BUSINESS & BANKRUPTCY LAW ASSOCIATION

2009

WEEK OF APRIL 6th

Lubbock Ranked Among Best Housing Markets
by Erin McMath 

     A study by Local Market Monitor places Lubbock among the top ten housing markets in the U.S. where housing prices are expect to increase by at least two percent over the next year.  Abilene and El Paso were also listed in the top ten.  Please click here to access the full article.                        

Stocks Gain for 4th Straight Week        
by Cardin Watson                                                                                                                                    Stocks rallied Friday, finding momentum at the end of a choppy session influenced by a wretched March jobs report, bringing the recent advance to four straight weeks. The Dow Jones industrial average gained almost 40 points, or 0.5%. The S&P 500 index added 8 points or 1%. The Nasdaq Composite added 19 points, or 1.2%. Since hitting 12-year lows on March 9, stocks have been on a tear with all three major gauges rising at least 20%. The stock market has been rising on hopes that the worst has happened and that some of the government's attempts to help the financial sector and economy will work. This week, leaders of the world's 20 largest economies pledged over $1 trillion to boost the International Monetary Fund and agreed to better monitor the global financial system. Please click here to access the full article.

Strike While The Iron's Hot! Ten Purchases to Make Before the Recession Ends.
by Jake Moore 

     High unemployment and public apprehension about the future of the economy are bad for business. At least for those who own a business. For consumers, such times can be an opportunity. Here the author covers 10 purchases that those who are able ought to make before demand recovers. If you're looking to move, get engaged, refurnish, etc... this is worth a look. Please click here to access the full article.

Libraries See Increase in Patronage During Tough Economic Times
by Erin McMath

     As the economic crisis continues, libraries across the country are seeing a ten- to thirty-percent increase in patronage over previous years.  Libraries have become a hot spot for job seekers who are taking advantage of libraries’ free Internet access, books on resume writing, and workshops for job seekers.  But as patronage increases, many libraries are also seeing an increase in stress levels.  Budget cuts, increased crime, and distraught patrons are just some of the issues libraries are facing.  Please click here to access the full article.

WEEK OF MARCH 30th

GM Head Resigns at Request of White House
by Jake Moore

   General Motors Chairman and CEO Richard Wagoner has agreed to a White House request that he immediately resign. Wagoner has been CEO for eight years, including the last four year during which GM has lost $82 billion. The move is part of a restructuring plan expected to deliver $16.4 billion dollars in federal loans to GM. This is in addition to the $13.4 billion already received. With car sales declining generally, and even more steeply for GM and Chrysler (which also is dependent on tax dollars to avoid bankruptcy), the company has said it requires the extra money to stay solvent. Please click here to access the full article. 

MGM Makes $200 Million Dollar Construction Payment on Giant Casino
by Erin McMath

   On Friday, MGM Mirage made a $200 million construction payment for its CityCenter development in Las Vegas.  Half, or $100 million, of the payment was for the amount owed by Dubai World, MGM’s partner in the CityCenter development. MGM made the payment after Dubai World filed a lawsuit against MGM on March 23, in which Dubai World alleged that MGM’s financial state has put the CityCenter project at risk.   Dubai World cited MGM’s annual financial report, in which MGM warned that it could default on its loans for the CityCenter project forcing MGM or the joint venture into bankruptcy. Please click here to access the full article.

Inadvertent Stimulus?
by Jake Moore

   President Obama has sought to affect consumer confidence such that consumer spending will increase. The strategy has succeeded wildly in at least one field: firearms. A boom in gun and ammunition sales was widely reported in the days just after President Obama's election, but comments from Attorney General Eric Holder made months later appear to have added fuel to the fire. In February, Holder hinted the administration favored reinstating bans on certain assault weapons. The bans were originally enacted under President Clinton in 1994, but then lapsed during President Bush's subsequent term. Fears of new bans have driven buyers to stock up at what one industry insider described as "an incredibly brisk pace." Demand has been so strong that manufacturers are struggling to keep up. One Tennessee based supplier now has wait lists of over 60 days. Please click here to access the full article.

