Sears aims to close up to 150 stores to avoid bankruptcy

Sears Holdings Corp is planning to close up to 150 of its department and discount stores and keep at least another 300 open as part of a plan to restructure under U.S. bankruptcy protection, people familiar with the matter said Friday.

The plans, which remained in flux on Friday afternoon, would leave the fate of Sears’ (SHLD) remaining roughly 250 stores uncertain, the sources said. The future of the stores could hinge on Sears’ (SHLD) negotiations with landlords over their leases.

The beleaguered 125-year-old retailer, once the largest in the United States, hopes to sell stores and other assets, including its Kenmore appliances brand and home services business, in court-supervised auctions while under bankruptcy protection, the sources said.

Sears (SHLD) Chief Executive Eddie Lampert, also the company’s largest shareholder and creditor, is exploring bidding on the assets as a so-called stalking horse, setting a floor with offers that other possible buyers could then attempt to top, the sources said.

Reuters first reported on Thursday that Lampert was exploring bidding for some Sears (SHLD) assets. Such a plan could potentially keep a slimmer Sears (SHLD) alive as a going concern, the sources said.

Sears (SHLD) was making progress in its negotiations with banks on Friday for financing to keep it afloat through the holiday season while in bankruptcy court, with lenders expected to provide several hundred million dollars, the sources said. The bankruptcy loan amount is unlikely to significantly exceed $400 million, though it could end up being less, the sources said.

A key unresolved aspect of Sears’ (SHLD) negotiations with lenders involves setting deadlines for Sears (SHLD) to achieve specific business goals while under bankruptcy protections, the sources said.

Sears is planning to seek bankruptcy protection in New York as soon as Sunday night, though a court filing could slip into Monday, the sources added, asking not to be identified because the negotiations are confidential.

Sears (SHLD) did not immediately respond to a request for comment.

Lampert could help finance his bids for the assets by forgiving some of the money Sears (SHLD) owes him, as opposed to putting in more cash, Reuters reported on Thursday.

At its peak in the 1960s, Sears (SHLD) sold everything from toys to auto parts to mail-order homes, and was a key tenant in almost every big mall across the United States. But it has struggled to reinvent itself in the face of online competition from companies such as Amazon.com, as well as other brick-and-mortar retailers, including Walmart Inc .

BY JESSICA DINAPOLI AND MIKE SPECTOR, REUTERS

Thank you for allowing me to reblog your story!

***

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, McLeansboro or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

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Michael Curry named Top Attorney for Marion County by Docketly

I received some wonderul news this morning:

I was named the top attorney in Marion County, Illinois by Docketly!

unnamed

Marion County (Salem) is my second home as it is the courthouse I spend more time in than, perhaps, my home county of Jefferson. Everyone from the bailiffs to the clerks to the judges are professional and courteous.

From my blog on Marion County:

“The courthouse is a neoclassical style and built in 1910, replacing the older courthouses that also stood in the center square of the town. As is typical, it is surrounded by law offices, small restaurants, abstract offices, etc. To the north of the courthouse is a huge a beautiful church.

The courthouse sets on the crossroads to two busy highways – Illinois 37 and US 50.

I have appeared in Marion County probably even more than my “home” county. The courthouse opens into a huge lobby going up to all three floors. Voices echo throughout the walkways surrounding the lobby with courtrooms and offices branching from them.

The three courtrooms range from small, modern and intimate to the typical large, ornate and dark brown wooden courtrooms you expect in older courthouses.

The lobby is dominated by a field piece (cannon) of the US Army Light Artillery that was used at the Battle of Shiloh (04/07/1862) by an unknown division. The cannon was made in St. Louis.

The west wall of the second floor hold a beautiful mural depicting the life and accomplishments of (William Jennings) Bryan.”

***

Docketly was created and developed to efficiently schedule and retain high quality attorneys to attend short procedural hearings throughout the country.  The attorneys (myself included) are FDCPA trained, experienced and held to a high standard for performance. They strive for instant hearing reporting and getting the best results for their clients.

***

About me:

Michael Curry of Curry Law Office in Mount Vernon, Illinois http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

Facebook breach affects millions, or as we say in America: нарушение facebook – миллионы пострадавших

Facebook now says data breach affected 29 million users …

Cyber attackers stole data from 29 million Facebook   accounts using an automated program that moved from one friend to the next, Facebook Inc   announced on Friday, as the social media company said its largest-ever data theft hit fewer than the 50 million profiles it initially reported.

The company said it would message affected users over the coming days to tell them what type of information had been accessed in the attack.

The breach has left users more vulnerable to targeted phishing attacks and could deepen unease about posting to a service whose privacy, moderation and security practices have been called into question by a series of scandals, cybersecurity experts and financial analysts said.

The attackers took profile details such as birth dates, employers, education history, religious preference, types of devices used, pages followed and recent searches and location check-ins from 14 million users.

