December 2023

An Illustrated Guide to Corporate Failure

Traders and lawyers know when a company is about to go under. So should you.

Illustration: Cath Kastner

“Bankruptcy” is a dirty word in boardrooms, on trading floors and in ­employee break rooms. There’s good reason: Insolvency tarnishes reputations, wipes out stockholders and kills jobs. Thankfully, corporate failures are rarely surprising to those who know what to look for. Close observers fully expected the recent bankruptcies of coworking giant WeWork Inc. and pharmacy chain Rite Aid Corp. Almost 200 companies with debts of at least $50 million declared bankruptcy this year—the most since the global financial crisis, except for 2020, during the Covid-19 pandemic. The wave shows no signs of ebbing as high interest rates weigh down corporate balance sheets. So how do you know if a company is about to go under? Read on.

Stock, bond and loan prices are the quickest way to spot a troubled company. When brokers offer floating-rate loans for less than 80¢ on the dollar, there’s little doubt the borrower is struggling. That price means lenders don’t expect the debt to be repaid in full. Almost a year before Rite Aid

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Father of Highland Park massacre suspect files for bankruptcy

The father of the Highland Park massacre suspect has filed for bankruptcy as he faces mounting legal costs related to the 2022 Fourth of July parade shooting.

Robert Crimo Jr. owes more than $1.6 million to more than 50 creditors, according to his October filing in federal bankruptcy court.

That total does not include the potential damages he could face in a dozen pending civil lawsuits from parade shooting victims and their families. A bank has already foreclosed on his Highland Park property.

Prosecutors say his son, Robert Crimo III, fired an assault rifle from a rooftop on July 4, 2022, killing seven people and wounding 48 more.

Crimo Jr.’s income has dried up, and he reported just over $200 in his bank accounts. He reported making $6,793 in 2023, far less than the $70,400 he reported in 2022, and $72,678 in 2021. He recently worked for three months at a Goodwill in Milwaukee, according to the filing.

His debts include a $2,800 unpaid dental bill, more than $2,600 in unpaid tickets in Chicago, thousands in unpaid utility bills and an unpaid car loan.

The largest chunk of debt is corporate loans totaling more than $1.4 million. Crimo Jr. once

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Rudy Giuliani says he’s bankrupt after $148 million court loss

  • Election workers’ attorney says bankruptcy “maneuver” won’t succeed.

Former New York Mayor Rudy Giuliani filed for bankruptcy Thursday after a jury hit him with more than $148 million in damages for defaming two Georgia election workers who received death threats after he falesly accused them of fraud in the 2020 presidential election.

“The filing should be a surprise to no one,” said Ted Goodman, a political adviser to Giuliani.

“No person could have reasonably believed that Mayor Rudy Giuliani would be able to pay such a high punitive amount,” Goodman said. “Chapter 11 will afford Mayor Giuliani the opportunity and time to pursue an appeal, while providing transparency for his finances under the supervision of the bankruptcy court, to ensure all creditors are treated equally and fairly throughout the process.”

On Wednesday, U.S. District Judge Beryl Howell opened the gate for the election workers, Ruby Freeman and her daughter Shaye Moss, to go after the money quickly, saying that Giuliani would likely try to “conceal and dissipate” his assets to avoid paying. Giuliani had repeatedly failed to comply with Howell’s instructions in the defamation case, and he has mounting debts to lawyers and others, Howell said.

In his bankruptcy

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WeWork Catches Its Breath After Reaching Bankruptcy Agreement with 18 Landlords

After months of impasse, office space retailer WeWork has finally come to a resolution with a group of 18 landlords who have insisted that the company pay the rents to its abandoned leases in full.

As part of the agreement overseen by U.S. Bankruptcy Judge John Sherwood, WeWork’s majority shareholder SoftBank, the Japanese investment company, will redirect up to $682.5 million into new credit facilities to act as a backstop for WeWork’s rent obligations. According to Sherwood’s order, landlords cannot draw from those letters of credit en masse at the end of the month, an option they likely would have taken if WeWork defaulted.

WeWork’s landlords had previously objected to this plan, worrying that debtor-in-possession financing would leave them empty-handed should WeWork’s Chapter 11 restructuring go awry. Attorneys representing the landlord insisted that SoftBank should advance new money as part of the agreement. But earlier in the week, Douglas Rosner, an attorney representing the 18 of those landlords, told Reuters that WeWork and Softbank revised the package to address their concerns.

The group, which includes Beacon Capital Partners LLC, Boston Properties, Nuveen, and other backers, continued to express concerns about how they might stay in control in a volatile situation.

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LoHi lawsuit precedes design and contracting firm’s bankruptcy

3327 Tejon scaleddesign and contracting firm’s bankruptcy 1″/

The apartments at 3327 Tejon St. in LoHi. (Justin Wingerter/BusinessDen)

A local design and contracting firm that is being sued for allegedly botching its work on an apartment building in LoHi has filed for bankruptcy.

Cline Design Group, of Littleton, was founded 25 years ago by owner Jeff Cline and has hundreds of projects under its belt across the metro area and in the mountains, it said.

The company filed for Chapter 11 bankruptcy on Dec. 8 because it has less than $500,000 in assets but owes as much as $1.1 million to banks, suppliers and governments.

Most of that debt is disputed, however. Cline Design doesn’t believe that it owes $800,000 for its work in Highlands and, in fact, claims it is the company that is owed money.

In August 2021, Cline Design was hired as the general contractor for a 13-unit apartment project at 3327 Tejon St. developed by Scott Riopelle, owner of Interstate Roofing in Denver. In a lawsuit filed Sept. 7, Riopelle lists dozens of mistakes that he says Cline Design made.

Months went by without work; there was no on-site management; flooring was installed too early and

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