San Francisco Bankruptcy Lawyer Blog

A San Jose judge's $711 million ruling against an internet entrepreneur who proudly calls himself the 'Spam King', as reported in the San Francisco Chronicle earlier this week, highlights some of the things California bankruptcy can't protect against. The development serves as a reminder that a Bay Area bankruptcy lawyer can be a key ally when facing both financial and legal problems.

Last February California company Facebook sued Sanford Wallace, the self-described "Spam King", claiming he had fraudulently gained access to millions of user accounts on the social networking site. Wallace responded in June by declaring Chapter 11 bankruptcy. At the time of the filing the tech news site CNET.com reported that Facebook's lawyers believed Stanford's Chapter 11 bankruptcy filing was mainly a legal maneuver designed "to avoid a default judgment and criminal contempt order."

This week's ruling by a US District Court in San Jose was a useful reminder that a Northern California bankruptcy filing can ease the path of a troubled company hoping to reorganize, but it does not make legal problems simply go away. In an interview with the Chronicle an attorney for Facebook acknowledged that the site did not expect to collect "the vast majority of the award", but added he hoped it would stand, serving as "a continued deterrent against these criminals."

Of course, most California bankruptcies have nothing to do with criminality. Rather they are a reflection of the difficult times we are all living through. But it is worth remembering that while bankruptcy often offers a much-needed fresh start it does is a long and complex process that addresses some legal and financial issues but not others. An experienced San Francisco bankruptcy attorney can walk you through the court documents and procedures, and can also offer advice and assistance regarding the areas bankruptcy may not directly address.

San Francisco Chronicle: Spammer ordered to pay Facebook $711 million

CNET: 'Spam King' could face criminal charges in Facebook case

Adjustable rate mortgages constitute a "ticking time bomb" that will lead to waves of California foreclosures unless they are properly addressed, according to a California foreclosure prevention press release issued Thursday by state Attorney General Edmund G. "Jerry" Brown Jr. Brown announced that he has sent letters to ten major banks and loan servicing companies requesting background information, data and an account of how they intend to cope with the anticipated problems of California homeowners facing foreclosure.

According to the Attorney General's letter, about one million ARMs will reset over the next four years. A full 58% of these loans are in California, making the state "the epicenter of this crisis", according to Brown's office. ARMs are often especially problematic for homeowners facing a potential California home foreclosure prevention situation.

In an ARM borrowers are usually given a very low interest rate initially, which rises sharply ("resets") after a certain number of years, leading to significantly higher payments. In an era when home prices climbed ever higher this was not seen as a problem - California homeowners would simply refinance the mortgages using the higher equity in their properties when it was time for interest rates to reset. Today, with home prices well down from their highs the result is that many California homeowners who find themselves underwater on their loans and have trouble making their payments.

ARMs may have seemed like a good idea a few years ago, but, today, are the cause of many California foreclosure prevention headaches for Bay area homeowners. A full-service Bay Area foreclosure prevention law firm can help customers facing a mortgage rate reset, a Contra Costa County Bankruptcy lawyer can help homeowners faced with a California mortgage foreclosure understand their options as they fight to keep their homes.

Brown's letter asks ten major ARM providers who operate in California, including Bank of America, JP Morgan and Wells Fargo, to provide background information and data on their loans and to tell the Attorney General, by November 23, how they plan to address the situation.

Continue reading "Wave of California foreclosures predicted by Brown - AG Wants Answers from Banks" »

This week's news that the San Francisco area bankruptcy of Spansion is producing more job cuts serves as a reminder that California Chapter 11 bankruptcy does not end with a court filing. Indeed, in most respects the actual California bankruptcy declaration is only the beginning. A Bay Area bankruptcy lawyer should be your partner and guide through this process - not simply an assistant who helps to file court documents.

Sunnyvale-based Spansion, which is described by the tech publication EE Times as the world's largest maker of NOR flash memory, filed for Chapter 11 bankruptcy in March. In late July the company said it hoped to emerge from Chapter 11 during the fourth quarter of 2009, just as it announced the closure of an R&D facility adjacent to its Silicon Valley headquarters. A company press release earlier this month announced that Spansion had applied to the US Bankruptcy Court for permission to file a reorganization plan and called this an "important milestone toward completing its Chapter 11 restructuring."