For the other 15 million users, the breach was restricted to name and contact details. In addition, attackers could see the posts and lists of friends and groups of about 400,000 users.

Lawmakers and investors have grown more concerned that Facebook   is not doing enough to safeguard data.

The company’s shares rose 0.25 percent on Friday as Wall Street rebounded after a six-day losing streak. The Nasdaq composite index gained 2.29 percent.

Facebook   cut the number of affected users from its original estimate after investigators reviewed activity on accounts that may have been affected. Still, cyber security experts warned that attackers could use stolen information in targeted phishing scams.

“The bottom line is that all this data is still out there,” said Corey Milligan, a senior researcher with cyber-security firm Armor Inc.

Facebook Vice President Guy Rosen told reporters that the U.S. Federal Bureau of Investigation has asked the company to limit descriptions of the attackers due to an ongoing inquiry.

Rosen revealed that while the attackers’ intent has not been determined, they did not appear to be motivated by the upcoming U.S. mid-term Congressional election on Nov. 6.

He said the attack affected a “broad” spectrum of users, but declined to break down the number affected by country.

Facebook said it was continuing to investigate whether the attackers took actions beyond stealing data, such as posting from accounts, but had not found additional misuse.

Hackers did not steal personal messages or financial data and did not use their access to accounts to access users’ accounts on other websites, Facebook said.

Rosen said the company would “do everything we can to earn users’ trust.”

The company previously warned that profits would suffer because of breach-related expenses. The vulnerability the hackers exploited existed from July 2017 through late last month, when Facebook noticed an unusual increase in the use of its “view as” feature.

That feature allows users to check privacy settings by glimpsing what their profile looks like to others. But three errors in Facebook’s   software enabled someone accessing “view as” to post and browse from the Facebook   account of the other user.

The attackers used the “view as” flaw with “a small handful” of accounts they controlled to capture data of their Facebook   friends, then used a tool they developed to breach friends of friends and beyond, Rosen said.

Facebook patched the issue last month and asked 90 million users to log back into their accounts, many just as a precaution.

Security experts have said Facebook’s   initial breach disclosure arrived earlier than it likely would have prior to the enactment in May of the European Union’s General Data Protection Regulation, which mandates notification within 72 hours of learning of a compromise.

Facebook’s   lead EU data regulator, the Irish data protection commissioner, last week opened an investigation into the breach. Authorities in other jurisdictions including the U.S. states of Connecticut and New York are also looking into the attack.

Regulators around the world have ongoing inquiries into another matter that came to light in March: How profile details from 87 million Facebook   users were improperly accessed by political data firm Cambridge Analytica.

Japan’s Personal Information Protection Commission (JPPC) has launched an investigation into the social media company, the Nikkei newspaper reported on Friday.

“We are working with local regulators including JPPC about data breach,” the company said in an emailed statement. Facebook   has about 28 million people active in a month in Japan.

(Reporting by Munsif Vengattil in Bengaluru and Paresh Dave in San Francisco; additional reporting by Akanksha Rana and Vibhuti Sharma in Bengaluru, Jim Finkle in New York and Joseph Menn in San Francisco; editing by Jim Finkle, David Gregorio and Leslie Adler)

Thank you for allowing me to reblog your story!

***

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, McLeansboro or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

 

 

A flood of paperwork won’t help your case if it isn’t what the Court ordered you to file.

Affidavits, judicial notice requests, motions …  just pay the damn filing fee…

***

As a bankruptcy attorney in Mount Vernon, IL for over 25 years, I read through and analyze court rulings throughout the country, as they may be a harbinger of things to come in districts in which I practice and can be used to help Debtors get the financial relief they need.

***

Valentine v. JP Morgan Chase Bank Nat’l Ass’n (In re Valentine),

2018 WL 3005839 (5th Cir. Jun. 14, 2018).

The issue presented to the Fifth Circuit was whether the district court’s dismissal of a bankruptcy appeal, for want of prosecution, was an abuse of discretion. The Fifth Circuit affirmed the district court’s decision, holding the court acted within its discretion.

Beginning in 2011, Dawna Valentine filed a number of lawsuits and initiated numerous bankruptcy proceedings to avoid foreclose and eviction from a property in Texas City, Texas. The issue on appeal derived from the relationship between the latest bankruptcy proceeding and an appeal of a judgement for possession. On January 13, 2017, a motion filed by JP Morgan Chase was granted to lift a bankruptcy stay, which Valentine appealed. On March 23rd, the district court entered a notice of deficiency notifying Valentine that certain required fees had not been paid or arranged to be paid and the failure to fix the deficiencies, within fourteen days, could result in dismissal.

