Kozyak Tropin Throckmortons Javier a Lopez named to Hispanic National Bar Associations Top Lawyers under 40

MIAMI – February 28, 2017 – Kozyak Tropin & Throckmorton today announced that partner Javier A. Lopez has been named a recipient of the Hispanic National Bar Association’s “Top Lawyers Under 40” award. Lopez will be honored during the HNBA Corporate Counsel Conference in Miami on March 31.

At Kozyak Tropin & Throckmorton, Lopez focuses his practice on complex commercial litigation, with particular expertise in advising and representing international clients in matters brought in U.S. federal and state courts. Among many other achievements, Lopez was recently installed as president of the Cuban American Bar Association.

“It’s no surprise that Javier has been recognized by the HNBA for his remarkable accomplishments and contributions to the field of law and the community,” said Tucker Ronzetti, managing partner of the firm. “We congratulate him on this honor and look forward to his continued success.”

The recipient of many accolades and awards throughout his career, he has been named a “Rising Legal Star” for five consecutive years by Florida Super Lawyers, a “Rising Star” by the Daily Business Review, and one of the Cystic Fibrosis Foundation South Florida Chapter’s “40 Under 40.” Deeply involved in the community, Lopez has been honored as a “Golden Angel” for his support of the Jackson Memorial Foundation through JUNTOS, a philanthropic foundation he co-founded.

Lopez received a bachelor’s degree from Harvard University and a law degree from the George Washington University School of Law.

About Kozyak Tropin & Throckmorton

Kozyak Tropin & Throckmorton is a complex commercial litigation firm founded in 1982 that focuses its practice on bet-the-company commercial cases, bankruptcy matters and class actions. For more information, visit www.kttlaw.com.




By Alan J. Keays

 Afederal judge has given initial approval to a nearly $150 million settlement with an investment firm over its alleged role in a “Ponzi-like” scheme to defraud investors in EB-5 funded developments projects at Jay Peak, Burke Mountain and in the city of Newport.

“(T)he Court preliminarily finds that the settlement is fair, adequate and reasonable, is a prudent exercise of the business judgment by the Receiver, and is the product of good Case faith, arm’s length and non-collusive negotiations between the Receiver and Raymond James,” Judge Darrin P. Gayles wrote in a filing issued Thursday.

“The Court, however, reserves a final ruling with respect to the terms of the Settlement Agreement, including the Bar Order, until after the Final Approval Hearing.”

That final hearing on the settlement announced last week, according to the judge’s filing, is set for June 30.

Last April, state and federal lawsuits alleged that the two developers, Ariel Quiros and Bill Stenger, misused $200 million in EB-5 immigrant investor funds. Federal regulators say the two men used investor money to buy Jay Peak Resort in a deal facilitated by Raymond James, a St. Petersburg, Florida-based financial institution.

A bar order would provide protection for Raymond James against future claims from the receiver and from investors in the EB-5 funded projects. Any objection to the settlement must be filed at the federal court in Miami where the case is pending by June 5 to have an opportunity to be heard at final hearing.

The case is taking place in Miami because that is where Quiros lives and many of his businesses are located.

Any person failing to file an objection by the deadline, Gayles wrote in Thursday’s filing, “shall be forever barred from raising such objection in this action or any other action or proceeding, subject to the discretion of this Court. “

If no objections are filed by the deadline or if the objections are resolved before the hearing, the court may cancel the final approval hearing, the judge added.

Harley Tropin, a Florida attorney serving as lead counsel in a proposed class-action lawsuit brought by investors against several parties, including Quiros, Stenger and Raymond James, said after the settlement was announced that he didn’t expect his clients will challenge the bar order.

“We’ve discussed it with our clients,” Tropin said. “It’s a great deal and we think all the investors will be benefited by it, they’ll all be favor of it.”

After initial settlement talks took place between Goldberg and Raymond James, attorneys in the proposed class-action case were later brought into the discussion, taking part in a two-day mediation session that eventually led to the settlement.

Tropin said rather than dealing with litigation over several years with the various defendants pointing fingers each other over responsibility for the allegations against them, the settlement brings some closure, at least with the Raymond James portion of the case.

There are about a dozen named plaintiffs in the proposed class-action lawsuit. That lawsuit, according court records, was filed on behalf of a proposed class of all 836 people who invested more than $400 million in the series of projects headed by Quiros and Stenger in northern Vermont as part of the federal EB-5 immigrant investor program.

