Business Plan – 18-98 Plus Wed, 08 Sep 2021 07:30:55 +0000 en-US hourly 1 Business Plan – 18-98 Plus 32 32 Personal Bankruptcy Statistics for 2020 Wed, 08 Sep 2021 07:29:27 +0000 Bankruptcy is a last resort for consumers in financial distress, giving them a chance to liquidate their debts and have a fresh start. That opportunity comes at a cost, both in what consumers pay to file bankruptcy and in the damage it does to their credit score — and getting access to credit with a […]]]>

Bankruptcy is a last resort for consumers in financial distress, giving them a chance to liquidate their debts and have a fresh start. That opportunity comes at a cost, both in what consumers pay to file bankruptcy and in the damage it does to their credit score — and getting access to credit with a bad credit score can be difficult for many years. How many people file bankruptcy every year? Are some demographics more likely to file bankruptcy? And what’s the most common cause? Find out here and head over to bankruptcy hq.

If you think the answer to that last one is medical debt, you’ll soon learn that’s something many news articles have gotten wrong.

In this analysis, we’ll be exploring the most important personal bankruptcy statistics dating back to the 1980s. (We’ll also provide some links below for those interested in credit counseling.)

Key findings

  • Personal bankruptcy filings peaked in 2005, were high during the Great Recession, and have been decreasing since 2010.
  • Chapter 7 personal bankruptcies are consistently the most common, although they’ve gone down since the passage of the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005.
  • The most common contributing factor to bankruptcy is a loss of income.
  • Alabama had the highest bankruptcy filing rate in 2019, and Southern states average higher bankruptcy filing rates than the rest of the country.
  • Debtors who have completed high school or some college account for over half of all bankruptcy filings.
  • Bankruptcy is more common among lower-income debtors, especially those who make $30,000 or less per year.
  • While there aren’t any races with particularly high bankruptcy rates, African Americans are more likely to file Chapter 13 bankruptcy and less likely to successfully discharge their debts through bankruptcy.

Total personal bankruptcy filings by year

In the 25 years from 1980 to 2005, personal bankruptcy filings rose significantly. Bankruptcies went up fast, though there were periods where filings dropped for a few years. We can’t attribute this to population growth, either. In 2004, the bankruptcy filing rate was 5.3 for every 1,000 people, over four times as high as it was in 1980.

What stands out most is that filings reached a record high of 2,039,214 in 2005, and then dropped to just 597,965 in 2006, the lowest rate since 1988. That’s because of the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), which added new provisions to the bankruptcy process. Most of these provisions took effect on Oct. 17, 2005.

Before the BAPCPA, consumers could file for Chapter 7 bankruptcy and liquidate all their debts regardless of their income. The BAPCPA stipulates that consumers can only file Chapter 7 bankruptcy if they make less than the median income in their state or they pass a means test demonstrating they wouldn’t be able to afford a payment plan for their debts. If neither of those is true, the consumer must file Chapter 13 bankruptcy, which involves a three- to five-year payment plan.

A massive number of consumers filed Chapter 7 bankruptcy in 2005 to get it done while the laws were more lenient. Since so many people filed in 2005, it led to a natural drop-off the following year.

Beyond that big drop, there’s good recent news regarding personal bankruptcies. The number of filings has gone down every year since the start of the decade, and there were less than half as many filings in 2018 as there were in 2010.

Yearly bankruptcy filings by chapter

There are several types of bankruptcies, and they’re referred to by the chapter of the U.S. bankruptcy code that they follow. Before we look at yearly bankruptcy filings by chapter, here’s a summary of how each chapter works:

  • Chapter 7: Also known as liquidation bankruptcy, this lets the debtor liquidate all nonexempt property and discharge their debts within three to six months.
  • Chapter 11: The debtor commits to a payment plan to repay a portion of their debts and discharge the rest. It’s more expensive and complicated than Chapter 13 bankruptcy, which also involves a payment plan. Debtors might select a Chapter 11 bankruptcy if their total debts exceed the limits for Chapter 13 bankruptcy.
  • Chapter 13: The debtor commits to a three- to five-year payment plan. Upon completion of the plan, their remaining debts are discharged.

Chapter 7 bankruptcy filings are the most common in every year in this range. That makes sense, considering the debtor can complete the entire process in a matter of months instead of years.

There was, predictably, a large drop in Chapter 7 filings from 2005 to 2006, in part because the Chapter 7 laws became stricter and most debtors who wanted to file this type of bankruptcy did so in 2005.

The percentage of Chapter 7 filings went back up over the next four years. One possible reason is that, during the financial crisis, people needed to file bankruptcy because of losses or reductions in income, meaning they could qualify for Chapter 7.

Chapter 12 bankruptcy

A less common type of bankruptcy is Chapter 12, which is available only to farmers and fishermen. Like Chapter 13, it involves a payment plan, but it has much higher debt limits.

Chapter 12 filings are the least common of the personal bankruptcy options, but numbers were higher than normal in 2010 and 2011. Here are the yearly numbers going back to 2006:

The most common causes of bankruptcy

The data above comes from a survey of consumers who filed bankruptcy between 2013 and 2016. Debtors were able to choose multiple factors that contributed to their bankruptcy.

By far the most common cause of bankruptcy was a loss of income, with over three-quarters of filers stating it was a contributing factor. Unfortunately, most simply aren’t prepared for this situation.

The usual recommendation on how much to save in an emergency fund is three to six months of living expenses. In our survey on Americans’ financial habits, we found that only 15% felt confident they could go without six paychecks or more before missing financial obligations.

Medical debt is often called the most common cause of bankruptcy, but that’s not quite the case. Medical expenses rank second, as they’re a factor in bankruptcy filings for 58.5% of consumers.

It should be noted that medical issues aren’t just a problem because they’re expensive. They can also result in a loss of income and even a job loss. That’s why having a plan for managing finances during a medical emergency is important, too.

Bankruptcy filings by state

Considering how much their populations vary, it doesn’t make sense to evaluate states by their number of bankruptcy filings.

In the table below, states are ranked by their number of bankruptcy filings per 1,000 residents to provide a more accurate picture of where debtors file bankruptcy the most. It also includes the numbers for Washington, D.C., and the United States as a whole.

Bankruptcy is a much bigger problem in the South — the four states with the highest bankruptcy rates are all Southern states. This could be in part because these states often have more seasonal work and fluctuating wages. Median incomes in several of these states are below the national average, too.

Interestingly, Chapter 13 filings are far more common in the South than they are in the rest of the country. Of the 25 federal judicial districts with the most Chapter 13 filings from 2006 to 2017, 23 were in the South. Chapter 13 bankruptcy originated in this region, which could partially explain this, but fee structures for bankruptcy attorneys in this part of the country are a more likely explanation.

In several Southern states, bankruptcy attorneys don’t charge anything upfront for Chapter 13 cases. Instead, they let debtors pay through their bankruptcy payment plan. With Chapter 7 cases, attorney fees (which can be $1,000 or more) are usually due immediately or shortly. This leads lower-income debtors in these states to predominantly choose Chapter 13 bankruptcy, even if they’d be better off filing through Chapter 7.

Unfortunately, this affects African Americans more than any other group, something we’ll explore further in a section below.

Alaska does the best in terms of personal bankruptcies, having both the lowest number overall and when adjusted for population. That’s somewhat surprising, considering that the state has the highest average credit card debt. However, it also ranks in the top 10 for median income.

Bankruptcy filings by county

Within each state, certain regions have a much higher number of bankruptcy filings than others. Here are the counties with the most 2019 bankruptcy filings in the five states with the highest bankruptcy rates.

  1. Alabama bankruptcies

2. Tennessee bankruptcies

4. Mississippi bankruptcies

Bankruptcy filings by age group

Bankruptcy filing rates are the highest in middle age, with over 50% of debtors being between 35 and 54 for each year in this study.

The average age at which debtors file bankruptcy has been steadily climbing. From 2006 to 2010, the 18-to-24, 25-to-34, and 35-to-44 age groups all saw their bankruptcy rates decrease. The 45-to-54, 55-to-64, and 65-and-older groups saw the opposite.

This trend isn’t limited to one study or time period, either. The authors of “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society” found that older age groups had been making up a larger percentage of the bankrupt population from 1991 to 2016. And from 2007 to 2016, the mean age for bankruptcy filers jumped from 44.4 to 48.5.

Rising debt among older consumers is one reason they’re filing bankruptcy at higher rates. From 2001 to 2013, the portion of households headed by someone 60 or older with debt went from 50.2% to 61.3%. In that same period, the median debt for households headed by someone 60 or older with debt went from $18,385 to $40,900.

Debt can be a problem at any age, but it’s more difficult for older consumers because they’re typically retired or near the end of their working years. Money can be tight, especially for those with insufficient retirement savings.

Bankruptcy filings by gender

Just like there’s a gender pay gap, there’s a gender discrepancy in bankruptcies. There’s a population difference, though, as well. In 2010, the population split between men and women was 49.2% to 50.8%.

Even after adjusting for population sizes, women filed bankruptcy more often than men in the most recent available data. This is likely in large part because of that gender pay gap.

Bankruptcy filings by marital status

There are two groups with higher bankruptcy rates than their population percentage: the married and the divorced.

Married debtors accounted for the majority of bankruptcy filings in each year studied. Married couples tend to have more expenses and more debt than those who are single, two factors that can make bankruptcy more likely.

Divorced debtors are also more susceptible to filing bankruptcy. With the cost of divorce attorneys and settlements, and possibly the challenge of going from two incomes to one, it makes sense that those who have gotten divorced have a higher bankruptcy risk.

Bankruptcy filings by education level

The biggest takeaway here is that, besides improving your earning potential, a college education also puts you at a lower risk of bankruptcy. Those with graduate or bachelor’s degrees declared bankruptcy at below-average rates. Associate’s degrees didn’t help nearly as much.

Those who completed some college without getting a degree had the highest bankruptcy rates compared to their population size. This group incurs at least a portion of the typical college costs — but without a degree, they don’t increase their earning potential.

From 2006 to 2010, bankruptcy rates rose among those with a college degree and fell for those with a high school or some college education.

Bankruptcy filings by income level

If you guessed that bankruptcy would be more common in lower income brackets, you’d be right. In each year of this study, over half of all bankruptcy filings were made by people earning $30,000 or less per year.

Bankruptcy rates went up from 2006 to 2010 among Americans making over $60,000 per year, and there’s no clear cause. One possibility is that the financial crisis drove more high earners to bankruptcy than other demographics.

Bankruptcy filings by race/ethnicity

As of 2010, bankruptcy rates for each ethnicity are similar to their population percentages. There were, however, some significant changes from 2006 to 2010.

The bankruptcy rate for African Americans decreased substantially during that period. On the other hand, filings among people of Latino/Hispanic and Asian descent increased, with the filing rate for the latter group more than doubling.

But these bankruptcy filing rates don’t tell the whole story, particularly for African Americans. The American Bankruptcy Institute’s (ABI) Final Report and Recommendations from 2017 to 2019 shows that over half of African Americans who file bankruptcy choose Chapter 13 bankruptcy. That’s a disproportionately higher rate than that of any other race.

