January 1, 2011

Bankruptcy Judge to Decide on Brennan

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A judge will decide whether recently-freed Robert E. Brennan will have his bankruptcy case reopened for regulators to recover money from a trust to repay his former clients whom he defrauded. Brennan was jailed in 2001 in Fort Dix for 9 years and 8 months for his crimes of bankruptcy fraud and money laundering. The bankruptcy case was officially closed in 2006 and Brennan himself was released on January 7th this year.

In the 1980’s, Brennan ran a now-defunct brokerage company called First Jersey Securities which he used to siphon money from hundreds of thousands of investors. Brennan’s company would manipulate stocks of small companies and sold them to investors at a huge profit. In his heydays, Brennan was well connected politically and highly visible, appearing on TV commercials promoting First Jersey by flying in a helicopter and persuading investors to, “Come grow with us.”

As a result of his dealings, many investors lost money. Brennan and First Jersey were ordered to pay $75 million plus interest in civil stock fraud judgment, and Brennan ended up filing for bankruptcy. A federal judge said the firm perpetrated a “massive and continuing fraud” against clients. Brennan filed for bankruptcy protection in 1995 but not before setting up a trust fund called Cardinal Trust in 1994, naming his three adult sons, Christopher, Kevin and Robert E. “Butch” Brennan Jr., and the “Robert E. Brennan Foundation” as beneficiaries.

Cardinal Trust is now held in Nevis, an island east of Puerto Rico. The trust has been moved twice, first from Gibraltar to Mauritius and then from Mauritius to Nevis, according to documents filed with the US Second Circuit Court of Appeals. This practice is often done with overseas trusts where a foreign trustee moves the trust in case creditors try to take control of the assets.

According to an affidavit filed this month by Deputy Attorney General Anna Lascurain, Brennan formed the Cardinal Trust “in a brazen attempt to shield his assets” from creditors. In addition, the funds from the Trust were also allegedly used to support “a lavish, globe-trotting lifestyle,” according to the authorities. Brennan at one time owned a private jet and made frequent trips outside the country. He also became a philanthropist and horse breeder and donated bullet proof vests for the state police.

The State Bureau of Securities did not say how much money is in the Trust.

The difficulty in getting funds from the Trust is due to the fact that Nevis does not recognize US Courts.

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

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Filed under Chapter 7 (Tampa) by dmishesq on Jan 1st, 2011. Comment.

December 26, 2010

Bankruptcy Judge Scuttles Plan to Sell Martin Cadillac

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The Newark US Bankruptcy Court Judge Rosemary Gambardella rejected a plan to sell the Martin Cadillac dealership in Eaglewood Cliffs to a company headed by Jonathan Sobel, once a managing partner at Goldman Sachs. The selling price was to have been $2.25 million. Instead, the judge ordered a bankruptcy trustee to oversee the finances of the dealership.

The attorney for Martin Cadillac, Gregory S. Kinoian, confirmed that the judge disapproved the sale because of ‘unresolved issues’ with the main creditor, General Motors. Judge Gambardella expects the bankruptcy trustee to recommend to her whether to lift the blockage to the sale.

General Motors, Martin Cadillac’s biggest creditor, made its own bid to buy over the ailing dealership but its bid was lower than that of DTF Holdings LLC headed by Sobel. When Sobel, who was the chief risk officer at Goldman Sach’s investment management division up to 2008, made his bid, General Motors complained that the sale would not sufficiently repay them what they were owed. Bankruptcy court papers showed that the debt Martin Cadillac owed General Motors was about $1.9 million.

Besides GM, other creditors namely Ally Financial Inc. and landlord Argonaut Holdings Inc. also objected to the sale to DTF. DTF won the auction on Dec 3 when its bid of $2.25 million beat that of Platinum Holdings LLC’s of $2.2 million.

