Bankruptcy and Student Loans

  • By John P. Brooke
  • 10 Oct, 2018

Posted 21 Sep, 2016

After working hard to improve your education, it can be frustrating to deal with massive student loan debt. Recent graduates often struggle to make ends meet, let alone pay down their loans. If your student loan debt is causing unmanageable financial hardship, it is time to talk with a bankruptcy attorney.

Generally, student loans are not dischargeable in bankruptcy. However, by filing either Chapter 7 or Chapter 13 bankruptcy, you can free up funds, making it easier to pay your student loans. At The Brooke Law Firm, we know the bankruptcy laws from the inside out and will explore every option available to get the relief you need.

Helping You Obtain an Increased Cash Flow

While you will most likely not be able to eliminate your student loan debt, there are ways to get the debt under control. By filing Chapter 7 bankruptcy, we can help you discharge your unsecured debts, such as credit card bills and medical expenses. Because you will no longer need to pay those debts, money is freed up to focus on your student loan.

By filing Chapter 13 bankruptcy, it is possible to reduce the amount of your monthly payment to something more workable without the threat of penalty. Your student loan could also be deferred for a period of time. To learn more about your options, call our office in Brightwaters (next to Bay Shore in Suffolk County) at (631) 397-0042 to arrange a free initial consultation.


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By John Brooke • 21 Sep, 2016 • 0 Comments

The first step in the process of filing for bankruptcy is consulting with an experienced, knowledgeable attorney who can meet with you and take the time to discuss all of your available options. I understand that people hit rough patches in their lives and sometimes a bankruptcy is the only option to get back on track. Once you fall behind on your debt it is almost impossible to catch up. When the credit card companies raise your interest rate it is almost impossible to pay back your debt within a reasonable amount of time.

At the initial consultation I will provide you with a questionnaire to fill out that I would need to prepare your case. I will also provide you with a checklist of documents that I would require in order to file. Once you have everything in order and are ready to move forward you can give me a call and we will make time for you to come in at your earliest convenience. I will then prepare your petition within a short period of time which in most cases is only a day or two. You will then have to come back to my office to review and sign the paperwork. After signing, I will have your case filed usually the same day. As you can see, the process moves quickly and orderly.

Approximately one month after your case is filed you will have to attend a court conference called the Meeting of Creditors. Even though it is called the Meeting of Creditors in the vast majority of cases no creditors will ever appear. At this court appearance the trustee assigned to the case will ask you questions for just a few minutes. I will be sitting next to you the whole time to answer any legal questions that may arise.

In a chapter 7 usually there is only one court appearance and in the vast majority of bankruptcies the case will be closed. In a chapter 13 there is an extra step involved which is a confirmation hearing. At the confirmation hearing the trustee should confirm your case based upon the repayment plan submitted. The debtor does not appear at the confirmation hearing and only the attorney needs to attend.

In most chapter 7 bankruptcy cases approximately two months after you go to court your case will be closed and your debt will be forever discharged, meaning your creditors can never attempt to collect the debt again.

By John Brooke • 21 Sep, 2016 • 0 Comments

The Benefits of Filing For Bankruptcy

A major benefit to filing a petition in bankruptcy is the automatic stay that prevents most collection actions by creditors against the debtor or the debtor's property. As long as the stay is in effect creditors may not initiate or continue lawsuits, garnish your wages, call you, harass you or attempt to collect the debt in any way. It allows you a fresh start to your financial life and allows you to start over with a clean slate.

Of course, even when the collection agencies are pounding at your door and you can't pay your mortgage, electricity, cable, and credit card bills all in the same month, bankruptcy may still be your last option. At the initial consultation we will go over all possible options and devise the best strategy for you to take. For most people, if you are considering bankruptcy the chances are good there are no more options available.

One major benefit to filing bankruptcy is that in most cases you will be able to keep your home and car, even in a chapter 7 bankruptcy. With changes in the bankruptcy law in January of 2011 debtors are now allowed to have more than $330,000 equity in their home or more than $12,000 in personal property, including cash. If you have no equity in your home or you do not own a home you can elect to take the federal exemptions which for most people protects all of their assets.

No one even has to know that you filed for bankruptcy. Your friends, family and co-workers don't ever have to know you filed. Bankruptcy is a matter of public record but unless someone specifically inquires into whether you filed for bankruptcy it would never come up.

Bankruptcy also prevents your utilities from being cut off and your car from being repossessed. It will stop a foreclosure and pending sale date and will buy you time to work with your creditors and stay in your home as long as possible. While bankruptcy will allow for the discharge of a number of debts others remain non-dischargeable according to federal law. Non-dischargeable debts include family support, matrimonial judgments, student loans, certain types of taxes, restitution and criminal fines.