One reason African Americans are far more likely to file Chapter 13 bankruptcy is the cost of an attorney. They’re more likely to file a “no money down” Chapter 13 bankruptcy.

The ABI also found that African Americans had disproportionately lower rates of successfully discharging debt through bankruptcy. This is in part because of their high Chapter 13 filing rate. Since that type of bankruptcy requires the completion of a payment plan, discharge rates are much lower than they are with Chapter 7 bankruptcy.

Bankruptcy trends present good news and bad news

Personal bankruptcy statistics are a mixed bag. We can see some positive signs as well as plenty of problematic information.

The number of bankruptcies has been falling since 2010, and fewer consumers filing bankruptcy is a good sign. But bankruptcy rates are much higher than the national average in several parts of the South, and several demographics are especially vulnerable, including older Americans and debtors in lower income brackets.

Work also needs to be done so that debtors of all races have equal access to Chapter 7 bankruptcy, no matter where they live. Chapter 13 bankruptcy is supposed to be for debtors who can pay back at least some of what they owe. Unfortunately, African American and Southern debtors file Chapter 13 bankruptcy at much higher rates because it’s cheaper upfront, even when they’d be better served by Chapter 7.

If you’re considering filing for bankruptcy, consider speaking with a credit counselor first. Credit counseling can help you figure out the best way forward, even if your debt feels completely overwhelming. The National Foundation for Credit Counseling (NFCC) is a great place to learn about the process and find a credit counseling agency near you.


  • American Bankruptcy Institute (2019). Annual Business and Non-business Filings by Year (1980-2018).
  • American Bankruptcy Institute (2019). Quarterly Non-Business Filings by Chapter (1994-Present).
  • American Bankruptcy Institute (2020). “December 2019: Nationwide Bankruptcy Filings by State and Jurisdiction [XLSX].”
  • Bertelsen, Kris (2019). St. Louis Federal Reserve. “Protecting Wage Earners: The Southern Roots of Bankruptcy Law.”
  • Department of Agricultural, Environmental, and Development Economics, The Ohio State University (2018). Farm Bankruptcies Are Stabilizing.
  • Himmelstein, et. al. (2019). American Journal of Public Health. “Medical Bankruptcy: Still Common Despite the Affordable Care Act.”
  • Kiel, Paul and Hannah Fresques (2017). ProPublica. “Data Analysis: Bankruptcy and Race in America: An in-depth discussion of racial patterns in bankruptcy filings and outcomes.”
  • Linfield, Leslie E. (2011). “2010 Annual Consumer Bankruptcy Demographics Report: A Five Year Perspective of the American Debtor.”
  • Thorne, Deborah, et. al. (2018). “Graying of U.S. Bankruptcy: Fallout from Life in a Risk Society.”
  • U.S. Census Bureau (2011). “Educational Attainment in the United States: 2010: Table 1. Educational Attainment of the Population 18 Years and Over, by Age, Sex, Race, and Hispanic Origin: 2010.”
  • U.S. Census Bureau (2011). “Overview of Race and Hispanic Origin: 2010.”
  • U.S. Census Bureau (2019). “2019 National and State Population Estimates: Table NA-EST2019-01: Table 1. Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2019.”
  • U.S. Courts (2018). “Just the Facts: Consumer Bankruptcy Filings, 2006-2017.”
  • U.S. Courts (2020). “Table F-5A — Bankruptcy Filings (December 31, 2019).”
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Renzo Rosso on Key US Market, Potential IPO Timeline and Mergers & Acquisitions – WWD Wed, 07 Jul 2021 04:02:01 +0000 MILAN – Renzo Rosso has come a long way since his first trip to New York City over four decades ago, but for the entrepreneur, the American dream remains as real today as it was then. “I feel so close to the United States and it continues to be a priority for me. It’s the […]]]>

MILAN – Renzo Rosso has come a long way since his first trip to New York City over four decades ago, but for the entrepreneur, the American dream remains as real today as it was then.

“I feel so close to the United States and it continues to be a priority for me. It’s the country where I invest the most, along with China, ”said the founder and president of the OTB group, citing“ James Dean, chewing gum, jukeboxes and Coca-Cola ”among the most popular idols. fascinating and most enduring America in his head.

“When I was 20 and first came to JFK [airport], I didn’t know a word of English, but I immediately felt at home, ”he said, smiling at the memory and marveling at the fact that Diesel’s debut show by Glenn Martens, digitally presented on June 21 for Spring 2022, was broadcast live in Times Square.

The love is mutual, as North America, which accounts for around 10% of the group’s sales, is expected to experience a growth rate almost double that expected for the rest of OTB around the world. In a three-year business plan, OTB is expected to achieve annual revenue growth of 15%, with North America expected to grow 27% year-over-year.

Investments totaling $ 250 million are planned over the next three years and “a large chunk” of that is destined for the United States, the entrepreneur said.

As part of this plan, the expansion of OTB’s retail distribution in the United States will be key.

The fashion group includes Diesel, Maison Margiela, Marni, Jil Sander, Viktor & Rolf and a stake in Amiri, as well as the production lines Staff International and Brave Kid.

Diesel RTW Spring 2022
Courtesy of Diesel

In addition to the relocation of a Diesel store to New York, five new units of the brand are expected to open in the United States in 2021. In Miami, Diesel will open 143 apartments under contract with Wynwood, which will be completed in a few years, as the work was stalled by last year’s pandemic.

By the end of 2021, there will be 16 directly operated Diesel stores, four Marni units and five Maison Margiela units in the United States.

“It’s a magical moment in the United States now, since the arrival of the president [Joe] Biden, stimulating economic development; there is so much energy and a desire to invest, ”said Rosso. “Sales in all of our stores in the United States are growing. “

Rosso was open to discussing Diesel USA’s Chapter 11 filing, although that is “a thing of the past,” he said, as the brand is now profitable. “I can say it with joy and I am very proud of this turnaround. I thank Stefano [his son and former Diesel USA chief executive officer] for the tremendous job it has done in reducing costs, implementing more selective and brand-compliant distribution by reducing the number of stores by 50% and improving brand visibility, ”said Rosso. “If we had been a public company, we couldn’t have done this. “

Over the years, Rosso has hinted that it is possible someday to publicly list the group and, when asked for a possible timeline, said that given the three-year business plan, this “doesn’t would not arrive for three years “.

He praised “an already strong, well structured and well managed group”, admitting that an IPO would also help bring “more transparency and soundness in the management of the company and in the change of generations”. Rosso has seven children and believes that while and when OTB is a public company, the family should have a controlling stake.

Last year, as reported, OTB saw an increase in online revenue and 20% growth at Maison Margiela – bright spots for the group, despite the effects of the COVID-19 pandemic.

In 2020, the group’s profit before interest, taxes and depreciation amounted to 176 million euros, down 7.3% compared to 190 million euros in 2019.

During the fiscal year ended December 31, OTB’s consolidated sales amounted to € 1.31 billion, a decrease of 14.3% compared to € 1.53 billion. euros in 2019, when the company was back in the dark.

Diesel, after a reorganization and repositioning of its retail and wholesale channels, continues to be a core business for OTB, accounting for over 50 percent of sales.

It is in the United States that Diesel will host an event in September to present a new line of sneakers, possibly in New York and Miami. Considering the growing importance of the category, Rosso brought in five new designers dedicated to sneakers and a technician specializing in research and development “from one of the largest sneaker companies in the world”, a- he declared, without naming him.

Rosso trumpeted Martens’ creativity, which, combined with Diesel’s techniques and know-how, is the recipe for success. The Belgian designer, who joined Diesel as creative director last October, is launching a major project called Diesel Library, a gender-neutral collection that will be presented in spring 2022 as part of the group’s “For Responsible Living” sustainable development initiatives. , dear to Rosso and her sons Andréa. The library will carry a wide range of evergreen and more durable denim items, from pants and jackets to tops and skirts to name a few, with 50 percent of the overall denim collection having a length of permanent conservation.

Rosso said the United States is also a very successful market for Maison Margiela, “best in class” and growing globally. There are five stores in the United States – one in Miami, one in Los Angeles, two in New York and one in San Francisco – and the goal is to open another unit in the United States by the end of the year. ‘year.

A Margiela store will open in Toronto at the end of the year or early 2022.

In the fall of 2019, the group renewed John Galliano’s employment pact for Maison Margiela. The designer was appointed creative director of the brand in 2014 and since then the income of the Parisian house has more than doubled.

Margiela House

The Maison Margiela store in London
Henri bourne

Also in Miami, Rosso plans to reopen the Pelican Hotel, which it first unveiled in 1994 and which was closed for renovations in 2020. The works will allow the hotel to expand by two bedrooms, reaching 30. “The location had become too commercial, but now [that] the mayor closed four blocks and changed the layout, it became the real heart of Miami and a pedestrian zone, ”explained Rosso. In a true Art Deco building, it has been faithfully restored to reflect this era. “I plan to open it before Christmas and I am currently looking for a partner to manage it.

Marni is also performing very well both in her Bal Harbor store – a move with a new concept earlier this year – and in her Madison Avenue unit.

The first store with the new Marni interior design concept opened in London, followed by Paris, Shanghai and Miami.

At the end of June, a pop-up called Marni Marine at the Sunset Beach Hotel in Shelter Island, NY, opened “with a specific and unique concept and dedicated products,” said Rosso.

He noted that, thanks to creative director Francesco Risso, “men’s clothing is booming”. He admitted that the creative change, when founder Consuelo Castiglioni came out in 2016, was a tough transition moment, “but now we’re getting offers to do branded capsules, Marni is super cool.” Namely, Rosso extended Risso’s contract with Marni in December 2020.

In the US next year, both Marni and Margiela will be available on the omnichannel platform supported by Moon, an in-house designed operating model that also promotes the customer experience. With a major investment, Moon was first deployed for Diesel in the United States, then in Europe.

Rosso, one of the few Italian entrepreneurs to have spoken openly about starting a fashion conglomerate, also spoke enthusiastically about his latest acquisition, Jil Sander, which he bought from Onward Holdings Co. Ltd. in March. “Day after day, I marvel at the beauty, cleanliness and sophistication of this product, and I have a great relationship with [creative directors] Luc and Lucie [Meier], enthused Rosso, who said early on that he did not want to change the creative direction of the brand. “I involve them more and more actively in the company, beyond creativity, I want their opinion.

The Meiers’ designs resulted in solid business, as Rosso revealed that the brand saw sales growth last year compared to 2019, despite the pandemic.

According to the latest available results, for the fiscal year ended February 28, 2019, Jil Sander’s revenues totaled 11.3 billion yen, or $ 104 million.

Rosso is hoping to open a temporary Jil Sander store in SoHo, New York with a new concept designed a year and a half ago. By the end of the year, it is preparing to open Jil Sander stores in New York and Shanghai.

“Based on our online sales, we see a strong demand for Jil Sander in the United States and we want to be there physically,” he said.

