Month: April 2020

Categories
Uncategorized

CPUC Sets Terms for PG&E to Exit Bankruptcy

The California Public Utilities Commission (CPUC) has made a few proposals that should be met before it approves PG&E Corp.’s bankruptcy plan. CPUC said they’d let the power giant exit bankruptcy if the company agrees to overhaul its governance and submit to increased state oversight.

The regulators recommended the new leadership to focus more on safety and establish a process for the company to lose its license if it gets into trouble again. The company is also required to create local operating units that would “bring management closer to customers.”

“These new oversight tools and changes to PG&E’s board of directors and management are designed to ensure PG&E will emerge from bankruptcy as a fundamentally changed company,” the commission said.

PG&E has said it will need time to fully review the recommendations adding that the proposals were a positive step in the company’s effort to emerge from Chapter 11.

The company has been devising a reorganization plan that would satisfy both state officials and creditors after filing for Chapter 11 last year. The company is facing $30 billion in damages from wildfires blamed on its power lines.

The company has already settled with major claimants including fire victims. The utility company is now racing to beat the June 30th deadline to qualify for a state fire insurance fund.

Categories
Uncategorized

Objections to the Bankruptcy Discharge by California Creditors

Ways of Objecting to a California Bankruptcy Debt Discharge

When a debtor files for discharge in bankruptcy, the primary purpose would always be to ward off creditors from their properties. The automatic stay imposed by law upon filing for bankruptcy effectively prevents the creditors from taking action against such a debtor’s assets. Besides, the bankruptcy claim might wipe out qualifying debt by discharge orders.

A debt discharge would mean that the creditor stands to lose their debts with the debtor if approved by the bankruptcy court. This arises as a result of the cancellation of qualifying debts after completion of the bankruptcy case, rendering the creditor unable to collect the discharged debts from the debtor legally.

California Bankruptcy laws, however, considers the interests of both parties during the formulation of the bankruptcy terms. As such, the creditor is given a chance to object to the discharge of either one or all of the debts in a bankruptcy claim.

Such a step would require the creditor to file a motion with the bankruptcy court challenging the awarded debts. The bankruptcy court will, after that, assess the circumstances and evidence presented by the creditor to determine merit.

The motion to object the discharge will have to be filed within 60 days of the 341 meetings held between creditors and the debtor. This period will, however, be communicated via formal means by the bankruptcy court.

As a creditor, it is crucial to understand the main areas that the court would look at when considering whether to halt or commence with the discharge orders.

California Bankruptcy laws recognize fraud as one of the basis to stop the discharge of a debt, for instance. Thus if the creditor can present evidence that shows the occurrence of an intentional wrongful act by the debtor before the bankruptcy case, they would stand a chance of winning the objection.

Also, when fraud is involved in connection with the bankruptcy case, the court will most probably halt all the debt discharges being objected. Fraud cases in this instance include property destruction, perjury, misinformation, as well as disregarding court orders.

Apart from the withdrawal of the discharges under bankruptcy, the debtor, in this case, could face severe penalties including criminal prosecution and dismissal of the entire case if they lose out in a fraud-related objection brought about by the creditor.

Categories
Uncategorized

Debt Negotiation Programs

Debt negotiation programs (DNPs), also known as “debt settlement companies,” are services offered by for-profit companies that negotiating with your creditors to allow you to pay a “settlement” to resolve your debt. These programs are provided as the last-resort efforts to get off debt. Although some DNPs are legitimate and valuable, the majority of these programs can be harmful, with the potential of negatively impacting a debtor’s credit rating.

These companies claim to be able to reduce a debtor’s original debt by almost half through negotiations with the creditors. However, the Federal Trade Commission (FTC) warns consumers to be wary when engaging these companies saying these programs can potentially leave debtors with either additional debt or the ill effects of a poor credit profile.

Some risks associated with these companies include;

  1. The programs require debtors to deposit money in a special savings account for 36 months or more before all your debts will be settled.
  2. The creditors are under no obligation to agree to negotiate a settlement of the amount you owe.
  3. These companies ask debtors to stop sending payments directly to the creditors. There is an increased risk of these debts accruing late fees and penalties. Creditors may, in turn, report negative information to credit reporting agencies.

