Florida Bankruptcy Attorney Blog

A company in Orlando, Mirabilis Ventures, Inc., pulled off one of the biggest payroll tax frauds in United States history. As a result of the scheme the company was forced to file bankruptcy in 2008. The battle is now being fought in federal court as to who will be recovering the lost money resulting from these schemes of CEO Frank Amodeo. Amodeo pleaded guilty to fraud and was sentenced to 22 years in prison. The case appears to be an interesting combination of federal criminal and bankruptcy law.

Prosecutors and the IRS have been attempting to get the company itself (as opposed to the CEO) to plead guilty to tax fraud, and these ages are fighting the receiver/trustee for this admission in an ultimate fight over who will be controlling the recovery of the fraudulently conveyed funds. Generally this would be an issue for bankruptcy courts to decide but there is a valid argument for the other agencies to have charge of the restitution aspects of this case. A careful analysis of the caselaw and arguments used on both sides is more than can be discussed here, but would prove interesting.

Retail establishments that specialize in video rentals and sales, as well as CD sales and rentals continue to be beat hard by a combination of recession and technological advancement. As more and more people in every generation continue to grow more savvy about use of the personal computer as well as downloading software and video products, video retail establishments like Blockbuster, Hollywood Video, etc... continue to go out of business or flirt with Chapter 11/7 Bankruptcy. Blockbuster's General Counsel recently announced that the company could not rule out the possibility of such a filing. Electronic and video products, unlike clothing and furniture, are often convenient to the consumer to purchase online. People often need to inspect the clothing and furniture they purchase. Not so for video programs and software. There is nothing in the nature of video to inspect before purchase, as the very experience of watching the video is what is purchased. People obtain information on whether the purchase is worthwhile through critics or other third parties. Clearly, the video industry is probably not a good place to be investing your money, and bankruptcy or corporate dissolution may become prominent in this area for some time to come. Prevailing economic conditions do not help either.

Many have been asking how likely it is that British Petroleum will declare bankruptcy. As with individuals, often corporations have other options to exhaust before filing in Chapter 11. Large oil companies like British Petroleum often have an enormous amount of assets, which is of course also reflected in their market capitalization. BP could sell its debt, could reduce capital expenditures, it could curtail its 10 billion a year in dividends, or tap into its tangible assets. As a result, Chapter 11 is not likely for a company as wealthy and established as BP. Chapter 7, which is straight liquidation of its assets, is likely not even on the radar screen. Contrast this with GM where the balance sheet and available resources were far more scarce, making a reorganization of that company necessary.

Bankruptcy is hardly ever an option for most people or entities until liabilities vastly outweight assets, because assets can be used to develop systems, programs, or opportunities for reorganization prior to the additional legal helps that are available. Especially with large corporations, lack of confidence may also result from the filing of the petition itself.

The judge of the General Motors bankruptcy noted today that the officers of the company were now spending more time on focusing on consumer needs, rather than in bankruptcy efforts, and efforts at Chapter 11 reorganization. This likely represents a step forward for the financially strapped and strained company. Meanwhile, General Motors still has significant reorganization to complete, including (unfortunately) possibly removing up to an additional ten thousand employees from payroll in order to make the company viable. Consumers are giving the new product lines a positive response.

Economic indicators appear to be mixed at this time, and the direction of the economy remains uncertain. In the midst of this uncertainty, Chrysler appears to be about to declare bankruptcy. It will be interesting to see what plan Chrysler will file and how they will reorganize to remain a viable concern. This is especially interesting considering that, last year, with the "bail out" extravaganza, bankruptcy was deplored as the least viable option by many. Perhaps now it is realized by more and more people to be the only acceptable way to handle Chrysler's difficulties.

There are various indications that the commercial real estate market may be about to collapse, similar to what was seen in the residential and consumer housing markets. If this occurs we could probably expect a slew of Chapter 11 filings and other mayhem to the economy in this sector. So far though, things appear to be holding somewhat steady.

New Mortgage Crisis Looms

A new crisis looms, but hopefully this won't impact things in January, right as consumers are about to get slamed with an apparent round of consumer credit line cuts by the lenders.

As the continuing recent economic decline begins to move out of the financial sector and into the other main sectors of the economy, the question has begun to be raised whether we should "bail out" the Big Three automakers or let them fall into Chapter 11. The traditional remedy in these cases is certainly the Chapter 11, which was designed for situations like this. However, recent policy arguments have been raised that without government intervention into these broad sectors the entire economy will collapse. But what will happen if the Government's credit rating drops below AAA, and the United States itself begins to suffer from the economic malaise? One has to wonder how this would restore confidence in the economy as a whole. Redistributing the problem may have little to any impact. Bankruptcy may in the end prove the most viable solution. It would also force the domestic car manufacturers to improve their product line.

Bankruptcy reporting is now proven to be a very risky business as Google made a blunder stating United Airlines was declaring Chapter 11. Apparently it was a recycled report from years ago, and was for some reason published in a local regional newspaper- the Florida Sun Sentinel. The blunder is discussed by The Los Angeles Times in this article- United Shares Plunge 76% on Bogus Bankruptcy Report. I am unsure why this Florida newspaper was reporting on the bankruptcy, but Google carried the story until it was flagged for removal.

This also demonstrates the power online search engines possess as they affect the lives of everyday people and even now large companies, whether or not they are really filing for Chapter 11.