WEEK OF MARCH 23rd

Texan Entrepreneurs Find Ways to Survive Recession
by Jake Moore

   Focusing on businesses in Houston and Ft. Worth, this story on entrepreneurs thriving in the current economy has a Lone Star feel. The three essential strategies seem to be to focus on cash rather than credit, to expand your customer base, and to cut costs. Please click here to access the full article.  

U.S. Seizes Two Large Credit Unions
by Cardine Watson

   In it's latest effort to prop up the financial system, the federal government seized two large credit unions on Friday. U.S. Central Federal Credit Union in Lenexa, Kan., and Western Corporate Federal Credit Union in San Dimas, Calif., were placed under conservatorship "to stabilize the corporate credit union system and resolve balance sheet issues," according to the National Credit Union Administration. The NCUA is a federal agency responsible for regulating federal credit unions. U.S. Central Federal Credit Union has about $34 billion in assets, with 26 retail corporate credit union members. WesCorp has $23 billion in assets and approximately 1,100 retail credit union members. Please click here to access the full article. 

Top States in Which to Live
by Jake Moore

   A survey conducted by Gallup ranked states 1-50 in “best” places to live. The survey included measurements of healthy behavior, quality of the environment, and resident’s optimism about the future. Utah scores the top overall spot, while West Virginia brings up the rear. Please click here to access the full article.

WEEK OF MARCH 9th

Bankruptcies In Houston Fell In 2008
by Erin McMath

   While there were 31.4 percent more bankruptcy filings in the United States in 2008 than in 2007, bankruptcy filings in the Houston area during the same time period fell by 6.1 percent.  Houston bankruptcy attorneys credit this to oil that was at one time $147 a barrel, a housing market that stayed in control, and, surprisingly, Hurricane Ike.  Hurricane Ike helped because many mortgage companies gave foreclosure forgiveness, and construction companies received business for work on existing homes.  Attorneys do not expect Houston to fare as well in 2009. Please click here to access the full article.  

Top Ten Big Cities with Small Taxes
by Jake Moore

   From Alaska to Florida and New Hampshire to Arizona, here are 10 major cities where local taxes are surprisingly low. The survey measures income, property, sales, and auto taxes and tells you what cities will largely stay out of your wallet. In 2010, about two-thirds of current law students will have graduated. Coincidentally, federal income taxes are scheduled to increase in 2010, which may make these localities more attractive in coming years. Please click here to access the full article. 

Bringing Rationality to the NFL's Pay Scale
by Guest Columnist Zach Thomas

   Last year Atlanta Falcons quarterback Matt Ryan signed his contract and in that moment became the fourth highest paid player in the NFL. He hadn't yet taken a training camp snap, nor put on an NFL helmet, but was guaranteed almost $35 million. Ryan plays the most important position on the field, and was drafted first which means an automatic windfall. Commissioner Roger Goodell has hinted that these days may be coming to an end. Within the next two years, the NFL will renegotiate its collective bargaining agreement with the Players' Union. One issue Goodell has suggested he wants addressed is a rookie pay scale that would mean players like Ryan would set foot on the field before earning more than their entire offensive line. Please click here to access the full article.

WEEK OF MARCH 2nd

Taxpayers to Pour $30,000,000,000 More into AIG
by Cardine Watson

   The U.S. government will pour roughly $30 billion into American International Group Inc. as the embattled insurer prepares to report the biggest loss in history. This would be the third time the government has had to bailout AIG, once the biggest insurer by market value, whose size, in the eyes of some has made it too big to fail. Please click here to access the full article.

Know Your Enemy, or at Least Your Next Client
by Jake Moore

   See how the other half lives. This article is aimed at those seeking an attorney. Understanding how prospective clients may go about seeking legal counsel may help you to be the counsel they eventually find. This in turn may help you make the next payment on the yacht, or failing that, at least keep from being evicted from your office! Please click here to access the full article. 

Summer Jobs Dry Up
by Erin McMath

 If you are 1L or 2L who does not have a summer job, yet, you are not alone.  According to CNNMoney.com, many students in law, finance, and other professional fields are having a difficult time finding summer jobs. Firms are uncertain what the future holds and are therefore hiring fewer or no students for their summer internship programs.  The assistant dean for career development at Pace Law School says it is important for students to be proactive and flexible in their job search. Please click here to access the full article.

