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A Round-up of Bankruptcies in 2020

A Round-up of Bankruptcies in 2020

As the year 2020 continues to witness a sharp decline in economic growth, businesses all over the U.S. are filing for bankruptcy. This mainly includes the brick-and-mortar retail sector businesses that have succumbed to the economic meltdown due to operational difficulties and financial stress. As a result, quite a few retail companies have petitioned for bankruptcy, including household names such as J.C. Penny and J. Crew, Pier 1.

RTW Retailwinds

The most recent addition to the list of companies filing for bankruptcy was RTW Retailwinds, the fashion retailer's parent company New York & Co. This is likely to result in the shutting down of business operations across 400 locations. However, the management of New York & Co does not plan to shut down the business entirely, but rather spin out portions of its business to repay creditors. In the bankruptcy petition, the retail giant declared assets worth $412 million and liabilities worth $396 million.

Sur La Table

Sur La Table has been in the kitchenware business for slightly over five decades. However, the privately held kitchenware retailer could not survive through the economic slowdown. In a recent move, Sur La Table filed for bankruptcy under Chapter 11. According to a report, Sur La Table plans to shutter down half of its operations, which is roughly about 60 stores in the U.S. The Seattle-based kitchenware retailer is currently negotiating a 70-store deal with the Fortress Investment Group.

Muji USA

Muji USA, the Japanese home goods chain, filed for bankruptcy protection under Chapter 11 with $64 of million debt. The minimalist home goods supplier plans to close non-revenue generating stores and renegotiate its leases.

After analyzing some of the top retailers that have filed for bankruptcy, two significant problems stand out. First off, these companies relied more on their brick-and-mortar business model, and secondly, they did not have a reliable disaster management plan in place. This made it impossible for them to adapt their operational model quickly.

If you are in that tight spot and are running into debt, you still have a handful of options. Depending on your assets and liabilities and your ability to repay your debt in the next five years, you can file for liquidation under Chapter 7 of the Bankruptcy Code or reorganization under Chapter 13.

Contact a Sacramento bankruptcy attorney to find out how you can get financial relief.

Modesto Budgetel Inn Files for Bankruptcy

Modesto Budgetel Inn Files for Bankruptcy

Budgetel Inn in Modesto California filed for Chapter 7 bankruptcy this past week. United Resorts LLC operates the nearly 100 room Budgetel Inn and hopes to liquidate its assets to pay off the motels debts. According to the court documents filed, United Resorts debt includes $61,439 in lease payments, $99,534 to California Department of Industrial Relations and $160,000 that United Resorts CEO and President loaned the motel for renovations, capital improvements, and other expenses.

One day after filing bankruptcy, tenants were informed that the motel was closing and they were to vacate the premises by that afternoon. This short notice came as a surprise to many, as most were waiting on refunds for rent that they already paid. Approximately half the people that stayed at the Budgetel Inn stay as long-term guests consisting mainly of homeless and low-income families. The motel has since ceased business activities, and the main office doors are padlocked shut.

Unfortunately, businesses that fail to pursue debt relief efforts early enough in their financial struggle may succumb to the results of their delay. While the motel could have restructured their debts in a Chapter 11 “reorganization bankruptcy”, they fell short leaving them with minimal options. Now in an attempt to resolve their financial liabilities, the motel will pursue a Chapter 7 “liquidation bankruptcy”. Here, a court-appointed trustee will sell off the debtor’s assets and distribute the funds to creditors and agencies the debtor owes money too.

For those left out in the cold, there are local agencies that can help. St. Vincent De Paul Ministry has arranged temporary lodging at other Modesto motels for 57 people including families with children, disabled adults, and senior citizens. The single tenants were advised to go to Beard Brook Park where the city allowed the homeless to set up a tent city. Social service workers also arrived at the Budgetel to provide assistance to the tenants.