Additionally, it is important to remember that chapter 7 bankruptcy does not relieve a co-signer from any responsibility to pay back debt. The creditor has the right to enforce the co-signer's obligation. Chapter 13 on the other hand will protect a co-signer as long as the debtor complies with the bankruptcy plan.

By John Brooke • 21 Sep, 2016 • 0 Comments

Bankruptcy can serve as a Fresh Start and set you up for a successful financial future. Debt worries are a terrible burden to carry. Wouldn’t you like to have:

  • No more sleepless nights
  • No more threat of lawsuits and wage garnishment.
  • No more fear of answering your phone.
  • No more fear of losing your home, car and other assets.
  • No more feeling helpless because your creditors won’t work with you.
  • No more calls from bill collectors.

Most people with severe debt problems are eligible for bankruptcy relief. But anyone that has debt issues should consult with a bankruptcy attorney who can advise you if bankruptcy is an option for you and how it will affect your assets.

There are several different kinds of bankruptcy cases. We refer to these different types of cases as “Bankruptcy Chapters.” The actual bankruptcy law is officially called Title 11, United States Code. It is divided up into a number of different “Chapters” that offer different types of relief.

Each of the bankruptcy chapters is designed for a different purpose. Chapter 7, often called straight bankruptcy, is intended to relieve you from the burden of most ordinary debts, such as credit cards and other unsecured debts. Chapter 13 and Chapter 11 are reorganization cases. They allow the restructuring of certain types of debts and then let you pay them under new terms while giving you and your property court protection from creditors.

An experienced bankruptcy attorney can guide you towards the remedy that will work the best for your situation. The whole point of bankruptcy is to give you a Fresh Start. Misfortune and financial mistakes can strike anyone. Why spend the rest of your life paying for yesterday’s mistakes, if you don’t have to? Let us show you a better way, if there is one.

By John Brooke • 21 Sep, 2016 • 0 Comments

Life After Bankruptcy

You have a fresh start, and some new challenges. Your credit rating, which probably wasn't all that great already, will be impacted by filing for bankruptcy. Filing for bankruptcy will have a short term negative impact on your credit rating, but not filing for bankruptcy may be worse. Not filing for bankruptcy and continuing to incur late fees, legal charges and judgements will continue to bring down your credit until you do something about it.

You really need to ask yourself several key questions including, 'how did I get here? What could I have done differently and what should I do differently in the future? And what have I learned from all of this? Your answers will help you create a better financial afterlife in the wake of a bankruptcy.

Many of my clients tell me that they were able to obtain a new car loan immediately after filing a chapter 7 bankruptcy, even while it is still on their credit report. FHA guidelines also allow you to get a mortgage two (2) years after filing a ch. 7 bankruptcy. You will also get solicited for new credit cards almost immediately because you can only file for a chapter 7 once every eight (8) years. The creditors know you have to pay back your debt to them so they will make credit easy to obtain, although at slightly higher interest rates. Generally, you do not want to incur more credit card debt, however you may want to get one credit card for emergencies or for contingencies such as booking plane tickets or car rentals. Remember, the whole point of filing for bankruptcy in the first place was to rid yourself of debt and get a fresh start, not to get into debt all over again.

After your bankruptcy has been discharged, you need to re-establish your good credit. You need to do so right away for a chapter 7 or after reorganization for a Chapter 13. Obviously, continuing to pay your other bills on time such as your mortgage and utilities will help to build up your credit. You may also want to get either a secured or unsecured credit card and pay it off every month. There are reputable companies available who will help you to build your credit back up. This can be explained more during your free initial consultation.

You are only able to receive a discharge in a chapter 7 bankruptcy after eight (8) years have passed since the commencement of the last case in which you received a discharge. You generally can file another chapter 13 case sooner (usually 4 years) if the need arises. Thus, you should not file a bankruptcy if you need the option of doing it again in the next few years. The case may arise if the reason you are filing bankruptcy is to discharge medical bills and you may have to incur additional medical bills in the future.

By John Brooke • 21 Sep, 2016 • 0 Comments

Questions About Bankruptcy?

1.) What is the difference between a chapter 7 and chapter 13 bankruptcy?

A chapter 7 is a "liquidation" bankruptcy that discharges your debts and you do not pay any of them back. Not all debts are dischargeable though such as some tax debts, criminal fines and most student loans. A chapter 13, on the other hand, is a wage earner's bankruptcy where you pay back anywhere from a fraction of what you owe up to the full amount. Debtors may file a chapter 13, as opposed to a chapter 7, for various reasons such as not passing the means test or they are trying to save their home and repay mortgage arrears.