A Loans B $500. Plan to Let Judges Declare B Borrowed Only $300 Might be Frustrated
by Jake Moore

   Unexpectedly strong Congressional resistance from both sides of the aisle may delay or even derail a proposal to help prevent foreclosures. Legislation introduced in the House would allow bankruptcy judges to lower the principal on home loans to the present market value of those homes. In effect, this would cause banks that loaned the entire purchase price of the homes to "eat" the reduction in market value. The bill has White House backing, but Speaker of the House Nancy Pelosi was forced to delay a vote on the measure scheduled for early last week when centrist Democrats expressed concerns. Please click here to access the full article.

WEEK OF FEBRUARY 23rd

America's 5 Most Loved and 5 Most Hated Cities
by Jake Moore

   The Hub City we all call home - at least for much of the year - isn't known as a glamour destination. This is a trait it shares with cities like Detroit and Cleveland, which earned low marks on this survey. On the other hand, Lubbock has a fair bit in common with one of America's top cities, as measured by how much people expect they'd enjoy living there. In fact, this city is in the same state, is just a short road trip away, and many Tech Law grads work there. Want a hint? Any presumptuous Longhorns should read the article before gloating. Please click here to access the full article.

Law Firm Offers Buyout Deal to Senior Staff
by Erin McMath

   The Washington, D.C.-based law firm Hogan & Hartson is taking a proactive approach in order to avoid outright layoffs.  The firm is offering each staff member who has more than five years of experience a buyout package consisting of four weeks of pay plus one week of pay for each year the staff member has worked for the firm.  This could amount to as much as 20 to 30 weeks of pay for some senior staffers.  Please click here to access the full article.

Watch for Falling Taxes
by Jake Moore

   President Obama has ordered the Treasury Department to implement reductions in withholding requirements for 95% of American wage earners. This means that by March 1, less money will be withheld from paychecks, nationwide. This action is part of the $787 billion stimulus package the President signed last week. Some Americans who will benefit from this step would ultimately have received a full federal tax refund. In their cases, this is not, strictly speaking, a tax cut. Still, it may help boost the economy as these workers will have access to more of their money more than a year earlier than if they'd had to wait for a refund on their 2009 returns. Please click here to access the full article.  

WEEK OF FEBRUARY 16th

Peanut Company Files for Bankruptcy Protection
by Erin McMath

   Peanut Corporation of American, the company whose products have been linked to the salmonella scare, has filed for Chapter 7 bankruptcy.  Nine deaths and 636 cases of food poisoning have been traced to PCA.  The company's bankruptcy attorney said PCA was hoping to reorganize but decided that would not be possible.  An attorney representing clients suing the company said he will move to have the stay of litigation lifted so that new claims against PCA can be made.  Please click here to access the full article.

I Can't Drive 55! Outrunning the Recession (legally) at Over 100mph
by Jake Moore

   If you don't find driving at 20mph around Texas Tech exhilarating, you might consider a private racing club. These institutions are booming despite the generally grim economic environment. Popping up all over the country, this relatively new industry allows every day citizens to take their vehicle to its limit and release a little tension at the same time. One catch: this is not a cheap form of entertainment. Entry costs run as high as $125,000, which helps explain why Ferraris are more common than Kias at these tracks. Please click here to access the full article.      

Chrysler in a Crunch
by Cardine Watson

   Chrysler has been scrambling to get dealers to order more cars. The push will bring in cash, but it also undercuts the value of Chrysler's cars and trucks, analysts say, applying a short-term fix to a long-term problem. Chrysler's sales pitch to dealers was that having more orders on its books would help the automaker appear healthier to the government, to which it has to submit a viability plan on Tuesday. Without Uncle Sam's thumbs up, Chrysler would not only lose out on $3 billion in requested loans, but it would also have to give back $4 billion already lent to it. In order to sell all these vehicles, Chrysler is going to have to rely heavily on incentives, something the automaker is already doing. Last month, Chrysler spent $4,300 on incentives per vehicle. The industry average was $2,700. Besides costing money and eating into profits, incentives drive down the value of vehicles in the used car market. That causes an ongoing drag on sales by making returning customers' trade-ins worthless and by making other car shoppers reluctant to buy the vehicles at all. That, in turn, leads to more incentives, and so on, in a cycle that can be difficult to break. Please click here to access the full article.  