If you find yourself in the circumstances beyond your control and you are struggling to pay your debt, don’t wait! There are many options to help you get out of debt and back on the path to financial freedom. Contact a Sacramento bankruptcy attorney to find out what choices you may have to get debt relief.

Vehicle Airbag Recall Forces Takata Into Bankruptcy

Vehicle Airbag Recall Forces Takata Into Bankruptcy

Takata, a company based out of Japan, will soon be replacing passenger airbag inflators in more than 782,000 Ford vehicles in the United States. The chemical used to inflate the airbags deteriorates over time, causing the airbag eruption to contain too much force; resulting in the explosion of shrapnel into the vehicle.

The financial ramifications of the recall have forced Takata into bankruptcy. The repairs will cost the company the remainder of their assets to be liquidated. The recall will cost the company the replacement parts of some 100,000 vehicles worldwide.

Explosive Chemical

Ammonium nitrate is the chemical used to create the explosion that inflates the airbag. The chemical becomes unstable when exposed to high humidity and temperature fluctuation between hot and cold. In prior Takata recalls, parts availability was a problem. According to the U.S. National Highway Traffic Safety Administration, that took over management of the recall, over 1/3 of the vehicles recalled have not had the inflators replaced according to a court-appointed monitor.

Check for Your Vehicle

Several vehicles in the recall are from the years 2010 to 2014. Ford owners can check the Ford website to see if their vehicle is included in the recall. Owners can put in their vehicle identification number to see if their vehicle is on the recall list. Dealers will be replacing the defective airbag inflators.

If you are facing some overwhelming debt and you need some relief from the bankruptcy court, consider speaking to a Sacramento bankruptcy attorney to see what options you may have.

Will California's PG&E file Bankruptcy?

Will California's PG&E file Bankruptcy?

If the Pacific Gas and Electric Co. are held liable for the deadly November 2018 wildfire in Northern California, it could add billions to the company's debt. The company’s insurance only covers $1.5 billion, coming far short of the estimated $15 billion in liabilities.

Financial Ruin

While the utility company hasn't made any announcements regarding bankruptcy, plunging stocks and the already $15 million in liabilities for the October 2017 wildfires could force the utility company into financial ruin. PG&E has $18 billion in unsecured bonds; these debts will have equal priority during bankruptcy to get repaid as the roughly $30 billion in expected liabilities from the 2017 and 2018 wildfires.

Huge Lawsuits

Michael Picker, president of the California Public Utilities Commission, said the state would work with PG&E so the company would not be forced into bankruptcy by huge debts from lawsuits.
Under a new law signed last September, PG&E will be able to pass some of the wildfire costs onto customers. The average customer will pay an extra $5.20 for every billion dollars the company must finance to pay for wildfire liabilities.

Bankruptcy Test

SB901 lets utilities use bonds that customers will pay off over time. But first, the utility company needs to go through a bankruptcy stress test to determine how much of the cost it can absorb on its own. The rest can be passed onto customers.Similar laws may be passed for the 2018 wildfire if PG&E is determined to be liable. More than 630 people are missing, and 63 deaths are attributed to the November fires still raging.

In a regulatory filing disclosure, PG&E stated it had experienced tower damage and outage on a nearby transmission line just 15 minutes before the fire started. This disclosure launched the current lawsuits.

In last year's fire, State investigators found PG&E to be responsible for 17 of the 21 fires in Northern California that October.

If tragedy hits you and your family and you are unable to keep up with the demands of creditors and basic living expenses, consider contacting a Sacramento bankruptcy attorney to discuss what options you may have.

New Credit Score Overhaul may Boost Your Credit

New Credit Score Overhaul may Boost Your Credit

Everyone wants a high credit score. Your credit, after all, is the financial key needed to access credit. Over the course of this year, you may have noticed that your own credit score has improved thanks to initiatives by the Consumer Financial Protection Bureau (CFPB). In fact, the average overall FICO Credit score in the US has hit a record of 704.