2.) How long does a chapter 7 bankruptcy take before I receive a discharge?

Generally, once a ch. 7 is filed you will have one court appearance where you meet with the bankruptcy trustee assigned to your case. This is called the 341 Meeting of Creditors. Although it is referred to as the Meeting of Creditors, in most ch. 7 bankruptcy cases the creditors will not appear. The court appearance is usually only a few minutes long and in the vast majority of cases your 341 meeting will be closed by the trustee. Sixty (60) days after this your bankruptcy case should be closed and you will then receive a discharge of your debts. The discharge means you no longer owe the debts listed in your bankruptcy.

3.) Do I have to stand before a judge in a courtroom?

Nope, you will meet with the trustee assigned to your case at the court appearance where he will ask you questions for a few minutes. You will be prepared for the types of questions beforehand and you will feel comfortable by the time your court date arrives.

4.) I thought chapter 7 bankruptcy stopped the foreclosure? Can the bank still take my house?

When you file Bankruptcy, you receive an "automatic stay" on court actions such as foreclosures and sheriff's sales. A creditor can still go into court and ask the bankruptcy judge for a "relief from stay", and if granted the creditor can proceed with a court action to foreclose.

5.) Can I keep some of my debts out of my bankruptcy?

Nope, you must list all of your debts as well as assets in your bankruptcy petition. Debtors are not allowed to pick and choose whom they want to pay back. You may still voluntarily pay back a creditor, such as a family member, car loan or mortgage once your bankruptcy is discharged although you are under no legal obligation to do so.

6.) Can I change my Chapter 7 to a Chapter 13 and vice versa?

Yes, in most cases you are permitted using a "motion to convert." In certain instances you may want to do so if you can no longer afford your chapter 13 plan payments. You may want to convert to a chapter 7 to discharge the debt. A trustee may also make the motion to convert if he feels you have money to pay back some of your debts in a chapter 13. This may happen in rare instances such as if a debtor fails to disclose all of his or her income in the bankruptcy.

7.) Do my spouse and I have to file jointly?

Nope, the decision to file individually or jointly depends on your situation. For instance . . .

  1. If only one spouse owes all or most of the debt then only that spouse should file.
  2. If both spouses owe the debt and want to file a chapter 7 then both can file.
  3. If you're trying to stop a foreclosure then only one spouse who is on the title to the home needs file a Chapter 13.

8.) Are my family, friends and co-workers going to find out that I filed for bankruptcy?

It is a matter of public record that you filed for bankruptcy but in most cases only your creditors are notified that you filed. No one else will know unless you tell them or they do a search in the public court records.

9.) What does it mean to reaffirm a debt such as a car loan?

This means you would become personally liable for the debt again. Sometimes you may reaffirm a debt such as a car loan. The bank may require it or they can repossess your car, even if you are current with the payments. Bankruptcy may be considered a default under your loan terms and some financing companies may repossess the vehicle. I will explain during your free initial consultation whether or not I think it is a good idea to reaffirm depending on your particular case.

By John Brooke 22 Feb, 2024

The Supreme Court cleared the way on Thursday for a $2.4 billion plan to settle sex abuse lawsuits against the Boy Scouts of America to go forward. The court’s brief, unsigned order gave no reasons, which is typical for emergency applications. There were no public dissents.

The Boy Scouts settlement involves more than 82,000 claims of childhood sexual abuse, with more than 86 percent of victims in the case backing the deal.

However, the group who asked the Supreme Court to intervene objected to the use of the mechanism, which protected from liability third parties like churches involved in scouting, local councils and insurers.

The outcome in the Boy Scouts case had been closely watched as a possible clue of where the justices might lean in the Purdue Pharma bankruptcy settlement. During oral arguments in December, the justices appeared divided, and a decision in that case is expected by the end of the court’s term, likely in late June.

The victims’ group, in asking the court to step in, argued that if the settlement were allowed to proceed, sexual abuse victims “will lose their right to pursue their claims independently of the bankruptcy settlement trust.”

The Boy Scouts had argued that the settlement should continue as planned, warning that if the justices blocked the deal, it would “threaten to throw the scouting program into chaos.”

The challengers represented “a tiny fraction” of the victims involved in the deal, the Boy Scouts said.

After Justice Samuel A. Alito Jr. temporarily paused the settlement earlier this month, the bankruptcy judge overseeing the case suspended work on the deal, which has already paid about $8 million to several thousand victims.

On Thursday, after the court announced its decision, the trust handling the settlement said it had “resumed all operations, including processing and paying claims.”


Article originally taken from NYT online. 


By John Brooke 21 Dec, 2023

Rudy Giuliani filed for bankruptcy in New York after being ordered to pay $148 million in damages to two Georgia election workers.