On April 3rd, Valentine submitted a letter to the district court requesting the court consolidate the two cases. The letter also stated she could not afford to pay the fee, should be granted in forma pauperis status, and that all the necessary paperwork had already been submitted. Valentine’s in forma pauperis status request was denied pending the completion of the Application to Proceed in District Court Without Prepaying Fees or Costs form. Valentine never submitted the required form but continued to file affidavits, judicial notice requests, and additional motions previously treated as deficient by the district court. On June 21st, the district court denied the consolidation request and warned Valentine both cases would be dismissed for want of prosecution if the deficiencies were not cured by July 7th. Instead of curing the deficiencies, Valentine filed a response restating her position and filed her first notice of appeal to the Fifth Circuit. On July 11th, the case was dismissed and all pending motions were denied as moot.

The Supreme Court has recognized a district court’s “inherent power” to sua sponte dismiss cases to manage its caseload to ensure quick and efficient processing of its cases. The Fifth Circuit held that the district court acted well within its discretion. See Footnote 1

Starting with the March 23rd notice, the district court provided Valentine with two options, pay the required filing fees or submit the form required to continue in forma pauperis. Instead of complying with one of the two options, Valentine chose to file additional motions and judicial notice request that did not cure the deficiencies. The court also gave Valentine numerous warnings of dismissal if the deficiencies continued to go uncured. The record of the court’s continuous warnings and notifications shows that a lesser sanction did not and would not prompt diligent prosecution. Thus, the Fifth Circuit affirmed the dismissal and found no abuse of discretion.

Footnote 1 In the Fifth Circuit, dismissals will be affirmed only if there is a clear record of delay or willful conduct by the plaintiff and the district court has determined that a lesser sanction would not result in diligent prosecution or lesser sanctions were given that proved to be “futile”. In re Wood, 199 F. App’x 328, 332 (5th Circ. 2006). Typically, when a dismissal is affirmed there has been intentional conduct causing delay, the plaintiff personally caused a delay, or a defendant has been harmed by a delay. Id.

***

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, McLeansboro or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

 

 

Riding the Circuit: Clinton County

As a Mount Vernon, Illinois attorney, I travel throughout the state practicing law and meeting with clients about topics ranging from bankruptcy to estate law, from divorce to litigation. In my travels, I enjoy seeing the courthouses in our county seats. Occasionally in my blog I will stop to describe these wonderful buildings and the towns and cities in which they set.

***

From Wikipedia:

Clinton County is a county located in the U.S. state of Illinois. As of the 2010 census, the population was 37,762. Its county seat is Carlyle (population 3,281).

502px-Clinton_County_Illinois_Incorporated_and_Unincorporated_areas_Carlyle_Highlighted.svg

In 1805, prior to the establishment of the county, the territorial government established a post road from its capital (Vincennes, Indiana) to St. Louis, Missouri, passing through the county.[4] In 1808 a wagon road was laid out through what is now Clinton County. The road extended from the Goshen Settlement to the Ohio salt works and crossed the Kaskaskia River at Carlyle.

Clinton County was created on December 27, 1824 out of Washington, Fayette, and Bond Counties. It was named in honor of the seventh Governor of New York, DeWitt Clinton, who helped build the Erie Canal.

Crossing the Kaskaskia became much easier when the bridge now known as the General Dean Suspension Bridge was built in 1859, at a cost of $40,000.  Before the bridge was constructed travelers had been forced to cross by ferry or over a mud bridge. The Illinois General Assembly set aside $20,000 for bridge restoration in 1951 and in 1953 the bridge was named after William F. Dean.

***

In 1811 or 1812, a man named John Hill built one of several “block” houses along the Goshen Trail, located at what is currently 201 Fairfax Street. The houses were reportedly built to serve as a line of defense against Native Americans. John Hill built the first house to be located in what has become Carlyle. He also established what could be considered Carlyle’s first business: a ferry to carry traffic across the Kaskaskia River, including a small shelter at the river which served as a toll house.

In 1816, Charles Slade and two of his brothers reached the John Hill settlement and bought him out. Charles farmed the land, took over the ferry, and within a year partnered with a man named Hubbard to start the first store, a mercantile business located at what is now 301 Fairfax Street. In 1818, a man named Calvin Barnes laid out town lots. On March 10, 1819, a post office was first established under the name Carlisle, Illinois. This spelling might have been a clerical error.

The area was settled after the 1809 creation of the Illinois Territory but before Illinois achieved statehood, six to seven years after John Hill had already built his establishment. Illinois’ first state capitol was located in Kaskaskia, but in 1820 the state decided that it should be moved. Carlyle lost to Vandalia by one vote. In 1824, the State of Illinois created Clinton County by carving it out of Washington, Bond, and Fayette counties. Carlyle was to be the county seat should land be donated for this purpose. Charles Slade donated 20 acres (8.1 ha) of property so that the county seat would be located in Carlyle.