Rosso is also now considering the acquisition of specialist manufacturers, a strategy that allows a company to “become more solid and develop know-how,” he explained, while protecting the company’s unique supply chain. ‘Italy. He is interested in different fields: manufacturers of handbags and shoes, as well as companies specializing in washes and treatments.

His group was support artisans through the CASH program, which stands for Credito Agevolato [facilitated credit] Assistance to suppliers launched in 2013. Rosso is part of the Camera della Moda strategic committee and is a delegate of Confindustria, representing the Made in Italy supply chain in front of the institutions.

OTB also owns a minority stake in the American brand Amiri, which Rosso has defined as a “beautiful” label, citing long-lasting lines in front of the brand’s Rodeo Drive store and plans to open two new stores, in New York and Las Vegas. this summer.

As reported, Paulo Redeem, a Philadelphia-based fashion brand, won the inaugural edition of the Amiri Award, 2021, created by Mike Amiri, founder and creative director of his Los Angeles brand for men and women, as Annual fashion incubator created to inspire little-known American fashion talent by providing a support system outside of the current establishment.

“We work well with Mike [Amiri] and help develop the brand in Asia. He can count on the structure and our financial assistance. We are developing a business plan, but it doesn’t want to open too many doors, ”said Rosso, noting that Amiri’s sales will double in 2021 compared to 2020. Amiri, who created his company in 2014, is merging l ‘authentic rock’ n from LA. ‘roll and street culture. It has diversified into new categories through haute couture, accessories and shoes, and presents its main collections twice a year at Paris Fashion Week. In 2020, he opened his first retail store on Rodeo Drive in Los Angeles.

As for the wholesale trade, which represented more than a third of sales at group level last year, Rosso is working to convert the corners of its various brands into concessions with the main American department stores, Neiman Marcus and Bergdorf. Goodman at Saks Fifth Avenue and Nordstrom.

“We are becoming partners, as department stores are increasingly becoming destinations, working to have fewer but more beautiful locations,” he said.

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Shell would like to leave Aera Energy | New Wed, 07 Jul 2021 00:15:00 +0000 One of Aera Energy LLC’s two partners is seeking to pull out of the Bakersfield-based oil producer, according to a report last week that relies on comments from four anonymous sources. London-based news service Reuters said Royal Dutch Shell Plc. informed Exxon Mobil Corp. of his intention to leave their 24-year partnership. It would be […]]]>

One of Aera Energy LLC’s two partners is seeking to pull out of the Bakersfield-based oil producer, according to a report last week that relies on comments from four anonymous sources.

London-based news service Reuters said Royal Dutch Shell Plc. informed Exxon Mobil Corp. of his intention to leave their 24-year partnership. It would be the Anglo-Dutch oil major’s latest move to sell carbon-intensive assets as part of efforts to reduce emissions.

It was not clear on Tuesday what a withdrawal from Shell could mean for Aera and its 1,100 employees, most of whom are based in Kern. The company is responsible for about a quarter of the oil and gas produced in California.

None of the parties involved have confirmed or denied the Reuters report, which cited people familiar with the talks who spoke on condition of anonymity because the companies’ talks are private.

The Houston-based US subsidiary of Shell said it had no comment, while a spokeswoman for Exxon Mobil said the company was not commenting on “market rumors or speculation about our plans. ‘business”.

A spokeswoman for Aera said the company could comment later if decisions were made that could impact local stakeholders.

“Aera does not comment on the details of our business strategy or speculate on possible business development opportunities that may or may not occur in the future,” spokeswoman Cindy Pollard said via email. “While we make decisions that could impact the communities we live in or the stakeholders in Aera’s business, we remain committed to communicating internally and externally as soon as possible. “

Reuters noted that Shell sold its refinery in Washington earlier this year, as well as its stake in a refinery in Texas, and that it was considering selling its stakes in the Texas Permian Basin oil fields.

The press service also reported that a Dutch court had rejected the company’s efforts to reduce the carbon intensity of its products by at least 45% by 2035. Calling the decision insufficient, the court said instead ordered Shell to reduce its emissions by 45% from 2019 levels by 2030..

Aera’s founding CEO, retired oilman Gene Voiland, noted on Tuesday that Shell had long signaled its intention to pull out of the oil business in favor of electricity. But while stressing that he had no specific information about the proposed divestiture of Aera announced by the company, he said the Reuters report was still a surprise given the high quality of the company’s California assets. .

“Saying like, ‘I’m going to quit it all,’ it’s just surprising in a way,” Voiland said. “I know they are under a lot of pressure but it’s surprising someone would do that.… You are making a huge bet” by leaving, he added.

Bakersfield Oil Director Steve Layton, chairman of local oil producer E&B Natural Resources, speculated that Exxon Mobil could end up buying Shell’s stake, although that could also go to a more aggressive company and keen to expand Area operations.

“It’s a guessing game at this point,” he said.

Reuters report was picked up by industry news site Oil Octobers, who said Shell is the majority owner of Aera with a 52% stake in the joint venture.

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What you need to know about bankruptcy Fri, 12 Mar 2021 01:43:03 +0000 If your debts have become unmanageable or you are facing foreclosure on your home, you may be considering filing for bankruptcy. While bankruptcy may be the only way out for some people, it also has serious consequences that are worth considering before making a decision. For example, bankruptcy will stay on your credit report for […]]]>

If your debts have become unmanageable or you are facing foreclosure on your home, you may be considering filing for bankruptcy. While bankruptcy may be the only way out for some people, it also has serious consequences that are worth considering before making a decision. For example, bankruptcy will stay on your credit report for seven or 10 years, depending on the type of bankruptcy. This can make it difficult to get a credit card, car loan, or mortgage in the future. It could also mean higher insurance rates and even affect your ability to find a job or rent an apartment. This article explains how bankruptcy works and also offers alternatives to bankruptcy.

Key points to remember

  • Bankruptcy can cause serious damage to your credit score and should be viewed as a last resort.
  • As an alternative, you may be able to negotiate with your creditors and work out a payment plan or other satisfactory arrangement.
  • If you decide to file for bankruptcy, you have two basic options: Chapter 7 and Chapter 13.
  • A Chapter 7 bankruptcy will sell many of your assets to pay off your creditors. In a Chapter 13 bankruptcy, you keep the assets but have to pay off your debts over a specified period.

What to do before declaring bankruptcy

Bankruptcy is generally seen as a last resort for people who are heavily in debt and see no way to pay their bills. Before declaring bankruptcy, there are alternatives that are worth exploring. They are less costly than bankruptcy and are less likely to damage your credit report.

For example, find out if your creditors are ready to negotiate. Rather than wait for a bankruptcy settlement and risk getting nothing at all, some creditors will agree to accept reduced payments over a longer period.

For a mortgage, call your loan manager to find out what options are available to you. Some lenders offer forbearance (postponing payments for a period of time), repayment plans (such as smaller payments over a longer period), or loan modification programs (which could, for example, lower your rate. interest on the remainder of the loan).

Even the Internal Revenue Service is often willing to negotiate. If you owe taxes, you may be eligible for an offer in compromise, in which the IRS will agree to accept a lower amount. The IRS also offers payment plans, allowing eligible taxpayers to pay what they owe over time.

How to declare bankruptcy

If you’ve decided to file for bankruptcy, your first step should usually be to consult a lawyer. Although it is possible to file a case without it, “seeking the advice of a qualified lawyer is strongly recommended because bankruptcy has long-term financial and legal consequences,” notes the Administrative Office of the United States Courts on his website. (Bankruptcy is governed by federal law, and cases are handled by federal bankruptcy courts, although some rules differ from state to state.)

Before you file your case, you will need to attend a counseling session with a credit counseling agency approved by the Department of Justice’s U.S. Trustee Program. The advisor should assess your personal financial situation, describe alternatives to bankruptcy, and help you develop a budget plan. The advice is free if you cannot afford to pay; otherwise, it should cost around $ 50, according to the Federal Trade Commission.

If you still want to proceed, your lawyer can advise you on the most appropriate type of bankruptcy for your situation.

Types of personal bankruptcy

For individuals, as opposed to businesses, there are two common forms of bankruptcy: Chapter 7 and Chapter 13. Here is a brief description of how each type works:

Chapter 7. This type of bankruptcy essentially liquidates your assets in order to pay your creditors. Certain assets, usually including part of the equity in your home and automobile, personal items, clothing, tools needed for your job, pensions, social security and any other public benefit, are exempt, which means you can keep them.

But your remaining non-exempt assets will be sold by a trustee appointed by the bankruptcy court and the proceeds will then be distributed to your creditors. Non-exempt assets may include property (other than your primary residence), recreational vehicles, boats, a second car or truck, collectibles or other valuables, bank accounts and bank accounts. placement.

At the end of the process, most of your debts will be discharged and you will no longer have any obligation to repay them. However, some debts, such as student loans, child support, and taxes, cannot be paid. Chapter 7 is generally chosen by people with low income and few assets. Your eligibility is also means tested, as explained below.

Chapter 13. In this type of bankruptcy, you are allowed to keep your assets, but must agree to repay your debts over a set period of three to five years. The trustee collects your payments and distributes them to creditors. Chapter 13 bankruptcy is normally chosen by people who want to keep their non-exempt properties intact or to save time against foreclosures or foreclosures.

The means test for chapter 7

Whether it is for Chapter 7 or Chapter 13 is not your only decision. The courts also impose a means test to determine if you qualify for Chapter 7. The means test first compares your average income over the previous six months with the median income of a household of your size in your state; if you earn less than the median, you should qualify for Chapter 7.

Even if your income is above the median, you may be eligible after subtracting some eligible expenses. But if the math shows you have enough disposable income left to start paying off your debts, rather than just wiping the slate clean, the court may decide that Chapter 13 is your only option. To help you determine your eligibility, you will need to complete this form 122A-2.

Image by Julie Bang © Investopedia 2020

List your debts

When filing for bankruptcy, you will also be asked to provide the court with a list of all the money you owe. Your debts fall into two categories:

  • Guaranteed debts. These include loans where the creditor has a security interest in the property that was provided as security when you took out the loan. Mortgages and auto loans are the most common types of secured loans, with the collateral being your house or your car, respectively.
  • Unsecured debts: These debts are not secured by property or other guarantees. Examples include credit card debt, medical bills, and unsecured personal loans.

The bankruptcy court considers the secured debt to be a priority, because default on payment may allow the creditor to claim the collateral.

Once all of the essential information has been filed with the court, the court appoints a trustee, whose job is to ensure that your secured debt is repaid over a period of time. At this point, the court issues an automatic stay that prevents creditors from seizing assets through forfeiture or foreclosure.

Eliminate your debts

When the bankruptcy court issues a discharge, you are relieved of your obligation to repay the listed debts. This means that the creditors no longer have a legal claim against the debts, so they cannot pursue any collection activity, take legal action or even communicate with you in any way.

The court will send your creditors a notice that the debts have been paid. A copy will also be sent to your lawyer and to the US Trustee Program at the Department of Justice. Any creditor who attempts to collect a debt after receiving a discharge notice may be fined.

For a Chapter 7 bankruptcy, the discharge is usually issued between four and six months after filing the bankruptcy petition. The discharge under Chapter 13 bankruptcy is issued after the payment plan is completed, usually three to five years after filing for bankruptcy.