The former New York Mayor has also listed more than $500 million in debt while racking up millions in legal fees.

The attorney who led the effort to overturn the 2020 election has been swamped my mounting legal issues.

Last Friday, he was put on the precipice of financial ruin when a jury awarded $148 million in damages to Ruby Freeman and Shaye Moss for claiming they tried to rig the vote for Joe Biden.

In August he admitted having 'financial problems' as he battled multiple court cases and said he didn't have enough money to defend himself.

In the filing, Giuliani said he had between $100 million and $500 million in liabilities and $1 million to $10 million in assets.

Giuliani said he owed $148 million to Ruby Freeman and Wandrea Moss, the two former Georgia election workers.

The filing also listed President Joe Biden's son, Hunter Biden, as a creditor, without specifying the amount Giuliani owed him. Hunter Biden in September sued Giuliani for violating his privacy over data allegedly taken from his laptop.

Giuliani listed the Internal Revenue Service and New York State Department of Taxation and finance among his creditors.

By John Brooke 21 Dec, 2023
Rite Aid has filed for bankruptcy and plans to sell part of its business as it attempts to restructure while dealing with losses and opioid-related lawsuits. 

Rite Aid has filed for bankruptcy protection and plans to sell part of its business as it attempts to restructure while dealing with losses and opioid-related lawsuits.

The company said Rite Aid stores will continue to fill prescriptions, and customers will still be able to visit its locations or shop online while it goes through its voluntary Chapter 11 process. But that process also will allow it to speed up its plan to close underperforming stores.


Going through Chapter 11 will help “significantly reduce the company’s debt” while helping to “resolve litigation claims in an equitable manner,” Rite Aid late Sunday.

Rite Aid Corp. said in its federal bankruptcy filing that it runs more than 2,000 stores. Most of its locations are on the East and West Coasts.

The Philadelphia company, which is marking its 60th year in business, has posted annual losses for several years and has been cutting costs and closing stores as it dealt with long-standing financial challenges. It has said it expects a net loss of as much as $680 million in the current fiscal year, which will end next spring.


The company, like its rivals, also faces financial risk from lawsuits over opioid prescriptions. Rite Aid already has reached several settlements, including one announced last year with the state of West Virginia for up to $30 million.

In March, the U.S. Justice Department intervened in a whistleblower lawsuit brought by former employees under the False Claims Act. Federal officials said in a statement that the drugstore chain filled “at least hundreds of thousands” of illegal prescriptions for drugs including opioids.

Rite Aid called the government’s claims “hyperbolic” in a subsequent motion to dismiss. The company said facts alleged in the case actually showed it exceeded regulatory requirements for diversion control.

Drugstores also have been dealing with several issues that frustrate customers. They’ve handled prescription drug shortages, and they have struggled to fill their stores with enough pharmacists and technicians to run the pharmacies. Rivals CVS and Walgreens both have dealt with walkouts by pharmacy employees concerned about their growing workloads and lack of help.

The stores also have had to weather tight prescription reimbursement and waning COVID-19 vaccine and testing business in recent quarters. Plus online competitors like the retail giant Amazon have hurt sales of consumer goods found outside the pharmacy areas of their stores.

Rite Aid’s larger competitors like CVS and Walgreens, which each run several thousand more locations, have moved more aggressively into health care, opening clinics and adding other sources of revenue.

Deutsche Bank analyst George Hill said in an August note that Rite Aid operates on a much thinner profit margin than its competitors and while it can pay costs to service its debt, it won’t be able to cover principal payments “based on the current trajectory of the business.”

The company’s filing in U.S. Bankruptcy Court in New Jersey listed $8.6 billion in total debts and $7.6 billion in assets.

Rite Aid said Sunday that it had reached an agreement with some key creditors on a financial restructuring plan to cut its debt. The company also said it obtained $3.45 billion in fresh financing from some of its lenders, which will help support the company through the Chapter 11 process.

Rite Aid says it does not know yet which stores it will close, but it will transfer workers to other Rite Aid locations where possible.


Article credited by the Associated Press



By John Brooke 13 Oct, 2023

Bankman-Fried has also stepped down as CEO and has been succeeded by John J. Ray III, though the outgoing chief will stay on to assist with the transition.

Approximately 130 additional affiliated companies are part of the proceedings, including Alameda Research, Bankman-Fried’s crypto trading firm, and FTX.us, the company’s U.S. subsidiary.

In the 23-page bankruptcy filing obtained by CNBC, FTX indicates it has more than 100,000 creditors, assets in the range of $10 billion to $50 billion, as well as liabilities in the range of $10 billion to $50 billion. By comparison, Lehman had more than $600 billion in assets and Enron had $60 billion.

