Click here for Fox5 Atlanta report.  From an AJC article:

Hill, who ends his single term at midnight Wednesday, filed suit Tuesday in U.S. District Court, claiming he does not have enough money to pay $1.7 million in damages for several lawsuits. This includes a judgment for $475,000 he owes to Mark Tuggle, the brother of Hill’s predecessor as sheriff. Tuggle won a lawsuit against Hill in U.S. District Court in October after a jury found Hill guilty of false arrest...

The bankruptcy is the cap to Hill’s tumultuous four-year term that began on his first day in office in 2005 when he fired 27 deputies. The deputies sued Hill for wrongful termination. They won their jobs back and settled for $7 million, which was paid by Clayton County.

The Clayton County Commission is also investigating Hill for alleged credit abuse. Commissioners allege Hill used a county credit card to pay for a trip to Las Vegas earlier this month. Hill said he was attending a conference. However, County Commission Chairman Eldrin Bell previously said he did not authorize the trip.

In August, Hill lost a bid for re-election to attorney Kem Kimbrough and put his Riverdale house on the market for $295,900. Kimbrough takes over as sheriff Thursday.

 More on Clayton County, here, here and here.

It is hereby ordered that upon the filing of such a case, the case shall not be assigned by the Court's blind draw system under E.D. Mich. LBR 1073-1 (a)(l). Instead, after consulting with the other bankruptcy judges, the chief bankruptcy judge shall assign the case to a bankruptcy judge.

It is further ordered that the bankruptcy judge to whom the case is assigned shall have the authority to assign adversary proceedings and contested matters to other bankruptcy judges as necessary and appropriate to carry out the purposes of this order.

 From Bloomberg:

The Sixth U.S. Judicial circuit, which includes Detroit, is “the backyard” of the United Auto Workers union as well as the circuit most protective of health care benefits promised to retirees, which makes it less likely to attract a bankrupt auto company that would likely seek to terminate those benefits, said Colleen Medill, an employee benefits law professor at the University of Nebraska. Still, the district’s judges are well versed in the auto industry, having handled bankruptcies of auto-parts makers including Collins & Aikman Corp., Intermet Corp. and Plastech Engineered Products Inc.

“There is no district in the country that has a greater stake in the outcome of a filing by one of the Big 3 than the Eastern District of Michigan,” said Chief Judge Steven Rhodes, referring to the formal name of his Detroit-based court. The court is reviewing staffing, security and technology functions so as to be ready to handle a case the size of an automaker.

Here is the FDIC Notice.   This makes it the fifth Georgia bank seized by regulators.

Donald Walton, US Trustee v. Cornerstone Ministries Investments, Inc., 2008 WL 5169523 (N.D. Ga. Dec. 5, 2008) (click here for .pdf of order) (click here for discussion of Cornerstone Chapter 11 case).

Th US Trustee sought the appointment of an examiner pursuant to 11 U.S.C. 1104(c) ...  

to conduct an investigation into and provide a public, transparent and objective report on: (1) the events and circumstances leading to [d]ebtor's shift in late 2004 from making loans only to churches and other non-profit organizations to making loans to for-profit developers, including related entities and/or entities with which it had other business relationships and/or shared common officers or directors; (2) the extent, if any, to which this shift in [d]ebtor's business plan was motivated or influenced by self-dealing on the part of its officers, directors, or professional advisers; and (3) whether and to what extent purchasers of the [i]nvestor [b]onds were notified of this shift in [d]ebtor's business plan and whether and to what extent they may have claims against broker-dealers or others arising from their purchase and/or retention of the [i]nvestor [b]onds.

The Bankruptcy Court denied the motion primarily on the grounds that the Official Committee of Unsecured Creditors was investigating many of the issues and the appointment of an Examiner would be duplicative.  Click here for Bankruptcy Court Order. The US Trustee appealed.

The District Court reversed and ordered the appointment of an Examiner.

