A server that runs Jefferson County's financial software system has crashed and halted financial activity in a number of county departments, officials said Thursday.
Since Tuesday, the hardware problem has slowed or stopped transactions in the finance, treasurer and purchasing departments, preventing vendor payments and deposits and delaying preparation of the fiscal 2011 audit, according to county officials.
The server runs SAP, the accounting software system the county uses to track financial activity.
"The SAP functionality is so diminished that it does not allow us to do the day-to-day financial operations of our county," Commissioner Jimmie Stephens said. "It's the financial backbone of the county. It's the language that we use to communicate with all of our vendors and all of our financial contacts throughout the county. And to have it go mute to where we can't communicate is a tremendous problem."
County Manager Tony Petelos said all of the servers that run the SAP program have outlived their useful life, and of the 16 servers in the Information Technology Department, only one has any life left.
"The rest of them are outdated and they need to be replaced," Petelos said. "When one server crashes it causes the whole system to go down. I've said this over and over again: The county has to reinvest in its infrastructure, and this is only one key example."
Workers were able to restore the server but are looking for a way to load SAP programs and data, Petelos said. "If successful, SAP should be available within 24 hours," he said. "If unsuccessful, a complete rebuild of the system will be required and could take up to five days."
Stephens blamed the problem on staff reductions and decisions to reduce maintenance contracts to save money.
The cash-strapped county laid off hundreds of workers last year to conserve cash until a fix could be found for a shortage of general fund revenue. Wayne Cree, director of information technology, has said his department lost approximately 30 budgeted positions in the past year because of layoffs, retirements, transfers and resignations.
But here is the "money quote," so to speak:
Stephens said contracts countywide have been either terminated or reduced to save money, and the toll is mounting.
"You do away with people and you do away with outside maintenance contracts that take care of that proprietary equipment, and you're left with the inability to operate government," Stephens said.
Consider this an early warning of things to come all across the country.
Bonus: "Alabama...you've got a weight on your shoulders that's breaking your back"
Strauss Discount Auto, the 93-year-old company founded in Newark, has filed for Chapter 11 bankruptcy protection for the fourth time, closing all 46 of its stores, including 24 in New Jersey.
The troubled auto-parts retailer formerly known as R&S Strauss abruptly shuttered its retail outlets - including two shops in Wayne, and others in Bergenfield, East Rutherford, Lodi and Passaic - and filed its petition in federal bankruptcy court in Newark Tuesday. The company also dismissed 580 employees, according to the Chapter 11 filing.
On Wednesday afternoon at the Strauss Auto store on Route 23 in Wayne, two signs on its doors said, "This store is closed." The signs also advised customers with inquiries to call 800-787-4554, Strauss's regular customer-service line.
The recording didn't mention the Chapter 11 filing. It merely said, "You have reached Strauss Auto ... We are on the line right now attending to other calls, but want to address your issue." It then asks customers to leave a message.
In Wayne, where the parking lot was empty and no one was inside, the signs also advised store managers to contact their "DM," district manager, and for store associates to contact their store manager.
In addition to its New Jersey shops, Strauss Discount Auto closed 19 stores in New York City metro area and three in Pennsylvania, according to the filing. Strauss president Joseph Catalano also explained some of the reasons for the company's latest financial woes.
"Increased power, gas and fuel costs have caused consumers to delay vehicle service and replacement expenditures," Catalano said in a filing. "Mild winter weather also resulted in a disappointing 2011-2012 winter selling season and a subsequent decline in spring business due to a lack of winter driving conditions."
One would think that with people not being able to afford to buy as many new cars and keeping their old ones longer that car repair would be a booming business. Not so much, however, if drivers are becoming financially tapped out. It's scary to think that many people are putting off vital maintenance and that their cars may thus be more likely to break down in heavy traffic. Chalk it up as yet another dire example of our crumbling transportation infrastructure.
Bonus: From my You Tube channel - another little ditty about driving
Here's a story I gather won't generate a whole lot of sympathy. Yahoo News has the details:
The crippled law firm Dewey & Leboeuf LLP filed for chapter 11 bankruptcy protection Monday night and will seek approval to liquidate its business after failing to find a merger partner, marking the biggest collapse of a law firm in U.S. history.
Once one of the largest law firms in the U.S., Dewey has been hit by the loss of the vast majority of its roughly 300 partners to other firms amid concerns about compensation and a heavy debt load.
Dewey had warned employees earlier this month of the possibility the firm may shut down, and a person familiar with the matter had told Reuters that the firm was considering a bankruptcy filing.
"Dewey's failure is rocking the industry in the sense that most firms are saying to themselves, if Dewey could go down, could we?" Kent Zimmermann, a legal consultant at the Zeughauser Group, said in an email Monday night.
Dewey said in a filing it had decided to wind down its business following unsuccessful negotiations with other law firms to strike a deal. It said it would ask about 90 employees to remain on staff to assist in the liquidation, which it expects to be completed in the next few months.
Gee, that's too bad. So what was the cause of the firm's sudden downfall?