“The immediate relief of Chapter 11 is appropriate to provide the FTX Group the opportunity to assess its situation and develop a process to maximize recoveries for stakeholders,” said the new FTX chief, Ray.

“The FTX Group has valuable assets that can only be effectively administered in an organized, joint process. I want to ensure every employee, customer, creditor, contract party, stockholder, investor, governmental authority and other stakeholder that we are going to conduct this effort with diligence, thoroughness and transparency,” continued Ray.

He added that stakeholders should understand that events have been fast moving, that the new team is engaged only recently and that they should review the materials filed on the docket of the proceedings over the coming days for more information.

It caps off a tumultuous week for one of the biggest names in the sector.

In the space of days, FTX went from a $32 billion valuation to bankruptcy as liquidity dried up, customers demanded withdrawals and rival exchange Binance ripped up its nonbinding agreement to buy the company. FTX founder Bankman-Fried admitted on Thursday that he “f---ed up.”

Anthony Scaramucci, founder of SkyBridge Capital and short-time Trump communications director, flew to the Bahamas this week to help Bankman-Fried as an investor and friend. When Scaramucci got there, he says, it appeared beyond the point of a simple liquidity rescue. He said he didn’t see evidence of this mishandling when he and other investors first screened FTX as a potential business partner.

“Duped I guess is the right word, but I am very disappointed because I do like Sam,” Scaramucci said Friday morning on CNBC’s “Squawk Box.” “I don’t know what happened because I was not an insider at FTX.”

An FTX spokesperson did not immediately respond to CNBC’s request for comment on this story, including on Scaramucci’s remarks.

In a short period of time, FTX expanded into non-crypto elements of life, such as pop culture. For example, in the past Super Bowl, it aired a commercial featuring comedian Larry David, in which David turned down an opportunity to invest in crypto. “Ehh, I don’t think so. And I’m never wrong about this stuff. Never.”


Article credited by CNBC.com

By John Brooke 13 Oct, 2023

Bed Bath & Beyond  filed for Chapter 11 bankruptcy protection in April 2023 after it failed in several last-ditch efforts to raise enough money to keep the company alive.

The beleaguered home goods retailer has been warning of a potential bankruptcy since early January, when it issued a “going concern” notice that it may not have the cash to cover expenses after a dismal holiday season. Shares of the company closed at 29 cents Friday, giving it a market value of $136.9 million. The stock is down about 88% this year. Last April, it was trading around $20 a share.

The company’s 360 namesake stores and 120 Buybuy Baby locations will remain open for the time being as it begins to close the business and liquidate assets. But it has filed motions in New Jersey bankruptcy court asking permission to auction the two brands, the company said in a release. It has already committed to closing all of its Harmon FaceValue stores.

As of late November, Bed Bath had about $4.4 billion in assets and $5.2 billion in debts, court filings show. Alongside a long list of creditors, including vendors like Pinterest, Keurig and Blue Yonder, it owes the most to BNY Mellon at $1.18 billion, the documents show. It has between 25,001 and 50,000 total creditors and employs about 14,000 non-seasonal workers, court filings say.

Bed Bath has been hanging on by a thread since January but has refused to go down without a fight. It secured what was then-considered a Hail Mary stock offering in early February that was expected to infuse more than $1 billion in equity into Bed Bath, but the plan faltered and brought in only $360 million, the company said.

At the end of March, Bed Bath announced another stock offering it hoped would bring in $300 million, but that news sent the share price tumbling and it struggled to raise the funds it hoped the offering would provide. As of April 10, the company had sold approximately 100.1 million shares and raised only $48.5 million.

In filings, the company warned if it didn’t raise the anticipated proceeds from the offering, it would likely have to file for bankruptcy protection.

Days after the second stock offering was announced, Bed Bath said it had partnered with liquidator Hilco Global to boost its inventory levels. Under the agreement, Hilco subsidiary ReStore Capital agreed to buy up to $120 million in merchandise from the company’s key suppliers after relationships with Bed Bath’s vendors soured because of its liquidity issues.

However, the plans ultimately proved futile.

The retailer has struggled to maintain relationships with its vendors and has been grappling with low inventory levels, lagging sales and a rapidly dwindling cash pile.

Going into the holiday season, Bed Bath had difficulty keeping its shelves stocked and because of its liquidity issues, some vendors began asking for prepayments, the company said in securities filings.

In late March, the company reported preliminary results for its fiscal fourth quarter, with net sales of roughly $1.2 billion and comparable store sales declining in the range of 40% to 50%. The company noted negative operating losses have continued, although it said it hadn’t depleted its free cash flow.