Carlyle was founded in 1818 by Charles W. Slade, father of Joseph “Jack” Slade, who named the town after his grandmother’s family. It may have been founded in 1818 but it was incorporated as a town on 2/10/1837 and incorporated as a city on 4/17/1884. Carlyle celebrated 150 years and used the 1837 date.

Charles Slade pushed hard for Carlyle to become the state capital of Illinois, but lost by one vote to Vandalia in 1819. In 1824, Clinton County was formed, and Carlyle became the county seat in July 1825, both at the initiative of Charles Slade.

***

The Clinton County Courthouse is a government building in Carlyle, the county seat of Clinton County, Illinois, United States. Built in 1999, this new structure is the county’s third courthouse; it replaced a building that had been in use since the 1840s.

The major territorial road from Shawneetown to Kaskaskia was constructed in 1808, and settlers soon began to take advantage of improved transportation by claiming lands near the road. Squatters began arriving in 1809, but the advance of civilization was retarded by the depredations of Indian bands, and only after the end of the War of 1812 could settlement occur on a more widespread basis. Carlyle’s foundation predated the war, consisting of a blockhouse fort to protect local settlers. Clinton County has never experienced a county seat war, as Carlyle has been the seat ever since the county’s establishment in 1824.

Clinton County’s obscure first courthouse was used until the construction of a replacement in 1849. This was a two-story brick structure in the shape of the letter “I”, with a three-bay central projection that included the main entrance and side rooms. Built of brick with corner pilasters, it was covered with a mansard roof supported by brackets under the eaves. Its arches were placed over each of the windows, most of which were single, although the doorways sat under larger double windows, and a triangular dormer window was placed in a small tower over the entrance. This building remained in use until 1997, after which Clinton County functioned without a courthouse for two years. Its replacement, the current structure, was completed in 1999 under the direction of Phillips Swager Associates and Kuhlmann Design Group; a modernist building, it features a concrete first story and two upper stories of brick with concrete belt courses and pilasters on the corners. A central glass section that rises from ground to roof, broken only by the belt course between the second and third stories; aside from this, the windows are plain and rectangular

***

How odd to go into a modern courthouse! Well, by “new” I mean a courthouse built in 1997-9, but it was (and still is) new to me! I appeared in Clinton County many times before I focused exclusively in bankruptcy in 1995. The old courthouse was of typical design with its +-shaped first floor with the courtroom in the western wing at the end of the hallway. Now it is thoroughly modern – impressive high lobby with open balconies on the second and third floors and modern and comfortable courtrooms.

***

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Grayville, West Salem, Centralia or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

Attempts to bypass Madoff’s Ponzi Scheme settlements fail

You can try to convince the court it is a squirrel, but if it quacks like a duck …

***

As a bankruptcy attorney in Mount Vernon, IL for over 25 years, I read through and analyze court rulings throughout the country, as they may be a harbinger of things to come in districts in which I practice and can be used to help Debtors get the financial relief they need.

***

A & G Goldman P’ship v. Picard (In re Bernard L. Madoff Inv. Sec. LLC), 17-51220(a), 2018 U.S. App. LEXIS 17574 (2d Cir., June 27, 2018)

In an appeal arising from the Securities Investor Protection Act (“SIPA”) liquidation of Bernard L. Madoff Investment Securities LLC (“BLMIS”), the entity through which Bernard Madoff (“Madoff”) perpetrated his Ponzi scheme, the Second Circuit affirmed the judgment of the district court enjoining an action brought in Florida because it violated an injunction and automatic stay issued in the SIPA liquidation.

On May 12, 2009, Irving H. Picard, the Trustee in the SIPA liquidation (the “Trustee”) filed an adversary proceeding in the SIPA liquidation against the estate of Jeffry Picower (“Picower”) and several entities associated with Picower (together, the “Picower Parties”)

seeking to recover $6.7 billion in withdrawals Picower made from BLMIS and bringing claims for fraudulent transfer, avoidable preferences, and turnover under both the Bankruptcy Code and New York law. The Trustee alleged that Picower benefited from BLMIS’s Ponzi scheme and either knew or should have known that BLMIS’s trading activity was fraudulent and fictitious, due to the closeness between Picower and Madoff and Picower’s knowledge of BLMIS’s operations, among other reasons.

In January 2011, the Trustee and the Picower Parties reached a settlement, pursuant to which the Picower Parties agreed to transfer over $7.2 billion to the government for distribution to Madoff’s victims, $5 billion of which would be returned directly to the BLMIS estate. The bankruptcy court also issued a permanent injunction (the “Injunction”), which barred future claims against the Picower Parties that were duplicative or derivative of the claims brought by the Trustee.