The firm's collapse is expected to be the subject of years of court proceedings, and a number of former partners have already retained lawyers to represent them.
Monday's filing follows months of turbulence, as wave after wave of partner defections shattered the high-profile firm from within. In April, the Manhattan District Attorney's office launched a criminal probe of former firm chairman Steven Davis. He has denied any wrongdoing.
The result of a 2007 merger between Dewey Ballantine and LeBoeuf, Lamb, Green & MacRae, Dewey & LeBoeuf had about 1,450 attorneys at its peak, according to The National Law Journal.
But the firm was eventually undone by a combination of the economic downturn, excessive compensation and governance problems, according to former partners and others in the industry. In particular, Dewey's management promised millions in packages to about 100 partners, according to the court filing, leaving it strapped for cash when revenues fell during the recession.
Dewey has retained Joff Mitchell of Zolfo Cooper LLC as Chief Restructuring Officer and Albert Togut of Togut Segal & Segal LLP as bankruptcy counsel.
"The full extent of the partner compensation arrangements is subject of continuing investigation," Mitchell said in the filing.
So, rapid expansion right into the teeth of the Great Recession and top management squeezing the the juice out of the firm with excessive compensation packages. Where have we seen this before? Oh that's right, all across every sector of the economy these days.
If you are old enough to remember the 1970s, you'll recall a time when it seemed like EVERYBODY was playing tennins. Not so much anymore. Here is the story from Bloomberg:
Prince Sports Inc. sought bankruptcy protection citing as much as $100 million each in assets and debts, and the maker of the first oversize tennis racket plans to change its business model to become more competitive.
Among the largest unsecured creditors listed in the Bordentown, New Jersey-based company’s Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware, were Da Sheng International Holding Ltd. of Taiwan and Pais International Ltd. and Marshal Industrial Corp., both of Hong Kong, each owed more than $1.9 million in trade debt.
Declining demand “combined with increased competition over the past five years” and a drop in “consumer discretionary spending” led to the bankruptcy, said Gordon Boggis, chief executive officer, in court papers. The company plans to cancel secured debt in exchange for new equity as part of its reorganization plan.
Prince, whose rackets were used by major champions including Jimmy Connors and Martina Navratilova, was founded in 1970 when Bob McClure invented the “Little Prince,” the first ball machine for home court use, in his garage in Princeton, New Jersey. In 1976, the company changed the sport by inventing the first oversize racket. The “Prince Classic” measured 110 square inches, had a much bigger “sweet spot” than traditional wooden rackets and became one of the best-selling rackets of all time.
In 1977, Prince produced the first graphite racket, which is still being used by professionals including doubles major champions Mike and Bob Bryan of the U.S. and former world No. 1 Jelena Jankovic of Serbia.
I believe the only way Prince can "change its business model to become more competitive" is to start making something else other than tennis rackets.
At first, this just looked like another routine bankruptcy story as reported by the Tampa Bay Business Journal:
Savtira Corp., the promising but troubled technology firm in Ybor City, filed for Chapter 11 bankruptcy reorganization.
The company’s estimated assets are between $1 million and $10 million, and its estimated liabilities are between $10 million and $50 million, according to the filing late Friday in the United States Bankruptcy Court for the Middle District of Florida in Tampa.
Pretty dull stuff, right? Well, it's about to get more interesting:
“We were forced to file Chapter 11,” wrote Timothy Roberts, Savtira chief executive officer, in an e-mail late Sunday to the Tampa Bay Business Journal. “This is actually a protection bubble around the company to ward off this hostile takeover attempt. We have plenty of money circling us and now that the blood is in the water the sharks are all circling. We feel confident we will come out of this quickly and fully funded.
Gee, almost makes you wonder why they had to file for bankruptcy, seeing as how they have money literally falling out of their ass and all. But wait, what's this?
Savtira, a B2B cloud e-commerce firm, is the subject of a U.S. Department of Labor investigation into missed payroll and faces lawsuits from three vendors who said they have not been paid. One of those vendors, Data Sales Co. Inc., repossessed equipment leased to Savtira last week.
That doesn't sound so good. In light of all that, the city and county governments wouldn't be so stupid as to pay this company a bunch of tax break bribes, would they?
Savtira last year qualified for $2.65 million in tax incentives from the city of Tampa, Hillsborough County and the state of Florida. The incentives were contingent on creating 265 high-paying jobs, which to date have not materialized.
Dooh! Well anyway, no other municipal government could possibly be so stupid as to make the same mistake. Right?
Roberts has said the company’s cash-flow problems are short term and he is in discussions with public and private entities in five state and cities that have offered to help with the company’s capital needs if Savtira relocates.
You...have...got...to...be...shitting...me. Tell you what, folks. The next time you here some scumbag politician claim that we have to cut benefits to welfare moochers, kindly inform him or her that you'll be happy to see such parasites as Savtira Corp. be the first ones to get cut off.
From my new You Tube channel: "Watch the baby dance to the welfare music...will she ever stand a chance?"
