Georgia Bankruptcy Blog

Another large home builder in metro Atlanta has apparently shuts its doors as a result of the horrible residential real estate market. 

Atlanta-area Homebuilder Fires Sales Staff
By KEVIN DUFFY
The Atlanta Journal-Constitution

Sales agents for a large metro Atlanta homebuilder, Robert Harris Homes, were told Thursday to head home. ... Woodstock-based Robert Harris Homes has built more than 2,500 houses, mostly in Georgia and a few in Manatee County, Fla., according to its Web site. It had recently expanded to North Frisco, Texas.

In metro Atlanta, the company built in Cherokee, Cobb, Forsyth, Fulton, Gwinnett and Jackson counties.

Management at Robert Harris Homes did not return phone calls Friday. A phone answering service in Texas said Robert Harris Homes employees there were suspended Thursday. The Florida office has a recording directing questions to Dustin Lough, a director with CRG Partners Group, a turnaround company with an office in Atlanta. Lough did not returns calls.

Robert Harris Homes was founded in 1994 and grew to be the nation's 135th biggest residential builder last year, according to builderonline.com. Its closings in 2007 numbered 337, down 15 percent from the year before, builderonline says...

A Robert Harris Homes representative told the family Thursday that "the [sales] agents were all told to get their stuff and go home, that they were closing their doors," Hays said.

The June 12, 2008 print edition (not online) of the Atlanta Business Chronicle has an article by Lisa Schoolcraft entitled Subdivision Developers Seeking Shelter In Court.

Developers with foundering subdivisions are seeking shelter in bankruptcy court, sometimes days before their foreclosed property goes up for auction. AK Builders, Inc. of Buford, Allegiance-Tyson Woods II Properties, LLC in Woodstock, Green Tree Estates LLC in Atlanta, and several others have filed for bankruptcy recently, just ahead of "Foreclosure Tuesday..." 

AK Builders, Inc., which was developing Lynnfield Park in Lawrenceville, Millside Manor III in Dacula, Sedgefield of Hamilton Mill in Buford, and Creekside at Stonecrest in Sugar Hill, all in Gwinnett County, filed Chapter 7 bankruptcy June 3.  Its largest creditors include Georgian Bank .. Gwinnett Community Bank... Peoples Bank and Trust...and United Community Bank. 

Norris Lake, LLC, with property in DeKalb County, filed for Chapter 11 bankruptcy June 2. ... New Market Properties, Inc., in Fayetteville, a land developer founded in 1995, filed Chapter 7 bankruptcy March 28. 

 The article also includes comments from lawyers, including your truly (who had to resort to the word "meltdown").

As banks foreclose on property from past-due loans, bankruptcy filings in the residential market have become more common and that is leading to a "complete meltdown," said Scott B. Riddle, bankruptcy attorney with The Law Office of Scott B. Riddle in Atlanta.  On any given week, I get calls for subcontractors, suppliers and individual homebuilders. .. Lenders are not willing to lend on the same terms they were two and three yeas ago, Riddle said. ...

The banks are forcing developers into bankruptcy, said L. Matt Wilson of The Wilson law Firm, P.C., who filed the paperwork for Allegiance-Tyson Woods II Properties. Banks need to avoid foreclosure, "which is a horrible remedy" for both developers and bankers, he said. The banks "end up putting their clients out of business, so they'll never get paid." ... "There will be banks going out of business, and that will have long-term economic effects on the community." ...

Thacher Proffitt has published an article entitled  American Home Mortgage Investment Corp. v. Lehman Bros. Inc. : Bankruptcy Court Broadens Repurchase Agreement Safe Harbors to Include Subordinated Notes Secured by Mortgage Loans and Limits the Application of Article 9 of the UCC  (click title for link to pdf).

A summary of the article:

On May 23 2008, in American Home Mortgage Investment Corp. v. Lehman Brothers, Inc., the United States Bankruptcy Court for the District of Delaware held that a transaction involving the purchase and sale of subordinated notes secured by mortgage loans was a "repurchase agreement" and a "securities contract" entitled to the financial contract safe harbor protections of sections 559 and 555 under the Bankruptcy Code. In so deciding, the Court found that the subordinated notes were "interests in mortgage loans." In addition, the Court ruled that the "commercial reasonableness" standard of Article 9 of the New York Uniform Commercial Code did not apply to the foreclosure and liquidation of the subordinated notes subject to the repurchase agreement. Am. Home Mortgage Inv. Corp. v. Lehman Bros. Inc., et al. (In re Am. Home Mortg. Holdings, Inc.), No. 07-11047, Adv. Proc. No. 07-51739, 2008 WL 2156323 (Bankr. D. Del. May 23, 2008).

From the Harvard Law School Corporate Governance Blog, an article by Marshall Huebner and Hugh McCullough of Davis, Polk & Wardwell entitled The Fiduciary Duties of Directors of Troubled U.S. Companies: Emerging Clarity.  The summary is below, and the article can be accessed by clicking here.

For many years, there was a diversity of opinion — including judicial opinion — with respect to various issues connected to the duties of directors and officers in the troubled company situation. Can they be sued directly by creditors? Does the business judgment rule apply to protect them? Is there a tort called “deepening insolvency?” To whom are duties owed? Can directors and officers continue to take (prudent) risks to maximize the value of the enterprise?

From the Atlanta Business Chronicle -

The Federal Trade Commission has sued Atlanta-based credit card marketer CompuCredit Corp. and its debt collection unit Jefferson Capital Systems LLC, charging them with using deceptive marketing and abusive debt collection tactics on consumers in the subprime market. 

...  The federal government is seeking $200 million in fines and restitution from CompuCredit (NASDAQ: CCRT), Wilmington, Del.-based First Bank of Delaware and Brookings, S.D.-based First Bank & Trust. FDIC has settled with a third bank, Columbus, Ga.-based Columbus Bank and Trust, a Synovus (NYSE: SNV) banking unit that paid a $2.4 million fine and agreed to a cease and desist order.

The FDIC is further seeking $6.2 million in penalties against CompuCredit.

FTC has alleged CompuCredit misrepresented the amount of credit that would be available immediately to consumers, failing to disclose up-front fees, failing to disclose certain purchases could reduce a consumer's credit limit and misrepresenting a debt collection program as a credit card offer. FTC has accused Jefferson Capital of misrepresenting a debt collection program as a credit card offer and using abusive collection tactics such as making debt collection calls to individual consumers more than 20 times per day, including before 8 a.m. and after 9 p.m., and on Sundays. ...

