Category Archives: New Chapter 11 Filings
The following case is of particular interest to Salene since she is originally from Weirton, West Virginia and attended West Virginia University.
Freedom Industries, Inc. filed a voluntary petition for Chapter 11 bankruptcy on January 17, 2014 in the United States Bankruptcy Court for the Southern District of West Virginia. The case has been assigned to the Honorable Ronald G. Pearson. Both assets and liabilities are estimated to be between $1 and $10 million. Approximately 700 creditors are listed in the petition including multiple WV state agencies, service companies, and private individuals. Multiple motions were filed along with the petition including motions to allow payments to essential trade vendors and to pay $2.4 million in unpaid taxes to the IRS. A summary of debtor’s filings can be found here.
Debtor is a specialty chemicals manufacturer founded in 1986 and located in Charleston, WV. It manufactures chemicals for the mining, steel, and cement industries and is wholly-owned by Chemstream Holdings, Inc. The Charleston chemical plant is located along the Elk River and has recently been widely publicized as the cause of a chemical spill that contaminated the Elk River on January 9th, 2014 which led to state and federal states of emergency being declared. The spill left 300,000 residents without running water for several days. The chemical that leaked into the river is used in coal processing. The local water supply is currently said to be safe for residents in the nine affected counties except for residents in certain towns. Additionally, pregnant women in the affected areas are advised to drink only bottled water at this time.
Debtor is represented by Mark E. Freedlander of McGuire Woods LLP and Stephen L. Thompson from Barth & Thompson. Debtor also filed a motion to Employ Pietragallo, Gordon, Alfano, Bosick, and Raspanti, LLP as Special Litigation Counsel.
DragonFire, Inc. filed a voluntary petition for Chapter 11 bankruptcy in October 25th, 2013. The petition was filed in the United States Bankruptcy Court for the Western District of Pennsylvania and has been assigned case number 2:13-bk-24517. Debtor’s Disclosure Statement, Balance Sheet, Declaration of Schedules, and other documents were due by November 8th, 2013. For a complete list of the documents due please refer to the document summary.
Debtor is the corporate entity for DragonFire Japanese Steakhouse and Sushi Bar located at 1500 Washington Rd. in the Gallery Mall in Mt. Lebanon, Pennsylvania. As the name suggests, DragonFire specializes in hibachi and sushi. For those unfamiliar with hibachi, it is a rectangular Japanese style barbecue grill. Customers often sit at a counter that spans three sides of the grill. The chef stands at the fourth side and prepares the meal (which typically consists of fried rice, vegetables, and various meats) with much fanfare. DragonFire also boasts a robata grill, a traditional Japanese slow grilling method. For more information about DragonFire, you can visit their website here.
Debtor has declared between $50k and $100k in assets with between $500k and $1 million in liabilities with approximately 20 creditors listed in the petition. Debtor is represented by Donald R. Calaiaro of Calaiaro & Corbett, P.C.
“Dance Moms” Instructor Abby Lee Miller Files for Chapter 11 Protection: Public Disclosure of Private Facts
Salene’s Preface: I was in Bankruptcy Court last week in Pittsburgh and noticed Abby walking into Court. (She is a stunning woman by the way and you can understand why she is on TV). I had to ask myself, “How do I know her?” I did figure it out pretty quickly. I was surprised to see her on my turf (that is in the world of commercial bankruptcy) and was not aware that Abby had filed for Ch. 11. My daughter is a dancer and I watch the show!
Abigale Lee Miller filed for Chapter 11 relief on January 3rd, 2011. The petition was filed in the United States Bankruptcy Court for the Western District of Pennsylvania under petition number: 10-28606 TPA and has been overseen by the Honorable Judge Thomas P. Agresti.
Debtor is better known as Abby Lee Miller, the host and instructor for the popular Lifetime reality television show Dance Moms. The show follows a group mothers and their young daughters who are participating in the world of young competitive dance. The show takes place in Pittsburgh, PA at the debtor’s studio, the Abby Lee Dance Company, and follows the ladies as they travel across the country to various competitions. Dance Moms is currently holding open casting calls for its 4th season.
The Abby Lee Dance Company was formed 27 years ago as a not-for-profit organization and is an audition only program. It is located at 7123 Saltsburg Road, Pittsburgh, PA, 15235. Debtor is also the owner of Reign Dance Productions, which shares the building with The Abby Lee Dance Company.