Bankruptcy: Chapter (11) and Verse
by Jake Moore 

   In this story, Melanie Lender explores the consequences of bankruptcy in its various forms. She also discusses the circumstances that might cause one to discharge debt through bankruptcy. She also examines those who should not. For example, those who obtained a loan with a co-signer will dump the entire balance onto that person if they declare bankruptcy. One note that might be of interest to many of us is that educational loans can't be discharged through bankruptcy. Please click here to access the full article.  

WEEK OF FEBRUARY 9th

Giant Companies Born in Hard Times
by Jake Moore 

    Think tough economic times make it harder to start a successful business? Well ok, that's basically true. But here are the interesting stories of six companies that defied the odds and grew into powerhouses. Five of them have even survived without receiving billions of taxpayer dollars in recent months! Please click here to access the full article.  

The Lesser-Known Job Problem
by Erin McMath

    There were nearly a quarter-million layoffs in January, but this is not the only problem facing the unemployed today.  A lesser-known but just as significant problem is the hiring freeze many employers have imposed.  Statistics from the Labor Department indicate that the level of hiring and job openings has decreased more than the number of layoffs has increased.  Moreover, economists expect that even if the number of layoffs peaks soon, it could take months longer for hiring freezes to be lifted.  Please click here to access the full article 

Most Miserable Cities for Business
by Jake Moore

    One good list deserves another. Click below to see a slideshow of the "Bottom 10" or the "Dirty (near) Dozen." With a handful of so-called "Rust Belt" cities, the list generally reflect the relative decline of the American manufacturing sector. However, warm-weather is no guarantee to keep a city off the list, as both Florida and California are represented. Please click here to access the full article

Stimulus Bill on the Way
by guest writer John Maynard Keynes 

    Very likely this week, Congress will pass a stimulus bill costing around $820 billion. Senate and House versions of the bill must still be reconciled, but expenditures are expected to range from infrastructure projects to funding for the National Endowment for the Arts. Counting the $350 billion remaining of the $700 billion bailout passed last year, in the coming weeks Congress will spend more than a trillion dollars in an effort to jolt the economy. The author does a good job helping readers grasp the enormity of these numbers. For example, read the story to find whether the U.S. has spent more money on bailouts in the last year or on military operations in Iraq and Afghanistan since 2001. Please click here to access the full article  

WEEK OF FEBRUARY 2nd  

Slim Chance of Recovery in 2009                                               
by Jake Moore 

    The Gross Domestic Product fell by 3.8% in the final quarter of 2008. This was less than the expected 5.5% decline. Yet, this is not the encouraging sign it might appear to be. According to author Anthony Karydakis, there are four reasons why a significant turnaround in 2009 is unlikely. Karydakis points to a reduction in capital spending as one indicator suggesting that recovery lies in 2010 at the earliest. Please click here to access the full article.

Bankruptcy Lawyers Seek $18.50 A Minute From Court                  
by Erin McMath  

   As the economic downturn continues, many bankruptcy lawyers are charging more than ever.  In fact, total fees paid for lawyers, accountants, and other professionals in bankruptcy cases are growing at four times the rate of inflation.  Bankruptcy lawyers at Kirkland & Ellis LLP are asking the court to approve fees as high as $1,110 an hour.  While judges usually approve attorneys’ fee requests, a Seton Hall University School of Law professor believes that bankruptcy fees could be challenged on grounds that rather than restructuring companies, lawyers are mostly liquidating them.  Please click here to access the full article.

