San Francisco Bankruptcy Lawyer Blog

On March 30, 2010, Electrical Components International (ECI), filed a Petition for Bankruptcy in the United States Bankruptcy Court for the District of Delaware. ECI's bankruptcy proceeding is before the Honorable Kevin J. Carey, Chief Judge of the Delaware Bankruptcy Court.

ECI has become a leading provider of wire harnesses, subassemblies and assembly services. ECI goods are sold to customers in the transportation and HVAC industries. Wire harnesses include wires and related components used in electronic components. Some of ECI's customers include Bosch, Chrysler, Delphi and GE. ECI manufactures wire harnesses in plants located in Mexico, n China and Poland.

The company filed the Declaration of ECI's CEO in Support of Chapter 11 Petitions. The ECI Declaration provides a summary of ECI's business, the events leading up to ECI's bankruptcy, and ECI's objectives in bankruptcy.

If a public company files bankruptcy, the company's securities may continue to trade even after the company has filed for bankruptcy under Chapter 11. Companies that file under Chapter 11 usually are unable to meet the listing standards to continue to trade on Nasdaq or the New York Stock Exchange. When a company is delisted from a major stock exchanges, their shares may continue to trade on either the OTCBB or the Pink Sheets.

ECI began with Burcliff Industries in the 1950s. Francisco Partners acquired ECI for $320 million. To finance the acquisition, ECI entered into a $250 million debt facility. In 2007, ECI increased its debt facility to $340 million to acquire Noma, another wire harness manufacturer. Within a year of the Noma acquisition, ECI defaulted under its loan agreements and requested a modification of the loans.

The Declaration explains ECI's "financial difficulties [were] primarily due to the unprecedented downturn in the U.S. housing industry and global economic recession." In 2008, the company closed plants, laying off employees. ECI lost $169 million in 2008. The drop in revenue prevented ECI from meeting long term debt obligations ($321 million). In late 2008, ECI notified its lenders it was in default of the loan covenants under credit agreements.

In most instances, the company's Chapter 11 plan of reorganization cancels the existing equity shares. Secured and unsecured creditors are paid from the company's assets before common stockholders. Where shareholders participate in the plan, their shares are usually subject to substantial dilution.

Under ECI's prepackaged plan, the first lien holders apportion 50 million shares of new common stock of the reorganized ECI. Second lien holders apportion $10 million in cash. General unsecured claim holders remain unimpaired.

Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.

In April 2010, the House Committee on Financial Services had a hearing "Second Liens and Other Barriers to Principal Reduction as an Effective Foreclosure Mitigation Program." The meeting was to decide how to handle the home foreclosure crisis. Executives from mortgage lenders Bank of America Home Loans, CitiMortgage, Inc., JPMorgan Chase Home Lending and Wells Fargo Home Equity Group were at the meeting to testify. The Chairman of this House Committee urged the bank representatives to adopt principal forgiveness programs.

Appearing before the Committee were the following:

Barbara Desoer, President, Bank of America Home Loans
Jack Schakett, Credit Loss Mitigation Strategies Executive, Bank of America Home Loans
Sanjiv Das, President and Chief Executive Officer, CitiMortgage, Inc.
Steve Hemperly, Executive Vice President, Citi
Molly Sheehan, Senior Vice President, Housing Policy, JPMorgan Chase Home Lending
David Lowman, Chief Executive Officer, JPMorgan Chase Home Lending
Mike Heid, Co-President, Wells Fargo Home Mortgage
Kevin Moss, Executive Vice President, Wells Fargo Home Equity Group
Each of the witnesses provided an update on their institution's foreclosure mitigation and mortgage loan modification efforts and the status of their current initiatives under the Home Affordable Modification Program ("HAMP"). Most discussed their intent to implement the Treasury Department's Second Lien Modification Program ("2MP").

Wells Fargo Home Mortgage noted that principal forgiveness was not an across-the-board solution. Principal forgiveness was best used to assist customers whose homes were owner-occupied and in geographic areas with severe price declines where there was little prospect for full recovery of home values.

JPMorgan Chase Home Lending stated a broad-based program of principal reduction would be expensive. Bank of America Home Loans agreed with JPMorgan Chase Home Lending that it used principal forgiveness only with customers with a legitimate hardship and interest in maintaining homeownership. Principal reduction could increase the cost of borrowing and the amount required for home down payments with taxpayers bearing the risks.

Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.

In a bankruptcy case, exempt property are those that cannot be taken by a trustee to be sold for payment of creditors. Exempt property includes: equity up to a certain amount for homes, equity up to a certain amount for cars, necessary clothing, household furnishings, appliances, jewelry up to a certain value, life insurance, retirement funds for current support, unpaid but earned wages, public benefits like social security and unemployment.

Nonexempt property includes stamp collections, cash, real estate not lived in, business assets, boats. If a person has a joint account with someone else who does not file bankruptcy, the debtor should tell the trustee that the account was set up perhaps to assist in helping an elderly parent and that the money is not really the debtor's. The trustee will look at where the funds for the account comes from, but joint accounts become a part of a debtor's bankruptcy estate.

For homes, a bankruptcy may discharge a promissory note, but the security agreement places a lien on the house that allows the first mortgage holder to still foreclose. Some people in debt may try to stay in a home for as long as it is possible if they think they will lose it anyway. They will stay free without paying the mortgage and save money from having to rent.

A creditor may challenge at bankruptcy court for a debt to survive bankruptcy. For example, someone who has a judgment for willful and malicious conduct may challenge the court, but since a challenge might require an attorney, the creditor may not want to go through the expense.

Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.

Sometimes resolving debt problems may require litigation. In litigation, a party may be deposed as a discovery method to obtain facts. If noticed for a deposition, never discuss the deposition with the opposing party or the opposing party's attorney. Any communication may be misinterpreted and any contact may lead to unintentional discussions of evidence that can be used against a party. Leave it to the attorney to do all the communications.

A deposition notice may require the witness to produce documents. Requests that are too vague like requirements to produce all records do not need to be responded to. It is up to the deposing party to fix the request. A witness only needs to provide documents in his possession and control. For example, a deposing party cannot force a witness to obtain emails stored with an Internet Service Provider in a closed account. Be careful not to reveal privileged information such as communications with a doctor on a medical condition that is not relevant to the lawsuit.

Cases usually settle at trial. Part of a good settlement evaluation comes from how well a witness performs in a deposition. If a witness has confidence, then the witness will be persuasive at trial. Trial begins with the deposition. If the witness keeps saying he does not remember or does not recall, or gives conflicting facts, the witness will not be convincing.

Credibility also comes from a witness' demeanor. A poised witness is credible, while a nervous witness is not. The deposing party looks for motives to lie such as any financial pressures for someone to close a deal.

At a deposition, if a question does not make senses, do not answer it. Do not guess at what a question means.

A deposition usually begins with background questions on education and employment. There is legitimacy to such questions because the past may lead to connections with the parties or facts in the case. However, the deposing party may not ask questions to annoy or embarrass. If a witness refuses to answer, the deposing party may do a motion to compel answers, where the deposing party must explain the reason for refusal was not based on privilege.

In a deposition, most questions are required to be answered even when an attorney objects. If the question is not proper then the deposing party will not be able to use the answer at trial. If a wrong objection was made then it is as if no objection was made.

Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.

On April 17, 2010, Pat Duran, Accelerated Women Entrepreneurs, gave a talk in Mountain View, CA on overcoming obstacles. People with insurmountable debts might feel limited in their success. But, dealing with financial hardship is like trying to make any other dream come true.

To be joyful in life, commitment takes a person further than having skill or money. Do not put what you want on a TO DO action list. Dreams fail when you do not break theme down into little pieces and do a little of each piece everyday to accomplish the dream.

Overcoming obstacles in life means to identify the obstacles as external or internal. If the obstacles are based on beliefs, do not use arguments such as "always" or "never" in your mind that do not allow for possible counterarguments. Do not say things to yourself that limit your success. If something has always been a certain way, free yourself of the past by saying that it will not be that way now or moving forward, things will be different. If the obstacles are external, have a strategy to deal with them by learning how to overcome the obstacles through classes or other means, and then practicing what you learn in low risk situations.

Dealing with debt is like losing weight. Was there a time when you were not in debt? Say to yourself that you have done it before. Was there a time when you were not in debt and got into debt? Use the situation as a learning experience on what not to do again to get into debt. It is like a scale that does not punish you by seeing the great weight gained, but giving you information on the past to allow you to change traffic patterns.

