Category Archives: Bankruptcy

A pedestrian walks past a closed Brooks Brothers store, following the outbreak of coronavirus disease (COVID-19) in the Manhattan borough of New York City, New York, U.S., July 23, 2020. REUTERS/Carlo Allegri

The billionaire Italian family that until recently owned Brooks Brothers has been accused in a lawsuit of driving the iconic apparel retailer into bankruptcy instead of selling it, to avoid paying millions of dollars to an investor.

In a complaint on Monday, Hong Kong clothing maker Tal Apparel said Claudio Del Vecchio and his son Matteo pressured it to invest $100 million in Brooks Brothers in 2016, and promised it would be "made whole" if they later sold the retailer for less than $652 million.

The complaint said the Del Vecchios lined up "several" bids for Brooks Brothers in 2019, before the COVID-19 pandemic, but did not pursue them because they would owe Tal money, and even asked if Tal would take a "haircut" on any payment.

Instead, the family put Brooks Brothers into Chapter 11 last July, making Tal's original investment "nearly worthless," according to the complaint in Manhattan federal court.

The defendants include the Del Vecchios and Delfin SARL, a holding company for family investments including eye wear giant EssilorLuxottica (ESLX.PA) and Mediobanca (MDBI.MI). Claudio Del Vecchio bought Brooks Brothers in 2001.

A person close to the Del Vecchios said: "The allegations in the complaint are false and we expect the court will dismiss the case." Delfin, which owns a small Brooks Brothers stake, declined to comment.

Tal is seeking $100 million of damages, less sums received from Brooks Brothers' bankruptcy estate.

The 70-year-old family-run firm said it makes one in six dress shirts sold in the United States, and Brooks Brothers had been its largest customer.

Forbes magazine said on Tuesday the Del Vecchio family is worth $27.9 billion.

Founded in 1818, Brooks Brothers is the oldest continually operating U.S. apparel brand, known for its suits, preppy clothing, and dressing 40 U.S. presidents including Abraham Lincoln, John F. Kennedy and Barack Obama.

A venture backed by licensing company Authentic Brands Group and mall owner Simon Property Group (SPG.N) acquired Brooks Brothers in bankruptcy for $325 million.

The case is Castle Apparel Ltd et al v Del Vecchio et al, U.S. District Court, Southern District of New York, No. 21-04406.

Our Standards: The Thomson Reuters Trust Principles.

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Brooks Brothers' billionaire former owners are sued over its bankruptcy - Reuters

On 14 May 2021, the Government of HKSAR and the Supreme People's Court signed the "Record of Meeting of the Supreme People's Court and the Government of the Hong Kong Special Administrative Region on Mutual Recognition of and Assistance to Bankruptcy (Insolvency) Proceedings between the Courts of the Mainland and of the Hong Kong Special Administrative Region" which effects a cooperation mechanism for Hong Kong liquidators and Mainland administrators to seek mutual recognition and assistance. This is no doubt a significant development in furthering judicial cooperation on cross-border insolvency matters between the jurisdictions.

The New Cooperation Mechanism (the "New Mechanism")

Pursuant to "The Supreme People's Court's Opinion on Taking Forward a Pilot Measure in relation to the Recognition of and Assistance to Insolvency Proceedings in the Hong Kong Special Administrative Region" (the "Opinion") a Hong Kong liquidator or provisional liquidator may apply to the Mainland Courts for recognition and assistance. Likewise, Mainland bankruptcy administrators may do the same in reverse. Personal bankruptcy is not included in the New Mechanism.

Key highlights of the Opinion are:-

1. "Hong Kong Insolvency Proceedings" covers (i) compulsory winding up; (ii) creditors' voluntary winding up; and (iii) schemes of arrangement: provided that Hong Kong is the centre of main interests of the wound-up company/debtor (collectively referred to as "Debtor") for at least 6 months continuously before the making of the application.

2. "Centre of main interests" means the place of incorporation of the Debtor, but the Supreme People's Court will consider other factors in making the final determination, including: (i) the place of principal office; (ii) the principal place of business; and (iii) the place of principal assets of the Debtor.

3. Both liquidators and provisional liquidators in Hong Kong Insolvency Proceedings may apply to the Mainland Courts for recognition and assistance.

4. The Supreme People's Court has initially designated Shanghai, Xiamen and Shenzhen as the pilot areas. It is expected that the cooperation mechanism will gradually extend beyond these areas.

5. Applications can be made under the New Mechanism where the Debtor's principal assets, place of business or representative office is situated in a pilot area.

6. Procedures for making the recognition application are to be made in accordance with the rules of the relevant pilot area.

7. After Mainland recognition of the Hong Kong Insolvency Proceedings (i) payment of debts made by the Debtor to individual creditors will be invalid; (ii) civil proceedings or arbitration involving the Debtor that have not yet concluded will be suspended; and (iii) Mainland measures for preserving the Debtor's property will be lifted and any execution suspended (in other words a creditor moratorium).

8. An application for recognition and assistance may be refused by the Mainland Court on any one of the following grounds:

a. Hong Kong is not the centre of main interests of the Debtor or it has been situated in Hong Kong for less than 6 months continuously before the making of the application;

b. Article 2 of the Enterprise Bankruptcy Law of the People's Republic of China is not satisfied. Article 2 sets out the circumstances under which a Debtor can make a bankruptcy application to the People's Court, namely where the Debtor cannot pay off his debts due and his assets are not enough for paying off all the debts, or he apparently lacks the ability to pay off his debts;

c. Mainland creditors are unfairly treated;

d. There is fraud (presumably committed by the Debtor although this is not expressly set out in the Opinion); or

e. Other circumstance where the Supreme People's Court considers that recognition or assistance should not be rendered (e.g. recognition or assistance may "violate the basic principles of the law of the Mainland or offend public order or good morals").

Details of the New Mechanism, including documents required for making an application and the powers of recognised Hong Kong liquidators and Mainland administrators are set out in the Opinion and a Practical Guide issued by the Government of the HKSAR.

Significance of the New Mechanism

There can be no doubt that the New Mechanism marks an important development in the Hong Kong R&I market.

