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Toys 'R' Us Files Bankruptcy: Retailers 'R' in Crisis

Even with the Christmas season coming, it must have been a 'Come-to-Jesus' meeting for Toys 'R' Us and its lawyers.

Kirkland and Ellis, a top ranked restructuring firm, was hired to look at options for the struggling retailer. Refinancing was on the Christmas list, but the attorneys had some bad news.

Bankruptcy was the only way out of billions of dollars in debt. The crisis was actually a long-time coming -- at least since the advent of internet companies like Amazon.

American Apparel filed for Chapter 11 bankruptcy protection this morning. The once-hip retailer popularized metallic spandex leggings and made-in-LA t-shirts in the early 2000s but has struggled with waning sales and tumbling stock prices. The company warned investors in August that it might not have the funds needed to meet its debt obligations.

Chapter 11 protection should allow American Apparel to keep open its Los Angeles manufacturing centers and 130 retail stores while it undergoes a debt-for-equity conversion. The company's current troubles are just one more reminder of how unfavorable market forces, poor planning, and questionable (to put it mildly) leadership can tank a promising company.

Lump-Sum Benefits May Be Removed in Bankruptcy

Dealing with the possibility of lump-sum pension benefits while going through bankruptcy is a strain on any company.

That's a substantial concern for American Airlines as it tries to find a way to emerge from bankruptcy. The company asked a federal court last month for permission to amend its pension policy and prohibit retirees from taking a lump-sum option, according to Workforce Management.

That filing came shortly after the IRS issued a new ruling on worker benefits after bankruptcy. Looks like the IRS recognized the problem pension plans can create for a company trying to re-establish itself in the market.

Bank lenders can't be put first by companies headed towards Chapter 11 bankruptcy. The 11th Circuit Court of Appeals ruling has set an important new precedent bound to send ripples through the lending industry.

The decision came following a long legal battle between homebuilding company TOUSA, its hedge fund debt holders, and Citigroup. The case had been heard by a bankruptcy judge and a district court. There was $421 million hanging in the balance. In the end, the appeals court ruled the Citigroup loans incurred by TOUSA to fight off bankruptcy were avoidable as fraudulent transfers.

It was a complicated fight, to say the least, but what does it mean for companies facing Chapter 11 and creditors?

Will Mad Cow Disease in California Lead to Bankruptcies?

As reports continue to stream in regarding the California dairy cow infected with mad cow disease, American consumers are second-guessing their meat choices. The news has even caused two major South Korean stores to pull U.S. beef from their shelves. Could bankruptcy announcements follow?

While the USDA investigates the circumstances surrounding the tainted cow, the only thing certain is that the beef industry will likely suffer from the press.

But how much damage could the negative coverage do to beef producers and could it be enough to force bankruptcies?

Meat processing giant AFA Foods has filed for bankruptcy-court protection due to controversy stemming from "pink slime," a ground beef filler. The company says the pink slime bankruptcy was brought on by slumping sales.

Pink slime is ammonia-treated boneless lean beef trimmings that is often added to ground beef. It has been approved for use for years by the USDA, the Los Angeles Times reports.

However, any in-house counsel worth their salt knows that even if something is deemed okay by the government, that alone isn't reason enough to do nothing.

Kodak Files Chapter 11, Claims Tech Companies Owes Royalties

Iconic photography company Eastman Kodak has filed for Chapter 11 bankruptcy protection.

Kodak has been in business for 131 years. The company pioneered innovations in print film. It was widely considered the "Google" of its day. Kodak film accounted for 90% of the market in 1976. Kodak cameras accounted for 85% of the camera market.

Up through the 1990s the company was heralded as one of the top 5 most valuable brands, according to The Economist. Ironically, its downfall can partially be attributed to its own innovation: the digital camera, invented by Kodak in 1975.

$600M Missing at MF Global as Jon Corzine Resigns

MF Global is bankrupt. And for whatever reason, the trading firm is missing more than $600 million. The Securities and Exchange Commission is now said to be probing into the situation, and is looking into whether or not Jon Corzine misled investors.

Corzine headed the now-defunct brokerage firm. He is the former governor of New Jersey and ex-CEO of Goldman Sachs. The firm filed for bankruptcy on Monday.

The bankruptcy is recent news, but the firm faced increasing scrutiny from regulators the past few months.

Borders Bankruptcy: Meet the Lawyers Handling the Case

The year didn't start out on a high note for Borders executives and shareholders. At the beginning of January, the bookseller was in discussions with publishers about deferring payments, as well as talking to lenders about refinancing its debt. Not only that, Borders began bleeding executives--vice presidents, the chief information officer, and even the general counsel. It was thus expected when the company filed for bankruptcy last week in a Manhattan court.

Borders blames the economic downturn and online competition for its predicament, and plans to close 200 of its 642 stores in the next few weeks. It's hoping that it can run the remaining locations more efficiently and competitively.

Before Filing for Bankruptcy, Pay Your In House $100K

Word to the wise: before filing for bankruptcy, pay your In House Counsel $100,000 for a job well done. Although financial services company Ambac cited a whopping $1.7 billion in debt in their recently-filed Chapter 11 bankruptcy, the company managed to settle up with their In House Counsel Kevin Doyle shortly before filing the petition.

Kevin Doyle was paid $100,000 in "recognition of his efforts to maximize the company's cash position, thereby assisting the company in its efforts to emerge successfully from Chapter 11 bankruptcy proceedings." Generous? Yes.

The right thing to do? Questionable.