds to fend off bankruptcy.

    Kodak’s undoing is quite similar to that of Border’s, the retail bookstore chain. Kodak did not capitalize on its knowledge in digital photographic technology. As a result, Kodak fell behind as its cash reserves started to dwindle. Now it is faced with the prospect of putting up its patents in the open market, which analysts estimate would fetch between $2 and $3 billion.

    But judging from more recent trends, the sale of the patents could fetch considerably more than just a couple of billion dollars. Digital product makers want to protect themselves from potential lawsuits, so they buy up patents. Google bought Motorola Mobility for a cool $12.5 billion not just for its mobile technology but also to own its 17,000 patents. And earlier, Microsoft and Apple joined forces to buy a suite of patents valued at $4.5 billion from Nortel Networks.

    Christopher Marlett, CEO of MDB Capital, an investment bank based in Santa Monica that specializes in intellectual property said, “There is an all-out nuclear war right now for global dominance in smart phones, tablets and mobile devices, and Kodak has one of the largest cache of weapons sitting there.”

    But regardless of the amount raised by the sale of the patents, it is unlikely to be the panacea Kodak is looking for. The company has to find new and consistent sources of revenue in the face of dwindling film sales. Kodak has been working on building up a high-margin inkjet printing business since July but there’s no telling how profitable this venture has been thus far. In the meantime, cash reserves have fallen from $1.6 billion in January to $957 in June.

    Kodak’s inkjet printers, home photo printers, high-speed commercial inkjet presses, workflow software and packaging are the company’s new core business, speculated to bring in nearly $2 billion in revenue in 2013, about 25% of Kodak’s total sales.

    But from now till 2013, Kodak may have to raise money to tide it over, which is where the sale of its patents comes in. The patents are for capturing, storing, organizing, editing and sharing digital images.

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      Chinese Investors Save Saab from Bankruptcy

      At the 11th hour, Chinese investors Pang Da and Youngman have agreed to buy over 100% of Swedish auto maker, Saab thus saving the debt-ridden company from bankruptcy. The purchase price – €100 million or $142 million. Victor Muller, Chief Executive of Saab said, “After the better part of seven months of agony for the company we have come to a point where we can proudly say that we made it.” As part of the deal, the Chinese companies have also agreed to provide long term funding.

      Altogether, Pang Da and Youngman will inject €245 million into the company in a deal including joint ventures and buy up about half of Saab’s shares. In addition, the Chinese will also provide a bridging loan of €70 million to tide the company over during a three-month restructuring that began in September.

      Saab had been granted approval for 3 months of renegotiation of debts and funding during which it will be protected from creditors and avoid filing for bankruptcy. Just last week, Saab’s court appointed administrator, Guy Lofalk applied to have Saab’s bankruptcy protection lifted, a move that would have opened the way for creditors to claim against the company and pave the way for bankruptcy. At that time, talks with the Chinese had fallen through after Saab’s owners, Swedish Automobile rejected Pang Da and Youngman’s initial offer of $30.4 million to buy over the company.

      In a sudden turn of events, Muller announced the deal was back on track after terms were renegotiated and have become acceptable. At that point, Lofalk withdrew his petition to lift bankruptcy protection.

      Under the new proposal, Youngman will buy 60% of Saab and Pang Da will buy 40%. According to Muller, the Chinese had agreed to provide funding to Saab that was “way in excess of the original agreement. It will probably be more like double that amount.”

      The new agreement would still require approval from a host of creditors, but Muller has expressed his optimism that they will find the new terms “convincing and compelling”.

      This buy over is now the second Swedish company bought by Chinese investors after another Chinese company, Geely bought over Volvo for $1.5 billion in August last year. Initially, there was also concern that the Chinese would move Saab’s operations to China should they become its owners. But now, it appears that they will continue operating in Sweden’s Trollhaettan plant. Geely also has not moved their production to China.

      Commenting on the deal, Sweden’s enterprise minister, Annie Loeoef said, “I am glad they have taken a step forward and that the reorganization will continue”.