Section 1102 of the Bankruptcy Code provides as follows:

If the court does not order the appointment of a trustee under this section, then at any time before the confirmation of a plan, on request of a party in interest or the United States trustee, and after notice and a hearing, the court shall order the appointment of an examiner to conduct such an investigation of the debtor as is appropriate, including an investigation of any allegations of fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity in the management of the affairs of the debtor of or by current or former management of the debtor, if-

 (1) such appointment is in the interests of creditors, any equity security holders, and other interests of the estate; or

 (2) the debtor's fixed, liquidated, unsecured debts, other than debts for goods, services, or taxes, or owing to an insider, exceed $5,000,000. 

The parties disputed whether § 1104(c)(2) is mandatory or discretionary. The US Trustee argued that the use of “shall” is mandatory, while Cornerstone argued that the statute permitted the bankruptcy judge to exercise discretion when a US Trustee requested an Examiner.  The Court agreed with the US Trustee:

On its face, the statute appears to require the appointment of an examiner if certain requirements are met. The only appellate court to consider the question reached the same conclusion as this court, explaining that “[t]he provision plainly means that the bankruptcy court ‘shall’ order the appointment of an examiner when the total fixed, liquidated, unsecured debt exceeds $5 million, if the U.S. trustee requests one.”  Morgenstern v. Revco D. S., Inc. (In re Revco, D. S., Inc.), 898 F.2d 498, 500-01 (6th Cir.1990). Furthermore, every district court and nearly every bankruptcy court that has confronted the question has also read the provision to be mandatory on its face...

Because “the meaning of statutory language, plain or not, depends on context,” the court must consider the text of § 1104(c) (2) in light of § 1104 as a whole... Such a contextual analysis only strengthens the court's conviction; the mandatory nature of § 1104(c)(2) is particularly clear when compared with the discretionary nature of § 1104(c)(1). Whereas § 1104(c)(1) predicates the appointment of an examiner on the court's determination that it is in the “interests of creditors, any equity security holders, and other interests of the estate,” § 1104(c)(2) only requires the debtor's fixed, liquidated, unsecured debts to exceed $5,000,000. “A provision for discretionary appointment, where the court is to consider the interests of parties in making its own determination whether an examiner is necessary, followed by a provision that only considers whether a dollar criterion has been satisfied, is conclusive that the second provision is compelling on the court.”...

Appellees insist that it is unnecessary to look beyond the plain meaning of the text to find discretion, as they argue that the phrase “as is appropriate”  endows bankruptcy judges with complete discretion over the scope-and, by extension, the existence-of the examiner's investigation. As one court confronting an identical argument explained, however, “[t]his reasoning is both grammatically and contextually wrong. In the provision, ‘as is appropriate’ modifies ‘investigation.’ The statute allows the court to determine the scope, length, and conduct of the investigation, rather than the appointment itself.”...

Conclusion -  On its face, the plain language of the statute requires a bankruptcy judge to appoint an examiner in certain situations. This case presents such a situation: the bankruptcy court has not appointed a trustee; a plan has not yet been confirmed; the United States trustee has requested the appointment of an examiner; and debtor's fixed, liquidated, unsecured debts equal roughly $143,000,000, far exceeding the $5,000,000 threshold. The court shares the bankruptcy court's and appellees' concerns for efficiency and preserving the bankruptcy estate. Nonetheless, the statute is clear, and, “[w]hile Congress may not have foreseen the problems that arise when discretion over an appointment of an examiner is missing, that is not sufficient grounds for refusing to give effect to the plain meaning of the statute.” For the foregoing reasons, the judgment of the bankruptcy court [1-3] is hereby REVERSED and the case is hereby REMANDED to the bankruptcy court with instructions to order the appointment of an examiner under 11 U.S.C. § 1104(c)(2)

The company plans to quickly start going-out-of-business sales at hundreds of its stores, "in order to take advantage of the last two weeks of the holiday selling season," KB Toys said in a filing with the U.S. Bankruptcy Court in Wilmington, Del.