Be proactive in overcoming obstacles. For example, if you lost a job and are looking for a job, follow up rather than wait for someone to call you. You need to persevere and be patient when a plan for a dream gets criticized. Reinventing means not wasting time doing things that do not bring you money or move you towards your dream. For example, if someone at the last minute calls you for a project with a rushed deadline, and makes you sign away your rights to intellectual property, unlimited liabilities, indemnities, in exchange for just $75 worth of work, that job is probably not worth taking. That potential employer is probably a bully and looking at you as a prostitute. It is probably not worth even responding to such a person because any response would be a further waste of time.

Dreams should be so compelling that they do not get weighed down by doubts and reality, but they should have some connection with reality to be achievable.

For a debtor, bankruptcy is not necessary a limit to success in life, but a fresh start to make dreams come true. Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.

When a debtor goes to a creditors meeting or has exchanges with a bankruptcy trustee, the debtor should understand that the trustee's job is not all that easy or glamorous. To become a trustee, the person must have his personal finances in check also. The trustee's role is like opening a small business, where he is not a federal employee, but an appointed fiduciary.

The trustee keeps a relationship with a bank, which might assist in providing a computer and software, but the trustee must have a dedicated telephone line, post office box, office supplies, and a bond premium to take on the trustee position. At first the trustee gets about 40-60 cases/month, and must be able to survive without seeing any payments for work in the first six months. Not all of these cases pay the trustee any money because sometimes a debtor gets his bankruptcy case fee waived. In the San Francisco Bay Area, usually when the trustee does get paid, for non-asset cases, he gets around $60/case, and for asset cases, less than 8% of the funds he liquidates and distributes to creditors. Asset cases rarely get closed within a year so the trustee does not get paid until the case closes. It does not matter how hard the trustee works, if there are no assets to recover, the trustee cannot expect more than $60.

The trustee must pass a FBI security background check, focusing on criminal history, taxes, student loans. Once a trustee sets up office, he gets audited by the Office of Inspector General. Each trustee is appointed for 1 year, which is renewable.

The trustee role is not fit for the person who has a full time job or responsibilities that do not allow the flexibility to make his own hours to take care of case matters. The trustee must be available to track down assets, valuate assets like cars, real property, businesses. A business background is helpful when deciding whether to operate a debtor's business and to identify records on profitability. The trustee must be intuitive in spotting discrepancies, suspicious circumstances, and questionable explanations. For example, a debtor who lists no car, but car insurance should be questioned.

The trustee presents matters to the bankruptcy judge in cases, and must review the petitions to see if there is a need to shut down businesses, secure assets. The trustee may need to visit property on site to evaluate them. Sometimes assets are cases that need to be litigated. A part-time trustee takes on 30-40 cases each month, and a full time trustee takes on about 100 each month.

Understanding the bankruptcy process may not always be easy. Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.

An attorney runs into a lot of problems when it engages in false advertising. Not only can the attorney be sued for defamation if the false ad is ruled as defamation, but the attorney can be sanctioned by the state bar for violation of rules of professional responsibility.

Many attorneys these days think it is ok to place case summaries on the cases they have settled or tried to verdict on their web sites, either in a settlements and verdicts section or on their bios. A web site for legal services is considered attorney advertising, and commercial speech. Commercial speech is given first amendment protections only when it is not false and misleading. If an attorney's former client or an opposing party of an attorney's former client sees a write up by an attorney of a case, any false statement can make a write up misleading, and defamatory. In California, an individual may also have claims against the attorney for violation of privacy, false light, and publicity rights.

One case that may put an attorney into foreclosure on his house, and insurmountable debts from litigation fees and costs involves Los Gatos class action lawyer Pierce Gore. On April 8, 2010, the Daily Journal reported that Gore placed ads in early 2006 in the San Jose Mercury News and the Los Gatos Weekly Times advising wood deck owners to contact Gore if they had built their decks after January 1, 2004, with galvanized screws manufactured by three companies, including Pleasanton-based Simpson Strong-Tie Co. Inc., because they might be entitled to monetary compensation or repairs. Gore's brother, also an attorney, was sued by Simpson, and committed suicide as a result of financial and litigation worries.