It has long been recognised that it would be desirable to introduce a formal insolvency recognition regime between Hong Kong and the Mainland given the volume and interconnected nature of their economies. In the absence of a formal mechanism, Justice Harris of the Hong Kong High Court has adopted, developed and relied on a number of core common law principles to recognise and grant assistance to foreign liquidators. More recently His Honour recognised bankruptcy administrator appointments made by the Mainland Courts:

Click here to see our Client Alert on "First recognition order granted by the Hong Kong Court to PRC insolvency practitioners"

For Mainland companies outside the pilot areas, the Hong Kong Court will continue to adopt the above jurisprudence when considering a recognition application.

The New Mechanism is precisely what the Hong Kong R&I market has been waiting for over many years. The reach of Hong Kong liquidators will now extend across the border into the Mainland: a right not afforded to overseas appointment takers and thereby entrenching Hong Kong as the primary restructuring hub for Greater China.

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A crucial step - mutual recognition and assistance to insolvency/ bankruptcy proceedings between Hong Kong and the mainland - Lexology

Im 65 years old, self-employed in pet care so not big earnings. I earned $36,000 before COVID. I really have zero in savings. No 401(k). I rent my apartment and lease a car.

The Bad: I went through a bankruptcy in 2011 due to my husband leaving me. That is set to fall off my record in July this year. My credit score now is around 726 and 730. I think it will go up after the bankruptcy clears.

But now what? My Social Security will probably be about $1,100-$1,200 a month at Full Retirement Age. This is impossible to live on in this country.

I was an actor for many years, and now take care of doggies (which I love) but its low pay. In other words, my skill set is paltry in light of todays economies and technologies.

The Ugly: I tried to finish college and finally get my degree about 15 years ago, but the educational counselor was so negative about my chances that it was discouraging and depressing, so I let go of that intention. Now I think, sadly, she was supposed to encourage and guide me.

The Good: This year, I finally paid off $20,000 in credit card debt that had been weighing me down, by doing 0% interest balance transfers for the past few years. So I now have very little credit card debt which I pay off in full every month to avoid Interest charges.

Any helpful suggestions on how to lift myself into a better financial situation?

Thank you.

JV

See: Im a 74-year-old widower in a five-bedroom house just making monthly payments and no retirement nest egg should I sell or rent out my home?

Dear JV,

Please dont be too hard on yourself. Lets start with the fact that youve gotten your debt in order that is a huge accomplishment.

Youre right to question how retirement could possibly work given your situation, but if youre flexible with when and how youll retire, there is absolutely hope in achieving a better financial situation.

I say flexible because if youre willing to work a while longer and maybe take on some side gigs or learn a few new skills, you can bring in more income as well as let your Social Security benefits build up a bit more before you claim.

It would be great if she could continue to work until age 70 to maximize her Social Security benefits, said Stephanie Trexler, chief executive officer and a certified financial planner at Golden Goose Wealth Planning. You mention your pay isnt substantial now, and Im sure the pandemic didnt help, but theres nothing wrong with following your passion of pet care and earning a little extra on the side. This could be by dog walking or pet sitting, or teaching obedience classes (especially since many people who adopted pups during the pandemic may need a little help training their furry loved ones when they go back to an office). You could even use an unrelated skill like sewing to make bandanas for puppies you then sell on Etsy or local craft shows, Trexler suggested. Ill dive into this a bit further later on.

First, lets briefly discuss what needs to happen. There are two primary ways for you to improve your financial situation, said Cody Garrett, a certified financial planner: increasing your income and decreasing your expenses. Youve gotten your debt under control, and once that is completely paid off, you will likely have more cash flow available to you.

Another exercise is to look closely at where your money is going every month. If youve already curbed much of your discretionary spending, thats fine, and if you still treat yourself to a few experiences or things you enjoy (take-out coffee, a dinner out or maybe a new shirt at your favorite store, for example), thats perfectly OK. This exercise should not be about stripping yourself of what you enjoy, but instead ensuring youre spending money on what you value and balancing present-day spending with saving for the future.

Try to have at least three months worth of expenses saved to provide a cushion, said Leyla Morgillo, a certified financial planner at Madison Financial Planning Group. Try to find a local office of aging to see if there are any assistance programs you qualify for as well, she suggested. Offices of Aging can point you in the right direction for help on health, employment, housing, food and meals and so on. A simple Google search of office of aging with the name of your state or county could provide you with these results.

Now lets talk about Social Security. Delaying Social Security is a surefire way to see more money in those monthly paychecks. The longer you wait, the higher the benefit paycheck roughly 8% each year you delay up until age 70.

If you need to claim Social Security as soon as possible something many Americans must do then thats what you need to do. So many people ask themselves if and when they should begin receiving their Social Security benefits, and there are so many factors to consider, such as financial need, age, life expectancy and so on. The greatest question in your particular situation, however, may be this: Can I meet my lifestyle expenses right now without Social Security?

If the answer is yes, consider holding off. It doesnt have to be until age 70 (even waiting a year or two will gift you a slightly higher benefit). If the answer is yes, but only temporarily, try to at least wait until your Full Retirement Age, which would be around 66 years old (assuming you were born in 1955 or 1956).

Before you claim, reach out to the Social Security Administration, which can calculate your benefits and provide possible alternatives. For example, check to see if youre eligible to claim spousal benefits based on your ex-husband. These rules can seem overly complicated and confusing, but if you two were married for more than 10 years, you might be able to receive benefits based on his record, Garrett said. If so, and you applied for your own benefit, youd get yours plus an additional amount if your ex-husbands benefits are higher.

If your ex-husband was born before Jan. 2, 1954 and has already reached his own Full Retirement Age, you could instead choose to receive just his benefit while still delaying your own, Garrett added. This is where the Social Security Administration can help you make sense of your options.

Also see: Confused about Social Security including spousal benefits, claiming strategies and how death and divorce affect your monthly income?

Keep in mind, these are all very introductory steps for you to take, but they could help you improve your current situation.

Theres just one more thing Id like to add before I end this letter, and it has to do with what you said about your experience pursuing additional education. Im sorry to hear what the educational counselor said to you, and you became discouraged. But just because that one person was negative doesnt mean you have to give up your goals entirely to pursue an education or extra skill sets.