On Monday the company announced a new round of job cuts. It did not say how these fit into the broader restructuring plan and declined to give specific numbers.

All of this highlights the degree to which Chapter 11 is a process. A Walnut Creek Bankruptcy law firm can be just as important a guide through the legal intricacies of restructuring as it is to the initial act of declaring Chapter 11 here in the Bay Area.

EE Times: Spansion cuts more jobs

Spansion Press Release on its restructuring activities

New San Francisco bankruptcy data and Northern California bankruptcy data released by the government last week details just how bad the Bay Area bankruptcy situation remains. The data set paints a grim economic picture, and reinforces the need for an experienced San Francisco bankruptcy lawyer to help guide clients through the process at a time when Northern California bankruptcy courts are experiencing unprecedented case volume.

The figures released last week by the United States Bankruptcy Court for the Northern District of California look at overall Northern California bankruptcies over a 24 month period (October 2007 through September 2009) and also break them down by bankruptcy type.

Northern California bankruptcy filings in September were up 46.8% overall compared to September 2008. Specifically, Northern California Chapter 7 bankruptcy filings increased by 45%, Northern California Chapter 13 bankruptcy filings were up 46% and Northern California Chapter 11 bankruptcy filings more than doubled (from 23 cases to 50 - Chapter 11 filings represent by far the smallest number of cases across the two year data period).

A year-to-year comparison (October 2008 - September 2009 vs October 2007 - September 2008) is even more sobering. This indicates a 62% jump in Northern California Chapter 7 bankruptcy filings, 66% for Northern California Chapter 13 bankruptcy filings and 63% overall. Northern California Chapter 11 bankruptcy filings increased by 72.8%.

A full-service Bay Area bankruptcy law firm can help you navigate the complexities of the bankruptcy process, including explaining the crucial differences between different sorts of filings and designing a personalized San Francisco bankruptcy legal strategy for each individual client.

US Bankruptcy Court (Northern District of California) - Statistics Page

This weekend's Chapter 11 bankruptcy filing by Capmark Financial Group, one of the country's largest commercial real estate finance companies, highlights the difficulties companies in California bankruptcy can expect to encounter as the national economic downturn continues. Chapter 11 bankruptcies like Capmark's can ripple through the rest of the economy, creating Bay Area bankruptcy issues for individuals and companies far removed from the world of high finance.

According to the Financial Times, Capmark reported a loss of $1.6 billion in the second quarter of this year. The paper reports that Capmark's bankruptcy filing listed about $20 billion in assets against consolidated debt of $21 billion. Additionally, 40 of the company's subsidiaries also filed for Chapter 11 bankruptcy protection over the weekend. In a statement released Sunday, the company emphasized that it still has "in excess of $500 million in cash and cash equivalents" and expects to continue its day-to-day operations.

According to the FT, Capmark services more than $288 billion in loans with a focus on the commercial real estate market - a sector many analysts believe may be the next part of the financial system to be severely tested as the global downturn continues.

California is one of the markets hit most severely by the real estate crisis of the last two years. If you believe your business may be in financial trouble consulting a San Francisco bankruptcy attorney early in the process can be a key step in protecting your assets and keeping your company running. A full-service Bay Area bankruptcy law firm can advise you of the options relevant to your particular circumstances.

Financial Times: Capmark Bankruptcy Filing Highlights Property Woes

Marketwatch: Capmark Financial files for Bankruptcy

Capmark press release regarding its bankruptcy filing

The collapse of Northern California car sales giant Superior Auto highlights, again, both the volatile nature of the current economy and the importance of early consultation with an Oakland bankruptcy lawyer. Superior Auto was forced to shut down five dealerships recently, and is now engaged in a series of legal battles with carmaker Nissan, according to a report in the San Jose Mercury News.

