Bankruptcies Down Locally and Nationally

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According to the Daily Press, federal bankruptcy filings have fallen to their lowest level in roughly seven years. From June 30th 2014 to the same date in 2015, the Administrative Office of US Courts reported 854,690 and 25,046 personal and business related bankruptcy filings respectively. This means that filings are down 12% total from the more than 1 million overall filing during the same period a year before. The same office reports that over the past four years, bankruptcies have fallen very steadily.

If the 12% drop in bankruptcy filings over the past year seems impressive, consider this. During the year that ended in June 2011, there were a total of roughly 1.5 million bankruptcies filed nationwide, which means that this past years total of 879,736 filings amounts to a drop of about 42% over that period. Just focusing on businesses, bankruptcies in the first half of this year were down 19.2 percent from the year before, and down 68% from the first six months of 2010.

As is usually the case, small and medium sized businesses accounted for the biggest chunk of these filings though their share of the total has been decreasing. The first 6 months of this year saw 76% of business bankruptcies filed by small to mid sized companies, as opposed to 81% and 87% in 2013 and 2014 respectively.

Of note is Caesars Entertainment’s bankruptcy filing this year. It’s notable because it is the biggest so far, with assets listed at 1 and a half billion.

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Relativity Media Gets Minimum Bankruptcy Bid

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Considering the fact that just a bit over a year ago some were saying that Relativity Media could be valued between $6 billion and $10 billion, their fall from grace could be considered quite meteoric. Recently, the senior lenders, who are now in control of the company since it is going through bankruptcy, have made a minimum bid of just $250 million for it. That’s just about 4% of the low end estimate for what the company could have been worth previously. Relativity’s bankruptcy was covered in a recent article in Variety.

So what is the big problem with Relativity? “Experts who have been kicking the tires of the failed entertainment concern have told Variety that they don’t see much value in a studio that has put out a string of mostly underperforming films and failed to build a substantial movie library.” In an industry in which so much money is thrown around, there can be nothing worse than several underperforming films in a row. While unfortunate for studios, box office bombs are inevitable every once in a while. But when they happen with regularity it is a huge problem. The stars get paid, the crew gets paid, many other people get paid, and then investors are left with major losses on their investments.

The numbers mentioned in the article linked to above are eye opening. “Unsecured creditors have racked up $89.9 million in credits against Relativity. The company has a total of nearly $1.2 billion in liabilities, against assets it put at $560 million.” A bankruptcy proceeding in such a situation is unsurprising to say the least.

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RadioShack Intellectual Property Rights

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Following up from a recent post about RadioShack emerging from bankruptcy, last week a US bankruptcy judge allowed RadioShack to sell its company name and customer data for $26 million to General Wireless, an affiliate of Standard General LP, the hedge fund that took over RadioShack for $160 Million after it filed for Chapter 11 bankruptcy earlier this year.

There was some controversy over this bid, which in addition to giving Standard General the right to the recognizable RadioShack brand name, also gives them the right to receive the names and addresses for 67 million customers. The controversy is summarized in this New York Times article as follows: “The Wonderland Investment Group of China, which participated in the intellectual property auction last week, said RadioShack stopped incremental bidding during the auction, abruptly telling parties they had 30 minutes to present final bids under seal. Wonderland, which bid $17.3 million, said it could have beaten General Wireless’s $26.2 million offer, if the initial guidelines had been followed.”

Generally, it is uncommon for a bankruptcy judge to re-open an auction, to prevent bidders from advancing new bids once the auction is closed and the value of the asset is established. Though this is not necessarily what Wonderland intended, the presiding judge still felt that reopening bidding would have been inappropriate.

As mentioned in that last post, the future for RadioShack still remains uncertain, because the issues that largely led to it filing for Chapter 11, including the difficulty of competing with online sales of the products they offer, are still very much present in the current business environment. Apparently, “Standard General [plans] to keep the purchased stores in business by establishing a co-brand with Sprint.”

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Negotiation Skills for Family Lawyers

Emile Harmon’s latest post.

A recent study revealed something not all that surprising about the family justice system – that most of the time, matters are resolved through negotiation, and not by way of a trial. The article I’m referencing mentions that for most family justice professionals, fewer than 10 percent of cases actually result in a trial. What this means is simple. It’s incredibly important for those who practice family law to have top notch negotiation skills.

