Tag Archives: Chapter 11

Strauss Discount Auto closes stores due to bankruptcy


| ChristopherBrito@queenscourier.com

THE COURIER/Photo by Christopher Brito

More than 40 Strauss Discount Auto stores scattered throughout the region — including six in Queens — have gone bankrupt, leaving more than 600 employees without a job and customers shocked by the sudden shuttering.

Strauss Auto, a New Jersey-based retailer primarily known for selling car accessories and parts, encountered insurmountable financial difficulties for the third time in six years, leading to a Chapter 11 petition, according to the New Jersey Bankruptcy Court.

The company, formally known as SDA Inc., filed for bankruptcy on June 4, court records show, and is said to be paced for re-organization. The chain’s 44 stores throughout New York, New Jersey and Pennsylvania are in the process of being shut down, according to Bill Belinowicz, director of real estate of Strauss Discount Auto.

“We practically found out overnight,” said John, an employee at a Bayside Strauss store, who did not give his last name. “All our managers were fired. Now, we have to move everything out of the store.”

Movers and workers were present at the 204-11 Northern Boulevard store on June 18, dismantling what was left of the location.

The retail chain, founded by Herman Schlenger and Harry Roth in New Jersey as R & S Home and Auto Stores, has supplied customers with car-related products since 1919.

“I can’t believe it. This place is gone. It was just here a couple days ago,” said Timothy, a customer from Flushing.

Trustee named, Peninsula expects to exit bankruptcy


| mchan@queenscourier.com

OLYMPUS DIGITAL CAMERA

The court-ordered bankruptcy trustee appointed to take over all operations at Peninsula Hospital has been named, federal officials said.

Lori Lapin Jones — a Long Island bankruptcy law attorney — was chosen by the U.S. Trustee’s office, an agency under the U.S. Department of Justice, to head the embattled Far Rockaway facility.

“The trustee who was selected was a very good choice. She’s an extraordinarily competent bankruptcy attorney who has tremendous experience serving as a trustee,” said Howard Fensterman, Peninsula’s former attorney, who represented the hospital before the court-mandated change. “I look forward to her getting the hospital back open and leading the hospital out of bankruptcy.”

Fensterman said hospital officials had consented to the court-ordered change, and he said he still expects Peninsula to exit bankruptcy in less than 60 days.

Jones currently serves as a Chapter 7 trustee on the panel of Trustees for the Eastern District of New York and as a court-appointed mediator in the Southern and Eastern Districts of New York.

She started her own Great Neck-based law firm — Lori Lapin Jones PLLC — in 2005, representing a wide variety of parties in out-of-court restructurings and in large and small Chapter 11 and Chapter 7 cases in courts around the country.

In 2009, she received the Long Island Business News’ award for being one of the top 50 most influential women in business.

These credentials, Fensterman said, will help her push the hospital toward recovery.

Two weeks ago, roughly 240 employees at Peninsula were temporarily laid off, officials said. The sudden terminations were instituted short-term, they said, in order to conserve cash while the hospital is “on diversion.”

Peninsula was also forced to halt its emergency care services for a period of 30 days after failed state health inspections found the hospital’s lab to be “a danger and threat” to patients on February 23.

A second state mandate also ordered the hospital to stop admitting new patients, cancel all surgeries and procedures and suspend any activities that depend upon laboratory services while a plan to transfer inpatients to other facilities was developed.

Peninsula Hospital declined to comment in regards to the hospital’s new overseer.

HEALTH CRISIS


| editorial@queenscourier.com

Just when we thought Peninsula Hospital had gotten the life-saving CPR it needed, it seems the facility is once again flatlining.

Late last month, the hospital was barred from accepting new patients after the State Department of Health (DOH) shut down the lab. Reportedly, there was expired blood plasma and staffers handling samples were not wearing gloves.

Now, 230 employees — nurses, emergency room personnel and support staff — have been let go as a result.

And, as if that weren’t bad enough, the judge overseeing Peninsula’s Chapter 11 proceedings is ordering a trustee be appointed to handle all operations at the facility.

What is going on?

It seems that no one did their homework when it came to Revival Home Health Care, which took over the cash-strapped Peninsula from MediSys last year.

Already $60 million in debt at the time, Peninsula was seemingly “saved” by Steve Zakheim, whose wife owns Revival, but who was reportedly required by the DOH to sign an affidavit that he would steer clear of Revival’s operations.

Did anyone know this before Revival took over Peninsula? Or was the ink dry before the vetting process was complete?

And there are also concerns over a conflict of interest, since Todd Miller, former Chief Operating Officer for Revival, is now serving as Peninsula’s chief executive.

A very shrewd Zakheim reportedly included a provision that allows him to withdraw his offer if a trustee is appointed — meaning Peninsula may be forced to close after all.

We had hoped that the hospital would enter a new “chapter,” but it seems that its “revival” might be ill-fated.

 

American continues to fly, despite Chapter 11


| mchan@queenscourier.com

American Airlines — and its parent company AMR Corporation — have filed for reorganization under Chapter 11 bankruptcy protection, but the company said it is still operating normal flight schedules, as well as honoring tickets and refunds.

“This was a difficult decision, but it is the necessary and right path for us to take – and take now – to become a more efficient, financially stronger and competitive airline,” said AMR President Thomas Horton, who is also the company’s newly-appointed chairperson and CEO. “We have met our challenges head on, taking all possible action to secure our long-term position.”

AMR filed voluntary petitions for Chapter 11 in the United States Bankruptcy Court for the Southern District of New York on November 29.

The Chapter 11 process enables the company to continue conducting normal business operations while they restructure their debt, costs and other obligations. According to the U.S. Courts, Chapter 11 debtors usually seek debt relief by proposing a plan of reorganization to keep its business alive and pay creditors over time.

According to a statement released by the company, AMR has $4.1 billion in unrestricted cash and short-term investments to ensure uninterrupted supply of goods and services during the proceedings. The money allotted will go toward fully maintaining AAdvantage frequent flyer and other customer service programs, ensuring all AAdvantage miles and elites status earned by members remain secure and intact, providing employee wages, healthcare coverage, vacation and other benefits without interruption and paying suppliers for goods and services received during the reorganization process.

AMR will be filing monthly operating reports with the Bankruptcy Court and also plans to post monthly operating reports on the Investor Relations section of their website, AA.com.

“Our very substantial cost disadvantage compared to our larger competitors, all of which restructured their costs and debt through Chapter 11, has become increasingly untenable given the accelerating impact of global economic uncertainty and resulting revenue instability, volatile and rising fuel prices and intensifying competitive challenges,” Horton said.

Competitors Delta, United, Continental and US Airways have all previously filed for Chapter 11 reorganizations.

“But as we have made clear with increasing urgency in recent weeks, we must address our cost structure, including labor costs, to enable us to capitalize on [our] foundational strengths and secure our future,” said Horton.

For more information, visit AA.com/restructuring.