In August 2014, A & G Goldman Partnership and Pamela Goldman (together, “Goldman”), former BLMIS customers, filed a complaint in the United States District Court for the Southern District of Florida (the “Florida action”), bringing a securities fraud claim under § 20(a) of the Securities Exchange Act of 1934 against the Picower Parties. The Picower Parties and the Trustee sought to enjoin the Florida action, contending that it violated the Injunction. The bankruptcy court in the Southern District of New York agreed and enjoined the Florida action, which the district court affirmed. This was Goldman’s third attempt to hold the Picower Parties liable under § 20(a), and it was the third time that the bankruptcy court enjoined Goldman from proceeding under the Injunction.

The complaint in the Florida action made many of the same allegations as the prior two complaints that had been dismissed (which focused primarily on Picower’s use of his own accounts at BLMIS), but further alleged two categories of conduct by Picower unrelated to his own BLMIS accounts. First, Goldman claimed that Picower what two purported loans to BLMIS totaling more than $200 million to help the Madoff Ponzi scheme avoid discovery and collapse, which the Second Circuit referred to as the “propping-up allegations.” Both loan transactions were completed without formal loan documents and were not disclosed to the Financial Institution Regulatory Authority (“FINRA”). Second, in what the Second Circuit referred to as “counterparty allegations,” Goldman claimed that Picower allowed BLMIS to list him in its fabricated books and records as a counterparty for a large volume of fictitious options trading, alleging that this lent credibility to Madoff’s and BLMIS’s fraudulent representations that they were engaged in a high volume of options trading. Finally, Goldman alleged that Picower knew that the foregoing activity would result in BLMIS’s preparation and filing of false financial reports with FINRA, and that such reports would reach BLMIS customers.

The central question in this appeal was whether the complaint in the Florida action violated the Injunction because, despite labeling their claim as a § 20(a) claim for control person liability, Goldman instead brought a disguised fraudulent transfer claim that was derivative of the Trustee’s fraudulent transfer claims. The Second Circuit began its analysis by outlining the differences between the two types of claims, noting that while a fraudulent transfer is a paradigmatic example of a claim that is “general” to all creditors in a bankruptcy (and is often brought by a trustee for the benefit of all creditors), a claim under § 20(a) is a securities fraud claim that is particularized to the injured party or parties.

The elements of a § 20(a) claim are (1) a primary violation of the securities laws by the controlled person, (2) control of the primary violator by the defendant, and (3) that the defendant was, in some meaningful sense, a culpable participant in the controlled person’s fraud. Goldman claimed that the Picower Parties were liable under § 20(a) because BLMIS was the primary violator of the securities laws, Picower was a control person of BLMIS, and Picower was a direct participant in BLMIS’s fraud.

The Second Circuit was not persuaded by this argument, finding that the substance of the allegations was essentially a derivative, fraudulent transfer claim, in part because Goldman failed to show that Picower had the power to direct the management or policies of BLMIS. Preliminarily, excepting the propping-up and counterparty allegations, the Second Circuit noted that the majority of Goldman’s complaint centered on the withdrawals that Picower made to himself from his accounts at BLMIS, which the Second Circuit noted caused a direct injury to the estate highly emblematic of a fraudulent transfer. The Second Circuit also noted that such allegations demonstrated no control over the “management and policies” of BLMIS.

The Second Circuit was also not persuaded that the propping-up or counterparty allegations demonstrated that Picower controlled BLMIS within the meaning of § 20(a). First, Goldman asserted that Picower’s contributions to the Ponzi scheme allowed the scheme to continue, and that, had he chosen not to assist BLMIS, the scheme would have collapsed earlier than it did. However, the Second Circuit noted that Goldman was only making conclusory allegations that Picower ever leveraged his allegedly important role in the scheme to direct the “management and policies” of BLMIS, holding that it was not reasonable to infer that Picower had that kind of influence merely because he could have caused BLMIS to collapse earlier than it did.

Next, Goldman contended that the propping-up and counterparty allegations demonstrated Picower’s ability to direct the creation and dissemination of false and misleading trading and financial documentation because he knew his participation would result in false information being incorporated into BLMIS’s financial disclosures. Again, the Second Circuit noted that such allegations demonstrated only Picower’s understanding that his participation would result in the dissemination of false information, not that he actually directed that the dissemination of false information occur or otherwise had control of the primary violator of the securities laws.

Ultimately, the Second Circuit held that the “control” allegations in the complaint amounted to nothing more than an attempt to “plead around” the injunction to assert a claim for fraudulent withdrawal of assets from the estate. Because such claim was a derivative claim that was barred by the Injunction, the Second Circuit affirmed the judgment of the district court.

***

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, McLeansboro or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

 

 

Bankruptcy looming for Sears…

Sears, once the largest retailer in the world, is now reportedly facing bankruptcy.

The company, which hasn’t turned a profit since 2010 and is $134 million in debt, recently approached several banks to prepare for bankruptcy filing, CNBC reported Wednesday.

Shares plunged almost 20 percent on the news, and are set to open at a record low.

