California Amusement Park Operator Files for Bankruptcy

The Company Has Agreed to be Acquired by Cerberus Group

California-based Apex Parks Group Llc. has filed for Chapter 11 bankruptcy in Delaware, the company said in a press release.

The company, which is owned by The Carlyle Group and Edgewater Funds, said it was seeking financial restructuring of its debt after its revenue dipped due to competition, excessive expenditure and the seasonal nature of business.

The company also disclosed that it was considering entering a “stalking horse” purchase agreement with its lenders led by Cerberus Capital Management.

“The actions we are taking today will better help position the company for the future and enable us to continue serving our guests, team members and other business partners in the years ahead,” CEO John Fitzgerald said in a statement.

Fitzgerald said the bankruptcy would not affect the operations of the firm’s ten family entertainment centers and two water parks in California, New Jersey and Florida.

The company has since closed all locations in compliance with the government and CDC directives to protect guests and employees from coronavirus.


Creditor Voting in California Chapter 11 Bankruptcy

California Chapter 11 Bankruptcy: Factors to Consider in Plan Design

The most common forms of bankruptcy in the US are Chapter 7 and Chapter 13 bankruptcy protection. While Chapter 7 is available to individuals of all levels in the society, Chapter 13 bankruptcy is mostly used by married couples with property to protect against creditors during dire financial situations.

The lesser-known Chapter 11 bankruptcy is joint for businesses and organizations seeking to protect their assets in financial hardships.

A common difference between Chapter 11 and Chapter 13 California bankruptcy is that creditors are required to vote on whether the plan is to be confirmed by the bankruptcy court or otherwise. This step ensures thus that the debtor created a debt restructuring plan that is acceptable to both the courts and the creditors they are engaged with.

However, the debtor must understand the process involved in designing a workable plan.

One crucial step in the creation of a workable debt restructuring plan is the division of creditors. The division of creditors into classes is essential as creditors in bankruptcy proceedings tend to vote as members of respective courses. Taking into consideration the interests of the different categories of creditors in a bankruptcy suit would ensure that the vote goes through.

Secondly, the debtor has to take into consideration the nature of claims. Since claims include either impaired or unimpaired claims, it is usually most likely that the creditors, to secure their interests may decide to vote for their respective classes of assets.

In an impaired class of claims, the creditors might vote in favour of at least two-thirds of the total dollar amount. The class division should, therefore, take into consideration these parameters when designing a plan.

It is also crucial that debtors understand the working of the absolute priority rule. Though the creditors may vote against your plan, California bankruptcy courts may still confirm the plan by enacting the absolute priority clause if they find sufficient merits in the program.


More California Traders Considering Bankruptcy as Pandemic Impacts Worsen

California Bankruptcies Rise as Businesses Feel the Pinch of the Pandemic

Amid the raging global pandemic, the US government has deployed aid to the most vulnerable states by injecting billions of dollars into their economies. The funding meant to combat the coronavirus pandemic comes at a time when cases of bankruptcy are on the rise.

The state of California, however, is not among the beneficiaries of the federal government aid. This is despite the rising bankruptcy cases under Chapter 11 California bankruptcy laws, as businesses struggle with economic hardships after the government forced companies to close to contain the virus spread.

Emergency grants and loans from financial institutions have been instrumental in sustaining the businesses so far. However, the strategy does not seem sustainable under the current conditions as many small businesses, including restaurants and independent retailers, continue to shut down.

The prospects of more and more companies seeking for Bankruptcy protection under California law is estimated to increase rapidly over the next few months. This would be unavoidable unless the government finds new strategies that would allow the small businesses and companies to continue their operations even as the battle against the pandemic is strengthened.

The government recently announced plans to have businesses including restaurants, which have been some of the hardest hit, resuming their operations soon. Many small scale firms and retailers owners, however, remain skeptical of the progress, seeing that the process seems to be taking longer than expected. This has left the businesses with little option but to seek financial aid from the government to remain afloat.