I guess I'm just not hip, because I had never heard of this fashion chain before reading this story. Here is New York magazine with the details:
Sad news: Betsey Johnson LLC has filed for Chapter 11 bankruptcy and will close the majority of its 63 stores, according to WWD. Betsey Johnson the person will remain at the helm of the brand, which is still owned by Castanea Partners, a Boston-based private equity firm that took over the company in 2007. Moving forward, the label will focus on its lower-priced range of clothing, which is sold at Macy's and other mass retailers. Meanwhile, Steven Madden, Ltd., which has owned all of Betsey Johnson's intellectual property since assuming her $48.8 million in outstanding debts in 2010, estimated that the bankruptcy will cost about 350 jobs overall. Steve Madden himself assures WWD that there won't be any interruption in wholesale deliveries or e-commerce.
This development isn't a huge surprise (the Betsey Johnson brand has wallowed in debt for years), but it's really too bad. Johnson's wacky fashion shows — which she always concludes with her trademark cartwheel — are always a highlight at fashion week, and she's a beloved character in the New York fashion industry. Best of luck to her and her employees.
This development isn't a huge surprise because in the middle of a never ending economic recession very few people need overpriced clothes, no matter how stylish they are.
Bonus: Something tells me that notoriously gloomy New Yorker Lou Reed doesn't attend a lot of fashion shows.
There is no truth to the rumor that falsely reporting a zombie outbreak is the real reason behind this story from Bloomberg:
BroadSign International Inc., a maker of software for operating digital signs, sought bankruptcy protection from creditors and said it intends to auction almost all its assets.
The company, based in Boise, Idaho, listed debt of $10 million to $50 million and assets of $1 million to $10 million in Chapter 11 documents filed today in U.S. Bankruptcy Court in Wilmington, Delaware. Two affiliates also sought court protection.
“The most effective way to maximize the value of their estates for the benefit of creditors is to complete a prompt sale of substantially all their assets,” BroadSign Chief Executive Officer Brian Dusho said in court documents.
BroadSign and its affiliates are insolvent and income is “insufficient to continue their operations without an infusion of further capital,” Dusho said. The company will seek court approval to borrow as much as $328,295 to help fund operations until it completes the sale.
The company’s software is used to manage digital advertising across formats such as billboards, kiosks and public transportation. BroadSign operates displays for airports, subway systems, highways or supermarkets in Canada, the U.K., Scandinavia, Spain and Singapore, according to its website and news releases.
Sounds like BroadSign is well on its way to being dead. We'll see if it remains buried.
As I've said before, I'm not a golfer, but I recognize the importance the sport has in an area like the Carolinas which relies on the tourist dollars it brings in. So this story from Bloomberg cannot be a good sign:
Cliffs Club & Hospitality Group Inc., which owns several luxury golf communities in South Carolina and North Carolina, filed for bankruptcy protection.
The Travelers Rest, South Carolina-based company listed assets of less than $50,000 and debt from $100 million to $500 million in Chapter 11 documents filed today in U.S. Bankruptcy Court in Spartanburg, South Carolina.
The eight communities are located between Asheville, North Carolina, and Greenville, South Carolina, according to the company website.
Holy crap! Assets of less than $50,000 and liabilities of over $100 million? Sounds like this move was LONG overdue.
Bonus: George's classic bit on what we should do with golf courses
Another major housing crash casualty was reported yesterday by The Arizona Republic:
Pinnacle West Capital Corp. subsidiary and once-prominent local developer SunCor Development Co. has filed petitions in U.S. Bankruptcy Court as a final step toward dissolving the company and its remaining subsidiaries.
Tempe-based SunCor Development's board of directors signed a resolution Friday authorizing the voluntary bankruptcy filing, which includes 17 SunCor subsidiaries.
This was another company that was flying high until the bubble burst, sending it plummeting back to Earth:
Incorporated in 1986, SunCor grew to become one of the Southwest's most prominent developers in the 1990s and early 2000s, developing residential communities, golf courses and commercial-real-estate projects.
At the peak of its success in 2005, SunCor had nearly 800 employees, according to Pinnacle West.
The company ran into serious financial trouble in 2008, after the collapse of both the residential and commercial real-estate markets.
And lo, we see the death of yet another company which had the long term viability of a golf course in the middle of the desert.
The media can keep hypingthe supposed recovery all it wants, but its pretty telling when a large advertising firm suddenly declares Chapter 7 bankruptcy and abruptly shuts down. Here is Cleveland.com with the details:
Advertising agency Liggett Stashower Inc. has closed its doors and filed for Chapter 7 bankruptcy, according to documents filed with the U.S. Bankruptcy Court.
In a letter addressed to friends and associates on Liggett Stashower letterhead, President and Managing Partner David Moore on Monday confirmed what many in the advertising and marketing community had suspected might happen -- that the 24-year-old company had shut down.
"I am saddened to share with you the news that despite our best efforts, Liggett Stashower has closed, effective February 3, 2012," he wrote in a letter obtained by The Plain Dealer.
"We had hoped to reorganize and rebuild the agency, but that unfortunately did not come to pass. . . Liggett has determined that it is in the best interest of its creditors and all interested parties to wind its business affairs down through a Chapter 7 bankruptcy."