Sears CEO Eddie Lampert has been pumping funds from his own hedge fund, ESL Investments, into the company for years in an attempt to keep it afloat. Lampert owns a controlling share in Sears, with 31 percent of its stock; his hedge fund owns another 19 percent.

In August, ESL made an offer to buy out Sears’ well-known appliance brand Kenmore and the company’s home improvement business. Cash from those sales would infuse the company with around half a billion dollars, which could stave off bankruptcy for a few more months. Sears sold off another legacy brand, Craftsman, in 2017.

Once a staple of Main Street and malls nationwide, the 125-year-old company has shut down over 100 stores in the last year, with 46 stores set to shutter next month alone. Sears and Kmart, part of Sears Holdings, operated around 1,000 stores in 2017.

Shares have fallen by more than 85 percent in the last year as e-commerce has taken over the brick-and-mortar retail space. Despite pairing up with Amazon in 2017 to sell appliances online, analysts say Sears has not kept pace with change nor made investments in the digital space to the extent that Walmart and Target have done.

***

Thanks to author Lucy Bayly and NBC news for this story.   https://www.nbcnews.com/business/business-news/125-year-old-sears-file-bankruptcy-report-n918446

***

About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, McLeansboro or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

State public records doctrine stands against strong-arm provisions of bankruptcy code

 

Louisiana did something King George III couldn’t – beat the United States!

***

As a bankruptcy attorney in Mount Vernon, IL for over 25 years, I read through and analyze court rulings throughout the country, as they may be a harbinger of things to come in districts in which I practice and can be used to help Debtors get the financial relief they need.

***

Matter of: Goodrich Petroleum Corporation

–F.3d–, 2018 WL 3149141 (5th Cir. June 27, 2018), as revised, June 29, 2018

In this case, the Fifth Circuit examined the interplay between the “strong arm” provision of the bankruptcy code, 11 U.S.C. § 544(a), and the Louisiana Public Records Doctrine, in the context of a mineral lease on which the debtor still owed money pursuant to separate, unrecorded agreements, that were not reflected in the terms of the lease itself.

In 2014, Fallon Family, L.P. (“Fallon Family”), entered into a settlement agreement with Goodrich Petroleum Corporation and Goodrich Petroleum Company, L.L.C. (collectively, “Goodrich”), pursuant to which Fallon Family agreed to ratify a previously disputed mineral lease in favor of Goodrich (the “Lease Ratification”), “and to release its claims against Goodrich in consideration for Goodrich’s paying $650,000 within ten business days of the Settlement Agreement and executing a promissory note (the “Promissory Note”) in the amount of $1,000,000.” Id. at *1. The Lease Ratification itself did not mention either the Settlement Agreement or the Promissory Note, but simply reads that “for the promises and covenants exchanged by the Parties on or near this date, the receipt and sufficiency of which is hereby acknowledged, the Parties agree [to the listed promises and covenants].” Id. at *2. Pursuant to the separate Promissory Note, Goodrich was to pay $1,000,000 in biannual installments of $100,000, with the first installment due on October 15, 2015. Goodrich paid the required $650,000 under the Settlement Agreement as well as the first $100,000 installment, but, failed to pay the next $100,000 installment which was due under the Promissory Note on April 15, 2016. In March 2016, Goodrich filed a Chapter 11 bankruptcy proceeding. In those proceedings and appeals, Fallon Family argued that because Goodrich failed to make payments under the Promissory Note, the Fallon Family had the right to dissolve the Settlement Agreement on grounds of non-payment and divest Goodrich of its interest in the lease. The Fifth Circuit disagreed, holding that based on 11 U.S.C. § 544(a) and the Louisiana Public Records Doctrine, the lease as ratified could not be dissolved for nonpayment because the public record reflected that consideration had been fully paid, and a third party was not placed on notice of the remaining payments.

The Fifth Circuit began its analysis by concluding that Goodrich, as debtor-in-possession, “occupies the shoes of a trustee in every way” under the Bankruptcy Code, and thus its abilities as debtor in possession are defined by 11 U.S.C. § 544(a). This section of the Bankruptcy Code “creates a legal fiction affording a debtor-in-possession the abilities it would have as a bona fide purchaser of the debtor’s interests in immovable property at the time the bankruptcy is filed.” Id. at *3. The abilities of a bona fide purchaser regarding the debtor’s immovable property are defined by state law. In Louisiana, the Louisiana Public Records Doctrine requires certain types of instruments affecting immovable property, including leases, to be filed in the public records in order to be effective against third persons. Thus, because the terms of the Settlement Agreement and Promissory Note were not filed in public records, nor referenced in the ratified lease that was filed in the public records, those terms would not be effective against third persons under Louisiana law. The Fifth Circuit relied on its prior holding in In re Zedda, 103 F.3d at 1202, to conclude that 11 U.S.C. § 544(a)(3) bona fide purchasers are third persons under the Louisiana Public Records Doctrine, and so Goodrich, as a debtor-in-possession, is considered a third person acting as a bona fide purchaser for the purposes of the Louisiana Public Records Doctrines.