In the same article, one of the researchers who was part of the study makes a good point: “Building solid negotiation skills isn’t often the focus in terms of legal education or continuing professional development sessions…. You can get a lot of training on substantive family law, or family court procedures, but it’s very easy for lawyers to overlook the negotiation skill-building side of things, despite the research showing that it’s really, really important.”

This is just another one of the skills that it is essential for family lawyers to develop. By its very nature, family law involves more than simply by the books legal advice. It is also important for family attorneys to be understanding of each clients’ specific needs and sensibilities. they must be sensitive to stress that this process has on many clients, while still maintaining a high level of professionalism and legal understanding that allows them to protect the rights of their clients in the best way possible. And on top of this, the development of negotiation skills must remain, or become if it isn’t already, a top priority.

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Renowned Bankruptcy Lawyer Harvey R. Miller

Emile Harmon’s latest post.

One of the most renowned corporate bankruptcy lawyers in America, Harvey R. Miller, who over the past few decades guided some of the biggest companies in the country and the world through Chapter 11, died in New York City this week at the age of 82. It’s probably not every day that the New York Times summarizes the entire career of a bankruptcy lawyer, so I think it’s worth highlighting some of his accomplishments here, too, since he is truly a titan of the industry.

“Through detailed knowledge of the law, a loquacious if sometimes unyielding negotiating style and an imposing presence, Mr. Miller became one of the most famous members of the corporate bankruptcy bar.”

I mentioned above that during his career he guided some of the biggest companies in the world through bankruptcy, and that was not an overstatement. These were very high profile filings, most of which were front page news in the years and decades in which they took place – Continental Airlines, Texaco, R.H. Macy, Drexel Burnham Lambert, General Motors, and American Airlines. But the biggest Chapter 11 case of his career, and actually to this date the biggest in history, was the 2008 filing of Lehman. The company had assets totalling $639 billion, and needless to say the case was incredibly complex.

The article linked to above goes into further detail about his life and career. It also includes warm comments from family, friends, and colleagues that give a bit of personal insight into this renowned legal figure. It’s definitely worth the read.

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Negotiation Skills for Family Lawyers

Emile Harmon’s latest blog page.

A recent study revealed something not all that surprising about the family justice system – that most of the time, matters are resolved through negotiation, and not by way of a trial. The article I’m referencing mentions that for most family justice professionals, fewer than 10 percent of cases actually result in a trial. What this means is simple. It’s incredibly important for those who practice family law to have top notch negotiation skills.

In the same article, one of the researchers who was part of the study makes a good point: “Building solid negotiation skills isn’t often the focus in terms of legal education or continuing professional development sessions…. You can get a lot of training on substantive family law, or family court procedures, but it’s very easy for lawyers to overlook the negotiation skill-building side of things, despite the research showing that it’s really, really important.”

This is just another one of the skills that it is essential for family lawyers to develop. By its very nature, family law involves more than simply by the books legal advice. It is also important for family attorneys to be understanding of each clients’ specific needs and sensibilities. they must be sensitive to stress that this process has on many clients, while still maintaining a high level of professionalism and legal understanding that allows them to protect the rights of their clients in the best way possible. And on top of this, the development of negotiation skills must remain, or become if it isn’t already, a top priority.

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RadioShack Emerges from Bankruptcy

Emile Harmon’s latest post.

According to the Wall Street Journal, the hedge fund Standard General LP has taken over RadioShack Corp., which filed for Chapter 11 bankruptcy earlier this year, in a deal that pares the company down to 1,743 stores from 4,000, but allows it to get out of bankruptcy and save roughly 7,500 jobs. The bankruptcy court’s ruling came down to the wire, just hours before a deadline after which complete liquidation of the company was a very real possibility. If this hadn’t come through, it’s possible that there would be no RadioShack stores anymore.

And actually, that is still a possibility, considering the newly solvent RadioShack only has the rights to the name “RadioShack” temporarily, for just six more months, unless Standard General pays more money to retain the name and certain other patents. That would be in addition to this initial bid, which is valued at $160 million.

Litigation involving RadioShack is certainly not over. In total, it is estimated that bondholders, suppliers, and landlords are still owed roughly $500 million.

RadioShack’s recent woes are summarized well in another Wall Street Journal article from late last year: “What many years ago was a point of pride for the company – that more than 90% of Americans then lived within five miles of a RadioShack – has become its Achilles’ heel. The cost of maintaining and stocking its 4,400 company owned outlets “pushed the chain into bankruptcy. While still afloat, and having avoided complete liquidation, many of RadioShack’s problems other than its number of outlets haven’t gone anywhere. They still have to compete with online sales of the products they offer. They will need to get creative if they are to thrive once again.