Moore would not comment about the letter.
The bankruptcy papers filed Friday to sell off the company's assets said Liggett had "entered a period of extreme financial distress and lack of financial liquidity." The company had assets of $1.42 million and debts of $2.70 million.
Liggett Stashower, once the second-largest advertising agency in Cleveland, cut most of its employees on Jan. 18, saying it needed to adjust its expenses to match its declining revenues.
Well, it looks like the companies are now very much matching its revenues: zero.
Everyone knows by now that American Airlines is in a world of hurt, especially after the company's bankruptcy declaration last November. The persistent high cost of aviation fuel and a flying public with less money in their pockets to spend on airline tickets has been hammering the entire industry. An article published this week by CNN Money spells out just what is in store for the beleaguered workers:
American Airlines' parent is meeting with its unions this week to lay out cost cuts it wants to implement as part of its bankruptcy reorganization -- moves that could cost many of the company's 81,000 workers their jobs and a portion of their pension benefits.
AMR Corp. said at the time of its Nov. 29 bankruptcy filing that it was forced to file because of the need to achieve a more competitive labor structure. Most other major U.S. airlines have already cut labor costs by their own trips through bankruptcy over the last 10 years.
Among the moves that American's unions expect include having aircraft flown overseas to low-cost maintenance facilities for the extensive overhaul required for planes on a regular basis. Most U.S. airlines, including United, Continental, Southwest Airlines and Delta Air Lines, already have costly maintenance performed at overseas facilities.
AMR, which owns both American and feeder airline American Eagle, is the only major carrier to perform the work in-house at U.S. facilities.
"This is the dirty little secret of U.S. aviation. You don't know where the plane that you're flying was repaired," said Jamie Horwitz, spokesman for the Transport Workers Union. "You assume standards are high for the person who works on your fuel line, but it doesn't necessarily follow."
Doesn't it just give you a warm, fuzzy feeling all over to know that almost all airline maintenance work is now being performed by poorly paid drones God knows where? Fuck, I may never get on an airplane again.
But please continue:
Horwitz said there are two major American-owned facilities doing the heavy maintenance work -- one in Tulsa, Okla., which has 6,500 union members, and another outside of Dallas with 2,200 union members.
Horwitz and industry experts say almost all other U.S. airlines already have outsourced regular overhaul maintenance required for aircraft to facilities in countries such as China, El Salvador and throughout South America.
Oh, so THAT'S where. Yep, I'm seriously going to have to swear off flying. Or do you really think a maintenance worker living in some crowded dormitory and getting paid a buck an hour really gives a shit whether that bolt is tightly fastened or not?
But the airline off-shoring maintenance work isn't the only potential ball of suck in this deal:
He also wouldn't comment on whether the company will seek to move its pension plans, which it estimates are underfunded by $5 billion, to the Pension Benefit Guaranty Corp., a federal agency that protects the pensions of workers in private-sector retirement plans.
The Pension Benefit Guaranty Corp. has issued numerous statements since the American bankruptcy that it would seek to keep the airline from dumping its pensions on the agency, which is already facing a deficit of its own. The agency's estimate is that the American pensions are underfunded by $10 billion.
If the company is successful in shifting its pensions to the agency, workers would likely lose promised retiree health-care benefits. Many, especially the pilots, would have their pension benefits slashed.
And the taxpayer would have to pick up the tab. Beautiful, just beautiful. How fitting is it that the company is still named AMERICAN Airlines? Because they have the new American way down PAT.
Addendum: a subsequent story published by MSNBC after I wrote the initial post listed the number of coming layoffs at American Airlines as up to 15,000 (although an even later update said 13,000):
American Airlines officials were meeting with their three major unions amid reports that the bankrupt airline company is making plans to eliminate up to 15,000 jobs.
Representatives of the Allied Pilots Association, Transport Workers Union, and Association of Professional Flight Attendants were meeting with company officials in Dallas, said Sam Mayer, a long-time American pilot who sits on the union's communication committee. The three unions represent about 54,000 total employees.
"Right now we have no idea what they're going to be asking for as far as pay cuts, work rules, job cuts, furloughs, etc.," Mayer said.
Bonus: Big ol' jet airliner...please don't crash due to poor maintenance
The desperation of state and local governments to try and preserve jobs in their jurisdictions is becoming palpable. Usually that means giving huge tax breaks to predatory corporations when they threaten to split town or even the country. Not content to stop there, the "leaders" of the city of Grand Island, Nebraska, decided to go one step further and just flat out hand $600,000 in taxpayer money to one such company. So how did that all work out for them? Not too well, as was reported by a local television station:
The company Structured Solutions in Grand Island has been in the headlines for weeks. They were given $600,000 from the city. All they had to do was add two hundred jobs and create 50 new ones by the end of 2011.
They didn't meet either deadline, only creating six jobs.
So Grand Island City Council decided not to grant an extension to the company and, severed ties with Structured Solutions.
Last week, a new development to this continuing headache for the city appeared.
