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.

A Primer on Wisconsin Bankruptcy Exemptions

How can I protect my property if I file for Chapter 7 bankruptcy?

Even though the number of bankruptcy filings in the state of Wisconsin has fallen to pre-recession levels, many individuals still may be faced with insurmountable debt burdens, in which case filing for bankruptcy may be the only option.

Eligibility for Bankruptcy

An individual whose income is less than the median for a household of a similar size is generally eligible for Chapter 7. If the debtor’s income is above the median, Chapter 7 may still be available provided that a means test of expenses and payments shows that the individual’s income is insufficient to meet those needs. Prior to filing for bankruptcy, it is necessary for an individual to receive credit counseling, within 6 months before filing, from an agency approved by the U.S. Trustee in the state.  It is also necessary to take a debtor education course after filing before a discharge will be granted.

Wisconsin Bankruptcy Exemptions

While filing Chapter 7 bankruptcy is a difficult endeavor, it does not necessarily mean that a debtor will be forced to sell all of his or her property. In fact, certain property is protected, or exempt, from being sold to pay off debts. In Wisconsin, a debtor who is filing a bankruptcy petition has the ability to choose between Federal and  state exemptions.

Some of the exemptions available in Wisconsin include:

  • Residential Property – up to $75,000  in a residential dwelling, $150,000 for married couples filing jointly
  • Motor Vehicles ­- up to $4,000 in motor vehicles
  • Wages – 75% of net weekly income
  • Personal Property – up to $12,000 in the total value of household goods and furnishings, clothing, jewelry, appliances, books, firearms, sporting goods and other tangible personal property

Other exemptions include savings accounts up to $1,000, personal injury (up to $50,000) and wrongful death settlements, insurance benefits (including Federal disability benefits, fire and accident insurance proceeds, un-matured life insurance policies and annuities, and life insurance payments). In addition, pensions are exempt for certain municipal employees, firefighters and police officers, military personnel, and other public employees.

Moreover, public benefits such as social security, unemployment compensation and Veteran’s war pension benefits are also exempt. Finally, Wisconsin bankruptcy also exempts certain other property. Understanding these exemptions and navigating a bankruptcy petition, however, require the skills of an experienced bankruptcy attorney.

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.

 

Bankruptcies Plague American Oil Patch

What is the reason for spike in bankruptcies in the oil sector?

Drivers in Wisconsin have been noticing it’s getting cheaper to fill up their tanks lately as gas prices are at the lowest level in more than a dozen years. In fact, the price of gasoline has been averaging $1.59 per gallon according to petro-analysts. This is due to two factors: the cost of a barrel of crude oil has been hovering at $30, and there is a glut of winter-blend fuels in the market. While the price of gasoline may start to rise as the warmer months require higher ethanol blends of fuels, consumers have been seeing more money in the pockets because of the low gas prices. That’s the good news. The bad news is that the oil industry has been forced to scale back and is seeing a wave of bankruptcies.

Bankruptcy Filings in the American Oil Patch

In 2015, about 67 U.S. oil and natural gas companies filed for bankruptcy protection — a spike of 379 percent from the prior year when oil prices were substantially higher. The boom in U.S. oil production over the last several years was triggered by the advances in “fracking,” but the abundant supply of oil has come back to haunt the oil patch.

Oil prices have continued to tumble this year, leading to another five energy gas producers filing for bankruptcy, and many observers believe more are on the horizon. While cheap gas is a boon for drivers, the flip side to cheap energy prices is the failure of dozens of drilling and servicing companies. This demise is also costing thousands of jobs — and unemployment is a key reason for personal bankruptcy filings. As was recently reported, bankruptcy filings in Wisconsin and across the nation fell in 2015. Nonetheless, the problems plaguing the oil industry may bring about an uptick.

Reasons for Oil Industry Bankruptcies

The shale boom along with high production levels form the OPEC cartel caused a glut of crude oil on the international markets. The price of a barrel of oil in mid-2014 was over $100; now the price is falling below the $30 floor. There has also been a steep drop in natural gas prices. With the shale boom and promises of high profits, many producers acquired massive debt in order to fund expensive drilling. Now that oil prices have tanked, revenues for these companies have fallen, cash flows have withered, and the oil producers have not been able to pay their debts. While some companies have been able to ride out the storm by cutting spending and slashing jobs, higher leveraged entities have been forced into bankruptcy.

Why this matters

The capital structures of oil producers are complex, and disposing of assets can be a slow process. Many analysts believe the first wave of bankruptcies is only a precursor as more companies will be unable to pay their debts, some of which are publicly traded oil and natural gas producers. The question remains as to whether there will be a ripple of bankruptcies for other businesses and individuals who depend on the energy sector. In the meantime if you have questions about bankruptcy or other debt-related issues, you should consult with an attorney who has expertise in bankruptcy law.

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.