After determining that Goodrich qualifies as a third party, the Court turned to the question of whether a party may dissolve an agreement when it will disrupt an interest in immovable property protected by the Louisiana Public Records Doctrine. The Court held that the agreement could not be dissolved. Under longstanding Louisiana legal principles, “[n]either fraud, nor want of consideration, nor secret equities between the parties, who have placed on the public records a title valid upon its face, can be urged against the bona fide purchaser for value, who has acted on the faith of such recorded title.” Id. at *6. Based on its previous holdings in LeBlanc v. Bernard and In re Leeward Operators, LLC, the Court held that even though Goodrich, as debtor, had not paid the Promissory Note, Goodrich, as debtor-in-possession and hypothetical bona fide purchaser of the Lease Ratification under 11 U.S.C. § 544(a)(3), may avoid dissolution because the public record indicates that consideration has been fully paid. Specifically, the Court held that the language of the Lease Ratification was inconsistent with Fallon Family’s claim that consideration is insufficient. The Court held that based on the Lease Ratification language that consideration was “exchanged, […] the receipt and sufficiency of which is hereby acknowledged,” a third person would understand that exchange to be complete once the Lease Ratification was effective, and would have no notice of additional payments due under the Settlement Agreement or Promissory Note.

The Fallon Family’s claim for nonpayment was thus prohibited by Louisiana Civil Code article 3342, which prohibits a party to a recorded instrument from later contradicting the instrument to the prejudice of a third person. Because the recorded instrument indicates full payment, the Court held that Goodrich was shielded from dissolution and could not be divested of the lease. The Court ended its opinion by acknowledging that in bankruptcy, creditors often do not receive the full amount of their claims, but that “this is a feature, not a flaw, of the design of the bankruptcy system,” and is expected and fair within the confines of bankruptcy proceedings.

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About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, McLeansboro or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

 

 

Celebrity Spotlight: Mark Twain

Bankruptcy affects people of every age, creed, sex or ethnicity from every part of the country. Even celebrities both loved and disliked have their financial problems and depend on the bankruptcy laws to get out from under crippling debt.

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From Wikipedia:

Mark Twain (November 30, 1835 – April 21, 1910), real name Samuel Langhorne Clemens, was an American writer, humorist, entrepreneur, publisher, and lecturer. Among his novels are The Adventures of Tom Sawyer (1875) and its sequel, the Adventures of Huckleberry Finn (1885), the latter often called “The Great American Novel”.

Twain was raised in Hannibal, Missouri, which later provided the setting for Tom Sawyer and Huckleberry Finn. He served an apprenticeship with a printer and then worked as a typesetter, contributing articles to the newspaper of his older brother Orion Clemens. He later became a riverboat pilot on the Mississippi River before heading west to join Orion in Nevada. He referred humorously to his lack of success at mining, turning to journalism for the Virginia City Territorial Enterprise. His humorous story, “The Celebrated Jumping Frog of Calaveras County”, was published in 1865, based on a story that he heard at Angels Hotel in Angels Camp, California, where he had spent some time as a miner. The short story brought international attention and was even translated into French. His wit and satire, in prose and in speech, earned praise from critics and peers, and he was a friend to presidents, artists, industrialists, and European royalty.

Twain was born shortly after an appearance of Halley’s Comet, and he predicted that he would “go out with it” as well; he died the day after the comet returned. He was lauded as the “greatest humorist this country has produced”, and William Faulkner called him “the father of American literature”.

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From: https://bankruptcy.uslegal.com/profilesfamousbankruptcies/mark-twain/

Twain filed for bankruptcy in 1894 following failed business. As he did not like his current publisher he decided to publish his work himself.  He put all his money to put up a publishing house along with his nieces’ husband, Charles L. Webster.  Twain also invested large sums in James Paige’s Paige Compositor, an automatic typesetting machine not yet perfected, but promised to be so in a very short period of time.  However, the deal fell through when James Paige failed to deliver his typesetting machine on time.  Twain was forced to file bankruptcy after running out of money to fund the machine and keep his publishing business open.

Twain overcame his financial troubles before long and wrote a string of successful novels such as Pudd’nhead Wilson and Following the Equator. Even though his bankruptcy had relieved him of the legal responsibility he worked hard to ensure that all of his creditors were paid in full.

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About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, McLeansboro or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com

 

 

 

 

Inventive end run to claim $700,000 in stock claims fails

You can try to convince the court it is a squirrel, but if it quacks like a duck …

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As a bankruptcy attorney in Mount Vernon, IL for over 25 years, I read through and analyze court rulings throughout the country, as they may be a harbinger of things to come in districts in which I practice and can be used to help Debtors get the financial relief they need.