On January 24th, Structured Solutions filed for Chapter 7 bankruptcy. For the city, this could mean that they don't see a cent of the $600,000 returned to them.
"It was clear that Structured Solutions was in serious financial trouble and it didn't terribly surprise me that bankruptcy was filed," said City Attorney Bob Sivick.
That's just fucking brilliant. I really hope the voters in Grand Island are paying attention and will wreak their vengeance upon the idiots who approved this deal in the next election. Actually, they had better, because the idiots don't seem inclined to learn from their mistakes:
The city council is chalking this up as a lesson learned.
"There are safeguards to how the LB-840 funds are distributed, and we didn't use those to the fullest and we will be more careful in the future," said council member Peg Gilbert.
Gilbert wanted to emphasize that while this LB 840 grant did not flush out, they have had sixteen or seventeen economic development projects that have been successful.
She said that the city must continue investing in economic development, regardless of this setback:
"That's the future of our community... we must."
Yep, fuck free enterprise and fuck the markets. Instead, just turn over the public treasury to the private corporations because they are able to blackmail your community by threatening to take advantage of our insane "free" trade agreements and leave the country. That's the new socialism...American style.
Bonus: Today is the day for playing Springsteen's "Nebraska" album:
In a properly functioning market economy, when a corporation is forced into bankruptcy the top management of said corporation would pay a very large financial penalty in terms of their pay and benefits. That is the whole foundation of our supposedly risk-reward capitalist system. Not in modern day America, however. Instead, we have evolved into a crony capitalist system in which it has become virtually impossible for those at the top to fail, however bad their decisions may be. What's more, this is true even in industries that don't receive massive government bailouts.
But wait, Bill, I hear you asking. Isn't that the case only in the Too Big To Fail sectors?
Sadly not, as reported this past weekend by MSNBC:
When companies go bankrupt, the misery is shared among many: Bond holders are wiped out, retirees see their pensions and benefits vanish, and employees lose their jobs.
But some feel no pain at all: CEOs and other top executives of companies that go through Chapter 11 receive robust compensation in the form of salary, stock grants and other benefits.
In some cases, they earn even more money than they did before the filing, even while other stakeholders suffer. It's the most unlikely fast-track to a fat payout ever, and it goes on in spite of federal legislation meant to crack down on corporate honchos feasting while everyone else fights over crumbs.
It wasn't supposed to be like this. In the wake of corporate catastrophes such as Enron, Congress passed legislation aimed at preventing companies from paying retention bonuses to executives at firms going through Chapter 11.
"You can't pay someone for just staying at a bankrupt company," said Robert Jackson, an associate professor at Columbia Law School at Columbia University, and former advisory to senior Treasury officials on executive compensation during the financial crisis. "But that's different from paying them from doing well at a bankrupt company," he said.
That distinction has become a loophole. Since the law allows performance-based incentives, huge executive payouts have morphed over the years to be little more than retention bonuses by another name, according to critics who say executives net outsized payouts even when they negotiate agreements that leave stakeholders out in the cold.
"There seems to be no sense of accountability at this level," said Steven Kropp, a professor at Roger Williams University School of Law. "In most of these cases, the unsecured creditors aren't being paid back in full, employees are being laid off, and in addition, they're finding their health insurance and pensions diminished." An investigation by The Wall Street Journal found that median compensation of CEOs at 21 companies that filed for bankruptcy was $8.7 million, just $400,000 less than the median compensation earned by CEOs at healthy companies.
Taking off my shoes and socks to do the math on that last data point reveals that the CEOs of bankrupt companies on average are paid just 4.5% less than those at non-bankrupt firms. Obviously, driving your company into the ground, usually in pursuit of a short term boost in revenue that can be used to pack your golden parachute, has virtually no negative ramifications to CEO pay anymore.
So how does this shit happen?
Companies are required to go to court and argue their case for big bonuses with the bankruptcy judge, explaining why the CEO deserves the set level of compensation and what targets they must meet in order to earn their bonus. The problem is that often the bar is set so low that even lackluster performance will be measured as success.
"It's all fine and well to say you're going to pay people for performance, but the key is what kind of performance," Jackson said. "It's very hard for a judge to know if an earnings target is easy or hard to hit. Are they just window dressings?" To make this determination, the court has to rely on evidence from the company's executives and lawyers, who may have an incentive to give themselves easy assignments.
Judges also have to rely on the input of compensation experts — also hired by the company — to know if the bonuses being proposed are appropriate for the industry and the task at hand, which also raises the prospect of manipulation.
In other words, it is a completely incestuous system from top to bottom. But wait, I hear you protesting. Why don't the shareholders object? After all, aren't they the ones being most negatively affected?
He said key stakeholders want a "bankruptcy guru," and they're willing to shell out enormous sums for the services of a CEO they think can pull the most money out of a troubled company. The catch is that this slate of decision-makers increasingly includes big creditors, negotiating with the kind of clout once limited to shareholders. What a creditor sees as the best return on its investment may very well be a bloodbath for the company's rank-and-file.
