To round out the new leadership team it will be Cesar Gueikian as new chief merchsnt officer, chief financial officer will be Kim Mattoon and its chief production officer will be Christian Schmitz.

Earlier this month a bankruptcy court in Delaware approved Gibson’s reorganization plan to get itself out of bankruptcy and keep itself in business.

On the team’s first day on the job November 1st, the investment firm of Kohlberg Kravis Roberts & Co. (KKR) will assume majority ownership control of Gibson.

Under the reorganization plan, the company will continue to manufacture its namesake Gibson and Epiphone guitars, as well as maintain its professional audio business that makes studio monitors and loudspeakers under the names KRK and Cerwin Vega. It will be dropping its efforts to push into the home entertainment and headphone areas, areas the company hoped would make up for the decline in instrument sales, but which accounted for much of its debt.

In filings earlier this year, Gibson estimated that it was up to $500 million in debt.

The good news is Sears is honoring those warranties. The company said in a statement, “We are honoring our warranties, protection agreements and guarantees as normal,” the company said in a statement. If you need help with a replacement part for your appliance, check out the Sears PartsDirect Site.

Eric Arnum, editor of Warranty Week, which reports on the warranty industry said,. “Normally consumers haven’t had to worry about their warranties being dissolved in the wake of a company going out of business.

When Circuit City and CompUSA filed for bankruptcy, outside insurance companies stepped in, and all extended warranties were honored. “That’s been the case for decades in the U.S.,” Arnum said. The reason: Many states mandate that a company work with outside insurance companies or demonstrate assets of a certain amount to continue coverage for consumers.”

So, even though you don’t have to worry about your current warranty, you should definitely think twice about extended warranties in the future. Here’s why you should think twice.

Warnings about extended warranties aren’t new. Consumer Reports against them for decades.

Margot Gilman, Consumer Reports money editor says, “Consumer Reports has always advised consumers to be wary of extended warranties. Whenever we’ve analyzed them, and surveyed our members about their experiences with them, we’ve reached the conclusion that the benefits don’t outweigh the costs. There are better, more financially prudent alternatives to extended warranties for people who want to protect themselves against products that may break.”

Consumer Reports found that almost two-thirds of consumers rated aggressive pitches to buy extended warranties a top annoyance.

Yet in 2017, consumers bought $44.6 billion in extended warranties, according to Warranty Week. In 2010, extended warranties totaled $31.3 billion.

Warranty Week editor Eric Arnum says, “People are often helpless in the face of a determined salesperson. There are people who can sell snowshoes in Hawaii, and they are extremely skilled.

The top offenders according to Arnum P.C Richards and Sears.

“Most consumers do not go into the store even thinking about extended warranties until the salesperson says, ‘Hey, thought about protection?’” Arnum says. “All the research they do is on the product, so it’s easy to convince one in three people, on average, to buy them.”

Many consumers see their kids’ cellphones as a peril worth insuring. They might not think they need the break/fix protection, Arnum says, but loss/theft is seen as worthwhile. ‘What if I drop it?’ You see that with laptops [people are attracted to] the accidental damage protection. Even the Consumer Reports people say loss/theft is good.”

Another critic of extended warranties is Ira Rheingold, executive director of the National Association of Consumer Advocates. “When something is a big profit center for a company, it’s probably not in the best interest of the consumer,” says Rheingold.

“I don’t typically think they’re worth it,” Rheingold said. “Whether [something] needs repairs along the way, the standard warranty is usually good enough.”

“Another issue is you can’t always see the cost of a warranty before you buy a product.” On the Sears website, which is still open for business, a customer has to place a specific refrigerator in the shopping cart before seeing the cost options for an extended warranty.

On its website, The Federal Trade Commission, has a section called ‘Who’s responsible for the contract,’ that says “Before you sign a contract for an extended warranty, think about the company’s financial situation and consider whether the business is reputable.”

All signs point to bankruptcy next week since out of that on hand money the company has to pay vendors, employees and stock up on inventory for the holidays.