Even if the government succeeds in reopening the operations of the companies as it plans, doubts remain on their ability to resume normal activities given the toll that the pandemic has had on them. Retailers and small scale traders in California did not seem confident about the government’s directives that recommend them to have a 60 to 65% occupancy rate as a way of observing social distancing to resume operations. Thus anxiety remains high with most eying Chapter 11 bankruptcy to take advantage of the Small Businesses Reorganization Act.


What are Debtor’s Available Options to Bankruptcy?

Debtors have several alternatives to bankruptcy, especially if they are considering filing for Chapter 7 bankruptcy. In a Chapter 7 bankruptcy case, most assets are liquidated to help pay down debts. However, debtors are advised to exhaust all available alternatives before filing for bankruptcy. They should also be aware that out-of-court agreements with creditors or debt counseling services might provide better alternatives to a bankruptcy filing.

Creditors also prefer debtors not going into bankruptcy since the process is long and may significantly reduce the amount of the debt that will be repaid to them. Some creditors may agree to modify the terms of debt accordingly.

Corporations, partnerships, and sole proprietorships should consider declaring bankruptcy under Chapter 11 to remain in business and avoid liquidation. Under Chapter 11, debtors may seek adjustments of debts, which may involve reducing the debt or extending the time for repayment.

Individual debtors may also consider filing for Chapter 13 bankruptcy, which usually allows them to save their homes from foreclosure. Chapter 13 bankruptcy allows the debtors to “catch up” past due payments through a payment plan.


Sacramento Bee Seeks Crowdfunding to Pay for COVID-19 News Coverage

Sacramento Bee is accepting tax-deductible donations to boost its coverage of COVID-19 after the company’s revenue dipped due to the pandemic.

The company kicked off its crowdsourcing campaign on Thursday and had already collected about $20,000 from 306 people on Friday midday. “It’s mostly small donations,” said Lauren Gustus, Sacramento Bee editor.

The McClatchy Co., the newspaper’s parent company which also owns more than 30 newspapers, is in the midst of a bankruptcy auction and recently laid off some staff because of the pandemic-driven economic slowdown.

The donated money is administered through the nonprofit Local Media Foundation, affiliated with Local Media Association based in Lake City, Michigan.

Sacramento Bee is one of the near 200 newspapers that are raising money this way across the country. Local Media Foundation said it had received more than $500,000 over four weeks.

The California News Publishers Association said some newspapers have recorded declines of more than 70% since the pandemic. Two entertainment-oriented publications, the Sacramento News & Review and Submerge, reportedly ceased publishing in March after their revenue from restaurants, pubs and club advertisers plummeted.

The association also announced plans to introduce state legislation called the Save Local Journalism Act of 2020 which seeks to make newspaper subscriptions and advertising tax-deductible expenses. The legislation also seeks to exempt newspapers from paying sales taxes until the industry recovers from the current crisis.


Growing Alternative to Asset Sales in California

California Chapter 11 Bankruptcy: Structured Dismissal

Chapter 11 debtors in recent times have found it convenient to utilize bankruptcy as a means of effectuating the orderly disposal of their assets to repay their debts with their creditors.

Clause 363 of the California bankruptcy laws recognize Chapter 11 debtors’ concerns regarding their assets when liquidation comes to play. As such, a debtor is given the leeway to proceed with the Chapter 11 plan, given that it complies with clauses 1123 and 1129.

A structured dismissal allows the trustees in a bankruptcy case to minimize costs and maximize creditor recoveries by selling off virtually all of the debtor’s assets.

In a typical Chapter 11 California bankruptcy case, the parties in a suite propose a reorganization or liquidation plan that is subject to confirmation by the court. The court enters the final decree in this aspect after substantial consummation and administration.

The entire process takes up time to complete, thereby increasing the costs of enacting the bankruptcy reorganization plan. A structural dismissal will come in handy in this case as it would expedite the processes necessary to go through with the Chapter 11 bankruptcy plan.

After the court has approved a proposed debt reorganization plan and the sale of the debtor’s assets under section 363(b), a debtor in a regular California Chapter 11 bankruptcy would typically be given a chance to seek confirmation of the liquidation plan or seek to have the case converted to a Chapter 7 liquidation. Such a process would inevitably take up significant time and administrative costs.

