Cycling associations – Company Of Cyclists http://companyofcyclists.com/ Fri, 21 Jan 2022 00:32:27 +0000 en-US hourly 1 https://wordpress.org/?v=5.8 https://companyofcyclists.com/wp-content/uploads/2021/10/icon-7-120x120.png Cycling associations – Company Of Cyclists http://companyofcyclists.com/ 32 32 Tommy Robinson sued for an estimated £2m debt after filing for bankruptcy | tommy robinson https://companyofcyclists.com/tommy-robinson-sued-for-an-estimated-2m-debt-after-filing-for-bankruptcy-tommy-robinson/ Thu, 20 Jan 2022 20:45:00 +0000 https://companyofcyclists.com/tommy-robinson-sued-for-an-estimated-2m-debt-after-filing-for-bankruptcy-tommy-robinson/ Far-right activist Tommy Robinson is being sued for around £2million by creditors after he declared bankruptcy in a High Court libel trial. English Defense League founder, real name Stephen Christopher Yaxley-Lennon, declared himself bankrupt in a High Court trial last year in which he was ordered to pay £100,000 damages for defamation to a Syrian […]]]>

Far-right activist Tommy Robinson is being sued for around £2million by creditors after he declared bankruptcy in a High Court libel trial.

English Defense League founder, real name Stephen Christopher Yaxley-Lennon, declared himself bankrupt in a High Court trial last year in which he was ordered to pay £100,000 damages for defamation to a Syrian schoolboy whom he had defamed online.

In March, Robinson will be officially discharged from bankruptcy, which means he will no longer have to pay any debts covered by the filing, including six-figure legal fees.

It emerged on Thursday that creditors have asked an independent insolvency expert to investigate whether Robinson’s claim is genuine or whether he is “hiding” assets to avoid paying his debts.

Campaign group Hope Not Hate said it believed Robinson had access to assets worth up to around £3million through property acquisitions, investments, donations and sales of books. The group said it would provide a dossier of evidence to the new investigation.

The Guardian attempted to reach Robinson for comment.

Nick Lowles, the chief executive of Hope Not Hate, said: ‘It is totally unfair that, when his victim’s life has been turned upside down, Tommy Robinson is carrying on with his life as before.

Robinson declared bankruptcy in March last year in a High Court libel suit brought by Jamal Hijazi, a Syrian schoolboy who was filmed being attacked at school.

Shortly after video of the incident went viral, Robinson falsely claimed in Facebook videos viewed by nearly a million people that Hijazi was “not innocent and violently going after young English girls in her school”.

The judge, Justice Nicklin, said the consequences of Robinson’s lies had been “particularly severe” for Hijazi and that the scars “would likely last for many years, if not a lifetime”.

He ordered Robinson to pay Hijazi £100,000 in damages plus his legal costs, although the teenager has yet to see a penny due to Robinson’s bankruptcy petition.

Hope Not Hate said it was raise funds to build a case for investigators into Robinson’s finances. Lowles said: “Tommy Robinson needs to understand that there are real consequences to his hatred. It’s time to make him pay and make sure his victims get proper justice.

The insolvency investigator has a number of powers, including access to Robinson’s banking and business records, hearing witnesses under oath and – if necessary – asking the court to obtain search and arrest warrants.

The Guardian previously revealed how Robinson had an international network of wealthy donors and received donations and other support from around the world.

Such was the influence of Robinson’s supporters that they asked advisers to former Republican U.S. presidential candidate Ted Cruz for legal advice on getting an extended visa for “someone who needs protection.” “.

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Judge approves deal to resolve Puerto Rico bankruptcy https://companyofcyclists.com/judge-approves-deal-to-resolve-puerto-rico-bankruptcy/ Tue, 18 Jan 2022 22:27:34 +0000 https://companyofcyclists.com/judge-approves-deal-to-resolve-puerto-rico-bankruptcy/ MIAMI — Puerto Rico on Tuesday received approval from a federal judge to emerge from bankruptcy in the largest public sector debt restructuring deal in U.S. history, nearly five years after the financially troubled territory said it could not repay its creditors. Since Puerto Rico went bankrupt, its economic crisis has only been worsened by […]]]>

MIAMI — Puerto Rico on Tuesday received approval from a federal judge to emerge from bankruptcy in the largest public sector debt restructuring deal in U.S. history, nearly five years after the financially troubled territory said it could not repay its creditors.

Since Puerto Rico went bankrupt, its economic crisis has only been worsened by hurricanes Irma and Maria, a series of earthquakes and the coronavirus pandemic.

The restructuring plan will reduce the bulk of Puerto Rico’s government debt – some $33 billion – by about 80%, to $7.4 billion. The deal will also save the government more than $50 billion in debt repayments.

And, albeit at a discount, Puerto Rico will begin paying off its creditors, something it hasn’t done in years. The government said in 2015 that it could no longer repay its loans.

“Today is truly a momentous day, and it’s a new day for Puerto Rico,” Natalie A. Jaresko, executive director of the board of oversight that has overseen Puerto Rico’s finances since 2016, told a conference. virtual press Tuesday afternoon. “This period of financial crisis is coming to an end.”

The unelected council, which was created by Congress, is far from popular in Puerto Rico, where many of the island’s more than three million residents refer to it as “the junta.” Critics worry Puerto Rico doesn’t have enough money in its general fund to make even the reduced long-term debt repayments, ultimately forcing more painful economic cuts.

When the territory filed for bankruptcy in May 2017, it had more than $70 billion in bond debt and more than $50 billion in unfunded pension liabilities to public servants. The bankruptcies of other public entities, including the Puerto Rico Electric Power Authority, remain unresolved.

“The agreement, while imperfect, is very good for Puerto Rico and protects our retirees, our universities and our municipalities that serve our people,” Gov. Pedro R. Pierluisi said in a statement. “We still have a lot of work ahead of us.”

The scale of Puerto Rico’s bankruptcy was unprecedented in the United States. The territory had more than $120 billion in debt and pension obligations, far exceeding the $18 billion bankruptcy filed by Detroit in 2013.