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Samson Resources May File For Bankruptcy

Emile Harmon’s latest post.

The Wall Street Journal reports that struggling energy corporation Samson Resources may be considering filing for Chapter 11 bankruptcy as a way to restructure its debt. According to the company’s 2014 annual report, they feel this may be the quickest means to a solution.

With oil prices having been relatively low for more than half a year, many other oil and gas companies are dealing with similar problems. Samson would not be the first to file for bankruptcy. For example, Quicksilver Resources, BPZ Resources, and Dune Energy already have.

A statistic from a New York Times article covering the potential Samson Resources filing includes a telling statistic. “As of Tuesday evening, the price of West Texas intermediate crude oil was $47.69 a barrel, less than half of what it was” a little more than three years ago.

These prices do not just have an effect on individual companies like those mentioned above. While drivers around the country are thrilled about the low prices at the pump, investment groups like Kohlberg Kravis Roberts, the owner of Samson Resources, are much less elated. The NYT article cites another statistic regarding KKR, noting that their fourth-quarter profits fell – get this – 89 percent, the value of their energy holdings being a chief factor. Low gas prices are a notorious double-edged sword for this reason. While consumers enjoy low gas prices, suppliers and the companies that own them wind up stopping drilling, selling assets, and laying off employees in order to shore up their financial positions.

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5 Tax Season Tips for Small Businesses

Emile Harmon’s latest post.

As we near the end of tax season, and accountants across the country look forward to their first full night’s sleep in months, many business owners are probably relieved that this universally dreaded time of the year is coming to an end, and thinking about how they can more efficiently prepare their taxes for next year. A recent Forbes Magazine article outlined 5 tips for small businesses during tax season, and I have summarized them below.

1. Prepare as you go – For a little inspiration here, see Aesop’s Fable The Ant and the Grasshopper. Both ancient and contemporary wisdom will tell you that leaving important preparation until the last minute is a bad idea. First, if you are rushing to prepare your paper work, it’s much more likely that you will overlook deductions that you are entitled to claim. Also, keeping your receipts, a log, and a summary of your purchases will be essential if you ever get audited.

2. Pay attention to ghost assets – Assets that “cannot be accounted for because they are physically missing or rendered unusable” are often overlooked, even though they can have a major impact on your bottom line, and therefore on your taxes.

3. Make the most of your deductions – The above mentioned article has a great quote about this that I need to share here: “As you prepare for tax season, keep in mind that tax rules are not just regulations to be followed; they are also a list of incentives to be used to your advantage.”

4. Use accounting software and accountants – This is a task that is best left to professionals, both so you don’t overlook anything, and so you get the most out of any deductions. Also, good software can help you with tip #1 above.

5. Set up a smart retirement fund – Contributions to a 401(k) or IRA are tax deferrable, which means that you don’t pay taxes on that income until you start withdrawing the money.

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5 Tax Season Tips for Small Businesses

Emile Harmon’s latest blog page.

As we near the end of tax season, and accountants across the country look forward to their first full night’s sleep in months, many business owners are probably relieved that this universally dreaded time of the year is coming to an end, and thinking about how they can more efficiently prepare their taxes for next year. A recent Forbes Magazine article outlined 5 tips for small businesses during tax season, and I have summarized them below.

1. Prepare as you go – For a little inspiration here, see Aesop’s Fable The Ant and the Grasshopper. Both ancient and contemporary wisdom will tell you that leaving important preparation until the last minute is a bad idea. First, if you are rushing to prepare your paper work, it’s much more likely that you will overlook deductions that you are entitled to claim. Also, keeping your receipts, a log, and a summary of your purchases will be essential if you ever get audited.

2. Pay attention to ghost assets – Assets that “cannot be accounted for because they are physically missing or rendered unusable” are often overlooked, even though they can have a major impact on your bottom line, and therefore on your taxes.

3. Make the most of your deductions – The above mentioned article has a great quote about this that I need to share here: “As you prepare for tax season, keep in mind that tax rules are not just regulations to be followed; they are also a list of incentives to be used to your advantage.”

4. Use accounting software and accountants – This is a task that is best left to professionals, both so you don’t overlook anything, and so you get the most out of any deductions. Also, good software can help you with tip #1 above.

5. Set up a smart retirement fund – Contributions to a 401(k) or IRA are tax deferrable, which means that you don’t pay taxes on that income until you start withdrawing the money.

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