Atty. Larry Yang

Blockbuster may file for bankruptcy

Saturday, 20 March 2010 00:00 Atty. Larry Yang

BLOCKBUSTER, the home video rental company, declared in its latest financial regulatory filings that it will likely file for bankruptcy if it is unable to solve its debt problems. The company has been struggling ever since Netflix started doing business with its direct home mail and internet video rental 3 years ago. Recently, another competitor, Red Box, which rents out videos for $1.00 a day through vending machines located at supermarkets added to Blockbuster’s problems. With Amazon.com and Wal-Mart entry into the home video rental business, Blockbuster’s survival even in the immediate future was unlikely. Due to fierce competition from these start ups, Blockbuster has lost $1.0 billion in the last 2 years. With its present overhead maintaining 4,000 brick and mortar stores in the United States, and 2,500 more stores worldwide, the company will continue losing at least $500 million a year. The monumental losses have whittled down the company’s capital to a paltry $34 million amidst staggering debt incurred to continue operating in the last 2 years of $1.0 billion; Blockbuster is now practically a shell company with nothing but debt. Blockbuster in its present state is certainly bankrupt and has no ability to pay maturing debt. With $1.0 billion of debt, it needs $112 million to pay maturing obligations in the next few months. But because it’s losing more than $40 million a month, it has no way of paying maturing debts. To avoid bankruptcy, Blockbuster is cutting overhead by closing stores which will slash expenses by $200 million. It will also ask its creditors to exchange debt for equity. In other words, creditors will end up owning Blockbuster to wipe out debt. It remains to be seen if creditors will agree to a debt to equity swap because the core business of the company doesn’t seem to be viable. Unlike Blockbuster, Netflix doesn’t have the expense of maintaining stores, and its business concept of mailing videos which members can keep as long as they want without penalty, and Netflix’s recent service of having videos linked straight to your TV is more appealing to customers. Amazon.com is in the same position as Netflix; it doesn’t have to maintain stores. Redbox only has to maintain vending machines, not brick and mortar stores. If creditors do not see a good future for Blockbuster, it may have to file for Chapter 7 bankruptcy this year. Chapter 11 may only delay the inevitable demise of Blockbuster.

Bankruptcy homestead exemptions increased by $25,000

Sunday, 14 March 2010 20:05 Atty. Lawrence Yang

A HOMEOWNER who files for bankruptcy gets to exempt or keep his house despite bankruptcy if he is able to exempt the equity of his residence. Equity is defined as the fair market value of the residence on the date bankruptcy is filed minus the mortgages on the residence.

Glendale Galleria owner may exit bankruptcy court soon

Monday, 08 March 2010 00:53 Atty. Lawrence Yang

YOU may not know it, but the owner of Glendale Galleria, General Growth, and the 2nd largest mall owner in the United States has been in Chapter 11 bankruptcy since April of 2009. It has the distinction of being the biggest real estate bankruptcy in American history, and ranked 10th largest bankruptcy in terms of assets.

Reader’s digest exits bankruptcy court

Sunday, 28 February 2010 19:59 Atty. Lawrence Yang

YOU have probably read Reader’s Digest at least once in your lifetime irrespective of your country of origin. Reader’s Digest is the best selling consumer magazine in the United States, maybe in the world. It has 8 million copies in the US and 18 million copies worldwide. It is read by 40 million people in more than 70 countries in 21 languages.

PIGS in Europe have too much debt

Sunday, 21 February 2010 18:03 Atty. Lawrence Yang

WHAT is it about PIGS that draws human attention? Last year, there was Obama’s reference to Sarah Palin as ‘putting lipstick on a pig.’ Notwithstanding the unkind metaphor, I voted for Sarah because not only did she have more sense and guts than Obama, she is a babe and I refer not to the PIG with the same name. Then, the swine flu broke out creating mass human hysteria. Certainly, PIGS can wear lipstick and PIGS can have the flu. But how can PIGS have too much debt? It’s actually PIIGS not PIGS: Portugal, Italy, Ireland, Greece and Spain. All of these European countries have one thing in common.