Judge Laura Taylor Swain of the United States District Court for the Southern District of New York, who presided over Puerto Rico’s bankruptcy case, noted in her findings Tuesday that some creditors opposed the restructuring plan. But she also wrote that the plan “would enable the Commonwealth to deliver future public services and remain a viable public entity”.

Judge Swain held lengthy hearings on the plan in November, including some in San Juan, Puerto Rico’s capital. Protesters gathered outside the federal courthouse as the hearings began.

On Tuesday, Julio López Varona, an activist and acting campaign director for the Center for Popular Democracy, a left-leaning advocacy organization, called the deal terrible for average Puerto Ricans.

“We’re talking about more budget cuts, more compromises on our services and potentially rate hikes like the ones we’ve seen in the last 10 years,” he said, referring to electricity rates. very high in Puerto Rico. “We know this is an unsustainable deal. Scores of economists have said that Puerto Rico is not reducing its debt enough. It’s a recipe for disaster.

José Caraballo-Cueto, an economist and associate professor at the University of Puerto Rico, says when a federal law giving foreign companies a tax incentive to operate on the island stops at the end of the year, it will will mean less money for the government’s general fund.

“What happens to the general fund will mean more austerity measures for essential services or higher taxes to make the payments,” he said.

The oversight board pushed back against those arguments on Tuesday, forcefully defending the restructuring plan, which says the government has enough to pay off debt through 2034. David A. Skeel Jr., chairman of the board, said the plan was long and complicated. and that many of his detractors probably haven’t read it.

“It’s absolutely sustainable,” he said. “It will not lead to further cuts. I really think there are a lot of misconceptions out there.

An earlier deal was struck in early 2020, but had to be reworked after the coronavirus pandemic wreaked havoc on Puerto Rico’s fragile economy, which in recent years has relied heavily on federal tax breaks and disaster relief funds. Hurricane Maria hit just days after Hurricane Irma in 2017, devastating the island.

Campaigners and elected officials scored a big victory in debt restructuring talks late last year when the supervisory board scrapped plans to cut pensions for retired teachers and other civil servants. This proposal was rejected out of hand by politicians in Puerto Rico. Many Puerto Ricans feared that such cuts would deepen poverty among the elderly.

Johnny Rodríguez Ortiz, who spent 31 years working for the electricity company, now spends every Wednesday morning demonstrating outside the company’s headquarters. He fears that the company’s bankruptcy proceedings will cost him his retirement.

“The only way they left us is poverty or street struggle,” said Rodríguez, 73, from the town of Sabana Grande in southwestern Puerto Rico.

Critics also demanded an audit of how the large debt was incurred and demanded that those responsible be prosecuted or otherwise held accountable.

But for all the controversy the restructuring plan has sparked on the island, it has also charted a way forward – although not necessarily an easy one – after years of debt limbo.

“The restructuring plan will give Puerto Ricans a level of certainty about how much the island will have to pay each year and allow us to create an effective economic policy,” said Heriberto Martínez Otero, executive director of Porto’s Ways and Means Committee. Rico. House of Representatives.

The plan, he added, also “starts the countdown” to the exit from the oversight board. Frustration with the power of the council was so intense that when angry Puerto Ricans took to the streets to oust Governor Ricardo A. Rosselló in 2019, they often chanted, “¡Ricky, renuncia, y llevate a la junta! “Ricky, quit and take the board with you. (Mr. Rosselló resigned. The board remained.)

To get rid of the commission, Puerto Rico must balance its budgets for four consecutive years and meet other requirements, such as access to the credit market at reasonable rates.

“So at the very least the board will be around for at least another three years,” Skeel said. “It may be a little longer than that.”

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Trial of former Rochester Drug Cooperative CEO Laurence Doud III to begin Tuesday https://companyofcyclists.com/trial-of-former-rochester-drug-cooperative-ceo-laurence-doud-iii-to-begin-tuesday/ Mon, 17 Jan 2022 08:18:06 +0000 https://companyofcyclists.com/trial-of-former-rochester-drug-cooperative-ceo-laurence-doud-iii-to-begin-tuesday/ In one historical criminal case, Former Rochester Drug Cooperative chief executive Laurence Doud III is due to stand trial this week over allegations that he and his company were major players in a deadly opioid pipeline. A wholesale distributor, Rochester Drug Cooperative, or RDC, was in the middle of the opioid pipeline, shipping drugs to […]]]>

In one historical criminal case, Former Rochester Drug Cooperative chief executive Laurence Doud III is due to stand trial this week over allegations that he and his company were major players in a deadly opioid pipeline.

A wholesale distributor, Rochester Drug Cooperative, or RDC, was in the middle of the opioid pipeline, shipping drugs to pharmacies. Evidence shows that RDC moved tens of millions of dangerous opioids – among them fentanyl and oxycodone pills – while ignoring growing evidence of the company’s role in fueling the opioid crisis in the world. country.

Doud personally dismissed clear signs that some pharmacies were flooding the streets with opioids, and he pushed for continued business with pharmacies under the Drug Enforcement Administration’s control, prosecutors say.

Former Rochester Drug Co-Operative CEO Laurence Doud III stands in U.S. District Court in Manhattan on Tuesday, April 23, 2019. Prosecutors allege Doud ignored red flags to turn his drug distributor into a supplier of last resort as the opioid crisis raged.

As RDC became one of the largest wholesale distributors of controlled substances in the country, Doud personally benefited from contracts related to this highly explosive expansion, records show.

In April 2019, the federal government prosecutors filed felony charges against the company, Doud, and another executive — the first time a distributor has been charged with crimes related to the outbreak. The company, which has since gone bankrupt, reached a settlement with prosecutors, while the other DRC official, former compliance officer William Pietruszewski, pleaded guilty to conspiracy to distribute controlled substances .

Pietruszewski is expected to testify against Doud.

Doud’s trial is set to begin Tuesday, Jan. 18, in federal court in Manhattan and is expected to last up to three weeks. A jury was selected on Wednesday.

