San Antonio Bankruptcy Law Blog

Back in January, our blog began covering the Chapter 11 bankruptcy filing of Texas-based Hostess Brands Inc. -- the food company behind such classics as Wonder Bread, Twinkies, DingDongs and HoHos -- and the events that have unfolded since this filing.

For those unfamiliar with Chapter 11 bankruptcy, it typically entails a debtor proposing a plan of reorganization outlining how it will keep its business alive and pay off creditors over the course of time.

Here, Hostess indicated in court documents that it plans to keep its business operations afloat with $75 million debtor-in-possession financing from a New York investment firm, and listed assets of $1 billion and debts/liabilities exceeding $1 billion.

Just last month, the company went before the U.S. bankruptcy court in New York, asking it to terminate existing labor agreements, which in turn would allow the company to alter how it funds purportedly expensive pension obligations.

However, the two unions that represent well over 75 percent of the company's 18,500-member workforce -- the International Brotherhood of Teamsters and the Bakery, Confectionary, Tobacco Workers -- have already indicated that if the labor agreements are thrown out, there will be a strike.

From letters threatening the development of bad credit to phone calls promising repossession, people who have been exposed to abusive communications from debt collection agencies know how unnerving the experience can be. However, what happens when debt collection agencies go one step further, going so far as to threaten your wellbeing or even criminal acts?

Unfortunately, this was precisely what happened to Diana M. of Wheeling, West Virginia.

Back in 2010, she received a phone call from a debt collector with the company Reliant Financial Associates indicating that she had an outstanding debt and that failure to pay the debt would jeopardize her home.

As it turns out, this proved to be a classic case of mistaken debtor identity as RFA -- one of many companies which purchases old debts from original debtors in the hopes of one day collecting -- had Diana M. (who has no debt) confused with someone else.

Last month, Adoption Services Associates Inc. -- an international adoption agency -- filed for Chapter 7 bankruptcy in the U.S. Bankruptcy Court here in San Antonio. While the amount of news coverage dedicated to such a routine matter would normally be minimal, the filing has actually generated significant media interest. The reason? ASA is currently under investigation by both the San Antonio Police Department and the Texas Attorney General for possibly engaging in fraudulent conduct.

ASA filed for Chapter 7 bankruptcy back on April 24, claiming no assets and approximately $31,550 in debts. In fact, the adoption agency's 359-page bankruptcy petition lists almost 950 couples -- many of whom were in the process of adopting -- as unsecured creditors.

For those unfamiliar with Chapter 7 bankruptcy proceedings, trustees manage the gathering and liquidation of non-exempt assets, and the distribution of proceeds from the sale of these non-exempt assets among unsecured creditors.

Quite naturally, many people believe that the tougher the times, the more likely people are to file for bankruptcy. While this is certainly true to some degree, it's very important to remember that people also turn to the fresh start offered by bankruptcy for a variety of reasons unrelated to current economic conditions, including divorce or a prolonged illness/sudden medical crisis.

Interestingly, the U.S. Bankruptcy Court for the Western District of Texas in San Antonio recently released a report detailing the number of bankruptcy filings in South-Central Texas last month.

The report reveals that the number of Texans filing for bankruptcy actually increased by 4 percent from March to April. Specifically, the number of people seeking debt relief via Chapter 13 rose significantly.

A few weeks back, RealtyTrac released a report outlining the number of foreclosure filings in the United States during the first quarter of 2012, and discussing what this might mean for the rest of the year. Now, the company has released yet another report, this time outlining the number of foreclosure filings in metropolitan areas.

As has been the case for the past two years, the figures present a good news-bad news scenario.

According to the report, foreclosures -- including bank seizures, default notices and scheduled auctions -- increased in 114 of 212 metro areas from the final quarter of 2011 through the first quarter of 2012. Breaking the numbers down further, the report found that foreclosure activity increased in 26 of the nation's 50 largest metro areas during the same timeframe.

Overall, however, the total number of foreclosures in metro areas are at a lower level than the same time last year. In fact, 64 percent of the 212 metro areas monitored by RealtyTrac saw a year-over-year decline in foreclosures during the first quarter. This includes such major cities as Las Vegas, Seattle, Salt Lake City and Austin.

Back in February, our blog reported how the San Antonio Opera -- which has been a staple of our city's cultural landscape for the past 16 years -- was in discussions about filing for bankruptcy.

Now it appears as if these discussions are finally becoming a reality, as an attorney representing the opera company indicated just last week that the company will be filing for Chapter 7 bankruptcy within the next month.

Evidently, the only reason for the delay is that the paperwork to notify musicians, art vendors and season ticket holders -- all potential claimants -- is still being prepared. Once this is completed, the filing will proceed.

San Antonio residents may recall that the opera company was plagued with a litany of problems over the past few months, including the departure of founder and artistic director Mark Richter in November and the subsequent departure of his interim successor, Terrance Frazor, less than two months later when the company was unable to make payroll.

For millions of families across the United States, the nightmare of foreclosure has been all too real. In fact, a recent study demonstrates that the fallout from losing a home is not just confined to the adults residing there, but their children as well.

The study, performed by the D.C.-based advocacy group First Focus, examined foreclosure and home mortgage loan information, as well as U.S. Census Data from 2004 to 2008. Here, they found that approximately one in ten children in the U.S. have been or will be affected by foreclosure.

"Children are often the invisible victims of the foreclosure crisis," said Julia Isaacs, one of the study's primary authors.

The study made the following rather startling findings concerning children and foreclosure:

• 2.3 million children lived in homes that were foreclosed upon
• 3 million children now live in homes that are in the foreclosure process or on the brink of foreclosure
• 3 million children lived in rental homes that were foreclosed upon or live in rental homes that are on the brink of foreclosure

Back in January, our blog began covering the Chapter 11 bankruptcy filing of Texas-based Hostess Brands Inc. -- the food company behind such classics as Wonder Bread, Twinkies, DingDongs and HoHos -- and the events that have unfolded since this filing.

For those unfamiliar with Chapter 11 bankruptcy, it typically entails a debtor proposing a plan of reorganization outlining how it will keep its business alive and pay off creditors over the course of time.

Here, Hostess indicated in court documents that it plans to keep its business operations afloat with $75 million debtor-in-possession financing from a New York investment firm, and listed assets of $1 billion and debts/liabilities exceeding $1 billion.

In recent developments, the company went before the U.S. bankruptcy court in White Plains, New York last Tuesday, asking it to do away with existing labor agreements, which in turn would allow the company to alter how it funds purportedly expensive pension obligations.

However, the two unions that represent well over 75 percent of the company's 18,500-member workforce -- the International Brotherhood of Teamsters and the Bakery, Confectionary, Tobacco Workers -- have already indicated that if the labor agreements are thrown out, there will be a strike.