In August, the US bankruptcy trustee had filed a motion seeking to convert Martin Cadillac’s case from Chapter 11 reorganization bankruptcy to a Chapter 7 liquidation bankruptcy because they were unable to keep up with their payments while their owner Timothy Martin looked for a buyer.

Martin Cadillac has been in business for the last 6 years before they filed for bankruptcy protection in June and closed down their operations in October this year citing the effects of the economic recession, the squeeze of the credit crunch and overwhelming debt as the main reasons for their financial problems.

It was only in 2009 that the Cadillac dealer was ranked among the top 5 dealers in the country and was top in the US for the sales of the Escalade Sport Utility Vehicle. Their customers included famous rap singers like Diddy, Fat Joe and Jay-Z.

The court granted Ally Financial, formerly known as GMAC Financial Services the permit to repossess an inventory of 60 of Martin Cadillac’s vehicles on October 18.

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Filed under Chapter 7 (Tampa) by dmishesq on Dec 26th, 2010. Comment.

December 24, 2010

News about Bankruptcy

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Trucking and Logistics Company Exits Bankruptcy

USA Dry Van Logistics Company formally emerged from bankruptcy protection on November 30. Most of its 600 employees kept their jobs. The logistics company, which was started in 2000, kept up with its operations throughout the bankruptcy and was able to weather the storm. The company’s business is primarily focused on moving cargo shipments between the US, all over Canada and Mexico.

When the company filed for bankruptcy in February this year, its creditors including General Electric Capital Corp and CapitalOne decided to keep the company intact and not break it apart and sell it in pieces. But one strategy the company employed was to restructure its business which included revamping the management staff.

As such, two of the three original founders of the company were replaced. Another thing the company was determined to do was to try to keep as many jobs as possible because the company had the business volume to justify retaining their employees.

Now that the company has exited bankruptcy, they are looking to the future. There are plans to expand the sales force and do other things to improve efficiency in the company. One step would be to ensure full loads as often as possible to save costs.

Although the company transports a lot of goods across the border to Mexico, none of the American drivers actually go into Mexico. This eliminates the fear of sending Americans into the line of fire. Instead, the company loads the freight and hauls it to the border where a Mexican carrier pulls it into the interior of Mexico. The reverse process is done when goods are brought from Mexico into the US or Canada.

Greensboro Housing Project Gets Go Ahead from Bankruptcy Judge

6 years after filing for bankruptcy in 2004, the once third largest home builder in Guilford County finally received Judge William L. Stock’s approval for the bankruptcy trustee’s final distribution plan. Under the plan, unsecured creditors of the now defunct Project Homestead will receive back less than 15 cents out of every $1 of debt owed to them. This includes Greensboro taxpayers who received $93,228 out of their claim of $640,000.

Greensboro as a city spent nearly $18 million on housing projects over the years until an audit revealed poor record-keeping on state and federal grants coupled with questionable spending.

Project Homestead was founded in 1991.

If you or your business is drowning in debt, consider filing for bankruptcy. Bankruptcy is your right under the law and gives you protection from your creditors. Call us at (813) 200-4133 for a free consultation.

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Filed under Chapter 7 (Tampa) by dmishesq on Dec 24th, 2010. Comment.

December 23, 2010

Former Mayor’s Assets Saved through Bankruptcy

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Robert Pastrick, the former mayor of East Chicago had his assets saved from being seized to help pay for his $108 million debt when he filed for bankruptcy protection in the nick of time. At first, US bankruptcy judge Christopher Nuechterlein ruled allowing US Marshalls access to Pastrick’s assets in his Ogden Dunes home and a storage locker in Portage to seize and dispose of them to raise money to pay his debts.

The state has been making attempts to collect the outstanding amount of $108 million that came about when Pastrick and other East Chicago city officials participated in the sidewalks-for-votes fraud scheme. They were convicted by a federal court judge of racketeering and running a corrupt activity. Under the scheme, the city spent $25 million to pour sidewalks, patios and driveways and remove trees from private properties in order to gain votes for Pastrick in the primary elections in 1999 when he was facing his challenger, Stephen Stiglich.