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        Saab on the Verge of Bankruptcy, Rescue Plans Collapse

        As restructuring efforts fell through last week, Swedish auto maker Saab faces the prospect of bankruptcy. Earlier, there was hope that Chinese investors Pang Da and Youngman would pump much-needed funds into the auto company, thus averting bankruptcy. But the Chinese have now said they are only willing to do so if they are given 100% control of the company. At the same time, the amount of money they wish to invest is only $30 million.

        With these developments, it appears Swedish Automobile, the company that owns Saab has failed to save the renowned auto company. Ever since Swedish Automobile bought over Saab from General Motor in 2010, things have not boded well for the auto manufacturer. Workers have often gone unpaid and been denied job security.

        The trade unions have worked alongside Swedish Automobile to try to keep as many workers from leaving as possible. Last month, the company was given three months bankruptcy protection to allow it to “restructure”. This has given cause for the unions to support Swedish Automobile and Saab CEO Victor Muller. But now that rescue efforts have not gone to plan, there are fears that the bankruptcy protection would be lifted and the company would be faced with demands from workers for unpaid salaries.

        Guy Lofalk, the court appointed administrator, intends to apply for the bankruptcy protection to be lifted, saying, “It is my duty as administrator to apply for the reorganisation to cease. There is no time to find other solutions due to [Saab’s] financial situation. [It] is not in the current situation in a position suitable for continued reorganization.”

        If the Chinese take over, they would shift Saab’s operations to China where the same tasks can be done for a fraction of the cost. This move would have been similar to Swedish Automobile’ plan, which was to hand over at least a 53% stake in Saab to the Chinese firms.

        As a result of the developments, Saab has applied for a short term loan of €50 million from a US venture capital company, a move which would do nothing to ease the total debts the Swedish company is carrying, valued at €150 million last month. The figure would have since grown.

        Another possible option is to sell a stake in Saab together with the auto maker’s plan in Trollhättan to Muller’s associate, Russian businessman Vladimir Antonov. Antonov was kept out of the initial deal to buy Saab at the request of General Motors.

        On the part of the unions, they have not called for protests, demonstrations or marches at all. Instead they have merely issued statements stating they hope that Swedish Automobile could raise capital from new buyers.

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          Florida Couple Lose Estate in Bankruptcy Auction

          Claudio Osorio and his wife Amarilis, entrepreneurs from Venezuela now based in Florida have put up their 9-bedroom Star Island home up for auction. The couple is bankrupt and must sell their home to raise funds to repay creditors. The starting bid is $10.5 million and the auction takes place November 3. The final day to submit bids is November 1. If you are interested to make a bid, you need to show proof of your ability pay at least $10.5 million and make a deposit in escrow of $500,000.

          Osorio will be allowed to keep part of the proceeds from the sale of the Star Island property, about $500,000. Along with their Star Island estate, the couple is also selling their Colorado ski cabin and Swiss resort condo, assets that are likely to raise millions of dollars to repay their debts. The Star Island property auction can only raise a limited amount of money because the property has been highly leveraged over the past decade, including being used as collateral for two mortgages totaling $7 million.

          There should be some money to repay irate creditors of Osorio’s most recent failed venture, InnoVida Holdings, a company making high-tech building materials. Creditors are demanding $50 million from the company.

          For the past few months the bankruptcy trustee, Mark Meland had worked to liquidate all of the Osorios’ assets to pay off their debts, ranging from loans from BankUnited, the mortgage holder of the Star Island property, to investments from wealthy individuals like Chicago Bulls star Carlos Boozer, one of a group of current and former NBA players who invested $5 million into InnoVida. These investors have accused the Osorios of using lies, fraud and theft to prop up their lavish lifestyle instead of working to support InnoVida.

          The surprising thing about the bankruptcy reorganization plan is that Osorio, 52, would be allowed to again assume leadership as president of InnoVida, which would be renamed SPV. In the bankruptcy plan, Osorio promises to repay all debts of InnoVida. But the creditors and investors remain skeptical. One of them, Miami-based businessman Chris Korge, said through his lawyer, “We are immensely skeptical about the notion that this fraud-infected company could be or should be allowed to continue under a reorganization.”