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[COLUMN] Can bankruptcy change your life for the better? — https://companyofcyclists.com/column-can-bankruptcy-change-your-life-for-the-better/ Sat, 15 Jan 2022 16:00:25 +0000 https://companyofcyclists.com/column-can-bankruptcy-change-your-life-for-the-better/ AS A bankruptcy attorney, I’m often asked, “How will filing for bankruptcy change my life?” I think people ask this question because of the negative things they may have heard about bankruptcy from friends, family, coworkers, and neighbors. They think bankruptcy means they will forever be considered pariahs in our economy. So instead of focusing […]]]>

AS A bankruptcy attorney, I’m often asked, “How will filing for bankruptcy change my life?”

I think people ask this question because of the negative things they may have heard about bankruptcy from friends, family, coworkers, and neighbors. They think bankruptcy means they will forever be considered pariahs in our economy. So instead of focusing on the pros and cons of getting out of debt, they tend to focus more on the possible downsides. Of course, the decision to declare bankruptcy should never be taken lightly, but if it suits your situation, it may be the very solution you need to put the past behind you and move on to bigger and better things. in your life. Again, while bankruptcy isn’t for everyone, millions of people who have no way of getting out of debt have found it to be the BEST thing they’ve ever had. made to start again. It proved to be a lifesaver for people who found themselves in a financial situation from which they could no longer extricate themselves. Yes, debt can be a huge trap for many, and when you don’t have enough resources to pay your debts every month while maintaining a fair standard of living, you often have no choice but to keep borrowing just to survive. It can become a vicious cycle where you find yourself buried deeper in an ever-widening financial hole. Bankruptcy might be the tool you need to save yourself from being buried under a mountain of debt.

If you can pay your bills, YOU SHOULD. But if you’ve done your best, but have reached a point where nothing short of filing for bankruptcy can help, bankruptcy could be a big turning point in your life. Bankruptcy gives you the chance to erase the past, learn from all the mistakes you’ve made, and start over. Where would most of us be today without having been given a second chance? That’s exactly what bankruptcy provides – another chance to rebuild your finances, your credit, and your life.

There are many positive changes that can come from filing for bankruptcy. First, peace of mind. How about a good night’s sleep for a change? If you have creditors constantly harassing and calling you, the instant relief that bankruptcy brings allows you to breathe, think and feel like a human being again. If creditors threaten to take what little you have, bankruptcy can also protect everything you’ve worked so hard for, and you can sleep better at night knowing that creditors won’t be able to follow through on their threats.

Once you are relieved of the burden of debt, your future can become exciting again. Regaining control of your finances is just the first step. Once you are debt free, you may now be able to plan for retirement, your children’s education, or start saving again. You can stop living your aimless life without a financial plan. Life after bankruptcy depends on what you do after the law gives you that badly needed second chance to recover and rebuild your life.

* * *

NOTE: Due to the COVID-19 pandemic, I am offering free consultations OVER THE PHONE to anyone who needs help dealing with their debt issues.

* * *

None of the information contained herein is intended to provide legal advice for any specific situation. Atti. Ray Bulaon has successfully helped over 5,000 clients get out of debt. For a free evaluation of your situation by an attorney, please call RJB Law Offices toll-free at 1-866-477-7772.

(advertising supplement)

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Disinfecting wipes maker GPMI declares bankruptcy and lays off dozens of workers https://companyofcyclists.com/disinfecting-wipes-maker-gpmi-declares-bankruptcy-and-lays-off-dozens-of-workers/ Thu, 13 Jan 2022 23:57:00 +0000 https://companyofcyclists.com/disinfecting-wipes-maker-gpmi-declares-bankruptcy-and-lays-off-dozens-of-workers/ The onset of a global health pandemic seemed to bode well for companies in the right sector, like disinfectant wipes maker Gilbert GPMI Company, but things didn’t go as planned. After a major expansion deal with an Israeli industrial partner turned sour, the company was forced to halve its workforce. This week, the company filed […]]]>

The onset of a global health pandemic seemed to bode well for companies in the right sector, like disinfectant wipes maker Gilbert GPMI Company, but things didn’t go as planned.

After a major expansion deal with an Israeli industrial partner turned sour, the company was forced to halve its workforce.

This week, the company filed for Chapter 11 bankruptcy protection. This means the company is entering into a side deal with its secured creditors in exchange for restructuring its largest debts. A secured creditor, like a bank, has security in the event of default.

Often, during a bankruptcy proceeding, unsecured creditors – sub-contractors of sub-contractors and small local businesses – could end up with many empty bags.

According to bankruptcy filings in federal court, GPMI has more than 100 creditors who want to be paid. The company had between $10 and $50 million in assets or the total value of the company and between $10 and $50 million in debts to creditors or payables.

GPMI has $13.3 million in unsecured claims from 116 creditors, records show.

He generated $14 million in revenue during the bad deal of 2021 and all, according to bankruptcy records.

Yarron Bendor, an Israeli entrepreneur, founded GPMI in 1989, and is headquartered in Arizona ever since. The company manufactures wet wipes of various types for companies including US companies The Clorox Company and Procter & Gamble Company, but also the Dial brand created by German giant Henkel AG, according to court documents.

GPMI had over 100 employees. Most received pink slips.

A recent scathing Google review of the company by a former employee described a tumultuous year, in which dozens of newly hired employees were laid off and the hours were so unpredictable “that at one point people started to quit.”

The company – which did not return immediately Phoenix New Times’ inquiries for this article – said in court documents that his financial problems began with the pandemic.

Although in the spring of 2020 demand for wet wipes and other disinfectant products increased, eliminating them from drugstore and grocery store shelves, shortages of manufacturing materials made it increasingly difficult for GPMI to keep pace. .

We all remember browsing the empty shelves for them.

Additionally, cheaper, lower-quality products have flooded the market, which GPMI says has contributed to lower demand in 2021.

But it was a deal with an Israeli hygiene giant, Albaad Massuot Yitzhak Limited, that ultimately landed GPMI in serious debt.

Albaad is listed on the stock exchange and claims to be one of the world’s largest manufacturers of wet wipes and other hygiene products. It does business in the United States and Europe in addition to Israel. In the spring of last year, he offered GPMI an attractive deal: he wanted to order tens of millions of goods from the company, to help bolster its offerings in the United States when demand soared. Albaad promised the local company $80 million in orders in the first year and $100 million in the second year, according to GPMI.