Once your debts have been discharged by the court, these creditors can no longer attempt to collect them or take further legal action against you.

Rebuilding Your Credit After Bankruptcy

As mentioned above, bankruptcy will stay on your credit report for seven years (in the case of Chapter 13) or 10 years (in the case of Chapter 7).This can make it difficult to obtain additional credit, such as a bank loan or a regular credit card. However, the effect of bankruptcy on your credit score will diminish over time, and your score will gradually improve if you show that you are using credit responsibly.

One tool for doing this is a secured credit card, where you make a deposit with the issuing bank, which then becomes your line of credit. By using this card wisely and making your payments on time, you can start building a new credit history. After a period of one-off payments, you may become eligible for a regular unsecured credit card.

The process of rebuilding your credit and restoring your financial life can take time. But bankruptcy, if you have no other viable choice, is not the end of the world.

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Definition of bankruptcy Fri, 12 Mar 2021 01:43:03 +0000 What is bankruptcy? Bankruptcy is a legal proceeding involving a person or business unable to repay their unpaid debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor’s assets are measured and valued, and the assets […]]]>

What is bankruptcy?

Bankruptcy is a legal proceeding involving a person or business unable to repay their unpaid debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor’s assets are measured and valued, and the assets can be used to repay part of the outstanding debt.

Key points to remember

  • Bankruptcy is a legal process conducted to allow individuals or companies to free themselves from their debts, while offering creditors a possibility of repayment.
  • Bankruptcy is handled by federal courts and the rules are described in the United States Bankruptcy Code.
  • There are different types of bankruptcy, commonly referred to by their chapter in the US Bankruptcy Code.
  • Bankruptcy can give you a fresh start, but it will stick on your credit reports for a number of years and make borrowing difficult in the future.

Understanding bankruptcy

Bankruptcy offers an individual or a business a chance to start from scratch by forgiving debts that simply cannot be paid while giving creditors a chance to get some repayment based on the individual’s assets or of the company available for liquidation. In theory, the ability to file for bankruptcy benefits the economy as a whole by giving individuals and businesses a second chance to access credit and offering creditors a portion of the debt repayment. Once the bankruptcy proceedings are successfully completed, the debtor is released from debts incurred before the bankruptcy filing.

All bankruptcy cases in the United States are handled by federal courts. All decisions in federal bankruptcy cases are made by a bankruptcy judge, including whether a debtor is eligible to file and whether he should be discharged from his debts. The administration of bankruptcy cases is often handled by a trustee, an agent appointed by the United States Trustee Program of the Department of Justice, to represent the debtor’s estate in the proceedings.There is usually very little direct contact between the debtor and the judge, unless there is an objection made in the case by a creditor.

Types of bankruptcy declarations

Bankruptcy filings in the United States fall under one of the many chapters of the Bankruptcy Code, including Chapter 7, which involves liquidation of assets; Chapter 11, which deals with reorganizations of companies or individuals; and Chapter 13, which organizes debt repayment with reduced covenants or specific payment plans. The costs of filing for bankruptcy vary depending on the type of bankruptcy, the complexity of the case and other factors.

Chapter 7 Bankruptcy

Individuals – and in some cases businesses, with little or no assets – typically file for Chapter 7 bankruptcy. This allows them to get rid of their unsecured debts, such as credit card balances and medical bills. . Those with non-exempt assets, such as family heirlooms (collections with high valuations, such as coin or stamp collections); second homes; and cash, stocks or bonds must liquidate the property to pay off some or all of their unsecured debts. A person who files for Chapter 7 bankruptcy essentially sells his assets to write off his debt. People who have no valuables and only have exempt goods, such as household items, clothing, tools for their trade and a personal vehicle of a maximum value of a certain value, can end up not repaying any part of their unsecured debt.

Chapter 11 Bankruptcy

Companies often file Chapter 11 bankruptcy, the goal of which is to reorganize, stay in business and become profitable again. Filing for Chapter 11 bankruptcy allows a business to create plans for profitability, cut costs, and find new ways to increase revenue. Their preferred shareholders, if any, can still receive payments, but common shareholders cannot.

On September 1, 2021, U.S. bankruptcy court judge Robert Drain approved a $ 4.5 billion settlement in the Chapter 11 bankruptcy of OxyContin maker Purdue Pharma LP. The settlement dissolves Purdue Pharma and creates a new public benefit corporation to fund the treatment and prevention of opioid addiction. It protects the former owners, the Sackler family, who will pay $ 4.5 billion over nine years, including federal settlement fees, against legal claims related to the opioid epidemic. Purdue has also agreed to release 30 million documents related to the case.

For example, a housekeeping company that files for Chapter 11 bankruptcy might slightly increase its rates and offer more services to become profitable. Chapter 11 bankruptcy allows the company to continue its business operations without interruption while working on a debt repayment plan under the supervision of the court. In rare cases, individuals can also file for Chapter 11 bankruptcy.

Chapter 13 Bankruptcy

People who earn too much money to be eligible for Chapter 7 bankruptcy can file a claim under Chapter 13, also known as a salary plan. It allows individuals, as well as businesses, with constant income, to create workable debt repayment plans. Repayment plans are generally spread over a period of three to five years. In exchange for repaying their creditors, the courts allow those debtors to keep all of their property, including non-exempt property.

Other bankruptcy declarations

While Chapter 7, Chapter 11 and Chapter 13 are the most common bankruptcy proceedings, especially with regard to individuals, the law also provides for several other types:

  • Chapter 9 bankruptcy is available to financially troubled municipalities, including cities, towns, counties and school districts. Under Chapter 9, municipalities do not have to liquidate assets to pay off their debts, but are instead allowed to develop a plan to pay them off over time.
  • Chapter 10 bankruptcy, which effectively ended in 1978, was a form of corporate bankruptcy that was superseded by Chapter 11.
  • Chapter 12 bankruptcy offers relief to family farms and fisheries. They are allowed to maintain their business while developing a plan to repay their debts.
  • Chapter 15 on bankruptcy was added to the law in 2005 to deal with cross-border cases involving debtors, assets, creditors and other parties who may be in more than one country. This type of request is usually filed in the debtor’s home country.

Being released from bankruptcy

When a debtor receives a discharge order, he or she is no longer legally bound to pay the debts specified in the order. In addition, any creditor listed on the discharge order cannot legally undertake any type of collection activity (such as making phone calls or sending letters) against the debtor once the discharge order is in effect.

However, not all debts can be paid. Some of these include tax claims, anything not listed by the debtor, child support or alimony payments, personal injury debts, and government debts. In addition, any secured creditor can still exercise a lien on the property belonging to the debtor, provided the lien is still valid.

Debtors are not necessarily entitled to a discharge. When a bankruptcy petition has been filed in court, creditors are given notice and can object to it if they wish. If they do, they will have to file a complaint in court before the deadline. This leads to the filing of an adversarial procedure to recover the sums due or to assert a privilege.

The Chapter 7 discharge is typically granted approximately four months after the debtor files a bankruptcy application. For any other type of bankruptcy, discharge can occur when it becomes practical.

Advantages and disadvantages of bankruptcy

Declaring bankruptcy can help you free yourself from your legal obligation to pay your debt and save your home, business, or your ability to function financially, depending on the type of bankruptcy petition you file. But it can also lower your credit rating, making it harder to get a loan, mortgage, or credit card, or buy a home or business, or rent a home. apartment.

If you are trying to decide whether to file for bankruptcy, your credit is probably already damaged. But it should be noted that a Chapter 7 filing will stay on your credit report for 10 years, while a Chapter 13 will stay there for seven years. Any creditors or lenders to whom you apply for new debt (such as a car loan, credit card, line of credit, or mortgage) will see the discharge on your report, which may prevent you from getting credit. .

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Bankruptcy filings are at their lowest in 10 years, but not for the reasons you might think Fri, 12 Mar 2021 01:43:03 +0000 Bankruptcy courts are quiet places these days, at least compared to previous years. Business and consumer bankruptcy rates are at their lowest in about a decade, according to a new report from Supreme Court Chief Justice John Roberts. Judicial statistics for September 2010 show that at the height of the Great Recession, nearly 1.6 million […]]]>

Bankruptcy courts are quiet places these days, at least compared to previous years.

Business and consumer bankruptcy rates are at their lowest in about a decade, according to a new report from Supreme Court Chief Justice John Roberts.

Judicial statistics for September 2010 show that at the height of the Great Recession, nearly 1.6 million bankruptcy claims were filed, with 1.53 million consumer cases making up the vast majority of the case.

Eight years later, the number of new cases has been cut by more than half. As of September 2018, more than 770,000 cases were filed by bankrupt businesses and individuals seeking to restore their finances through court-ordered debt forgiveness and repayment plans. Consumers accounted for 97% of the cases.

People may not go bankrupt because it costs too much and they may not have enough assets to protect.

In fact, bankruptcy claims haven’t been this low since 2007, Roberts said Monday in his annual Federal Courts Summary.

Yet the relative silence in bankruptcy court rooms, at least when it comes to consumer affairs, may not be all golden.

People may not file for bankruptcy because it’s too expensive to do so, and they might have too few assets to protect, bankruptcy experts told MarketWatch. In addition, some added that other cases could be around the corner.

“People can’t afford to pay lawyers to file for bankruptcy,” Chicago attorney Lorraine Greenberg said. She cited a legislative overhaul from 2005. The Bankruptcy Abuse Prevention and Consumer Protection Act has created more work for lawyers, who have been forced to raise their own rates for their clients, t she declared.

Bankruptcies can be expensive

Greenberg said she was charging $ 1,500 up front to file a Chapter 7 case, in which debtors sell their assets and can have some debts written off. This price does not include legal costs and costs that debtors must also incur, she said. Those prices can hover around $ 350, she noted.

She has about a meter of storage space for documents from people willing to file bankruptcy once they get the money to hire her. “I’ll never see him. … They have no disposable income to pay their lawyer, ”she said.

“Bankruptcy follows recovery. When people have something to protect, they go bankrupt.

– —Ricardo Kilpatrick, Michigan-based lawyer

A 2017 study estimated the average attorney fees in Chapter 7 cases at around $ 1,200, paid in advance. Debtors typically paid around $ 3,200 for lawyers to file Chapter 13 cases; these costs were paid over time as part of the resolution of the case. (Chapter 13 allows payment plans confirmed by the court to creditors.)

The flip side of the findings was that older Americans are filing for bankruptcy at disproportionate rates, struggling with too low incomes and too high health costs.

But Ricardo Kilpatrick, a Michigan-based attorney representing creditors in consumer bankruptcy cases, said there were a number of reasons behind the drop in petitions, including attorney fees. “Bankruptcy follows recovery,” he said. When people have something to protect, they file for bankruptcy, ”he said.

Yet Kilpatrick, former president of the American Bankruptcy Institute, said consumer reports could increase as more people return to the workforce and take on more credit.

Declining bankruptcy claims.

