Dex Media Bankruptcy

Dex Media, Inc. is a digital marketing company that has undergone organizational changes, mergers, and bankruptcies within the past decade. Now it is preparing for yet another bankruptcy to begin in December 2015.

The Chapter 11 bankruptcy filing is meant to alleviate over $2.3 billion in debt with the help of its senior lenders. The company has been struggling with its debt since at least September 30, when a group of junior bondholders threatened involuntary bankruptcy as a result of the company skipping interest payments. Now the company is seeking the support of a wider group of lenders in preparation for the filing.

The two businesses that merged to form Dex Media both previously went through bankruptcy filings of their own. R. H. Donnelley Corp. filed for Chapter 11 bankruptcy in May of 2009. It emerged from the proceedings as Dex One Corp. and soon decided to merge with SuperMedia Inc. This company had also filed for bankruptcy in August 2012. The merged company filed again in March 2013 in a pre-packaged bankruptcy that was intended to facilitate the merger.

Dex Media, Inc. intends to allow investors to recover on their investments. However, the aggression from junior creditors will likely lengthen and complicate the proceedings. The fact that the company is already in default because it skipped the September 30th interest payment does not simplify matters. The holders have declared that the debt is immediately due in full. The company is also in default on four term loans, but the agreements allow for additional time for restructuring.

Dex Media, Inc. shares have lost 98.5% of their value this year. Hopefully this round of bankruptcy and restructuring will help the company enough to finally become profitable and self-sufficient.


Beware of Debt Relief Scams

Beware of Debt Relief Scams

Anyone who has experienced debt knows how stressed out and desperate it can make you feel. It seems impossible to pay off debts while more bills are constantly coming in, and a person can easily become desperate enough to seek relief from other sources. When someone is in this position, it is easy for scammers to take advantage of them by offering hope with no actual solutions, resulting in even more problems.

There are many companies out there that scam struggling families out of what little money they have left, but the government is working on rooting them out. Recently, the Federal Trade Commission went after a debt relief operation called DebtPro 123, and its effort ended in a settlement of $7.9 million.

How the Scam Worked

The foundation of any debt relief scam is making false promises to desperate people. According to the FTC, DebtPro 123 told its clients that its “debt resolution program would completely resolve consumers’ credit card and other unsecured debts (including department store accounts, personal loans, medical bills, student loans, and accounts with collection agencies.” They claimed that they reduce their clients’ debts by 70-80%, including fees, and they ensured that their clients would “become debt-free quickly and comfortably”.

Any company that advertises a “quick” and “comfortable” plan for debt relief is dishonest. Paying down your debts will be a long and painful process, even with good organization and outside help.

Promises vs. Reality

DebtPro 123, along with other convincing scams, use professional-sounding words and methods to entice potential customers into their trap. DebtPro 123 claimed to have a “debt calculator” that backed up their claims. The company also had a two-step program for debt relief. The first step was the client investing in a “Creditor Fund/Settlement Account” to be used for negotiations with creditors. The second step was for the client to wait while DebtPro 123 worked on getting their debt terms changed.

While the client awaited financial relief, DebtPro 123 urged that they stop paying their bills and stop communicating with all creditors. Since nothing was actually being done, this resulted in the piling up of bills, interest, late fees, and other penalties. The company claimed that they would remove negative information from the clients’ credit files. This was an empty claim, since most negative credit information will remain on reports for seven years no matter what.

DebtPro 123 also assured its clients that they had a skilled legal team backing up their claims. They told clients that, “the attorneys will communicate directly with your creditors and debt collectors via the mail and telephone. They will audit your bills and the collection methods being used by the creditors to determine if your consumer rights have been violated.” Shockingly, when the FTC investigated DebtPro 123, they found that there was “no legal department, ‘legal in-house counsels’ or any attorneys on staff.”

