Bankruptcy

Michele and Russell Poland's credit was shot, but they managed to buy their suburban dream home anyway. After a business bankruptcy and a home foreclosure, they turned to a rare option in this era of tightfisted banking - a subprime loan. The Polands paid nearly $10,000 in upfront fees for the privilege of securing a mortgage at 10.9% interest. And they had to raid their retirement account for a 35% down payment. Most borrowers would balk at such stiff terms. But with prices rising, the Polands wanted to snag a four-bedroom home in Temecula near top-rated schools for their 5-year-old son. By later this year, they figure, they'll be able to refinance into a standard loan.

American Airlines, hoping to reinvent itself by coming out of bankruptcy with a new logo, freshly painted planes and a merger plan that will make it the nation's largest carrier, suffered a setback Tuesday when a computer outage grounded hundreds of planes across the country. The computer problem forced the airline to cancel 745 flights, frustrating thousands of passengers who were left to fume and wait at crowded terminals from Los Angeles to Dallas and New York. Even after the system was restored about two hours later, passengers waited in long lines as airline officials struggled to rebook them on new flights.

Car dealers have found a new way to profit from people with money trouble: leasing them hand-me-down vehicles. The deals are pitched to customers as the cheapest way to drive a used car off the lot, with the added benefit of an easy escape for those who can't keep up with the payments. Few customers are told about the advantages on the other side of the trade. Leases can allow dealerships to sidestep interest rate caps, and there are fewer financial disclosures rules than with a conventional car loan.

Ernie Schneider, the chief administrative officer of Orange County when it declared bankruptcy in 1994 because of its disastrous investment practices, died Saturday at his home in San Juan Capistrano. He was 66. His death, related to liver and kidney problems, was confirmed by former wife and current Laguna Beach City Councilwoman Elizabeth Pearson. A longtime public servant, Schneider was the top appointed officer when Treasurer Robert L. Citron was discovered to have lost $1.64 billion in the value of the county's investment portfolio.

Sirva Inc., a provider of moving services and parent of Allied Van Lines, filed for bankruptcy protection after struggling with too much debt in the U.S. housing downturn. The Westmont, Ill.-based company and nearly 60 affiliates filed for protection in U.S. Bankruptcy Court in Manhattan. Sirva has $924.5 million of assets, $1.23 billion of debt and more than 100,000 creditors, according to the filing. It said the bankruptcy covered only its U.S. operations. Sirva expects to stay in business while it restructures, and emerge from bankruptcy within 60 to 90 days.

Aloha Airlines has filed for Chapter 11 bankruptcy protection a little more than two years after emerging from a previous bankruptcy. Aloha Airgroup Inc. said it was unable to generate sufficient revenue because of what it called "predatory pricing" by Mesa Air Group's Go airline. Mesa Air Group Inc., based in Phoenix, launched Go into the inter-island market in 2006 to compete with Aloha and Hawaiian Airlines Inc. All three airlines have reported losses totaling $85 million.

Restaurant chains Bennigan's and Steak & Ale have filed a bankruptcy petition and will shut their doors and liquidate their assets. The chains' owner, privately held Metromedia Restaurant Group of Plano, Texas, said recently that it was not preparing to put the chains in bankruptcy.

Thornburg Mortgage Inc., a specialist in so-called jumbo home loans that also invested in mortgage-backed securities, said it would file for bankruptcy protection and shut down. Assets will be sold to pay bondholders and creditors, the Santa Fe, N.M., company said.

A Silicon Valley financier who owns a stake in the NHL's Nashville Predators has filed for personal bankruptcy two weeks after being accused of loan fraud. William "Boots" Del Biaggio III, 40, scion of a prominent San Jose banking family, has at least $57 million in unpaid personal and business loans, credit card bills and other financial obligations, according to the Chapter 11 filing in U.S. Bankruptcy Court for the Northern District of California. The filing didn't enumerate Del Biaggio's assets or debts.

After a federal judge ruled last week that the city of Stockton can reduce its debt through bankruptcy, observers began to frame the battle as one of municipal bondholders against public employees. But it's hard to shed tears for either of them. During the boom years, Stockton promised its future public-sector retirees free lifetime medical coverage. It also adopted rules allowing workers to spike their pensions by letting them include overtime and other payments from their final work year to calculate retirement pay. The city also issued far too many bonds.

Lawyers for Casey Anthony have filed suit in bankruptcy court to prevent one of her creditors from selling her life story. Bankruptcy trustee Stephen Meininger considers Anthony's story an asset akin to any other and is seeking the rights in perpetuity to that story as a way of earning money, according to various reports, including the Associated Press and the Orlando Sentinel . Anthony's daughter, Caylee Marie, was last seen in June...

What does it look like when a city goes bankrupt? The answer was sharp and clear at a contentious Stockton City Council meeting the day after a judge declared the city of 300,000 eligible for bankruptcy. The meeting began at 5:30 p.m. Tuesday and ended shortly after 2 a.m. Wednesday. The council opposed a sales tax intended to pay for more police officers, which could imperil the city's standing in Bankruptcy Court. PHOTOS: California cities in bankruptcy The chambers were packed with people who said that crime in California's second-most violent city was eating away at their lives.

The city of Stockton's impending bankruptcy case sets up a battle over employee pensions. A federal judge ruled Monday that Stockton was eligible for bankruptcy protection , rebutting Wall Street creditors who claimed the city was not. U.S. Bankruptcy Judge Christopher Klein found that Stockton can move forward with a plan to reorganize its debt. The city's creditors, he said, had acted in bad faith by refusing to negotiate. "The creditors got a big black eye today," said Karol Denniston, an attorney who helped draft the legislation that guided Stockton's mandated mediation before filing for Chapter 9 protection.

A federal judge ruled Monday that Stockton is eligible for bankruptcy protection, despite the objection of creditors who argued the city could come up with more money.  Stockton is the biggest U.S. city to file for bankruptcy.   When it filed last June, Mayor Ann Johnston said there were no  alternatives. "We are extremely disappointed that we have been unable to avoid bankruptcy," Johnston said in a statement at the time. "This is what we must do to get our fiscal house in order and protect the safety and welfare of our citizens.

STOCKTON -- A federal judge ruled Monday that Stockton is eligible for bankruptcy protection, over the objection of creditors who argued the city could come up with more money.  U.S. Bankruptcy Judge Christopher Klein said Stockton can move forward with a plan to reorganize debt. He twice stated that the creditors had acted in bad faith and had refused to pay their share of the costs for negotiations. "The creditors got a big black eye today," said Karol Denniston, an attorney who helped draft the legislation that guided Stockton's mandated mediation before filing for bankruptcy protection.

FRESNO - A federal judge ruled Monday that Stockton was eligible for bankruptcy protection - rebutting Wall Street creditors who claimed the city wasn't really broke and setting up a battle over employee pensions. U.S. Bankruptcy Judge Christopher Klein found that Stockton can move forward with a plan to reorganize its debt. The city's creditors, he said, had acted in bad faith by refusing to negotiate. "The creditors got a big black eye today," said Karol Denniston, an attorney who helped draft the legislation that guided Stockton's mandated mediation before filing for Chapter 9 protection.

A federal judge ruled Monday that Stockton is eligible for bankruptcy protection, but left the door open for CalPERS obligations to be part of negotiations in the coming phases of the bankruptcy. Over the objection of creditors who argued the city could come up with more money, U.S. Bankruptcy Judge Christopher Klein said Stockton can move forward with a plan to reorganize debt. He twice stated that the creditors had acted in bad faith and had refused to pay their share of the costs for negotiations.