Some bankruptcy lawyers say December has been busy

A strong jobs report said Friday that the US economy gained 312,000 new jobs in December. The unemployment rate climbed to 3.9% from a low of 3.7% in 49 years. The slight increase might actually be a good thing, indicating that people think it’s easier to get a job.

Kilpatrick recalled conversations last month with four separate debtor attorneys. Three of the four told him it was the busiest December they’ve had in the past six years, Kilpatrick said.

Chicago attorney Lorraine Greenberg said the Affordable Care Act could help people avoid bankruptcy due to unpaid medical bills.

The reasons for the fall might not all be bleak. Greenberg said there may be a link to increased health care coverage under the Affordable Care Act. “Fewer people need bankruptcy to wipe out medical bills,” she said.

Don’t miss:Medicaid expansion saved 50,000 people from bankruptcy in 2 years

Another explanation: Recession-era federal mortgage programs that allowed distressed homeowners to make deals with lenders have also helped people avoid filing for bankruptcy, lawyers told MarketWatch. Creditors “have become much more accommodating in doing extrajudicial training,” Kilpatrick said.

Roberts’ recent report said that deposits “increased steadily” from 2007 to 2010, “but have declined in each of the past eight years.”

This drop in bankruptcy claims largely coincides with a historic nine-year bull run on Wall Street – a streak that could come to an end amid concerns about an economic slowdown.

The drop in bankruptcy claims largely coincides with a historic nine-year bull run on Wall Street, a streak that may soon end.

But bankruptcy rates do not necessarily reflect the overall economic health of the country. “It really didn’t exactly follow the economy,” said Henry Sommer, former president of the National Association of Consumer Bankruptcy Attorneys. Deposits were high in the late 1990s when the economy was buzzing and consumer credit was easy, he said.

Bankruptcies seem to follow Americans’ debt-to-income ratio more closely, according to Sommer. The figure shows how much debt a household is, by dividing its monthly debt payments by its income. Aggregate household debt ratios rose in the early 2000s, then began to decline in 2008, according to data from the Federal Reserve.

Despite record levels of credit card debt, households are still in a better position to repay their debts than they were during the recession.

The $ 1.5 trillion gorilla

Another possible factor in the decline of bankruptcies is the American student loan crisis. Americans now owe $ 1.5 trillion in student debt, and the repayment efforts can be overwhelming for some.

But borrowers have a hard time proving legally that repayments are “undue hardship,” which means filing for bankruptcy wouldn’t help them much.

“In practice, it is virtually non-dischargeable in all cases,” Sommer said of student debt. The courts will not write off “non-dischargeable” debts.

And cash-strapped student loan borrowers may not be forced into bankruptcy simply because they don’t have enough money to accumulate other forms of debt, such as credit card debt. Sommer said.

In fact, consumers aged 18 to 34 have experienced fewer bankruptcies over the past decade per 1,000 people, compared to those aged 65 and older, Foohey research has found. “These are people who are struggling with student loans,” she said, making it difficult for them to build more assets.

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Should student loans be dischargeable in bankruptcy? Fri, 12 Mar 2021 01:43:03 +0000 About seven million borrowers are in default on their federal student loans, and a record amount of unpaid student debt is past due. There is a well-known concern that defaulting on student loans will hamper economic growth and hurt students for years to come. Policymakers have responded to this concern with a wave of proposals […]]]>

About seven million borrowers are in default on their federal student loans, and a record amount of unpaid student debt is past due. There is a well-known concern that defaulting on student loans will hamper economic growth and hurt students for years to come. Policymakers have responded to this concern with a wave of proposals for laws and regulations relating to student loan repayment, and have also produced broader proposals to reform the structure of higher education funding.

An important element, but less frequently considered in this policy discussion, is the way in which student loans are treated in bankruptcy proceedings. This has become of greater concern now that so many borrowers are struggling to repay their student loan debt and, therefore, will require attention even if student loan programs are overhauled. The crux of the matter is that student loans are not dischargeable except in limited circumstances, which means borrowers are forced to repay their student debt even after declaring bankruptcy. Recent proposals attempt to overturn non-discharge laws, but would making student loans dischargeable in bankruptcy lead to more defaults?

The discharge debate

The political debate is full of conflicting views: some argue that the incentives to abuse the bankruptcy system are high and threaten the survival of student loan programs, while others argue that the impact of opportunism is insignificant. and therefore does not deserve the burden that non-liberation imposes on people in difficulty. debtors.

US bankruptcy laws provide the “honest but unhappy” debtor with the opportunity to recover financially after experiencing hardship. Bankruptcy is costly for lenders because it reduces the expected return on funds disbursed. Bankruptcy is also costly for debtors because it damages credit scores and makes borrowing more difficult in the future. Nonetheless, bankruptcy can have many benefits when used wisely. Most see it as essential to credit market operations as it arbitrates the claims of creditors against the borrower. Bankruptcy also promotes the post-bankruptcy productivity of debtors by giving them the opportunity to start from scratch, without being burdened with pre-existing debts.

Some policymakers have long feared that many student loan borrowers who file for bankruptcy are neither honest nor unhappy. As a result, federal student loans have been considered non-dischargeable since the 1970s, and bankruptcy reform in 2005 extended non-discharging to private student loans.

Therefore, most student loan borrowers cannot take full advantage of bankruptcy relief because they retain the responsibility of paying off student debt. There are hard exceptions to non-discharge laws, but the appeal process has been criticized for being arbitrary and can be expensive and arduous.

Why are student loans treated differently in bankruptcy? In the past, debtors could settle their student loan debt in bankruptcy by assigning their assets. However, recent college graduates often have few assets to give up, even though they have high expected future incomes. As a result, the worry is that the opportunists could play with the system by accumulating large debts that they never intend to pay off as they may file for bankruptcy on the eve of starting lucrative careers.

Without restrictions to guard against this moral hazard, lawmakers argued that student loans would be ripe for fraud, that is, they would be too easily discharged in the event of bankruptcy. This could ultimately reduce the availability of student credit and possibly even destroy student loan programs. The unique nature of student loans complicates actions that guard against this behavior. Borrowers do not place collateral against their student loan debt, and the interest rates charged to borrowers often do not fully reflect their risk of default or are not risk-rated at all.

Proof of bankruptcy filings

To shed light on this debate, a colleague and I analyzed millions of anonymized credit bureau records to examine whether bankruptcy filing behavior has changed as a result of the 2005 law that made student loan debt private. not releasable. The private student loan market is estimated to represent approximately $ 150 billion of the $ 1.2 trillion in outstanding student debt. The private student loan market, in particular, has been the target of recent legislative proposals that attempt to roll back non-liberation. This is because unlike federal programs which are subsidized by taxpayers and where the public would be responsible for covering the costs associated with default, private lenders can build risk into the terms of their student loans. Aggravating criticisms of the non-availability of private student loans are allegations that these provisions were slipped into the 2005 legislation without proper verification.

If private student loan debtors behaved opportunistically before the policy, we would have expected a large relative decline in bankruptcy filings after the 2005 provision hampered their so-called opportunistic behavior, compared to debtors whose incentives did not exist. ‘were not directly affected by the non-release clause. However, we do not find evidence of such a reduction. In other words, our analysis does not reveal any responses to the 2005 bankruptcy reform that would indicate widespread opportunistic behavior on the part of private student loan borrowers prior to the policy change. Our results do not rule out the possibility that some filers were playing with the bankruptcy system, but we do not find the behavior to be pervasive.

Potential reforms

Until student debt can be discharged in bankruptcy, it will carry magnified financial risk, as struggling students might not be able to get the “fresh start” that the bankruptcy system aims to provide. This risk is of particular concern, as new analysis indicates that those most likely to default on their student loans are relatively vulnerable – more likely to come from low-income families and live in poorer, less susceptible neighborhoods. to complete their post-secondary programs and achieve well-being. paid work.

Our analysis suggests that policymakers may not have to worry so much about the potential for abuse of the bankruptcy system; however, it also indicates that the 2005 non-waiver policy change increased the availability of student loan credit. Therefore, if the non-exemption laws were rescinded, it is likely that private student loans would be less accessible and more expensive for many borrowers. There are many concerns that students who currently rely heavily on private loans are not making informed decisions, as these loans generally have less attractive terms than federal loans. Nonetheless, private student loans have been used to meet financial needs unmet by public programs and to compensate for the lack of access to federal loan programs in some schools, including many community colleges.

The expected reduction in the availability of credit may make policy makers reluctant to completely repeal non-availability laws for student loans. If so, establishing clear and accessible guidance on the standards debtors must meet in order to obtain an undue hardship exception could be an improvement. The need to appeal will always be a substantial barrier for many struggling student debtors, so policymakers might also consider supports that facilitate hardship appeals among those who deserve it.

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CHEMBIO DIAGNOSTICS: MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-K) Fri, 12 Mar 2021 01:43:03 +0000 We develop, manufacture and commercialize point-of-care tests for the detection and diagnosis of infectious diseases, including COVID 19, sexually transmitted disease, and fever and tropical disease. Our product portfolio is based upon our proprietary DPP technology, a diagnostic platform that provides high-quality, cost-effective results in 15 to 20 minutes using fingertip blood, nasal swabs and […]]]>
We develop, manufacture and commercialize point-of-care tests for the detection
and diagnosis of infectious diseases, including COVID 19, sexually transmitted
disease, and fever and tropical disease.

Our product portfolio is based upon our proprietary DPP technology, a diagnostic
platform that provides high-quality, cost-effective results in 15 to 20 minutes
using fingertip blood, nasal swabs and other sample types. The DPP technology
platform addresses the rapid diagnostic test market, which includes infectious
diseases, cardiac markers, cholesterol and lipids, pregnancy and fertility, and
drugs of abuse. Compared with traditional lateral flow technology, the DPP
technology platform can provide enhanced sensitivity and specificity, advanced
multiplexing capabilities and, with the DPP Micro Reader, quantitative results.

We target the market for rapid diagnostic test solutions for infectious
diseases, which is driven by the high prevalence of infectious diseases
globally, an increase in the geriatric population, growing demand for rapid test
results, and advancements in multiplexing. We have a broad portfolio of
infectious disease products, which prior to 2020 were focused principally on
sexually transmitted disease and fever and tropical disease. In February 2020 we
began the process of shifting substantially all of our resources to leverage the
DPP technology platform to address the acute and escalating need for diagnostic
testing for COVID-19.

Our products are sold worldwide, directly and through distributors, to medical laboratories and hospitals, government and public health entities, non-governmental organizations, healthcare professionals and retail establishments. . We continue to seek to expand our commercial distribution channels.

In 2020 we continued to invest in automating our test manufacturing processes,
all of which are now based in the United States. Among other actions, we
expanded our manufacturing capabilities by validating and implementing automated
lines. Our transition from manual to automated assembly is intended to add
capacity, reduce variable costs and improve product margins. In order to address
challenging economic conditions and implement our business strategy, we
continued to execute a program to reduce operating expenses and better align our
costs with revenues, including by eliminating positions that were no longer
aligned with our strategy.