Davis Wright Tremaine LLP represents Gore. At the trial and appellate court level, the firm obtained summary dismissal. The case is awaiting oral argument in the California Supreme Court (S164174) on the burden of proof under California Code of Civil Procedure Section 425.17(c) relating to California's anti-SLAPP statute.

The Daily Journal reported that Gore could have saved himself a lot of trouble by removing Simpson's name from the ads. Gore might have to put his house up for sale for his free speech rights, but if he wins on the anti-SLAPP, he will get attorneys fees. A defamation lawsuit can lead someone into bankruptcy. But, even if someone files bankruptcy after losing a defamation suit, bankruptcy will not normally wipe out debts resulting from willful and malicious harm. The case is being followed for its anti-SLAPP precedent outcome, but opponents to the free speech claims say that Gore was not a citizen making public commentaries on products, but placing ads to sell his legal services to obtain potential clients.

Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.

In order to prove a prima facie case for common law defamation, a plaintiff must show (1) defamatory statement of fact, (2) of or concerning the plaintiff, (3) publication by defendant to a third person, (4) damages to plaintiff's reputation, and (5) no defenses by defendant.

The U.S. Bankruptcy Court for the Southern District of Texas found in a Chapter 11 proceeding in In re William Perry that emailing hyperlinks directing others to view a third-party's blog is a sufficient publication for defamation under Texas law.

Perry and David Wallace were in a business relationship where a partnership dissolved. The court focused on Wallace filed defamation claims against Perry, the debtor, about an email that Perry sent to people containing hyperlinks to the Rhymes with Right blog, which Perry did not write, but contained a discussion of Wallace's associations with the son of former British Prime Minister Margaret Thatcher. The court found the statements falsely "insinuated ... that Wallace was an arms dealer and was in league with Mark Thatcher in attempting to overthrow the government of Equatorial Guinea."

The court ruled that Perry's email containing hyperlinks to the blog met the publication element of Wallace's defamation allegation under Texas law: "a statement is published when it is said orally, put into writing or in print, and the statement was published in such a way that the third parties are capable of understanding its defamatory nature."

In Texas, "an email, just like a letter or a note, is a means for a statement to be published so that third parties are capable of understanding the defamatory nature of the statements." The court held Perry acted with actual malice and defamed Wallace by sending the links with other defamatory statements.

The decision goes to show that people have to be careful of their online communications whether by email or on the Internet.

Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.

When involved in litigation or bankruptcy filings, everyone needs to be aware of the public nature of the court system. Unless there is a reasonable expectation of privacy, people cannot expect what they are doing to be protected as confidential even though they involve personal matters.

A couple in Pennsylvania, Aaron and Christine Boring, sued in federal appeals court about having a photo of their home included on Google "Street View" based on trespass. The three-judge panel agreed the photos depicted nothing that invaded the couple's privacy.

Google launched Street View around 2007 by going around the country with cars strapped with cameras that took 360-degree views at the street level of cities. The pages permit visitors to take virtual tours through neighborhoods on their computers. Many real estate companies started to use the photos to market homes since the launch. The argument that there is no invasion of privacy is that the images are out in the public. Anyone walking by a person's home would see exactly what is on Street View. Google has taken some privacy measures by blocking out license plates on cars and offers a feature for people to remove an image such as a home or car if they do not want the image on the Internet.

Aaron and Christine Boring lived on a private street. They sued Google for invasion of privacy and trespass, alleging the photos were taken without permission from their driveway that had postings with "Private Road" and "No Trespassing".

The U.S. Third Circuit Court of Appeals agreed with the district court as to the privacy claim because the photos were not offensive. The appeals court reversed the district court on the trespass claim: "Here, the Borings have alleged that Google entered upon their property without permission. If proven, that is a trespass, pure and simple. There is no requirement in Pennsylvania law that damages be pled, either nominal or consequential." The district court rejected the claim because the Borings did not plead damages.

The appellate court denied the couple's request for an injunction to order Google to remove the pictures from its site because Google had "long since" taken down the photos.

Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.

