Auto Masters files Large Bankruptcy Case in Middle District

Bankruptcy filings are down in the Middle District of Tennessee Bankruptcy Courts. In the busy years, this district could expect anywhere from 13,000 to 15,000 cases to be filed annually under Chapter 7, 11, and 13. So far for 2017, only 7,000 cases have been filed. It’s a slow time for Bankruptcy, both because the economy in middle Tennessee continues to hum along strong–and because most people who were going to file Bankruptcy did over the last 4-5 years.

Our case filings got a big boost last night, as local car dealer and financier, Auto Masters, LLC,  filed for Chapter 11 Bankruptcy, along with 7 of their related entities.  This includes: Auto Masters of Franklin, LLC; Auto Masters of Clarksville, LLC; Auto Masters of Hermitage, LLC; Auto Masters of Madison, LLC; Auto Masters of Nashville, LLC; Auto Masters of Smyrna, LLC; and Auto Masters of West Nashville, LLC.

This is one of the largest debtor cases filed this year, and it’s no surprise to see the debtor is represented by Griffin Dunham, of Dunham Hildebrand, PLLC, one of Nashville’s more sophisticated (and litigious) debtor/creditor attorneys.

These filings closely follow the filing of a receivership lawsuit filed on Wednesday, October 11, 2017, by Capital One, NA, alleging default and requesting court review of Auto Masters’ business operations.

Expect a flurry of activity on these cases, since this case involves so many financial lenders, creditors, and impacted customers. This will be a big one.

 

 

Big New Case in Nashville Bankruptcy Court

For Nashville Bankruptcy lawyers, most weeks look the same: Chapter 7 and Chapter 11 hearings are on Tuesday mornings, and Chapter 13 matters are heard on Wednesdays (this is new: Monday used to be Chapter 13 docket day).

Today, however, there was a flurry of activity over in Bankruptcy Court, with a “Who’s Who” of local bankruptcy lawyers in court. Typically, June dockets aren’t very busy, with summer vacation season in high gear.

Today was the hearing setting for “first day” Motions in the Amnon Shreibman Chapter 11 Bankruptcy Case (12-05272). There were about nine matters set for hearing, with most being the Debtor’s various Motions for Use of Cash Collateral. Where a secured lender either holds a claim secured by cash or the proceeds of other collateral, the Debtor has to ask for and obtain Bankruptcy Court authority to spend that cash (and must provide adequate protection to the secured lender for the use of the cash).

After seeing the commotion, I’ll say this: nothing gets the local Bankruptcy lawyers as excited as a debtor who says they have assets in the $50,000,000 to $100,000,000 range. This is going to be a big case.

All this reminds me of this weekend’s New York Times article, The Trouble With Bankruptcy Lawyers, which discussed proposed legislation to limit legal fees in big bankruptcy cases. Sometimes, those fees can exceed $1,000 an hour.

Your Next Landlord Could be A Hedgefund: Are Rental Properties Making a Comeback as a Good Investment?

I’ve said for years that the contractors and investors who got burned by the economic downturn will eventually hit rock bottom, dust themselves off, and end up making as much money on the backside of the recession as they lost on the front end. This is because the same market inefficiencies that were exploited in the past are being replaced by equally exploitable new ones.

The builders who once built speculative homes on inflated market appraisals are going to be the contractors who do the work for the investors who buy the properties from the banks at 40 cents on the dollar.

The Las Vegas Sun did a story last week on how hedge funds are buying Las Vegas real properties at bargain rates, making minimal investments/improvements, and renting the properties for an 8% to 12% annual return.  Then, once the economy rebounds, the investors could expect appreciation to add more value to the investment.

As far as investments go, being a landlord is fairly labor-intensive. And, if the past 4 years has shown us anything, it’s hardly a fool-proof move.

Potential landlords would be smart to read this excellent article in the Wall Street Journal, Do You Really Want to be Landlord? The article has both horror stories and advice, as well as a forecast that rents are likely to increase over the next few years.

I got out of the landlord business two years ago, when my tenant couldn’t unclog her drains and called me every other day.  The 30 minute drive, coupled with time spent waiting on plumbers, gave me all the time to reconsider the pros and cons.