Stocks:  New Months, More Fears                                               
by Cardine Watson

   After the Dow and S&P 500 ended their worst January ever, the week ahead brings reports on all areas of the economy, including consumer spending, retail sales, manufacturing, and housing. The biggest focus will be the government's January employment report, due Friday, with companies expected to have cut at least half a million jobs during the month. Companies have been shedding jobs left and right this year in anticipation of a deeper recession than was previously expected. Last week alone saw companies announce more than 100,000 layoffs. Please click here to access the full article.

Sports Franchises’ Values Have Exploded.  Can Growth Continue Despite the Economic Downturn?                                               
by Jake Moore

   Five years ago there was no such thing as a billion dollar sports team. Now there are more than 20. These include most teams in the NFL, several European soccer teams, and the New York Yankees. However it appears for that the skyrocketing value of sports teams may finally be leveling off. Panicked selling isn't forecasted, but given the difficulty in arranging financing of the necessary magnitude, it appears unlikely any of the most valued franchises even could be purchased at the moment. Please click here to access the full article.

WEEK OF JANUARY 26th  

Lawyers Make Your Clients Pay!                                                  
by Jake Moore  

   A common nuisance for lawyers, and for most small businesses, is collecting from delinquent clients. After all, working for your clients with total selflessness will lead to eviction from your office and repossession of your furniture. Various tactics are discussed ranging from simply choosing clients carefully to using the internet to make credit card payment feasible. Many small business owners worry that getting tough may cost them clients. Anecdotal evidence suggests that this isn’t as large a problem as most fear, and besides, as one expert counters, “You lose customers who aren’t going to pay you anyway.”  Please click here to access the full article.  

Forced CEO: ‘No More Money’ Needed                                      
by Cardine Watson

   Ford contends they have sufficient liquidity to fund their transformation plan. Executives for Ford Motor Co. are saying that the automaker has enough liquidity to fund its restructuring plan and despite the deep downturn in auto sales still see no need to ask for government loans. Ford executives are also saying they are in a better shape than their rivals because they borrowed more than $23 billion in 2006. Additionally, Ford expects an economic stimulus package being pushed by new President Barack Obama to drive a recovery in auto sales starting in the second half of the year and maintains its forecast of U.S. auto sales at 12 million to 12.5 million units. However, analysts have forecast U.S. sales in a range between 10.1 million and 12.5 million units for 2009. Please click here to access the full article.

McDonald’s Expands Despite Economic Downturn                        
by Erin McMath

   In addition to the numerous retailers who have been impacted by the economic downturn, many restaurants have experienced financial challenges.  McDonald's, however, is planning to expand. The fast-food restaurant plans to invest $1.1 billion in opening and remodeling restaurants in Europe this year.  McDonald's Europe experienced a 7.2% sales increase in the third quarter despite a slowdown in the informal eating-out and quick-service restaurant market during the same time period.  According to Denis Hennequin, the president of McDonald's Europe, the company has "gained market share in a market that is not expanding."  Please click here to access the full article. 

A Silver Lining? Dollar Makes Gains on Euro & Pound               
by Jake Moore

   Europe’s two most prominent currencies may need to watch their rears. A glance in the rearview mirrors would reveal the American dollar roaring up behind them, closing the gap that had accumulated in recent years. The news is soured somewhat by the fact that the dollar’s relative gains have less to do with American economic recovery than the faltering of both the Euro and Pound. Nevertheless, the dollar’s proverbial stock is on rise. Please click here to access the full article.

WEEK OF JANUARY 19th   

Hail to the Chief (Economic Advisors?)

by Jake Moore

    Today millions of Americans will watch Barak Obama become the 44^th President of the United States. Inaugurations generally inspire patriotism and hope, but because of the barrier shattering nature of his election, Obama’s inauguration will be uniquely moving to countless Americans and inspire pure joy in many. But according to his aides, the new Commander-in-Chief will quickly switch gears from celebratory to practical. His top priority? Economic recovery. This article offers a rough outline of the new administration’s goals. One key aim is to manage expectations. While not exclusively related to economics, it makes clear that whatever else happens, the administration sees management of the struggling economy as job one. Please click here to access the full article.