Also, three companies that sell items at Sears told Reuters that Sears had missed payments to them over the past few weeks. One of Sears’ major shareholders recently dumped a large bunch of his stock for pennies on his original investment. The company added a new director last week who is familiar with bankruptcies and restructuring.

Robert Schulz, chief credit analyst for the retail industry for Standard & Poor’s said despite years of losses, store closings and other financial problems, “the possibility of a bankruptcy does seem to be higher than over the past couple of years,” . He said in years past the situation did not have the “sense of urgency” that exists now.

The investor mentioned above, Bruce Berkowitz of Fairholme Capital Management dumped 142,000 shares of Sears last week.

The Wall Street Jouirnal recently reported Sears has also hired M-III Partners, a boutique advisory firm specializing in seeing companies through bankruptcies and restructuring. The company is also talking to lenders about providing it with debtor-in-possession financing, according to CNBC. That kind of loan is used by companies that file for bankruptcy to fund operations during the process.

• 2120 West Genesee St., Syracuse
• 4141 South Salina St., Syracuse
• 710 Lake Ave., Rochester
• 175 N. Winton Road, Rochester
• 6720 Pittsford/Palmyra Road, Fairport
• 33 Forgham St., Lyons
• 381 Hamilton St., Geneva
• 909 West 1st St. S., Fulton
• 299 S. Main St., Elmira
• 622 Lake Flower Ave., Saranac Lake

Frank Curci, Tops’ chief executive officer told the Buffalo News, “There are a few stores that are not performing to our standards, due to a number of factors including location, store size, lack of visibility, and lease costs. “We are using the tools available to us through the court-supervised process to conduct an orderly wind down of these stores.”

The ten stores slated to close are scheduled to shutter by the end of November.

In 1978, the bankruptcy laws were overhauled and the ability to discharge studennt loans was taken away. The reasoning was tuitions were much lower and there was a robust job market and most graduates had no problems getting jobs.

Fast forward 30 year and tuitions have skyrocketed and graduates have no avenue to climb out from under the debt even if they are gainfully employed.

The ability to declare bankruptcy as a last resort has long been a vital element of American society yet that is denied to young people who need to borrow for their education.

Back when the law was changed, student loan defaults were not an issue. Now due to the high cost of college, defaults are common and a change in the law is needed.

Last year U.S. News and World Report released study saying total student debt now tops $1.3 trillion. It’s the single fastest-growing segment of U.S. consumer debt, increasing by 170 percent over the past ten years. 44 million Americans currently have student debt, and 8 million of those have already defaulted on their loans.

We define that as a crisis.

The cause, according to experts comes from a 30-year shift of a financial risk shift from government and employers to individuals who now burden a greater share of their financial well-being as government help shrinks.

The Times reports the transfer has come in the form of longer waits for social security benefits, the replacement of pensions from companies to personal 401(k)s and more spending on health care.

The paper based their reporting on a study by the Consumer Bankruptcy Project who explain that older people whose finances are precarious have few places to turn.

“When the costs of aging are off-loaded onto a population that simply does not have access to adequate resources, something has to give,” the study says, “and older Americans turn to what little is left of the social safety net — bankruptcy court.”

Deborah Thorne, an associate professor of sociology at the University of Idaho and an author of the study is quoted saying

“You can manage O.K. until there is a little stumble,” said “It doesn’t even take a big thing.”

The study says “bankruptcy can offer a fresh start for people who need one, but for older Americans it “is too little too late.” By the time they file, their wealth has vanished and they simply do not have enough years to get back on their feet.”

Ailsa Chang of NPR has an interview with Thorne, here.

A 20-year study by the American Bankruptcy Institute of bankruptcy filers in Utah, found that 10.7 percent of debtors in the study had filed bankruptcy multiple times, and may have been abusing the system and 20.3 percent of those serial debtors who filed Chapter 7 bankruptcy cases, did not receive a discharge, and ultimately had their cases dismissed. Additionally, only 2.9 percent of repeat Chapter 13 filers completed their payment plan. With almost 800,000 bankruptcy filings in the year 2017, serial bankruptcy filers present a massive problem to the judiciary, attorneys and creditors.