If college classes are too expensive right now, there are other ways to pick up skills. YouTube is an excellent resource for learning. There are so many wonderful, free tutorials to pick up a few lessons. Take, for example, Trexlers suggestion to sew puppy bandanas. If you didnt know how to sew, you could likely figure it out after following a reputable, helpful guide on YouTube.

There are also a plethora of websites that offer free classes. AARP curated a list of sites that offer free content from a wide range of sources, including top-notch universities. If youre willing to work on these classes during your free time, that would open up a ton of opportunities to make some extra money at your current job or in the form of a side hustle.

Do not be discouraged about not having a new skill set, Garrett said. Discover ways to translate your current strengths that made you a talented actor and a responsible dog sitter into a new job or career opportunities.

Readers: Do you have suggestions for JV? Add them in the comments below.

Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

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Retirement? How? Im 65, have nothing saved and am coming out of bankruptcy. - MarketWatch

When shares of Hertz Global Holdings Inc. soared after the company filed for bankruptcy a year ago, finance professionals reacted with a mix of confusion and scorn. Stockholders routinely get wiped out in bankruptcies, so who would put money into a stock like that?

Zack Konovitch would. The 33-year-old real-estate broker from Brooklyn, N.Y., said he invested in Hertz near its low point in 2020.

A year later, small investors who bet on the company in its distress are getting the last laugh. The century-old rental-car giant is poised to mint big gains for loyalists on its way out of bankruptcy. Its a result that seemed unfathomable when its business unraveled early in the Covid-19 pandemic and another marker of an upside-down year in markets.

Mr. Konovitch said he is up about $15,000 on his Hertz bet. I always thought someone was going to come in and buy them out because the company is one of the biggest rental-car providers, he said.

On Friday, a bankruptcy court approved a winning auction bid that will hand control of Hertz to institutional investors who won a heated competition to buy the company out of bankruptcy as its prospects brightened. Hertz expects stockholders to receive more than $7 a share of value out of the deal, and perhaps as much as $8 a share, as the company emerges from chapter 11.

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Hertz, the Original Meme Stock, Rewards Its True Believers - The Wall Street Journal

True comedy has just enough truth in it to make it sting, and John Oliver is a master at delivering the laughs with lessons, and dya think that stick.The April 18, 2021 show featured bankruptcy as a central subject. An unusual topic for a comedian, yes, but one thats very much in need of discussion.

Household debt grew significantly during the first quarter of 2021,though credit card debt dropped. That speaks of millions more ordinary Americans in desperate financial straits who have considered the impact on their credit ratings and thesocial stigma of bankruptcy, and out of fear, do nothing.

Bankruptcy presents more problems for the working poor and lower middle class than for the more well-off. When the filing party is a homeowner, there are protections to safeguard their home as exempt from the bankruptcy estate. In contrast, those who rent their home people of lesser means may not be able to persuade their landlord to let them stay in apartments when rent payments are suspended. While eviction actions cant take place until after discharge, they often follow immediately thereafter. Finding housing with a bankruptcy on your credit report is not an easy task, especially now with so many unable to pay rent due to the COVID eviction bans.

While the wealthy and many businesses make use of bankruptcy as a matter of course, the working poor and those in poverty are often discouraged from applying in more subtle ways. Bankruptcy costs money; everyone will tell you that. For people trying to scrape up enough to feed their kids and put new tires on the car, that knocks bankruptcy right out of consideration. The most common type of bankruptcy for individuals isChapter 7 followed by Chapter 13. Chapter 11 is more of a Chapter 13 for businesses that need to reorganize.

Back when wages actually paid for a family to not just survive but thrive, credit cards didnt get much use. They were pretty tightly regulated, but as deregulation fever took hold in Washington (thanks again, lobbyists), they started to market themselves more aggressively to people whose wages were beginning to feel a little pinched.

With the new access to credit came the debt cycle minimum payments, interest hikes, over-limit fees, late fees, and an endless cycle of making payments yet still having more debt. Understandably, during the dark days of the 1987 recession, many people cut out of this cycle by filing for bankruptcy.

The banks responded by you guessed it lobbying members of the House and Senate to curb bankruptcy abuse in a 1998 bill. By then, the worst of the 1987 Recession was behind everyone or so they liked to think. The bill made it harder for consumers to leave their debts behind.

Only one senator voted against it, thelate Paul Wellstone (D-Minn) who was offended by the banks cash blitzlobbying effort that made sure Wall Street was heard over and above those on Main Street. In 2005, during the Bush Administration, the bankruptcy code was further amended to includea Chapter 7 means test and an in forma pauperis categorywhere filing fees are waived for someone who cant afford them.

The rich are different from the rest of us, and the reason for that is nothing more or less than they can afford to be. They have access to expert legal and financial advice and all manner of special breaks meant to do nothing more than to help them accrue and retain more wealth.

Even tax breaks are targeted to those who are solidly upper-middle-class this includes tax breaks for home offices, mortgage interest deductions, and so on. Can you have a home office in a one-bedroom apartment? Yes, if youre going to give up your bedroom or dining room. Having a home office in a four-bedroom house is a lot easier.

For the wealthy, being bankrupt does not equal being broke. All that expert advice gives ways to shield the goodies homes, cars, art, jewelry from bankruptcy. All too often, those goodies are protected either as assets in a business or a trust. In the case of putting the trusts in a business such as a family office, the assets belong to the business and are not part of a personal bankruptcy.

In the case of a trust, trusts are an instrument that the debtor does not directly control and is therefore exempt from being part of the bankruptcy estate. Furthermore, the rich use bankruptcy as a business tool hows that for abuse?

Some reasons for the wealthy filing for bankruptcy are:

Its not so much that the rich are different from the rest of us; their money lets them buy better exit strategies when their debts become bothersome.

You have options! Well work with you for your best outcome, and you may not even need to file for bankruptcy. Whatever services you need, we will make sure they are affordable to you.Get in touchwith any of our offices and take advantage of a free consultation with a bankruptcy attorney.