Nissan's Oakland foreclosure on what had been one of its top dealers worldwide is a key element of a story that also involves the termination of lines of credit. According to the newspaper, Nissan is now suing Superior Auto founder Michael Kahn for breach of contract and he is countersuing them on the same grounds, as well as charging fraud.

In the meantime the Fremont bankruptcy dispute has led to the closure of five of Kahn's dealerships, including major facilities in both Oakland and Fremont, and has put hundreds of people out of work - a development that, in turn, is likely to exacerbate the already serious Bay Area bankruptcy situation as individuals struggle to replace their lost income.

Lawyers for Kahn say Nissan cut off his credit and instituted an Oakland foreclosure on a new dealership that had only been open for one week. The problems began when Kahn fell behind on some payments to the company. Kahn's lawyers contend that his payments were never excessively late and were in line with industry practice for large auto dealerships.

As the pain from the foreclosures, shuttered dealerships and job losses spreads it will be important for many ordinary families to consult a Fremont bankruptcy attorney to help guide them through a period of financial disruption. A Bay Area bankruptcy law firm is an essential first stop in the wake of a financial trauma, be it personal or professional.

San Jose Mercury News: Bay Area auto dealer, Nissan lock horns

Homeowners fearing San Francisco foreclosure converged on the Cow Palace last weekend desperate for help avoiding the loss of their homes through Bay Area Foreclosure proceedings. Television station KGO estimated 5,000 people were on hand when the doors opened for the five day event. Similar workshops in other cities have attracted tens of thousands of distressed homeowners over their multi-day runs.

The Bay Area foreclosure prevention event was organized by a non-profit group, the Neighborhood Assistance Corporation of America, or NACA. NACA helps homeowners already in foreclosure, or who are having trouble making their payments and fear foreclosure, to reorganize their finances in an effort to keep their homes. Even with this free service, the amount of paperwork and financial information that must be gathered before the process begins can be daunting. This is an area where a Contra Costa County foreclosure prevention attorney's help can be essential both before and after events like the NACA workshop.

KGO reported that people, some from as far away as Georgia, waited in line overnight outside the Cow Palace before the Bay area foreclosure event began. The huge turnout here in the Bay Area, and in other cities around the country, spotlights the continuing distress of ordinary homeowners, despite recent indications that the country's overall economic picture may be improving.

Even if you were lucky enough to attend last weekend's NACA event and get some assistance, the fight to keep your home is likely to be a long one. Consulting an experienced San Francisco foreclosure prevention lawyer as early in the process as possible is one of the best decisions a homeowner can make when faced with financial distress and the potential loss of their property.

KGO.com: 5,000 people show up for foreclosure help

Contra Costa Times: Free workshop for homeowners in distress

San Francisco Chronicle: Thousands at Cow Palace seeking mortgage help

California chapter 7 bankruptcy and California chapter 13 bankruptcy will continue to be problems throughout the coming year according to data cited in the annual Fulbright & Jaworski LLP Litigation Trends Survey. The survey results reinforce our belief that the assistance of an experienced San Francisco bankruptcy lawyer will be essential for companies forced to make their way through the bankruptcy system.

As reported by BusinessWire, the Fulbright & Jaworski Survey, now in its sixth year, tries to predict litigation trends on both sides of the Atlantic by polling corporate law departments at US and UK companies. Organizers claim the survey "is the largest such canvas of corporate counsel on litigation issues and trends."

The survey highlights an expected increase in bankruptcy issues as a result of the global economic downturn, noting that this trend can be seen across every sector save one: health care. Fifteen percent of corporate counsel surveyed said they planned to increase their budgets for bankruptcy-related litigation in the coming year, a figure second only to the number planning budget increases for labor and employment litigation (18%). The change is particularly dramatic since, the report notes, bankruptcy is "a practice area that had remained relatively dormant over the previous three years."

This is particularly worrisome for smaller companies as it may mean larger corporations are budgeting more for bankruptcy litigation precisely because they fear turmoil among smaller suppliers and other business partners. Companies unable to deploy the resources of a major corporate legal department can be especially well-served by a skilled Bay Area bankruptcy attorney who can handle the litigation that San Francisco bankruptcies often generate.