The company reported $2.05 billion in revenue for the fiscal fourth quarter of 2021.


Article taken from CNBC.com

By John Brooke 28 Jul, 2023

Trucking company Yellow is preparing to file for bankruptcy, according to people familiar with the matter, heightening the threat that one of the nation’s largest freight carriers will shut down as customers abandon it amid a cash crunch and union negotiations.

A bankruptcy filing by Yellow would put it at high risk of a liquidation since its customers already have started to abandon the trucker in large numbers, some of the people said. The company could seek bankruptcy court protection as soon as this week, though no decision has been made and Yellow continues to explore other options, they said.

A Yellow representative said Wednesday that “in keeping with the fiduciary responsibility of the company’s executives, the company continues to prepare for a range of contingencies.”

Yellow has been losing thousands of shipments to other operators because of the risk that a labor dispute will disrupt its operations, according to equity analysts and industry executives. The company averted a planned strike this week by the Teamsters union that represents most of its workforce, but the customer exodus has continued. Yellow has seen freight volumes fall 80% in recent days, according to a research report Tuesday by TD Cowen.

“The Teamsters introduced variability and uncertainty into a market that can’t stand variability and uncertainty,” said Mike Regan, chief of relationship management at TranzAct Technologies, which manages transportation services for retailers and manufacturers.

The company is continuing to negotiate with the Teamsters about a new contract that would give Yellow the ability to restructure its operations to make them more efficient, Yellow’s representative said.

A bankruptcy filing would again spotlight the $700 million Covid-19 rescue loan that Yellow received from U.S. taxpayers in 2020. A congressional probe later concluded that the Treasury Department erred in giving the loan on national-security grounds when Yellow didn’t meet the standards for that designation.

Nashville, Tenn.-based Yellow has $1.3 billion in debt maturities next year, according to securities filings. Earlier this month, the company negotiated an agreement with lenders including the Treasury Department and Apollo Global Management that gave it some breathing room by temporarily suspending required earnings targets.

Of the $1.3 billion in loans the company has coming due next year, $729 million are from the government, according to Yellow’s latest quarterly report. The company reported about $1.48 billion in total debt at the end of the first quarter against $806 million in assets.

Yellow’s liquidity problems have mounted this year as declining shipping demand has cut into freight volumes and sent rates falling. Its cash holdings fell to around $100 million at the end of June from $235 million at the end of December.

The carrier sought this spring to institute a widespread overhaul of operations to lower costs and make its businesses more efficient. That triggered a series of sharp exchanges between the Teamsters and Yellow, which last month sued the union for allegedly costing the company business.

The union said Sunday that it had withdrawn plans for a walkout after a pension fund agreed to continue to extend health benefits to unionized workers at Yellow and a sister company. The pension fund said it would give Yellow another 30 days to make some deferred payments.

If customers pull back further from Yellow, the company’s remaining shipments would go to a range of other carriers, including FedEx Freight, ArcBest subsidiary ABF Freight, XPO and Old Dominion Freight Line. That would likely drive up pricing in a sector that has seen freight rates and demand tumble this year, according to industry experts.


Article credit of wsj.com online


By John Brooke 19 Aug, 2022

Personal bankruptcy filings have fallen dramatically since the beginning of the coronavirus pandemic, but with interest rates rising and government relief waning, filing numbers will likely pick up through this year, say experts.

Bankruptcy attorney David Leibowitz, head of Chicago-based Lakelaw, said his firm has “already seen filings in the Chicago area pick up by about 25% in the last two months.”

The variety of government stimulus programs, enhanced tax credits and protections against evictions and loan foreclosures put in place in the last two years have reduced the number of bankruptcy filings.

Bankruptcy may feel like rock bottom for financially strapped Americans, but it is also a new start and an opportunity to get out of hole that only seems to get deeper for many.

“If you can pay off your debts outside bankruptcy, you should,” said Leibowitz, a past chairman of the consumer bankruptcy committee of the American Bankruptcy Institute. “However, if your wages are being garnished, your car has been seized and you’re being hounded by collection agencies, bankruptcy may be imperative.”

If you’ve decided bankruptcy is your best option, your first decision is whether to hire a lawyer to help you through the process. You can file with the courts on your own, but the cost of mistakes is high.

What chapter of the code should you file under? What forms do you need to complete? What mistakes must you avoid? Bankruptcy law is complex and while you may save money filing on your own, you could lose much more on the back end.

“People don’t do their own dental work,” Juntikka said. “You need to consult a lawyer.”

What to do

The bankruptcy process involves a series of steps and procedures that have to be followed. The kind of bankruptcy filing you choose will depend on your circumstances.