But recently, U,S. Court of Appeals for the Seventh Circuit issued an opinion which may have serial filers thinking twice before using bankruptcy as a stall tactic.

In United States v. Williams, 2018 WL 2709457, the debtor fell behind on her payments to several creditors, including the dues to her condominium association. In January 2003, the debtor filed her first of eventually five Chapter 13 bankruptcy cases. The scheme was simple, upon the filing of the bankruptcy case the automatic stay would apply to stop the collection efforts of all creditors. Subsequent to the filing of the bankruptcy case, the debtor would propose a bankruptcy plan, but then fail to make all the payments required under that plan. The failure to make the required payments would lead to the dismissal of the bankruptcy case.

Following the dismissal, the debtor’s condominium association would again begin collection lawsuits, at which point the debtor would again file for bankruptcy protection and the process would continue.

In between the second and third bankruptcy fillings, the debtor transferred title to her condominium to a friend, and then arranged for the property to be transferred back to her at a later date.

After the dismissal of the debtor’s fifth and final bankruptcy case, the condo association once again tried to evict the debtor. But once again, she concocted a scheme to delay the eviction by again transferring the condominium to her friend, who this time filed his own Chapter 13 bankruptcy.

That’s when the government stepped in and charged the debtor and her friend in a five count indictment for bankruptcy fraud. They were found guilty and sentenced to four years. They appealed to the Seventh Circuit who upheld the verdict.

In September 2016, the company was bought by South African conglomerate Steinhoff International Holdings in a $3.8 billion deal that included Steinhoff assuming more than $1 billion in debt the U.S. retailer had racked up in an expansion move.

Last December, Steinhoff’s president and chairman resigned following the discovery of what the company described as “accounting irregularities.” Also in December, Mattress Firm revealed they planned to close about 200 under-performing stores in 2018.

Bloomberg quotes CEO Daniel Griesemer, who took over in May 2001, “We have spent the past nine to 10 months positioning the company, and the Gymboree brand in particular, for a turnaround. So nationwide, all new products, new brand positioning, new look and feel. Essentially, an all-new Gymboree.”

The company rolled out its new offerings last week which include more basic staples to allow better mixing and matching in an attempt to go up against fast-fashion retailers who have snagged a bigger share of the youth market.

Griesemer said, “The modern parent learned to shop at Forever 21 and H&M and Zara” and that Gymboree’s line seemed “dated.”

In the next month approximately 75% of their stores will feature the new line and the old inventory will be sold as discounted clearance.

Gymboree will also open 12 new Janie and Jack stores across the country. These stores are a higher-end clothing line which Griesemer said “has significant room to grow” and will see a “broadening product line.” There are also plans to open “a couple” of new Crazy 8 stores, an affiliated brand.

After Andy Warhol died in the late 1980s, Brant bought the magazine and is the company’s sole secured creditor. In bankruptcy speak that means he goes to the head of the line to get paid. The fact he was the owner and he loaned the company money over the years means he is most likely the only one who will get paid. The writers, artists and others who are also owed money are petty much out of luck.

According to court filings Brant floated the magazine around $8.2 million out of his own pocket. The bankruptcy trustee told WWD that in 2016, Interview, was being run led by Brant’s daughter and she guaranteed a loan from her father, “collateralized by security interests in and liens on substantially all of [Interview’s] assets and property.”

Soon after the May bankruptcy filing, Kelly Brant quit as president and in an internal memo wrote that Interview was being bought by Crystal Ball Media, a new company she and Jason Nikic, Interview’s chief revenue officer had formed.

The memo hinted the magazine will relaunch in September with Nick Haramis as editor in chief and Mel Ottenberg, Rihanna’s stylist as creative director. The memo was published by the Daily Front Row, who’s new chief revenue officer is a former Interview executive who claims he is owed $170,000 for his work at Interview.

The Telegraph reports that his attorneys have applied for a restraining order to prevent the sale of his belongings that include trophies he won at Wimbleton in the 1980s. Becker told Germany’s Bild am Sonntag tabloid, “Next week, my lawyers in England will apply for a restraining order to stop the auction. This auction is all about hurting me personally because of course I’m emotionally attached to the trophies.”