When there are debts, co-debtors are individuals (or entities) obligated to pay a debt if the person/entity who incurred the debt does not pay. When a bankruptcy petition has been filed by only one of the co-debtors, a creditor may pursue payment from the non-bankrupt co-debtor.

In a bankruptcy petition, the petitioner needs to disclose co-debtors associated with the debts. The debtor should have an attorney read agreements with co-debtors to find out if the:

1. debt is secure or unsecure
2. bankruptcy petitioner is the primary or secondary debtor on the agreement
3. items used for collateral on the debt is in the possession of the bankruptcy petitioner, and if the petitioner will surrender the item in the bankruptcy.

Chapter 7 and Chapter 13 treat debts differently. Example: A mother cosigns a $30,000 credit card with the son. The son wants to file bankruptcy. The mother is not part of the bankruptcy petition. If the son files Chapter 13 and has income to pay back his unsecure creditors 100%, there is not much to worry about by the mother. The debt could be paid in full through the Chapter 13 repayment plan filed with the bankruptcy petition. If the son does not have money to pay the unsecured creditors 100%, the co-debtor stay will come into play. Section 1301 of the Bankruptcy Code says that in a bankruptcy for individuals filed under Chapter 13, a creditor may not pursue against a co-debtor or a personal guarantor, not in bankruptcy, if the debt is a consumer debt. Bankruptcy Code Section 101 (8) defines consumer debt as debt incurred by an individual primarily for a personal, family, or household purposes. If a debt arose in the ordinary course of business (as when a bankruptcy petitioner cosigns an ordinary course loan to a corporation he controls), there is no co-debtor stay.

A bankruptcy discharge doesn't make the liability of a co-debtor disappear. The co-debtor stay in Chapter 13 is only until the bankruptcy case is closed, which may be three or even five years after the petition is filed. The bankruptcy petitioner may establish special payment classes in a Chapter 13 repayment plan to pay co-signed debts in full to protect the co-debtor. The co-debtor may remain exposed if the co-debtor is the one who actually got the consideration for the debt (e.g., the mother cosigns a car loan for the son, and actually owns the car).

The creditor may seek relief from the court on the co-debtor stay.

Handling debts may not always be easy. Rinne Legal provides counseling to individuals, families and small businesses in financial difficulties. Call for a no charge initial consultation.

The following is a fictitious scenario:

-Prepare for market decline by locking sales to budgeted expenses.
-Any customer is not a good customer. A good customer is a profitable customer that allows the company to move from a department to the enterprise.
-Bad deals bring immediate revenue but create long-term damage in deep discounts.
-Strategy models work well in some situations, and cause failures in others. The skill is less in knowing the strategy than in sorting out the situation to which it applies.
-Looking and finding nothing is better than not looking at all. Look for what is not clearly stated, look between the lines.

Continue reading "Collections Trial Damages Prove Up" »

In these poor economic times, engineers look to open source software to save on engineering costs. The LGPL is a type of open source licensing used for program libraries. A library means a collection of pre-written functions or data that other programs use.

Usually, the LGPL is used when a library's features are readily available from proprietary software. The library does not give free software any advantage. When a library provides unique capabilities, using the GNU General Public License (GPL) and limiting it to free programs gives the open source community an advantage for further free software development.

Like the GPL, the LGPL does not provide any warranties, representations, indemnities.

The LGPL also applies the copyleft concept, but the restrictions do not apply to software that merely links to a LGPL program.

A program (linker) can combine a library with another program, creating a single new program. If the library and the program are separately installed, and the program is configured to link at run time with the library, the new program, when it runs and finds the library, does not need to be subject to the LGPL.

However, if a program incorporates the library code, the new program would be subject to the LGPL requiring source code release.

Also, if a program that links to a library is subject to the GPL, the new program becomes subject to the GPL.

Because the LGPL requires the release of source code and prevents users from establishing proprietary rights in the works when a program incorporates a LGPL library, a company that manufactures products for commercial distribution should ensure that its products are not statically linked but dynamically linked to the LGPL library.

For a bankruptcy attorney who understands economics and business operations, schedule a FREE initial consultation with Rinne Legal.

SugarCRM is a company located in Cupertino, CA that distributes open source customer relationship management software. It takes pride in creating an 'architecture of participation' where users from around the world assist in building its products depending on world needs. It evangelizes the confidence that there are smart people everywhere.

