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Bankruptcy Headlines

Report Highlights Continued Financial Stress for Wisconsin Dairy Farmers

The number of Wisconsin farms filing for bankruptcy has more than doubled since milk prices fell in 2014, according to a new report from the Wisconsin Policy Forum, Wisconsin Public Radio reported. The public policy think-tank used federal data to examine the relationship between milk prices and chapter 12 bankruptcy filings. “The bankruptcy filings rose, with a certain lag, but they rose as the milk price fell in recent years,” said Jason Stein, research director at the Wisconsin Policy Forum. “I think in some ways that’s not surprising given what we know about the crisis on dairy farms, as well as how important dairy is to agriculture in general in Wisconsin.” Court system data shows that Wisconsin had 22 chapter 12 cases in 2014. That number rose to 50 cases in 2017, and the Western District of Wisconsin had the most chapter 12 bankruptcies in the nation that year. Stein said 50 cases could seem small, especially when compared to the 68,500 farms in Wisconsin, but the rising number of farm bankruptcies suggests broader financial distress in the dairy industry that could be detrimental to the state’s economy. One factor that could be contributing to more farm bankruptcies is a decline in producers' income. The report found net farm income in Wisconsin fell 56 percent between 2011 and 2017. Combined with low milk prices, declining incomes could be forcing farms to take on more debt and even push some into bankruptcy. The U.S. Department of Agriculture's 2019 Farm Income Forecast shows farm debt increasing by 4 percent this year, reaching $426.7 billion — the highest level of farm debt since 1982.

Freight Carrier NEMF Fighting Banks on Bankruptcy Auction

Bankrupt carrier New England Motor Freight Inc. told a judge this week it has corralled its rolling fleet and is preparing for the trucking industry sale of the decade, the Wall Street Journal reported. More than 1,300 semi-tractors, more than 4,000 trailers and assorted freight-handling equipment are headed for the bankruptcy auction block, NEMF lawyers said in a filing with the U.S. Bankruptcy Court in Newark, N.J. However, banks’ worries could complicate the auction plan, which must be approved by a judge. Many of the trucks were on the road when NEMF filed for chapter protection in February. They had to be rounded up in preparation for the sale, which will be conducted by Taylor & Martin Inc. NEMF is fighting off banks worried that the millions of dollars they are owed won’t wind up in their pockets after the auction. TD Bank NA, Capital One NA and Santander Bank NA have asked a judge to lift the automatic stay protecting the company from legal actions so they can lay claim to collateral, including the equipment. Judge John Sherwood will decide the dispute at a bankruptcy hearing in Newark on April 1.

New Fed Forecast for 2019: Slower Growth and Zero Rate Hikes

The Federal Reserve sent a stark message: The economy is slowing, and it won’t be raising interest rates anytime soon, the Associated Press reported. The Fed left its key short-term rate unchanged and projected no rate hikes this year, reflecting a dimmer view of the economy as growth weakens in the U.S. and abroad. The central bank said that it was keeping its benchmark rate in a range of 2.25 percent to 2.5 percent. It also announced that by September, it will no longer reduce its bond portfolio, a change intended to help keep long-term loan rates down. Combined, the moves signal no major increases in borrowing rates for consumers and businesses. Together with the Fed’s dimmer forecast for growth this year — 2.1 percent, down from a previous projection of 2.3 percent — the statement it issued after its latest policy meeting suggests it is grown more concerned about the economy. What’s more, with inflation remaining mild, the Fed feels no pressure to tighten credit. In predicting no rate increases for 2019, the Fed’s policymakers reduced their forecast from two that were previously predicted in December. They now project one rate hike in 2020 and none in 2021. The Fed had raised rates four times last year and a total of nine times since 2015. The Fed’s decision was approved on an 11-0 vote.

Nine West Exits Bankruptcy Protection with New Name

Nine West Holdings Inc. has exited bankruptcy proceedings and has been renamed Premier Brands Group Holdings LLC, The Wall Street Journal reported. Premier Brands will have more than $100 million of capital to support its operations and growth efforts. Nine West announced a settlement to be taken over by creditors in New York bankruptcy court last month, a deal that included shaving debt obligations by more than $1 billion. That deal ended a courtroom contest over grants of legal immunity to the company’s former owner, private-equity firm Sycamore Partners LP. Nine West filed for chapter 11 bankruptcy protection in April of last year. Premier Brands produces jeanswear, women’s apparel and accessories as well as licenses brands including Anne Klein, Gloria Vanderbilt, Kasper and Napier.

Newark Watershed Asks Bankruptcy Judge for Help with Insolvent Pension Woes

Trustees of the Newark Watershed Conservation and Development Corp. have asked a bankruptcy judge for a break from its obligations relating to the agency’s insolvent pension plan, the New Jersey Law Journal reported. Counsel for the Watershed group asked U.S. Bankruptcy Judge Vincent Papalia on Tuesday to void claims for pension benefits by the agency’s former executive director, Linda Watkins-Brashear, and Donald Bernard Sr., its former senior projects manager. The Watershed also asked the judge to reduce or eliminate a claim for more than $1.8 million by the U.S. Pension Benefit Guaranty Corp., which represents the amount that agency says is needed to make the pension plan solvent. The trustees are represented by Daniel Stolz of Wasserman, Jurista & Stolz in Basking Ridge, N.J.

Warren, Klobuchar Call on FTC to Curtail Use of Non-compete Clauses

Sens. Elizabeth Warren (D-Mass.) and Amy Klobuchar (D-Minn.) signed onto a letter calling for the Federal Trade Commission (FTC) to limit non-compete clauses for workers, The Hill reported. Warren and Klobuchar said that the clauses hurt roughly 30 million workers by limiting their abilities to tack on additional work to supplement their income or find new employment in a similar field for a period of time after leaving a job. The letter requested that the FTC respond within 30 days with any action it is taking to curtail the clause. The message came partly in response to a petition signed by more than 60 organizations and individuals for the FTC to ban non-compete clauses.