By Scott B. Riddle, Esq.

It has been a common practice for residents of northeast Georgia to file bankruptcy petitions in Chattanooga, Tennessee rather than Rome, Georgia, in spite of the Bankruptcy Code's requirement that cases be filed in the district in which the debtor resides.

According to an article from the Chattanooga Times ...

Georgia may not yet be successful in its border battle for water from the Tennessee River. But the Peach State could lay claim to more bankruptcy cases -- and millions of dollars in legal and court fees -- that now end up in U.S. bankruptcy courts in Tennessee.

Although no policy change has been made yet in Chattanooga about cross-state filings, one of the 21 U.S. trustees who represent the government in bankruptcy courts has objected to border crossings from Mississippi residents into the Memphis bankruptcy court, and a Memphis bankruptcy judge has moved to enforce the border. ...

Last year, 1,049 North Georgia residents filed for bankruptcy relief in Chattanooga, representing more than one of every six cases filed here, according to the Eastern Tennessee district of the U.S. Bankruptcy Court....

U.S. Bankruptcy Court Judge Thomas Stinnett, one of two bankruptcy court judges in Chattanooga, said the local court "has always maintained close connections" with the North Georgia bankruptcy courts in Rome and Atlanta.

"This is something that we've known about for a considerable period, and we would certainly accommodate them on whatever may be needed," he said. ...

But whether a policy change is made for Chattanooga may end up being decided by either U.S. Trustee Richard Clippard in Memphis or U.S. Trustee Donald Walton in Atlanta, either of whom might object to bankruptcy filings from Georgia residents in Chattanooga. Jane Limprecht, public affairs officer for the U.S. trustee's executive office in Washington, D.C., declined to discuss any plans to object to cross-state filings.

The practice might come to an end after a recent 6th Circuit opinion -

But a 4-year-old case along the Tennessee-Mississippi border near Memphis threatens to create a new border fence there against people crossing state lines or federal districts to file bankruptcies.

In 2004, the U.S. trustee's office in northern Mississippi moved to transfer out of the Memphis court two bankruptcy cases from Mississippi debtors.

After conflicting rulings in bankruptcy and federal district courts, a three-judge panel of the U.S. Court of Appeals for the 6th Circuit in Cincinnati ruled that bankruptcy cases should be filed in the same judicial district in which the debtor lives. Previously, many bankruptcy courts have accepted filings outside their district as a matter of convenience unless a creditor or debtor objected.

In a seven-page opinion, Chief Judge Danny Boggs said venue requirements of the bankruptcy code "are mandatory and not optional" and therefore debtors from Mississippi should not cross the state line to file their bankruptcy case in Memphis.

The case is Thompson v. Greenwood, 507 F.3d 416, (6th Cir. 2007) (click here for .pdf opinion).  The facts are the following:

Debtors Reuben and Patricia Thompson and Leonard Jordan (“the debtors”), all of whom reside in the Northern Mississippi suburbs of Memphis, filed voluntary petitions for bankruptcy in the United States Bankruptcy Court for the Western District of Tennessee in June 2004. In both cases, the United States Trustee in the Northern District of Mississippi filed motions to dismiss or transfer on the ground that venue was lacking because the debtors did not reside in the district, as required by 28 U.S.C. § 1408. Although the debtors conceded, both then and now, that venue in Tennessee was “technically improper,” Appellants' Br. at 9, they maintained that, both as a matter of statutory construction and for equitable reasons, the bankruptcy judges had inherent authority to retain the cases in the interest of justice or for the convenience of the parties. The Trustee argued that a proper interpretation of the applicable venue statutes left the judge with no discretion to retain the cases, and that the court was required either to dismiss or transfer the cases under the plain language of 28 U.S.C. § 1406.

The decisions of the bankruptcy judges in the two cases were contradictory. In the case of Mr. Jordan, Chief Bankruptcy Judge David S. Kennedy agreed with the debtor's position, holding that “the court, in its discretion, pursuant to its inherent or implicit authority, ... may retain ‘cases' filed in an improper district ‘for the convenience of the parties' or ‘in the interest of justice’ even if a timely motion is filed to contest venue....” In contrast, in the case of the Thompsons, Bankruptcy Judge Jennie D. Latta… found that venue was not proper in the Western District of Tennessee and ordered the case transferred to Mississippi. Both cases were appealed to the District Court for the Western District of Tennessee, which thoroughly analyzed the applicable venue statutes and determined that the Trustee's position was “the most coherent reading of the statute as a whole in conformity with accepted norms of statutory construction.”… The court therefore affirmed Judge Latta's ruling in In re Thompson and reversed Chief Judge Kennedy's ruling in In re Jordan.

A very liberal cut & paste of the Court's analysis, and authority from the Northern District of Georgia, after the jump:

From the Administrative Office of the U.S. Courts, via Law.com, bankruptcy filings are up 30% for the twelve month period ending March 31, 2008.  It is not a surprise that Georgia is near the top -

The top five states for bankruptcy filings per capita in the 2008 data are Tennessee, 6.7 per 1,000 population; Georgia at 5.45; Alabama at 5.29, Illinois at 5.16; and Michigan at 4.82 per 1,000. 

There was also a bit of a "lull" in Gwinnett foreclosures this month, but it is not what it appears.

It's not that the tide of foreclosures has truly ebbed. A legal change forced lenders to file some paperwork differently before foreclosing. When a lender sells a loan to another institution, the change must be recorded at the courthouse before a foreclosure can happen, Hardegree said. The change will push many of the June foreclosures into later months, he said. "Next month will be horrendous," Hardegree said. "And the month after that will be worse." ...

Lowell Pratt Residential LLC lost to foreclosure 35 plots of land in the Wilshire Manor subdivision near Grayson. The foreclosure represented an $8.76 million loss for the Norcross-based builder. Twenty lots and a handful of homes in the Georgetown Commons subdivision also went up for auction Tuesday. Homes had been listed for more than $600,000 in the Grayson-area development. About $10.5 million in residential property was lost to foreclosure Tuesday at Georgetown Commons 
 

The now-not-so-rich and famous are also facing the music.  This includes Ed McMahon and, probably no surprise, Evander Holyfield, who also can't make support for at least some of his nine (+) children. 

His palatial estate in Fayette County is under foreclosure, according to a legal notice that appeared in a local newspaper, and is set to be auctioned by Washington Mutual Bank on July 1. The home is worth an estimated $10 million

For a bright spot, tomorrow, June 6, 2008 is National Doughnut Day.  Stop by the local Krispy Kreme for a freebie.

