ROCKPORT DEVELOPMENT BANKRUPTCY: REAL ESTATE LIQUIDATION

Rockport Development filed for bankruptcy in May, 2020 under Chapter 11 in Santa Ana.  The company develops, builds and/or “flips” high end single-family and multi-family residential homes in Southern California.

The company is owned by Kevin Zhang.  Allegations of impropriety surfaced against Mr. Zhang in connection with several of his real estate projects, which led to the Chapter 11 filing.  Continue reading “ROCKPORT DEVELOPMENT BANKRUPTCY: REAL ESTATE LIQUIDATION”

NEUMEDICINES INC. BANKRUPTCY: CANCER DRUG PATENT

Neumedicines Inc. bankruptcy was filed under Chapter 11 in Los Angeles in July, 2020.  Neumedicines is an R&D company that develops cancer treatment drugs.   Its primary patent is on Interleukin-12 (IL-12) (“Hemamax”), which is designed to boost a patient’s immune system responses during cancer treatments.

Neumedicines asserts in its bankruptcy filings that the Hemamax patent is worth $20 million. Continue reading “NEUMEDICINES INC. BANKRUPTCY: CANCER DRUG PATENT”

PROFESSIONAL INVESTORS BANKRUPTCY: REAL ESTATE FMV

Professional Investors bankruptcy was filed under Chapter 11 on July 26, 2020 in San Francisco.  The joint debtors (Professional Investors Security Fund Inc. and Professional Financial Investors Inc.) own 29 real estate projects in Marin County.

The properties include both commercial and residential.  These projects were financed largely by individual investors who live in Marin County. Continue reading “PROFESSIONAL INVESTORS BANKRUPTCY: REAL ESTATE FMV”

CALIFORNIA SENATE BILL 939 FAILS IN COMMITTEE

The year 2020 has been rough for business, so far.  But there is a silver lining: this is the perfect environment in which to restructure and rightsize your business.  With brand businesses everywhere filing for Chapter 11 and otherwise restructuring commercial leases and other obligations, 2020 offers the perfect cover for small businesses to do the same.

California Senate Bill 939

For California businesses, commercial lease relief looked as if it was on the way.  California Senate Bill 939, if passed, would have required a moratorium on commercial evictions as well as rent restructuring.  The entire proposed bill can be read here.   [UPDATE]: this bill subsequently died in committee and will not become law in the state of California. Continue reading “CALIFORNIA SENATE BILL 939 FAILS IN COMMITTEE”

FMV PART 4: FAIR MARKET VALUE IN BANKRUPTCY

The primary thesis of this blog series is that assessing fair market value in bankruptcy must now account for general economic conditions, due to Federal Reserve distortions of fair market value through unlimited monetary expansion and the unavoidable influence of global derivatives trading markets.

In Part 1 and Part 2 we addressed the mechanisms of value distortion due to Fed policy and the derivatives trading markets. Yet even with these distortions of fair market value, the standard valuation models used in bankruptcy courts and other civil courts should continue to work reasonably well, provided valuation experts and courts adapt the valuation models to more fully account for general economic conditions. Continue reading “FMV PART 4: FAIR MARKET VALUE IN BANKRUPTCY”

FMV PART 3: BANKRUPTCY ASSET VALUATION METHODS

The concept of fair market value is central to bankruptcy asset valuations. As such, bankruptcy asset valuation methods affect every part of the reorganization or liquidation process.

REVIEW OF VALUATION BASICS

As per the authoritative bankruptcy valuation paper, “Valuation Methodologies: a Judge’s View by US Bankruptcy Judge Christopher S. Sontchi (Chief Judge, D.Delaware), a company and/or its assets can be valued in one of four ways (as paraphrased in this section, below):
1. Estimation of current asset values, typically using liquidation value or replacement value;
2. Discount of expected cash flows (DCF);
3. Relative value analysis of comparable companies / assets; and
4. Contingent event assessment. Continue reading “FMV PART 3: BANKRUPTCY ASSET VALUATION METHODS”

FMV PART 1: DISTORTIONS OF FAIR MARKET VALUE

Our legal system depends on accurate assessments of fair market value in virtually every business-related matter that comes before a court. Distortions of fair market value, from whatever source, are problematic. Valuation issues materially affect everything from real estate values to stock and commodity values to more esoteric valuations involving crop prices for farmers.

Fair Market Value

As every business student learns, FMV is the price at which a willing seller and a willing buyer will close a transaction. Until about 2008, the centuries-old assumptions of fair market value more or less held throughout our economic system. After 2008, the validity of “fair market” value began to erode in certain securities markets supported by the various Congressional bailouts and Federal Reserve liquidity injections. After all, if the Federal Reserve is fully committed to supporting securities markets at any cost, that means the the Fed can, and does, unilaterally set the market price of assets it is willing to purchase. Invariably, this causes distortions of fair market value. Continue reading “FMV PART 1: DISTORTIONS OF FAIR MARKET VALUE”

WALL STREET ON PARADE: “THE TIDE IS GOING OUT…”

Wall Street on Parade is the best available blog site that follows the daily activities of the Wall Street banks and the Federal Reserve.  Authored by Pam and Russ Martens, the Wall Street on Parade blog routinely tracks the relationship between the worst derivative speculators and their counter-party insurers. The title of this article (March 29, 2020) succinctly describes the most recent economic and financial disaster caused by derivatives speculation: The Tide Is Going Out and JPMorgan, Deutsche Bank and AIG Appear to Be Swimming (Read Trading) Naked.

While last week’s bailouts, by both Treasury and the Fed, have helped stem the “tide” (no pun intended), the share prices for JPMorgan, Deutche Bank, AIG and Ameriprise Financial are falling significantly faster and farther than other financial and corporate share prices. This derivatives disaster is highly material to holders of annuities and life policies from any of these insurers, forecasting a near certainty that policy and contract claims will go unpaid–or at the very least–only partially paid. Continue reading “WALL STREET ON PARADE: “THE TIDE IS GOING OUT…””