What Actually Happened to the Clients

The people unfortunate enough to trust DebtPro 123 ended up in a much worse situation than before. Money that should have gone towards paying off debts instead went into DebtPro 123 fees. Creditors who were not receiving payments filed lawsuits against the debtors. The clients ended up more in debt, causing some to lose their homes, have their wages garnished, or file for bankruptcy.

Debt Negotiation vs. Bankruptcy

If you are struggling with debt and considering debt relief options, this article may have filled you with even more anxiety, but it’s important to seriously look into any company that claims that it can provide aid before giving them money.

You may also want to consider bankruptcy as an option, depending on your circumstances. There are differences between how the saved money is handled in debt negotiation verses bankruptcy. In debt negotiation, all of the money that is saved is taxed, so you still end up having to pay off some of the debt. With bankruptcy, there is no charge for discharged debts.

If you are in serious need for either debt negotiations or bankruptcy, you should first consult an attorney to make sure your money goes to the right place. Dan Higson is experienced in all aspects of California debt laws. Call today if you have any questions about your situation.

Chapter 9 Bankruptcy

Chapter 9 of the Bankruptcy Code provides for the reorganization of municipalities. These include cities and towns, counties, taxing districts, municipal utilities, and school districts. Although it is unlikely that you will ever take part in Chapter 9 proceedings, they are a very interesting part of bankruptcy law that can have widespread effects.

History of Municipal Bankruptcies

The first municipal bankruptcy legislature was enacted in the middle of the Great Depression in 1934. When drafting the legislation, Congress had to be particularly careful not to interfere with the sovereign powers of the states as given by the Tenth Amendment to the Constitution. Even with this caution, the Supreme Court ended up declaring the 1934 Act unconstitutional as an improper interference with the sovereignty of the states in 1936 in the caseAshton v. Cameron County Water Improvement District.

In 1937, Congress enacted a revision of the Municipal Bankruptcy Act. This version was upheld by the Supreme Court in the 1938 case United States v. Benkins. The law has been amended several times since then, but is still holding strong. Chapter 9 cases are relatively rare. Since the creation of municipal bankruptcies, there have been fewer than 500 petitions filed. However, since they cover such a large area when compared to other chapters, they can have extensive and lasting results. For example, the 1994 filing by Orange County, California, involved hundreds of millions of dollars in municipal debt.

Municipal Bankruptcy Basics

Chapter 9 bankruptcy provides protection for financially distressed municipalities from creditors while they restructure their debts. This debt adjustment can involve the extension of debt maturities, the reduction of principal or interest, or the refinancing of a debt through a new loan.

Unlike other chapters, municipal bankruptcy contains no provisions for the liquidation of assets and distribution of proceeds to creditors. This type of liquidation would violate the states’ sovereignty over internal affairs from the Tenth Amendment to the Constitution. Because of such restrictions, the bankruptcy court is much less active in Chapter 9 cases. The court is mostly limited to approving the petition, confirming the plan for debt adjustment, and ensuring that the plan is implemented.

Eligibility for Chapter 9

Chapter 9 bankruptcy can only be filed by a municipality, which is defined as a “political subdivision or public agency or instrumentality of a State.” This includes cities, counties, townships, school districts, and public improvement districts, as well as some general service providers such as bridge and highway authorities.

When a municipality files for Chapter 9 bankruptcy, there are four further eligibility requirements set by Bankruptcy Code:

  1. The municipality must be authorized to be a debtor by state law or government officer.
  2. The municipality must be insolvent (unable to pay off the debt).
  3. The municipality must desire to pay off its debts with a plan.
  4. The municipality must attempt to obtain an agreement from creditors holding the majority of the claims.

Commencing the Case

When a municipality files for Chapter 9 bankruptcy, they must provide a list of creditors and be assigned a judge. Other types of bankruptcy begin with a clerk assigning the case to a particular judge. However, at the beginning of a Chapter 9 case, “the chief judge of the court of appeals for the circuit containing the district in which the case commenced [designates] the bankruptcy judge to conduct the case.” This provision was designed to keep politics out of municipal bankruptcy cases and ensure that the judge would be able to handle such a case.