Debtor has declared approximately $325,500 in assets with approximately $356,500 in liabilities. Thirty-four creditors are listed in the petition, with Chase Mortgage holding the largest unsecured claim in the amount of $50,000. This debt is the unsecured portion of what appears to be a $200,000 undersecured mortgage on a home of Ms. Miller’s in Florida valued at $150k. Ms. Miller’s dance studio has a $96,000 mortgage on it; the studio is valued at around $150,000 Ms. Miller owes about $27,000 in back taxes (which are unsecured priority claims). Her unsecured debt only totals $32,000, many of whom are vendors for her business.
The Second Amended Disclosure Statement was approved on January 18th, 2013 and the Order Approving Disclosure Statement and Scheduling Hearing on Plan Confirmation was entered into on October 21st, 2013. Please click here to for a copy of the order. The debtor is represented by Donald R. Calaiaro of Calaiaro & Corbett, P.C. The Confirmation Hearing to approve her Plan of Reorganization is set for December 12, 2013 at 1:30 p.m. EST. Please click here for a copy of the Disclosure Statement. A summary of the Chapter 11 plan can be found here.
Salene’s comment: We purposefully do not often write blog posts about individual Chapter 11 cases (usually filed by very wealth individuals. Most folks file a Chapter 7 or Chapter 13). When a company or person files for bankruptcy, I warn my clients that you are subjecting yourselves to a “financial autopsy”; you are making a public filing of all of your assets and liabilities. So, information seekers can look up what your home is worth, what kind of car you drive, how much credit card debt you have, whether you own a fur coat, how much your wedding ring costs, and whether you have any money in an IRA/401k. Anyone can see how much money you have made in the last three years and they get to read what your monthly budget is for expenses. While there are certainly benefits to the privilege of filing for bankruptcy, public disclosure of private facts is certainly one of the drawbacks.
The entities in charge of the 1818 Market Street location for the Marathon Grill Philadelphia restaurant chain, 1818 Market Street Marathon Grill, Inc. and its general partner 1818 Market Street Marathon Grill Associates , filed for chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Eastern District of Pennsylvania (Philadelphia) on October 9, 2013. 1818 Market Street Marathon Grill, Inc. is the corporate entity for the 1818 Market Street location and has been assigned to the Honorable Judge Magdeline D. Coleman under case number 2:13-bk-18861. 1818 Market Street Marathon Grill Associates, the partnership in charge of the location filed separately and has been assigned to the Honorable Judge Eric L. Frank under case number 2:13-bk-18863. (Please click the hyperlinks for docket summaries). Motions for Joint Administration of both cases were filed by each entity on October 9, 2013. The debtors listed the same creditors with the exception that 1818 Market Street Marathon Grill, Inc. also lists NNN 1818 Market, LLC, the building management company in charge of 1818 Market St.
The Marathon Grill began as a 10-seat hamburger restaurant in Northeast Philadelphia in 1984. It eventually grew into a six location restaurant chain before shrinking back down to operating three locations at 1818 Market St., 19th & Spruce St., and 16th & Sansom St. The bankruptcies affect the 1818 Market St. location, the largest of the three restaurants. The filings were made in response to learning that the landlord intended to take possession of the restaurant space over an ongoing dispute over unpaid back rent and fees of approximately $540,000.
1818 Market Street Marathon Grill Associates declared assets between $500,000 and $1 million with liabilities between $100,000 and $500,000. 1818 Market Street Marathon Grill, Inc. declared assets between $50,000 and $100,000 with liabilities between $1 and $10 million. The debtors entities are represented by Aris J. Karalis and Robert W. Seitzer of Maschmeyer Karalis P.C. The bankruptcies do not affect the other Marathon Grill locations and the debtors have pledged that the 1818 Market St. location will remain open during the bankruptcy proceedings.
Salene: In my younger years as a lawyer at Weir & Partners LLP in Philadelphia (2002-2004), I used to grab many late dinners at the Marathon Grill location at Sansom Street. It was hip, for sure. What is the formula for sustainability in the restaurant industry?
