Production Company of American Idol Has Filed for Chapter 11

Why does a company with 2 hit reality shows have to file for bankruptcy?

Core Media Group, the production company that owns several reality TV shows, including “American Idol” and “So You Think You Can Dance,” has filed for Chapter 11 bankruptcy protection. The company, which is based in New York, apparently is carrying $398 million in debt. According to The Hollywood Reporter, its creditors include “American Idol” creator Simon Fuller.

Core Media was formed in 2014 as a joint venture between 21st Century Fox and Apollo Global Management, a private equity firm. The portion of the debt to Fuller is$3.4 million and his demand of payment played a key role in Core Media’s decision to file for bankruptcy.  Core’s other creditors include Marc Graboff, the former CEO of Core Media who is now the head of the Discovery Communications studio, and a group of investor loans that have now matured.

According to an email received by Fortune from a Core Media spokesperson, the company believes that Chapter 11 will help to restructure the company, allowing for more flexibility and growth in the future. A statement by the company states that:  “Core Media Group remains firmly committed to our mission as a global content and management company producing award-winning programming.”

Core Media’s filing for Chapter 11 move comes less than four weeks after the final episode of “American Idol” was aired. The program had a great track record, having been on the air for 15 seasons as part of a surge of reality TV programs. “American Idol’s” top rating was more than 37 million viewers (in 2007, its sixth season), but the show was cancelled when its ratings fell perilously low. In filing for Chapter 11, Core Media submitted a document stating that “Despite its long-running success . . . [Core Media] has recently experienced deterioration in its [the show’s] financial performance.” The document claimed that declining ratings for “American Idol” had created a correlated decline in revenue from Idol-related broadcast fees, international rebroadcast sales, touring fees and merchandise sales.

At times when a business can no longer meet its financial obligations, filing for business bankruptcy may be necessary.  Relieving the overwhelming strain that unpaid debt produces can help the firm to restructure and move forward. If your business needs to restructure its debt, and is considering filing for bankruptcy, you should consult with a law firm that specializes in bankruptcy to get the best possible advice and assistance.

Small Business Bankruptcy: To file or not to file

Under what conditions should a small business file for bankruptcy?

Small businesses are essential for economic growth in Wisconsin, but some business owners may find themselves with debts that are unmanageable. While no entrepreneur launches a venture with failure in mind, being unable to pay off creditors can jeopardize the business as well as the owner’s personal assets. If the situation becomes untenable, the only way out may be to file for bankruptcy.

Small Business Bankruptcy

Bankruptcy does not necessarily mean financial ruin, and a business has options that can enable it to continue operating while reorganizing its debts, depending on the circumstances. Filing for bankruptcy also protects the business from liquidation proceedings by creditors while giving it time to reduce and delay debt payments as it regains its footing.

There are three types of bankruptcy protection, Chapter 7, Chapter 11 and Chapter 13. Each form of bankruptcy grants the business a “temporary stay” which stops all collection activities and gives the business time to put a plan in place. A sole proprietor may file under any of these forms of bankruptcy while corporations and partnerships can only file under Chapter 7 and Chapter 11.

In a Chapter 7 bankruptcy, the business is closed and the assets are liquidated to pay off the debts. If the business is a sole proprietorship, the owner must file a personal bankruptcy for both personal and business assets. On the other hand, a Chapter 11 filing allows the business to come up with a creditor-approved plan to reorganize its debts while retaining its assets and continuing to operate. Finally, a Chapter 13 bankruptcy is utilized by an individual to personally pay off business and personal debt with proceeds from future income over a 3 to 5 year period.

Reasons to File a Small Business Bankruptcy

A business owner may need to file Chapter 7 bankruptcy if credit problems cannot be resolved. This might be the best route to take when the relief of the debt burden outweighs the downside of losing the business and the long-lasting damage to the owner’s credit history. On the other hand, a Chapter 11 bankruptcy is designed for a business that is still viable, but needs to reorganize its debts in order to return to profitability. Regardless of the circumstances facing your small business, an attorney with expertise in bankruptcy law can help you explore your options.

 

Republic Airways Files for Chapter 11 Bankruptcy

What are the reasons for Republic’s filing for bankruptcy and how will it help them regroup?

Republic Airways, based in Indianapolis, filed for bankruptcy this past week in an attempt to revitalize its operation. Republic operates a fleet of smaller planes, providing flights for larger airlines, including American Airlines, Delta Air Lines, and United Continental.

Reasons for Republic’s Financial Troubles

Republic blames its financial woes on a lack of pilots, explaining that this is the primary reason for its failure to succeed during a period when most major airlines are doing remarkably well. According to its report, even though it signed a three-year union contract with its pilots last year, the company still had to ground aircraft while renegotiating agreements with larger carriers and re-establishing the terms of leases for its aircraft.

The Pilot Problem

During negotiation of its labor contract, Republic states that it was losing about 40 pilots every month, but adding only 30. Dan Akins, an aviation consultant involved in the negotiations between Republic and the pilots’ union, the International Brotherhood of Teamsters, explains that while the new contract did stabilize the pilot base, the resulting higher pay for pilots meant Republic had to get increased compensation from Delta, American, and United. Akins view is that Republic turned to bankruptcy as a last resort to coerce the three major airlines to pay the higher fees it required, though he believes “they did not want to do it.”