At the beginning of the case, notices must be published publicly. Objections may be filed, and hearings will be held for each objection. If the petition is not dismissed because of an objection, the case will proceed.

Automatic Stay

Automatic stay applies to Chapter 9 bankruptcy and halts all collection actions against the debtor after filing the petition. This protects officers of the municipality from creditors acting on behalf of a prepetition debt.

Court Limitations

The bankruptcy court is much more limited during Chapter 9 cases than other types of bankruptcy cases. The court cannot interfere with:

  1. The political or governmental powers of the debtor.
  2. The property or revenues of the debtor.
  3. The debtor’s use of income-producing property.

These rules are in place to ensure that the debtor’s day-to-day activities do not have to be approved by the court. The municipality may also borrow money without the court’s consent. Since there is no estate involved, the court cannot appoint the usual type of trustee and cannot interfere with the debtor’s use of its property and revenues. Instead, a U.S. trustee is appointed to the case, but has limited involvement.

Each of these rules is in place to ensure the constitutionality of the proceedings. Otherwise the court might obtain control over a governmental or political affair or property.

Powers of the Creditor

During a Chapter 9 bankruptcy case, the creditors have a more limited role to play. There is no first meeting of creditors, and they cannot propose competing plans. If approved, the debtor’s plan is binding even on dissenting creditors.

There is a creditor’s committee similar to other types of bankruptcy chapters. Its duties include employing attorneys, accountants, or other agents for their own representation, consulting with the debtor, and participating in the plan’s formulation.

Powers of the Debtor

Overall, the debtor has more power over the case during Chapter 9 bankruptcy. A municipal debtor may use its property, raise taxes, and make expenditures freely. It may also borrow money during the Chapter 9 proceedings as an administrative expense and employ professionals without court approval. These aspects are crucial to the survival of the municipality during the case.

Confirming a Plan

Seven general conditions must be met if a plan is to be accepted by the bankruptcy court in a Chapter 9 case:

  1. The plan must comply with the provisions of title 11.
  2. The plan must comply with the provisions of chapter 9.
  3. All amounts to be paid by the debtor must be disclosed and reasonable.
  4. The debtor is not prohibited by law from taking any action necessary to carry out the plan.
  5. On the effective date of the plan, each holder of a claim will receive the amount of cash specified by the claim.
  6. Regulatory or electoral approval necessary under nonbankruptcy law has been obtained.
  7. The plan is feasible and in the best interest of the creditors.


A municipal debtor receives a discharge in a Chapter 9 bankruptcy case after three requirements are met:

  1. The plan is confirmed.
  2. The debtor deposits any consideration to be distributed under the plan with a disbursing agent appointed by the court.
  3. The court determines that securities deposited with the disbursing agent will constitute valid legal obligations of the debtor.

There are two exceptions for discharging debt during a Chapter 9 case. Firstly, any debt excepted from discharge by the plan will not be discharged. Secondly, a debt that is owed to an entity that did not receive prior notice of the case before confirmation of the plan will not be discharged.


Chapter 9 cases are a rare and interesting aspect of bankruptcy law. Although there are many similarities with other bankruptcy chapters, since municipalities are entrenched within state governmental establishments, the rules have been altered significantly in order to remain constitutional. Hopefully the next time you see a Chapter 9 case in the news you will have a better understanding of what is involved.Chapter 9 Bankruptcy

American Apparel files for Chapter 11 Bankruptcy

American Apparel files for Chapter 11 Bankruptcy


American Apparel, the notorious American-made clothing manufacturer and retailer based in Los Angeles, has been struggling for years. The company rose to prominence after being founded in 1989, but harsh competition has developed from retailers such as H&M and Forever 21 that provide cheaper fashionable clothing for their young customers.