From Bloomberg:

KB Toys Inc., the 86-year-old toy retailer, filed for bankruptcy three years after leaving court protection, blaming a cash crisis caused by a “sudden” drop in sales at its 277 stores...  “The liquidity crisis is directly attributable to a sudden and sharp decline in consumer sales,” Controller Raymond Borst said in court documents filed in U.S. Bankruptcy Court in Wilmington, Delaware...  The case is In re KB Toys Inc., 08-13269 U.S. Bankruptcy Court, District of Delaware (Wilmington).

 

The housing market is so bad that some banks and builders that had been business partners are now adversaries, and experts are using the dreaded “D” word.  “In northeast Georgia we’re not in a housing recession, we’re in a housing depression,” Jim Williams, president of Southern Highlands Mortgage in Blairsville, told state lawmakers at a daylong hearing Wednesday. .. Likewise, Eugene James, head of the Atlanta division of the research company Metrostudy, said the 22 metro counties it covers “are in a housing depression right now.”

James said sales closings were down 44 percent for the third quarter, compared to the same period last year, and housing starts had plunged 67 percent. The metro area also has about 148,000 lots with infrastructure but no homes — a 117-month supply, he said...

Sen. Chip Pearson (R-Dawsonville), co-chairman of the meeting, was intrigued by a California rescue plan that Chuck Fuhr, Ryland Homes’ Atlanta division president, described. ..  “Almost every small builder I know today has his bank knocking on the door, trying to collect his loan and put him out of business,” Fuhr said. If builders continue to fold, competition will lessen and home prices will escalate, he said.

Kurt Cannon, president of Rabun Builders and the Home Builders Association of Georgia, said at the hearing that worried bankers have turned on builders, even those with good credit, by calling in loans and threatening to sue.

The housing pain may get worse, Cagle said. “I don’t think we’ve found bottom yet,” he said. “Once we’ve reached there, I think we’re going to be there for an extended period of time.”

Tribune Co. filed for bankruptcy protection Monday, in a sign of worsening trouble for the newspaper industry.  In recent days, as Chicago-based Tribune continued talks with lenders to restructure its debt, the newspaper-and-television concern hired investment bank Lazard Ltd. as its financial adviser and law firm Sidley Austin to advise the company on a possible trip through Chapter 11 bankruptcy, people familiar with the matter say.

Tribune owns eight major daily newspapers, including the Los Angeles Times, Chicago Tribune and Baltimore Sun, plus a string of local TV stations....

Even as its financial performance worsens, Tribune has some options. A sale of its Chicago Cubs baseball team is under way, and Tribune owns valuable stakes in businesses including the cable-TV channel Food Network.

See the petition here.

APRIL 23 – 25, 2009

The Economy at Sea: New Rules of Engagement

Featuring Consumer Toolbox and Breakout Sessions

LEADING EXPERTS – This nationally recognized seminar brings the nation's bankruptcy experts, including judges, professors and practicing attorneys together to help you and thereby your clients navigate the Bankruptcy Laws.

Faculty Bios

Program and Schedule.

Registration.

Among the highlights from Alan's article:

• The day he went to jail, Michael Vick bought a $99,000 Mercedes.  He cashed four checks that totaled $24,900. He gave $28,000 to the mother of his oldest child. He paid a public relations firm $23,000 and gave a friend $16,000.  Altogether on Nov. 19, 2007, Vick spent $201,840. But for the former Atlanta Falcons quarterback, the day was most remarkable for how it ended: behind bars .. From Aug. 27, 2007, the day he pleaded guilty in a Richmond federal courthouse, until Nov. 19, the day he bought the new Mercedes before reporting to jail, Vick shelled out $3,627,291.

• During his last weeks of freedom, though, Vick also spent $85,000 on a fish pond and $48,257 for landscaping. He bought a $31,000 Ford pickup and a $33,100 Chevrolet. Vick’s financial records suggest he was hemorrhaging money. In the weeks before he went to jail, he made 48 cash withdrawals for a total of $325,945. The largest was on Sept. 19, for about $67,000. Using three cashier’s checks, he withdrew an additional $90,000.