A structured dismissal makes the process shorter as the debtor would, in most cases, have sold their assets but only lack sufficient liquidity to fund the plan confirmation process.

Under California law, a structured dismissal would include provisions such as expedited procedures to resolve objections to claims, provisions specifying the manner and amount of distribution to creditors as well as gifting arrangements. These provisions notwithstanding however, the prior court orders issued before the dismissal would remain standing and exercisable by law.


California Bankruptcy Fraud and its Implications

Asset Disclosure Issues in California Bankruptcy

Bankruptcy fraud, though not as common as could be suspected, is an issue that has been around from as long as we have had the bankruptcy system in place. Bankruptcy cases in practice involve trustees appointed by the court to oversee the decisions agreed upon the execution of the arrangement. The trustees are the individuals tasked with managing the documentation of the debtor’s affairs.

The trustees in the California bankruptcy agreement are tasked with the sale of non-exempt property to repay the creditors in the case. In this aspect, they have to remain vigilant to detect fraudulent activity by the debtor including the failure to disclose necessary information that would affect the execution of the bankruptcy suit.

California bankruptcy laws recognize bankruptcy fraud as being actions involving false oaths, a failure to disclose assets or debs among others correctly. These violations of the bankruptcy code are deemed to fall under the federal domain.

Anyone within the California jurisdiction however, is allowed to report bankruptcy fraud to the relevant authorities when there is sufficient reason to doubt the assets declared by the debtor.

A debtor that fails to disclose their assets correctly to the trustees in a bankruptcy case is deemed to have engaged in fraudulent activity under bankruptcy.  As such, the debtor would not be legally eligible to enjoy the protection offered under bankruptcy since bankruptcy is a powerful remedy given to honest debtors willing to disclose their assets and debts fully.

Under the Chapter 7 California bankruptcy laws, the debtor’s non-exempt property would be sold, and the proceeds distributed to the creditors if the individual has no regular income that they would otherwise use in debt reorganization to repay the creditors’ debts. However, when this is not an option, the Chapter 13 bankruptcy would come in handy for an individual with a regular income to repay their creditor debts under California law.

Complex institutional structures would, however, use the Chapter 11 bankruptcy clause under the California Bankruptcy laws as a way to reorganize their structures to the point of compensating the creditor of their debts.

Whichever way it is taken, bankruptcy fraud would serve to deny the debtor of the right to bankruptcy protection if they are discovered at any stage during the proceedings. It is thus advisable to be forthcoming with information regarding your debts during a bankruptcy proceeding at all times.


PG&E Corporation’s CEO Bill Johnson to Step Down on June 30

The Utility Company is Fighting to Emerge from Bankruptcy Triggered by 2017 and 2018 Wildfires

PG&E Corporation’s CEO Bill Johnson has announced that he will retire from the utility company on June 30, 2020. His retirement is expected to be after the company’s Plan of Reorganization is confirmed by the Bankruptcy Court.

Bill was hired by the company fourteen months ago to rescue it from bankruptcy. The nation’s utility is fighting to emerge from bankruptcy triggered by deadly 2017 and 2018 wildfires blamed on its faulty electrical grid. Nearly 130 people were killed and more than 25,000 buildings were destroyed. He replaced Geisha Williams, who stepped down as the company’s CEO shortly before it filed for bankruptcy in January 2019.

California Gov. Gavin Newsom and the California Public Utilities Commission, which oversees PG&E’s operations, had proposed a complete overhaul of the corporation’s governance entire 14-member board of directors as a condition to approving the company’s bankruptcy plan.

PG&E has named William “Bill” Smith as Interim CEO. Smith joined the PG&E Board of Directors in 2019 and will lead the company until a new CEO is appointed. Johnson will remain on the board until June 30, which is the deadline for PG&E to wrap up its bankruptcy case with a deal that includes $25.5 billion to pay for losses suffered in Northern California wildfires.

Smith is the retired President of AT&T Technology Operations at AT&T Services, Inc. He held a number of senior positions over his 37-year stay at the company.