 

Santa Fe Holding Company Bankruptcy Case in Middle District of Tennessee Starts the Preference Recovery Process

Yesterday in the Middle District of Tennessee Bankruptcy Court, the Trust (DBMC Restaurants f/k/a DBMC Investments, LLC) created in the Santa Fe Holding Company, Inc. bankruptcy began the process of filing adversary proceedings to recover preferences. So far, about 30 cases have been filed.

This is a process that generally happens after a Chapter 11 Plan is confirmed, in which the post-confirmation entity takes action on the various lawsuits it held as of the bankruptcy filing.

Here, the pleadings, styled “Complaint to Avoid and Recover Avoidable Transfers,” make claims under 11 U.S.C. 547, which is a provision of the Bankruptcy Code that, under certain circumstances, allows a trustee to recover payments made to creditors within 90 days of the bankruptcy filing.

The basic theory is that, the debtor is presumed to be insolvent during those 90 days, and any payments made during that period were selective disbursements (a.k.a. preferential payments) to certain preferred creditors. By these actions, the trustee recovers these preference payments, puts the money into a big pot, and then distributes it evenly to all creditors.

Sounds pretty fair in theory, right? Well, in practice, these actions drive creditors crazy. “Not only did this company bankrupt on the debt, now, two years later, they’re suing me to take back some of the last money they paid me?” My response? “Yes.”

There are a number of defenses to these actions (see 11 USC 547(c)), and I’ll touch on those in a later post. Right now, I’m going to go look at the dockets to see who all is getting sued. So far, this includes: Continue reading

50 Cent and Young Buck are scheduled for a Big Fight next week in Nashville Bankruptcy Court

Young Buck has filed a Chapter 11 Bankruptcy Case in the Middle District of Tennessee, and the battle is heating up between Young Buck (David Brown) and 50 Cent’s G-Unit Records about what to do with the remainder of Young Buck’s recording contract with G-Unit.

Plus, Young Buck owes $170,983.00 to 50 Cent on a personal loan. Yikes.

The Wall Street Journal Bankruptcy Blog has a good summary of the issues set for hearing on July 19, 2011.

Here is a copy of the Objection to the Young Buck Chapter 11 Plan filed by G-Unit. An interesting excerpt:

…there is a significant question as to whether the Debtor can manage his business affairs throughout the course of the Plan to sustain any level of success going forward to fund the Plan. At the recent 2004 examination of the Debtor, he had trouble identifying where he had been on tour, who had booked his travel, how he had even gotten from one place to another…

Just another day in the Nashville Bankruptcy Courts.

Sommet Group LLC Proof of Claim Deadline Set for May 18, 2011

When I write about creditors in bankruptcy, one of the mantras I repeat over and over again is:  don’t forget to file your Proof of Claim.

In many instances, the only way a creditor gets a distribution of money recovered by the Trustee is if the creditor has filed a claim. In fact, as a creditor, you’re hoping that other creditors miss the bar date/deadline for filing claims, because, if they don’t file a claim, they don’t get any money. Which, in turn, means the creditors with filed claims get a tiny bit larger share of the money.

All that having been said, the Chapter 7 Trustee in the Sommet Group LLC Bankruptcy filed a Trustee’s Notice of Assets & Request for Notice to Creditors to File Claims. The deadline to file the Claims has been set for May 18, 2011.

The Trustee is chasing this company hard, but, even so, he’ll probably only collect a fraction of the monies owed to creditors. The only way to guarantee that you don’t receive any money is to forget to file a Claim.

Sabre Defence Industries LLC files Chapter 11 Bankruptcy in Tennessee

You never want to be a creditor of a company that “manufactures high-quality XR15 rifles in the US and Europe.” But, many creditors find themselves in that position, as Sabre Defence Industries LLC has filed for Chapter 11 Bankruptcy in the Middle District of Tennessee.

This filing follows a variety of recent articles about criminal charges against the principals of Sabre Defence.

This case was apparently timed to stay a sale of the Sabre Defence assets by a creditor, Cadence Bank, that had been scheduled for February 14, 2011. So far, however, the bankruptcy contains only a skeletal filing–the company has filed a Petition, but not the required Bankruptcy Schedules and Statements.

Creditors of Sabre Defence need to be on the look-out for the various filings that are sure to follow, as I predict this case will go through a number of twists and turns long before the Meeting of Creditors. I’d bet on a 11 USC 363 Sale of the assets.

I realize that I missed an opportunity to make a joke about the “bullets flying” or a “shoot out.”

Update: Here’s the Nashville Business Journal’s story.