Consolidated operating results

The results of operations for the years ended December 31, 2020 and 2019 were as

                                                         Year Ended December 31,
                                                              (in thousands)
                                                      2020                     2019

TOTAL REVENUES                                 $  32,470       100 %    $  34,464       100 %

Cost of product sales                             23,874        74 %       22,394        65 %
Research and development expenses                  9,509        29 %        8,538        25 %
Selling, general and administrative expenses      21,038        65 %       16,139        47 %
Severance and related costs                        1,122         3 %            -         0 %
Acquisition costs                                     63         0 %          721         2 %
                                                  55,606       171 %       47,792       139 %
LOSS FROM OPERATIONS                             (23,136 )     (71 )%     (13,328 )     (39 )%

OTHER (EXPENSE) / INCOME                          (2,842 )      (9 )%        (847 )      (2 )%

LOSS BEFORE INCOME TAX BENEFIT                   (25,978 )     (80 )%     (14,175 )     (41 )%

Income tax benefit                                   457         1 %          500         1 %
NET LOSS                                       $ (25,521 )     (79 )%   $ (13,675 )     (40 )%

The percentages in the table reflect the percentage of total income.

Total income

Total revenues during 2020 were $32.5 million, a decrease of $2.0 million, or
5.8%, compared to 2019. The decrease in total revenues reflected a $4.1 million,
or 14%, decrease in net product sales, which was principally comprised of (a)
lower sales in Africa, Latin America, and the United States associated with
diminished funding and the closure of clinics for HIV testing due to the
COVID-19 pandemic, offset in part by (b) The Company's success in achieving
regulatory approvals for and selling the COVID-19 IgM/IgG Systems in Latin
America and gains in Europe associated with our long term agreement with UNICEF
for our DPP Zika IgM/IgG and DPP ZCD IgM/IgG multiplex tests and Micro Readers.
The decrease in net product sales was offset in part by a $2.2 million, or
31.9%, increase in research and development and grant revenues relating to new
government grants for the development, and submission for U.S. regulatory
approval, of DPP SARS-CoV-2 Antigen and DPP Respiratory Panel test systems.

Gross product margin

Cost of product sales is primarily comprised of material, labor, manufacturing
overhead, depreciation and amortization, and freight and distribution costs.
Gross product margin is net product sales less cost of product sales, and gross
product margin percentage is gross product margin as a percentage of net product

The gross margin on product decreased by $ 5.6 million, i.e. 86.2% compared to 2019. The following scale calculates the gross margin of the product:

                                               For the years ended December 31           Favorable/
                                                 2020                   2019            (unfavorable)       % Change
                                                       (in thousands)
Net product sales                          $         24,767       $         28,845     $        (4,078 )        (14.1 )%
Less: Cost of product sales                         (23,874 )              (22,394 )            (1,480 )          6.6 %
Gross product margin                       $            893       $          6,451     $        (5,558 )        (86.2 )%
Gross product margin %                                  3.6 %                 22.4 %

  Table of Contents
In 2020 we invested in developing and offering products to address the COVID-19
pandemic, which we expect will have average selling prices greater than those of
our legacy products. We also continued to invest in automation in order to
reduce our reliance on manual labor and improve our product margins (see Q1'21
Restructuring Charge). The $5.6 million decrease in gross product margin was
comprised of (a) $4.7 million from unfavorable product margins and (b) $0.9
million from unfavorable product sales volume as described under "-Total
Revenues" above. The $4.6 million decrease from unfavorable product margins
principally reflected the following:

? We have incurred the cost of product sales for COVID-19 IgM / IgG systems that have been

returned by customers following the Revocation.

? Revocation prevented planned sales of COVID-19 IgM / IgG systems to customers

in United States during the last three quarters of 2020 and resulted in the

postponement of certain customer opportunities for the sale of COVID-19 IgM / IgG

Outdoor systems United States, which had a negative impact on our sales mix because

we recorded (a) a significant drop in sales in United States, or U.S

have our highest average selling prices, and (b) outside United States, a

higher combination of sales in geographic areas with lower average selling prices.

? We have experienced operational inefficiencies, including those triggered by the

Revocation and activities related to the qualification of automated lines for production

of certain products, which has resulted in an increase in the cost of sales of products as we

dramatically shifted our production of COVID-19 products towards legacy


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Research and Development

This category includes costs incurred for clinical and regulatory affairs and other research and development activities, as follows:

                                                For the years ended December 31            Favorable/
                                                 2020                     2019            (unfavorable)       % Change
                                                        (in thousands)
Clinical and regulatory affairs            $          1,061         $          1,516     $           455           30.0 %
Other research and development                        8,448                    7,022              (1,426 )        (20.3 )%
Total research and development             $          9,509         $       

$ 8,538 (971) (11.4)%

The decrease in clinical and regulatory affairs costs for 2020 as compared to
2019 was primarily associated with reduced clinical trial costs following the
FDA's granting of premarket approval for the DPP HIV-Syphilis test during 2020,
offset in part by expenditures related to the DPP SARS-CoV-2 Systems. The
increase in other research and development costs was primarily related to costs
associated with the development of the DPP SARS-CoV-2 Systems.

Selling, general and administrative expenses

Selling, general and administrative expenses include administrative expenses,
sales and marketing costs (including commissions), and other corporate items.
The $4.9 million, or 30%, increase in selling, general and administrative
expenses for 2020 as compared to 2019  primarily reflected legal costs arising
subsequent to the Revocation, costs from expanding our U.S. commercial
organization, a full year of our Brazilian facility (which was acquired during
the fourth quarter of 2019), and facility costs related to the COVID-19
pandemic, offset in part by cost savings from retrenching our Malaysia facility
and other restructuring actions taken during the first quarter of 2020.

Severance pay, restructuring and other related costs

During the year ended December 31, 2020, the Company recognized $0.7 million in
net severance expenses related to the departure of Chembio's former chief
executive officer and the elimination of certain positions as part of its
multi-faceted expense reduction program to reduce operating expenses. The
Company undertook actions to adjust the size and composition of the
organization, including by removing positions that were non-essential in light
of its new business strategy, and to remove other expenses, all of which the
Company expects will provide savings throughout, and after, 2020.

In light of market dynamics, the Company retrenched its Malaysian operations,
including the termination of employment of its Malaysian workforce. The Company
will maintain its Malaysian subsidiary and sustain the product registrations
that were obtained throughout southeast Asia, with the benefit of having that
entity and the WHO prequalification certified facility.

Based on these activities, the Company took restructuring actions totaling $0.4
million to realign and resize its production capacity and cost structure. All
expenses have been paid as of December 31, 2020.

Acquisition costs

Acquisition costs include legal, due diligence, audit, and related costs
associated with acquisitions. The $0.7 million decrease in acquisition costs for
2020 as compared to 2019 reflected the fact that we completed acquisitions in
2019 but not 2020.

Other (Expense) / Income

Other (expense) / income  was principally comprised of interest expense net of
interest income. Interest expense increased by $2.0 million for 2020 as compared
to 2019, due to the interest paid on the term loan debt we incurred in September

Income Tax Benefit

For 2020 we recognized a tax benefit of $0.4 million primarily attributable to
the loss generated by Chembio Diagnostics Germany. As of December 31, 2020 and
2019, the Company recorded a full valuation allowance against its net deferred
tax assets.

Liquidity and capital resources

During the year ended December 31, 2020, we funded our business operations,
including capital expenditures and working capital requirements, principally
from a public offering of common stock, which generated proceeds of $28.4
million (net of expenses), and from cash and cash equivalents. Our operations
used $18.9 million of cash. As of December 31, 2020, we had outstanding
indebtedness of $20 million (carrying amount of $18.2 million) pursuant to the
Credit Agreement described under "-Sources of Funds-Credit Agreement" below.

  Table of Contents
We continually evaluate our liquidity requirements, capital needs and
availability of capital resources based on our operating needs and our planned
growth initiatives, particularly in the light of our shift in business focus to
the DPP SARS-CoV-2 Systems. We believe our existing cash and cash equivalents
will be sufficient to meet our anticipated cash needs for at least the next
twelve months. Our future working capital needs will depend on many factors,
including: the fact and timing of our receipt from the FDA of an EUA award for
the DPP SARS-CoV-2 Antigen System and/or the DPP Respiratory Panel System; the
fact and timing of our receipt from the FDA of a CLIA waiver for the DPP
HIV-Syphilis System; the rate of our business and revenue growth, including our
ability to successfully build distribution channels and commercialize the
COVID-19 Diagnostic Test Systems in geographies (principally Europe) covered by
our CE-Marks for those products, particularly if we are able to resume
commercialization of the COVID-19 Diagnostic Test Systems in the United States;
the occurrence and timing of regulatory approvals for other new products; the
timing of our continuing automation of U.S. manufacturing; and the timing of our
investment in research and development as well as sales and marketing. If our
sources of liquidity become insufficient to fund the growth of our business, we
may need to reduce the level or slow the timing of our growth plans, which would
likely curtail or delay the growth in our business contemplated by our operating
plan and could impair or defer our ability to achieve profitability and generate
cash flow, or to seek to raise additional funds through debt or equity
financings, strategic relationships, or other arrangements, to the extent
funding would be available to us on acceptable terms or at all. If we were to
raise additional funds through the issuance of equity or convertible securities,
the issuance could result in substantial dilution to existing stockholders, and
the holders of those new securities may have rights, preferences and privileges
senior to those of the holders of common stock.

Sources of funds

Credit agreement. At September 3, 2019, we, as the borrower, and certain of our subsidiaries, as guarantors, have entered into a credit and guarantee agreement, or the credit agreement, with Perceptive Credit Holdings II, LP, or the lender.

? The principal amount. The credit agreement provides for a $ 20,000,000 Senior

secured term credit facility, which has been drawn in full from September 4,

2019. Under the terms of the credit agreement, we may use the proceeds to

for general working capital purposes and for other purposes authorized for the business, to

refinance some of our existing debts and pay the fees, costs and

expenses incurred under the Credit Agreement.

? Interest rate. The principal overdue under the credit agreement bears interest

at an annual rate equal to the sum of (a) the greater of the two months London

Interbank rate offered and 2.5% plus (b) 8.75%. Any time an event

default (as described under “- Default Provisions” below) has occurred and is

Continuing, the interest rate will increase by 4.0%. The accrued interest is

payable monthly.

? Scheduled reimbursement. No capital repayment is due before September 30,

2022, unless we decide to prepay the capital as described in the section “- Optional

Prepayment “below or the principal is accelerated in the event of default

as described under “- Default Provisions” below. The main payments in the

number of $ 300,000 are payable on the last day of each of the eleven months

of September 2022 through July 2023, and all the remaining capital is payable

at maturity on September 3, 2023.

? Optional prepayment. We may prepay outstanding principal from time to time,

subject to payment of a premium on the prepaid principal equal to 10%

through September 3, 2020, 8% of September 4, 2020 through September 3, 2021,

and 4% of September 4, 2021 through September 3, 2022. No premium will be due

in respect of any prepayment made on or after September 4, 2022.

? Guarantees. Our subsidiaries Chembio diagnostic systems inc. and Chembio

Diagnosis Malaysia Sdn Bhd. have guaranteed, and the lender from time to time

may require our other subsidiaries to guarantee our obligations under the

   Credit Agreement.