American Apparel has not made a profit since 2009, and in 2014 its founder and CEO Dov Charney was ousted due to allegations of misconduct in the workplace. In August of 2015, the company warned investors that it won’t be able to “sustain operations for the next twelve months,” and American Apparel files for chapter 11 bankruptcy on October 5th.

Chapter 11 Bankruptcy

Filing for Chapter 11 bankruptcy will give the failing company a chance to reorganize while continuing production. The retailer claims that it has already come to an agreement with its creditors on a restructuring plan that addresses 95% of its secured debts. Currently the company employs around 8,500 people in over 200 stores spread across nearly 20 countries but the plan proposed to the court includes shedding some of its unprofitable stores.

CEO Struggles

The relationship between American Apparel and its previous CEO continues to be rocky, and it is not clear how the bankruptcy will affect Dov Charney. He has continued to attempt to regain control since he was the target of several lawsuits for sexual harassment and ousted from his position.

However, Charney still owns 5% of the company. He also sued American Apparel, escalating the company’s financial problems.

The Downfall

American Apparel has acknowledged several marketing aspects that have been dragging sales down. The company ignores seasonal planning by continuing to produce swimsuits in the fall and selling the same offerings all year round. This results in a stale sales appeal.

Also, the company’s online presence is weak compared to other clothing retailers. Only about 11% of American Apparel’s revenue comes from the website, while its competitors tend to bring in 20% from online sources.

The new CEO, Paula Schneider, has outlined a new plan to re-establish the company’s image through changes in marketing, products, and store design.

The Filing

According to the bankruptcy filing, American Apparel lost around $300 million between 2009 and 2015. It listed $199.3 million in assets and $397.6 million in debt. It obtained $90 million in bankruptcy financing from secured creditors. The company plans a debt-for-equity exchange, which involves converting $200 million senior secured notes into stock. Unsecured creditors will receive $1 million payments from a litigation trust.

The company’s leaders are optimistic about its future, stating during the filing that the restructuring plan “will save thousands of American manufacturing jobs and will preserve a true American apparel manufacturer.”

The Larry King Bankruptcy Story

Larry King has been a renowned host on quality shows for both television and radio stations for decades. He has experienced great success since his career took off in 1978 as an all-night national radio broadcaster. But did you know that before then, he struggled to get by financially and even had to file for bankruptcy? Here is a quick version of the Larry King bankruptcy story.

By 1978, King had fallen on hard times. He had already begun his trend of repeated marriage and divorce, which drained his funds to the point that he owed over $350,000 to creditors. That year he filed for bankruptcy.

With his fresh start, King’s luck turned around. He was offered a position to host his own radio talk show, where he quickly became an iconic voice of America. In 1985, he became even more famous on his television show Larry King Live, which ran until 2010 on CNN. More recently, he has been hosting Larry King Now which is available online.

Obviously Larry King did not let debt and bankruptcy control his life. He continually looks towards the future in both his private and public lives, and although I wouldn’t recommend taking the same path that he did with marriage, he does provide a good example for everyone who has experienced financial hardship.

The Walt Disney Bankruptcy Story


The Disney brand has been a household name around the world for decades, but did you know that even the illustrious Walt Disney had a rocky financial start? Here is the Walt Disney bankruptcy story.

In 1922, Walt Disney incorporated his “Laugh-O-Gram” film studio with the intention of producing animated fairy tales. He found a financial backer from New York and began to assemble a team of skilled animators. Amusingly, the studio had a rodent infestation, and one particular mouse had enough personality to earn the name “Mickey” and inspire the creation of the famed mouse character.

Unfortunately, the backing firm went broke. This meant that Disney was no longer able to pay his employees or his debts, and the company filed for bankruptcy. Disney then struggled to find the money to buy a bus ticket to Hollywood, where he would make a new company and name it after himself. Lucky for him, his new company worked out, with a little help from Mickey.