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Wallach v. Smith (In re Nanodynamics, Inc.), 17-2410; 2018 WL 2973103 (2d Cir., June 13, 2018)

The Second Circuit affirmed the judgment of the district court affirming a bankruptcy court order dismissing the claim asserted by Mark Wallach (“Wallach”), the chapter 7 trustee of NanoDynamics, Inc. (“NanoDynamics”), for $700,000 plus interest pursuant to a prepetition stock subscription agreement.

Prior to the bankruptcy filing, David and Jennifer Smith (the “Smiths”) executed a stock subscription agreement (the “Agreement”) with NanoDynamics to purchase 2.5 million shares of stock at $1 per share. Under the Agreement, the Smiths would complete payment in stages by March 31, 2009, and NanoDynamics would issue a number of shares corresponding to the money paid within five business days of each receipt of funds. The Smiths failed to complete their payments by the March deadline, but did pay a total of $1.8 million in various amounts between March 9, 2009, and June 8, 2009. All but one of these payments occurred after the March deadline. Rather than terminating the Agreement or suing for breach, NanoDynamics continued to issue shares of stock within five business days of each of the three payments.

When NanoDynamics filed for bankruptcy in July 2009, a balance of $700,000 remained untendered on the Agreement, and NanoDynamics’ petition listed the Agreement as an executory contract. Years later, Wallach alleged that the Smiths were in breach of the Agreement as of the contractual deadline, and were liable for the remaining balance plus interest under section 628(a) of the New York Business Corporation Law (the “BCL”) and section 542 of the Bankruptcy Code. The Smiths denied liability and asserted a number of counterclaims and affirmative defenses. The bankruptcy court ultimately dismissed the claims because section 365(c)(2) of the Bankruptcy Code expressly prohibits a trustee from assuming and collecting upon a contract for the issuance of stock.

On appeal in the Second Circuit, Wallach sought the remaining balance of $700,000 plus interest as a matter of contract law, notwithstanding that performance on the contract by NanoDynamics was no longer possible. Wallach asserted that the common law rule that a trustee in bankruptcy may bring and maintain an action based on a stock subscription agreement even if the corporation is bankrupt and cannot issue stock was codified in the BCL, which provides that a “subscriber for shares of a corporation shall be under no obligation to the corporation for payment for such shares other than the obligation to pay the unpaid portion of his subscription.” BCL § 628.

The Second Circuit found such authority unavailing, noting that section 365(c)(2) of Bankruptcy Code provides in plain terms that a “trustee may not assume or assign any executory contract … if such contract is a contract … to issue a security of the debtor.” 11 U.S.C. § 365(c)(2). The Second Circuit noted that section 365 would therefore specifically supersede any rule that would otherwise permit a trustee in bankruptcy to assume an executory contract for the sale of stock.

Wallach argued in the alternative that the proscription of section 365(c)(2) of the Bankruptcy Code did not apply to this case because the Agreement was non-executory, and the Bankruptcy Code only prevents the assumption of an executory contract. After noting that there are multiple tests for determining whether an agreement is an “executory contract” within the meaning of section 365(c) of the Bankruptcy Code, including the so-called “Countryman Test” (defining an executory contract as a contract under which the obligation of both the debtor and the counterparty are so far unperformed that the failure of either to complete performance would constitute a material breach excusing the performance of the other) and a less stringent Second Circuit test described as the “some performance due” test (defining an executory contract as one on which performance remains due to some extent on both sides).

Here, the Second Circuit held that the Agreement was an executory contract under either test, because (1) it was undisputed that neither side tendered complete performance on the Agreement; and (2) $700,000 remained unpaid and 700,000 shares remained unissued when NanoDynamics filed for bankruptcy. The Second Circuit was also unpersuaded by Wallach’s argument that the Agreement was non-executory because NanoDynamics could have rescinded the contract immediately following the payment deadline, noting that regardless of whether or not rescission was possible, NanoDynamics did not so rescind, accepting payments and issuing stock as though the Agreement were in full force and effect. Accordingly, the Second Circuit affirmed the dismissal of Wallach’s claims.

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About the blogger:

Michael Curry of Curry Law Office in Mount Vernon, Illinois (http://michaelcurrylawoffice.com/) has helped thousands of individuals, family and small businesses in southern Illinois find protection under the Bankruptcy Code for almost twenty-five years. He is also available to help individuals and families with their estate planning (wills, power-of-attorney) and real estate and other sales transactions.

He is also the author of books on finance and bankruptcy available on Kindle through Amazon!

Whether you live in Mount Vernon, Salem, Centralia, McLeansboro or anywhere in Southern Illinois call Curry Law Office today at (618) 246-0993 and Finally Be Financially Free!

You can also access my website at http://www.mtvernonbankruptcylawyer.com