Gibson Guitars files for bankruptcy

After over 100 years of being in the mucil instrument business, famed Gibson Guitars has filed fo bankruptcy.

The company filed for bankruptcy protection in Delaware, an action many have for some time. The company owes as much as $500 million and that debt has burdened it over the years. According to Bloomberg News, a $135 million loan should help keep Gibson in business after its debt is restructured. The report also states that several dozen companies were contacted about a purchase, but no deal was finalized in time.

Gibson has been in the music business since 1894, and throughout that time has sold millions of guitars to some of the greatest artists who have ever recorded music, like Elvis Presley. The company still sells over 150,000 units every year, and through the decades has diversified and moved into other areas of the music industry. The guitar giant also owns a dozen other brands like Epiphone, Steinberger and Kramer. it sells audio equipment such as amplifiers, tuners an headphones

.According to a number of experts, its this diversification is one of the reasons Gibson is in financial trouble is because it tried to expand and diversify and make the company more of a lifestyle brand, instead of just a guitar seller.

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L.I. based Vitamin World to file for Bankruptcy

Long Island, N.Y.-based seller of vitamins and nutritional supplements, Vitamin World plans to file Chapter 11 bankruptcy this month with the hope of getting out of what they say are expensive leases for their stores.

The vitamin and nutrition supplement seller has 345 stores around the country. Madden told Newsday  the company is filing bankruptcy, to renegotiate “problematic lease agreements.”

In his statement Madden said

“While a handful of landlords cooperated, the vast majority have not,” he said in the statement. “At this time we have no other option than to restructure the company’s real estate portfolio by filing for Chapter 11 protection.”

Now the question is, if you as an individual, file for bankruptcy can you get out of paying back rent or prevent eviction?

Chapter 11 is designed for businesses. Individuals can also use chapter 11 bankruptcies but it is far more complex and expensive to pursue. There would also be administrative burdens. The ultimate purpose is to allow you to reorganize yourself, giving you an opportunity to restructure debt and get out from under certain burdensome leases and contracts.

Residential renters filing personal bankruptcy most often file under either Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. Chapter 7 is a liquidation bankruptcy in which the bankruptcy trustee sells the debtor’s assets, with a few exceptions, and uses the money to pay off creditors. Chapter 7 bankruptcy is only available to individuals with low income and few assets.

Chapter 13 is also known as the wage owner plan. This helps qualified individuals who have a regular income and who are willing to repay their creditors but are in financial difficulty. The advantage of chapter 13 is that it protects you from the collection efforts of your creditors and permits you to keep your property while giving you time to catch up. In Chapter 13, you will have to work out a periodic payment plan that all your creditors can agree on to pay off their debts.

Chapter 7 is the most common and easiest type of bankruptcy usually for individual consumer debtor. Under this type of Bankruptcy, you can get relieved of your debts while keeping certain assets. This can be done only if you have an income lower than a certain limit.

Back rent is treated like any other debt like credit cards, medical bills, etc. and can and must be included in bankruptcy. It is unsecured debt. If you have back rent payments and are facing eviction, bankruptcy will delay the eviction proceeding, but only for a for a short period of time. An automatic stay goes into effect the minute you file for bankruptcy.

Unfortunately, when the bankruptcy is over, the landlord can move forward with eviction. On the other hand, if you can’t afford the rent, you can break the lease under bankruptcy, but be careful of doing that  It could hinder your ability to sign new leases in the future.

This post is just a thumbnail overview and shouldn’t be taken a legal advice. If you plan to file for bankruptcy to help with eviction, contact an attorney

 

 

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Perfumania files for Chapter 11 bankruptcy

The Fragrance company Perfumania has declared Chapter 11 bankruptcy and will shutter 65 of its 226 stores nationwide. The company, known for selling high-end perfumes in malls across the country has said it will focus on online sales and high performing stores.

CEO Michael Katz said in a prepared statement,

The company has been working diligently to amend its business model, reduce its cost structure, improve supply chain efficiency, optimize marketing, reduce expenses and improve operating results long-term,”The company hopes bankruptcy will allow it to renegotiate its leases and focus on high-performing stores “to establish a foundation for sustainable long-term growth.

The company which is based in Bellport, Long Island said that no stores or employees on Long Island will be affected by the move.  Perfumania fell to the same pressures other retailers have faced in the last few years with declining mall traffic and consumers turning to online purchasing.

Under the bankruptcy plan, Katz said the company has a commitment for $84 million in financing from Wells Fargo and the company will cancel its current equity and the company plans to go private after bankruptcy and the stock will be canceled. But Katz assured employees and customers:

Our employees can be assured that during this time and beyond they will continue to receive their salaries and benefits. Our retail customers can continue to purchase the brands they love at our stores and online, and our wholesale and retail customers will not see any interruption in the flow of merchandise.”

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SAFE AT HOME – The Los Angeles Dodgers Bankruptcy

The Dodges filed Chapter 11 Bankruptcy in Federal Court last month. How can a Team worth over $500 Million Dollars go broke?

Fact is that Dodgers are not broke. They have a billion dollar contract with the Fox Network pending the approval of Major League Baseball.

Bud Selig, the commissioner, refused to ratify the Dodgers Fox contract because Mr. Selig, apparently, does not like the way Frank McCourt is operating the Dodgers baseball team.

According to news reports, Frank McCourt has an ultra extravagant lifestyle and spends millions of dollars on swimming pools and houses.

Mr. Selig claims that Mr. McCourt does not follow the rules of MLB and he is draining money generated from the Dodgers and converting those funds for his personal use.

The key legal question is: what happens when private contract agreements – between MLB and an individual owner—conflict with federal bankruptcy rules? The answer is Federal bankruptcy rules trump MLB.

In the end, the Bankruptcy Court will most likely allow the Dodgers to enter into the contract with Fox News, and that influx of cash will allow the Dodgers to exit Chapter 11 Bankruptcy, with the federal judge declaring “Play Ball”.

For more information email me at j.weinstein@jlwlawoffices.com or call me at 212-693-3737.

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