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John Oliver Bankruptcy Breakdown - Part 1: What He Got Right - South Florida Reporter

On May 11, 2021, Judge Harlin D. Hale, of the Bankruptcy Court for the Northern District of Texas (the Court) found that the bankruptcy cases of the National Rifle Association of America (NRA) and its subsidiary Sea Girt LLC (collectively, the Debtors)1 were filed in bad faith to (i) gain an unfair litigation advantage, and (ii) avoid the regulatory scheme of the State of New York.2 The Court dismissed the cases without prejudice but noted that if the NRA filed a new case, the Court would revisit its concerns regarding, among other things, disclosure, transparency, secrecy, and conflicts of interest, which could cause the appointment of a trustee to address the ability of the NRA, as a debtor in possession, to fulfill its fiduciary duties.

The NRA is a 150-year-old not-for-profit New York corporation headquartered in Fairfax, Virginia. On August 6, 2020, the New York Attorney General (NYAG) filed a lawsuit in New York State Court against (i) the NRA (NYAG Action) and (ii) certain individual defendants, including the NRAs Executive Vice President, Wayne LaPierre, for, among other things, breach of fiduciary duties, gross mismanagement, wrongful related-party transactions, self-dealing and unjust enrichment. As a remedy, the NYAG sought (i) dissolution of the NRA, (ii) restitution of funds, (iii) ban on certain officers from serving as fiduciaries of any New York charity, and (iv) voiding of certain transactions.3

On September 10, 2020, the NRAs president created a Special Litigation Committee to oversee, among other things, the NYAG Action (as well as other lawsuits). Thereafter, on January 7, 2021, the NRA held a board meeting at which the board of directors adopted a resolution formalizing the Special Litigation Committee and approving a new employment agreement for Mr. LaPierre, which permitted Mr. LaPierre to exercise corporate authority in furtherance of the mission and interests of the NRA, including without limitation to reorganize or restructure the affairs of the Association for the purposes of cost-minimization, regulatory compliance or otherwise.4 No discussion of bankruptcy or the possible reorganization of the NRA occurred at that meeting, nor were the board of directors informed that the language could authorize Mr. LaPierre to unilaterally authorize a bankruptcy petition.

On January 15, 2021, (i) the NRA and (ii) Sea Girt LLC, a Texas limited liability company wholly owned by the NRA, which was formed on November 24, 2020 (approximately two months prior to the bankruptcy filing),5 filed for chapter 11 bankruptcy. Through the filing, the Debtors sought to restructure as a Texas nonprofit and to exit what it believes is a corrupt political and regulatory environment in New York effectively dumping New York. At the time of filing, the NRA claimed that it is in its strongest financial condition in years,6 and noted that it would propose a plan that pays creditors in full.

Thereafter, on February 10 and 12, respectively, (i) Ackerman McQueen, Inc.7 the Debtors former advertising agency, largest unsecured creditor, and counterparty to a lawsuit currently pending in the U.S. District Court for the Northern District of Texas and (ii) the NYAG,8 each filed motions to dismiss the Debtors bankruptcy cases and, alternatively, seek appointment of a chapter 11 trustee (collectively, the Dismissal Motions).9 Generally, the Dismissal Motions asserted (among other things) that the cases were filed in bad faith, solely as a litigation tactic (not to reorganize or respond to financial crises as the Debtors are solvent) and, in light of misappropriation and lack of oversight, grounds existed to appoint a trustee (rather than allow the NRA to continue to manage their cases as debtors-in-possession). In support of their positions, the movants highlighted (i) the lack of board authorization for, and notice of, the bankruptcy filing, which was authorized solely by Mr. LaPierre relying on his employment agreement approved on January 7, 2021, and (ii) a post-filing attempt to retroactively ratify the bankruptcy filing.

After a 12-day trial that included 23 witnesses, the Court dismissed the bankruptcy cases for cause under Section 1112(b) of the Bankruptcy Code, finding that the cases were not filed in good faith and that the appointment of a trustee or an examiner was not in the best interests of creditors and the estates.10 In evaluating the Debtors good faith, the Court reviewed whether the bankruptcies were filed (i) for a valid bankruptcy purpose and (ii) merely to obtain a tactical litigation advantage.

Ultimately, the Court found that the purpose of the filings was to avoid the potential dissolution of the NRA in the NYAG Action. In reaching that finding, the Court focused on the testimony of Mr. LaPierre to establish that (i) the filing was not related to the NRAs financial condition (as the NRA is financially healthy),11 (ii) if the case were dismissed, the NRA would be able to pay its debts in full and meet its obligations and (iii) but for the NYAG Action, a bankruptcy filing by the NRA would not have been necessary.

As such, the Court found that [t]he NRA is a solvent and growing organization using bankruptcy as a tool to win its dissolution lawsuit, and that is not an appropriate use of bankruptcy.12 The Court distinguished the present case from the more typical case, where a debtor files a bankruptcy to avoid a potential monetary judgment posing an existential threat. Here, in contrast, the NRA sought to deprive the NYAG of the statutory remedy of dissolution (if the NYAG could meet certain high thresholds),13 and the Court found that the Bankruptcy Code does not provide sanctuary from this kind of threat.14 Furthermore, using the bankruptcy process to avoid dissolution deprived the state of New York of the ability to regulate its not-for-profit corporations in accordance with its laws. As such, the Court found that the bankruptcy filings sought to (i) obtain a litigation advantage and (ii) avoid a regulatory scheme, each of which equates to bad faith for purposes of section 1112(b).

The Court next considered whether appointment of a trustee or examiner was in the best interest of creditors and the estates, but found that such relief was not warranted. Specifically, the Court was concerned with lingering issues of secrecy and a lack of transparency, and, in particular, the surreptitious manner in which Mr. LaPierre obtained, and exercised, authority to file bankruptcy for the NRA.15 The Court noted that [e]xcluding so many people from the process of deciding to file for bankruptcy, including the vast majority of the board of directors, the chief financial officer, and the general counsel, is nothing less than shocking.16 However, the Court also noted, among other things, that the NRA was financially healthy and, outside of bankruptcy, could pay its creditors, continue to fulfill its mission and improve its governance and internal controls and contest dissolution in the NYAG Action. As such, the Court believed such factors weighed in favor of dismissal, rather than keeping the cases in bankruptcy.

