Bankruptcy

The Obama administration's new plan to give a boost to small businesses reflects continued trouble in that sector, which is facing new failures even as much of the nation's economy is stabilizing. As credit lines have shrunk and consumers have cut back on spending, thousands of small businesses have closed their doors over the last year. The plight of struggling firms has been aggravated by the reluctance of banks to lend money, said Brian Headd, an economist at the Small Business Administration's office of advocacy.

Jim Waldorf only made it to 11th grade, but there is no disputing his success. He is chief executive of Lorcin Engineering Co., which, despite its name, is a leading maker of the cheap handguns known as Saturday night specials. He has made up to $900,000 per year and has a multimillion-dollar net worth. He has also written a book, "Landing on Your Feet," that is an evangelical appeal to victims of corporate downsizing to pursue the entrepreneurial path.

In an attempt to ease the foreclosure crisis, the House on Thursday approved a major change to bankruptcy law that would give judges new powers to modify home mortgages. The revision, which was approved 234 to 191 as part of a broader housing bill, would allow bankruptcy judges to reduce, or "cram down," the principal owed on an existing mortgage for a primary residence.

Former Army Pfc. Felicia Hurst repeatedly sought help from the Orange County veterans agency, but all she got for months were notices to drive 55 miles out of her way to get help in Los Angeles County. But this month, things changed. The 28-year-old Westminster resident now can take a much shorter trip to Santa Ana, where the Orange County Veterans Service Office has been rejuvenated with more money after the county's bankruptcy-related budget cuts nearly killed it off.

After 59 years in business, the Mervyns department-store chain called it quits Friday -- promising a huge going-out-of-business sale just in time for the holidays. And there is plenty of competition for a close-out Christmas. Linens 'n Things Inc. began a liquidation sale Friday, and Shoe Pavilion Inc. starts one this weekend, according to firms that said they were hired to liquidate the stores. Already gone are the novelty retailer Sharper Image Corp.

As the recession lingered in Orange County last year, bankruptcy filings soared 33% to a record 12,368, new figures show. Bankruptcy filings also increased elsewhere in Southern California last year and affected companies involved in the real estate industry, such as Kimtruss, an Irvine-based building supplies company that has been caught in the real estate slump.

Magna Entertainment Corp., the troubled owner of Santa Anita Park in Arcadia and six other major thoroughbred horse racing venues, filed for bankruptcy protection Thursday after defaulting on conditions of a bank loan. The move puts pressure on the Canadian company to sell its storied racetracks, which also include Pimlico Race Course in Baltimore, home of the Preakness Stakes. Magna's financial problems are long-standing.

Jim Bakker conceded that he has no Greek tycoon to underwrite his bid to buy back the PTL ministry and that he learned Tuesday a businessman who offered to arrange financing for the deal is an ex-convict. Bakker visited PTL headquarters in Ft. Mills, S. C., to speak with bankruptcy trustee M. C. (Red) Benton after he heard a reporter was about to disclose the arrest and prison record of the businessman, Louis Pihakis of Pensacola, Fla.

Venerable Irvine developer John Laing Homes, one of the nation's largest, filed for bankruptcy protection Thursday, joining the growing ranks of residential builders laid low by the collapse of the housing market. WL Homes, which does business as John Laing, listed assets of more than $1 billion and debt of $500 million to $1 billion in Chapter 11 documents filed in U.S. Bankruptcy Court in Delaware.

For investors, UAL Corp. shares now may look like a cheap ticket. But experts warn that taking this ride probably would prove costly. The stock rallied initially Monday as the airline giant filed for bankruptcy protection. The shares opened at 64 cents, soared as high as $1.19, then closed unchanged at 93 cents on the New York Stock Exchange. Stocks of companies in bankruptcy protection often are extremely volatile, and big rallies -- at least in percentage terms -- are common.

Dear Liz: I am a 49-year-old single father with two boys, 17 and 12. I had my own business for five years, which I finally gave up last year. I have credit card debt of about $68,000. My credit score is still good and all payments are current. I do not own a house, and I do not own much personal property either. I found a job a few months ago, and with that, I can still make payments every month. But I just figured out that it will take me about 40 months to pay them all off. I am considering filing for Chapter 7 bankruptcy.