By Scott B. Riddle. Esq.

The New York Times has an article about the recent suicide of Kirk Wright (discussed in this post). See Hedge Fund Manager's Death Does Not Halt Suit Against N.F.L. and Players Union by Mike Tierney.

Six former players, including the star defensive backs Steve Atwater and Blaine Bishop, are involved in a two-year-old civil suit against the Players Association and the N.F.L. The lawsuit accuses the union of improperly allowing Wright onto a list of financial advisers provided to members, even though liens had been filed against Wright.

The union, seeking to have the suit dismissed, says that all of its registered financial advisers undergo annual background checks that were developed in conjunction with the Securities and Exchange Commission. The list also includes a disclaimer, indicating that the advisers are neither endorsed nor recommended.

The article also includes a picture of auctioneer Scott Schwartz of Auction Management Corporation and items auctioned through the pending bankruptcy case of Wright's company, International Management Associates.

Corporate Counsel and Law.com have an article about litigation arising from the subprime mortgage meltdown.  The article is entitled Wipeout: Subprime Crisis Spawns Wave of Litigation, by Sherry Karabin.

Among the highlights:

A new study by Navigant Consulting Inc. offers the most detailed statistical portrait of subprime litigation yet. The Chicago-based firm reports that 448 subprime-related cases had been filed in federal court from January 1, 2007, to March 31, 2008. By comparison, the Resolution Trust Corp., which was created to deal with problems spawned by the savings and loan crisis, handled a total of 559 suits from 1989 to 1995.

And while subprime litigation steadily increased last year, filings really soared during the first quarter of 2008. "What we saw in 2007 was a mild breaking wave compared to the tsunami we're witnessing now," says Navigant managing director Jeff Nielsen. "In the most recent quarter, we're looking at approximately two filings per day, including weekends." Nielsen adds that 86 percent of all subprime cases that Navigant tracked in its study were still active.

The Guardian has an article about the dominance of Delaware and New York when it comes to large Chapter 11 cases.

The choice of judge and court is often seen as particularly important in bankruptcy cases where there are no juries and limited ability to appeal the decisions made by that judge.  On top of that, the credit crisis has made it more difficult to get bankruptcy exit financing and the bankruptcy law reforms that took effect at the end of 2004 have pushed companies to get out of court sooner, making it crucial for lawyers to find judges used to handling complex cases. "If you're going to do a pre-negotiated, or pre-packaged bankruptcy, you've got to go to an experienced court," said Roger Frankel,a bankruptcy attorney at the Orrick law firm in New York.

The article also mentions Chicago, and the reason it might have lost the opportunity for larger cases.

In 2000 a Chicago focus group looked into why nearby companies were filing cases in Delaware, and made recommendations about rule changes to the court, which it adopted.  The court succeeded in attracting large company filings, such as United Airlines, National Steel, Conseco Inc and K-Mart. But an appeals court ruling in K-Mart restricting how certain trade vendors are paid, has scared many lawyers away from Chicago, Lubben said, illustrating how individual decisions can impact where cases are filed. Only two public company bankruptcy filings were made in Chicago in 2007, and just one so far in 2008, according to BankruptcyData.com

By: Scott B. Riddle, Esq.

If you have been reading real estate Bankruptcy blogs and headlines, you know foreclosures are up. Way up.  Georgia, and Atlanta in particular, are amount the nations leaders in that respect. 

That naturally crates a market for individuals or companies who have the ability to invest in foreclosed properties.  Kiplinger's Magazine has an article in the Jun 2008 issue entitled How To Buy A Foreclosure (click here for online version, then scroll to table of contents).  The magazine also includes tips on financing a foreclosure and cutting closing costs. 

Meanwhile, if you are interested in foreclosures in Atlanta, you can take a bus tour of the homes.

The Federal Reserve Bank of New York has posted Dynamic Maps of Non-Prime Mortgage Conditions in the United States. The interactive map is searchable by state and ZIP code, and provides quite a bit of information on mortgage loans.

Thanks to Jeb Howell of Auction Management Corporation for the link.

From CNNMoney.com

The Countrywide executive told a U.S. Senate Judiciary subcommittee that the company was taking new steps to address concerns that have led to an outcry from consumer advocates and that were the catalyst for Tuesday's hearing. Bailey said Countrywide plans to hire an independent auditor to review its treatment of loans whose borrowers have filed for bankruptcy. If Countrywide made mistakes that hurt borrowers, the company will compensate them, he said.

Countrywide also plans to create a bankruptcy ombudsman to review claims of borrower abuse, and adopt a series of "best practices" issued by a national group of bankruptcy trustees.

The article also discusses the adversary filed in the Northern District against Countrywide, discussed in this post:

The subcommittee was also scheduled to hear testimony from Robin Atchley, a mother of four from Georgia and a former Countrywide borrower. Atchley, in her testimony, told the panel that her and her husband were engaged in a "tug of war" with Countrywide and its lawyers to try and stay in their house.

"It seems as if Countrywide used the bankruptcy court to gain even more opportunities to take advantage of our predicament and to profit from our struggle," Atchley said, detailing various fees and charges the company assessed.

Is Bank of America still going to buy Countrywide?

After being on the verge of a filing for many months, Linens N' Things finally pulled the trigger.  According to this article in the Atlanta business Chronicle, the following local stores will close -

It will close stores at Perimeter Mall in Atlanta, Uptown Square Shopping Center in Fayetteville, Stonecrest Marketplace in Lithonia, Macon Mall in Macon and Southlake Pavillion in Morrow.

The company has landed $700 million in debtor-in-possession financing from General Electric Capital Corp., which Linens Holding said will ensure healthy merchandise flow as it gets ready for the back-to-school and holiday selling seasons.

From the May 2, 2008 Atlanta Journal Constitution -

Georgia ranked No. 2 nationally for its rate of consumer bankruptcy filings in the first quarter of the year. The bankruptcy courts statewide processed 12,981 consumer filings during the quarter, up 16 percent from the same period in 2007.

Only Tennessee had a higher bankruptcy rate than Georgia. In Tennessee, the rate in annual terms was 1 bankruptcy filing for every 56 households. In Georgia, 1 in every 60 households sought legal protection from creditors, according to the National Bankruptcy Research Center, a California-based data firm. ...