          The bankruptcy trustee, Meland at first labeled Osorio’s reorganization plan a “farce” in court papers because InnoVida had no operating cash or viable projects anywhere in the world but later approved the plan because “under Mr. Osorio’s plan, the bulk of his personal assets – including the Star Island home – will be sold and paid to creditors.”

          In the meantime, Meland will continue to investigate Osorio’s financial dealings including transferring money from InnoVida to his personal accounts. He has not discounted the possibility of further lawsuits to recover more money to pay off debts.

          The Osorios, who once played hosts to then political aspirants Hillary Clinton and Barak Obama, are so deep in debt that they have been forced to do their shopping at Target and Marshalls departmental stores.

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            Southern Montana Electric Files for Bankruptcy, Raises Rates

            Southern Montana Electric (SME) Generation and Transmission Cooperative Board, a wholesale electric company made up of five rural electric co-ops in Central and Southern Montana, has filed for bankruptcy citing ‘acute cash flow problems’ as the reason. At the same time, three members of the board voted to raise electricity rates by 20%. This has been the fourth increase since December. However, some other board members claim they were kept in the dark. Dave Kelsey, an SME board member from the Yellowstone Valley Electric Cooperative said, “We had no clue this bankruptcy thing was coming. We should have been alerted to it.”

            The five cooperatives that make up Southern Montana Electric Generation and Transmission are Yellowstone Valley in Huntley, Beartooth in Red Lodge, Fergus in Lewistown, Tongue River in Ashland and Mid-Yellowstone in Hysham. Among them, Yellowstone Valley and Electric City Power of Great Falls has sued to terminate their association with SME but the bankruptcy proceedings will take precedence over the lawsuits.

            On the other hand, the bankruptcy filing also put a stop to SME’s efforts to apply for a loan of up to $300 million to complete the phase two of the Highwood Generating Station. This project alone cost co-op members millions of dollars because it was changed from a coal-fired plant to a natural gas-fired plant.

            It appears the voting to file for bankruptcy and raise the rates was carried out under somewhat acrimonious conditions. The five member board voted 3 to 2 to include a new board member, Arleen Boyd representing the Beartooth co-op. As a result, the board members from Yellowstone Valley and Electric City Power walked out in protest. After that, the remaining 3 board members voted for bankruptcy and upping the rates. The bankruptcy filing was done last Friday.

            Great Falls City Commisioner, Bob Jones commented that the vote may have lacked the necessary quorum. He said, “You’d think something of this magnitude, they would have called a special meeting. It wasn’t on the agenda. Everything is secretive.” But board attorney Jon Doak advised the remaining members that they had a quorum because the meeting had started with five members.

            According to bankruptcy papers, SME owes nearly $7.6 million to PPL EnergyPlus and $1.16 million to the Bonneville Power Administration. It also lists a debt of $4.85 million in credit lines, $4.29 million in construction costs, nearly $1 million in engineering costs and more than $330,000 in legal fees.

            Yellowstone Valley general manager Terry Holzer contends that SME bought too much power from PPL such that it had to sell the excess into the market, resulting a loss of about $9 million from April through August.

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              Wisconsin Sees 9.5% Drop in Bankruptcies

              Wisconsin state’s number of bankruptcy filings has fallen by 9.5% this year. But analysts say they are not jumping for joy yet, at least not until the jobless rate in the state falls significantly. The number of bankruptcy cases in US bankruptcy court in Wisconsin fell to 21,167 year on year, mostly coming from Chapter 7 bankruptcies, according to records.

              According to figures from the American Bankruptcy Institute (ABI), the trend in Wisconsin follows that of the nation as a whole. Bankruptcy filings fell by about 10% nationally through the first three quarters of this year to a little more than 1 million.

              Economists concur that the downward trend of bankruptcy filings comes just after the worst of the economy which happened about two years ago. Commenting on the national decrease in bankruptcy rate, Jay Mueller, a portfolio manager for Wells Fargo Advantage Funds in Menomonee Falls said, “I don’t think there is a lot to read into it other than to say there is a lag effect between a bad economy and bankruptcy filings.”

