Bankruptcy Lawyers Las Vegas

Jaaskelainen v. Wells Fargo Bank, N.A. (In re Jaaskelainen), 391 B.R. 627,645-46 (Bankr. D. Mass. 2008) (Hillman) (Debtors in bankruptcy have no obligation to tender funds received at defective mortgage closing as condition of rescission when debtors established violations of Massachusetts Consumer Credit Cost Disclosure Act. Debtors did not receive adequate notice of right of rescission, did not receive required number of copies of right of rescission, and lender failed to establish that its violation of notice requirements was result of bona fide error. As a result of rescission by debtors, mortgagee only holds unsecured claim. Although Massachusetts statute and Truth-in-Lending Act require as condition of rescission that borrower tender money loaned back to creditor, “‘Bankruptcy . . . relieves the debtor from his obligation to pay the creditor upon rescission. Conditioning rescission upon the debtor’s payment therefore imposes an obligation from which the debtor has been legally freed. Unlike the situation absent bankruptcy, there is a legitimate, legal impediment to the debtor’s reciprocal performance. It would be palpably unfair to deny the relief to which a consumer is entitled under TIL[A] because that consumer has also availed himself of bankruptcy relief. To do so would require that the consumer choose between bankruptcy and TIL[A], something neither form of statutory relief contemplates.’” Although debtors had no actual damages, they are entitled to statutory damages under Massachusetts statute of $1,000 each.).

June 25, 2008

American LaFrance Sues Daimler Trucks

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Bankrupt fire truck maker American LaFrance LLC (AFL) has sued its former owner, Daimler Trucks North America LLC, alleging that Daimler breached agreements it entered into when it sold off American LaFrance’s assets, Bankruptcy Law360 reported yesterday. ALF’s complaint, filed June 19 in the U.S. Bankruptcy Court for the District of Delaware, also asks the court to disallow a claim of about $12 million filed by Daimler Trucks, formerly known as Freightliner LLC. Freightliner owned AFL from 1995 to 2005. According to the complaint, when Freightliner sold its ALF assets so that ALF could operate independently, it entered into two agreements: an asset purchase agreement and a transition services agreement in which it pledged to help ALF with the transition. During the transition, Freightliner attempted to undermine ALF by failing to disclose necessary information, interfering with ALF’s customer relationships and overcharging ALF for services, according to the complaint.

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Whitehall Jewelers Files for Chapter 11

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Whitehall Jewelers Holdings Inc. filed for bankruptcy yesterday, becoming the latest jewelry retailer to seek court protection as the sagging U.S. economy cuts into consumers’ discretionary spending, Reuters reported. The company, which operates stores under such names as Whitehall and Lundstrom, is seeking to sell itself by July 18, according to an affidavit from its CFO. Whitehall said that it operates 373 retail stores in 39 U.S. states, and employs 2,852 people. The company said that its store base includes 78 locations it bought in April from Friedman’s Inc, a jewelry retailer that sought bankruptcy protection earlier this year, and which later began liquidating.

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June 21, 2008

U.S. Trustee Objects to Linens ‘N Things Severance Plan

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Acting U.S. Trustee Roberta A. DeAngelis objected to Linens ‘n Things Inc.’s motion for approval of a severance plan for certain noninsider store-level employees, arguing that it lacks adequate details and that the debtors have not acknowledged relevant legal precedent on severance pay, Bankruptcy Law360 reported yesterday. The debtors did not attach a copy of the severance plan to the motion, or include information about the identity of the specific individuals the plan would cover, the participants’ respective salaries, the length of their tenure with the company, or whether the participants are covered under any other bonus programs, the trustee contends. In addition to failing to provide enough information to properly evaluate the plan, the objection said that the debtors aren’t acknowledging the new limitations imposed by the Bankruptcy Code, or controlling Third Circuit law that bars or limits the debtors from paying employees severance as an administrative expense based on a length-of-service calculation, where the work that forms the basis of the payment occurred prepetition.

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May 13, 2008

Fremont General Says Bankruptcy Filing Is Likely

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Fremont General Corp., the former subprime lending giant that regulators forced out of the mortgage business last year, said Friday that it probably would seek bankruptcy protection to hasten its liquidation of assets, the Los Angeles Times reported on Saturday. Fremont General said that its board would wait to make the bankruptcy filing until regulators approved the sale of its retail business to commercial lender CapitalSource Inc. of Chevy Chase, Md. The retail operation includes 22 Fremont Investment & Loan offices in California and $5.6 billion in deposits. When the deal was announced last month, CapitalSource officials said that the branches would stay open with many of the same employees and no changes in interest rates or other terms of existing certificates of deposit or other accounts.

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May 10, 2008

GM to Pay Up to $200 Million to Help End Axle Strike

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General Motors Corp., the biggest U.S. automaker, agreed to provide as much as $200 million to help American Axle & Manufacturing Holdings Inc. end a two-month strike that has idled all or part of 33 GM plants, Bloomberg News reported yesterday. The aid will be used for costs such as early retirements and buyouts of union workers at the supplier, GM said yesterday in a U.S. regulatory filing. The United Auto Workers walkout at American Axle, GM’s largest axle supplier, cut the automaker’s production by 230,000 vehicles through April and cost $800 million in the first quarter, GM said. The strike began Feb. 26.

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May 8, 2008

Tropicana Holders Seek Court-Appointed Trustee

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Bondholders who are owed hundreds of millions of dollars by Tropicana Entertainment LLC asked a judge to put the casino operator under the control of a court-appointed administrator, saying the company’s leader steered it into financial distress, the Wall Street Journal reported today. The bondholders asked Bankruptcy Judge Kevin Carey to put the company under the control of a chapter 11 trustee, saying that Tropicana Entertainment CEO William J. Yung shouldn’t be allowed “unfettered control over a significant chapter 11 proceeding involving a multi-jurisdictional, highly regulated gaming enterprise with over $2.5 billion of creditor claims.” The bondholders account for more than $700 million of Tropicana’s debt. The group includes Citigroup Global Markets, Harbinger Capital Partners, Highland Capital Management, Lehman Brothers Holdings Inc. and a Merrill Lynch & Co. unit.

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April 24, 2008

SEC Rebuffs Lawmakers over Decision to Drop Bear Stearns Inquiry

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Securities regulators refused a congressional request to disclose why they dropped an investigation into whether Bear Stearns Cos. harmed investors by improperly valuing complex debt securities, the Wall Street Journal reported today. The Securities and Exchange Commission cited confidentiality in its decision involving the late-stage probe of the Wall Street firm. At issue is a move by the SEC to abort an enforcement case into activities at Bear Stearns several months before the firm imploded in March. The firm has agreed to be acquired for a fire-sale price by J.P. Morgan Chase & Co.

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