Indeed, the first-quarter statistics suggest that most Georgians entering bankruptcy are trying to keep their homes, not walk away. About 55 percent of Georgians who file for bankruptcy filed Chapter 13, which allows consumers to hold onto their house and car but requires that they repay a portion of their debts. A Chapter 7, chosen by 45 percent of Georgians who file for bankruptcy, is a liquidation in which most debts are wiped out, but so are all of a consumer's assets that aren't protected by exemptions.

By: Scott B. Riddle, Esq.

In a prior post, I discussed Judge Massey's opinion concerning Amended Bankruptcy Rule 6003.  In re Smith, Ch. 11 Case No. 08-63990 (click here for Order). 

Catherine Vance, Vice President of Research & Policy and Associate General Counsel of Development Specialists, Inc., has subsequently written an article about the new Rule, in which she cites Judge Massey's opinion in Smith (and this Blog).

You can read the entire article, entitled The Purpose and Application (So Far) of New Bankruptcy Rule 6003, on the Bankruptcy Litigation Blog.

By: Scott B. Riddle, Esq.

Updated 4/25/08 (scroll to bottom)

The disaster that is the Clayton County School Board has struck again.  On the verge of being the third school district in the United States to lose accreditation in the last 20 years (see the report here), they struck again last night.  In a non-public session, and in apparent violation of the open meetings law, they hired a "corrective superintendent."  It just happens that this candidate had previously withdrawn his name from consideration, and has been  deemed unqualified by state and accreditation officials (yes, that would be the officials who determine whether the schools are accredited).

The board voted 5-1 to hire John W. Thompson, who state and accreditation officials said is not qualified. ....  Thompson's $285,000 contract runs until to June 30, 2009, and has an option to be extended, Schwartz said. It also includes a car and security, if needed. Thompson initially requested a $275,000 salary, 24-hour access to a car and driver, 24-hour security and $2 million for consultants. It's unclear if he will have a consultant budget.

"His demands are appalling," said Winnie Thomas, whose daughter is a junior at Lovejoy High School. "The fact that Mr. Elgart from SACS and the governor's liaisons disapproved is alarming. For a board to pass an offer to this man is ridiculous. In what world do they live?"

Excellent question, Winnie!  They live in a world where they, the School Board, value their own positions and power more than the condition of the schools or welfare of their neighbors.  They apparently did not even follow the law when making this hire behind closed doors.

"Unfortunately, this is part of a continuing pattern where the board takes actions without even attempting to follow the law," said Thomas Clyde, an attorney for The Atlanta Journal-Constitution.

Even better, the attorney they hired to represent the Board during the troubling times, Glenn Brock, resigned, stating -

"I fired the school board because of deceptive and unethical behavior," said board attorney Glenn Brock. "Their behavior demonstrated last night is what SACS has been criticizing all along."

What does this have to do with a Bankruptcy Blog? The end result of losing accreditation is that students are ineligible for the Hope Scholarship, and will have a difficult time getting into a decent college.

Clayton County residents can expect plummeting home values as parents (or anyone who might be  a parent in the next few years) move out of the county so their kids get in college and they are eligible for the Hope Scholarship.   Home buyers with school-age kids, or who may have school age kids in the future (i.e, most younger couples) will avoid the county like the plague.  The housing market in Clayton County will be a disaster, and the tax base will decrease dramatically.  Refinancing will not be possible because the equity in homes will simply disappear.  Companies and industries considering Clayton County will immediately strike them off of their list because employees will not want to move there.  Some businesses will move, or perhaps even close, because of a decrease in business and an inability to keep qualified employees. 

According to a realtor association official ...

"All the board members need to resign. We need to have a special election and start over with qualified candidates," said David Barton, Vice President of the Metro South Association of Realtors. He said that during the last four years of turmoil in the Clayton County schools, property owners in the county have lost a half billion dollars in value.

This quote was in February, when there still might have been a chance for remedies.  That chance seems to be over, so expect much higher losses in value for Clayton homeowners.  If you have school-age kids, or think you might have them in the next few years, stay way from Clayton County.

If you are a homeowner in Clayton County and you find yourself in Bankruptcy, think twice before reaffirming your mortgage debt.  Even if you qualify for a reaffirmation and your home is worth the amount of debt, it might not be the case for long.  You might be signing up for post-petition personal liability for the mortgage on a home that decreases significantly in value in the coming months and years.  You could be locked into staying in Clayton because you cannot sell, selling your home at  discount and paying the difference, or a foreclosure. You will owe the full amount of your mortgage (including interest and fees) after your discharge.  Again, think twice.

Update - The latest news from the evening of April 24.  The Chairman of the board has resigned.

School board Chairman Eddie White said he decided to step down this week after finding a defamatory letter on his desk at the board meeting Wednesday. The unsigned letter, drafted by a board member, accused White of engaging in sexual conduct with a member of the school administration, he said Thursday.

"I do not approve of such conduct. It was very, very inappropriate for that to occur," White said. "It is untrue and negatively impacting my family. I was of the opinion we could meet the nine recommendations, but behavior like that from last night will not help us."

Like a few million other people, I created a profile on LinkedIn.  I am not quite sure what that means in the long run (see below), but after joining the legal bloggers group, it occurred to me that it might be useful for creating an online directory for Bankruptcy lawyers in Georgia. 

Thus, I have created a LinkedIn group for Georgia Bankruptcy Lawyers (click to join), or others who have a professional interest in Bankruptcy law and/or Georgia cases.  

Users will have access to profiles of others in the group, and there is a sort function for finding members in a specific geographic location.  It is not  a tool for mass emails and "listserve" type threads that we all have probably come to dislike.  As far as I know, I do not get a kickback for any fees to LinkedIn (especially since I am not a paid member), and my only fuction is to click "approve" when someone joins.

I asked above what it means in the long run.  In this article, entitled Is The Party Over For Social Networking, Larry Bodine asks the question " What if you gave a party, hundreds of people showed up, but almost nobody talked to each other?"

In contrast, LinkedIn aficionado Kevin O'Keefe, president of LexBlog Inc. near Seattle, has more than 500 connections. He gets multiple invitations from others to be a part of their network daily. O'Keefe started a Legal Blogging group on LinkedIn and got 200 applications to join within two days.

"I now have a huge knowledge group that will view me as their leader," he said. "People who don't get results from LinkedIn are the same as people who go to Rotary and complain, 'Nobody came up to talk to me.'" O'Keefe says he has generated new business from LinkedIn. "It definitely helps me get work," he says. "And you can't beat the price." (A basic membership is free.)

I can't really turn this into a Bankruptcy or litigation issue, so it will be a rare stray for this news story -

Wall Street Journal: U.S. Pastor's Hunting Ammunition Gets Him 3 Years in Russian Prison.  