Effects of the Credit Score Change

According to the New York Federal Consumer Credit Panel and Equifax, the effects of the changes made to how the credit agencies report were largely positive. 65% of consumers with at least one collection account removed from their credit over the past year, witnessed a higher credit score. Overall, a few consumers could realize a 30-point jump in their credit score.

Because of the nature of the credit score changes, the individuals with more collection accounts on their credit report observed the biggest spike in credit score points. As one might assume, these were, in general, the individuals with the lowest credit scores to begin with. Thanks to improved standards for using public records, all major credit reporting agencies have also removed tax liens from credit reports, giving an additional credit score boost to consumers.

Importance of Credit Score

Because credit scores have woven themselves into every facet of our lives, your credit score should be protected whenever possible. Having a high credit score (in the 700+ range) will allow you to qualify for lower interest rate loans when purchasing an automobile or home. If you're currently working to rebuild your credit, 620 is most likely your target as this is typically seen as the baseline to be approved for a bank loan. Ensure that you request your credit report from all major credit reporting agencies annually to stay abreast of any reporting errors or inaccuracies.

Bankruptcy and Credit Scores

Consumers that are considering bankruptcy are often deterred by worries that their credit score will be ruined forever. While a Chapter 13 bankruptcy remains on your credit report for seven years, and Chapter 7 remains for ten, it is possible to increase your credit score after, and even during the bankruptcy process. When weighing the pros and cons of bankruptcy, one must account for two outcomes: the amount of repairable damage a bankruptcy can do to your credit score and the greater amount of damage that delinquent payments and other negative reports can continue to do to your credit score over time.

Bankruptcy in California

When filing a California bankruptcy, you can eliminate debts that are negatively affecting your credit score every month. Filing for bankruptcy protection also offers individuals the ability to show future lenders that they have managed their debt through the US Bankruptcy Court. Contact a Elk Grove bankruptcy attorney to understand how bankruptcy can affect your current debt.

New Law Helps Utilities Prevent California Bankruptcy

New Law Helps Utilities Prevent California Bankruptcy

A new law is helping utilities prevent a possible California Bankruptcy, but it appears as though the direct cost may be the burden of California utility consumers. The new law, signed in the last week of September 2018, is already drawing stringent criticism from Californians. Critics are calling the new measure, which allows California utility companies to bill customers to help pay future legal settlements from the 2017 wildfires, a bailout to prevent the bankruptcy of Pacific Gas & Electric Co., the nation’s largest public utility. Because lawmakers have determined that a large utility filing bankruptcy in California would be catastrophic, the bill will allow the Public Utility Commission to pass along the cost of liabilities to consumers.

PG&E Lawsuits

The embattled Pacific Gas & Electric Co. (NYSE: PCG) is facing multiple lawsuits from insurance companies who have spent over $10 billion covering insured losses and are subsequently looking to recoup their own costs from the tragic disasters. California Courts have determined the utilities were directly liable for the 2017 Northern wildfire damages for failing to follow predetermined safety precautions. Still fresh in the minds of Northern Californians, the 2017 wildfires burned over 245,000 acres across Butte, Napa, Sonoma, and Solano counties. State laws and regulations required that utility companies provide compensation for property damaged by its equipment.  In each case the courts found that vegetation was too close to PG&E power lines and that the fires directly stemmed from these violations.

How Much Will Consumers Pay

Just how much of a surcharge that PG&E will pass on to its customers is at the moment unclear. The reason being is that the total amount of damages PG&E will be responsible for hasn’t been decided. Once a final agreement is reached of how much financial damage the company can absorb, consumers could see a fee of $5.20 per $1 billion of financing that PG&E must acquire.

Lawmakers also hinted that the bill will assist with future wildfires and ultimately prevent a potentially catastrophic bankruptcy. For more information about Chapter 11 California bankruptcy cases, read more at Bankruptcy & Debt Resolution Attorneys.