The sale will be conducted as an online auction this Thursday. Becker told The Mail On Sunday, “The whole world is asking, ‘How can you pay for dinner? How can you pay for your flat? We thought you were bankrupt. But as far as I’m concerned, I’ve paid all I owe.”

In applying for the restraining order Becker has claimed he has diplomatic immunity from the Central African Republic, (CAR) which grants him diplomatic immunity. CAR officials say it is fake an last Friday, the country’s foreign minister, Charles Armel Doubane, called Becker’s diplomatic passport a fake.

Memorabilia from Becker’s career is being auctioned online by Wyles Hardy & Co, the British company that also sold off possessions of disgraced financier Bernie Madoff.

On 23 June the Telegraph reported Becker was being urged to “remember” where some of his prized trophies were, after he claimed to have forgotten where he had put a few of his most valuable ones.

One of the trophies, awarded for Becker’s victory over Ivan Lendl in the 1986 Wimbledon final, was discovered in the care of Becker’s mother, who claims it was a “gift” from her son.

The UK firm of Smith & Williamson, which is handling the bankruptcy, said they had visited his German property to look for items they could auction off.

The company has been holding going out of business sales at their stores but this girafee turned out to be a white elephant of sorts.

Although there was interest, the statue is 16-feet tall and weighs 550-pounds and nobody wanted to pay the necessary expense to move it. Enter Joseph Malfitano, whose firm Malfitano Partners were advisors on liquidating the company’s assets.

Malfitano embarked on a search of children’s hospitals who might be interested in giving Geoffrey a new home. While he had some nibbles from hospitals, they couldn’t take the statue due to its size.

Maltifano told BloomberNews, “I thought having this thing in a hospital would cheer kids up. The giraffe is smiling, and is raising his forelegs triumphantly as if he has just completed a gymnastic flip.” Malfitano’s son has type 1 diabetes and gets treated at a hospital near Denver, which wanted the statue but couldn’t accommodate its large size.

In a last ditch effort, Maltifano posted on his LinkedIn page looking for someone to take the giraffe. That’s where former colleague Andrea Saavedra saw the posting and eventually connected Malfitano to a hospital who agreed to take the statue: the Bristol-Myers Squibb Children’s Hospital in New Brunswick, New Jersey.

Saavedtra told BloombergQuint.com, “As a resident of New Jersey, I felt pretty strongly that this iconic piece of retail history stay in New Jersey.” Toys R Us HQ is located in Wayne, New Jersey, 50 miles from the hospital. Maltifabo agreed to pay for the cost of transporting the 550-pound fiberglass beast.

“I just thought it would be really cool for a sick kid to see,” said KenRosen, who is a board member at RWJBarnabas Health, the health-care network that includes the hospital. “It’s probably incredibly therapeutic if you’re a sick child looking for a little mental health boost.”

Rosen, is chair of the bankruptcy department at law firm Lowenstein Sandler, heard about the plan from Saavedra and agreed with his wife to donate the cost of Geoffrey’s installation at the hospital, which he expects to be about $6,000. His firm represented some vendors that were creditors to Toys “R” Us.

Bloomberg reports Buying Geoffrey ended up being a little more expensive than Malfitano had expected after more interest for the statue emerged at the last minute.

“There was another offer for it, so we had to pay more than the other guy,” he said.

For more info read the source article at Bloomberquint.com

It is commonly understood that you are not able to discharge student loan debt through bankruptcy. This is true…for the most part. There are circumstances where you can use bankruptcy.

Forbes points us to Make Lemonade for some advice:

According to Make Lemonade, there are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. The average student in the Class of 2016 has $37,172 in student loan debt.Unlike other consumer debt such as credit card and mortgage debt, however, student loans traditionally cannot be discharged in bankruptcy.

Student loans are now the second highest consumer debt category – behind mortgages, but ahead of credit card debt.

There are exceptions, if certain financial hardship conditions are met.

The Brunner Test: Financial Hardship

Brunner test is the legal test in all circuit courts, except the 8th circuit and 1st circuit. The 8th circuit uses a totality of circumstances, which is similar to Brunner, while the 1st circuit has yet to declare a standard.