On September 17th, 2013 Rhinoceros Visual Effects and Design LLC filed a voluntary petition for bankruptcy relief under Chapter 11 of the U.S. Bankruptcy Code. The filing was made in the U.S. Bankruptcy Court in the Southern District of New York and assigned case number 1:13-bk-13016. (A summary of the docket can be found here. ) The case has been assigned to the Honorable Judge Stuart M. Bernstein under case number 1:13-bk-13016.
The Debtor is a Multi-Video Group/Gravity Company. The Multi Video Group, Ltd. owns and/or is associated with various companies that are in the business of graphic and audio design and editing. Internationally, The Multi Video Goup, Ltd. is associated with companies such as Gravity Post Production in Tel Aviv, Israel and Digital Renaissance in Oberhausen, Germany. Rhinoceros Visual Effects and Design LLC is, as the name implies, a visual effects and design firm located at 315 Madison Avenue, 3rd Floor New York, NY 10017. Debtor’s clientèle has included Victoria’s Secret Stores, LLC, a subsidiary of Limited Brands, Inc., and Six Flags Theme Parks, Inc. (sources: VS, Six Flags)
The Debtor claims assets between $100,001 and $500,000 and liabilities between $1 and $10 million. It has listed 62 creditors including various individuals and companies such as Bell Technologies and Verizon. For a complete list of creditors please click here. Debtor is represented by Paul H. Aloe of Kudman Trachten Aloe LLP. A Scheduling Order was signed on September 17th, 2013 scheduling the Initial Conference Hearing to be held on September 31st, 2013 at 10:00 AM.
Hovbilt, Inc. filed a voluntary petition for bankruptcy relief under Chapter 11 of the bankruptcy code on September 17th, 2013. The case was filed in the Bankruptcy Court of New Jersey and the case was assigned to the Honorable Judge Michael B. Kaplan under case number 3:13-bk-30341. For a summary of the docket please click here.
Debtor claims assets between $0 and $50,000 with liabilities of $1 to $10 million. In its petition, it lists 10 creditors including Home Depot and Sovereign Bank. (Please see the docket summary for a complete list of creditors.) Sovereign Bank filed for a Notice of Appearance and Request for Service of Notice by its duly appointed counsel in response to Debtor’s voluntary petition for Chapter 11 relief. The petition, as filed, was incomplete and the Attorney Disclosure Statement, Statement of Financial Affairs, Summary of Schedules, and Incomplete Filings are due by October 1st, 2013.
This Chapter 11 Debtor’s exclusive right to file a plan of reorganization expires on January 15, 2014.
CHAPTER 11 DEBTOR TIP: Every Chapter 11 Debtor should know that upon the commencement of a chapter 11 case, Bankruptcy Code section 1121 gives a debtor-in-possession (“DIP”) the exclusive right to file a plan of reorganization for 120 days (4 months). The DIP also has the exclusive right to solicit acceptances (votes) for a plan filed within that 120-day period until 180 days (6 months) after filing for chapter 11. (A debtor may file a plan but creditors may not actually vote on the plan until an accompanying approved Disclosure Statement and set of ballots are served). No competing plans may be filed during this period of exclusivity. A creditor, a creditors’ committee, or another special interest committee may be one of the parties filing a competing plan. Sometimes various parties join together to file a ”jointly proposed” competing plan. See helpful article regarding exclusivity written by Salene’ brother-in-law’s fine law firm Jones Day.
This Debtor is a property developer specializing in residential housing developments located at 1 Dag Hammarskjold Blvd. Freehold, NJ 07728. Hovilt, Inc. was established in 1969 as a private company categorized as a speculative building of single-family houses and primarily operated in Monmouth and Ocean Counties in New Jersey. (source)
By: Justin Saporito, Law Clerk and Salene Mazur Kraemer, Owner
What fees are associated with filing a Chapter 11 case? Aside from payment of attorneys’ fees (which can be steep), there are filing fees and ongoing quarterly administrative fees.
For a chapter 11 case, quarterly fees must be paid to the U.S. Trustee each quarter, or fraction thereof, until that case is closed, dismissed, or converted. These fees are in addition to the filing fee that must be paid by the debtor. The amount owed by the debtor is based upon the amount of disbursements made during the quarter starting at a minimum of $325 with a maximum of $30,000. (Complete breakdown of quarterly fees w/ instructions.) Again we repeat, there is a minimum payment of at least $325 a quarter. If significant assets are sold, a debtor may be looking at a quarterly fee up to $13,000 or even $30,000 to be made payable to the U.S. Trustee’s office. The fee schedule is uniform for all Federal Judicial Districts that are a part of the U.S. Trustee Program which includes all Federal Judicial Districts except for Alabama and North Carolina.
