. . . page 1 of Form B 201, VPFB, voluntary petition for filing for bankruptcy . . . 11 U.S.C., Title 11 United States Code (commonly known as the Bankruptcy Code), & its Chapter 11 is ‘Reorganization’; section-wise, 101-1532 & 1101-1195 – https://www.govinfo.gov/app/collection/uscode/2020/title11 . . .
Chapter 11: protected bankruptcy, for a wannabe phoenix. Forbes puts it succinctly: “[t]he goal is to keep your business afloat and keep creditors at bay while you restructure your debt obligations”. Restructuring to praps slow the speed of repayment, praps even get write-offs. https://www.forbes.com/advisor/debt-relief/chapter-11-bankruptcy/
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“Chapter 11” was mentioned in passing at the W28Sep WBAI Finance Cttee by Jim ‘I know I talk a lot, but I know I’m the best at knocking it out’a the park, OK’ Dingeman (director semi-woke sleepwalker, & WBAI listener-delegate). Hence this post.
The D-Man:
[…] in situations like this, that is, you know, we, we’re, you know, in a, you know, near Chapter 11 situation throughout the whole network, […]
Jim Dingeman (4:31, emphases added), W28Sep WBAI Finance Cttee – https://kpftx.org/archives/pnb/wbai_fin/220928/wbai_fin220928b.mp3
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Pacifica’s 9/11 = 11/11
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The essence of Chapter 11, especially the main effects, will be described in another post, along these lines:
• from the KPFA Protectors to the Fed Protectors: but who’s benefiting?
• the automatic stay of creditor action (including by FJC or, if they sell the debt, by the Marty and Dorothy Silverman Foundation – please note, Miss Grace; even though, by Section 9.1 of the FJC loan agreement, the whole debt, $2 258 821, would otherwise immediately become due)
FJC ‘root’ loan agreement, § 9.1, page 14, being page 15 of the PDF, https://mega.nz/file/AI0iUYga#QzMtaBd0iRTZJ_YNmh2KZ1xKu7Qh_hQ6IcPMVkGWX94 (this agreement has been re-written, for things like maturity at 30Oct2024 – FY2021 auditor’s report, p. 17, being p. 19 of the PDF, https://pacifica.org/finance/audit_2021.pdf)
• Pacifica management functions effectively as a trustee of the assets
• debtor in possession – a concept in bankruptcy law, referring (in part) to the conditioned possession of property, its usage being supervised by the judge
• the exclusive period of 120 days for management to file a plan for reorganisation & debt repayment
• and what can the members do during the whole period – will the judge be their champion? . . . wishing on a star
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A crucial matter is this. Will the current Pacifica fiduciaries – the passive ED Wells & the Fabian directors – survive scrutiny under Chapter 11 bankruptcy? The judge may be presented with evidence that Pacifica lacks competent fiduciaries for protecting its assets. Glaring evidence since 30June is that the directors have chosen not to hire a suitably qualified & experienced chief financial officer to be responsible for the financial management tasks mandated by California law – albeit a responsibility that ultimately remains with the directors. If persuaded, the judge will issue a rare order to the Office of the United States Trustee to provide a ‘case trustee’: new management in the house – 11 U.S.C., § 1104, https://www.govinfo.gov/content/pkg/USCODE-2020-title11/pdf/USCODE-2020-title11-chap11-subchapI-sec1104.pdf; & https://www.justice.gov/ust-regions-r16 (re federal law, Pacifica is in the Central District of California, & its US Trustee is Peter C Anderson)
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Sources on Chapter 11: law, process
In reading the law itself, the fed website encumbers it with annotations. Better flow is achieved by the Cornell University version, https://www.law.cornell.edu/uscode/text/11.
However, here are the primary sources:
• mom, the fed site that spawns (clicking thru the pluses, ‘+’, gets to the latest version of Title 11, & any paragraph; on the PDF, the section #, like ‘§ 1121’, tops the page), https://www.govinfo.gov/app/collection/USCODE. (On the US Code itself, https://www.govinfo.gov/help/uscode.)
• Title 11, opened up, showing the chapter headings, https://www.govinfo.gov/app/collection/uscode/2020/title11
• handy PDF of its Chapter 11, Reorganization, annotated, free from the feds, https://www.govinfo.gov/content/pkg/USCODE-2020-title11/pdf/USCODE-2020-title11-chap11.pdf
• the official overview, Chapter 11 – Bankruptcy Basics, https://www.uscourts.gov/services-forms/bankruptcy/bankruptcy-basics/chapter-11-bankruptcy-basics
• official guidance on filling in the bankruptcy application form, https://www.uscourts.gov/sites/default/files/instructions-non-individuals-2015.pdf
• the forms (including the one for Pacifica), https://www.uscourts.gov/forms/bankruptcy-forms
• Form B 201 itself, https://www.uscourts.gov/sites/default/files/b_201.pdf
• Pacifica’s local US Bankruptcy Court, Central District of California, https://www.cacb.uscourts.gov/ (especially the ‘Rules & Procedures’ tab)
• the Court’s local rules, https://www.cacb.uscourts.gov/local-rules
• Pacifica’s local Office of the United States Trustee, UST (the body administering the process, the US Trustee Program), Central District of California, Region 16, https://www.justice.gov/ust-regions-r16
• its guide on Chapter 11, Guidelines and Requirements for Chapter 11 Debtor in Possession, effective 1Sep2022, 13 pp., https://www.justice.gov/ust-regions-r16/file/ch11_debtors_possession.pdf/download. (A much more readable guide comes from the Middle District of Florida, the Orlando/Jacksonville area, Region 21, Operating Guidelines and Reporting Requirements for Chapter 11 Debtors in Possession and Chapter 11 Trustees, Oct2022, 14 pp., https://www.justice.gov/ust-regions-r21/file/ch11_guidelines_reporting_req.pdf/download.)
• the MOR (Monthly Operating Report): strikes terror even into CPA’s on top of their game . . . this UST form is a stark indication of the standard of financial reporting demanded by the bankruptcy court – much higher than NETA ever provided – a report that has to be submitted every calendar mth, within 21days. This is the legal expectation of how a fiduciary has to behave financially. It stands in sharp contrast with the abdication of responsibility exercised by successive sets of directors sleepwalkers.
The form (4 pp.), UST Form 11-MOR (reference to Chapter 11), https://www.justice.gov/ust/file/1452406/download (there’s also a Mac version) … the instructions for filling it in (14 pp.), https://www.justice.gov/ust/file/1452396/download. The reporting becomes much less onerous once a reorganisation/repayment plan has both been approved by the judge, “confirmation”, & become “effective”: a calendar quarterly form (3 pp.), UST Form 11-PCR (Post-confirmation Report), https://www.justice.gov/ust/file/1452411/download … instructions (7 pp.), https://www.justice.gov/ust/file/1452391/download. All are linked from https://www.justice.gov/ust/chapter-11-operating-reports.
Secondary source:
• 54 no. Q&A, quite useful, https://arklatexlaw.com/practice-areas/bankruptcy/chapter-11-bankruptcy-reorganization-frequently-asked-questions/
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PacificaWatch 