In plain English, the Brunner standard says:

1. the borrower has extenuating circumstances creating a hardship;
2. those circumstances are likely to continue for a term of the loan; and
3. the borrower has made good faith attempts to repay the loan. (The borrower does not actually have to make payments, but merely attempt to make payments – such as try to find a workable payment plan.)

How Do You Discharge Student Loans In Bankruptcy?

An adversary proceeding needs to be filed in a bankruptcy court. The debtor has to prove that repaying the loan would create a financial hardship.

The Wall Street Journal, (WSJ) which spoke to more than 50 current and past bankruptcy judges appointed during both Democratic and Republican administrations, found some judges are more open to helping debtors.

Does that mean the floodgates are open and student loans can be discharged in bankruptcy?

Nope.

Fortune wrote that the Wall Street Journal said some judges are looking at ways to help alleviate the strain. The Wall Street Journal wrote the instances could include:

1. encouraging bankruptcy attorneys to represent debtors at no cost
2. potentially eliminating future tax bills that be linked to student loan debt relief or debt cancellation after 25 years through federal student loan repayment programs
3. cancelling private student loan debt from unaccredited schools
4. allowing student loan borrowers to make full payments during the Chapter 13 debt repayment period (which can last five years.)

What Else Can You Do If Your Struggling To Make Student Loan Payments?

For more info please see Can Student Loans Now Be Discharged In Bankruptcy?

CBS affiliate Action News 2 reported that an unnamed California legislator told the station that since PG&E were blamed for the fires last month, the company has been worried that should they be held liable and have to pay damages it could force them to seek bankruptcy protection unless legislators bail them out.

Some lawmakers say the threat is just a scare tactic although the company did file for bankruptcy protection in 2001. Back then there were electricity shortages and blackouts due to market manipulations, and capped retail electricity prices. The California Department of Forestry and Fire Protection said last month that 12 of last years fires were caused by malfunctioning PG&E equipment and criminal charges are being pursued.

PG&E supplies power to most of the northern two-thirds of California from Bakersfield to the Oregon border which is 5.2. million households. They are one of the biggest power company in the country.

In a statement, the company said, “We continue to believe our overall programs met our state’s high standards.”

Lost Valley Farm won’t have to auction off its cattle and instead will be able to sell them along with the farm and its equipment.

Rabobank sought to foreclose on the dairy herd in an attempt to get back some of the $67 million owed the bank by Lost Valley, but the owner Greg te Velde filed for Chapter 11 bankruptcy to protect himself from creditors like the bank.

Patrick Criteser, The CEO of Tillamook County Creamery Cooperative of which Lost Valley is a member terminated the dairy’s contract back in May because the dairy wasn’t paying its debts and claimed it had violated quality standards more than 60 times by supplying milk with high bacteria levels.

The bank cited wastewater management problems at the dairy which will require expensive remediation, such as emptying and rebuilding manure lagoons, which will run close to $400,000. It also noted te Velde has a substance abuse problem which he acknowledges but says once the business has been stabilized he will be entering a substance abuse program.

Te Velde responded to the wastewater management problems saying he in the process of upgrading the lagoons which contain the wastewater and noted there has never been a spill out of the lagoons.

Te Velde also asked the bankruptcy court to allow him to hire a realtor to sell the business and property. He feels the business is worth more if it is sold as one unit as opposed to piecemeal.

“Data Breach Plaintiffs” filed a notice this past week to appear in the company’s New York bankruptcy. They want their claim to be seen as a class action suit on behalf on 87 million Facebook users who had their personal information taken without their permission.

The attorney for the plaintiffs, Michael Etkin, a partner in the bankruptcy firm of Lowenstein Sandler LLP told Bloombeg News, “Nothing is off the table, and what we do will be a function of developments in the class actions as well as in the U.S. bankruptcy and insolvency proceedings in the U.K.”

The suits were brought in Delaware District Court and seek damages for what the group says were invasion of privacy and increased risk of theft and data breaches.