Many states have passed laws regulating DNPs to varying degrees, while others have adopted the Uniform Debt-Management Services Act (UDMSA). Some provisions of this act include;

  1. Full disclosures of fees, services, potential risks and benefits of the agreement.
  2. Requirement for all DNPs to register as a consumer debt-management service
  3. Mandatory credit counseling services must be provided by either a certified credit counselor or a certified debt specialist before entering into a DNP contract.
  4. Debtors must have a three-day right of rescission.
  5. Payments earmarked for creditors must be kept in a trust account.

Consumers are also advised to avoid doing business with any DNPs if the company;

  1. Charges any fees before it settles your debts
  2. Guarantees it can make your unsecured debt go away
  3. Advises you to stop communicating with your creditor
  4. Promises to stop all debt collection calls and lawsuits
  5. Guarantees that your unsecured debts can be paid off for pennies on the dollar
  6. Claim the ability to remove negative information from your credit report
  7. Promise that your credit rating will not be negatively impacted
  8. Charge for a percentage of your supposed debt savings
  9. Claim that their program will save you from filing for bankruptcy
Categories
Uncategorized

California Bankruptcy Status: Harassment and the Associated Discrimination

California Bankruptcy Claims and Stigmatization in Public and the Employment Sector

Bankruptcy, though always beneficial for both parties involved in financially stressful situations, have over time, come to be associated with high negativity. The situation is even worse for people who have never had prior experience in bankruptcy and the involved steps. The misinformation that exists thus gives people the perception that bankruptcy is something to be avoided in all situations, at times leading to immeasurable negative consequences.

The stigma associated with bankruptcy has several negative impacts that sometimes are not directly observed.  Emotional and psychological traumas associated with the stigma often drive people to develop self-harming habits and at times even drive California bankruptcy clients to suicide.

Other than that, discrimination arises as a result of the stigma associated with bankruptcy. A bankrupt client may find it harder to secure a paying job with California employers as compared to someone with no bankruptcy record.

Similarly, a client who seeks for California bankruptcy protection might find themselves at the risk of losing their current employment when employers find out about their status due to the stigma associated with declaring bankruptcy.

As if that is not enough, clients who have previously gone through bankruptcy often complain of harassment in the community from neighbours and colleagues due to their status.

The California laws, however, protect such individuals from discrimination both in the workplace through the enactment of the discrimination clauses.  It is advisable for a person seeking to file a bankruptcy claim thus to consult with an attorney if concerned about the stigmatization resulting from the bankruptcy claim.

A discrimination claim will effectively protect you from unfair treatment in the workplace as well as from harassment from colleagues due to your bankrupt status.

While you might not have the option of concealing your bankruptcy status when applying for employment with the state, the discrimination claim will ensure that you are not treated differently from other applicants based on your bankruptcy status.

The discrimination claim, though, will not apply to private employers, especially in positions that involve the handling of money. In such an instance, it would require your openness and personal effort to convince the employer of your trustworthiness if you hope to secure the position.

Categories
Uncategorized

Dwindling Stock Prices Force PG&E Fire Victims to Seek Court Refuge despite California Bankruptcy Protection

Victims of PG&E Fire Incident Seek Guarantee of Payout amid Virus Pandemic

Desperate times seek desperate measures, as the saying goes. It is thus no wonder that individuals and organizations seek bankruptcy protection when things go wrong, and financial debts become overwhelming.

California bankruptcy protections extend to cover both the debtor and creditors’ interests. This protection is much needed, especially with the wave of the Coronavirus pandemic wreaking havoc in all sectors of the economy at the moment.

Amid the raging pandemic, PG&E Corp has been sued by victims of the wildfires in California that came as a result of the company’s negligence.

Following court proceedings in early 2020, the company was held liable for the wildfires and the victims were to be compensated a total of $13.5 billion settlement for their losses.

In a recent development, however, the company was afforded protection under California bankruptcy laws after its plea went through.

In the face of the coronavirus pandemic; however, the victims are slowly growing doubts on whether their compensation would be worked out given the increasingly worsening situation in the economy.

The fire victims, through lawyers representing the committee, have thus petitioned to have the company’s assurance that their compensation will be made in full. This comes after the PG&E Company warned that investors that had previously backed its plan by pledging over $9 billion in equity might back off if the company agreed to the terms proposed by the fire victims in the compensation settlement.

Although the company had initially agreed to a settlement amounting to $13.5 million in the bankruptcy suit, the deal had been structured in a manner that the compensation would be paid in stock.