Sixteen years after its treasurer drove Orange County into the largest municipal bankruptcy in U.S. history, the man now holding the office -- haunted by his own legal battles -- has announced that he would surrender his investment powers and bow out of his reelection bid. Amid calls for his resignation and a stern rebuke from a federal judge, Treasurer Chriss Street said he would give up authority over the county's roughly $5-billion investment pool....

A new Rasmussen poll about the California's budget woes reveals a deeply frustrated electorate unhappy with its elected leaders and their options to balance the budget. A startling 94% called the fiscal crisis "very serious," while only 2% rated Republican Gov. Arnold Schwarzenegger's budgetary leadership as excellent. Half those surveyed, 50%, called his handling of the crisis poor. Schwarzenegger's plan to fill the budget with billions of dollars in federal aid, when framed as a "bailout," was supported by 46% of those surveyed.

Coming only two days after the Republicans' upset U.S. Senate victory in Massachusetts, the sudden demise of the Air America radio network -- after a protracted illness -- left liberals reeling and conservatives gloating over the failure of their competing ideology's highest profile outlet. But the end of Air America is not the end of liberal talk radio, nor should it be, according to observers. "The only thing they did that was outstanding -- boy, did they get a lot of PR," said Michael Harrison, publisher of Talkers magazine, a trade journal of the talk-radio industry.

Freedom Communications Inc., owner of the Orange County Register along with 89 other daily and weekly publications and eight TV stations, received court approval for a disclosure statement supporting its plan to emerge from Chapter 11 bankruptcy protection Thursday. The approval of the Irvine-based company's statement in a Delaware U.S. Bankruptcy Court gives Freedom the clearance to solicit votes on its reorganization plan from its creditors, the company said in a statement. A hearing to grant final approval to the reorganization plan has been set for March 9, the statement said.

The city of Los Angeles is not on the brink of bankruptcy, and prudent action now by city leaders can keep the city solvent. As surprising as it may sound, that's disappointing to some people. We can make allowances for the city's occasional self-esteem crises. You know the saying: "To start a conversation in San Francisco, say something bad about Los Angeles. To start a conversation in Los Angeles, say something bad about Los Angeles." But civic mood swings aside, there is something unseemly about how readily some inside City Hall have begun to use the "b-word," not because they view it as likely but perhaps because they view it as easy.

The Obama administration's new plan to give a boost to small businesses reflects continued trouble in that sector, which is facing new failures even as much of the nation's economy is stabilizing. As credit lines have shrunk and consumers have cut back on spending, thousands of small businesses have closed their doors over the last year. The plight of struggling firms has been aggravated by the reluctance of banks to lend money, said Brian Headd, an economist at the Small Business Administration's office of advocacy.

Chrysler, now known as Old Carco, filed a reorganization plan that gives nothing back to the U.S. for its $4-billion loan under the Troubled Asset Relief Program while repaying some secured lenders in full. The rough outline of a Chapter 11 plan, filed Tuesday in Bankruptcy Court in New York, said creditors classified as "other secured claims" of $20.6 million will get an estimated 100% recovery. The recovery for unsecured claims is "undetermined." The plan winds down Chrysler's 25 units that remained in bankruptcy after the sale of its most valuable assets to Fiat, which was completed June 10. The company isn't operating any businesses, and the plan would liquidate all remaining assets.

A U.S. Bankruptcy Court judge Tuesday extended until Feb. 28 Tribune Co.'s exclusive right to file a reorganization plan in its year-old Chapter 11 case. The decision heads off -- at least for now -- a challenge to that exclusivity by a group of senior creditors who had sought to seize control of the case by requesting the right to file a plan of their own. Tribune Co., whose holdings include the Los Angeles Times and KTLA-TV Channel 5, had asked for an extension until March 31, but in a nod to creditor concerns, Judge Kevin Carey clipped the request by a month and set a date in mid-February for a hearing to revisit the issue.

Bondholders battling Donald Trump for control of Trump Entertainment Resorts' three Atlantic City casinos have reached a deal allowing the casinos to retain Trump's trademark name. Under the deal to buy the company out of bankruptcy, the real estate mogul and reality TV star gets to keep a 10% stake while the company retains the right to use his name. Trump and his daughter, Ivanka, had offered nearly $114 million in cash to bondholders, and bondholders were offering $225 million to buy the company out of bankruptcy.