Government data reinforce the trends highlighted by the Fulbright & Jaworski Survey . California chapter 7 bankruptcy statistics compiled by the US Justice Department show that California chapter 7 bankruptcy filings nearly doubled between 2007 and 2008.

BusinessWire: Fulbright & Jaworski Litigation Trends Survey

Justice Department US Trustee Program - Bankruptcy Statistics

Housing Secretary Shaun Donovan has announced over $1.8 million in California homeowner assistance as part of a federal effort to stem the tide of California home foreclosures. A Bay Area foreclosure prevention lawyer can help homeowners understand the federal programs and benefits on offer and apply for any aid to which they may be entitled.

In all 37 housing counseling organizations in California are slated to receive $1,887,550 as part of a larger, $60 million, nationwide program. "This critical funding will help counseling organizations continue to assist families in making more informed choices before they buy a home and counsel families facing foreclosure," Secretary Donovan said. The money will go to organizations that help people buy or keep their homes. An additional $5 million is also earmarked for three national organizations that will train 4,400 new housing counselors.

The new round of federal aid is a sign the government continues to regard the California housing and foreclosure crisis as serious. Foreclosure prevention efforts can be complicated and time-consuming. Even with federal assistance available, it is often prudent to consult an experienced Bay Area foreclosure prevention attorney for advice on the best way to approach a California loan modification. As an earlier blog highlighted, even tiny paperwork errors can lead to a homeowner's exclusion from relief under the government's HAMP loan modification program.

Continue reading "California housing aid announced by Housing Department" »

New Sacramento house foreclosure data published at the end of last week appears to indicate that a fragile balance has emerged between Sacramento bank repossessions and Sacramento home sales. That is the good news. Underlying factors in the same report, however, such as Sacramento mortgage loan defaults and Sacramento payment delinquencies highlight how troubled the system remains overall, and why consulting with an experienced Northern California foreclosure lawyer is still key part of the fight to hold onto your home.

August data released last week by the California Building Industry Association (CBIA) showed that new home sales remain at historic lows, 13% off the levels of August 2008. Foreclosures, and the repo sales that follow, obviously played a significant role in this as well as in the overall fall in house prices.

Newspaper headlines focused on the fact that an expected wave of Northern California foreclosures did not materialize in the Sacramento area. As the Sacramento Bee points out, banks are, for the moment, selling more homes than they are repossessing, and this has slowed the downward pressure on housing prices. Buried in same stories, however, was some more troubling data: Sacramento loan defaults continue to grow. The paper reported that foreclosures have slowed mainly because of political pressure on banks to work with homeowners on loan modifications. In other words, foreclosures and repo sales have slowed because the banks are approaching the California loan modification process more slowly, not because the number of homeowners in distress has fallen.

A Sacramento foreclosure prevention attorney should be a key ally and advisor for any homeowner opening these sort of talks with his or her bank. California loan modifications can be just as complex and confusing as obtaining the original mortgage, and homeowners need an experienced Northern California housing lawyer on their side when seeking a loan modification or negotiating over California mortgage delinquencies.

Sacramento Bee: Foreclosure flood fails to materialize in Sacramento area

Real Estate Rama: New-Home sales continue their sluggish pace in August, CBIA announces

Homeowners struggling to avoid a Bay Area home foreclosure got both good and bad news in recent days: word that a government program aimed at helping people avoid California home foreclosures, and foreclosures nationwide, is ahead of schedule in terms of the number of people it has helped. At the same time, however, a new report says many people who would like to take advantage of the program have been barred from it due to bank errors. This news highlights again why talking to a Bay Area foreclosure prevention attorney before you begin the loan modification process is a sensible self-protection strategy.

The good news about the home loan modification program was announced jointly by Housing Secretary Shaun Donovan and Treasury Secretary Timothy Geithner in a conference call with reporters Thursday. According to ABC News, Donovan said the $50 billion Home Affordable Modification Program, or HAMP, had reached its initial goal of half a million trial loan modifications ahead of the target date of November 1.