In other words, once again we see the "heads they win, tails you lose" dynamic at work. The system has become so totally gamed by the elites that it no longer matters to them whether a troubled company survives as an ongoing concern. If the company ultimately fails due to impossible market conditions created by peak oil, or the relentless off-shoring of decent paying jobs by corporate America, or because the CEO has never worked in that particular industry and has no fucking clue as to what they are doing, it doesn't matter at all to the big money boys. They'll just strip away the assets and leave a hollowed out husk...and then move on to the next ripe, juicy target. So while it was nice of MSNBC to treat this as a news story, it really shouldn't have been a surprise to anyone.
Bonus: "You get your money for nothing...and your chicks for free"
In yet another blow for state and local governments who think more legalized gambling is a great way to increase tax revenues comes a story from the Norwich Bulletin about deep financial problems being experienced by the Mohegan Sun casino in Connecticut:
The parent entity of Mohegan Sun recently received a waiver from its bankers, something the casino operator sees as a vote of confidence in its future. Yet it could be the calm before a major storm in Connecticut’s economy in 2012, an analyst said.
Foxwoods Resort Casino, whose parent also is in talks to restructure debt, and Mohegan Sun are on course for severe financial problems in the year ahead, said Clyde Barrow, a University of Massachusetts Dartmouth professor of public policy who follows the New England casino industry.
The Mohegan Tribal Gaming Authority was unable to complete a refinancing agreement during its fiscal first quarter, which ended today. With that, the authority’s auditors attached a “going concern” warning to 2011 financial statements, authority CEO Mitchell Etess said Thursday.
A filing with the Securities and Exchange Commission said lack of a resolution would materially impair Mohegan Sun’s ability to operate.
So just how bad is it?
Mohegan’s total debt as of Sept. 30 was $1.6 billion, the authority reported. Of that, $811.1 million comes due within the next 12 months, including $535 million that needs to be paid by March 9 and $250 million in 8 percent notes that mature on April 1. This debt will need to be refinanced before the due dates, the authority said Thursday.
So what are the overall implications for the Nutmeg State?
Foxwoods and Mohegan Sun are two of Connecticut’s largest employers and major sources of revenue to the state government. Both are members of the Chamber of Commerce of Eastern Connecticut. Chamber President and CEO Tony Sheridan declined to comment on the Sun’s finances Friday, saying he was still studying them.
What is there to study, exactly? The casinos are deep in debt, and unless there is a miraculous economic recovery they are soon going to have to declare bankruptcy. Looks like Chamber of Commerce President and CEO Tony Sheridan is about to find out what Las Vegas already knows: a gambling-based economy is only sustainable so long as the marks still have money in their pockets. As the old saying goes, you can't get blood out of a stone.
I've posited the theory previously on this blog that there are a lot of companies out there, particularly in the consumer portion of the economy, that are just hanging on by the skin of their teeth hoping that a real economic recovery will take place soon and allow them to survive. All it will take to kill many of these concerns is another major economic shock wave. Well, more evidence of this phenomena was reported last week by CNBC in a story about how many bankrupt restaurant chains are so far refusing to go under:
You see them all across the country, in shopping malls and street corners, suburban towns and city centers: zombie restaurants.
Many of the undead are part of familiar chains that filed for Chapter 11 bankruptcy protection this year: Friendly’s, Chevys, Sbarro, Perkins. The zombie restaurants, barely bringing in enough cash to cover basic expenses, always seem to be one sizzling fajita or glazed chicken skewer away from a merciful end, but somehow keep hanging on — leaving too many restaurants chasing after scarce dining dollars.
“There’s a lot of walking dead,” said Bob Goldin, executive vice president for Technomic, a consulting firm that works with restaurant companies. “A lot of chains, they hang in there and they’re hard to kill off.”
Consumers, who have generally cut back on the number of meals out since the recession [cnbc explains] began, are benefiting from the proliferation of zombies. Healthy and failing restaurants alike have been forced to discount relentlessly to lure diners. But for the restaurants, particularly small independent operators, the competition from the undead is a nightmare that just won’t end.
Heh - given how many times I've used the term "zombie economy" on this blog, I love that CNBC is now using the same metaphor.
So who are some of the walking dead?
When Friendly’s Ice Cream, the chain based in Massachusetts, filed for bankruptcy protection in October, it said it would close 63 underperforming restaurants. But the company said it would continue to operate 420 stores, and a spokesman said it was making plans to expand again.
In California, Real Mex Restaurants, which owns several chains, including the midprice Chevys Fresh Mex, closed just 30 outlets after it filed for bankruptcy in October. It continues to operate 156 restaurants.
After Sbarro, the Italian fast-food chain, filed for bankruptcy in April, it closed 31 stores in the United States, but kept the doors open on 429.
Some chains are even trying to make a comeback:
The imbalance does not seem likely to end soon. Indeed, one midprice chain that everyone thought was dead and buried — Bennigan’s — is now coming back from the crypt.
Bennigan’s declared bankruptcy in 2008 and abruptly shut down the approximately 240 restaurants operated by the company, though some franchise-run Bennigan’s restaurants stayed in business.
