As Takata Files For Bankruptcy & Dissolves, U.S. Companies On The Line

Articles Tagged with: Alabama Credtors Rights Lawyers

As Takata Files For Bankruptcy & Dissolves, U.S. Companies On the Line

Takata—the airbag manufacturer at the center of the largest auto safety recall in history—filed for Chapter 11 bankruptcy on June 25^th, setting in motion a series of business transactions and obligations that will undoubtedly fall on the shoulders of various unsecured creditors in the U.S., such as Fiat Chrysler.

The company has specifically decided to dismantle itself in stages because it owes too much money to too many people to continue operating. Much of the work—which mostly includes settling disputes by companies such as banks and carmakers, as well as accident victims who are owed money by the airbag giant—will now take place in courts throughout both the United States and Japan.

The Deal

In filing for bankruptcy, Takata announced that it would sell its surviving operations to Key Safety Systems, a Chinese-owned company which rivals its American equivalent. Takata will continue to supply replacement airbag inflators as it winds down; a move designed to insulate Key Safety Systems from the recall process.

Although antitrust regulators in various markets must first approve the deal, it appears to provide Key Safety Systems with approximately one-quarter of the global airbag market, making it the second-largest supplier in the industry. In this move, Takata has essentially placed a legal firewall between itself and its creditors.

Uncertainties for Carmakers, Takata’s Biggest Unsecured Creditors

Takata has estimated that its liabilities far outweigh its assets at this point, ranging from $10 to $50 billion. Ultimately, no one yet knows just how much the recalls will cost and/or the victims could be awarded in lawsuits. However, it also owes billions of dollars to banks and automakers, which have been funding the costs to replace the company’s airbag inflators. Declaring bankruptcy effectively leaves some of these creditors at a loss.

Because there are so many uncertainties—not only with legal payouts Takata might have to pay, but also due to the potential for additional defects to surface after Takata is long gone—and because U.S. carmakers have indicated that they are committed to ensuring that all cars are fixed, these companies are now in a tricky position. For example, Honda has already informed its shareholders that it may be difficult to recover the majority of claims that the automaker holds against Takata. Other companies include Fiat Chrysler and Toyota (amongst others), as they are amongst Takata’s biggest unsecured creditors.

Business & Corporate Lawyers Serving Alabama

Cloud Willis & Ellis offers a variety of legal services for our clients. Our practice is focused on Bankruptcy, Business Litigation & Corporate Law, Creditors’ Rights, and related areas. We practice on a broad spectrum of topics, addressing the needs of our clients in a variety of business matters and financial dilemmas.

If your company is dealing with the financial fallout of an associated company, we can help. Contact us for a free consultation—we serve Birmingham, Hoover, and Mobile-based businesses and creditors.

Resources:

nytimes.com/2017/06/26/business/takata-japan-bankruptcy.html

nytimes.com/2017/06/25/business/takata-japan-restructuring.html?action=click&contentCollection=Business%20Day&module=RelatedCoverage&region=EndOfArticle&pgtype=article

Alabama Collection Case Heard By U.S. Supreme Court Could Have Broad Implications

On January 17^th, the U.S. Supreme Court heard a case that could have national repercussions for debt collectors. Specifically, the issue at stake is whether debt collectors are abusing the bankruptcy process when they request bills to be paid, bills which are no longer collectible under state laws.

According to the Federal Trade Commission, the nine largest debt buyers are currently facing a value of more than $140 billion, where more than 10 percent of that debt is between six and 15 years old; therefore, this decision in this case will have a broad impact on U.S. collection companies.

The Case

The case heard by the Court originated with the bankruptcy of an Alabama resident who filed for chapter 13 bankruptcy almost three years ago, enabling any businesses who were owed money be paid over the course of three to five years by filing a claim. One of those was a company which filed a claim for credit card debt that was more than six years old.

The Law

Many state laws prohibit medical and credit card collection companies from collecting for debt after three to six years; for example, in Alabama, creditors cannot collect debts that are more than six years old.