? Security. Our obligations under the credit agreement are secured by a first

priority and perfect privilege on almost all of our property and assets,

including our holdings in our subsidiaries. Our subsidiary Chembio

Diagnostic Systems Inc. obtained its guarantee from our Credit Agreement

bonds with a lien on substantially all of its assets, and the lender of

from time to time may require Chembio Diagnostics Malaysia Sdn Bhd. and any of our

other subsidiaries that have guaranteed our credit agreement obligations to be made

   the same.

? Representations and guarantees; Financial and other commitments. To credit

Agreement that we have made the usual representations and warranties as well as

positive and negative restrictive covenants, including restrictive covenants

debts, liens, sureties, mergers and acquisitions, substantial assets

sales, investments and loans, sale-leaseback, transactions with

affiliates and fundamental changes. The credit agreement also contains

financial commitments requiring that we maintain total unallocated liquidity of

no less than $ 3,000,000 at any time and we get a specified minimum turnover

total amount of income for the four quarters (“last twelve months”) at September 30,

2019 and the last day of each calendar quarter thereafter. The minimum total

income amounts, which range from $ 32.0 million To $ 50.1 million, were

developed for the purposes of the credit agreement and do not reflect the

estimates and plans used by our management and board of directors to understand

and assess our operational performance, establish budgets and establish

operational objectives for the management of our company. So we do not think that

restrictive covenants provide useful information to investors or others

   enhancing an understanding of our future prospects.


————————————————– ——————————-


? Default provisions. The credit agreement provides for the usual events of

default, including events of default based on non-payment of sums due under

credit agreement, defaults on other debts, misrepresentation, commitment

violations, changes of control, insolvency, bankruptcy and the occurrence of a

material adverse effect on the Company. In the event of failure resulting from

voluntary or involuntary bankruptcy, insolvency or

receivership, the amounts unpaid under the credit agreement will become

immediately due and payable and the Lender’s commitments will automatically be

ended. In the event of the occurrence and continuation of any other event of default,

the lender can expedite the payment of all obligations and terminate the lender’s contract

commitments under the credit agreement. When accelerating payment

following an event of default that occurred before September 4, 2021, the amounts

   due and payable by us will include a prepayment premium on accelerated
   principal in the amount described under "-Optional Prepayment" above.

We were in compliance with the financial covenants on cash and income balances at December 31, 2020.

Equities and equity-linked securities. We raised additional capital from a public offering of ordinary shares subscribed in 2020 for an amount of $ 28.4 million (net of charges).

Research and Development Awards. We routinely seek research and development
programs that may be awarded by government, non-governmental organizations, and
non-profit entities, including private foundations. Since 2015 we have received
over $14.2 million of funding from some of the world's leading health
organizations, which has helped us accelerate the expansion of our pipeline of
infectious disease tests. Our collaborators have included Bill & Melinda Gates
Foundation, The Paul G. Allen Family Foundation, FIOCRUZ and FIND, as well as
U.S. government agencies such as Centers for Disease Control and Prevention,
Biomedical Advanced Research and Development Authority or BARDA, and the U.S.
Department of Agriculture. See "Item 1. Business-Products" above. During the
year ended December 31, 2020, we recognized grant revenue totaling $2 million
from government, non-governmental organizations, and non-profit entities.

Working Capital. The following table sets forth selected working capital

                                             December 31, 2020
                                              (in thousands)
Cash and cash equivalents                   $            23,066
Accounts receivable, net                                  3,377
Inventories, net                                         12,516
Prepaid expenses and other current assets                   779
Total current assets                                     39,738
Less: Total current liabilities                          12,351
Working capital                             $            27,387

On December 2, 2020, we were awarded a contract of $12.7 million from BARDA to
assist us in (a) developing, and requesting an EUA from the FDA for, the DPP
Respiratory Panel and (b) performing the clinical trials for and submitting the
DPP SARS-CoV-2 Antigen system to the FDA for a 510(k).

Our cash and cash equivalents at December 31, 2020, which included a restricted
amount of $1.0 million, were held for working capital purposes. We currently
intend to retain all available funds and any future earnings for use in the
operation of our business and do not anticipate paying any cash dividends. We
have not entered into, and do not expect to enter into, investments for trading
or speculative purposes. Our accounts receivable and inventory balances
fluctuate from period to period, which affects our cash flow from operating
activities. Fluctuations vary depending on cash collections, client mix, raw
material lead times, the mix of vendor terms, and the timing of shipment of our
products and the invoicing of our research and development activities.

Uses of funds

Cash Flow Used in Operating Activities. Our operations used $18.9 million of
cash during the year ended December 31, 2020, primarily due to the net loss
adjusted for non-cash items of $7.3 million and a $6.5 million increase in
inventory related to supply chain timelines, including materials for COVID-19
systems that were ordered but could not be cancelled following the Revocation.
Those uses of cash were offset in part by a $3.9 million increase in accounts
payable and other accrued liabilities, a $1.5 million increase in deferred
revenue, and a $0.3 million reduction in accounts receivable.

Capital Expenditures. Our capital expenditures totaled $4.2 million in 2020, of
which $4.0 million related to investments in automated manufacturing equipment,
facilities, and other fixed assets.

  Table of Contents
We have capital purchase obligations of $1.3 million related to additional
automated manufacturing equipment with payments expected to come due during 2021
based on vendor performance milestones.

Effects of inflation

Other than the impact of increases in minimum wage levels in New York, inflation
and changing prices have not had a material effect on our business, and we do
not expect that they will materially affect our business in the foreseeable
future. Any impact of inflation on cost of revenue and operating expenses,
especially employee compensation costs (including any effects of future
increases in minimum wages levels in New York), may not be readily recoverable
in the price of our product offerings.

Q1’21 restructuring charge

On January 14, 2021, the Company's Board of Directors (the "Board") approved a
restructuring plan ("2021 Plan") to better align its business priorities. The
Plan comprises the termination of employees primarily in the manufacturing
department. These actions were intended to better align the Company's cost
structure with the skills and resources required to more effectively pursue
opportunities in the marketplace and execute the Company's long-term growth

Costs associated with the 2021 Plan are primarily related to Severance and Legal
costs. Severance payouts are expected to be substantially completed by the end
of the six months ending June 30, 2021. Under the 2021 Plan, the Company expects
to incur pre-tax charges between approximately $0.1 million and $0.2 million.

Off-balance sheet provisions

We have no off-balance sheet arrangements, as defined in Section 303 (a) (4) (ii) of Regulation SK under the Securities Exchange Act of 1934.

Significant accounting policies and critical accounting estimates

Our significant accounting policies are described in Note 2 - Significant
Accounting Policies to the audited consolidated financial statements included
herein. Certain of our accounting policies require the application of
significant judgment by management in selecting the appropriate assumptions for
calculating financial estimates. By their nature, these judgments are subject to
an inherent degree of uncertainty. These judgments are based on our historical
experience, terms of existing contracts, our evaluation of trends in the
industry, information provided by our customers and information available from
other outside sources, as appropriate. We consider an accounting estimate to be
critical if (a) it requires us to make assumptions about matters that were
uncertain at the time we were making the estimate and (b) changes in the
estimate or different estimates that we could have selected would have had a
material impact on our financial condition or results of operations.

The following listing is not intended to be a comprehensive list of all of our
accounting policies.  In many cases, the accounting treatment of a particular
transaction is specifically dictated by accounting principles generally accepted
in the United States, with no need for management's judgment in their
application. There are also areas in which management's judgment in selecting
any viable alternative would not produce a materially different result.

Revenue recognition

We recognize revenue for product sales in accordance with Financial Accounting
Standards Board Accounting Standards Codification, or ASC, 606, Revenue from
Contracts with Customers. Revenues from product sales are recognized when the
customer obtains control of our product, which occurs at a point in time,
typically upon tendering to the customer. We expense incremental costs of
obtaining a contract as and when incurred because the expected amortization
period of the asset that it would have recognized is one year or less or the
amount is immaterial. Freight and distribution activities on products are
performed after the customer obtains control of the goods. We have made an
accounting policy election to account for shipping and handling activities that
occur either when or after goods are tendered to the customer as a fulfillment
activity, and therefore recognizes freight and distribution expenses in cost of
product sales. We exclude certain taxes from the transaction price (e.g., sales,
value added and some excise taxes).

Product revenue reserves, which are classified as a reduction in product
revenue, are generally related to discounts and returns. Estimates of variable
consideration and the determination of whether to include estimated amounts in
the transaction price are based on all information (historical, current, and
forecasted) that is reasonably available to the Company, taking into
consideration the type of customer, the type of transaction, market events and
trends, and the specific facts and circumstances of each arrangement. The
transaction price, which includes variable consideration reflecting the impact
of discounts, allowances and returns may be subject to constraint and is
included in the net sales price only to the extent that it is probable that a
significant reversal of the amount of the cumulative revenue recognized will not
occur in a future period. Actual amounts may ultimately differ from the
Company's estimates. If actual results vary, the Company adjusts these
estimates, which could have an effect on revenue and earnings in the period of

For applicable contracts, we recognize revenue from research and development,
milestone and grant revenues when earned.  Grants are invoiced after expenses
are incurred. Revenues from projects or grants funded in advance are deferred
until earned. For certain collaborative research projects, we recognize revenue
by defining milestones at the inception of the agreement and applying judgement
and estimates in recognizing revenue for relevant contracts.

Stock-based compensation

We recognize the fair value of equity-based awards as compensation expense in
our consolidated statement of operations. The fair value of restricted stock and
restricted stock unit awards are their fair value on the date of grant. The fair
value of our stock option awards was estimated using a Black-Scholes option
valuation model. This valuation model's computations incorporate subjective
assumptions, such as the expected stock price volatility and the estimated life
of each award. The fair value of equity-based awards, after considering the
effect of expected forfeitures, is then amortized, generally on a straight-line
basis, over the related vesting period of the option.

  Table of Contents
Research and Development Costs

Research and development activities primarily consist of new product development, further engineering for existing products, and regulatory costs and clinical trials. Costs related to research and development efforts on existing or potential products are expensed / included as they are incurred.


Inventories are stated at the lower of cost or net realizable value with cost
being determined using a standard cost method, which approximates average cost.
Average cost consists primarily of material, labor and manufacturing overhead
expenses (including fixed production-overhead costs). The Company analyzes its
inventory levels quarterly and writes down, in the applicable period, inventory
that has become obsolete, inventory that has a cost basis in excess of its
expected net realizable value and inventory in excess of expected customer
demand. The Company also writes off, in the applicable period, the costs related
to expired inventory. Costs of purchased inventories are recorded using
weighted-average costing.

Accounts receivable

Our policy is to review our accounts receivable on a periodic basis, no less
frequently than monthly. On a quarterly basis an analysis is made of the
adequacy of our allowance for doubtful accounts and adjustments are made
accordingly. The allowance was approximately 0.6% of accounts receivable as of
December 31, 2020.