The lead plaintiff Ben Redmond, a California resident, told Bloomberg damages should be more than $1,000 per violation. He has been using Facebook since at least 2007, and says he didn’t agree to using an application called thisisyourdigitallife.com, a personality quiz through which the alleged violations occurred. The case also represents plaintiffs in Ohio, Texas and Illinois.

Bloomberg also reports another suit was filed by Craig Skotnicki, who makes similar claims about the quiz, saying his user data was shared because a friend had logged into the app. If Facebook is found to have violated a 2011 consent decree over its handling of user data, it could face fines of more than $40,000 a day per violation, according to his complaint.

In April, three employees of Florence filed an involuntary bankruptcy petition for $46, 650 in wages and the Gilbert involuntary petition was filed by the founder and CMO Dr. Timothy Johns, an unsecured creditors’ trust and a Phoenix law firm. Involuntary bankruptcies are used by creditors when they don’t believe they will be paid for goods or services they provided.

In court documents filed May 1st, creditors claimed the two Arizona hospitals failed to make lease payments for months and both facilities are “on the brink of complete shutdown.”

After creditors ask a court to initiate bankruptcy proceedings, the debtor(s) have the chance to contest the petition. The two Arizona hospitals failed to meet the 21-day timeline and the court granted the creditors’ request for relief through the Chapter 11 bankruptcy process.

This is the second time the two hospitals have been in bankruptcy court. The hospitals filed for voluntary Chapter 11 bankruptcy in 2014.

The company listed $1-$10 million in liabilities in its filing. In their Chapter 7 filing they will be liquidating their U.S. affiliates such as SCL Elections Ltd., and SCL USA Inc. and SCL Social Ltd. The bankruptcy petition was signed by board members Jennifer and Rebekah Mercer, daughters of New York hedge fund manager Robert Mercer whose family backed Donald Trump for President.

The company, which did work for Trump’s campaign claims they lost almost all their business after their Facebook data mining shenanigans were revealed. The case could shed light on Analytica’s financial and other relationships in the US. In the UK such proceedings are less transparent.

Among the creditors the company cited were Google, Facebook and Target. They didn’t detail what those liabilities are. Other creditors listed in the filing were other data analysis companies such as Datawatch Systems based in Maryland, which has building access technology to control and Doximity Inc., a social network for healthcare professionals.

The company agreed to sell its assets to private equity firm, Charlesbank Capital Partners for $150 million. Under the agreement, Rockport would continue to sell its shoes at retailers like Lord & Taylor and Macy’s. Those two retailers account for almost 60% of Rockport’s sales. Charlesbank hasn’t stated whether they would keep Rockport’s own outlets open.

Rockport has 60 stores in the U.S. and Canada. It was founded in 1971 in Marlborough, Mass. by Saul Katz and his son and was one of the first companies to encourage walking as physical fitness activity.

In the 1940s Saul’s father started the Hubbard Shoe Company in New Hampshire, which went out of business in the late 1960s as shoe manufacturing moved out of the U.S. At one point he had two factories which employed 900 people.

In Saul’s father’s 2012 obituary in the Boston Globe, his grandson Bruce said, “He was a leader in the New England shoe manufacturing industry, and held on until there was no more possibility of operating.”

Detroit posted balanced budgets and surpluses for each of the last three years which was a key factor in the decision by Michigan’s Financial Review Commission (FRC) to free Detroit from oversight.

“For the first time in four decades, Detroit’s elected leadership will be in complete control of government functions,” Mayor Mike Duggan said in a statement

The statement also said,

The FRC will continue to exist for a 10-year term, although it will play no active role in City of Detroit operations. The city will be required to submit monthly financial reports, and will also submit its adopted budget and 4-Year Financial Plan each year. So long as the city continues to balance its budgets and meet other basic fiscal requirements, the FRC will stay inactive for the rest of its existence.

According to the Michigan Chronicle, the city has always been under some form of federal or state oversight since 1977.

“That includes 36 years of federal court oversight of the Water & Sewerage Department for environmental issues, a decade of U.S. Justice Department oversight of the police department over use-of-force and lockup conditions, and a decade of U.S. Housing and Urban Development control of the Detroit Housing Commission due to poor performance,” the Metro Times writes.