In these poor economic times, companies are looking to open source software to save on engineering costs. The open source movement began when the Free Software Foundation (FSF) formed to create the GNU project, a free version of the UNIX operating system. The license agreement that accompanied the GNU was the GPL.

The FSF has never enforced the GPL. In most instances, the FSF is not a party to the license agreement, and the agreement can only be enforced by the developers who are the authors of a program. The FSF is only able to enforce the GPL when it is a FSF project where the authors are required to assign the copyrights to FSF.

The main terms of the GPL prevent users from establishing proprietary rights in the works or subsequent versions of the works. Unlike licenses for proprietary software, where use may be limited to internal purposes, the GPL allows the user to copy, modify, and commercially redistribute and resell the source and object code.

The source code must accompany the program in order to allow others to modify and improve the program. This can be accomplished by bundling the source code with executables or accompanying the program with a written offer to provide source code on a physical medium such as a CD upon request.

The program does not come with any warranties, representations, and indemnities.

The program may be used internally. It is possible to modify the program and not have to reveal the modifications if they are only used internally and not distributed. However, once the program is distributed, it must include a notice during the program execution indicating that the GPL applies.

The first part of the notice states that the software is copyrighted.

Copyright laws prohibit copying, redistributing, or modifying software without the author's consent.

The second and third paragraphs of the notice give the user permission to distribute, modify, copy, use the code or any derivative work if the distribution terms are unchanged. The GPL must be included as part of the license agreement. By requiring GPL terms to be followed verbatim without further restrictions, users are able to share creations and prohibit rights that prevent further sharing. This prevents proprietary rights in works or subsequent modifications.

Continue reading "GNU General Public License (GPL) " »

In these poor economic times, companies are looking for resources where they can get free products and services for less the effort or hiring. One resource is open source projects. With open source, companies are able to use their engineers for what is core to the company, and engage the collective community intelligence for peripherals where they do not need to reinvent.

In order to be considered open source, a program's source code must be provided to the licensee and allow for certain distribution requirements.

These distribution requirements include:

1. Free distribution. Free distribution means the license may not restrict anyone from selling or giving away the software.

Since the goal of open source is to allow for rapid development of a program, redistribution is needed in order for the community to improve it, adapt to it, and fix it, in the event the original author does not maintain the program.

2. Source code. The program must include source code.

This can be accomplished by bundling the source code with executables, publicizing where to obtain the source code such as downloading it from the Internet, or providing the source code in a physical medium such as a CD upon request.

Since source code is the preferred format in which a programmer would modify a program, the source code is needed in order to improve an open source program.

3. Derived works. The license must allow modifications.

4. Integrity of Author's Source Code. In order to protect the author's reputation, the license may require derived works to carry a different name or version number from the original software.

5. No Discrimination Against Persons or Groups. The license must not discriminate against any person or groups.

6. No Discrimination Against Fields of Endeavor. The license must not restrict anyone from making use of the program in a specific field.

7. Distribution of License. The rights attached to the program must apply to all to whom the program is redistributed without having to sign any additional license such as NDAs.

8. License Must Not Be Specific to a Product. The rights attached to the program must not depend on the program's being part of a particular software distribution. If the program is extracted from that distribution, all parties to whom the program is redistributed should have the same rights.

Continue reading "Open Source Licensing" »

The following is a fictitious scenario:

The check comes, and after signing it, he marks the receipt "General". Every aspect of Peters' life flows without failures. He goes to the top schools, never loses a job, and turns a non-client lunch into a billable event.

Continue reading "Attorney Advertising" »

Workers' compensation is a type of insurance that compensates an injured employee regardless of who is at fault when the person is hurt in the course of employment, in exchange for the employee's mandatory relinquishment of rights to sue the employer for negligence. Workers' compensation provides benefits to dependents of a worker killed because of a work-related accident.

If a worker is hurt by a party other than the employer at the workplace, such as when a delivery person harasses a receptionist, the worker may recover from the outside party, but may need to reimburse the employer if the recovery from the outside party is higher than the workers' compensation payments received.

Work-related injuries can result from slips and falls, toxic chemical exposures, machine injuries, car accidents, or repetitive job duties. For instance, hotel housekeepers may experience injuries to the back and upper extremities cleaning 25-30 rooms/day.