The NRA bankruptcy cases are a unique situation given, among other things, their high-profile nature, the ongoing litigation with the NYAG and the nature of the allegations against the NRA and Mr. LaPierre. Nonetheless, the cases offer valuable lessons and considerations regarding the scope of bankruptcy protections and filing rationales. Moreover, the cases highlight the (i) importance, and need, for corporate formalities and process and (ii) care and thoughtfulness that should go into planning, and implementing, a cohesive, justifiable, and feasible restructuring.

1 The cases were jointly administered under case number 21-30085-hbh-11. Citations to [ECF No. __] shall refer to documents filed on the docket in the case captioned In re National Rifle Association of America and Sea Girt LLC, No. 21-30085 (HDH) (Bankr. N.D. Tex. May 11, 2021).

2 Order Granting Motions to Dismiss, In re National Rifle Association of America and Sea Girt LLC, No. 21-30085 (HDH) (Bankr. N.D. Tex. May 11, 2021), ECF No. 740 (the Dismissal Order).

3 The suit, which remains pending, has spawned related litigation, additional federal suits and motion practice, including motions to dismiss and to transfer venue.

4 See Dismissal Order, at 8.

5 NRA Dumps New York to Reincorporate in Texas, Announces New Strategic Plan, NRA, Jan. 15, 2021, https://www.nraila.org/articles/20210115/nra-dumps-new-york-to-reincorporate-in-texas-announces-new-strategic-plan.

6 Id.

7 See Motion to Dismiss the Chapter 11 Bankruptcy Petition, or, in the Alternative, Motion for the Appointment of a Chapter 11 Trustee and Brief in Support [ECF No. 131].

8 See Motion to Dismiss, or, in the Alternative, to Appoint a Chapter 11 Trustee [ECF Nos. 155 and 156].

9 Subsequently, among other things, (i) the District of Columbia filed motions in support of the NYAGs motion to appoint a trustee [ECF No. 214] and dismiss the cases [ECF Nos. 423 and 429], (ii) Christopher Cox, a former executive director of the NRA Institute for Legislative Action, joined the NYAGs motion [ECF No. 172], (iii) the United States Trustee, in closing arguments, took the position that the evidence supported dismissal, the appointment of a trustee, or the appointment of an examiner, (iv) sixteen other States sought leave to submit a brief as amici curiae in support of the Debtors [ECF No. 439], which the Court granted on March 31, 2021 [ECF No. 439] and (v) the Official Committee of Unsecured Creditors appointed in the cases also opposed the relief sought in the Dismissal Motions, contending, among other things that a bankruptcy proceeding was in the best interests of creditors (but suggested a trustee with limited powers to the extent that the Court were inclined to appoint a chapter 11 trustee) [ECF No. 369].

10 Section 1112(b) of the Bankruptcy Code provides the Court shall convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause unless the court determines that the appointment under section 1104(a) of a trustee or an examiner is in the best interests of creditors and the estate. 11 U.S.C. 1112(b).

11 Dismissal Order, at 28.

12 Id. at 32.

13 See N-PCL 1101 and 1102; see also Dismissal Order, at 28.

14 Dismissal Order, at 28.

15 Id. at 34.

16 Id.

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Not in My Court: Northern District of Texas Bankruptcy Court Dismisses NRA Bankruptcy Cases as Filed in Bad Faith - JD Supra

Dive Brief:

Centric Brands CEO Jason Rabin touted the operational and digital chops of Keswani and Hartman as the company works to execute on its "strategic growth initiatives."

Rabin said of Hartman, "Ruth has a great deal of knowledge and experience in the digital space that can help us capitalize on one of our key growth initiatives of expanding our online revenue." Prior to Lord & Taylor, Hartman was chief merchant of online clothing rental specialist Le Tote (which acquired Lord & Taylorin 2019 before filing for bankruptcylast year).

Before overseeing Pandora's operations on the continent,Keswaniserved as CEO of grocer Fiesta Mart and also spent 19 years with Target."Sid's extensive operational experience and strong leadership capabilities will help to drive efficiencies throughout the organization," Rabin said aboutKeswaniin a statement.

Centric filed for bankruptcy last year amid the disruption to retail in general and apparel in particular wrought by COVID-19. It was forced to shut its stores (mostly under the BCBG, Robert Graham and Joe's Jeans banners). Centric's wholesale business suffered as well as stores that sold its products closed as well, according to court papers from its Chapter 11 last year.

Since launching as a consumer products company in 1987, Centric Brands has gone through several names and incarnations.Over the years, it grew its portfolio of licensed products and private labels to include products under the Calvin Klein,Frye, Jessica Simpson, Nautica, Joe's Jeans,Timberland, Tommy Hilfiger and Under Armour brands, among others.

In all, the company's portfolio has more than 100 licensed brands as well as owned brands. The company has a heavy presence in kids apparel, which has suffered from school closures.

Its bankruptcy helped the company shed $700 million in debt and turned control over to financial firms Blackstone (its majority sponsor), Ares Management and HPS Investment Partners.

As they look to strengthen the company, Hartman and Keswanipointed to digital tools and data as paths to growth and better performance.

Excerpt from:

Centric Brands adds to exec ranks, board as it eyes post-bankruptcy growth - Retail Dive

Lansing Former Michigan Gov. Rick Snyder wants a federal bankruptcy court to hold Attorney General Dana Nessel's office in contempt, arguing confidential documents had been released as part of the Flint water proceedings.

Snyder's attorneys filed a motion Wednesday in Michigan's Eastern District, asking a judge to impose sanctions "appropriate to coerce" the office's compliance with 2013 court orders that required secrecy about the Detroit bankruptcy mediation.The filing points to concerns that privileged documents related to the bankruptcy have been shared with other defendants and legal teams involved in the Flint prosecution cases.

The mediation occurred at a time when Flint officials were on course to end their service with the Detroit water system in 2014over concerns that rates were too high. The Eastern District oversaw the mediation that led to the so-called "Grand Bargain" resolving the bankruptcy of Michigan's largest city while Snyder was governor.

"Despite our repeated warnings to the Attorney Generals office about the inappropriate release of protected information, they continued with reckless abandon and now appear to have violated not only the attorney-client privilege, the attorney work product doctrine and executive privilege, but also federal court confidentiality orders related to the Detroit bankruptcy," Snyder's attorney Brian Lennon said Wednesday.