Quarterly fee bills are mailed to the debtor by the U.S. Trustee at the end of each quarter with instructions on how to determine the amount of fees owed. These fees are due on the last day of the calendar month following the calendar quarter. The minimum fee is due even if no disbursements were made that quarter and failure to pay a quarterly fee is cause for conversion or dismissal of the chapter 11 case. Failure to receive an invoice does not excuse the obligation to timely pay U.S. Trustee’s fees. Debtor’s counsel should contact the Office of the U.S. Trustee If a quarterly bill is not received, unless counsel for the debtor has executed an authorization allowing the U.S. Trustee to discuss the issue of quarterly fees with the debtor.
For payments made by check, the payment is converted to an electronic funds transfer (EFT). This means that the account information will be copied from the check to electronically debit the debtor’s account for the amount of the check. The debit usually occurs within 24 hours after which the original check is destroyed. A copy of the check will be made by the U.S. Trustee’s Office however. If the EFT cannot be process due to technical reasons, the debtor authorizes the U.S. Trustee’s Office to process the copy in place of the original check. If the EFT cannot be completed due to insufficient funds, two more attempts to make the transfer may be made.
TIPS FOR THE CHAPTER 11 DEBTOR: Payment of these U.S. Trustees fees is important. The U.S. Trustee is an agent of the Department of Justice. He or she is a lawyer who plays a critical and influential role in every Chapter 11 Case (more on this later). Do not overlook paying these fees or responding to any requests made by a U.S. Trustee. If a Debtor ignores such requests or fails to pay U.S. Trustee fees, the Debtor can almost be certain that a Motion to Dismiss the Case or Convert the Chapter 11 Case to Chapter 7 Case (liquidation) will be forthcoming.
By: Justin Saporito, MAZURKRAEMER Law Clerk
On September 10, 2013, the Riverview Country Club, Inc. filed a Chapter 11 Voluntary Petition in the United States Bankruptcy Court for the Southern District of West Virginia, Case No 2:13-bk-20467 in front of the Honorable Judge Ron Pearson. Riverview Country Club is a semi-private 18 hole regulation golf course that was built in 1970 and opened in 1972. Riverview Country Club is located on Route 17 Riverview Course Road in Madison, West Virginia 25130. The 6,069 yard par 70 course was designed by Bob Plant and is open year round to the public.
The Debtor claims assets valued between 0$ to $50,000 with liabilities of $500,001 to $1 million listing BB&T, Dollar Bank Leasing Corp, Motive Power, Inc. Premier Bank, and USX Transportation as creditors. The Debtor is represented by Mitchell Lee Klein of Klein Law Office located at 3566 Teays Valley Road Hurricane, WV 25526. Mr. Klein filed a Corporate Statement Ownership Statement and Corporate Resolution.
On September 10th, 2013 Prithvi Catalytic, Inc. filed a voluntary petition for relief under Chapter 11 in the United States Bankruptcy Court for the Western District of Pennsylvania, which was incomplete. Statements A-J, Statement of Operations, Summary of Schedules, and Tax Information are due by September 24th, 2013 and a Chapter 11 Plan is due by January 8th, 2014. Debtor claimed assets between $1 million to $10 million with liabilities ranging from $10 million to $50 million.
The Debtor is a multi-national IT Consulting and Engineering solutions company that began operations in 1998 with its registered office in Hyderabad, India and opened its first U.S. office near Seattle, WA in 2000. The Debtor expanded operations with new development centers and sales offices in the U.S., Canada, Brazil, India, South Africa, and the Middle East. Debtor focuses its strategic business in the healthcare, retail, BFSI (banking, financial services, and insurance), and telecom markets and provides services in Europe in addition to the regions where it maintains offices.
A total of fifty-four creditors are listed on the Debtor’s petition including the District of Columbia, various Departments from 22 different U.S. states, the federal government, and several private companies. Click here for Complete list of Creditors and summary of docket.