Even with Mickey’s aid, this wasn’t the end of Disney’s financial struggles. He came to the brink of bankruptcy once again prior to the release of Snow White and the Seven Dwarfs. In 1937, in the middle of the production of the film, Disney was forced to approach a bank for a loan to complete his work. This loan allowed Disney to be able to pay his staff and complete the film.

These days it can seem like “Disney” is just the name of a colossal corporation that puts out an unending supply of movies, shows, and merchandise. It’s important to take a moment and look at the company’s past and see that its founder was just as human as any of us.

Donald Trump’s Bankruptcies

Billionaire Donald Trump has kept himself in the limelight throughout his career. He started out working for his father’s company in real estate then quickly rose to fame as a casino mogul when he purchased the Taj Mahal and several other Atlantic City casinos. His notoriety spread when he branched out into reality television, and now he’s even testing his skills in politics.

Not everything has gone perfectly in Trump’s career, however, as he has several bankruptcies under his belt. He shows no embarrassment towards his financial history, and even brags about how well his companies have fared through the bankruptcy process. During a Republican presidential debate, he stated, “I have used the laws of this country…the [bankruptcy] chapter laws, to do a great job for my company, for my employees, for my family.”

Trump has never filed for personal bankruptcy, but he has used Chapter 11 bankruptcy to restructure his businesses four times. The first bankruptcy was probably the most personally detrimental one that Trump has had to file. In 1991 his Trump Taj Mahal Casino went under. In order to fund the restructuring, Trump had to give up a yacht, his Trump Shuttle airline, and half of his ownership stake in the Taj Mahal Casino. The largest creditor at the time was Carl Icahn, who held $400 million in bonds.

Less than a year later, in 1992, Trump was back in the bankruptcy court for Trump Castle Associates, a company that oversaw several of his casinos. This bankruptcy included the Trump Plaza Hotel in New York, the Trump Plaza Hotel and Casino in Atlantic City, and the Trump Castle Casino Resort. During the filing, Trump gave up half of his interest in the New York hotel, but retained his control over the other locations.

After a lengthy break, Trump returned to the bankruptcy court in 2004 for his Trump Hotel and Casino Resorts. This included a restructuring for several of his Atlantic City casinos and a riverboat resort in Indiana. During the proceedings, the company shed $500 million in debt and Trump turned over a sizeable amount of the company to bond holders. However, Trump remained the majority shareholder to stay in control.

Trump’s most recent bankruptcy occurred in 2009 for Trump Entertainment Resorts after the company missed a bond payment of $53.1 million. This marked the end of Trump’s reign as an Atlantic City casino owner. He resigned from the board and gave up his stake in the company, though his name remained on some of the casinos.

In 2014, the Trump Taj Mahal and Trump Plaza filed for bankruptcy once again. Trump responded by suing to have his name removed in order to solidify the fact that he no longer had a connection to the failing casinos. Trump stated during the debate that he’s glad he got out of the Atlantic City casino business when he did, “I had the good sense, and I’ve gotten a lot of credit in the financial pages, seven years ago I left Atlantic City before it totally cratered.”

Trump’s departure from that business hasn’t seemed to hurt him as he developed his career in different ways, and his many visits to bankruptcy court didn’t hold him back at all. No matter what your opinion on Trump as a person, it’s hard not to admire his ability to move forward after experiencing huge setbacks. He’s a good example of how filing for Chapter 11 bankruptcy doesn’t mean the end of your career.