              However, the number of bankruptcies among certain classes of consumers has not decreased in some states. For one thing, the number of small business owners filing for bankruptcy has not fallen. This has been the case in Milwaukee, for instance.

              Small business owners selling specialized services and small luxury items seem to have continued to file for bankruptcy. Demand for specialized services such as repairing hydraulic pumps in off road vehicles and small luxury items that are not necessities like costume jewelry, flowers or boutique clothing appear to have drastically fallen. This has propped up bankruptcy figures among these classes of consumers.

              Furthermore, filing for bankruptcy has become more socially acceptable and less of a stigma these days simply because so many people have done it. This has also prompted a continuous flow of bankruptcy filings.

              Whether you are a business owner or a wage earner, bankruptcy may be your answer to starting afresh financially. Bankruptcy is your right and can offer you protection from your creditors and elimination of certain debts. If you are contemplating filing for bankruptcy, call us at (813) 200 4133 for a free consultation.

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                Utah Bankruptcy Rate Up 7%

                Unlike the rest of the country, Utah has seen an increase in bankruptcy filings the first nine months of this year. Overall, the nation has had a 10% decrease in bankruptcy filings but in Utah, the number has increased by 7%. According to Samuel Gerdano, executive director of the American Bankruptcy Institute, “The trend of declining filings [nationally] has been consistent with consumers continuing to rein in their spending, household debt, and an overall pullback in consumer credit.”

                On the other hand, the bankruptcy court revealed that in Utah, the state’s 7% increase continues the trend in the state over the last 5 years. Ironically, this may have something to do with the state’s own economic success.

                Utah’s unemployment rate is about 7.6%, significantly less than the above 9% nationwide. This may have let to less than frugal ways among the Utahans compared to consumers in other states who have been tightening their belts. According to US Bankruptcy Court in Utah 14,552 Utahans filed for bankruptcy protection during the first nine months of this year, an increase of 981 applicants from the 13,571 who filed for bankruptcy during the same period last year.

                In offering an explanation for the disparate bankruptcy trends nationally and that of Utah’s, visiting professor at the American Bankruptcy Institute, John Kilborn said, “What you’ll often see is that more people will file for bankruptcy if they think the economy is improving. And it could be that some consumers in Utah see the economy a little different than elsewhere.” Kilborn stated that the reason for the bankruptcy increase during a perceived upturn in the economy is that people want to take advantage of the turnaround by eliminating their debts.

                Another contributing factor could be the rate of foreclosure in the state. In other states there has been such a huge backlog of foreclosure cases in the courts that the debtors are still allowed to stay in their homes even while their cases are in court. But in Utah, the backlog is minimal, which tends to contribute towards the higher rate of bankruptcy.

                33% of the 14,552 bankruptcy filings in Utah through the first nine months of this year were for Chapter 13 bankruptcy which allows debtors to repay their debts following a court-approved payment plan. The remaining 67% of the filings were for Chapter 7 bankruptcy, commonly called liquidation bankruptcy.

                If you are going through financial distress, bankruptcy may be the answer to your financial problems. Bankruptcy can mean a fresh start for you and your family financially. If you wish to have a discussion with a licensed bankruptcy attorney, give us a call at (813) 200 4133 for a free consultation.

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                  Bill May End Delaware Bankruptcy Capital Status

                  Bill may end Delaware Bankruptcy Capital Status

                  The Chapter 11 Bankruptcy Venue Reform Act of 2011 proposed by leaders of the House Judiciary Committee seeks to prevent court-shopping and compel companies to file for bankruptcy in the primary district they do business or where most of their assets are located, not in the state they are incorporated in. Lamar Smith and John Conyers, the Texas Republican and the Michigan Democrat respectively, who introduced the bipartisan bill, said in a statement that the bill is “to ensure maximum input from all affected stakeholders.” If this bill is passed, Delaware may lose its status as the foremost venue of US bankruptcy cases, which would cost the state approximately $100 million per year in lost revenue.

