Last
Updated 11/07/05
News and Information from Fort Lauderdale lawyer David Langley
See also our pages on Bankruptcy Reform Legislation
, the Winn-Dixie Bankruptcy, and
Corporate and Civil Matters.
IRS to Launch Collections Program with Private Contractors
This coming February, the IRS plans to hire three private contractors in order to launch their new tax collection program. The number of outside contractors is expected to grow over the next three years and eventually incorporate ten to twelve private-sector agencies. The firms will only collect on the basis that taxpayers acknowledge that certain dues are owed. Contractors will have limited contact, and will not hold any law enforcement authority.
Winn-Dixie Stores, Inc.
Winn-Dixie Stores, Inc., filed for bankruptcy pursuant to Chapter
11 on February 21, 2005 in the Southern District of New York.
An order was entered on April 13, 2005, transferring the cases
to the Middle District of Florida, Jacksonville Division. These
cases are assigned to The Honorable Jerry A. Funk.
According to the Associated Press, the supermarket chain is hoping
to resolve its deep financial crisis by closing more than a third
of its stores and slashing 22,000 people from its work force under
a proposed reorganization plan to leave Chapter 11 protection.
Winn Dixie said it will close or sell 35 percent, or 326 of its
913 stores in the coming months. It will cut 22,000 of 78,000
positions and an additional 500 workers will lose their jobs in
the company's corporate headquarters in Jacksonville.
Winn-Dixie Stores Inc. will cease operations in four states —
Tennessee, Virginia and North and South Carolina — and will
trim operations in its five remaining states. Those are Florida,
Georgia, Alabama, Mississippi and Louisiana. It also has stores
in the Bahamas.
The company said it will try to find buyers for the closing stores
and ask the new owners to retain as many employees as possible.
"We made a very detailed announcement and I am confident
we are making the right decision," said Peter Lynch, company
president and CEO.
In a statement, Winn-Dixie also said it will try to sell six
dairy plants, its pizza plant in Montgomery, Ala., and its Chek
Beverage/Deep South Products plant in Fitzgerald, Ga., which produces
Chek soda, shelf-stable juices and condiments. If buyers are not
found, Winn-Dixie said it would continue to operate the Chek Beverage
plant and its Hammond, La., and Plant City, Fla., dairies.
The company also said that is working to find a third party to
produce elsewhere the items made at its Astor Products plant in
Jacksonville and the condiments at the Deep South plant. Those
plants will then be closed.
Lynch had said for months that the reorganized company must be
smaller and he said it was difficult to determine which stores
to close.
Winn-Dixie is leaving a number of larger markets, including Atlanta,
Augusta and Savannah in Georgia; Charleston, Columbia and Greenville-Spartanburg
in South Carolina; Charlotte, Greensboro-High Point and Raleigh-Durham
in North Carolina; Chattanooga, Tenn.; Columbus, Tupelo and Jackson
in Mississippi and Alexandria, La. An announcement on corporate
restructuring will be made later this summer.
Burt P. Flickinger III, managing director of Strategic Resources
Group in New York, said he doesn't believe the changes will save
Winn-Dixie, which must still battle Publix Super Markets and Wal-Mart.
"They really need to close over 500," Flickinger said.
"Sadly, they cut too far at corporate headquarters and haven't
sufficiently cut the number of stores."
Mark Hamstra of Supermarket News said Winn-Dixie still needs
to define itself and find a niche. But he thinks the decision
to close stores should help.
"It looks like they are getting rid of their weakest performing
stores. That should help reduce their overhead and bring them
closer to profitability," Hamstra said.
Winn-Dixie, which filed for bankruptcy on Feb. 21, is No. 182
on the 2005 Fortune 500 list of the country's largest corporations.
Winn-Dixie was ranked No. 8 among 19 food and drug store companies,
while Lakeland-based Publix was ranked No. 6 among supermarkets
and No. 117 overall.
The Jacksonville-based supermarket chain listed assets of $2.2
billion and liabilities of $1.9 billion in the February bankruptcy
filing.