Insurance plans differ by state. The injured worker usually gets payments that are not subject to state or federal taxes, in lieu of wages, to compensate for economic, vocational rehabilitation, and medical care losses, but not pain and suffering or punitive damages.

State laws require employers to notify employees of their legal rights to workers' compensation benefits with posters in public areas such as break rooms on the claims procedures and benefits. Some employers do not like paying workers' compensation premiums, and fear that, when workers get injured, their premiums will increase, or the employees will take advantage to take time off from work with benefits when they are not really hurt.

Typical workers' compensation disputes include an employer retaliating against an employee for filing a workers' compensation claim, or an insurance company stopping payments before an employee attains full recovery from injuries.

Accidents in the workplace, and insurance requirements may cause a business to go into insurmountable debt. The alternative to going out of business may be to file for Chapter 11 bankruptcy to reorganize a corporation, limited liability companies, business trusts, unincorporated associations, or partnership. In a Chapter 11, the debtor proposes to the bankruptcy court a plan to reorganize finances, while remaining in control of assets. The Trustee appoints a creditor's committee made up of unsecured creditors unaffiliated with the debtor to formulate a plan. The debtor must disclose to the court information on assets, liabilities.

Continue reading "Workers Compensation" »

In February 2010, Roche Pharmaceuticals lost a lawsuit in New Jersey when the court ordered the company to pay $25.16 million for its failure to warn consumers of side effects such as severe bowel illness, depression, birth defects, and severe, sometimes fatal skin reactions associated with Accutane. A 38-year-old computer technician from Alabama, started taking Accutane in his 20s and developed inflammatory bowel disease, forcing him to have his colon removed.

Pharmaceutical litigation deals with injury from pharmaceutical products, including prescription drugs. Harmful drugs can result in organ damage, blood clots, illness, and death. Drugs with adverse side effects make it to market because drug companies, focused on profits, do not anticipate the dangers during clinical trials and many times, the profits outweigh the fines for wrongdoings. The Food and Drug Administration is an agency of the United States Department of Health and Human Services, responsible for protecting public health through regulation of prescription and over-the-counter pharmaceutical drugs.

The pharmaceutical industry is powerful. In 2009, President Obama gave the drug lobby a seat at the healthcare table. Drug companies dispute claims, arguing injuries come from the injured's own actions, not products. Sometimes, companies offer insufficient settlement to keep defective product issues out of the courts or media. The settlements may not pay for the lifetime medical expenses the person has to live with.

The medical expenses from taking the wrong drugs could drive someone into bankruptcy. Bankruptcy may require someone to liquidate property and assets. A bankruptcy filing will become part of someone's credit report for 10 years and make it difficult to obtain new credit, rent an apartment, buy a car, or buy insurance. Bankruptcy is a matter of public record, leaving a stigma when a debtor seeks employment, though the Bankruptcy Code prohibits termination of employment or discrimination solely because an individual has (1) filed bankruptcy, (2) been insolvent, or (3) not paid a discharged debt.

When hit with medical problems stemming from pharmaceuticals, negotiate with the medical provider to reduce the total costs charged, and agree on payment plans. On payment plans, make sure what is agreed to is something that can be paid. A creditor may file a collections action against a debtor and then enter a judgment when payments are not made according to payment plans. Engage a credit counselor for advice on money management, identity theft, predatory lending, and budget analysis.

Bankruptcy is a complicated process, and it is important to discuss concerns with a local bankruptcy attorney.

In 2009, a Massachusetts jury found two doctors at a Boston hospital, one of them an anesthesiologist and former physician-in-chief at the hospital, caused the death of a 3-year-old boy. The boy died in December 2004, after undergoing a procedure at the hospital for a complex but treatable birth defect. The boy went to the hospital playful and active, but died after 8 unsuccessful procedures.

It seems that hospital and physician fees have skyrocketed though there may be professional negligence by a health care provider who deviates from the reasonable standard of care in the medical community and causes injury or death to the patient. A legal duty exists when a hospital or health care provider agrees to care or treat a patient. The provider breaches a duty when it fails to conform to the standard of care in the jurisdiction evidenced by expert testimony. The breach of a legal duty causes an injury when an injury would not have occurred but for the breach. Damages result from an injury when a patient suffers monetary or emotional losses such as death from a failure to diagnose cancer.