The problem is that the coronavirus pandemic is projected to push stock prices down in the coming months, and it is estimated that the final settlement package might end up being lower by up to half of the agreed amount.

With no means of collecting the settlement due to the automatic stay protection that the bankruptcy claim accords the company, the victims are left with no choice but to seek the audience from the courts to get assurance from the PG$E Corp regarding the settlement package.

Categories
Uncategorized

Student Loan Relief and What Happens after a Student Loan Default?

Student loans can represent a significant expense and financial difficulty to many who are unaware of the options to manage student debt. Defaulting on a student loan can result in severe consequences. Some student loans can be delayed through deferment or forbearance options, which allow debtors to postpone payment. Deferment is the most common method of student debt management since it may also prevent interest from accruing during the period of deferment.

To qualify for loan deferment, the borrower must normally establish one of the common grounds for deferment. These include;

  1. Temporary total disability
  2. Unemployment
  3. Economic hardship
  4. Enrollment in a rehabilitation program for a disability
  5. Entry into uniformed service
  6. Work in health care or law enforcement.
  7. Enrollment in school
  8. Service to a needy population

Borrowers can also apply for loan cancellation. Some loans are eligible for income-sensitive or income-based repayment programs, while others are more manageable when consolidated.

While student debt can be discharged through bankruptcy, it is more difficult under the current law. For these loans to be discharged, the borrowers have to show that their repayment would impose a severe hardship on them, which is often difficult to prove.

When a borrower fails to keep current on their student loan payment, they become “delinquent” on the first day they miss a payment. If they remain delinquent for nine months, they enter default and become liable for collection fees and commissions charged by any debt collection agencies hired by the Department of Education.

The Department of Education may proceed to seize a defaulter’s tax refund or may seek to garnish their wages. The law allows the department to garnish up into 15% of a borrower’s disposable income or no more than $217.50 per week.

The department has several options available, including seizure of federal benefits such as Social Security retirement and disability benefits, revocation of professional licenses and lawsuits to collect from assets such as bank accounts and property.

Categories
Uncategorized

Prepackaged Plans in California Bankruptcy

California Bankruptcy Laws: Advantages of a Prepackaged Plan

A common perception that most people have when the word bankruptcy is mentioned is that of angry parties at each other’s necks following financial hardships. This perception of bankruptcy arises from the common practices of creditors to push for possession or auctioning of the debtors’ assets when they run into financial situations that make them unable to honor their debt arrangements. In such instances, anger might flare up and the parties might end up in court under unpleasant circumstances.

Less common, however, is the perception that bankruptcy could include peaceful negotiations between the creditors and the debtor, with an agreement being reached before the matter arrives in court.

Even less common is the thought that the involved parties could reach an agreement before seeking bankruptcy claims as a form of implementing the accepted plan.

However, a prepackaged bankruptcy entails precisely that. California bankruptcy laws allow creditors and their debtors to propose a reorganization plan and file for bankruptcy after reaching an agreement as a means of formalizing the plan’s implementation.

The prepackaged approach involves the key creditors and the debtors agreeing upon restructuring terms that are contractually binding before engaging in the voting process under Section 1126 Bankruptcy Code.

Following the execution of a lock-up agreement and solicitation, a Chapter 11 Bankruptcy is initiated to implement the restructuring under the agreed terms.

A vital advantage of this approach is that it allows the involved company to impose a treatment of claims if the creditors dissent, as long as it abides by the California Bankruptcy Code. Additionally, it allows the debtor to maintain its positive image regarding its debt management. Besides, it minimizes the need for court approvals for business decisions to be made. Furthermore, it gives the debtor increased degrees of freedom concerning the disclosure statements as compared to a regular California bankruptcy case.

On the downside, though, the initiation of a Chapter 11 bankruptcy case might be disruptive to the key constituencies of the business including the customers, the suppliers as well as the employees.

Categories
Uncategorized

California Bankruptcy Protection among Retailers amidst the COVID-19 Pandemic

Waning Jeans Sales Forces True Religion Files For Chapter 11 Bankruptcy

The raging Coronavirus pandemic has no doubt impacted all the sectors in the economy, though others more than the others. From the suppliers to the consumers, citizens are currently reeling from the economic strains posed on the supply chain. The economic impacts on the consumer arise from the decrease in disposable income as people face increasing uncertainty regarding the state of the economy.

