Philadelphia Bankruptcy Lawyer Blog

Bankruptcy is not an option for Harrisburg...at least not a voluntary one and at least not for a little while.

Voting in line with their parties, the Pennsylvania State House and Senate voted on and passed a bill on fiscal matters which contain a modified, somewhat slimmer version of the Senator Jeffrey Piccola's last minute attempt to turn the well-known Act 47 recovery pan into an outright mandate. The change in langue, then, which the Senator did not himself author but which he does support and which Governor Tom Corbett is believed to be willing to agree to, prevents those municipalities labeled as "finally distressed" by the state from filing bankruptcy at least until June 2012. The goal is to find alternate solutions between now and then so as to avert a bankruptcy altogether. The bill also fails to require officials of the city (or any township which qualifies as third class) to actually implement Act 47. Recall that this blog has discussed Act 47 in the past. The replacement provision was designed in case the General Assembly lacked the time to get the original bill of Senator Piccola to the governor.

Continue reading "Bankruptcy Delayed in Harrisburg (Berwyn Need Not Similarly Worry)" »

You are reading this online or on your phone. Such is the nature of an evolving world that embraces technology. We used to write on cave walls, then stone, scrolls, papyrus, etc. Now we write in digital cyberspace and write less and less on paper. No surprise then that Borders is finalizing its bankruptcy. Their Chapter 11 reorganization case was originally filed in February 2011 and they had sought, through the protections afforded by the filing (such as the automatic stay), to emerge restructured so as to become profitable. They closed a big chunk of stores right out of the gate. Today, their efforts to restructure proved a failure and now they must close their remaining stores, selling their inventory to liquidators Hilco Merchant Resources, LLC and Gordon Bros. Group. This includes, of course, the stores in the local Philadelphia area: Exton, Bryn Mawr, Plymouth Meeting, Pottstown, and Philadelphia city).

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Written by a local bankruptcy attorney.

Philadelphia wireless spectrum holder NextWave may be headed toward bankruptcy. Without a forebearance, renegotiation, waiver, or further refinancing, the company may need to file for Chapter 11 bankruptcy protection.

This makes sense, of course. Chapter 11 is a unique vehicle for companies to get a bit of breathing room while they consider and weigh their options. Because a payment is due to either the government, its creditors, or both, the creditors can foreclose on the spectrum holdings and/or the government can seize the spectrum itself. The rules for such things are complex and beyond the scope of this bankruptcy blog, but just because the FCC is involved does not mean that contracts are in any way different. Money is due and NextWave cannot pay. The company is not headquartered in Philadelphia, or Pennsylvania at all, but rather Rhode Island. it is just that they own spectrum in Philadelphia. They have apparently been working to sell some of their spectrum since 2009. They hold considerable chunks in the 2.3GHz and 2.5GHz and in other popular urban areas like New York, Boston, and San Francisco.

If you are considering starting a business or investing in one, I recommend steering clear of things entangled with the government. Some things you think are "can't miss" end up running into trouble due to things you did not know you did not know. Everything was great with Marie Curie when she and her husband were discovering polonium and radium and the unique thing called radioactivity...until it was discovered that radioactivity caused harm to living beings. That's just a silly, unrelated example but it shows that there are often things you cannot know that might be discovered in the future. With respect to wireless broadband, here is another, and actually related illustration. Making poor investment choices -- not that NextWave even did so -- can lead to bankruptcy. Here it is likely a Chapter 11, barring a last-minute, alternate solution.

Continue reading "Philadelphia Wireless Spectrum Provider Likely Headed to Bankruptcy (NextWave)" »

This blog was written by a local bankruptcy attorney.

In the wake of the extraordinary late-game victory of the United States Women's Soccer team in its game against Brazil this last weekend, allow me to find a connection between soccer and bankruptcy. I do so below. First, however, it seems appropriate to revisit the instant classic that was the shootout victory for the United States in the quarterfinal of the 2011 Women's World Cup against the Marta-led Brazil squad. In brief, wow. After being limited to ten players following a questionable red card to a US defender, the American women were down to the final moments in overtime, down 2-1, when Abby Wombach, the consensus top player for the United States team, hit a header to tie it on a long feed from Megan Rapinoe and send it to the shootout. Surely, the self-assured Brazil squad felt emotionally bankrupt as the ball went into the net. The shootout went the Americans' way as Ali Krieger put it away following a Hope Solo save on the third penalty kick from Brazil's Daiane. The United States advanced to the semi-finals in the tournament most now expect the ladies to win.

