A U.S. Bankruptcy judge has approved a request by American Airlines to eliminate a lump-sum pension option for pilots who retire. The airline, which is in Chapter 11bankruptcy, argued that if the pilots were able to take their pensions in a single lump sum, too many would choose to retire, creating operational problems for the company. The unsecured creditors committee agreed with the airline, indicating they would have opposed the airline’s reorganization plan if it retained the lump-sum option. Pilots still will be able to receive their pension benefits in monthly payments over their lifetimes under the labor terms approved by the judge. But even those pilots who retired before American’s bankruptcy will lose their ability to take their pensions in a lump sum. The judge rejected their argument that no operational risk would be created if they kept the option because their departures already had occurred. The judge also approved new collective bargaining terms that affect how ex-TWA pilots will be merged into the pilot union’s seniority list after the airline closes the former TWA pilot base in St. Louis. The new contract terms are a critical milestone in American’s quest to emerge from bankruptcy. When a business files… Continue reading
New York may be one of the best states for homeowners facing foreclosure because of legal protections against mortgage fraud. However, those protections are costly to lenders and may end up costing New York borrowers more money, too. The foreclosure process in New York is the longest in the nation, taking on average 1,089 days to complete. A backlog of foreclosures has stalled the state’s housing recovery and has kept housing prices low. Now, the Federal Housing Finance Authority is considering fee increases for New York borrowers to compensate Fannie Mae and Freddie Mac for costly foreclosure delays. The good news is that the state’s lengthy foreclosure process means New Yorkers in default of their mortgages have multiple opportunities to try to save their homes from foreclosure. These options include filing for Chapter 13 or other forms of bankruptcy, a mortgage loan modification or a short sale. Chapter 13 bankruptcy allows a homeowner to reorganize debts into a court-supervised repayment plan and make manageable payments over time. For individuals with a steady source of income, Chapter 13 can be an excellent option for eliminating some debt, reducing interest payments and making a fresh financial start. By sticking to the Chapter 13 repayment… Continue reading
Demonstrating that bankruptcy can provide a troubled business owner with a fresh financial start, fashion icon Betsey Johnson is planning a comeback less than a year after filing for business bankruptcy. The designer, who is known for her bright and flirty raiments, filed for Chapter 11bankruptcy in April 2012, listing millions in debt. That proceeding resulted in the closure of all 63 of her stores and dismissal of 350 employees. Johnson is back, however, with a new line of dresses just in time for spring. Despite the bankruptcy proceeding, which she blamed on competitors selling cheap knock-offs of her expensive party dresses, Johnson went ahead with her plans for a runway show at New York’s Fashion Week in September. She now plans to release a new line of clothing and accessories at significantly lower prices than before. The new line will be available at Nordstrom, Macy’s and other department stores beginning in February. Johnson also plans a reality television series co-starring her daughter Lulu, also a fashion designer, and a summer release of a new fragrance, Betseyfied. Filing for Chapter 11 business bankruptcy allows a company to stay in business by developing a plan for debt reorganization. This plan may… Continue reading
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