Phillip Miles, from South Carolina, has been in custody since his arrest on Feb. 3. He was arrested several days after customs agents at a Moscow airport found a box of 20 rifle shells in his luggage. The court sentenced him to serve three years and two months in prison, with the sentence calculated from his detention date.

Mr. Miles said he didn't know bringing the .300 caliber cartridges was illegal and had packed them for a friend who had recently bought a Winchester rifle. ... "I'm very disappointed. It's a strange sentence for one box of hunting bullets,"

What?!? 

The cartridges were not initially found as he flew into Moscow, but a day later, as airport security put his luggage through an X-ray machine while he was on his way to check in for a flight to Perm, a city in Siberia.

Maybe he was lucky to get caught in Moscow.  I spent a week in Perm, Russia (which is not really in Siberia, but is the "Gateway to Siberia"),  which was a "closed" city for many years after the fall of the USSR because of the defense industry there, and when we de-planed late at night we were thoroughly searched as we looked at the business end of several AK-47 rifles.   Like the pastor, we were caught smuggling illegal goods.  Thankfully, several containers of Tylenol and aspirin only resulted in confiscation, not a Russian prison.  We really didn't consider packing high-powered rifle ammo.

I ran across a post about the issue of tithing and paying off debt on the Free Money Finance Blog entitled Tithe or Pay Off Debt: Which Should You Do?  There is a follow-up post on the subject here.   These posts, and the blog, may be of interest to some readers. 

Gretchen Morgenson of the New York Times has an article in tomorrow's Sunday edition about the improper conduct of mortgage lenders.  See Piling On; Borrowers Buried By Fees.  Morgenson discusses several cases in which Bankruptcy Judges have found misconduct on the part of lenders.

As discussed in this post, the United States Trustee has filed an adversary proceeding in the Northern District of Georgia, making similar allegations.

Morgenson discusses these cases -

 The case out of the Eastern District of Louisiana, overseen by Judge Elizabeth W. Magner, is especially depressing. It involves Dorothy Chase Stewart, an elderly borrower and widow whose original loan of $61,200 was serviced by Wells Fargo. Judge Magner cited “abusive imposition of unwarranted fees and charges,” and improper calculation of escrow payments, among other things. She found Wells Fargo negligent and assessed damages, sanctions and legal fees of $27,350.

The heart of the case is that Wells Fargo failed to notify the borrower when it assessed fees or charges on her account. This deepened her default and placed her on a downward spiral that was hard to escape. And Wells Fargo’s practice of not notifying borrowers that they were being charged fees “is not peculiar to loans involved in a bankruptcy,” the court said

....

Finally, borrowers can be cheered by an opinion written this month by Cecilia G. Morris, bankruptcy judge in the Southern District of New York.

The case involved Christopher W. and Bobbi Ann Schuessler, borrowers who had $120,000 of equity in their Burlingham, N.Y., home when their bank, Chase Home Finance, a unit of JPMorgan Chase, moved to begin foreclosure proceedings. The couple had filed for personal bankruptcy protection, which automatically prevents any seizure of their home. ...

The Schuesslers got into trouble because Chase had refused a mortgage payment they tried to make at a local branch. Testimony in the case revealed a Chase policy of accepting mortgage payments in branches from borrowers who are current on their loans but rejecting payments from borrowers operating under bankruptcy protection. ..

“Without informing debtors, Chase Home Finance makes it impossible for JPMorgan Chase Bank branches to accept any payments,” Judge Morris wrote. “It appeared that Chase Home Finance intended to commence an unwarranted foreclosure action, due to ‘arrears’ resulting from Chase Home Finance’s handling of the case in its bankruptcy department, rather than any default of the debtors.”

From Law.com -

The 75-page complaint, filed Monday in Manhattan Supreme Court by trustee Richard Gray, alleges McDermott Will put off a much-needed Chapter 11 filing to facilitate self-dealing by two other members of the hospital group's restructuring team. As a result of the delay, the trustee claims, Saint Vincent's incurred greater operating losses, paid more professional fees and took longer to emerge from bankruptcy after it finally did file.

The suit is requesting $1.2 billion in damages for legal malpractice, fraud and breach of fiduciary duty, among other claims, as well as disgorgement of $4.5 million in previously paid legal fees. In addition to the firm itself, partners William P. Smith, Stephen B. Selbst and David D. Cleary are individually named as defendants. ...

The other members of the restructuring team cited in the suit are financial advisory firm Huron Consulting Inc., and turnaround boutique Speltz & Weis, whose principals David Speltz and Timothy Weis respectively stepped into the roles of chief executive officer and chief financial officer at Saint Vincent's in 2004. McDermott Will was retained to advise on the group's financial situation in December 2003.

Like most lawyers, I am often asked what kinds of cases I generally handle.  Obviously, one of my practice areas is bankruptcy law, but I also receive questions about what specific types of bankruptcy matters I handle.  After a year and a half of publishing this Blog, I thought it time to describe my practice areas in a little more detail.

1. Bankruptcy  -  I started my career clerking for Judge Homer Drake, U.S. Bankruptcy Judge for the Northern District of Georgia in 1991, was in the bankruptcy section of a large Atlanta firm for several years,  and have maintained a bankruptcy practice since then. 

• On the debtor side, I handle small and medium-size business Chapter 11 cases as well as Chapter 7 cases.  I also handle a relatively small number of individual Chapter 7 cases, usually where there are complications such as business debt or potential litigation.  As I get many calls from individuals from this Blog, if I can't handle a case I have developed some very good referral sources.   I welcome all calls, and am happy to help people find a lawyer if I am unable to assist.
• I handle bankruptcy litigation for creditors and other parties. I have prosecuted and defended preferential transfer and fraudulent conveyance actions, and many other litigation matters that arise in a bankruptcy case.  I also handle litigation for Chapter 7 Trustees.
• I have litigation corporate governance cases, including breach of fiduciary duty matters, in the context of bankruptcy cases in Georgia and other districts.  I frequently post about these issues in this Blog (see the Corporate and Fiduciary Litigation category).

2.  Business and Real Estate Litigation.   I handle a wide variety of business matters, including disputes between partners or shareholders, business collection matters, and other business disputes. 

• A significant part of my litigation practice involves real estate matters.  Over the last several years, I have represented several residential, commercial and golf course developers.  I have also acted as counsel in some of the larger mortgage fraud cases in the Northern District of Georgia.
• I have handled construction and defect cases in Georgia and several other states.
• I have handled real estate and title matters for several title insurance companies. 
• As I mentioned above, I have handled disputes between partners and shareholders, trade secret cases, and prosecuted and defended breach of fiduciary duty and other corporate governance cases.