The expansion of the company, at the time, has been touted as a win for Gilbert’s economy. GPMI spent $7.5 million to speed up operations, somewhat offset by Albaad’s $3.75 million upfront payment.

But things quickly turned sour.

GPMI built new facilities, hired dozens of new employees, and began shipping product.

Albaad’s client needed FDA approval for their product but ran into problems securing it.

Albaad never paid for or even collected the products, according to the bankruptcy filings. GPMI ended the year with revenue $37 million lower than forecast.

GPMI was forced to pay $17,000 to stock products for which it had no buyer and was $800,000 short of budgeted revenue. And the Israeli company was not ready to buy $25.5 million more of the product by the end of December 2021.

“Other promises of payment were made by Albaad but nothing materialized, Bendor said in court filings.

It turns out that Albaad decided to tell its shareholders that it would cancel $10 million from its failed US expansion venture “due to issues with its customers and distributor and research litigation options with its partners,” GPMI said in bankruptcy court filings.

Still, GPMI painted a bright future for its sales, saying it still forecast more than $15 million in revenue for the coming year, given the new customers it had developed.

The company got a $2.5 million loan to pay its remaining employees and other expenses until it could restructure and even consider selling itself out of its mountain of debt.

He also says he plans to seek damages from Albaad in civil court, whose “failure to perform has threatened the very survival of GPMI.”

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Seadrill unit files for bankruptcy within 24 hours https://companyofcyclists.com/seadrill-unit-files-for-bankruptcy-within-24-hours/ Wed, 12 Jan 2022 00:23:00 +0000 https://companyofcyclists.com/seadrill-unit-files-for-bankruptcy-within-24-hours/ The SEADRILL 3. REUTERS / Luis Enrique Ascui / Files Register now for FREE and unlimited access to Reuters.com Register Restructuring involves Mexican platforms Noteholders take control of the Seadrill unit The names of companies and law firms shown above are generated automatically based on the text of the article. We are improving this functionality […]]]>

The SEADRILL 3. REUTERS / Luis Enrique Ascui / Files

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  • Restructuring involves Mexican platforms
  • Noteholders take control of the Seadrill unit

The names of companies and law firms shown above are generated automatically based on the text of the article. We are improving this functionality as we continue to test and develop in beta. We appreciate comments, which you can provide using the comments tab on the right of the page.

(Reuters) – A unit of offshore driller Seadrill Ltd filed a fast-track reorganization plan in Houston bankruptcy court on Tuesday, where it hopes to seek approval of the proposal on Wednesday.

The case comes just months after its parent entity emerged from its own bankruptcy proceedings. This reorganization plan is expected to come into effect early this year. According to a statement by Financial Controller Tyson de Souza, the Chapter 11 affair of Seadrill New Finance Ltd is supposed to be the “end piece” of the overall restructuring efforts of the Seadrill Group.

De Souza said there was no objection to the plan and that “there is no doubt that it is in the best interests” of the company, which is represented by Kirkland & Ellis.

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A representative from Seadrill Ltd did not immediately respond to a request for comment.

Seadrill New Finance, which has approximately $ 535 million in guaranteed debt, does not operate on its own. It serves as a holding company for a joint venture with an investment fund controlled by Fintech Holdings Ltd. The joint venture, SeaMex Ltd, owns five rigs in Mexico and underwent restructuring last year after state oil company Pemex, a major customer, failed to pay.

Under the proposed plan, holders of secured notes will repossess most of the shares of Seadrill New Finance. The company, which says it has lined up the votes it needs from creditors, will ask U.S. bankruptcy judge David Jones to approve the plan on Wednesday afternoon.

Seadrill Ltd went bankrupt in 2018, emerging with billions of dollars in lost debt and $ 1 billion in new investments. He returned to Chapter 11 in 2021, blaming the sustained downturn in the oil and gas market and the economic impact of the COVID-19 pandemic.

Jones signed Seadrill Ltd’s latest restructuring plan in October, which aimed to reduce the company’s $ 5.6 billion debt by $ 4.9 billion.

Although unusual, one-day cases in Chapter 11 have appeared occasionally in recent years. Kirkland, who also represented the parent entity in its Chapter 11 cases, has previously guided companies through these types of quick restructurings in court.

The case is In re Seadrill New Finance Ltd, United States Bankruptcy Court, Southern District of Texas, 22-9001.

For Seadrill New Finance: Anup Sathy, Ross Kwasteniet, Spencer Winters, Christopher Marcus and Jaimie Fedell of Kirkland & Ellis; and Matthew Cavenaugh, Jennifer Wertz, Vienna Anaya and Victoria Argeroplos of Jackson Walker

Read more:

Mexican Ministry of Finance Completes Refinancing of Pemex Short-Term Debt

Seadrill lenders agree to extend cash usage, for now

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how to file bankruptcy relief under the
Bankruptcy Code, and if they try, they will face a prompt exit.
Yet, as more states continue to legalize/decriminalize marijuana,
it is likely that more marijuana-related businesses will enter this
industry, where some will face distress but with few avenues to
restructure, reorganize, and/or liquidate.

The tension between state laws that legalize or decriminalize
marijuana on the one hand, and the CSA’s enforcement of
marijuana as a controlled substance on the other, can be understood
by reviewing decisions made by U.S. Bankruptcy Courts when they
have been faced with marijuana-related businesses or individuals
who sought relief under Chapter 7, 11, or 13 of the Bankruptcy
Code. Bankruptcy Courts generally find that because marijuana
violates the CSA, businesses or individuals may not seek relief
under the Bankruptcy Code, regardless of whether the state in which
the business operates or the individual resides and regardless of
whether the particular debtor is directly (such as
cultivators and dispensaries) or indirectly (such as landlords)
engaged in marijuana.

Decisions in the Plan Context

A number of courts have addressed this issue in the context of
the plan process, where the courts found the plan filed by the
applicable debtor, while statelicensed to grow/dispense marijuana,
did not comply with the two Bankruptcy Code sections that required
that the plan (i) be proposed in good faith and not by means
forbidden by law, and (ii) be feasible.4 The courts
found that because the applicable debtors were engaging in conduct
that violated federal law and the funding of the plan would come
from income generated from such illegal conduct, the requirements
of Sections 1129(a)(3) and (11) would not be met. Both courts
dismissed these cases.