Debtor is represented by Louis P. Vitti of Vitti & Vitti & Associates, PC located at 215 Fourth Avenue Pittsburgh, PA 15222. The Office of the United States Trustee Liberty Center shall be represented by Kathleen Robb located at Suite 970 1001 Liberty Avenue Pittsburgh, PA 15222.
The first 30 days of a Chapter 11 bankruptcy case often are like water spewing violently out of a fire hydrant. Fast. Furious. Urgent. Many issues being thrown at the Debtor, its employees, and its lawyers at one time.
On August 2, 2013, Judge Patrick Flatley confirmed one of my Chapter 11 cases in the Northern District of West Virginia (near my hometown of Weirton), In re: Gene Charles Valentine Trust, Case No. 12-1078. The case was intense from the start. We had filed the Chapter 11 case on August 9, 2012, an hour before a foreclosure sale. We are proud to report that we confirmed the Gene Charles Valentine Trust plan in under a year.
We defied the odds by getting this plan confirmed. According to the Pre-Bankruptcy Planning for the Commercial Reorganization: A Brief Guide for the CEO, CFO/COO, General Counsel and Tax Advisor, written by the Reorganization and Restructuring Group of Squire, Sanders & Dempsey, LLP (2nd edition, 2008), a whopping 83 percent of chapter 11 reorganizations that are filed generally “die on the vine” and are never confirmed.
I purchased this Brief Guide at the American Bankruptcy Institute that I attended this past Spring and I thought I would write a few blog posts integrating my experience with the concise content of the book. As set forth on Appendix A to the Guide, generally certain matters must be addressed within the first 30 days of a case.
- Petition filed
- Filing of list of 20 largest creditors
- Applications for retention of professionals (attorneys, accountants, turnaround professionals, valuation specialists, real estate brokers). A Debtor cannot pay a professional unless the retention of the firm is first approved by the Judge and the professional files a fee application on the docket, to which parties may review and/or object.
- Filing of ”first day” motions (seeking authority to pay wages, use pre-petition bank accounts, pay deposits for utilities, use of cash collateral, payment of interim compensation to professionals)
- Filing of schedules of assets and liabilities and statement of financial affairs. Getting correct addresses and dollar amounts owed for every single creditor often is a daunting task. Once the Schedules are filed, a creditor matrix is generated. The Bankruptcy Court and parties in interest use this address list to mail or “serve” important pleadings in the case. If the matrix is enormous, certain limited servicing lists can be authorized by the Court. In mega-cases, servicing agents are employed by the Debtor to handle only this aspect of the case, i.e., proper service.
- Filing of Corporate Resolution authorizing the Chapter 11 filing
- Negotiation of debtor in possession financing
- Hearing on use of cash collateral and adequate protection
- Negotiation with trade creditors regarding reclamation claims and/or reestablishment of trade terms.
The first few weeks of a case can be exhausting and dramatic. Often, by the time a petition is filed, a debtor runs out of money and payroll has not been paid (therefore employees are angry and morale is low), bank accounts frozen, the utilities have been shut off, and/or the front doors have been padlocked by a creditor. Once a case is filed, a creditor may immediately file a motion to dismiss the case.
The filing of the petition and related schedules requires a financial autopsy of a business and all of its related entities. In order to avoid confusion down the road, Debtor’s counsel should try to obtain as much factually accurate information as possible during this time. The process requires persistence, diligence and coordination with the Debtor’s employees, who basically become your co-workers for as long as the case is open, which could be 18 months or longer.
During this critical time, management and key employees must be counseled regarding what to do and not do, now that the actions of the Debtor are under close scrutiny by not only a Judge but also a U.S. Trustee as well as the creditor body. Employees should be clear regarding what transfers may or may not be made without court approval. Also, at the same time, the U.S. Trustee’s Office dictates that a debtor comply with its financial reporting requirements (hence the required “Monthly Operating Report”), and the filing of insurance and bank account information. Lack of compliance may lead to a dismissal of the case or a conversion to a Chapter 7. Often the debtor must close pre-petition bank accounts and open new ones.
Keeping all constituencies informed is an important part of the role of Debtor’s counsel. Creditors may include key lenders and critical vendors who will want to know what the turnaround strategy is for the company. Once creditors receive the “Notice of Suggestion of Bankruptcy”, they too will be scurrying around to hire bankruptcy lawyers if the size of their claims warrants such an expense.