This is just a brief summary of my practice over the years, and is by no means and exclusive list.  I am fortunate to get a large percentage of my cases from referrals from other lawyers and professionals, and I welcome any emails or calls.

From the Atlanta Journal Constitution -

A record number of metro Atlanta properties are scheduled to be auctioned on the courthouse steps next month, according to numbers released Tuesday by Equity Depot, an Alpharetta company that tallies foreclosures. ...

In the 13-county metro area, 7,335 properties are scheduled for courthouse auctions, Equity Depot said. The previous record was 6,992 properties reported in January.

The numbers declined in February and March, then shot up again this month. The difference between March and April was 1,650 properties, according to Equity Depot.
...

From Bloomberg -

April 11 (Bloomberg) -- They're talking more about Chapter 9 municipal bankruptcy in Jefferson County, Alabama, the home of the largest city in the state, Birmingham.

Who can blame them?

The county is now being whipsawed by an ill-thought-out debt policy and the collapse of the bond insurers. Credit-rating downgrades all around have triggered a series of events that are no longer in the county's control, leaving it at the mercy of securities firms that have little room for maneuver themselves.
....

The bankruptcy will be the biggest in the municipal market's history by virtue of the county's debt load, according to the News. Jefferson County has $3.2 billion in sewer debt; Orange County lost $1.6 billion in its investment pool. I'm sure the matter will be debated. I'm also sure Orange County will be happy to pass the crown to Jefferson County.

There are going to be two acts to this drama.  First, of course, is the actual filing itself. The county seems to think that this will allow it to hold its creditors at bay and proceed in a business-as-usual fashion. ...

The second act of the Jefferson County bankruptcy is going to focus on Wall Street and all the banks, law firms, advisers and consulting firms that helped put the county where it is today. The county was not well-served, for all the money that changed hands. In this act, the county sues to get some of that money back.

A plug for my law school and a CLE event in Atlanta--

UNC School of Law is pleased to present -

"Lessons Learned in the Nifong Case"

A two-hour CLE program presented by Richard E. Myers II,
Assistant Professor of Law at UNC School of Law

Tuesday, April 22, 2008
3:00 - 5:00 p.m.

Troutman Sanders LLP
600 Peachtree Street, NE
53rd Floor
Atlanta, GA 30308-2216
(404) 885-3000

Directions are available at  Troutman Sanders.

A reception with Dean Jack Boger will follow the CLE program.

Please note: One hour of ethics credit and one hour of general credit are pending with the State Bar of Georgia.

Program Details:

In response to failures related to the investigation of rape allegations involving members of the Duke lacrosse team, the North Carolina State Bar disbarred the then-sitting district attorney, Mike Nifong. Nifong was also convicted of criminal contempt of court and served a one-day sentence.

The Nifong case has much to teach about prosecutorial ethics, pretrial publicity, the prosecutor's role in a pretrial investigation and a prosecuting attorney's duty to justice. The program will reference two articles by Robert P. Mosteller:

1. Exculpatory Evidence, Ethics, and the Road to the Disbarment of Mike Nifong: The Critical Importance of Full Open-File Discovery, 15 George Mason Law Review 257 (2008)
2. The Ethical Limitations on Prosecutors When Preparing and Presenting Evidence The Duke Lacrosse Case, Innocence, and False Identifications: A Fundamental Failure to 'Do Justice,' 76 Fordham L. Rev. 1337 (2007).

The program fee is $35. The fee includes two hours of CLE credit and the reception to follow the program. Please respond by April 15, 2008 to louise@unc.edu or (919) 962-1592.

From the Wall Street Journal -

Linens 'n Things Inc., a home-furnishings retailer caught by an increasing debt load and shrinking housing market, is expected to file for Chapter 11 bankruptcy-court protection by Tuesday, several people familiar with the matter said.

A Linens 'n Things filing would mark one of the first major retailers to seek bankruptcy protection in this economic downturn. The New Jersey retailer, which sells home products like towels, bath rugs and kitchen appliances, has about 590 stores ...

From the Bankruptcy Prof Blog, you can now get email updates from the U.S. Trustee.  Go to their website, click on Email Updates in the top right corner, and sign up.

From Above the Law , Kirkland &  Ellis wants its bankruptcy lawyers to dress for success --

04/01/2008 10:58 AM
To: #FW Restructuring Attorneys
Subject: Upcoming Dress Code Program
As part of our KIRT [Kirkland Institute of Restructuring Training] programs, I am pleased to announce a "dress for success" program, which will be held on each Monday for one hour for the next four weeks. I have arranged for outside speakers from a number of prominent men's and women's fine clothing stores to lead the programs. In light of the number of button down shirts being worn with suits and the number of associates (mostly, male) wearing boring and mismatched ties and shiny suits, the program is highly needed. Attendance for the program is strongly encouraged.

Debtors in Chapter 7 generally have three ways to deal with secured debts -- reaffirm the debt pursuant to §524, surrender the property to the lender, or "redeem" the property by paying the secured lender the value of the collateral. (For now, we'll leave discussion of the ride-through for another occasion).

It is common for individuals in Bankruptcy to find themselves in a situation in which they are "upside down" on a loan and the loan balance is far higher than the value of the collateral.  A reaffirmation means the debtor pays back the entire loan balance, plus interest, regardless of the value of the collateral.  That is, if the debtor qualifies for reaffirmation.

Redemption sounds like a good idea for many people who want to keep the property, such as a vehicle that allows them to get to work, but the reality is that individuals in bankruptcy do not have several thousand dollars available to redeem. This is where redemption lenders come in, and according the Professor Hayes it may be a good deal.   If anyone has experience with them, please leave a comment.

Many of the calls I receive are from individuals who own small or mid-size businesses that are experiencing financial difficulties are need to shot down.  They often assume that they should file a bankruptcy petition on behalf of the business if it is a corporation, partnership or limited liability company. 

Often, filing the petition for the business does no good, and potentially could lead to negative consequences.