“I joined PG&E to help get the company out of bankruptcy and stabilize operations. By the end of June, I expect that both of these goals will have been met,” Johnson said shortly after his planned retirement was announced. “As we look to PG&E’s next chapter, this great company should be led by someone who has the time and career trajectory ahead of them to ensure that it fulfills its promise to reimagine itself as a new utility and deliver the safe and reliable service that its customers and communities expect and deserve. I want to thank the Board as well as all of the employees, who work so hard every day to address the challenges the company has faced–it has been a privilege to work with them.”


California State Bankruptcy amid COVID-19 Pandemic

California Eyes Bankruptcy Route as Means to Stay Afloat as Crisis Worsens

The local governments, including California, have already received the first round of aid from the federal government in efforts to quell the impacts of the coronavirus pandemic. The packages though, come as a form of debt for the local government even as it aims to combat the spread of the deadly disease.

Under the current California bankruptcy law, the state cannot declare bankruptcy even as the situation gets worse by the day. Even so, the Senate led by the republicans is set to propose a change in the current regulations to allow the states to declare bankruptcy if need be.

The state recently spent more than $1.4 billion to purchase masks and other protective gear. This is in addition to billions more already spent in the fight against the pandemic, in what could be a build-up to bankruptcy in the near future.

Despite the aid from the federal government, the state still struggles a great deal in its efforts to combat the disease, with a recession looming due to its impacts on businesses coupled with uncertainty on how it would last.

Several top companies have already sought bankruptcy protection under California laws, with several more still considering the same route if the current situation persists further.

Modifying the bankruptcy code to allow the local governments to declare bankruptcy, however, would be a significant lift in Congress, despite being the best way in which the federal government would be able to avoid having to borrow from future generations.

California is among the top states that support the use of state bankruptcy to cushion it from economic downfalls rather than relying on aid from the federal government.

If the current laws are modified to allow the state to declare bankruptcy, it would be able to induce bankruptcy protection on its assets and channel the much-required aid to the most vulnerable sectors of the economy.

Among those set to benefit from the new development are small businesses and individuals, who would find it easier to declare for bankruptcy under the Chapter 11 debt reorganization arrangement. Even more, the state will be able to reorganize its debts to enable it to channel more resources towards combating the deadly COVID-19 pandemic.


California Retail Giant: Neiman Marcus Rumored to be working on Bankruptcy Plan

Neiman Marcus Seeking California Chapter 11 Bankruptcy amid Virus Pandemic

The coronavirus pandemic has reportedly pushed one of the largest retail stores in the US, Neiman Marcus, to the point of seeking bankruptcy. Although it is just one among the market giants, it doesn’t seem to be the last to be going that route. Reports indicate that the retail store may be seeking bankruptcy protection sooner than expected after being saddled with debt for the better part of the year.

The company is currently grappling with debt over 4.3 billion from different lenders, having temporarily halted its operations in March to hold talks with its creditors. As such, it is considering the drastic step of closing down some of its stores in California to keep afloat amid the worsening crisis.

The Chapter 11 California bankruptcy codes, in this case, would allow the company to remain in business while taking measures to limit or close its operations in their under-operating stores. With the bankruptcy protection in place, the company would be in an excellent position to handle its debts while at the same time reorganizing its assets and business affairs to meet the current conditions.

The pandemic has so far impacted not only the retail stores but also wholesale outlets including Walmart, target, and Cusco. Among these, the clothing stores are the most affected by the stay at home orders, with the accessory sales falling by more than 50%.

Though it is not clear at the moment, Neiman Marcus is already on the verge of bankruptcy, with the announcement being expected sometime before the close of the week. Under Chapter 11, California bankruptcy laws, the company would have to look for ways to hold private discussions with its creditors as well as their suppliers to agree before the bankruptcy proceedings began.

This way, there will be sufficient time to rework unsustainable finances and rearrange the affairs of the workers that the company has in its branches.

While the company rework its finances and attempt to cover the debts accrued within the first quarter of the year, the Chapter 11 Bankruptcy would come in handy in keeping the creditors at bay, thereby securing the company’s assets.