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Delaware Leads Nation in Bankruptcy Filings; Other States Find it Tough to Compete
According to The Washington Post, Delaware's bankruptcy court is one of the busiest in the nation, and last year nine of the 12 largest corporate bankruptcies were filed there. Since 1990, 22 companies with assets exceeding $1 billion have filed for protection there. Many companies file in Delaware because it is their legal home, but also because the court has procedures and rules they like. Judges are appointed, not elected; there are no jury trials, and the court does not award punitive damages. In efforts to entice or retain corporations, some states are trying different tactics that mirror or improve upon Delaware's filing system. But experts agree that it will be a long time, if ever, before other states catch Delaware as corporate America's favorite state. Read the entire story from Sunday's Post here.
Jobless Rate Hits 30-year Low
The unemployment rate is now below 4 percent for the first time since January 1970, but economists warn that the fast-paced U.S. economy may finally have to relent to the inflation pressures it has thus far been avoiding, The Wall Street Journal reported today. However, the news, which came out in Friday's labor-market report, is that so far the labor-cost increases aren't causing problems throughout the economy. 'Given the productivity we're getting, the wage increases we're seeing aren't enough to put upward pressure on inflation,' said Martin Baily, the chief White House economist. 'The flexibility of the current work force, the ability of workers to acquire new skills or for employers to train people means we have a pool of workers that's bigger than it looks.' Pay rates have been rising faster this year than last year, yet wage increases are running at or below 1998's pace. However, a separate government report issued last week suggested that companies still seem to be able to cover the costs with increased productivity without having to raise prices. Unless the growth slows, some analysts have predicted that the jobless rate could fall as low as 3.5 percent over the next few months; the last time that peacetime unemployment fell below 4 percent was during 1957.
Saucy Bread Seeks Bankruptcy Protection
In a company press release, the Saucy Bread Co., Calgary, Alberta, announced Friday it has sought the bankruptcy protection. The creditors' meeting is scheduled for May 15. Its Richmond, B.C. store has been closed and the Edmonton Center store had previously been closed. Certain directors of the company are providing financial support until May 15. One prospective purchaser indicated that it is prepared to purchase the assets of the company and the franchise network. A formal agreement of purchase and sale is expected.
Doctors and Attorney Indicted in Bankruptcy Fraud, Money Laundering Case
In a news release issued last week by the U.S. Attorney's office in the Central District of Calif., two doctors and their lawyer have been indicted in a bankruptcy fraud case that allegedly includes the unlawful discharge of more than $1 million in unpaid income taxes. Last Wednesday, a federal grand jury in Los Angeles returned a 14-count indictment against the trio, alleging that they conspired to violate bankruptcy laws by making false statements and concealing the doctors' businesses and assets from the bankruptcy court and creditors. Dr. John Bussell, an anesthesiologist, is charged with one count of conspiracy, 11 counts of bankruptcy fraud and one count of money laundering. Letantia Bussell, a dermatologist, is charged with one count of conspiracy and eight counts of bankruptcy fraud.
The Brussels, with Sherman's help, allegedly set up several nominee corporations to conceal their ownership and control of various assets from the bankruptcy court and the IRS. They recorded a fictitious debt on a property they owned in Utah in order to promote the property's fraudulent foreclosure. The couple's 1995 bankruptcy petition gave the false impression that they had no assets and were able to discharge more than $1 million in taxes due the IRS and $135,000 in taxes owed to the state of Calif. They also concealed more than $1 million from their Beverly Hills dermatology practice into nominee bank accounts, and their equity in their Park City, Utah ski lodge, which was worth up to $900,000. Jeffrey Sherman, an attorney and CPA in Beverly Hills, is charged with one count of conspiracy and 10 counts of bankruptcy fraud. The defendants in this case have agreed to appear for an arraignment in U.S. district court in Los Angeles on May 22.
AmeriServe Says It Has Changed Customer Distribution System
AmeriServe Food Distribution Inc. reveals in recently filed
bankruptcy court documents that it has converted
its historical distribution system to a direct pay system with major
customers Burger King Corp., Tricon Global Restaurants Inc., Chick-Fil-A
and Long John Silvers. Under the new direct-pay system, the Addison,
Texas-based food service distributor's customers purchase goods directly
from the company's suppliers and AmeriServe distributes those goods for a
fee. Under the old system, AmeriServe notes, the company bought and sold
goods.
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