                  But Delaware’s Congressional delegation disagreed based on the experience and expertise of the bankruptcy courts at Wilmington, Delaware. Representative John Carney, a Democrat, said in an e-mail, “Delaware’s courts are our nation’s bankruptcy specialists.” Delaware’s two US senators, Democrats Thomas Carper and Chris Coons, also oppose the bill.

                  63% of all Fortune 500 companies are incorporated in Delaware. Delaware first became the center for bankruptcy filings about a century ago in response to New Jersey’s quest to become America’s corporation capital. The state passed the Delaware General Corporation Law 1899 with the aim of making state regulations less burdensome and develop a more predictable basis of court procedures for business disputes. Since then, courts in Delaware have set the pace and established authoritative precedents for corporate governance in America.

                  155 public companies with assets of more than $500 million filed for bankruptcy in Delaware between 2000 and 2011. This constitutes 38% of the nation’s total of 405 cases.

                  Since 2006, more than 90 public companies have sought protection from creditors in US Bankruptcy Court in Wilmington, where they are incorporated. The proposed bill would rule most of these companies out.

                  Other lawmakers supporting the bill are Howard Coble, the Republican representing North Carolina who chairs the House subcommittee on courts and Steve Cohen, the Democrat representative of Tennessee.

                  Samuel Gerdano, the executive chairman of the American Bankruptcy Institute made his thoughts clear when he said the bill “has no chance of passing in my opinion”.

                  Said Gerdano, “Delaware has many supporters within the bankruptcy community, including creditor interests and major banks who have come to rely on the predictability and reliability of practicing there.”

                  Retired federal judge Joseph J. Farnan Jr., who presided over bankruptcy cases in Wilmington, said the proposed bill may come from a desire of bankruptcy judges outside of Delaware to bring business to their areas.

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                    Milwaukee Principal Steps Down over Florida School Bankruptcy

                    The newly appointed principal of Fairview School, a public school in Milwaukee, was forced to step down pending an investigation into her role in the bankruptcy of the Florida school at which she was principal. Wendy Alexander had only been appointed principal of Fairview School five months before news broke about the bankruptcy of her former school, Hand in Hand Academy. Alexander was implicated in the financial fiasco when parents and at least one businessman reported that her former school closed just weeks after opening for the fall school season without refunding tuition money paid.

                    The creditors of Hand in Hand initiated foreclosure proceedings when Alexander could not keep up with payments on the mortgage of about $2.3 million for two buildings. According to bankruptcy records, Alexander filed for Chapter 11 personal bankruptcy and Chapter 11 bankruptcy for Hand In Hand in January 2010.

                    Alexander said she is fully committed to repaying the parents of children at Hand in Hand. According to her attorney, Alexander made a bad business decision two or three years ago that contributed to her financial problems. Her attorney also said she took on the principal job in Milwaukee to earn enough income to keep paying the mortgage in Florida.

                    Alexander was hired as principal of Fairview School, Milwaukee in May after clearing a standard criminal background check. But whether the Milwaukee school was aware of Alexander’s financial issues in Florida is not immediately known. Last month, a former Florida employee informed the district about certain matters concerning Alexander’s personal business dealings in Florida.

                    Besides complaints about non-refunds of tuition fees, Alexander also faces claims of non-payment of certain services rendered to her school. Teri Herrington, who runs Signature Roofing in Thonotosassa, near Tampa was hired to repair the roof at Hand in Hand Academy but was never paid for the job, worth $23,000. In response, Herrington filed a lien against the building but it is scheduled to be sold November 22, so she doubts she will get any money back as the creditor bank, Pilot Bank will doubtless have first claim over the proceeds.

                    Hand in Hand announced its closure on September 16, just four weeks into the fall term.

                    Alexander ran Hand in Hand successfully for about 10 years and in its final year, had a student enrollment of between 85 and 90 students. She purchased a bigger building two or three years ago to house the growing number of students. But she closed the purchase of the bigger building before she completed the sale of the smaller one. That’s when Alexander obtained a bridge loan on both buildings worth about $2.3 million. In the end, it was too much for the school to sustain.

                    Alexander’s attorney said his client was not keeping the school’s impending foreclosure and bankruptcy a secret.

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