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Curious what happens to a client whose law firm is on the brink of collapse? Just ask paper maker NewPage Corp., which saw a hearing on a key issue in its Chapter 11 case pushed back because of the “extraordinary difficulties” its lawyers at Dewey & LeBoeuf have faced in recent weeks.

The head of Dewey’s bankruptcy team, prominent attorney Martin Bienenstock, is representing NewPage in its bankruptcy case. The hot issue in recent weeks has been whether NewPage’s unsecured creditors can file a lawsuit to challenge a 2007 deal that they say loaded up the company with debt. If the unsecured creditors win the right to file suit and are successful, they could free up more cash for themselves when it comes time for NewPage to exit Chapter 11 protection.

The creditors filed their motion to sue on May 4, which happened to be the same day Dewey notified its workers of their impending layoffs and the firm’s potential closure. As a resu

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Tags: Chapter, Chapter 11

The real estate market is seeing some promising signs of recovery – for instance, sales of existing homes are up slightly – yet prices are still falling.

As banks release formerly-held foreclosures onto the market, home values are only expected to drop further.

But while many homeowners are panicking at the prospect of being underwater on their mortgages, the loss of home equity probably isn’t their real problem.

Our Chicago bankruptcy lawyers often point out that borrowing against home equity, not the decline of home values, is what has landed so many Americans in hot water.

In the past, a home was a safe shelter, a place to raise children, and a source of pride. No one expected to make money off their primary residence; they were content to just live in it.

Somewhere along the way, we stopped looking at houses as homes and began treating them as investments.

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Tags: Home, Home Equity

One of the primary reasons that people are filing for bankruptcy these days is to let go of and truly walk away from real estate that is significantly underwater or in foreclosure. Bankruptcy is in nearly all cases a vastly more cost-effective and time-efficient means of walking away from a home than is a short sale in which homeowners must negotiate with and often pay off lenders to get their agreement on the sale (not to mention the tax liability that short sales can leave them with!), and it is certainly more effective than simply letting a house go to foreclosure, which, particularly here in Michigan, can result in potentially huge deficiency debts to the mortgage-holding bank.

However, the surrender of a home in bankruptcy, which requires no negotiation with creditors or banks, incurs no tax liability, and leaves you free from worry over collections for deficiencies owed, unlike short sales, does not instantly immunize a homeowner from all costs associated with the property.

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Tags: Bankruptcy, Home Bankruptcy

This week on The Broke and the Beautiful, the Los Angeles Dodgers have scored a new owner in basketball superstar Magic Johnson. Also, Dolby is making noise about acquiring naming rights to the former Kodak Theatre.

It was sheer magic—Magic Johnson, that is—that brought forward the beginning of the end of the Los Angeles Dodgers bankruptcy saga this week. According to The Wall Street Journal, the basketball superstar led a group to produce a $2.15 billion bid for the team, a price tag that easily strikes out the record of the $1.1 billion Steve Ross paid for the NFL’s Miami Dolphins three years ago. The Los Angeles Times notes that Johnson, known by his first name of Earvin in the business world, is popular and widely recognized and has one of the most successful careers of any former professional athlete. “He i

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Tags: Magic, Magic Edition

More Illinois students are being forced to take out expensive loans to pay for college, and it’s putting a financial strain on their families.

A rapid increase in applications for financial aid has caused the state to run out of funds early, according to the Chicago Tribune. While 140,000 applicants are expected to receive aid, an equal number of eligible students will be turned down.

The problem isn’t exclusive to Illinois. In fact, some are calling student loans the next big debt bubble.

In a recent survey, more than 80 percent of bankruptcy lawyers say they’ve seen an increase in clients looking for help with school loans. Our Chicago bankruptcy attorneys certainly have.

Unfortunately, bankruptcy can rarely eliminate student debts because of a 2005 bankruptcy law reform.

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Tags: Financial Aid, Student