In what is slowly becoming a common trend in the country, California based True Religion, the once-mighty jeans manufacturer, has for the second time in the last three years, opted to file for the Chapter 11 bankruptcy.

The step was aimed at cushioning the company from the impacts of the coronavirus in the market today. Dwindling sales over the past few months have put the company at crossroads with its creditors, with the operating costs increasing as time goes by.

Among the hardest hit by the pandemic in California are cloth manufacturers, given the reduction of non-essential purchases by the general population and the stay at home restrictions imposed by the state. The S&P Global Market Intelligence listed among the most likely companies to default in debt payment such groups as the True Religion fashion companies.

Considering such market predictions, it is understandable why creditors might get jittery on the status and progress of the company in their debt repayment plans. With Chapter 11 protection in place, however, California bankruptcy laws are set to protect the company’s assets from the actions of these creditors.

Chapter 11 bankruptcy, in this instance, was the best for the company as it would allow it to restructure its debt arrangements with the creditors without having to risk losing its assets. The automatic stay, for instance, would immediately protect the company’s assets creditors who, at the moment, might have ganged up to harass it to repay their debts.

Besides, the restructuring plan would enable the company to go back to the table and make crucial decisions on the best way to sustain its more than 100 stores still operating in the US during this period, further safeguarding its over $500 million assets.

Categories
Uncategorized

How to Redact Information on Documents Filed with A Bankrupcy Court

To redact a document is to conceal, obstruct or remove sensitive information from a document filed with a bankruptcy court. The Federal Rule of Bankruptcy Procedure 9037 stipulates that private information, also known as “personal data identifiers,” must be redacted before a document is filed. This information includes social security and tax identification numbers, birthdates, names of non-debtor minors and financial account numbers.

An individual who wishes to redact information other than those listed in the Federal Rule of Bankruptcy Procedure 9037 must obtain Court approval by filing a Motion to File Redacted Document in accordance with Court’s procedures for Electronically Filing Sealed and Redacted Documents. No fee is charged to file a Motion to File Redacted Document.

Individuals who may wish to redact information from a document that has already been filed in court can do so by filing a Motion to Redact Previously Filed Document in accordance with the District Procedure for Motion to Redact Previously Filed Document. A fee must be paid to file a Motion to Redact Previously Filed Document. However, a judge may waive this fee under appropriate conditions in accordance with the Bankruptcy Court Miscellaneous Fee Schedule.

An individual may wish to redact a document in a closed case. Whenever it’s necessary to reopen a case for the sole purpose of redacting a document, a case reopening fee will not be charged. However, the fee for filing the Motion to Redact Previously Filed Document still applies.

Categories
Uncategorized

California Bankruptcy and Landlord Agreements

Dealing with Bankrupt Tenants: Options for California Landlords

The mention of the word bankruptcy is enough to strike fear in landlords not only in California but also in other states in the US. The critical factor in this aspect is the automatic stay protection that the declaration of bankruptcy accords the tenants, preventing landlords from seeking compensation or taking action against them.

However, what can landlords do in the face of a bankruptcy threat from a tenant? Should they just wait for the proceeding or is there any action you could do as a landlord?

Well luckily, there are a few options that California landlords could consider in such a situation. Of course, you could always terminate your lease agreement on legal grounds if the tenant is behind on rental payments.

However, you need to consider the type of bankruptcy claim they will be filing under.

Under Chapter 11 California bankruptcy laws, the tenant will be able to repay the rent with a reorganization plan.

If the tenant is going for a Chapter 7 bankruptcy, however, they might not be able to pay the rent with insufficient assets. Thus it would be advisable to terminate the lease before they go ahead with the bankruptcy claim. If on the other hand, their assets are sufficient enough to cover future rents you could keep the lease in place but with a provision that upon default, the lease would terminate automatically with a notice from the landlord.

Another question that the California landlords may ask is the possibility of lease termination after the tenant files for bankruptcy. While this would be primarily impossible without a court order, California bankruptcy codes provide that if the lease could be rejected to the lessor immediately if it is not accepted or rejected within a specified period depending on the type of the bankruptcy claim.

With this provision in place, the landlord has the option to file a motion requiring the debtor to assume or reject the lease if the rent is not being paid instead of waiting for the period to end.

In this manner, the landlord would be safe if the lease is assumed. On the other hand, you could file for damages if it is rejected. However, you should make sure to file proof of claim with supporting documentation.