Asian Journal- The Filipino-American Community Newspaper

PRACTICALLY every one in California has been to Magic Mountain at one time or another. Six Flags operates 20 theme parks in the US, Mexico and Canada. It’s a right of passage for kids in California to graduate from Disneyland to Magic Mountain as soon as they get to middle school. The company had 25 million visitors last year producing record revenues. Let’s assume the cost of a ticket is $40, that number of visitors would have generated $10 billion of gross receipts. We don’t know how the bottom line figures look like but despite the huge revenues, Six Flags is unable to sustain $2.4 billion of debt. At 10 percent interest, that level of debt would require $240 million of interest payment a year just to keep the debt current! Thus, the company filed for Chapter 11 bankruptcy reorganization last month. The purpose of the bankruptcy is to allow Magic Mountain to get rid of at least 75 percent of its debt. Instead of trying to pay off the $2.4 billion of debt, the company will get rid of $1.8 billion without any payment, through bankruptcy. This means that Magic Mountain will emerge out of bankruptcy court owing only $600 million of debt instead of $2.4 billion, just like magic.

This means the creditors will have to suffer a loss of 75 percent or $1.8 billion of money owed to them by Magic Mountain. Creditors will be given lifetime VIP tickets to the theme park in exchange for voiding 75 percent of the IOU’s. The company said that it inherited a "$2.4 billion debt load that cannot be sustained, particularly in these challenging financial markets…"

The purpose of bankruptcy reorganization is to give the debtor a chance to become productive again by allowing it to shed off unsustainable debt. GM and Chrysler both filed for bankruptcy in the last 2 months and were both out of bankruptcy in 45 days with a lot less debt. Both companies emerged out of bankruptcy as leaner and more competitive entities poised for profitability. Magic Mountain follows the path of the BIG 2 with it’s own bankruptcy last month. Thus, bankruptcy does not mean that Magic Mountain, GM and Chrysler have stopped doing business and closing down. On the contrary, the purpose of bankruptcy reorganization is to get rid of unsustainable debt so that the business can become profitable once more. The company president said that in bankruptcy Magic Mountain would cut off its debt so that it can emerge from bankruptcy "stronger and more competitive than ever." Watch out Mickey Mouse, the next roller coaster ride from Magic Mountain will bring you to the moon and back to Valencia in one minute and 30 seconds! Have you ever heard of faster than the speed of light?

Thus, the proposition that bankruptcy is good for you if you have too much debt is true. This is not only true for business. It is also true for individuals. If you have too much accumulated debt, it will be beneficial for you to seriously consider going through bankruptcy to get rid of debt, so you can become productive again. In a Chapter 7 case, you will be able to get rid of all of your accumulated debt while keeping your house, retirement account, furniture, cars and practically all if not all of your assets. For instance, if you own a $400,000 house with a mortgage of $450,000, have a retirement account of $500,000, own a 2008 Lexus RX 400 with a balance of $30,000 and a 2009 Mercedes Benz 300 S with a balance of $28,000, you will be able to keep all of these assets while getting rid of $100,000 of credit card debt, assuming you pass the means test analysis. By nullifying a hundred thousand of credit card debt, you free yourself of $4,000 of minimum credit card payments monthly. You become productive again while you keep all your assets and income.

Contact my office if you need debt relief. I will analyze your case personally.

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Lawrence Bautista Yang specializes in bankruptcy, business, real estate and civil litigation and has successfully represented more than five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 1000 S. Fremont Ave., Bldg. A-1 Suite 1125 Unit 58, Alhambra, CA 91803.

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( Published on August 5, 2009 in Asian Journal Los Angeles p. B4 )