City Shorts Out Circuit

by Cardine Watson

    Circuit City Inc., the nation’s second largest electronics retailer behind Best Buy, will liquidate and close all of its 567 U.S. stores. Concerns over the company’s ability to pay manufacturers for new inventory made continuing operations infeasible. Closure was ultimately sealed when the company failed to reach an agreement with its creditors and lenders to structure a going-concern transaction. According to retail experts, management mistakes in recent years combined with the recession brought down Circuit City. Additionally, the company has 34,000 employees. The Circuit City employees will receive 60 days' notice of the termination. However, the company said its Canadian operations will continue to operate. Please click here to access the full article.

For Business Big and Small, It's Lights Out

by Erin McMath

    Business bankruptcy filings rose significantly in 2008, and as the year progressed, the number of businesses looking to liquidate rather than restructure also increased.  There were 64,318 commercial bankruptcy filings in 2008, which is the most since 2005, when many debtors rushed to file before changes in bankruptcy law took place.  In addition to the numerous bankruptcy filings among retailers, analysts have reported a rise in filings in many other industries including hospitality, gaming, and automotive supply.  According to experts, changes in bankruptcy law have made it more difficult for companies to restructure.  For example, the implementation of shorter time periods for accepting and rejecting leases and proposing or confirming a reorganization, has forced debtors to make decisions more quickly and made restructuring more challenging. Please click here to access the full article.

Entrepreneurs Won't Go Gently Into That Good Night!

by Jake Moore

    Two California women have started a "Revolution" in the school lunch business. Revolution Foods aims to capitalize on two economic forces that - particularly in California - are recession resistant: government and the desire to stay fit. Boasting organic and locally produced food products while bemoaning the hazards of soda, founders Kristin Richmond and Kirsten Tobey hope to defy bleak economic forecasts and ride the wellness wagon straight to the top! Please click here to access the full article.

2008

WEEK OF NOVEMBER 17th   

Leaders Seek to Prevent Future Economic Crisis

by Erin McMath

    World leaders from twenty countries met in Washington, D.C., over the weekend to discuss the current global economic crisis.  The leaders adopted broad goals in the hope of reviving the global economy and avoiding future financial meltdowns. The plan calls for an early warning system for possible economic problems and the creation of groups of financial regulators from different countries to detect risky investing and other possible problems.  The leaders also discussed the importance of free-trade and international monitoring of markets.  Leaders plan to hold another summit by April 30. Please click here to access the full article.

Nokia Lowers Mobile Sales Outlook

by Cardine Watson

    Friday, the world's largest cell phone maker, Nokia, downgraded its outlook for industry wide mobile device volumes for the fourth quarter, citing pressure from the economic. The rapid change in consumer spending will eventually hit the mobile device market. The decrease in spending will lead to lower sales and possibly employee layoffs to cut cost. Nokia also projects reduced sales industry-wide in 2009, mainly because of the overall economic slowdown.  Please click here to access the full article.                                        

Office Holiday Party Pits Money Against Morale

by Dominica Moore                                             

    Companies are replacing catered holiday parties with potlucks.  Due to our poor economy, companies are forced to forgo the Christmas parties or cutback on lavish parties and have smaller, more practical gatherings instead.   Experts say there are two reasons for this 1) economics and 2) perception.  Companies do not the public to see them as blowing money when their employees fear losing their jobs.  Other companies simply cannot afford the holiday frills.  Some experts suggest that canceling the parties altogether can have damaging effects.  They believe canceling can sap morale.  Please click here to access the full article.                                                       

 

Goldman Sachs Executives Pass on Bonuses

by Jake Moore

   In the wake of the $700 billion federal bailout and concerns over how those funds are being dispersed, leaders of Goldman Sachs have decided to forego their year end bonuses. Each of the executives earns a salary of $600,000. This is a particularly large sacrifice for CEO Lloyd Blankfein. Last year, Blankfein’s bonus was nearly $70 million.  

    New York Attorney General Andrew Cuomo, who has been leading a charge against large bonuses by companies receiving bailout money, described the decision as, “a step in the right direction.” Goldman Sachs was among nine banks that received a collective $125 billion as part of the federal bailout plan.  Please click here to access the full article.