• Vick seems to have relied heavily on cash.  In 2007, documents show, he used cashier’s checks to withdraw $908,500 from his bank accounts. During a two-year period, he wrote checks payable to “cash” totaling almost $1.1 million.

• Not long after joining the Falcons, Vick bought his first house: a $918,000 mini-mansion behind the gates that guard the Sugarloaf Country Club in Duluth. Two years later, in April 2005, he upgraded to a larger house in the same neighborhood, for almost $3.8 million.  He bought four more houses, all in Virginia, and began building another.He bought a condominium in Miami Beach.He bought interests in two farms — one in Virginia, one in Rockdale County, east of Atlanta. He bought six Paso Fino horses, worth about $450,000. He bought two boats, one for $100,000, the other for $125,000. He bought cars: a Bentley, two Land Rovers, Cadillacs, an Infiniti sport utility vehicle and an Infiniti sedan, two Ford pickup trucks, a Dodge, a Chevrolet, the $99,000 Mercedes. And he bought as much as $450,000 in jewelry.
  

WSB Radio) - News/Talk 750 WSB mourns the death of Money Matters Radio Talk Show host Mike Kavanagh. His passing was sudden and unexpected. He suffered a heart attack in his suburban Atlanta home Saturday. He was 57. Kavanagh is survived by his wife Grace, a daughter and granddaughter.

Mike Kavanagh was a veteran of two worlds - broadcasting and financial planning. In 2007, he celebrated 40 years in radio and TV work. Since 1987 he divided his life between broadcasting and financial planning...

Mike's mission was to convince consumers that investing is not difficult, that fear and greed will combine to be the worst enemies of your financial plan and the main goal of all financial planning is to create your own person "SWAN" plan -- which stood for "Sleep Well at Night".

Andy Peters at the Deal Watch Blog has an informative post on Blue Genes -

Blue Genes was founded in August 2001 by sisters Jennifer, Julie and Jane Arrendale...  Blue Genes owes about $159,000 to 7 For All Mankind, which makes Seven Jeans. The store owes Karen Zambos Vintage Couture about $25,000. Designer Elise Overland is owed about $16,000. Blue Genes owes Alice & Olivia of New York about $12,000...

Blue Genes has been a featured spot on the Bravo show “The Real Housewives of Atlanta." [photo, right] One of the housewives, Kim Zolciak, held a birthday party for her daughter at Blue Genes, according to the NoControl television blog. The wives also frequently are shown shopping at the store.

 

Zebulon, Ga.-based United Bank will assume all of the deposits of Jackson, Ga.-based First Georgia Community, according to announcements by the Federal Deposit Insurance Corp. and Georgia Department of Banking & Finance.

As of Nov. 7, First Georgia Community had $197.4 million in total deposits in four branches, while United Bank posted $553 million in deposits in third quarter 2008, according to FDIC data.

United Bank is acquiring the deposits for a 0.811 percent premium, and the FDIC expects the failure will cost its insurance fund $72 million.

United Bank also purchased $60.6 million in assets as part of the deal. The FDIC will hold the remainder of First Georgia Community’s assets, totaling $237.5 million, for later disposition.

 

Real estate investors decry four-loan limit;  New rule restricts number of loans backed by Fannie Mae, Freddie Mac, by D.L. Bennett (free reg. req'd). 

The new policy, which limits to four the number of real estate loans by one person that will be backed by mortgage giants Freddie Mac and Fannie Mae, has spread to most local and national lenders. Experienced investors, frustrated and angry, complain the limits prevent them from buying bargain homes and possibly helping resolve the mortgage crisis...  The new policy, which went into effect Dec. 1, was designed to keep small-time investors from getting in over their heads and losing numerous rental properties to multiple foreclosures.  The previous 10-loan limit was easier to get around, investors say...

“The four-house rule is going to keep us in a recession longer,” said Tom Hutchens, a Dunwoody mortgage broker and real estate investor. “It’s going to keep qualified buyers out of the market.” ..