The South Bay Law Firm Law Blog highlights developing trends in bankruptcy law and practice. Our aim is to provide general commentary on this evolving practice specialty.

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      Insolvency News and Analysis - Week Ending July 25, 2014
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    Posts Tagged ‘Los Angeles’

    Southern California – America’s Small Business Bankruptcy Leader

    Monday, August 2nd, 2010

    In a globalized business environment, it should be no surprise that some of the more interesting – and better – economic reporting on the US economy now comes from offshore.

    Last month, China’s Xinhua news agency reported that California leads the nation in small-business bankruptcies.  The report – based on data reported by Equifax – covers small business filings under all applicable chapters of the Bankruptcy Code (i.e., Chapters 7, 11, and 13).  The Xinhua report (it broke the story a day before the Orange County Register) is here.

    Equifax’s reporting shows that California remains the most impacted state, with the Los Angeles and Riverside/San Bernardino MSA’s leading the nation in small business bankruptcy flings by a significant margin.  

    The chart below provides a closer look at this trend.

                                                        # of
                     MSA         # of Bankruptcies Bankruptcies  % of Increase
                                        Q1 2009        Q1 2010
        Los Angeles-Long
         Beach-Glendale, CA                899          1035          15.13%
         CA                                663           736          11.01%
         CA                                462           522          12.99%
        Houston-Sugar Land-
         Baytown, TX                       365           399           9.32%
        San Diego-Carlsbad-
         San Marcos, CA                    345           387          12.17%
         Beaverton, OR-WA                  276           386          39.86%
        Denver-Aurora, CO                  304           382          25.66%
        Santa Ana-Anaheim-
         Irvine, CA                        359           370           3.06%
        California -Rest of
         State                             233           335          43.78%
         Scottsdale, AZ                    234           327          39.74%
         Irving, TX                        348           323          -7.18%
         Joliet, IL                        395           314         -20.51%
         GA                                336           304          -9.52%
        Oregon -Rest of
         State                             235           299          27.23%
        ---------------                    ---           ---          -----
        New York-White
         Plains-Wayne, NY-
         NJ                                335           272         -18.80%
        ------------------                 ---           ---         ------

    Inc. Magazine picked up the story last week, commenting that “no area has been insulated from the recession and the economy clearly isn’t rebounding quickly enough.”

    No kidding.

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    Rock & Republic . . . and Venue

    Monday, April 12th, 2010

    Many readers of this blog will be well aware that “venue shopping” – usually to a known, “debtor-friendly” jurisdiction such as Delaware or the Southern District of New York – is a common feature of Chapter 11 practice.  For those who may not be, the primary idea is that the debtor’s management, looking to increase the likelihood of a successful reorganization, often identifies a “debtor-friendly” jurisdiction and seeks to fit within the venue provisions for commencing a reorganization case there.

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    But though the federal venue provisions (at least as interpreted by these courts) generally make it easy to obtain access to file a Chapter 11 case, not every such case filed in New York or Delaware stays there without a fight from one or more creditors who disagree with the debtor’s choice of forum.

    Last week, another example of creditors disagreeing with the debtor’s choice of forum - in the strongest possible terms – presented itself in the recently-filed Chapter 11 bankruptcies of Rock & Republic Enterprises, Inc.  and Triple R, Inc.

    The purveyors of high-end jeans sought Chapter 11 protection on April 1 in Manhattan.  Though the bulk of their management and facilities – and their creditors – are located in the Los Angeles metropolitan area, the companies opted for an East Coast venue, each citing a single office – and a showroom – as the basis for their request to reorganize in New York’s Southern District.

    The companies’ primary secured creditor, RKF, LLC, wasn’t pleased.  It immediately filed an “Emergency Motion to Transfer Venue” to the Central District of California, alleging:

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     - The companies’ status as California corporations;

    - The companies’ management offices, books and records, and address for service of process are in the Los Angeles area;

    - All but 2 of 10 of the companies’ leased premises are in the Los Angeles area;

    - 16 of the companies’ top 25 creditors are based in Los Angeles (only 2 are in New York); and

    - 9 of 14 litigation matters involving the companies are being heard in California.

    On Friday, RKF was joined by Zabin Industries, Inc.  Zabin is one of the companies’ self-described “larger unsecured creditors” and is also based in Southern California.

    No word yet on a date for the hearing on RKF’s “Emergency Motion” – as of this writing, presiding Judge Arthur Gonzales hadn’t set one.  Meanwhile, the Judge has set an accelerated hearing date on the companies’ request to reject an exclusive distribution agreement with Richard I Koral, Inc. (dba “Jessica’s”), the companies’ present off-price distributor.

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