Former Michigan Gov. Rick Snyder has pleaded not guilty to misdemeanor charges of willful neglect of duty in Flint. Snyder's legal team is asking the Detroit bankruptcy court to suppress confidential documents the Attorney General's office has shared in the discovery process.(Photo: Cody Scanlan, AP)

Courtney Covington Watkins, spokeswoman for the Attorney General's office said the filing appeared "to be part of an ongoing strategy of distraction by the defense."

"We look forward to addressing these concerns in court so that we can move forward with the prosecution of those responsible for the Flint Water Crisis," she said.

In January, Nessel's office filed41 charges against nine state and city officials, including Snyder, over allegations tied to the lead-contaminated water crisis that resulted after Flint switched its water source on April 25, 2014. A one-judge grand jury in Genesee County that operated in secret signed off on the Flint charges.

Snyder, who left office at the end of 2018 after two four-year terms, is facing two counts of willful neglect of duty in connection with the Flint crisis. The misdemeanor counts carry a penalty of one year behind bars and a fine of up to $1,000.

The state's prosecution team has begun producing about 21 million documents that were involved in its investigation, according to the Wednesday filing by Snyder's legal team. About 4 million documents have been provided so far, the filing says.

Snyder's lawyers contend that documents they have received include "communications among mediators and parties regarding the substantive issues being mediated" as part of the Detroit bankruptcy.

"On information and belief, the other state criminal defendants, including some parties who did not participate in any mediations related to this bankruptcy case, received the same set of documents," the filing says.

An Aug. 13, 2013, mediation order said proceedings, discussions and writings involved in the Detroit mediation "shall be privileged and confidential and shall not be disclosed, filed or placed in evidence. Snyder's lawyers saidNessel's office had violated the orders, "flagrantly disregarding any privileges or confidentiality protections."

Nessel is a Democrat who took office at the beginning of 2019.

In April 2013, state, Flint and Detroit officials held an unsuccessful last-chance meeting to try to avert Flint's disconnection from Michigan's largest water system. Detroit's Water and Sewerage Department already had sent Flint a notice of termination indicating the flow of water would stop in one year after Flint officials agreed to join a new regional authority based in Genesee County.

Both cities were run by Snyder-appointed emergency managers.

Detroit water officials battled to keep Flint and Genesee County from breaking off, charging that the proposed regional body, the Karegnondi Water Authority, was flawed and too expensive. Flint area officials were convinced that Detroit's estimates about building a new pipeline to Lake Huron and operating the regional authority were inflated.

Nearly all the principal players in the fight over Flint's water future metat the state's Cadillac Place offices in the New Center neighborhood on April 19, 2013. Snyder was there to oversee the debate.

The meeting included DWSD Director Sue McCormick and Detroit water system Chairman Jim Fausone; state Treasurer Andy Dillon and Michigan Department of Environmental Quality Director Dan Wyant; and Flint Emergency Manager Ed Kurtz and Mayor Dayne Walling, Genesee County Drain Commissioner Jeff Wright. Detroit Emergency Manager Kevyn Orr participated by phone.

The meeting failed to resolve the situation. Mediation talks followed Detroit's filing for bankruptcy in July 2013.

The court filing bySnyder's lawyers saidMichigan Solicitor General Fadwa Hammoud did not respond when they asked whether she agreed with their interpretation of events.

Hammoud and Wayne County Prosecutor Kym Worthy are leading the state's Flint water investigation.

cmauger@detroitnews.com

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Snyder's legal team wants AG's office sanctioned over bankruptcy records - The Detroit News

The disruption to the global economy that has ensued since the World Health Organization declared COVID-19 a pandemic has resulted in a sharp increase in the number of companies filing for bankruptcy. Notably, the number of U.S. bankruptcy filings by companies with over $100 million in assets increased by 84 percent during the first three quarters of 2020 compared to the same period in 2019.[1] In the second quarter of 2020, such filings reached the second-highest total for any quarter in the last fifteen yearsjust below the all-time high in the first quarter of 2009 during the aftermath of the 20082009 financial crisis (the Financial Crisis).[2]

Bankruptcy and insolvency proceedings can result in litigation filed by trustees and receivers against insiders and third parties. Such lawsuits are generally initiated several months after the beginning of the bankruptcy or insolvency proceeding due to the time needed to investigate claims. For example, a wave of trustee and receiver litigation was filed in the years that followed the Financial Crisis.

This article discusses how certain new accounting and auditing standards implemented after the Financial Crisis could affect the expected next wave of trustee and receiver litigation.

Bankruptcy trustees are typically appointed by the court in (1) Chapter 7 liquidation proceedings; or (2) Chapter 11 proceedings, upon request of a party in interest or the United States Trustee, either when fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor by current management are alleged, or if such appointment is in the interests of creditors.[3] Less frequently, the debtors assets and operations are placed under receivership and a receiver is appointed by the court to administer or liquidate the debtors property.[4]

Trustees and receivers have historically filed claims for fraud and breach of fiduciary duty against the insolvent or bankrupt companys former directors, officers, and/or executives as part of bankruptcy proceedings. It is also not uncommon for trustees and receivers to sue third-party service providers, such as the companys public accountants or attorneys, for professional malpractice or to seek disgorgement or repayment of professional fees. In the years following the Financial Crisis, trustee- and receiver-led lawsuits increased in tandem with the surge in bankruptcy proceedings. Based on this historical evidence, such lawsuits are expected to also arise from the COVID-19 pandemic albeit with some delay.

The number of lawsuits filed by trustees in U.S. bankruptcy courts increased significantly following the Financial Crisis, nearly tripling in 2009 compared to 2008. The number of lawsuits peaked in 2010 and remained high in 2011when the number of filings was five times greater than in 2008. Trustee bankruptcy lawsuits have remained above pre-2009 levels and were on a relatively stable trend between 2012 and 2019 with annual fluctuation.

The COVID-19 pandemic and the resulting global operational and financial disruptions, coupled with the large amounts of corporate debt amassed after the Financial Crisis, has put pressure on the liquidity and solvency of an increasing number of companies.[5] The number of lawsuits filed during the first half of 2020 was three times greater than the number of filings during the first half of 2008 and close to the number of filings during the first half of 2009. As the number of bankruptcy filings increases, trustee and receiver lawsuits are also expected to increase in the subsequent months and years.

