By: Justin A. Saporito, Law Clerk
Bradford & Byrd Associates, Inc. filed for voluntary Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of New Jersey on May 23rd, 2014. The case has been assigned to the Honorable Christine M. Gravelle under case number 3:14:bk-20478.
Debtor claims assets of less than $50,000 with liabilities ranging between $500,000 and $1 million. Among debtor’s 21 creditors are the Internal Revenue Service, New Jersey Department of Labor, New York State Workers Compensation Board, Mercedes Benz, and several other companies and private individuals. Debtor is represented by Bunce Atkinson of Atkinson & DeBartolo, PC from Red Bank, New Jersey.
Debtor is a janitorial firm that was founded in 1989 and headquartered in Freehold, New Jersey. Debtor provides janitorial services clients in New York, New Jersey, Pennsylvania, Georgia, and North and South Carolina. Some of debtor’s more notable clients include UPS, the Social Security Administration Headquarters, and Public Service Electric and Gas Company. In debtor’s more than 20 years in business, it has achieved some noticeable accomplishments including servicing the Statue of Liberty in 1996 and being contracted to clean vintage chandeliers at West Point Military Academy in 2001.
In the beginning of 2014, I was asked by the WV Attorney General’s office to participate in a town hall meeting to discuss issues impacting the WV economy. As a business and bankruptcy lawyer, I wanted to do my diligence. I asked my clients and colleagues what they believed were significant factors. Here was a punch list of the issues identified by them and those at the town hall meeting:
- retention and attraction of young talent
- scarcity of livable downtown spaces in major WV cities, Weirton, Wheeling, Huntington, Charleston, Martinsburg, Morgantown
- healthcare reform proving costly for new businesses
- business and Occupancy taxes
- rampant drug addiction
- revitalization of old industry to attract new industry.
- deterioration of main streets
- oil and gas industry presence.
Prior to the town hall meeting, I also asked Justin Saporito, my law clerk to take to google to research this topic.
Justin found a 2014 Outlook Report (Report) for WV’s economy, produced by West Virginia University’s College of Business and Economics (one of my alma maters).
The economy of West Virginia has grown steadily over the past year with Gross Domestic Product (GDP) growing by 3.3% over the past year, ranking it tenth (10th) among U.S. states in real GDP growth. This growth was the result of several factors such as the addition of 3,000 new jobs over the past year, a state unemployment rate that has remained 1% below the national average for the past five years, and increased exports. Exports accounted for 16% of state economic output in 2012 compared with only 5% in 2000. The housing and automotive sectors of the economy, important indicators of economic health, have also seen increases. Home sales in WV are on par with home sales during the 2004-2005 housing boom and auto sales are at pre-recession levels.
According to the report, the key drivers of the economy in 2012 were coal mining, natural gas, healthcare, tourism, electrical power manufacturing, and chemical manufacturing. The Report predicted that annual job growth would increase in the healthcare services, wholesale and retail trade, construction, and professional and business service sectors every year through 2017.
A shining light for WV’s economy has been the city of Morgantown. Morgantown boasts an unemployment rate that is 3% below the national average with job growth above the national average with an estimated annual job growth rate of 2% in the coming years.
It is not all good news for WV however as it is ranked 47th among the 50 states in per capita income. Another major concern is the declining and aging population. WV’s median age is 5 years above the national average. Another concern is the state budget, ¼ of which comes from coal tax revenue and lottery revenue. With coal production predicted to fall through 2017, the state will have to find additional sources of revenue in the coming years. Despite these looming issues, WV is expected to have revenue growth of 3.5% for 2014.
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.
“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 3, 2013 Fairmont General Hospital, Inc. of Fairmont, WV and affiliate company Fairmont Physicians, Inc. (“debtors”) filed voluntary petitions for bankruptcy relief under Chapter 11 of the bankruptcy code with Fairmont General Hospital, Inc. as the lead debtor. The petitions were filed with the United States Bankruptcy Court for the Northern District of West Virginia with the assigned case numbers 1:13-bk-01054 and 1:13-bk-01055 respectively. The cases were assigned to the Honorable Judge Patrick M. Flatley (who is originally from Salene’s hometown of Weirton by the way) and consolidated (by debtors’ request) under case number 1:13-bk-01054.
The Debtors’ Chapter 11 Plan and Disclosure Statement are due by January 2, 2014. Schedules A-J were originally due on September 17, 2013 as were a Statement of Financial Affairs, Statement of Operations, Federal Income Tax Return, and other filings. (Please see the docket summary for a complete list of due filings.) At the time of filing, the debtors made multiple motions including motions to extend the time before the required Schedules and other would become due, maintain existing financial institutions and practices, pay pre-filing debts and obligations, and maintain utility services. All of these motions were granted. For a complete breakdown of the case please refer to the docket summary. The Meeting of Creditors has been set for Thursday, October 31, 2013 at 10:00 AM.
Fairmont General Hospital (FGH) is a private, non-profit, community hospital that was originally founded in 1939. FGH offers a variety of health services including surgical, rehabilitation, mental health, wellness/testing, emergency services, and more. For a complete list of the services they offer please click here.
The debtors claim assets and liabilities between $10 and $50 million. Notably, the debtors are currently seeking a strategic partner to take over its facility. The debtors are represented by Rayford K. Adams, III of Spilman, Thomas, & Battle, PLLC. Spilman, Thomas, & Battle, PLLC has seven offices spread across West Virginia, Pennsylvania, Virginia, and North Carolina with three of their offices located in West Virginia.
New York City Opera, Inc. filed a petition for Chapter 11 bankruptcy protection on October 3rd, 2013. The petition was filed in the United States Bankruptcy Court for the Southern District of New York. The case was assigned to the Honorable Judge Stuart M. Bernstein under case # 1:13-bk-13240. Among the motions filed with the petition was a motion to authorize debtor to refund pre-paid tickets. Please click here for a docket summary.
New York City Opera, Inc. was dubbed “The People’s Opera” by former NYC Mayor Fiorello LaGuardia. It has hosted and performed traditional and contemporary operas since its founding in 1943. Debtor filed for Chapter 11 protection due to a projected $44.1 million deficit for 2012 and a combination of a troubled economy, decreased donations, and increasing pension obligations. The debtor raised approximately $1.5 million from an online fund-raising campaign (Kickstarter), but required $7 million by the end of September in order to fund itself through the end of the year. The board and management have begun necessary financial and operational steps to wind down the company with no plans to borrow in order to fund the 2014 season.
Debtor claims assets and liabilities of between $1 and $10 million and 93 creditors including New York City Ballet, Inc. and the New York City Dept. of Finance. Please refer to the docket summary for a complete list of creditors. The debtor is represented by Kenneth A. Rosen and Nicole Stefanelli of Lowenstein Sandler LLP.
Salene had the privilege of hanging out with Nicole over the weekend in NYC. Nicole and Salene had met at the American Bankruptcy Institute this past Spring. They were also friends via Twitter. Nicole said that this Chapter 11 filing has been published in newspapers all over the world. She also said that her firm was doing the representation PRO BONO. She will be handling first day motions on Thursday!
This will definitely be an interesting case to watch.
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.
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.
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.