Let's look at a common scenario.  Richard owns a small residential construction company, set up as a limited liability company (LLC), that he runs from his house.  Due to the downturn in the real estate market, the business is going under.  It cannot sell its two houses under construction or the two other lots it owns.  The secured lenders have sent notices of default and are starting the foreclosure process.   Richard also cannot pay the company's sub-contractors or the SBA loan the company took out three years ago, for which he is personally liable.  There is no equity in the houses or lots, so even if he did sell them at market value, the company would not receive an excess above the construction loans.  Although Richard believes the market would get better if he could hang on for a few months, he has few personal assets and cannot keep the company afloat.  Like most small business owners, he has personally guaranteed

Is this company a viable candidate for Chapter 7?  There is a good chance it is not.

If, after getting to the end of his rope, Richard simply "walks away" and lets the banks foreclose on the only assets (the land), and the company essentially has no assets, creditors are left with filing lawsuits against the dead company or against Richard for debt for which he is personally liable.  Richard must then decide (if he has not done so already) whether or not to file a personal Bankruptcy petition.

If, instead, Richard files a Chapter 7 for the company, a trustee is appointed. The trustee inevitably allows the secured lenders to foreclose on the real property, and creditors file claims in the case.  However, the creditors that have personal guarantees then file lawsuits against Richard individually, and he faces personal bankruptcy.  Did he get a real benefit from the business Bankruptcy?  Probably not.

The Chapter 7 trustee for the company takes a look at the books and records of the debtor company and sees that during better days a couple years ago, Richard caused the company to write a check for the down payment on Richard's house.  Almost a year ago, when the company got its SBA loan, Richard also paid himself and his wife  "bonuses."   The Trustee for the business then files lawsuits against Richard and his wife for preferential transfers and fraudulent conveyances.  By filing the Chapter 7 for the company, Richard simply invited someone to come in and review everything he had done for the last several years and he bought himself and his wife lawsuits.  Arguably, the fraudulent conveyance claim may not even be dischargeable if Richard files his own Chapter 7 case.  Basically, the business Chapter 7 was something he should have never filed.

However, under some circumstances, a business Chapter 7 may be a good idea. 

At least one investor believes Bankruptcy is a better option for Bear Stearns than the $2 per share offer by JP Morgan.

From CNN Money -

Here's what Nye Lavalle, a private investor, investor and consumer advocate, in Atlanta, writes:

My recommendation and our vote of our shares will be to turn down the proposal and force a bankruptcy liquidation. Now why, some may ask, would we prefer bankruptcy?

Well, since many of Bear's ABS/MBS deals were really financing of receivables and not "true sales," the bankruptcy system, trustees, and courts could very well seek the return of those assets back to BSC. Regardless of the outcome, there is and will be litigation. So, the best forum with the most advantageous laws would be the Federal Bankruptcy Court for Bear shareholders, investors, employee pension funds etc...

However, the downside, is that the house of cards and black box alchemy tools used by many of Bear's partners, counter-parties, trusts etc...will be open for all to see. Thus, those harmed could hold the real parties responsible for the collapse. The true and real value of Bear can be decided whether it is $1, $2, $ 6, or $80.

I was prompted by this blog post to check the monthly Justia Blog Rankings.  I was surprised to see this Blog as the No. 22 most popular legal Blog.  I am not sure what it means, but it has to be a good thing. 

Other good Blogs on the list, that may be of interest to readers interested in bankruptcy, business litigation or Georgia law, are:

• Above the Law
• Delaware Corporate and Commercial Litigation Blog
• Wall Street Journal legal Blog
• Mortgage Fraud Blog
• Bankruptcy Law Network
• Atlanta Injury Law & Civil Litigation Blog
• Credit Slips
• Real Lawyers :: Have Blogs
• theBKblog
• Georgia Family Law Blog

On May 19, 2008, I will be speaking at a seminar on Bankruptcy Law and Litigation, presented by National Business Institute. The description of the course is the following:

Your clients rely on you to unravel the complexities of the bankruptcy process and guide them to the most favorable outcome possible. This innovative program was designed to give you the rules, essential strategies and litigation techniques to confidently handle your next case. Register today!

• Review recent updates and judicial rulings pertaining to bankruptcy law.
• Gain a solid understanding of the bankruptcy litigation process.
• Understand creditors' rights: effectively represent your clients and resolve your cases.
• Learn what constitutes a bankruptcy estate.
• Understand the difference between adversary proceedings and contested matters.
• Identify the impact means testing has on bankruptcy cases.
• Effectively determine which chapter debtors need to file under.
  

Faculty: Paul Burke O'Hearn, James S. Rankin Jr., William Rhymer,  Scott B. Riddle

In this post, I summarized Assignment for the Benefit Creditors in Georgia.  Bob Eisenbach just posted an article in the Business Bankruptcy Blog entitled Assignment for the Benefit of Creditors; Simple as ABC?

Most of us in the Atlanta area have heard the story of Eve Marie Carson, the Student Body President of my alma matar, The University of North Carolina.  Eve grew up in nearby Athens, Georgia, where she was the student body president of Clark Central High School.  Eve was shot to death in Chapel Hill last Wednesday, about a mile from campus.   Her killer(s) have not been found, but the police have some pictures and leads, and they will no doubt be found.  The story has been on the news for several days, and was a focus of the national broadcast of the UNC v. Duke basketball game Saturday night.   Duke fans and students wore ribbons, and for one night, dispensed with the "creative" anti-UNC chants.

This Blog is, by definition, about negative events.  However, I am going to hi-jack it to celebrate a person who had amazing accomplishments at a young age (and had a completely different experience in Chapel Hill than I). 

See the Daily Tar Heel video memorial here and WRAL slideshow.

Here is some video from her high school teachers.

From the UNC website -

Teaching and working with children were key service interests for Eve. In 2006, she taught science at Frank Porter Graham Elementary School in Chapel Hill as part of UNC’s INSPIRE program, whose mission is to encourage young students to pursue science as an interest. In her junior year, Carson was a tutor at Githens Middle School in Durham. She was also an assistant coach in the Girls on the Run of the Triangle, a character development program for girls ages 8-12 that uses running to teach values and a sense of self.

Eve's service extended well beyond the Triangle, however. In the spring of her sophomore year, she participated in a study abroad in Havana, Cuba, and she spent her summers working and volunteering in Ecuador (see slideshow) , Egypt and Ghana as part of the Morehead Summer Enrichment program. "I credit my prior experiences, especially my past two Morehead summers, for preparing me to get along with pretty much whatever comes my way," she wrote in an e-mail posted on the Morehead Web site. On campus, she became involved in Nourish International, an organization started by UNC students in 2002 for hunger relief. Eve served as freshman volunteer coordinator (2004) and co-chair (2005) for the group.