Similarly, in In re Arm Ventures, 564 B.R. 77, 84
(Bankr. S.D. Fla. 2017), where the debtor was a commercial landlord
with a tenant that had sought (but not yet obtained) federal and
state approval to grow and sell marijuana, the Bankrupt Court found
the plan was not feasible and was not filed in good faith, as the
plan was based on funds that included future rents from this
tenant.

Decisions Involving ‘Unclean Hands’

Related to the good faith argument, some courts have concluded
that a debtor that engages in an illegal business is not eligible
for relief, as it enters the court with “unclean hands.”
For example, in In re Rent-Rite Super Kegs W. Ltd, the
court found that the debtor’s lease of warehouse space to
tenants who were state-licensed to cultivate marijuana
(representing one quarter of its rental income) was an ongoing
criminal violation of the CSA and also put the debtor’s secured
creditor’s collateral at risk, justifying the application of
the unclean hands doctrine. 484 B.R. 799, 807 (Bankr. D. Colo.
2012).

These facts, coupled with the debtor’s inability to satisfy
Section 1129(a)(3) of the Bankruptcy Code—as any plan would
rely on revenue from illegal activity—warranted
“cause” for dismissal of the case, even though (i) the
debtor’s business was legal under its state law (Colorado) and
(ii) the court recognized that federal prosecutors may exercise
their prosecutorial discretion to decline to seek indictments under
the CSA where the federal illegal activity is legal under
applicable state law. Id. at 802-05.

Similarly, in In re Basrah Custom Design Inc., the
court found that the debtor’s lease of space to a statelicensed
medical marijuana dispensary violated the CSA and thus triggered
the application of the unclean hands doctrine that warranted
“cause” for dismissal of the case. 600 B.R. 368, 382
(Bankr. E.D. Mich. 2019).

Decisions Regarding Estate Administration

Another basis for the dismissal of cases where the debtors were
state-licensed to grow/dispense marijuana is the inability of a
Chapter 7 or Chapter 13 trustee to administer the estate case or
plan with assets that relate to illegal activity. See Arenas, 535
B.R. at 848. In contrast, the court in In re Write, (Not
Located) rejected the U.S. Trustee’s argument that Chapter 7
was unavailable to the debtors (state-licensed growers for sale to
medical clinics), finding that the ability to liquidate an estate
is not a prerequisite to a discharge.

Decisions Over ‘Direct’ vs. ‘Indirect’
Connections

While it is clear that the majority of courts do not allow
individuals or businesses directly engaged in marijuana activities
to seek relief under the Bankruptcy Code, some courts have
recognized the distinction between direct and indirect marijuana
activities. Direct engagement cases include (i) In re Arenas, where
the debtor grew and sold marijuana and leased its property to a
marijuana dispensary and (ii) Rent-Rite Super Kegs W.
Ltd
., where the debtor was a landlord that derived about 25%
of its rental income from a marijuana grower.

Although the court in In re Way to Grow, Inc., 597 B.R.
111, 123 (Bankr. D. Col. 2018) dismissed the case as the debtors
sought to expand their supply business in the cannabis industry in
states where such operations were legal, it did find that the
debtors were indirectly violating the CSA, as most of its
current customers were not in the cannabis industry.

As some refer to as the “outlier case,” the court in
Garvin v. Cook Investments NW, SPNWY, LLC, 922 F.3d 1031
(9th Cir. 2019) interpreted Section 1129(a)(3) to mean a plan must
not be proposed in an unlawful manner. The court found that such
provision did not preclude confirmation of the plan that contained
substantive provisions that are premised upon illegality, such that
a court only is required to look at the plan proposal and not the
terms of the plan for purposes of plan confirmation. In
Garvin, the court confirmed a plan that included a
continuing lease to an entity growing marijuana. It is worth noting
that the debtor was not engaged in the cultivation, production, or
distribution of marijuana.

Decisions Advocating Flexibility

Despite the few bright-line rules that have emerged from
decisions published to date, some courts have favored the need for
flexible latitude to deal with variations, as opposed to
bright-line rules. As advocated by the court in In re
Burton
, 610 B.R. 633, 638 (B.A.P. 9th Cir. 2020), a Bankruptcy
Court should “be explicit in articulating its legal and
factual bases for dismissal in cases involving
marijuana”5 and not take the approach that the mere
presence of marijuana automatically prohibits a debtor from
bankruptcy relief.6

As explained in In re Olson, this articulation should include an
evaluation as to whether and how the debtor was actually violating
the CSA and/or why dismissal of the case was necessary. 2018 WL
989263 at *6 (Tighe, J., Concurring). The court in Olson also
recognized the increasing need for courts to address the needs of
litigants who are in compliance with state law while not excusing
activity that violates federal law. Id. at *6.

Similarly, the court in In re Malul recognized the
evolution of case law and that potential CSA violations will be
highly factual and specific. 614 B.R. 699, 714 (Bankr. D. Col.
2020). Similarly, although it ultimately dismissed the Chapter 11
case, the court in In re CWNevada LLC recognized the
possibility that Chapter 11 relief could be appropriate for an
individual or entity directly involved with marijuana-related
businesses. 602 B.R. 717, 747 (Bankr. D. Nev. 2019).

Bankruptcy Courts Are Sympathetic

While a majority of courts have dismissed cases where the debtor
was involved in marijuana-related businesses, many have expressed
empathy for debtors that are in need of bankruptcy relief but face
little to no practical alternatives. Way to Grow, 597 B.R.
at 132.

In In re Arenas, the court was sensitive to the fact
that the joint debtors, licensed in Colorado to grow and dispense
marijuana, “have not engaged in intrinsically evil
conduct” but could not seek bankruptcy relief “because
their marijuana business activities are federal crimes.” 535
B.R. at 849, 850.

