At the Pew Law Center, we’ve been reporting on high-profile bankruptcy cases across the nation. Today, we’ll take a look at where some of those bankruptcy cases are in the first quarter of 2013.
Ding Dong! Hostess Files Chapter 11
Back in January 2012, heavily unionized Hostess Brands, Inc., filed for Chapter 11 bankruptcy relief. Memorable for the hardened positions taken by the Bakery, Confectionery, Tobacco Workers & Grain Millers International Union, here’s where Hostess Brands was on March 1, 2013.
Following nationwide strikes by the bakers union, Hostess decided last November to close operations and liquidate its assets. Since then, Mexico’s mega-bakery Grupo Bimbo has been in the forefront ready to buy up many of the Hostess brands and bakery facilities. Grupo Bimbo just won the auction bid from challenger Flowers Foods, Inc., headquartered in Georgia (Cobblestone Mill, Nature’s Own, Tasty Kake). The bidding war was over the “Beefsteak” brand which went to Grupo Bimbo for $31.9 million. Among Grupo Bimbo’s U.S.A. brands are Entenmann’s, Sara Lee, and Earth Grains.
Chapter 11 Transforms Another Kodak Moment Instamatically
In another January 2012 bankruptcy, having resisted the shift to digitalized photography in the marketplace, the Eastman Kodak Company and its subsidiaries inevitably filed for Chapter 11.
The pride of inventor George Eastman, Kodak would need to raise $600 million under an amended financing agreement through the sale of its noncommercial imaging assets and trademarks. Approval of the amended financing agreement is currently pending before the bankruptcy court. Preparing to file a reorganization plan in April of this year, Kodak is expected to emerge from its bankruptcy this summer. If all goes as planned, Kodak’s operations will be in the nature of commercial imaging.
Tale of Two Cities: Detroit and Stockton on the Brink of Bankruptcy
Since we reported on the financial struggles of Detroit, Michigan, and Stockton, California, today both cities continue to deal with challenging financial decisions.
In Detroit, Governor Rick Snyder declared on Friday, March 1, that the Motown is in a state of financial emergency. According to the Governor, “There’s probably no city that’s more financially challenged in the entire U.S.” Assuming Detroit’s Mayor David Bing requests a hearing on the Governor’s decision, but the result is unchanged, an emergency financial manager will be appointed. With long-term liabilities over $14 billion, with more than a $327 million budget deficit, with bankruptcy looking more likely each day, we could see Detroit make history as the largest municipal bankruptcy ever.
Out of reasonable options, the City of Stockton filed for bankruptcy protection in June 2012. At the end of February 2013, the city filed its response to creditor objections to any grant of bankruptcy relief in the Chapter 9 proceedings. This is an eligibility issue in which the “city’s filings directly address arguments made by creditors and their hired experts about the city’s insolvency and good faith negotiations during the pre-bankruptcy mediation processes.” Recently, a federal bankruptcy judge approved Stockton’s request to purchase four new fire trucks to replace a portion of its antiquated fire engines.
Call the Pew Law Center at (480) 745-1770 for Bankruptcy or Tax Relief Assistance
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