• Chicago Fed Calms Fear of Projected Municipal Bankruptcies

    Despite predictions of widespread defaults and bankruptcies in the United States municipal market (worth approximately $2.9 trillion), the Federal Reserve Bank of Chicago’s recent report attempts to calm investor fears.

    Richard Mattoon, senior economist and author of the report, acknowledges that municipalities are facing declining property values, decreased state aid and under-funded pensions. Yet Mattoon predicts a bright future for the municipal market: “[I]f history is any guide, few local governments will either default on their debt or end up in bankruptcy ,” the report said.

    According to Mattoon, there are a multitude of alternatives available to the municipalities. Many Chicago bankruptcy attorneys agree and recommend that local governments begin tapping reserve funds and take immediate corrective budget actions.

    The report comes as good news for investors, many of whom have been running from the municipal market since late last 2010. The fear of investing in this type of market was in part due to Meredith Whitney, a well-regarded Wall Street analyst, when she publicized predictions that 50 to 100 local governments would topple under their current indebtedness.

    The Chicago Fed report projects that while local government debt levels have increased since 1999, “history suggests that municipal bond defaults are rare, even in the worst of times.” In fact, municipal defaults are down this year compared to last.

    Worth noting is the fact that Chapter 9 municipal bankruptcy filings are not legal in some states. In states where the law allows Chapter 9 bankruptcies, they are quite rare; approximately 600 Chapter 9 petitions have been filed since 1934.

    Benjamin Brand Services – Chicago Bankruptcy Lawyers

  • Pasquinelli Homebuilding Files for Chapter 7 Bankruptcy

    Pasquinelli Homebuilding, the once large and lucrative Chicago-based national homebuilder, has just filed Chapter 7 bankruptcy.

    Pasquinelli started building in Chicago in 1956; the company eventually expanded into Indiana, Ohio, North Carolina, South Carolina, George, Florida and Texas. As of 2006, the company’s annual revenues had eclipsed the $500 million mark.

    According to the Chapter 7 petition filed by Pasquinelli’s Chicago bankruptcy lawyer , the homebuilder currently has more than 10,000 creditors and $10 million to $50 million in liabilities. Despite this crushing debt, the company only has $500,000 to $1 million in assets.

    The bankruptcy petition will stay all current litigation. It will also prevent Harris Bank from going forward with its claim that Bruno and Anthony Pasquinelli illegally appropriated $87 million in revenue from Pasquinelli Homebuilding between 2005 and 2009. Harris Bank filed a complaint against the Pasquinelli’s last year in Cook County, Illinois. The court dismissed the complaint. Harris had planned to re-file the suit, but that will have to wait until the bankruptcy is final.

    The Pasquinelli petition adds to a long list of homebuilders whom have vanished from the Chicago construction market. As the number of petitions increase, the demand for Chicago bankruptcy attorneys will rise.