How to pack your storage container correctly in these 5 easy steps (an infographic)


How to Pack Your Storage Container

When preparing to put some of your belongings into storage for any amount of time, there are several things to take into consideration. Different types of items need to be packed differently, depending on factors such as fragility, size, and weight. Above is a convenient infographic detailing the most important steps. Below we’ll provide an extended list of guidelines to follow when preparing your storage containers:

Wrapping Tips

  • Make an inventory. Write a list of everything you are putting into storage as you pack them.
  • Pack as many items as you can into boxes. They protect your belongings more than wraps.
  • Reinforce the bottom of boxes with tape.
  • Put a lid on it. You don’t want your items falling out or getting dusty while being stored.
  • Wrap up your delicates. Use bubble wrap, crumpled paper, foam peanuts, or other fillers to ensure that fragile items don’t shift around and break no matter how far you have to move them.
  • Do NOT pack perishables/dried foods. Insects and rodents can hitch a ride to your storage and breed. Spoiled food will cause odors.
  • Evenly distribute weight. This makes the containers easier to carry and also reduces the chances of items shifting around in transit.
  • Put heavy items in smaller boxes, lighter items in larger boxes. No one wants to lift a huge box of books!
  • Pack tightly. Boxes shouldn’t bulge or cave in. You can use crumpled paper or other fillers to get rid of empty space.
  • Use special boxes on certain items. Picture frames, mirrors, and flat-screen TVs should be bubble wrapped and placed in specialized boxes.
  • Take extra care with lamps. Remove all light bulbs and wrap and box the lampshades separately from the posts.
  • Label all boxes.
  • Protect your furniture with moving blankets. You can use moving bands (giant rubber bands) or shrink-wrap to stabilize moving blankets. Tape is more difficult to remove.
  • Wrap soft furniture with plastic. This includes couches, mattresses, etc. Use mattress covers or stretch wrap.
  • Cover appliances. Use cardboard or moving blankets.
  • Use moisture absorbers. These can reduce the formation of mold, mildew, and odors.

Truck Packing Tips

  • Dollies can save your back while moving around heavy boxes and furniture.
  • Put heavy items at the back end of the truck. Our trucks load at an angle, and this prevents heavy items from crushing lighter ones. Other moving trucks may require you to evenly distribute the weight.
  • Pack the truck wall-to-wall and floor-to-ceiling. You can use all available space.
  • Place heavier boxes on the bottom. By putting lighter boxes on top, you avoid crushing them.
  • Fill spaces with small and large items. You don’t have to put all your boxes in one area and all your furniture in another.
  • Tie down your belongings a section at a time. Mattresses and other soft furniture can be used to hold smaller items in place.
  • Secure the truck with a lock when unattended.

Feel free to contact us with any further questions you might have about moving your stuff into storage. Keeping your belongings safe is our primary concern.

Molycorp Files for Bankruptcy

Molycorp Files for Bankruptcy


Molycorp Inc., the sole U.S. provider of rare earth materials, filed for Chapter 11 bankruptcy in June of 2015. Rare earths are a group of 17 metals (including neodymium, lanthanum, and cerium) that are used in high-tech communications, transportation, and industry such as batteries, magnets, and alloys.

The market for rare earths has dramatically wavered over the past few years. Prices steeply rose in 2011 when China restricted its exports. This cost increase concerned U.S. lawmakers who understood that many of our weapons rely on such materials from China. As a result, interest rose in Molycorp’s Mountain Pass Mine in California, since this is the U.S.’s only rare earth source.

Molycorp owns the largest rare earth deposit outside of China and also makes specialized products out of them. It operates in 10 countries, but its European and Asian branches are not part of the restructuring plan at this time.


Since 2011, rare earth prices have plummeted as consumers search for cheaper solutions, and Mountain Pass experienced delays. Molycorp has reported annual financial losses for three years straight. In 2010, the initial company shares sold at $14 apiece. In 2011, they rose as high as $79.16, giving the company a market value of over $5 billion. When the company filed for bankruptcy, its stock was priced at 36 cents.

Molycorp listed assets of $2.49 billion and liabilities of $1.79 billion in their Chapter 11 filing. The company’s creditors have offered to provide $225 million in financing to support the company while it undergoes Chapter 11 restructuring. The plan includes the discharge of over $700 million in unsecured notes. Also, holders of $650 million in 10% senior secured notes have been requested to swap their debt for a majority stake in the company’s reorganization.