Examples of trustee-led cases filed in May and June 2020 include actions brought to recover fraudulent transfers, actions brought against third-party service providers to avoid or recover fees either because the company was insolvent at the time of payment or due to alleged professional negligence, and actions seeking to enforce insurance or guaranty payments.

Although the number of lawsuits initiated by receivers is relatively lower than filings initiated by trustees,[6] a similar increase can be observed during the years after 2007. The number of lawsuits filed by receivers increased steadily in the years following the Financial Crisis. Receiver filings increased by 50percent between 2008 and 2009, and remained high through 2014. As of June 30, 2020, about the same number of filings were registered in the first half of 2020 as during the first half of 2008. Moreover, in 2008, the majority of filings were filed by the FDIC acting as receiver for financial institutions.

Receiver-led cases filed in May and June 2020 include actions involving allegations of fraud, actions seeking relief from breach of obligations under an insurance policy, or actions seeking to recover allegedly improperly diverted funds.

These historical trends in trustee- and receiver-led litigation suggest that the COVID-19 pandemic will trigger another wave of bankruptcy and liquidation-related lawsuits.

Recent changes in accounting and auditing standards may affect litigation against corporate and individual defendants. This section assesses the impact of changes related to going concern disclosures and critical audit matters.

One postFinancial Crisis standard that may affect trustee and receiver litigation is the disclosure of going concern issues by reporting entities. At the time of the Financial Crisis, there was no going concern disclosure guidance in Generally Accepted Accounting Principles (GAAP) for reporting entities. Instead, relevant guidance in auditing literature and federal securities law required going concern opinions by external auditors.[7] That changed when the Financial Accounting Standards Board (FASB) issued Accounting Standard Codification Subtopic 205-40, Presentation of Financial Statements Going Concern (Subtopic 205-40).[8] Subtopic 205-40 became effective for the annual period ending after December 15, 2016.

The new going concern standard brought two additional changes from the auditing standards effective during the Financial Crisis. First, the standard requires management to perform a going concern evaluation for every set of financial statements issued, including interim financial statements. As such, for public companies, managements evaluation of going concern should occur at least every quarter to comply with GAAP. The standard related to going concern effective during the Financial Crisis, however, only applied to the annual financial statement audit.[9] These additional requirements of management may affect the decision of trustees and receivers to assert claims against management and/or the external auditor.

Second, the new standard extended the period over which the entitys ability to continue as a going concern needs to be assessed. Specifically, under the prior guidance, including auditing standards issued by the Public Company Oversight Board (PCAOB), the auditor was required to evaluate whether the entity had the ability to continue as a going concern for one year beyond the date of the financial statements.[10] Under the new accounting standard, the one-year period begins on the date the financial statements are issued.[11] As such, trustees and receivers could use this change to claim a failure to disclose going concern issues in financial statements issued for a fiscal year ended more than twelve months before the bankruptcy event. For most public companies, the effects would likely be a matter of weeks. For example, large accelerated filers are required to file their 10-Ks with the SEC sixty days after the year-end.[12] The effect can be greater for private companies that sometimes issue their financial statements months after the year-end. Thus, the timing of a bankruptcy may affect when trustees and receivers assert claims in lawsuits on behalf of the bankrupt entity.

A second postFinancial Crisis standard that may affect trustee and receiver litigation is the disclosure of critical audit matters (CAMs) by external auditors. Under the new standard, external auditors of public companies are required to include in their audit report a disclosure of matters that involve especially challenging, subjective, or complex auditor judgment.[13] The disclosure by the auditor generally includes a description of how the CAM was addressed in the audit, such as the audit procedures performed in response to the CAM. For fiscal years ended starting on June 30, 2019, auditors of large accelerated filers are required to evaluate the disclosure of CAMs, if any.

Assessing the ability of the entity to operate as a going concern represents one of the matters that auditors have disclosed as a CAM. An analysis of 1,451 annual reports filed with the SEC by large accelerated filers between July 1, 2019, and August 31, 2020, shows that going-concern-related CAMs, as well as broader going concern disclosures, have been modest for the largest public companies considering the current economic environment. Going concern was identified as a CAM for a small group of large accelerated filers that also included going concern disclosures in their financial statements. The auditors of only four of the sixteen large accelerated filers identified going concern as a CAM. Going concern was also identified as a CAM for a small group of large accelerated filers that did not include going concern disclosures in the financial statements (four large accelerated filers).[14] That means that management of these large accelerated filers concluded that there was no substantial doubt about the ability to continue as a going concern even though the auditor concluded that this evaluation represented especially challenging, subjective, or complex auditor judgment.

Given the new CAM standard, there may be a greater number of going concern CAMs in early 2021 annual filings for companies with December 15, 2020, or later fiscal year ends if the economic environment remains challenging.

The disclosure of CAMs could affect lawsuits by trustees and receivers against management and the auditor. During the standard-setting process, the PCAOB acknowledged that the new CAM standard could generally increase the risk of litigation in connection with financial disclosures. Trustee and receiver litigation represents one type of litigation that may be affected by the implementation of the CAM standards.[15]

Bankruptcy and insolvency lawsuits by trustees and receivers against insiders and third parties are generally initiated months after the beginning of the bankruptcy or liquidation proceeding. The COVID-19 pandemic has created substantial uncertainty and has particularly affected certain industries such as travel, entertainment, and retail. These lawsuits may differ from past litigation due to the new accounting and auditing standards that became effective after the Financial Crisis.

The views expressed in this article are solely those of the authors, who are responsible for the content, and do not necessarily represent the views of Cornerstone Research.

[3] U.S. Code 1104. Appointment of trustee or examiner; 11 U.S. Code 701. Interim trustee.

[4] U.S. Code 3103. Receivership.

[5] The debt of large companies stood at $10 trillion (48% of GDP) as of mid-2019, up from $6.6 trillion in 2008 (44% of GDP). Considering small and medium-sized companies and other businesses adds another $5.5 trillion to the U.S. corporate debt load, raising the debt-to-GDP ratio to 74%. See Mayra Rodriguez Valladares, U.S. Corporate Debt Continues to Rise As Do Problem Leveraged Loans, Forbes, July 25, 2019, https://www.forbes.com/sites/mayrarodriguezvalladares/2019/07/25/u-s-corporate-debt-continues-to-rise-as-do-problem-leveraged-loans (last accessed 9/18/2020). See also G-20 Surveillance Note, G-20 Finance Ministers and Central Bank Governors Meetings, July 18, 2020, pp. 6, 1920, https://www.imf.org/external/np/g20/pdf/2020/071620.pdf (last accessed 9/18/2020).