The court in Way to Grow, 597 B.R. at 132, acknowledged
that the debtor did not seek bankruptcy in bad faith and
“[b]ut for the marijuana issue, this would be a relatively
run-of-the-mill Chapter 11 proceeding.” 597 B.R. at 133. The
court stated further that “if the result in this case is
unjust, Congress alone has power to legislate a solution.”
Id.

The court in In re CWNevada LLC went further to state until
Congress does so, “all parties engaged in or having a
significant connection with the marijuana industry face a creeping
absurdity” as they can rely on state law to expand businesses
and investments, yet such businesses “expose all of them to
possible federal criminal prosecution,” as well as create
uncertainty for states and local governments that receive taxes
from such businesses. 602 B.R. at 739-40.

One court aptly summarized the dilemma as follows:

If the uncertainty of outcomes in marijuana-related bankruptcy
cases were an opera, Congress, not the judiciary, would be the fat
lady. Whether, and under what circumstances, a federal bankruptcy
case may proceed despite connections to the locally
“legal” marijuana industry remains on the cutting-edge of
federal bankruptcy law. Despite the extensive development of case
law, significant gray areas remain. Unfortunately, the courts find
themselves in a game of whack-amole; each time a case is published,
another will arise with a novel issue dressed in a new shade of
gray. In re Mulul, 614 B.R. at 701.

What’s a Marijuana-Related Debtor to Do?

While there may be creative ways for a debtor involved with
state-legalized marijuana activities to be eligible for bankruptcy
relief,7 on a practical level, alternatives to
bankruptcy protection remain dismal. These limitations also harm
creditors, as they, too, are denied their benefits of bankruptcy
relief, including the maximization of asset value, equality, and
transparency.

Many in the turnaround and restructuring industry appreciate how
the Bankruptcy Code provides unique and powerful tools that are not
otherwise available outside of the official bankruptcy process.
Unless or until changes are made to federal law, distressed
companies and individuals in the cannabis industry will continue to
face uncertainty and limited bankruptcy relief.

Footnotes

1. The CSA governs the the manufacture,
distribution, and dispensing of controlled substances in the U.S.,
defined as a “drug or other substance, or immediate precursor,
included in schedule I, II, III, IV or V [of the CSA].” 21
U.S.C. Section 802(6). The CSA was amended by the Agriculture
Improvement Act of 2018, Public Law 115- 334, to exclude hemp and
THC found in hemp from the definition of marijuana.

2. See Gonzales v. Raich, 545
U.S. 1, 29 (2005).

3. See generally, Memorandum from David
W. Ogden, Deputy General, to Selected United States Attorneys on
Investigations and Prosecutions in States Authorizing the Medical
Use of Marijuana (October 19, 2009), available at justice.gov/archives/opa/blog/memorandum-selected-united-state-attorneys-investigations-and-prosecutions-states;
Memorandum from James M. Cole, Deputy General, for United States
Attorneys on Guidance Regarding the Ogden Memo in Jurisdictions
Seeking to Authorize Marijuana for Medical Use (June 29, 2011),
available at justice.gov/sites/default/files/oip/legacy/2014/07/23/dag-guidance-2011-for-medical-marijuana-use.pdf;
Memorandum from James M. Cole, Deputy General, to All United States
Attorneys on Guidance Regarding Marijuana Enforcement (Aug. 29,
2013), available at justice.gov/iso/opa/resources/3052013829132756857467.pdf;
Memorandum from James M. Cole,Deputy General, to All United States
Attorneys on Guidance Regarding Marijuana Related Financial Crimes
(Feb. 14, 2014) (available at justice.gov/sites/default/files/usao-wdwa/legacy/2014/02/14/DAG%20Memo%20-%20Guidance%20Regarding%20Marijuana%20Related%20Financial%20Crimes%202%2014%2014%20%282%29.pdf;
Department of the Treasury Financial Crimes Enforcement Network,
Guidance FIN-2014-G001 (Feb. 14, 2014), available at fincen.gov/sites/default/files/shared/FIN-2014-G001.pdf;
Memorandum from Jefferson B. Sessions III, Attorney General, to All
United States Attorneys on Marijuana Enforcement (Jan. 4, 2018),
available at justice.gov/opa/pr/justice-department-issues-memo-marijuana-enforcement.

4. See Sections 1129(a)(3) and (11) of
the Bankruptcy Code; In re Mother Earth’s Alt. Healing
Coop., Inc
., Case No. 12- 10223-LT11 (Bankr. S.D. Cal)
(Chapter 11 plan); In re Arenas, 535 B.R. 845, 847 (B.A.P. 10th
Cir. 2015) (Chapter 13 plan).

5. The court in Burton concluded
the Bankruptcy Court did in fact sufficiently articulate the legal
and factual bases for dismissing the debtor’s case because the
continuation of the case would likely require the trustee or court
to become involved with administering assets related to an
ownership interest in an entity involved in litigation related to
growing and selling marijuana.

6. Id. at 610 B.R. at 637-38
(citing In re Olson, 2018 WL 989263, at *6 (B.A.P. 9th
Cir. Feb. 5, 2018) (remanding for the bankruptcy court to
“articulate the findings that led it to determine that Debtor
was violating the CSA and what legal standard it relied upon in
dismissing the case”); In re Johnson, 532 B.R. 53, 59 (Bankr.
W.D. Mich. 2015) (rejecting the notion that dismissal was a
foregone conclusion and giving the debtor option to remain in
bankruptcy by ceasing illegal activities); Northbay Wellness Grp.,
Inc. v. Beyries, 789 F.3d 956, 960-61 (9th Cir. 2015) (affirming
bankruptcy court’s confirmation of a Chapter 11 plan where the
plan derived indirect support from rental income from a lessor
engaged in a marijuana growing business).

7. For example, it has been suggested
that a debtor could agree to discontinue involvement with
marijuana-related activities business (see In re Johnson, 532 B.R.
at 58 or the debtor proposes a plan that meets the requirements of
the Bankruptcy Code where the funding of the plan comes from a
source unrelated to marijuana activities. See In re
McGinnis
, 453 B.R. 770, 773 -74 (Bankr. D. Or. 2011).

Originally published by Journal of Corporate
Renewal
.