The other city officials, three city councilmen and three city administrators, each received criminal convictions whereas Pastrick’s case is civil. The state requested the court for permission to seize Pastrick’s assets of value such as jewelry, bonds and works of art found on his properties to pay for his debts. The state also surveyed local banks to find out if Pastrick held any accounts with them. All the banks questioned by the state replied that he did not. Subsequently, Pastrick applied for bankruptcy protection and as a result, his assets were saved.

Pastrick’s bankruptcy filing valued his assets at between $100,000 and $500,000 whereas his debts amounted to more than $100 million. According to the filing, Pastrick has only one creditor which is the Indianapolis law firm who represented the state against him.

Pastrick’s attorney, Michael Bosch stated that Pastrick has no means to repay the debt of $108 million that he owes even if his assets are seized and sold. The other co-defendant, James Harold Fife III is also deemed to be unable to pay up. The third co-defendant, Frank Kollintzas is believed to have been in hiding for a few years somewhere in Greece.

A meeting of creditors for Pastrick is scheduled to be held January 25.

If you are facing insurmountable debts, you have the option of seeking bankruptcy protection as a way out. Call us at (813) 200-4133 for a free consultation.

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Filed under Chapter 7 (Tampa) by dmishesq on Dec 23rd, 2010. Comment.

November 2, 2010

Bashas Exit Bankruptcy

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A federal bankruptcy court judge recently approved the emergence from bankruptcy of Arizona grocer Bashas Inc. despite the objections from banks and insurance companies who are the secured creditors of the company. Bankruptcy judge James Marlar was of the opinion that the 100% repayment plan proposed by Bashas was sufficient to satisfy the court. This payment plan received the backing of Bashas’ unsecured lenders, primarily made up of its suppliers. In his ruling, Judge Marlar said that the objections of the secured creditors would have served no purpose but to delay matters further, which would have been beneficial to no one concerned in the bankruptcy.

Bashas Inc. is a family-run company based in Chandler, Arizona. Before it filed for bankruptcy protection in July 2009, it had 155 Bashas stores which were all in Arizona except for two stores. Now this number has been reduced to 132. In addition, the company had to lay off about 1,000 of its workers and renegotiate the leases for its stores in efforts to cut costs. In addition to the Bashas grocery stores, the company also ran Food City, an outlet that targeted the Hispanic population and the high-end AJ Fine Foods grocery store.
Bankruptcy papers show that the company had $386 million in assets and $271 million in liabilities at the point of bankruptcy. Its reason for seeking bankruptcy protection was the slow growth of the company’s business, added competition in the grocery market from other groceries in the Phoenix area and the credit squeeze due to the economic recession. However, the company continued to conduct its business throughout the bankruptcy.
During the period of time the company was under bankruptcy, it renegotiated its leases, sold excess assets to raise funds, closed underperforming or non-performing stores which had no future potential and operated within its budget. Most importantly, the company had started to make profits again.
Now Bashas Inc. has about $100 million in cash reserves, which it plans to use in paying off priority claims, bring its interest payments up to date and settling the expenses of its bankruptcy. It intends to pay off its creditors over a period of 3 years and refinance the remaining $155 million of its debt and pay off all its current obligations.
If your business is struggling to stay afloat, consider bankruptcy protection to ease your debt burdens. Many companies, both big and small have benefited from bankruptcy and yours can, too. Call us at (813) 200-4133 for a free consultation or visit http://tampabankruptcy.pro.

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Filed under Chapter 7 (Tampa) by dmishesq on Nov 2nd, 2010. Comment.

Bankruptcy Judge

Bankruptcy Judge to Decide on Brennan

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Bankruptcy Judge Scuttles Plan to Sell Martin Cadillac

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News about Bankruptcy

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Former Mayor’s Assets Saved through Bankruptcy

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Bashas Exit Bankruptcy

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