This will be a short Christmas post. We just couldn’t resist the urge to follow-up on our Thanksgiving filing figures by looking-up Christmas filings.
Like Thanksgiving Day, Christmas Day is a popular day for bankruptcy filings, just not as popular as Thanksgiving. There were over 2 times more Thanksgiving filings than Christmas filings over the last 10 years. Neither day is a big day for Chapter 11s, with only 3 Thanksgiving filings and 3 Christmas filings over the 10 year period. Here’s another chart:
Christmas Day Bankruptcy Filings (2005-2014)
|Year||Ch. 7||Ch. 11||Ch. 13||APs||Total|
Even if Chapter 11 cases aren’t popular filings on Christmas Day, Chapter 11s can still wreak havoc on the holiday season. Take, for example, “Nabi” children’s tablet maker Fuhu. After being named “America’s fastest-growing company by Inc. Magazine in 2013 and 2014,” Fuhu sought Chapter 11 bankruptcy protection in Delaware on December 7 (in part due to product delivery problems from last Christmas). To be sure, Fufu intersects with the major holiday players in the supply chain, including, according to the Wall Street Journal, Target, Best Buy, Costco Wholesale, Toys R’ Us, and Wal-Mart. In addition to Peg Brickley’s usual excellent reporting at the WSJ, the LA Times has a good story. So does Bloomberg.
And if you’re a fan of a good “First Day Affidavit,” then click here. Third-party manufacturing juggernaut Foxconn Technology Group (a/k/a Hon Hai Precision Industry Co., Ltd.) of iPhone fame plays the part of Scrooge rather believably (“creditors bad, debtors good!”). And it’s fitting that Mattel, Inc. (Santa?) is tentatively coming to the rescue with a $9.5 million offer to buy Fuhu’s assets.
(Fuhu CEO Jim Mitchell and Fuhu President Robb Fujioka in 2014 during happier times at Fuhu)
(Image by Michael Lewis from this Inc. Magazine article )
Finally, we found it interesting to compare the optimistic, “everything can run smoothly with Court approval” tone of Fuhu’s first day “Customer Programs” motion to this story from St. Louis, a more holiday take on what’s going on at Fuhu. Although the latter is anecdotal, the comparison provides a reminder that Bankruptcy Court authorization is necessary but provides no guarantee that bankrupt operations will run smoothly in Chapter 11, especially those operations that are deeply-logistical.
But let’s get real: The most likely question around your holiday dinner table isn’t going to be “Is Fuhu going to be able to honor its customer programs and warranty obligations in Chapter 11?” Rather, it’s going to be “How in the heck can that awful Teresa Giudice lady go bankrupt, spend almost a year in federal prison for bankruptcy, tax, wire, and mail fraud, still owe the State of New Jersey over $200K in criminal restitution, still owe the IRS over $500K in back taxes, and then get a brand new $95K 2016 Lexus LX570 for Christmas–just one day after she got home from prison?!”
(Yes, we’re getting our news and pictures from DailyMail)
One answer is “Ma! If I’ve told you once, I’ve told you a thousand times: I don’t do consumer bankruptcy. I do business bankruptcy.” If that doesn’t settle it, then, while pretending that you wouldn’t be caught dead watching Reality TV, let everyone know that you heard from somebody who does watch it that Ms. Giudice waived her Chapter 7 discharge a little over 4 Christmas’s ago. Therefore, it’s outside of your expertise. And if that doesn’t do it, then just turn the tables and let everyone know that they’re the reason that Giudice will likely land on her feet. After all, crime pays–with memoir and book deals, “Real Housewives of New Jersey” (“RHONJ” for the fans) spin-offs, and the like. Or maybe Bravo bought the car? These are the times we live in.
Ultimately, we can’t help but think of Jimmy “The Gent” Conway from Goodfellas in this situation–the most unlikely pre-bankruptcy planner. Admittedly, we can relate to his frustration with our own debtor clients. And so, now, “Your Moment of Mob” (but click here, instead, if you’re offended by De Niro’s very colorful use of the English language or simply prefer a curse-free Christmas Day):
(This video is NSFW due to some language)
(Phil Spector might be a lunatic murderer, but Christmas songs never sounded better than when he gave them his “Wall of Sound” treatment!)
Merry Christmas from Plan Proponent! Stay Tuned for Monday’s post. Tom will remind all of us about some deadly small business debtor confirmation deadlines.