There are many more articles and news reports about other interests and activities.  I am sure it is no consolation to her parents, family and friends, but they can be proud of the amazing person she was.  She is, of course, one of thousands of students who have similar credentials.  Sadly, we don't hear about them often enough and it takes a tragic death to bring these students to our attention.  So .... I am piling on and spreading the word.

Emory Bankruptcy Developments Journal 2008 Banquet Honoring Douglas Baird

Here is the flyer.

When:  March 27, 2008 Maggiano’s -Buckhead 

Where:  3368 Peachtree Road, Atlanta GA 

Time:  6:30-9:00 PM

Seats are $80 each and limited tables of ten are  available for $1000. For more information, please call 404-805-1720

See Bob Eisenbach's post entitled   North Of The Border: Reorganization Under Canada's Companies' Creditors Arrangement Act describing the the Bankruptcy and Insolvency Act, known as the BIA, and the Companies' Creditors Arrangement Act, known as the CCAA.

I previously posted about the US Trustee's action against Countrywide for alleged abuses in Chapter 13 cases.  From the Wall Street Journal Law Blog -

Does flat-fee pricing foster assembly-line lawyering?

That’s what U.S. bankruptcy judge Jeff Bohm suggested in a decision, entered yesterday, in a consumer bankruptcy case involving Countrywide and a Texas homeowner. While Judge Bohm declined to enter sanctions against Countrywide and its lawyers from two firms — Barrett Burke and McCalla Raymer — he wrote: “This fixed-fee business model appears to have been an overwhelming financial success. . . . Meanwhile, the profession has suffered from the ever decreasing standards that firms like Barrett Burke and McCalla Raymer have heretofore promoted. This demise must stop.”  ...

These law firms aren’t the only ones that have hit speed bumps in the foreclosure crisis. Law blog colleague Amir Efrati did this story on so-called “foreclosure mills.” He quotes a lawyer who says that while most firms who handle these cases for lenders in general do a good job, in the “gold rush” to get a piece of the growing business, some firms “have cut corners.”

According to this article in the recent edition of the Atlanta Business Chronicle, Ford & Harrison has decided to stop billing for first year associate work -

C. Lash Harrison said his law firm received four letters last year from Fortune 500 companies, stating that they would no longer pay for first-year associates on their cases.

Harrison could see the trend: four turns into 40 the next year and 400 the year after that. So rather than fight it, the managing partner of Ford & Harrison LLP came up with a revolutionary approach.

Starting with its new first-year class last September, the Atlanta-based, 200-attorney labor and employment firm has eliminated its billable hour requirement for first-year associates.

Could this become a trend that finds its way into an analysis of fee applications in Bankruptcy Court?   Is it reasonable to assume that if other large companies put pressure on large law firms to follow Ford & Harrison's lead, thus leading to a change in the standard practice, objections to fee applications may follow where the billing firms include first year billing? 

"Emerging Trends in Bankruptcy" is the topic.  Here is the flyer and the agenda -

Panel topics will include:

• The Rise of Non-Bankruptcy Consumer Actions and Emerging Trends in Consumer Bankrupcy Litigation;

• Emerging Trends in Chapter 11 Litigation and Evidentiary Issues in Bankruptcy; and

• The Use of Alternative Dispute Resolution in Bankruptcy.

Featured Panelists:

* Honorable Paul W. Bonapfel, U.S. Bankruptcy Court Northern District of Georgia 

 * Howard D. Rothbloom

* Grant Stein, Alston & Bird LLP

* Marjorie L. Girth, Professor of Law, Georgia State University College of Law

* Debi Miller-Moore, Vice President, American Arbitration Association

* Harris Winsberg, Troutman Sanders LLP

* Franklin Childress, Baker, Donelson, Bearman, Caldwell & Berkowitz, PC

From CNN.com -

The plan, called Project Lifeline, will allow overdue homeowners to suspend foreclosures for 30 days while they try to work out more affordable terms with lenders. It's not clear how many homeowners will be covered under the plan, but the proposal is aimed at delinquent homeowners whose mortgages are 90 days or more past due. The plan initially will involve six of the largest mortgage lenders -- Bank of America Corp., Citigroup Inc., Countrywide Financial Corp., JPMorgan Chase & Co., Washington Mutual Inc. and Wells Fargo & Co.

Apparently, this program will not be available to debtors in bankruptcy.  It is also unlikely to be a long-term fix for borrowers who cannot afford their house payment and cannot re-finanace at a lower interest rate.

From Law.com -

Nearly $75,000 in legal fees have been blocked by a federal judge who complained that a Long Island, N.Y., law firm was "purposefully vague" in disclosing that its lead attorney in a bankruptcy case was the son-in-law of the executive of one of several unsecured creditors it was representing.

Had the court known in 2002 about the relationship, it might have been "reluctant" to appoint Berkman, Henoch, Peterson & Peddy of Garden City to represent a committee of creditors in the Chapter 11 case, wrote Stephen D. Gerling, chief judge of the Northern District Bankruptcy Court.

In a 2002 affidavit, Berkman Henoch attorney Ronald M. Terenzi stated that an unnamed partner in the firm who would be primarily responsible for representing the creditors "is related to and [sic] officer and shareholder of one of the general unsecured creditors of the Debtors."

In fact, Gerling wrote in In Re: Matco Electronics Group Inc., 02-bk-60835, Berkman Henoch attorney Douglas Spelfogel was the son-in-law of Joel Girsky, the chief executive officer of Jaco Electronics Inc., one of the creditors in the action. The judge said it also appears that Spelfogel's wife, Wendy, later became in-house counsel at Jaco. ...

He added, "Fed.R.Bankr.P. 2014 is not intended to condone a game of cat and mouse where the professional seeking appointment provides only enough disclosure to whet the appetite of the [U.S. trustee], the court or other parties [of] interest, and then the burden shifts to those entities to make inquiry in an effort to expand the disclosure."

From the Atlanta Business Chronicle, Roark Capital, which owns Chapter 11 Debtor Pike Nursery Holding, LLC., has formed a new equity fund -

 Roark Capital Group said it has formed a private equity fund with $1 billion with which it will invest in consumer and business service companies.

Roark's specific areas of focus include franchising, food and restaurants, specialty retail, direct marketing and financial services companies. Roark has acquired 13 franchise brands including Batteries Plus, Carvel, Cinnabon, FastSigns, McAlister's Deli, Moe's Southwest Grill, Money Mailer, Schlotzsky's and Seattle's Best Coffee International. Atlanta-based Roark has also acquired four direct marketing businesses and three financial services companies.