At the same time, however, an Associated Press report noted that many otherwise qualified applicants are being turned away from HAMP because of technical errors on the part of their banks. The news agency cited one example in which a loan was denied because of a 7-cent error in the paperwork (the homeowner's bank allowed the claim only after being contacted about it by reporters). When this happens California foreclosed homeowners often have little recourse, particularly since the HAMP program lacks an appeals procedure. This lack of an appeals process highlights the importance of contacting an experienced California foreclosure attorney first. An experienced Bay Area foreclosure attorney can help guide clients through the government's complex and confusing loan modification procedures, and may be a key ally in a California foreclosure homeowners' fight to save his or her house.

According to the data service RealtyTrac foreclosures nationwide are still on pace for a record total of 3.5 million by the end of the year.

DS News: Rejected HAMP borrowers lack much legal recourse

ABC News: Obama administration says mortgage modifications ahead of goal

New data on San Francisco Bay Area home sales shows communities hard hit by foreclosures and the housing slump did a little better in September. Still, problems remain in both the housing market and the broader economy, highlighting areas where a San Francisco foreclosure lawyer can be a key ally in difficult times.

Though this week's data contained some positive news, the larger, mostly negative, Bay Area foreclosure issues are still significant. Nearly 4000 Bay Area homeowners received notices of foreclosure during September, a 116% increase on September of 2008. If you receive a foreclosure notice a San Francisco foreclosure attorney is one of the first people you should call.

As the Reuter News Agency reports, Bay Area foreclosure sales continued to be a major element of the regional picture, accounting for 32.8% of all homes sold in September. Contra Costa foreclosures and other San Francisco suburban foreclosures remained higher than normal with Solano County foreclosure sales topping the regional list at 56.9% of total sales.

Taken alongside the new changes to mortgage and foreclosure regulations here in California (see previous blog entry) these numbers highlight the necessity for experienced San Francisco foreclosure legal help when you find yourself facing this complex legal procedure. An experienced Walnut Creek foreclosure attorney can guide you through the entire foreclosure process, ensuring that your interests are protected.

Reuters: San Francisco area home sales post gains in September

San Jose Mercury News: Bay Area Homes Still Taking a Hit

MDA DataQuick: Slight Uptick in Bay Area home sales and prices

A series of California foreclosure and mortgage laws signed this week by Gov. Arnold Schwarzenegger highlight once again the need for a skilled California foreclosure attorney to help guide you through the legal process.

In all, Gov. Schwarzenegger signed nine bills Monday related to housing and mortgages. For homeowners facing a Contra Costa County bankruptcy and foreclosure proceeding the most important are SB 94, which establishes new regulations for designed to help distressed borrowers save their homes, and AB 957, which gives the buyers of foreclosed properties new rights related to their escrow transactions.

Other new measures effect the way the mortgage finance industry is regulated and raise mortgage fraud from a misdemeanor to a felony. It is unusual for such a large number and wide variety of bills to be signed into law at one time, a fact that makes San Francisco foreclosure attorneys all the more critical for Northern California residents in financial trouble and facing California bankruptcy proceedings.

Knowledgeable legal help is particularly essential because the new laws vary not only in the new regulations they impose or actions they require, but also because even the effective dates of the laws vary widely. The governor's signature put some of the new laws into force immediately, while others will not take effect until next year.

DS News: Schwarzenegger Institutes Nine New Mortgage Laws

HousingWire: California Law Gets Tough on Mortgage Finance

Background Resource:
Contra Costa County Information Page: Foreclosures & Referral Resources

FormFactor of Livermore, California has announced it is acquiring assets of the Bay Area bankrupt company Electroglas. The Northern California bankrupt company manufactured wafer-testing tools for the chip-making industry. Electroglas filed for Chapter 11 bankruptcy protection last July, reporting it had only $5 million in cash, while having spent $11.9 million in the first nine months of its fiscal year. FormFactor released a statement saying it has agreed to purchase Electroglas' intellectual property as well as some of the Bay Area bankrupt company's physical assets. FormFactor supplies materials to chipmakers.

