Post-petition filing of NJ construction lien violates automatic stay

The Third Circuit Court of Appeals recently upheld that the filing of a mechanic’s lien following a bankruptcy violates the automatic stay. The opinion by the court was filed on March 30.

In United States bankruptcy law, an automatic stay is an automatic injunction that halts actions by creditors, with certain exceptions, to collect debts from a debtor who has declared bankruptcy. Under section 362 of the United States Bankruptcy Code, the stay begins at the moment the bankruptcy petition is filed.

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“Under New Jersey law, any contractor, subcontractor, or supplier who provides work, services, material, or equipment pursuant to a contract is entitled to a lien for the value of the work or services performed or materials or equipment furnished, in accordance with the contract, based upon the contract price,” an article on the Lexology website reads.

The Bankruptcy Code does provide an exception to the stay though, stating that the filing of a petition in bankruptcy does not stay any act to perfect, or to maintain or continue the perfection of, an interest in property to the extent that the trustees or debtor-in-possession’s rights and powers are subject to such perfection under section.

Section 546(b)(1) in turn provides that the rights of a trustee or debtor-in-possession to avoid a lien are subject to any generally applicable law that (A) permits perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of perfection; or (B) provides for the maintenance or continuation of perfection of an interest in property to be effective against an entity that acquires rights in such property before the date on which action is taken to effect such maintenance or continuation.

Under New Jersey law, the filing of a mechanic’s lien, or any other lien, that under State law does not attach to a debtor’s property is not barred by the automatic stay.

The Court emphasized that its ruling relates to lien creation or perfection and not to enforcement or maintenance.

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Dance Mom star facing prison time for bankruptcy fraud

Abby Lee Miller, who is a former “Dance Moms” reality TV star was in court on Monday as defense attorneys tried to chip away about $775,000 of Miller’s income that prosecutors say she hid from a bankruptcy judge.

Miller reportedly made a bankruptcy fraud plea last year and the amount that settled on in court will determine the 51-year-old’s sentence, according to an article in U.S. News.

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“Assistant U.S. Attorney Gregory Melucci wants Miller to spend 2 1/2 years in prison, while her attorneys are hoping she’ll receive probation,” the article reads. “The hearing was scheduled to resume Tuesday.”

Miller’s attorneys argued that some of her sales from merchandise were split 55-45 with a partner and other income she received, including payments from special appearances, didn’t deduct some of her expenses for the trips.

Melucci pointed out that none of that matters because when someone files for bankruptcy, they are required to truthfully disclose all income so the court is able to ensure all creditors receive maximum value in a repayment plan that is set by the court.

“Melucci contends Miller repeatedly hid her true income and contracts for future income from her TV shows until her channel-surfing bankruptcy judge saw her on TV and concluded she must be making far more than the $8,899 in monthly income she initially declared,” the article reads.

Eventually, Miller confessed that about $288,000 of income she received that she failed to report. On top of that, federal investigators uncovered she had also hidden about $550,000 from personal appearances, selling merchandise, and from teaching dance sessions.

Miller filed for bankruptcy after defaulting on a $245,000 condominium mortgage in Florida and also a $96,000 mortgage on her dance studio that’s located in Penn Hills, a Pittsburgh suburb.

“Miller wanted the bankruptcy court to let her repay only $150,000 of the condominium mortgage at a lower interest rate and sought to repay her other debts in full but without interest or at lower rates,” the article reads. “The outraged bankruptcy judge ordered Miller to repay every penny.”

Miller’s defense argued that she didn’t disclose the TV income because her career was just taking off and she couldn’t guarantee her future earnings.

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Italian airline workers nix deal to avoid bankruptcy

Employees at an Italian airline recently rejected a government-brokered package aimed at saving the airline from bankruptcy.

According to an article in the New Jersey Herald, Alitalia employees rejected the package late Monday afternoon. The deal reportedly included job and wage cuts.

Because employees voted no, now union leaders are calling on banks and other investors to come up with an alternative strategy to keep the airline from closing its doors.

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“What will happen, I don’t know,” UILTrasporti union leader Claudio Tarlazzi told RAI News24 state TV.

“The country needs Alitalia, and 12,500 people don’t deserve to go home” jobless, Tarlazzi said, referring to the airline’s employees. He urged banks and shareholders to “show good sense” and called for renewed negotiations with unions for a revised industrial plan.

The board was expected to meet later this week to discuss the airline’s next steps, which could potentially be filing for bankruptcy.

The airline has been losing nearly $2.2 million a day.

“Some 12,500 Alitalia workers began voting last week on whether to accept the package offering less drastic wage cuts and fewer layoffs than first proposed,” the article reads. “Parent company Etihad Airways wants to cut costs in hopes of securing 2 billion euros ($2.1 billion) in investment to keep the airline afloat.”

The plan would have left about 980 permanent workers without a job and cut flight crews’ paychecks an average of 8 percent. Union leaders had reportedly urged workers to accept the proposal, despite that fact that employees were angry about the situation.

“The current crisis follows about 20 years of attempts to successfully re-launch the company, including privatization efforts and searches for industrial partners,” the article reads.

The airline has reportedly suffered due to competition from low-cost airlines. There are also high-speed trains that run between Rome and Milan, which are draining passengers from a major Alitalia route.

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Cranberry’s Westinghouse Electric Co. files bankruptcy, hundreds could be affected

Hundreds of people will potentially be affected after the recent decision by Westinghouse Electric Co. to file for bankruptcy.

According to an article by Cranberry Patch, Westinghouse is Cranberry’s largest employer and the greatest impact could be felt in the township where the company is headquartered.

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About 2,200 of the company’s 4,500 western Pennsylvania workers are stationed at its Cranberry Woods complex, according to Patch.

“According to township statistics, more than 300 Westinghouse workers live in Cranberry, while about another 300 live in other Butler County municipalities,” the article reads. “Westinghouse’s parent company, the Japan-based Toshiba, announced on Wednesday that the major player in global nuclear projects filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in New York.”

Toshiba told the media last week the company had suffered nearly $10 billion in losses. The losses are related to nuclear reactor construction initiatives.

Township manager Jerry Andree told the media that the decision by Westinghouse Electric Company to file for bankruptcy is not unexpected and that the company has a long-standing history to managing challenges within its industry.

Patch said Andree is downplaying the announcement with his statement. Andree also said the company is resilient and has many talented employees who serve a global demand.

“There is every reason to believe they will overcome this current challenge and continue to be a leader in their field,” Andree is quoted as saying in the article. “Ironically, when Westinghouse announced it was moving its headquarters from Monroeville to Cranberry in 2007, the company cited the rapid expansion of the global nuclear industry as the primary reason. The Cranberry Woods campus was formally dedicated in 2011.”

Westinghouse is just one of many companies in the U.S. and Pennsylvania that have recently filed for bankruptcy to try and salvage financial issues within the last few years.

Unilif Corp., a Pennsylvania-based medical device company recently announced it filed for bankruptcy, listing company assets of about $83 million and debts totaling $201 million.

Payless ShoeSource is filing for Chapter 11 bankruptcy protection and closing nearly 400 stores. WetSeal,Aeropostale, Pacific Sun, and Quicksilver have all recently filed for bankruptcy, and a new report says Rue21 may be the next to fall.

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