However, these companies have traditionally still been able to file paperwork in association with a consumer bankruptcy case in order to collect debts that may technically be ‘expired’ at the state law level. This is because bankruptcy law does not explicitly ban creditors from collecting older debts; in fact, one might argue that bankruptcy law explicitly invites this type of debt collection.

A company requesting payment under bankruptcy law has been both a legal and fair means of collecting past due debts for many years. Collection companies are still technically in keeping with federal law as long as they are, at the federal level, in compliance with the Fair Debt Collection Practice Act, which establishes a system of consumer protection against abusive debt collection practices, promotes fair debt collection, and provides consumers with a means of disputing and obtaining validation of debt information in order to check its accuracy.

Now At Issue

One of the main issues that the Court will decide on is whether this particular debt-collection practice conflicts with the requirement that creditors file claims in good faith. The Court is expected to announce its decision by the end of June of this year.

Attorneys Committed To Protecting Collection Companies

Cloud Willis & Ellis has been serving local and national creditors in commercial, medical, and other collections for years. We work hard to protect those rights for creditors, who depend upon these payments. Contact us in Alabama today and find out how we can help your business efficiently recover delinquent debts.

Resources:

wsj.com/articles/supreme-court-hears-arguments-on-collection-of-expired-debts-1484693691

ftc.gov/enforcement/rules/rulemaking-regulatory-reform-proceedings/fair-debt-collection-practices-act-text

What Is A Mechanic’s Lien?

A mechanic’s lien (also referred to as a materialman’s lien or a construction lien) is a legal tool that is designed to help those who supply labor or materials for a construction project to collect money that is owed to them for work that they have completed but have unjustifiably been denied payment for. If you own a construction business, you may lose sleep at night worrying about not being about to collect payment for your services; therefore, it is a good idea to know a little bit about how a mechanic’s lien works just in case you ever need one. This article briefly outlines Alabama’s laws regarding who can claim a mechanic’s lien, how to file a lien, and how long your lien is valid.

Who Can Claim A Mechanic’s Lien In Alabama?

Under Alabama code section 35-11-210, a mechanic’s lien can be filed by a mechanic, person, firm, or corporation who acts on a qualifying contract with the owner (or his agent, architect, trustee, contractor, or subcontractor) of land and improves a building or improvement of land by:

Performing any work or labor,
Furnishing any material, fixture, engine, boiler, waste disposal service and equipment, or
Repairing, altering, or beautifying the land

Note that in Alabama even subcontractors may be able to obtain a mechanic’s lien against the property that they have been working on. But how do you actually file a mechanic’s lien?

How To File A Mechanic’s Lien In Alabama

In order to obtain a mechanic’s lien you must first go to the office of the probate judge for the county in which the property is located and file a verified statement of the lien. A ‘verified statement of the lien’ is a statement given in writing that states the amount of the demand secured by the lien and a description of the property on which the lien is claimed (generally providing the house’s address is sufficient). The person claiming the lien, or some other person who knows the facts surrounding the desired lien, must provide this statement under oath.

It is important to note that Alabama requires verified lien statements to be filed within a certain time period. Original contractors must file within six months after completing the last item of work or labor, or providing the last material. On the other hand, journeymen and day laborers have 30 days, and all other parties have four months.

How Long Is A Mechanic’s Lien Valid In Alabama?

Generally, Alabama code section 35-11-221 requires lien holders to bring an action to enforce their mechanic’s lien within six months “after the maturity of the entire indebtedness secured thereby…” In some instances this time period may be tricky to determine, but a competent creditor’s rights attorney can help determine when your lien will expire.

How Can We Help?

If you are interested in obtaining or enforcing a mechanic’s lien in Alabama it is a good idea to consult with a competent attorney. The experienced creditor’s rights lawyers at Cloud Willis & Ellis, LLC have offices in Birmingham (205-322-6060) and Mobile (251-545-4844) and are happy to assist you.

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