Common categories of medical malpractice include:

• Failure to diagnose
• Mistakes during surgery
• Birth injuries
• Prescribing incorrect medication
• Surgical errors
• Hospital negligence
• Cancer misdiagnosis

Continue reading "Medical Debts" »

In the HomeBanc Mortgage Corporation bankruptcy, George Miller, the Chapter 7 Trustee, filed in April 2010 around 400 preference actions against defendants under section 547 of the Bankruptcy Code. Bankruptcy Code Section 547(c)(1) excludes from preference liability payments "made to be a contemporaneous exchange for new value given to the debtor."

The first pre-trial conference was scheduled in the United States Bankruptcy Court for the District of Delaware on April 21, 2010 before the Honorable Kevin J. Carey, Chief Judge of the Delaware Bankruptcy Court.

HomeBanc Mortgage Corporation operates a mortgage banking company that offers residential mortgages to consumers in southeastern United States. HomeBanc Mortgage Corporation issues prime fixed-rate first mortgages, adjustable-rate mortgages, and home equity credit lines. It originates loans through a retail network and strategic marketing alliances.

HomeBanc Mortgage Corporation filed petitions for relief on August 9, 2007, under chapter 11 of the Bankruptcy Code. On February 24, 2009, the cases were converted to chapter 7. The company has been winding down its businesses, liquidating substantially all of its assets and operating with only contract employees.

Bankruptcy is a complicated process, and it is important to discuss concerns with a local bankruptcy attorney.

The court decided in Banc of America Leasing & Capital, LLC v. 3 Arch Trustee Services, Inc. (2009) 180 Cal.App.4th 1090, that the defendant 3 Arch Trustee Services conducted a nonjudicial foreclosure properly.

The courts process judicial foreclosures, commencing with the lender filing a complaint and recording a notice of lis pendens. Lis pendens is a formal notice that starts the foreclosure process. The complaint states the debt, and why a default allows the lender to foreclose and take property given as loan security. The homeowner will be served notice of the complaint, and has the opportunity to appear in court. If a court rules the debt valid, and in default, it will issue a judgment for the total amount owed, including the foreclosure costs. After the judgment is entered, the court issues a writ authorizing a sheriff's sale, which is an auction, held in a public place. The highest bidder at the auction is the property owner, subject to court confirmation of the sale. After the court confirms the sale, the highest bidder gets a sheriff's deed. When that deed is recorded, the highest bidder is the property owner.

A nonjudicial foreclosure occurs when a foreclosure does not require court approval. In Banc of America Leasing & Capital, after Arch recorded notices of default and sale, a creditor recorded an abstract of judgment against the property owner. The creditor transferred the judgment to Banc of America Leasing & Capital. When the property was sold at a foreclosure sale, there were excess sale proceeds. Arch gave the excess proceeds to the former property owner. Banc of America Leasing & Capital claimed Arch owed a duty to pay excess proceeds to junior lien holders. The appellate court held Arch had no duty to search out junior lien holders to give them excess proceeds because "[t]he rights and powers of trustees in nonjudicial foreclosure proceedings are 'strictly limited and defined by the contract of the parties and the statutes.' A trustee owes no duty to provide notices unless the trust deed or the statute requires such notice." Under Civil Code Section 2924b, Banc of America Leasing & Capital, as a judgment lien holder, was not entitled to automatically receive a notice of default or notice of sale. Banc of America Leasing & Capital did not record a statutory request for notice. Parties automatically entitled to receive a notice are those that recorded a statutory request for notice.

The court stated a trustee's duties in a nonjudicial foreclosure are governed by Civil Code sections 2924-2924k and refused to impose additional obligations on trustees. The Legislature included in Civil Code Section 2924j a way for how a trustee must notify, collect claims, prioritize, and distribute the surplus funds to junior lien claims. If the trustee was obligated to also locate, notify, and distribute payments to all possible judgment creditors ..., the Legislature would have spelled out these additional duties when discussing the trustee's other duties. ...

Foreclosure is a complicated process, and it is important to discuss concerns with a local foreclosure attorney.