The assets acquired by FormFactor were made available at auction as part of Electroglas' bankruptcy proceedings, highlighting the opportunities that can emerge from careful management of the California Chapter 11 bankruptcy process. When companies find themselves in the unwelcome position of having to declare Chapter 11 bankruptcy, an experienced California bankruptcy attorney can be an essential part of navigating this difficult and complex legal procedure and realizing maximum revenue from the careful sale of company assets.

FormFactor did not disclose the sum it will pay for Electroglas' Chapter 11 bankruptcy assets, but referred to them in a statement as "the product of significant investment in the research and development of high accuracy motion control."

When it filed for Chapter 11 protection last July Electroglas cited the worldwide recession as a key element of its business difficulties, noting that global demand for semiconductor manufacturing equipment has dropped rapidly over the last year. It remains unclear whether the company will succeed in emerging from Chapter 11 protection.

San Jose Mercury News: Bay Biz Buzz

SiliconBeat: Electroglas seeks bankruptcy protection

FormFactor news release on Electroglas acquisition

New developments in the Northern California bankruptcy of Financial Title Co., have shed unexpected light on some pitfalls of the California Chapter 7 bankruptcy process. Financial Title was once the largest real estate title agent in Silicon Valley, boasting 45 offices stretching from the Bay Area to Sacramento.

According to local media reports, when the company abruptly closed for business last year employees in its office in the Cow Hollow section of San Francisco left behind 46 cardboard boxes filled with years of financial data on thousands of clients. Landlord Billy Tookoian found the boxes when he retook possession of the building under a bankruptcy settlement that left him responsible for disposing of Financial Title's left-over furniture and papers. Tookoian described the contents of the boxes - which contained thousands of files filled with social security numbers and other personal data - as "an identity theft fraud starter kit." He has since arranged for all of the documents to be destroyed by a company that specializes in the disposal of sensitive paperwork.

At the time of Financial Title's San Francisco bankruptcy filing examiners from the California Department of Insurance were on hand at Cow Hollow, and all of the company's other offices, to ensure that escrow funds did not get lost or stolen during the California bankruptcy procedure. Their mandate, however, did not include securing the personal data of the company's customers. This is where a San Francisco bankruptcy attorney can make all the difference - protecting clients from mistakes that might lead to problems beyond the bankruptcy itself, possibly including litigation. The assistance of an experienced Bay Area bankruptcy practice is indispensible when navigating this complex process.

NBC Bay Area: How one man averted an identity theft epidemic

Silicon Valley Business Journal: Financial Title Co. shuts down in California

The recent California bankruptcy filing by Wickline bedding of Escondido highlights potential problems California chapter 7 filers may encounter. The mattress manufacturer's problems are a timely reminder of the difficulties an experienced California bankruptcy attorney can help clients avoid.

According to industry publication Furniture Today, Wickline listed assets of $3.1 million against liabilities of $49.7 million in its US Bankruptcy Court filing. A company spokesman, however, says the figures cited in these official bankruptcy court documents are inaccurate. The spokesman says one debt to a supplier reported at $45.5 million is, in fact, a debt of only $45,000. If correct, this would significantly alter the company's financial picture as the California chapter 7 bankruptcy proceedings move forward. Wickline is an independent mattress producer founded in 1949 and run since 1979 by the Malkiewicz family. At one time the company enjoyed annual sales of $16 million.

Wickline president Mike Malkiewicz says the family hopes to remain in the bedding business and is still looking for a buyer for the company's assets, despite the chapter 7 bankruptcy filing.

According to the Department of Justice's US Trustee Program, California Chapter 7 Bankruptcy filings rose by 251% over the last two years, rising to over 101,000 in 2008. A San Francisco bankruptcy lawyer can be a key ally if you find yourself in the unwelcome position of needing to liquidate a business.

Furniture Today: Wickline bedding ceases operations

Wickline bankruptcy serves double dose of sadness

Resources:
UScourts.gov background page on Chapter 7 Bankruptcy

Justice Department US Trustee Program - Bankruptcy Statistics