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]]> The collapse that ruined lives revealed the dark side of business https://companyofcyclists.com/the-collapse-that-ruined-lives-revealed-the-dark-side-of-business/ Thu, 02 Dec 2021 05:55:24 +0000 https://companyofcyclists.com/the-collapse-that-ruined-lives-revealed-the-dark-side-of-business/ The fall of Enron, then ranked seventh in the United States, affected thousands of employees and rocked Wall Street. File photo of the entrance to the head office of Houston-based energy trader Enron at 1400 Smith in downtown Houston, Texas. AFP On December 2, 2001, 20 years ago, energy giant Enron – then the seventh […]]]>

The fall of Enron, then ranked seventh in the United States, affected thousands of employees and rocked Wall Street.

File photo of the entrance to the head office of Houston-based energy trader Enron at 1400 Smith in downtown Houston, Texas. AFP

On December 2, 2001, 20 years ago, energy giant Enron – then the seventh largest company in the United States – filed for bankruptcy, sending shock waves through the investor world, leading to historic layoffs and ravaging retirement savings accounts.

The collapse of Enron, which held more than $ 60 billion in assets, continues to generate interest and spark much debate about improving accounting standards and practices.

So what was all the hubbub about and why is it still being talked about today?

The Rise of Enron

In 1985, Enron was formed by the merger of Houston Natural Gas Company and Omaha-based InterNorth Incorporated. Kenneth Lay, who had previously been CEO of Houston Natural Gas, became CEO and chairman of Enron and quickly rebranded the company as an energy trader and supplier.

With the help of Jeffrey Skilling, Enron quickly dominated the natural gas contract market and the company began to generate huge profits on its transactions.

The skills have also changed the culture of the company and put more emphasis on aggressive trading. One of his brightest recruits was Andrew Fastow, who quickly rose through the ranks to become the chief financial officer of Enron. Fastow oversaw the financing of the company through investments in increasingly complex instruments.

The fall of Enron

However, as they say, what goes up must come down and the same happened to Enron. In the fall of 2000, Enron was starting to crumble under its own weight. Faced with increased competition in the energy business, the company’s profits began to decline rapidly.

In an attempt to hide the losses, the company created an array of related business entities and used accounting tricks to cover up massive business losses and large debts. They adopted the dubious tactic of “mark-to-market accounting”, in which the company recorded future unrealized gains from certain trading contracts in the current income statements, giving the illusion of higher current profits. .

These tactics eventually stopped working, and in October 2001, Enron revealed a huge quarterly loss of $ 638 million. Soon after, the Securities and Exchange Commission (SEC) began investigating the company’s transactions and deals.

Investigations revealed a horrific story of accounting fraud in which Arthur Andersen, then one of the world’s largest accounting firms, ultimately revealed that his employees destroyed Enron documents that could have been used to prosecute the business.

Enron went into a deep dive; The company’s shares, which had peaked at $ 90 per share in mid-2000, fell below $ 12 in early November 2001.

On November 7, 2001, his rival Dynegy voted to acquire the company at a very low price of around $ 8 billion in shares. However, days later, Dynegy ended his merger talks, dropping Enron shares to less than $ 1 a share. Finally, without an option, Enron filed how to file bankruptcy on December 2, 2001.

On the day they filed for bankruptcy, thousands of employees were ordered to pack their belongings and were given 30 minutes to leave the building.

Lawsuits and legislation

Arthur Andersen was one of the first victims of Enron’s notorious disappearance. In June 2002, the company was convicted of obstructing justice for shredding Enron’s financial documents in order to conceal them from the SEC. The conviction was later overturned on appeal; however, the company has been deeply dishonored by the scandal.

Enron founder and former CEO Kenneth has been convicted of six counts of fraud and conspiracy and four counts of bank fraud. Prior to conviction, he died of a heart attack in Colorado.

Former Enron star CFO Andrew Fastow has pleaded guilty to two counts of wire fraud and securities fraud for facilitating Enron’s corrupt business practices. He eventually made an agreement to cooperate with federal authorities and served more than five years in prison. He was released from prison in 2011.

Former Enron CEO Jeffrey Skilling was convicted of 19 of 28 counts of securities fraud and wire fraud and acquitted of nine others, including insider trading charges. He was sentenced to 24 years and 4 months in prison. In 2013, the United States Department of Justice struck a deal with Skilling, which saw him reduce his sentence by 10 years.

Lessons from Enron

The Enron collapse was a financial disaster for thousands of people, and its indirect impact injured millions more.

However, this also led to the passage of the Sarbanes-Oxley Act in 2002. This legislation imposed severe penalties for destroying, altering or fabricating financial records. The law also prohibited audit firms from carrying out concurrent consulting activities for the same clients.

With contributions from agencies

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How to make a good impression in bankruptcy court https://companyofcyclists.com/how-to-make-a-good-impression-in-bankruptcy-court/ Wed, 01 Dec 2021 23:10:16 +0000 https://companyofcyclists.com/how-to-make-a-good-impression-in-bankruptcy-court/ Chapter 11 debtor’s financial information What is the best way to present an Chapter 11 debtor’s financial information be presented to bankruptcy courts to give the best impression? In order to provide the court with an accurate representation of the effects of operations in Chapter 11 and to ensure that the debtor has enough time to […]]]>

Chapter 11 debtor’s financial information

What is the best way to present an Chapter 11 debtor’s financial information be presented to bankruptcy courts to give the best impression? In order to provide the court with an accurate representation of the effects of operations in Chapter 11 and to ensure that the debtor has enough time to meet his objectives?

The pandemic has led to severe revenue reductions for many companies. The returning to normal has begun however, in many industries the business environment has not reached pre-pandemic levels.

For certain companies this was the tipping point which is why filing bankruptcy guide on Chapter 11 may now be needed to facilitate an orderly liquidation process of the assets of the debtor. For other companies with solid foundations, the debtor might require Chapter 11 relief. Why? Even though they’re run well or producing products that continue to be sought-after or investing enough in their business (or the three) certain companies do not have the capital to stand up. Long to the storm.