Now, a group of investors has resurrected the franchising company and plans to open a small number of company-owned restaurants and dozens of new franchised outlets over the next five years. Paul M. Mangiamele, chief executive of Bennigan’s Franchising, said he had come up with a new design for stores and a revamped menu that would inject new life into the brand.
This is what the past three years of insane federal deficit spending has bought us, a temporary reprieve from the crash in which the dimwitted continue to make plans as if nothing has changed. Just more sheep for the slaughterhouse when the next big leg of the downturn finally begins.
As reported this past week by the Atlanta Journal Constitution, the Money Tree is declaring bankruptcy, shutting down half of its locations and presumably throwing all of the workers at those locations onto the unemployment line. Just in time for Christmas.
The Money Tree Inc., a Georgia-based provider of small consumer loans, and several of its subsidiaries have filed for bankruptcy protection, citing the economy and customers’ inability to repay loans.
The Bainbridge-based lender, which filed for Chapter 11 protection in Alabama on Friday, said it would restructure its business and close half of its 92 locations across the Southeast.
The company has 28 locations in Georgia, including branches in Buford, Conyers and Forest Park, according to its website.
The Money Tree was founded in 1987 and expanded into Alabama, Florida and Louisiana in the 1990s. Hurricane Katrina and the economic downturn that began in 2007 were significant setbacks for the lender, the company said in its bankruptcy filings.
You'd think it would be pretty hard to spin this announcement positively, but damn if Money Tree's president didn't try:
Bradley Bellville, the company’s president, said in a news release that the filing was made with “great regret.”
“However, this filing allows The Money Tree to enhance its short-term liquidity while we confront this historically difficult environment for our business,” he said.
Bellville did not immediately return a call requesting comment.
I'll bet he didn't. And a big "bah, humbug" to you too, sir.
Bonus: Here is a completely inappropriate song dedication to Money Tree President Bradley Bellville
Let me start off this post by saying that Hostess makes shitty products. Their snack cakes alone have contributed as much as any single factor to the obesity epidemic in America. And Wonder Bread is actually a crime against the fine art of baking. Still, it's tough to see anyone facing the prospect of losing their job, especially right before the holidays. Here is the New York Post with the details:
Hostess Brands, America’s biggest bakery, is on the verge of filing for bankruptcy again — perhaps as early as next month, The Post has learned.
Staying out of Chapter 11 is proving tough for the Twinkies maker, a source said, adding the question now is whether it will be a pre-packaged bankruptcy or not.
“We are working hard to keep it out of [Chapter] 11,” another source close to the months-long talks with lenders and unions said.
The tipping point: Hostess maintains it cannot afford to stay current on its $700 million in outstanding loans and keep contributing to the unions’ pension plans, sources said.
Hostess has not been paying future pension benefits since August, thereby breaking its union contracts.
Even with the pension expense savings, the company still needs more money within the next several weeks. And private-equity firm Ripplewood Holdings, which holds a controlling ownership in Hostess, will not reinvest capital unless it gets its union concessions, one source said.
“I would read that as pretty drastic,” another source said. “It’s not easy to resolve that kind of issue.”
It's an all too common theme these days, lose your benefits or lose your job altogether. Here is a telling quote:
A Hostess worker said, “We understand that, should we pursue some form of legal action to require the company to live up to the terms of the contract, they may close, but we have come to believe that they will close anyway.
So what exactly will bankruptcy mean?
Much is at stake for Twinkie the Kid. The firm filed for Chapter 11 in September 2004 and spent 4 1/2 years there before Ripplewood in February 2009 bought it after gaining union concessions.
There is a concern that if it files again, the result could be liquidation with many of its brands, including Hostess, Wonder, Nature’s Pride, and Drake’s, sold for cash.
In that scenario, the first to be paid would likely be the company’s lenders, including General Electric, Monarch Alternative Capital and Silver Point Capital.
The unions will likely rank behind them in a bankruptcy, and Ripplewood’s equity stake would be wiped out, sources said.
So typical, the financial institutions get paid while the workers get the shaft. Just another sad tale of modern corporate America. Almost makes me wish I had some comfort food to help me forget all my troubles.
More bad news in the construction industry, this time down in Texas where, as I reported earlier today, the horses and donkeys are also dying do to the drought:
A Central Texas construction company with roots to 1939 has notified state officials that it plans to lay off 300 employees and that the layoffs are expected to be permanent.
J.C. Evans Construction Co., which filed Chapter 11 bankruptcy in August, advised the Texas Workforce Commission about the layoffs in a letter dated Nov. 23. The state released the letter Monday.
What's interesting is how this company, which has been around for more than 70 years, got into trouble:
Andrews wrote that the Leander-based company was trying to auction off quarries to raise money. When the quarries could not fetch a sufficient price, the layoffs were executed "across every position and job title."
For most of its existence, the company focused on commercial construction, including work on Mansfield Dam, baseball and softball fields for the University of Texas, IBM facilities and several state buildings around Austin.