[6] Between January 2007 and June 2020, only 320 filings were registered by receivers (in U.S. District Courts and Federal Bankruptcy Court), compared to a total of 74,535 filings by trustees (in U.S. Bankruptcy Courts).

[7] PCAOB, AU Section 341, The Auditors Consideration of an Entitys Ability to Continue as a Going Concern; (The Codification of Financial Reporting Policies, Section 607.02; AICPA, Auditing Standards Section AU-C 570, The Auditors Consideration of an Entitys Ability to Continue as a Going Concern.

[8] FASB, Accounting Standards Update No. 2014-15, August 2014.

[9] Auditors of public companies are still required to perform reviews of interim financial information in conformity with auditing standards and federal securities laws, see, PCAOB, AS 4105: Reviews of Interim Financial Information).

[10] PCAOB, AS 2415: Consideration of an Entitys Ability to Continue as a Going Concern, at .02.

[11] Or, in certain circumstances, available to be issued.

[13] Greg Eastman, Elaine Harwood, Steven McBride, and Jean-Philippe Poissant, Will PCAOBs New Audit Rule Trigger Shareholder Litigation?, Law360, October 16, 2019.

[14] Three of four entities prepared their financial statement pursuant to US GAAP. The other company prepared its financial statements pursuant to the international financial reporting standards (IFRS). The relevant IFRS guidance differs from Subtopic 205-40.

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How Will Bankruptcy Trustee and Receiver Litigation Change? - The National Law Review

In an explosive video interview to Telly Stars Talk, Rakhi Sawant opens up about her husband Ritesh like never before. She also demands answers on why she's judged so often, why she's targetted so often. Further, Rakhi rewinds to reveal how she landed up in a financial mess which made her bank balance zero. Rakhi also spoke about Karan Johar, Salman Khan, Sohail Khan and Priya Dutt.Is your marriage status, today A) Sorted B) Complicated C) To Be Decided?It's a mix of all three. But my husband Ritesh has told me that he wants to be with me. However, he isn't able to come down in today's times. I am waiting. I am a firm believer in Jesus Christ and I haven't exchanged fake marriage vows with him. I can't be sharing him with any other woman. The fact that he was married before tying the knot with me and is a father as well has jostled me. I have left the decision to him. The ball is in his court. Why isn't he appearing before the world? What complex is he suffering from? Can I ask you his age?He is 37/38. I had asked him this question before marriage too. Little did I know the reason was his first marriage. But I still respect and love him from the bottom of my heart. I didn't love him earlier, but now I do. However, now, I will decide after contemplating each and everything about him. I have taken many hasty decisions in my life. If this marriage does not sustain, I shall never marry. Having said that, I must add here that Ritesh has spent a lot on my mother and me and has promised me a flat in Mumbai.

But Ritesh was your WhatsApp friend. How could you marry your WhatsApp friend without knowing much about him?

'Log mithai khaane ke liye aur shopping karne ke liye desperate hote hain. I was desperate to get married. My marriage with Ritesh was the outcome of another chapter in my life. A very violent guy from Gujarat was forcing me to marry him. I had gone out on a date with him to Goa where my friends had also accompanied me. I saw a video there which had him beating up someone in his farmhouse. Later, he threatened to kidnap me if I didn't marry him.

One day I was fervently praying that God should get this aggressive man out of my life. At that point, my phone rang. It was Ritesh. I told Ritesh that he should find a good guy for me. Those days, though, it was felt that I wouldn't make a good wife, daughter-in-law and and mother as I was very controversial. Kyun bhai? Yahan to log saalon saal jail me kaatte hain, unki bhi shaadi ho jaati hai, bachche bhi ho jaate hain. I have done no crime. We are a democracy and I reserve the right to speak my mind. Excuse me, why am I judged? Just because I dance in the industry? Don't I pay my taxes? Anyway, Ritesh promised to help and we began talking more and more with the passing of each day. Suddenly he popped the marriage question and sent me his bank statement. Seeing that statement, I felt I must marry him as that would mark the end of my struggle. Lekin...

Lekin?

He didn't turn up for our marriage. He apologised. This happened not just once. I asked him in no uncertain terms that why was he dilly-dallying our marriage. Finally, he came down to Mumbai and we tied the knot. This marriage helped me to ward off the Gujarat don.

No, but I have seen her photos.

Moving on to your financial crunch...

My bank balance had turned zero.

Why didn't you raise an alarm?

I didn't do it until my mother was diagnosed with cancer. Think of it, whom should I have called out to? I had gone bankrupt because my CA duped me. He had transferred my entire money to someone else's account, who did not return my money to him. Later, my CA passed away. I have seen hell on earth.

During this period, did you call up filmmakers to give you work?

(Gets emotional) I did and whatever work I got, I did with honesty. I even got Bhojpuri movies. A large part of my years in the industry have gone in paying my mother's medical bills. In fact, not just her, I have been paying for the rest of my family too. That's exactly why I was looking out to marry a rich guy who can look after my mother.

But you didn't get much work in Bollywood after calling up filmmakers...Yes. So, I started making videos which showcased my talent. Those videos helped me to get shows.

Has your outspoken nature come in the way of making friends (in the industry)?

Yes, certain celebrities used to laugh on my face and say 'Oh my God, Oh s**t'.

Over to 'Bigg Boss 14'. Did you feel from Day 1 that Rubina Dilaik will be the winner?

Yes. 'Bigg Boss' has made many lives; it helped me too, financially. The Rs 14 lakh- and even the money I got from the spoof marriage with Deepak Kalal- helped me in my mother's treatment.

It is strongly felt in the industry that you seek publicity...

I don't know why that tag hasn't left me. On the contrary, my acts aim at just comedy.

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Telly Stars Talk - Rakhi Sawant on her complicated marriage and bankruptcy: 'I have seen hell on earth' - Times of India