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Corporate Bankruptcy News Updates

In 2018, we saw some shocking bankruptcies and they were mostly brick and mortar retail chains.  Companies such as David’s Bridal, Mattress Firm, Brook Stone, and Nine West all filed.  Read on to get an update on a few of the companies we reported on in 2018.

Sears

In October, we covered the history and events that led to the downfall of Sears (catch up here).  A lot has happened since October.  As we reported in the previous post, CEO Eddie Lampert stepped down but kept his post as Chairmen.  Mr. Lampert is now using his hedge fund to take over the failing chain.  The bankruptcy court agreed to allow Lampert to be the sole party in the $5.2 billion dollar bid.  Creditors are livid and claim that they would get more if the court allowed liquidation of assets to take place.  Lampert plans to keep Sear’s 45,000 employees in their positions.

PG&E

Everyone with television has heard of the California wildfires that took place in 2018.  Well, an investigation determined that PG&E, California’s largest utility company, was to blame.  In our previous article, we explained the faults of the utility company, California law, and plans to file for bankruptcy in anticipation of an earth-shattering lawsuit.  On January 29th, 2019, PG&E filed for chapter 11 bankruptcy in anticipation of a lawsuit and potential liabilities in excess of $30 billion.  On their website, they outline the changes they are making which include:

  • Enhanced safety inspections
  • Intense vegetation removal and infrastructure enhancements
  • Equipment replacement

PG&E fully expects to be able to restructure and make it out of chapter 11 bankruptcy while “keeping the lights on” for its customers.

Mattress Firm

On October 20th, 2018, we reported that Mattress Firm was filing for bankruptcy under chapter 11.  Just over one month later, the court agreed to allow the company to exit bankruptcy.  After filing, Mattress Firm closed about 700 stores.  The newly emerged company does not plan on slowing down.  According to the CEO, bankruptcy “significantly improved financial and operating position [and] will enable us to strategically expand our business in new as well as existing markets, while continuing to focus on enhancing our omnichannel capabilities and product offerings.”

Bankruptcy can be an essential business tool.  It often does not mean the business even has to close its doors.  Chapter 11 allows businesses to restructure debt and stay open.  If your business is struggling and you need help, contact Elias Dsouza at Dsouza and Strachan Lawgroup GroupElias has been guiding businesses through difficult financial situations for over 15 years.

PG & E to File Bankruptcy Amid Lawsuit over California Fires

In 2018, fires ravaged just under 2 million acres of land.  Recent evidence suggests that a local utility company’s equipment may be responsible for the catastrophic event.  PG&E may be on the hook for expenses totaling at around $30 billion.  Top brass has decided they cannot afford that so they plan to file for bankruptcy under chapter 11.

PG & E

PG&E is the holdings company for California’s largest utility company, Pacific Gas and Electric.  They currently employ about 20,000 people.  They incorporated in 1995.  The fires of 2018 are not the company’s first brush with disaster.  In 2017, the company was held responsible for a fire outbreak due to insufficient brush trimming around power lines.  This catastrophe resulted in the death of 44 people.

The 2018 Fires

In the summer of 2018, over 8,000 fires ravaged central and southern California.  During the course of these fires, over 80 people were killed.  Just under 2 million acres of land were affected.  The estimated damage caused by the fires is around $30 billion.  In California, liabilities laws allow the utility companies to be blamed for disasters even if they followed all safety regulations as long as their equipment is at fault.

Reluctance to Bail Out PG&E

In the “too big to fail” age, essential companies such as utilities providers are often bailed out when faced with adversity.  Utilities play an extremely important role in modern society.  California state legislators have already expressed their reluctance to offer a hand to PG&E.  They are quoted as saying there will be no “golden parachute”.  This may be partially due to the fact that the 2018 fires were not the first strike against the company (2017 fires).

The Inevitable Chapter 11 Bankruptcy

Since PG&E was implicated in the fires, their stock price has dropped over 65%.  When asked about their ability to cover the damages caused by the fires, the company said they have about $1.5 billion in cash on hand.  Legislators stopped just short of demanding that the utility company file for bankruptcy under chapter 11 to allow for restructuring of debt.  While restructuring, those in need of the funds the most will be prioritized.

Bankruptcy is an important tool for people who find themselves in over their head.  If you are behind on mortgage, medical, or any other type of payments, there may be a way out.  If you are interested in reclaiming your life, contact Elias Dsouza at Dsouza and Strachan Lawgroup.  Elias has been helping people reclaim their life for over 15 years.