PRESIDENT SIGNS BANKRUPTCY REFORM LEGISLATION
President Bush signed the Bankruptcy Reform Bill into law on
Wednesday, April 20, 2005. The Senate passed the Bankruptcy Reform
bill on March 10th and the House then submitted and passed the
identical bill on April 14th without amendment.
Effective Dates
Some provisions of the new bankruptcy legislation have specific
effective dates. All other provisions take effect 180 days from
April 20, 2005.
Sections 308, 322 and 330, all concerning the homestead exemption,
take effect immediately. This will have a major impact on many
Florida residents. See the discussion below on homestead protection.
Section 1234, concerning involuntary bankruptcies, takes effect
immediately on passage and will apply to existing cases as well.
Most other provisions concerning consumer bankruptcies fall under
the general effective date of 180 days after enactment.
Bankruptcy Filings Set New Calendar Year Record In 2003
Bankruptcy filings in the federal courts broke a record during
calendar year 2003, according to data released by the Administrative
Office of the U.S. Courts. Total bankruptcies filed in the 12-month
period ending December 31, 2003, totaled 1,660,245, up 5.2 percent
from the previous record of 1,577,651 bankruptcies filed in the
12-month period ending December 31, 2002. The calendar year total
for 2003, however, did not break the historic high for a 12-month
period, which was reported for the 12-month period ending September
30, 2003, at 1,661,996. The overwhelming percentage of bankruptcy
filings are non-business (personal) filings, totaling 1,625,208
in calendar year 2003, up 5.6 percent from the 1,539,111 personal
bankruptcies filed in calendar year 2002. The number of business
filings continued to decline, totaling 35,037 in 2003, down 9.1
percent from the 38,540 business bankruptcies filed in the 12-month
period ending December 31, 2002. Large public company cases filed
under chapter 11 fell to 142 in 2003, down from 191 in 2002.
Bill allowing for private collection of tax debt moving through
Congress
After multiple failed attempts at cloture, Senate Republicans
and Democrats reached an agreement to move forward on S. 1637,
a bill which includes a provision allowing for private debt collection
of outstanding federal tax debt.
Greenspan says U.S. May Need to Trim Retiree Benefits
Federal Reserve Chairman Alan Greenspan said on February 26th
that Congress should consider cuts to U.S. Social Security benefits
by raising the retirement age and offering less generous adjustments
to future payments. Urging swift action on a spiraling budget
deficit Greenspan told the House Budget Committee that spending
restraint was the best way to meet future commitments rather than
raising taxes and endangering the economy. "The exact magnitude
of such risks is very difficult to estimate, but they are of enough
concern, in my judgment, to warrant aiming to close the fiscal
gap primarily, if not wholly, from the outlay side," he said.
Greenspan warned a major budget crunch looms as early as 2008
as tens of millions of baby boomers begin to qualify for early
retirement benefits. "This dramatic demographic change is
certain to place enormous demands on our nation's resources --
demands we almost surely will be unable to meet unless action
is taken," he said. "For a variety of reasons, that
action is better taken as soon as possible," he said, reported
the newswire.
NEW BOOK RINGS ALARM ON FINANCIAL STATUS OF AMERICAN MIDDLE
CLASS
In “The Two-Income Trap: Why Middle-Class Mothers &
Fathers Are Going Broke" (Basic Books, $26), authors Elizabeth
Warren and Amelia Warren Tyagi report the following alarming statistics:
• In the past 25 years, the number of families in bankruptcy
has increased 400 percent, and housing foreclosures are up 350
percent.
• The average middle-class family can no longer buy a house
without putting both husband and wife to work.
• Parents with young children are more than twice as likely
to go bankrupt than any other segment of the population.
• More than 90 percent of those in bankruptcy would qualify
as middle-class.
If these trends continue, the authors contend, more than 5 million
families with children will file for bankruptcy by the end of
this decade.
"That would mean that across the country nearly one of every
seven families with children would have declared itself flat broke,
losers in the great American economic game," Warren and Tyagi
write.
Copyright © 2005 by David W. Langley. All rights reserved.