Chapter 7 bankruptcy filings, which account for a significant majority of personal filings, can ultimately discharge most, though not all, personal debts. Alimony, tax debts and student loans are among the liabilities that may remain for petitioners. Most of your property is subject to seizure and sale, although there are some exemptions, such as retirement account balances.

To qualify for Chapter 7, you have to pass a means test. Essentially, your income must be less than the median income of the state where you file. Otherwise, you have to file under Chapter 13 of the code.

In that situation, some unsecured debts may be forgiven and you may be able to keep some personal property, but it basically creates a debt repayment plan, typically over a five-year period.

Here are individual steps you need to take in a bankruptcy filing:

  • Gather the documents you will need, including tax returns, pay stubs, bank, brokerage and retirement account statements, appraisals of real estate and other assets you own, vehicle registrations and any other documents pertaining to debts you owe or assets you own.
  • All bankruptcy filers have to complete a credit counselling course both before and after filing. The fee is typically less than $50 and may be waived if you’re unable to pay it.
  • Fill out and print the appropriate bankruptcy forms, get your filing fee ($338 for a Chapter 7 filing in federal court), file the forms in court and mail the necessary documents to your appointed bankruptcy trustee.
  • Attend the meeting remotely with your trustee. It takes place about a month after your case is filed.

All these steps are essential, and having an attorney can help ensure you don’t make mistakes.

What not to do

The biggest mistake people make in bankruptcy filings is trying to game the system. All your assets may be seized in a bankruptcy and failing to disclose all of them can result in criminal charges

Just ask tennis player Boris Becker, currently looking at jail time in the U.K. for hiding assets. Do not transfer property to family or friends before you file. It will be clawed back.

Also don’t max out your credit resources before you file. The court will not look kindly upon it. Never use funds from retirement accounts to pay off debt.

“Truth and transparency are critical to the bankruptcy process,” said Leibowitz. “Honest debtors get a fresh start, while dishonest ones can potentially go to jail.”

What to do post-bankruptcy

Declaring bankruptcy can feel like the ultimate failure, but there is life after bankruptcy. Leibowitz advises clients to take the following steps to get their lives back in order:

  1. Establish a budget you can stick to.
  2. Open a savings account and save a month’s worth of income to provide a financial cushion for unexpected expenses.
  3. Get a secured credit card and use it only for expenses you can pay off at the end of the month.
  4. Pay your rent and bills on time.
  5. Check your credit report regularly to make sure no debts discharged in bankruptcy remain outstanding on your profile.

If you follow a disciplined plan, you can quickly improve your credit profile and even be eligible for a Federal Housing Administration mortgage in as little as three years.

“There is such a stigma associated with bankruptcy,” Leibowitz said. “But the idea of rehabilitation and forgiveness is baked into our constitution.

“Bankruptcy can give people a second chance.”

Story taken from www.cnbc.com

By John Brooke 19 Aug, 2022

Cosmetics giant Revlon filed for Chapter 11 bankruptcy protection on Wednesday evening as it grappled with a cumbersome debt load and a snarled supply chain.

The company said it expects to receive $575 million in debtor-in-possession financing from its existing lender base, which will help to support its day-to-day operations.

The filing “will allow Revlon to offer our consumers the iconic products we have delivered for decades, while providing a clearer path for our future growth,” Revlon President and Chief Executive Officer Debra Perelman said in a press release issued Thursday morning.

“Our challenging capital structure has limited our ability to navigate macro-economic issues in order to meet this demand,” Perelman added.

Revlon’s bankruptcy filing said the company is currently unable to timely fill almost one-third of customer demand for its products, due to an inability to source a “sufficient and regular supply of raw materials.” Shipping components from China to the United States takes Revlon eight to 12 weeks and costs four times 2019 prices, it said.

Revlon is the first major consumer-facing business to file for bankruptcy protection in what has been a years long pause of distress in the retail sector. More than three dozen retailers filed for bankruptcy in 2020, marking an 11-year high, which experts say was an extensive and Covid pandemic-driven pull-forward of restructuring activity.

Now, however, as inflation rages, interest rates rise and consumers begin to pull back spending on discretionary items, experts predict more retail companies will be pressured to restructure. Particularly as many of these businesses grapple with ongoing supply chain challenges that have left them with the wrong inventories.

The nail polish and lipstick maker, which is controlled by billionaire Ron Perelman’s MacAndrews & Forbes, listed assets and liabilities between $1 billion and $10 billion, according to a filing with the U.S. Bankruptcy Court for the Southern District of New York.

Revlon had long-term debt of $3.31 billion as of March 31, a securities filing shows. The company’s market cap was nearly $123 million as of the close of trading Wednesday. Trading of Revlon shares was halted in Thursday’s premarket session.