Good will and intangible assets with indefinite useful life

We periodically review goodwill for impairment indicators. We review goodwill
for impairment annually in the fourth quarter or more frequently if events or
changes in circumstances indicate that goodwill might be impaired. We perform
the goodwill impairment review at the reporting unit level. We perform a
qualitative assessment of whether it is more likely than not that a reporting
unit's fair value is less than its carrying amount. If not, no further goodwill
impairment testing is performed. If so, we perform the step discussed hereafter.
Our qualitative assessment involves significant estimates, assumptions, and
judgments, including, macroeconomic conditions, industry and market conditions,
our financial performance, reporting unit specific events and changes in our
share price.

If the fair value of the reporting unit is greater than its carrying amount,
goodwill is not considered to be impaired. We would recognize an impairment
charge for the amount by which the carrying amount exceeds the reporting unit's
fair value, provided the impairment charge does not exceed the total amount of
goodwill allocated to the reporting unit.

Indefinite-lived intangible assets are tested for impairment annually during the
first fiscal quarter of the year, and when events or changes in circumstances
indicate the assets might be impaired. Impairment is indicated when the carrying
value of the intangible asset exceeds its fair value.

Recently published accounting position papers

Refer to Note 2 - Significant Accounting Policies to the audited consolidated
financial statements included herein for a complete description of recent
accounting standards that we have not yet been required to implement which may
be applicable to our operations. Additionally, the significant accounting
standards that have been adopted during the year ended December 31, 2020 are


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© Edgar online, source Previews

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Here’s why retailers take so long to file for bankruptcy Fri, 12 Mar 2021 01:43:03 +0000 There are going to be a lot of personal bankruptcies in the weeks and months to come. Timing is key and having a plan is everything, experts say, because a bankrupt crash landing is suicide. While 630,000 retail businesses have been closed since mid-March, customers and employees alike are wondering who is going to pass […]]]>

There are going to be a lot of personal bankruptcies in the weeks and months to come.

Timing is key and having a plan is everything, experts say, because a bankrupt crash landing is suicide.

While 630,000 retail businesses have been closed since mid-March, customers and employees alike are wondering who is going to pass to the other side of the Big Reset, as some are starting to call this recovery.

Dallas-based Neiman Marcus and Plano-based JC Penney have landed on most analysts’ watch lists as their heavy debt has been magnified by the pandemic.

Gordon Brothers, a go-to retail liquidator, has estimated that up to 25,000 stores and 100,000 restaurants could end up shutting down permanently this year as companies scrutinize store leases and locations and abandon those that do. are at the limit.

That prediction hangs over the fact that stores and malls will start opening in Texas on Friday and have started opening in a handful of other states.

“It may take some time before you see a rash of [bankruptcy] deposits, a window of 60 to 120 days, ”said J. Robert Bob Medlin, senior managing director of FTI Consulting. Medlin has worked in financial restructuring for 40 years and FTI helps companies manage change and risk.

“Uncertainty is preventing a lot of people from going to bankruptcy court,” Medlin said, “because there isn’t a lot of visibility. “

The bankruptcy of Fort Worth-based Pier 1 Imports was essentially put on hold when all of its stores were closed due to the pandemic. He filed his case in mid-February and began to close its doors in half of its 900 stores. All of this has been stopped, and without income, it burns funds. In bankruptcy, when you run out of money, there is no more.

Store closure and sales posters in the windows of Pier 1 Imports on South Cooper Street in Arlington. The store near the Parks Mall in Arlington was scheduled to close permanently in February. (Tom Fox / Staff Photographer)

Of course, Pier 1 management didn’t know what to expect when they filed their case, and other companies are feeling the same now.

Over the past five weeks, retailers have done everything possible to avoid bankruptcy.

They preserve their cash flow by deferring rent, freezing costs, cutting wages, laying off employees and laying off contractors. They reduced their lines of credit to create a bigger cash cushion. They can sell assets.

“All of these things are things that businesses can do to adapt to downturns, but there have never been any like what we are seeing now,” Medlin said.

A first step in filing for bankruptcy is obtaining funds to use while the business is in court protection. Debtor in charge financing begins with a forecast of 13-week cash flow requirements.

“It’s up to Retail 101 to figure out short-term cash flow, how much money is needed to run,” and it’s not easy to do today, Medlin said. “Next, companies have to show lenders a plan for their survival. “

Doctors examine a CT scan of the lungs at a hospital in Xiaogan, China.

Many retailers didn’t pay April’s rent, but now lenders, landlords and retailers are all in the same boat. said Mark Dufton, CEO of real estate at Gordon Brothers.

“There is starting to be a heightened sense of cooperation going through the months of April, May and June,” Dufton said. “I don’t think anyone in the industry wants years of litigation in court.”

The goal now is to get through the COVID period and take a close look at their store portfolios in the future, he said in a webinar hosted on Tuesday by Coresight Research founder Deborah Weinswig.

Retailers are also looking for properties that could be sold to raise funds, especially if they are trying to avoid bankruptcy, Medlin said.

Banks are now working with retailers on their loan terms, offering 90-day debt moratoria, waiving fees and allowing them to draw on lines of credit, he said.

This will help retailers buy two to three months to see what the world will be like.

The clocks are starting to go bankrupt. A huge one for retailers is a maximum of 210 days – 120 days upfront and an often granted 90-day extension period – for them to accept or reject store leases, Medlin said.

One of the main reasons retailers reorganize in bankruptcy is to get rid of unprofitable leases. Right now, stores are combing their leases to see which stores they would ask a court to close.

It takes longer in a world that is going to be different.

The other big reasons retailers have historically filed for bankruptcy is to deleverage unsustainably, typically from debt buyouts, a prevalent problem in retailing in the United States today.

As negotiations continue with the lenders and both Neiman Marcus and Penney have said they have not paid their debts, speculation has centered on whether the companies are planning any court reorganizations. The two said they were preparing for various scenarios, but no decision was made.

Medlin said some companies are now on lists of probable bankruptcy filings that he remembers were on lists as early as the 1990s. But companies can eventually run out of options. To obtain financing or attract a new owner, they must prove that they have a plan to become a permanent business with a role in the market.

Closing the COVID-19 pandemic will force more of them out of business than ever before, Medlin said.

And as if a pandemic weren’t enough, there are always people taking advantage of the desperate appearance of retailers – potential buyers.

These include strategic buyers and hedge funds or private equity, Medlin said. “There are people who run funds that invest in distressed situations where they think there is long-term value and they can buy at distressed prices.”

A business never wants to go bankrupt with a hard landing, without a plan, Medlin said.

There’s a reason people say, “It’s easier to go broke than it is to get out of it.

Twitter: @MariaHalkias

Looking for more business coverage? Click here to read all retail news and updates. Click here to subscribe to D-FW Retail and more newsletters from The morning news from Dallas.

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Can you pay off your student loans in bankruptcy? Fri, 12 Mar 2021 01:43:03 +0000 Photo credit: Getty Getty This is one of the most searched student loan questions on Google: Can you pay off your student loans in bankruptcy? The quick answer is that student loans are generally not dischargeable in bankruptcy. However, there are exceptions. Here’s what you need to know. Student loans: why student loans traditionally cannot […]]]>


This is one of the most searched student loan questions on Google: Can you pay off your student loans in bankruptcy?

The quick answer is that student loans are generally not dischargeable in bankruptcy. However, there are exceptions.

Here’s what you need to know.

Student loans: why student loans traditionally cannot be discharged in bankruptcy

As many borrowers struggle to repay their student loan debt, bankruptcy is a strategy that is offered as a potential option.

According to Make Lemonade, there are over 44 million borrowers who collectively owe $ 1.5 trillion in student loan debt in the United States.

Unlike other types of consumer debt such as credit cards and mortgages, student loans traditionally cannot be discharged in bankruptcy. In 2005, Congress passed and President George W. Bush signed the Bankruptcy Abuse Prevention and Consumer Protection Act, which exempted federal and private student loans from the discharge.

You may be asking yourself, “Why are student loans not dischargeable in bankruptcy?” “

Some cannot explain the rationale for the “no bankruptcy” exception for student loans, but others say it arose out of fear that student loan borrowers could take advantage of bankruptcy laws. , borrow a bunch of debt, get a degree and then file for bankruptcy.

However, there are exceptions if the borrower can demonstrate that he has been under undue hardship.

The Brunner test: financial difficulties

Congress did not specifically define “undue hardship”.

Thus, the main criterion for undue hardship is Brunner test, which is the legal test in all shorts except 8th and 1st circuit. The 8th circuit assesses a set of circumstances, which is akin to Brunner, while the 1st circuit has not yet declared a standard.

In fluent English, the Brunner standard says:

  1. the borrower has extenuating circumstances creating such a hardship that he cannot repay the student loan and maintain a minimum standard of living;
  2. these circumstances are likely to persist for the duration of the student loan repayment; and
  3. the borrower made a good faith attempt to repay the loan. (The borrower doesn’t actually have to make payments, but is just trying to make payments, such as trying to find a workable payment plan.)

There are variances between federal districts, but this is the basic framework. The courts can also assess other financial and life circumstances of the borrower, such as age, income, health and other factors.

How can you pay off student loans in bankruptcy?

In order to have a student loan discharged through bankruptcy, an adversarial proceeding (a lawsuit in bankruptcy court) must be filed, where a debtor claims that paying the student loan would create undue hardship for the debtor.

Could you ever pay off your student loans in bankruptcy?

Yes. Before 1976, you could pay off your student loans in bankruptcy.

Congress then changed the law: student loans were dischargeable if they had been repaid for five years. This period was subsequently extended to seven years. In 1998, Congress removed the exemption unless a debtor could prove that paying off student loans would create undue hardship. In 2005, Congress extended this protection to private student loans.

Can you pay off both federal student loans and private student loans?

Yes, federal student loans and private student loans are both eligible for discharge if you can demonstrate undue hardship.

Should you file for bankruptcy to pay off your student loans?

It is a personal decision based on your specific life circumstances. When you file for bankruptcy it can be costly and take a lot of time and energy. There may be other options for paying off student loans besides filing for bankruptcy. Usually, bankruptcy is a last option.

What can you do if you are having trouble paying off your student loan?

If you’re struggling to pay off your student loan, here are some helpful strategies:

1. Reimbursement based on income: For federal student loans, consider an income-based repayment plan such as IBR, PAYE, or REPAYE. Your payment is based on your income, family size, and other factors, and is generally less than the standard repayment plan. Your monthly payment could be as low as $ 0.

After a certain period (like 20 or 25 years, for example), your federal student loans (not private student loans) may be canceled. However, you will likely owe income tax on the amount of your student loans that are canceled.

2. Pay off credit card debt: If you have other credit card debt, consider paying off that debt first if the interest rate is higher than your student loan interest rate. You can use the cash savings for student loan repayment.

You can also consider a personal loan to pay off your credit card debt (also called a credit card consolidation loan). Credit card consolidation is the process of paying off your existing credit card debt with one personal loan at a lower interest rate.

If you can borrow a personal loan at a lower interest rate than your credit card debt, you can save on interest charges and potentially improve your credit score.

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