The television ratings for the Brazil game were the highest for a women's soccer team since the World Cup final held in America where Brandi Chastain famously took off her jersey in celebration of the American win. Spain's men's team is the reigning World Cup champion, so it comes as some shock that twenty-two Spanish Soccer clubs have filed for bankruptcy protection. Sure, they are in Spain and the bankruptcy laws are not the same there as they are in the United States. They have bankruptcy laws, like any Western nation, but they do not have an exact equivalent of Chapter 7 bankruptcy, Chapter 13 bankruptcy, or Chapter 11 bankruptcy, though the filings in Spain surely resemble an American Chapter 11 bankruptcy.

Continue reading "Bankruptcy and Soccer (Philadelphia Bankruptcy Lawyer Finds a Connection)" »

Blogged by a local bankruptcy attorney:

Good news today - at least in the short term - at the Philadelphia Orchestra. Musicians and management have agreed to a temporary stop-gap which will keep the music playing this summer. In lieu of cancelling the current contract and having one imposed on them in bankruptcy court, the Philadelphia Orchestra Association extended an offer to musicians to keep the weekly compensation at at least $2400 through November 13. The musicians accepted the offer. $2400 per week is $125,000 annually, but note that most musicians make in excess of this amount anyway. These salaries should remain unchanged.

At issue is a pension. Pensions are a real hot topic lately where institutions are financially strapped. This includes private employers, unions, and states (such as California). The Philadelphia Orchestra has filed for Chapter 11 bankruptcy protection, primarily related to how the pension is to be funded. The management seeks to employ a fixed contribution system (that is, the amount paid to the pension fund is set at a particular level) whereas the pensioners themselves seek to maintain the status of what was promised: a fixed distribution system (meaning that each musician would get a particular, knowable amount or that the distribution would be of a certain size to the group at large). In any event, any change is a drastic one, with each side seeking to protect itself. The musicians are arguing that the large endowment paid by donors to the Orchestra could help cover any gap in the fixed contribution schema. The orchestra management, however, says that, by contract, the amounts given as gifts are exclusively set aside for production of performances and the like, and not useable for servicing a pension fund.The amount held in this fund is roughly $120 million.

Continue reading "Bankruptcy: Philadelphia Orchestra Agrees to Short-Term Contract Extension (Music to Play This Summer)" »

Bankruptcy is part of the American fabric. It's not quite apple pie, baseball, or a V-8 engine, but it's been with us longer than each of those, albeit in varying forms. Reference to it is found in Article I, Section 8, Clause 4 of the United States Constitution. It was first addressed by Congress in 1801, then amended, modified, and wholly redone in 1978 and 2005 (in 2005 Congress passed the Bankruptcy Abuse Protection and Consumer Protection Act which is Congress' most recent effort to enact substantive bankruptcy law changes; BACPA, among other things, established the means test and the mandate for credit counseling). And Bankruptcy Courts across the country make law almost every day in their application and interpretation of the law. Often, these rulings are inconsistent across differing jurisdictions of the country and may get resolved before the United States Supreme Court, eventually. As you can see, then, bankruptcy is all-American.

And that's good, too. Up until 1833, people could be put into debtor's prisons for failing to pay their obligations. A couple signers of the Declaration of Independence spent time incarcerated in debtor's prison as did the father of Charles Dickens (he was British, of course, but the best understanding of debtor's prison and its associated gloom can be deduced from reading Dickens; his dad was in this one.).

So, when we celebrate the Fourth of July, we celebrate all things that make us American. This includes bankruptcy. Fortunately it includes things more grand such as freedom, liberty, property, taxation WITH representation, and everything else that makes our nation the best in the world. But, indeed, it does include bankruptcy.

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