In the end, when rates of interest increase for over-leveraged businesses especially those that have survived solely by relying on Paycheck Protection Program funds, will have to think about the possibility of restructuring debt, whether in or out of the courtroom.

Bankruptcy cases

In the beginning of bankruptcy proceedings everyone involved particularly the bankruptcy judge to know the reason for this bankruptcy case. Did the debtor submit his petition because he produces a defunct product such as Polaroid cameras and his business has been declining steadily? Did the debtor file for bankruptcy after he was hit with an unfavorable ruling? Was the bank’s deposit a result of excessive leverage that was incurred in an earlier acquisition? Perhaps it is because the business is operating in an industry which has grown to be too big?

The responses to these questions will affect the judge’s initial impressions of the matter and maybe, as follows: (1) whether he or she approves urgent assistance requests (such as the sale in bulk of debtor’s assets) (2) the length of time the debtor is required to issue an reorganization plan, and (3) whether or not the judge allows a secured lender to exercise the authority to take possession of collateral.

In some instances Rome may appear to be in flames unless you dig deeper. Judges don’t want to delay liquidation of a debtor and cause job loss when they believe that the odds are in favor of the reorganization to be successful. However when the reorganization seems difficult and the debtor has a substantial cash loss that the judge will not want to delay liquidation.

Cash flows

In the case that fall under Chapter 11, this is generally cash flow. The cash flows must be reported every month in accordance with the United States Trustee, the administrator of bankruptcy within the Department of Justice. In general, an income statement will not be required (but as explained below, the best option is to file a 3 column income statement regardless). The lenders are more concerned with whether the borrower is burning funds. If they’re burning money the lenders are worried that they might need to pump more capital, something they prefer not to do. A depletion of liquidity can also be an indication that the borrower’s main business has not stabilized.

Although the court might need the submission of a monthly cash flow report it is best to provide to the judge a cash flow report that includes and does not include (1) those items that are related to Chapter 11 (such as professional fees and one-off financing expenses) which would not be incurred in any other context than Chapter 11 and (2) non-recurring items that aren’t related in ongoing activities (such like lease payment getting rejected or the severance payment that is included in the reduction of personnel). This is due to Chapter 11 expenses and non-recurring items may either overestimate negative cash flows or limit positive cash flows.

Chapter 11 case

In the beginning of the Chapter 11 case, the major question is whether current financial performance of the debtor can be an accurate reflection of how the debtor is likely to conduct themselves when they enter Chapter 11. Everyone wants to sort out their finances and reduce their expenses, and negotiate with creditors, and show that it’s a viable option. It is unfortunate that very only a few people file bankruptcy and immediately see the pendulum shift towards profit.

They often recognize what must be done, but they need time to put in place the solutions. It will take time before the solutions are visible in the financial statements of the debtor. The debtor might require some more time “burn off” the cost of certain expenses that aren’t recurring, but can result in a negative effect on financial results. In the end, the debtor requires time for a shaky market to resume normal in certain situations.

The financial report to the court should be presented in three columns. The financial results on their own could present a false image before an bankruptcy judge. Instead the judge should be presented with three columns of information. The first column is a representation of real results. The second column contains the list of adjustments that are required to restore actual financial results in order to remove the impact of unusual items. The third column contains the financial results after being restated which show what the actual results would have been without the extraneous items.

Every item in column 2 should be explained to allow the court to decide if it is appropriate to change the part of column 3. This process must also be used for the cash flow statements as well as the statement of income (although the income statement is typically not a part of the US trustee’s reporting obligations for the month of each month). The goal is to allow the court to determine how the principal business of the debtor is operating in the absence of the issues that led him to bankruptcy.

Failure to allow the bankruptcy judge the opportunity to examine (1) the debtor’s conduct in ongoing transactions prior to the bankruptcy would have been in absence of any extraordinary events, as well as (2) what the “normalized” results of the bankruptcy. The bankruptcy process can decrease the likelihood that you will have Chapter 11 success. It is essential that the financial advisor of the debtor clearly explains the fundamentals of the adjustments. Without these the court will see an inaccurate image.

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Colombian airline Avianca says it has completed bankruptcy proceedings https://companyofcyclists.com/colombian-airline-avianca-says-it-has-completed-bankruptcy-proceedings/ Wed, 01 Dec 2021 23:02:00 +0000 https://companyofcyclists.com/colombian-airline-avianca-says-it-has-completed-bankruptcy-proceedings/ A logo of the aviation company Avianca is pictured in the headquarters building in Bogota, Colombia on August 29, 2019. REUTERS / Luisa Gonzalez Register now for FREE and unlimited access to reuters.com Register BOGOTA, December 1 (Reuters) – Colombian airline Avianca (AVT_p.CN) on Wednesday announced that it had completed its Chapter 11 bankruptcy proceedings, […]]]>

A logo of the aviation company Avianca is pictured in the headquarters building in Bogota, Colombia on August 29, 2019. REUTERS / Luisa Gonzalez

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BOGOTA, December 1 (Reuters) – Colombian airline Avianca (AVT_p.CN) on Wednesday announced that it had completed its Chapter 11 bankruptcy proceedings, a month after a U.S. court approved its reorganization process.

“Today the preconditions have been met,” the airline said in a statement from Bogota. Avianca “has successfully emerged from this process”.

Avianca, along with Chilean rival LATAM Airlines (LTM.SN), were the region’s two largest carriers before the coronavirus pandemic, but both were bankrupt when the virus disrupted air travel, amid restrictions particularly strict in Latin America.

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Avianca had already suffered several years of losses before the start of the pandemic, started on  and suffered a coup in 2019 led by United Airlines (UAL.O).

The Southern District of New York City approved the company’s reorganization plan in early November, a day before Avianca announced that it would be moving its home to Britain and that its shares will no longer be traded on the Colombian Stock Exchange. Read more

Once its main domicile is established in Great Britain, the company will be known as Avianca Group International Ltd. Its current shareholders will not receive any payment or be included as shareholders of Avianca Group, the airline said.

(This story is passed on to go from “airline” to “airliner” everywhere)

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Reporting by Julia Symmes Cobb Editing by Marguerita Choy

Our standards: Thomson Reuters Trust Principles.

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