Payless Shoe Source announces bankruptcy

Payless Shoe Source, a widespread discount shoe store chain, announced on Tuesday that it’s seeking bankruptcy court protection.

According to an article on the NewJersey.com website, the company, which is based in Topeka, recently filed a Chapter 11 petition for bankruptcy in St. Louis.

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Payless Shoe Source is joining the ranks of other retailers such as J.C. Penny, Macy’s, Radio Shack, Gamestop, and HH Gregg that have suffered in a changing retail market and have been forced to shut down store locations across the country.

“The Topeka-based company filed a Chapter 11 petition in bankruptcy court in St. Louis, stating it had just $1 billion in assets and $10 billion in liabilities. The company said it plans to shed debt and boost online sales in a bid to stay competitive,” the article reads.

The company released a statement on Tuesday explaining that it plans to implement a strategic plan moving forward to enhance the company’s growth and profitability.

“As part of its restructuring, the company also said it would close 400 of its stores in the U.S. … The company operates 4,400 stores across the world, including several in New Jersey.

Other media reports say at least nine Payless Shoe Source stores will close in the New York City metro area. More than 70 stores are spread out across New York State and New Jersey.

“This is a difficult, but necessary, decision driven by the continued challenges of the retail environment, which will only intensify,” Payless CEO Paul W. Jones said in a prepared statement. “We will build a stronger Payless for our customers, vendors and suppliers, associates, business partners and other stakeholders through this process.”

New Jersey Store closings include:

• 146 Smith Street in Perth Amboy
• 306 Route 9 North in Woodbridge

 

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Federal judge: No fraudulent transfer in Foxwoods casino project

A federal judge in Pennsylvania Tuesday agreed with a bankruptcy judge’s ruling to nix a bid by the developer of a Foxwoods casino project in Philadelphia that failed. The bankrupt developer was seeking to recoup $50 million from a casino licensing fee it paid to the state.

U.S. District Judge Joseph Leeson Jr. agreed that U.S. Bankruptcy Judge Magdeline D. Coleman had come to the correct conclusion that the Pennsylvania Gaming Control Board’s action did not qualify as a fraudulent transfer, according to an article posted on the Law360 website.

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“In its appeal of Judge Coleman’s April 2016 ruling, Philadelphia Entertainment & Development Partners LP, which had its casino license revoked by the state in 2010, said the judge misconstrued its fraudulent transfer claims as a challenge to the revocation of the license itself.”

Leeson on Tuesday cited the transcript from the bankruptcy court hearing that it was a fraudulent transfer because it was revoked, and nothing was received in return. He goes on to explain that the bankruptcy court did not misunderstand the claims.

“PEDP in 2006 landed one of two casino licenses earmarked for the city of Philadelphia, for a proposed Foxwoods casino along the Delaware River. But the license was revoked in 2010, after the Gaming Control Board found that it had halted construction and failed to maintain financial suitability,” the article reads.

It was after the company lost an appeal of the decision that it filed for bankruptcy and launched an adversary proceeding against the state in May 2014.

The claims dealing with the revocation of the license cannot go before a federal court due to the Rooker-Feldman doctrine, which bars federal courts from reviewing state court rulings. Tuesday’s affirmation confirmed this.

“We have reviewed and were disappointed re: the opinion; we think it is wrong in its application of the Rooker-Feldman doctrine,” Fred Jacoby of Cozen O’Connor, who represents PEDP, said in an email. “We have recommended to our clients that they pursue appellate review in the Third Circuit Court of Appeals.”

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Toshiba: Westinghouse filed for Chapter 11

Last week Japan’s Toshiba Corp. made an announcement that its U.S. nuclear unit, Westinghouse Electric Co., has filed for bankruptcy protection. Various media reports say the filing was an attempt at restructuring Toshiba’s finances and hopefully getting out of the red ink.

“Toshiba said in a statement that it filed the Chapter 11 petition in the U.S. Bankruptcy Court of New York. The move had been largely expected,” an article in the New Jersey Herald reads.

Toshiba acquired Westinghouse in 2006. The company is expecting a loss of about $4.3 billion (in American dollars) from April to December of 2016, and $6.2 billion from Westinghouse. The numbers could reach a whopping $9 billion loss for the company’s fiscal year.

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Costs of the business have ballooned due to growing safety concerns and regulations, along with a dislike of nuclear power in some countries, like Germany.

“Toshiba has been eager to get Westinghouse off its books to improve its plight, and it said it would do just that from this fiscal year. It has said earlier it wants to sell Westinghouse. Toshiba said Westinghouse had racked up debt of $9.8 billion,” the newspaper reports.

Toshiba President Satoshi Tsunakawa told media the move was aimed at “shutting out risks from the overseas nuclear business.”

Toshiba plans to monitor the rehabilitation proceedings and disclose information as quickly as possible. Its chairman has taken responsibility for the company’s financial troubles.

“The company has said it will no longer take on new reactor construction projects and will focus on maintaining the reactors it already has,” the article reads. “But it is also involved in the decommissioning of the Fukushima Dai-ichi nuclear plant, which suffered multiple meltdowns after the March 2011 tsunami.”

Toshiba has reportedly sold off so many parts of its operations, it has little left but its infrastructure business.

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Tentative settlement reached in fire department bankruptcy case

The Conneaut Lake Volunteer Fire Department and Mercer County State Bank, the fire department’s main creditor, have reached a tentative settlement agreement in an effort to resolve the fire department’s Chapter 11 bankruptcy case.

The fire department and Mercer County State Bank reached the agreement during an all-day mediation session last Wednesday, according to an article published by Firehouse.

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A report on the settlement was filed with U.S. Bankruptcy Court in Erie by Norman Gilkey, the court-appointed mediator.

“As a result of the session, details of the settlement agreement are being drafted and will be reviewed before being submitted to the court for approval, according Gilkey’s report, which was filed with the court Friday,” the article reads.

In January of last year, Conneaut Lake Volunteer Fire Department filed for voluntary Chapter 11 bankruptcy protection. The department did so in an attempt to reorganize its debts, which include more than $1.6 million to Mercer County State Bank, and also to remain in operation.

The bank filed a mortgage foreclosure action in Crawford County Court of Common Pleas in December 2015.

“U.S. Bankruptcy Court Judge Thomas Agresti of Erie approved a consent order on Jan. 19 allowing the fire department and Mercer County State Bank to try federal mediation after both sides has asked the court to do so,” the article reads.

The Chapter 11 bankruptcy filing halted any foreclosure action by the bank and other creditors. Bankruptcy rules prohibit legal actions by, for, or against a corporation unless approved by a federal bankruptcy judge.

“The bankruptcy filing has not affected Conneaut Lake Volunteer Fire Department’s ability to provide fire protection. The department’s primary service area is the borough of Conneaut Lake and the southern and eastern portions of neighboring Sadsbury Township,” the article reads. “The fire department operates a social club equipped with a restaurant and liquor license adjacent to its fire station.”

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