Its sales of about $1.9 billion in 2020 were down 21% from 2019 levels. Though the business rebounded in 2021, Revlon’s revenue is still below pre-pandemic levels.

Start-ups including Glossier, Kylie Jenner’s Kylie Cosmetics and Rihanna’s Fenty Beauty have also challenged Revlon as it vies for younger consumers’ dollars.

Revlon could use its time in bankruptcy proceedings to prune its portfolio, given it owns numerous brands, some of which are performing better than others, said David Silverman, a retail senior director at Fitch Ratings.

“If executed effectively, Revlon could emerge from bankruptcy with a cleaner balance sheet and a better operating profile, improving longer term business prospects,” Silverman said.

Story originally taken from CNBC.com

By John Brooke 10 Jun, 2022

A federal judge in Texas on Friday dismissed the bankruptcy protection case of Infowars and two other companies controlled by Alex Jones, the result of an agreement between lawyers for the conspiracy theorist and parents of some of the children slain in the 2012 Sandy Hook Elementary School shooting.

U.S. Bankruptcy Judge Christopher Lopez approved the deal after a brief court hearing. The judge’s action allows the parents’ defamation lawsuits against Jones to continue in Texas and Connecticut, where trials are pending on how much he should pay families after judges in both states found Jones and his companies liable for damages.

The families’ lawsuits say they have been subjected to harassment and death threats from Jones’ followers because of the hoax conspiracy. Jones, based in Austin, Texas, has since said he believes the shooting did occur.

Relatives of eight of the 20 first graders and six educators killed in the massacre and an FBI agent who responded to the school in Newtown, Connecticut, are suing Jones and Free Speech Systems.

Infowars, Prison Planet TV and IW Health consented to dismissing the bankruptcy case last week after the families agreed to drop the three companies from their defamation lawsuits. Those lawsuits will continue against Jones himself and his largest moneymaking company, Free Speech Systems.

The families and the U.S. trustee’s office — a Justice Department agency that oversees bankruptcy cases — had questioned the legitimacy of the three companies’ bankruptcy filing and sought to throw out the case, saying it was only a tactic to delay the lawsuits. Jones’ lawyers denied the allegations.

Article taken from https://apnews.com/article/politics-texas-victoria-school-shootings-76618718255edcfe1270cf293f5c8876

By John Brooke 09 Dec, 2021

Members of the Sackler family on Monday said billions of dollars they collected from Purdue Pharma before the company filed for Chapter 11 was the result of extra cash, not part of a "secret plan" to abuse the bankruptcy system.

In court papers, lawyers for the Sackler family members, who controlled Purdue, rejected U.S. District Judge Colleen McMahon’s suggestion that the more than $10 billion Purdue paid out in the years leading up to the 2019 bankruptcy could amount to an abuse of the Chapter 11 process. Around half of the money went to taxes or business investments, according to court documents.

The Sacklers are alleged to have drained Purdue of cash over several years. When it eventually filed for bankruptcy in the face of lawsuits over the epidemic, the company needed Sacklers' money to settle the billions of dollars of legal claims. In return, the Sacklers were able to demand protection from the lawsuits.

The Sacklers rejected the notion that there was any "scheme" to "deliberately weaken Purdue so it could not reorganize without" their financial contribution.

There is no evidence to suggest the payments “were made as part of a secret plan” to abuse the bankruptcy system, the Sackler lawyers said. They called the idea “pure fiction.”

McMahon is considering whether to overturn a bankruptcy court ruling that shields the Sacklers from liability over the opioid epidemic. If she finds that there is sufficient evidence of abuse, she could send the matter back to the bankruptcy court to reconsider the shield.

More than 500,000 people have died from opioid overdoses since 1999, according to the Centers for Disease Control and Prevention.

The payments, the Sacklers argued, were made as business grew, including increased revenue following the restoration of Purdue's patent for OxyContin in 2008.

The Sacklers, who have denied wrongdoing and did not file for bankruptcy themselves, have contributed about $4.5 billion to a settlement of opioid-related litigation in exchange for protection against future lawsuits.

Purdue argued in a separate filing on Monday that the protections are necessary because the company cannot exit bankruptcy without resolving opioid-related claims against both Purdue and the Sacklers.

The U.S. Department of Justice’s bankruptcy watchdog, the U.S. Trustee, has long opposed this type of litigation shield and said on Monday in court filings that the law offers no such protections for people who have not filed for bankruptcy.

The U.S. Trustee accused the Sacklers of “piggybacking” off Purdue’s bankruptcy to protect themselves.

“If this is not abuse of the bankruptcy system, it is unclear what is,” the trustee said.

Article taken from Reuters.com by Maria Chutchian

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