All of this was complicated by the fact that the U.S. Federal Aviation Administration (FAA) increased required flight experience sixfold for first officers during this same period. Since first officer pilots now must have 1500 hours of flight experience, and the FAA set new limits on duty times, the process of hiring qualified pilots has become even more difficult.

The Need for Bankruptcy

Bankruptcy is never the first choice, but it can be a company’s salvation. Under bankruptcy protection, Republic can request that the judge cancel unprofitable contracts, and will also permit Republic to escape leases for planes that are too expensive or planes that it’s not actually flying. As Republic’s Chairman and CEO Bryan Bedford stated, ” It’s become clear that this process has reached an impasse and that any further delay would unnecessarily waste valuable resources of the enterprise.”

Recent History of Airline Bankruptcies in the U.S

Republic’s filing for bankruptcy is not unprecedented, though it is the first filing by a large airline since American went into Chapter 11 in 2011 and Feeder Pinnacle Airlines filed for court protection in 2012. Other major airlines, far from having financial difficulties, have reported major profits during recent years.

Bankruptcy Provides Hope, Not Certainty

Like so many businesses in similar straits, Republic hopes that by filing for bankruptcy it can ensure a bright future, though, as CEO Bedford recently notified his employees, he “can’t promise how it will all work out.”

If your business is in financial difficulty, for whatever reason, and you are considering bankruptcy proceedings, you should contact a reputable, experienced bankruptcy attorney to help you weigh your options.

Bankruptcy Numbers Down In Wisconsin

Why has there been a decrease in bankruptcy filings in the state?

Bankruptcy filings peaked both nationally and in the State of Wisconsin during and after the recent recession. Now, bankruptcy numbers are coming down and returning to a normal level.  But, why are the numbers coming down? Apparently, many of the factors that drove them up are no longer present.

During and after the recession, most bankruptcy filings were for Chapter 7, which allows the debtor, in most situations, to take advantage of a fresh start. The major causes of bankruptcy were, and still are, job loss, divorce and medical costs. During the recession, an exponentially increasing number of job losses drove the number of bankruptcies through the roof. Now that many people are working again, the number of bankruptcies filed because of unemployment is coming down. Although many people are not making as much money as they used to, they are seemingly making enough to keep them afloat and up to date with their bills.

Rock bottom real estate values are also less of a problem these days. While the numbers are still not where they were, the market is slowly rebounding, allowing owners to see an increase in their assets. This increase in wealth is allowing more and more people to steer clear of bankruptcy.

Another major cause of the recession, easily accessible credit, is less of an issue at this time. Before the recession, too many unqualified individuals were able to obtain credit in various forms. Now, tougher restrictions have made it much more difficult than it once was to obtain credit cards and mortgages. This has made it harder for people to get into financial trouble.

While it seems that the recent recession taught the country a lesson in several areas, we shouldn’t get ahead of ourselves. There is still plenty of work to be done. Some experts believe that even though we are at a more normal level of bankruptcy filings, that the numbers should go even lower. Things could also go the other way. Experts are keeping their eye on the student loan crisis. Many individuals are unable to pay back their student loans and are turning to bankruptcy for relief. This might cause an uptick in the number of filings in the near future.

If you are considering bankruptcy, you should speak to a qualified Wisconsin bankruptcy attorney today.

Verso Bankruptcy May Hurt Wisconsin Paper Mills

What is the latest news about the Verso bankruptcy?

As has been reported, the demand for coated paper has been declining for years and this has had a staggering effect on paper mills in the state of Wisconsin. In fact, Verso Corp., the firm that owns paper mills in the state, recently filed for bankruptcy.

Verso is a Tennessee-based corporation and there is growing concern that the bankruptcy may ultimately lead to job cuts for the 1200 employees of the company, including those who work at the Wisconsin Rapids and Steven Point mills. While company officials have said that reductions in force are not part of the reorganization plan, the company has acquired billions in debt, and, according to industry observers, the future for the coated paper industry looks grim.

This will invariably force paper companies to cut costs and even unwind some of their operations. Some papers mills will cease operation entirely, and some believe the mills in Wisconsin are among those that may shut down. By pursuing a Chapter 11 Bankruptcy, Verso may be able to mitigate or wipe out about $2.4 billion in debt.

What is a Chapter 11 Bankruptcy?

A Chapter 11 bankruptcy is designed to enable a business that has heavy debt burdens to reorganize. In short, a Chapter 11 filing allows a debtor to come up with a post-bankruptcy plan for returning to profitability. Included in the plan are measures like cutting costs by workforce reductions, winding down certain operations, and seeking new sources of revenue or income. Meanwhile, creditors need to agree to a new payment plan for the debt, and may ultimately suffer losses.

What is causing the demand for coated paper to decline?

Deteriorating demand for coated paper is due in part to the fact that this product is used primarily by magazines and catalogs. In the digital media age, subscription for these items has fallen dramatically, and many magazines and catalogs are transitioning to electronic formats. Moreover, foreign competition has also had an impact on the domestic coated paper industry, since suppliers in Asia and Europe produce the paper more cheaply.

Meanwhile, Verso has previously reported a net loss of $111 million for the third quarter of 2015 and said that it was considering selling the Stevens Point Mill. While Chapter 11 is typically relied upon by large corporations, this relief is also available to small businesses. If you are a small business owner and have questions about bankruptcy, you should consult with a qualified  bankruptcy attorney.