In the early 1990s, employees bought out the Evans family, making the company 100 percent employee-owned, according to news reports. In the early 2000s, the company remade itself, focusing on site work at subdivisions for homebuilders.
Over the past year, the company's fortunes soured, according to the bankruptcy filing.
Business income fell from $155 million in 2010 to $54.7 million through Aug. 1.
The company also was a party to 18 lawsuits within the past year, and Caterpillar Financial Services Corp. repossessed $373,400 in machinery and equipment.
So they made the decision to chase after the housing bubble mirage and ended up dying of thirst in the middle of the desert. Kind of an apt metaphor these days for a company based in Texas.
It's been speculated for months. And today it finally happened. Lee Enterprises, the Iowa-based publisher that took on a massive amount of debt in 2005 to purchase the St. Louis Post-Dispatch, has filed for bankruptcy.
Below is a letter that Lee CEO Mary Junck emailed out to employees later this afternoon, informing them that bankruptcy is a "good news" -- you know, like winning Pulitzer or something.
Why have America's newspaper's fallen on such hard times? Some blame the Internet. As for me, I lay at least part of the blame on the fact that many of them are run by idiots who would write something this fucking stupid in a letter to their employees and shareholders:
Dear Lee Stockholders and Employees:
There is welcome news for all of us who have a stake in Lee. The terms are in place for the completion of a comprehensive refinancing of Lee's debt.
We have achieved agreements with an overwhelming majority of our creditors to extend our existing loan agreements on reasonable terms that preserve stockholders' ownership interests in the company with only 13% dilution.
As we previously noted as a possibility, implementation will require a favorable, voluntary, prepackaged Chapter 11 process to bind the remaining minority of non-consenting lenders to the terms of the agreements. While such a filing falls under bankruptcy laws, in our case it differs significantly from most such filings because it preserves interests of stockholders and all other parties. The process will simply provide a favorable legal framework for implementing the agreements.
The court process is expected to take 60 days or less. In the meantime and throughout the process, we expect there will be no change in our business. There will be no impact on employees, customers, vendors, contractors, contracts, company operations or corporate governance. We expect Lee stock will continue to be traded on the New York Stock Exchange. I am enclosing our news release with additional details.
Although the refinancing will require Lee to pay higher interest rates, it and our strong cash flow will keep Lee on solid financial footing as we continue reshaping our company for long-term growth by expanding our digital platforms, building audiences, driving sales and improving our balance sheet.
As I hope you noticed in our most recent earnings release, Lee has continued to outperform the industry in multiple measures, most notably in digital advertising growth and audience growth. As I also hope you noted in our recent President's Awards announcements, our publishers, editors, management teams and employees throughout our company have demonstrated outstanding journalism, innovation and spirit. All of this underscores our excitement and confidence as we enter 2012.
With deep appreciation for your continuing support,
Mary Junck
Chairman, President and Chief Executive Officer
Imagine working for a company and receiving a letter like that. Sure would do wonders for your morale, don'tcha think? Just how delusional do you have to be to say that you have "excitement and confidence" as you file for bankruptcy.
Taking a look above at that disgraceful cover story celebrating a past Black Friday, I think I have a pretty good idea why fewer and fewer people are willing to actually pay hard earned money for the St. Louis Post Dispatch. It must be an example of the "outstanding journalism" being practiced at the paper these days. Perhaps some real news for a change, particularly above the fold on the front cover, might make some people willing to open their wallet to pay for an old-fashioned, dead tree media source. After all, there are plenty of pandering fluff pieces available for free on teevee and the Internet to appeal to the lowest common denominator.
Corporate America has become a vast cesspool for the greedy, the conscienceless and the functionally incompetent. It's just rare that you see a corporate executive with such a perfectly appropriate last name.
Bonus: this may be completely inappropriate, but I hereby dedicate this song to Lee Enterprises CEO Mary Junck
image: The Virginia State Fair in better times, circa 2010
You know that times are getting tough when state fairs start to declare bankruptcy:
Many residents of Richmond, Henrico and her surrounding counties have found memories of the State Fair. We remember going when it was located off Laburnum Ave, and most of us can still conjure up the aromas of cotton candy and hot dogs, mixed with the earthy smells emitting from the livestock exhibition buildings.
Today it was announced in the Richmond Times-Dispatch that VASF will be filing for Chapter 11 Bankruptcy. According to President and CEO Curry A. Roberts, this is a one-time financial event, and is a responsible step to take.
Most of the problem is in the repayment of the principal and interest in the organizations' financial portfolio, of which half of the loans have already been repaid since 2007. The drop in the stock market in 2009 was a major factor in creating the financial disparity leading up to the filing today.
Who knew that state fairs were heavily invested in the stock market? Actually, I have to admit I really don't know all that much about state fairs. I haven't attended a fair of any kind since I left my small Illinois hometown for good nearly a quarter-of-a-century ago, although I used to have a lot of fun at the annual local county fair when I was a kid.
In these modern times with most family farms having been bought out by giant agribusinesses, state fairs seem like quaint relics of a bygone era. Looks like soon they will just be gone.