Curtis Carlson, a Florida attorney representing a group of 33 Chinese investors who decided against joining the proposed class-action case, filed a separate federal lawsuit against Quiros and Raymond James. He said after the settlement announcement that he would need time to review it and discuss it with his clients.

Carlson said his clients invested in various projects, or phases, headed by Quiros and Stenger.

“My initial reaction is that some phases are being treated more fairly than others and that could be a real problem,” Carlson said, declining further comment.

Michael Goldberg, the court-appointed receiver overseeing properties in Vermont’s Northeast Kingdom at the center of the investor fraud case, announced the settlement with Raymond James and Associates Inc. at a press conference at the Statehouse last week.

Goldberg, appointed by a federal judge last April to the post of receiver, oversees Jay Peak Resort and other properties in the Northeast Kingdom after state and federal regulators accused Quiros, the owner of the ski area, and Stenger, the resort’s former CEO and president, of investor fraud.

Stenger has since settled his federal case, while the state case is pending. Quiros has contested the allegations against him in both cases.

Goldberg said Thursday that the action by the judge to preliminarily approve the settlement was expected. Now, the receiver said, he will send out notices to the various parties and investors to inform them of the settlement details and the key dates if they intend to oppose it.

“We are very optimistic that this will get approved,” he added.

A large portion of the settlement funds will be used to refund dozens of investors who put money into projects that never materialized, or weren’t built as pitched. The alleged fraud put in peril the immigration status of many investors seeking permanent U.S. residency. That’s because job creation requirements tied to those investments under the EB-5 foreign investor program for those projects were not achieved.

The Raymond James settlement, if ultimately approved, releases claims against Raymond James and Joel Burstein, Quiros’ former son-in-law, who served as the branch manager of a Raymond James office in Coral Gables, Florida.

Goldberg claimed in his lawsuit that the financial services company and Burstein helped Quiros develop a scheme to commingle and “steal investors’ funds for his own use in breach of partnership agreements.”

Goldberg alleges that Raymond James “aided and abetted” Quiros in a “Ponzi-like” scheme in which he misused $200 million in investor funds, including “looting” more than $50 million.

The settlement provides roughly $80 million to EB-5 investors allegedly defrauded, with the largest chunk of the money going to those who put money into a failed project to build a biomedical research facility in Newport.

The U.S. Security and Exchange Commission has said that project, AnC Bio Vermont, was “nearly a complete fraud.”

The settlement will ensure that contractors and other businesses owed millions will be paid in full for their work and services associated with projects funded through the EB-5 program.

If the settlement is approved after a final hearing, Raymond James will pay the receiver $145.5 million. Combined with $4.5 million Raymond James paid in an earlier agreement with state regulators, that brings the total settlement figure to $150 million.

Most investors in projects at Jay Peak will not get an immediate financial benefit from the settlement, because six of those developments, or phases, were built and are operating.

Investors in Jay Peak’s Tram Haus Lodge, who held promissory notes, will be paid in full with funds from the settlement. Also, the more than 60 investors in AnC Bio will be able to get their money back. That’s because funds from that project were used to cover shortfalls in earlier projects at Jay Peak.

Those investors who do not get immediate funds from the settlement, however, do get the benefit of having debts, such as money owed to businesses and contractors, associated with projects they invested in, paid off so when the properties sell, they will be free and clear to benefit from the proceeds.

Under the settlement, Raymond James admits no wrongdoing. The company has reported that it “accrued” $50 million in expenses related to the case prior to the settlement.

“We believe this resolution is fair and representative of our commitment to redressing the victims’ losses in this case,” Jonathan Santelli, Raymond James executive vice president and general counsel, said in the statement announcing the settlement last week.

The settlement includes $25 million to cover attorneys fees for investors. Attorneys seeking compensation from that fund will have 30 days from Thursday’s order to submit a claim with the court.

Click here for the original article.


Retailers Going Bankrupt at Staggering Rate on Flood of Store Closures

By F McGuire

Retailers reportedly are filing for bankruptcy protection at a disturbing rate that’s flirting with recessionary levels.

Meanwhile, a steady stream of store closures continues to haunt the battered American retail industry.

“It’s only April, and nine retailers have already filed for bankruptcy since the start of the year — as many as all of last year,” Business Insider explained.

“2017 will be the year of retail bankruptcies,” Corali Lopez-Castro, a bankruptcy lawyer, told Business Insider. “Retailers are running out of cash, and the dominoes are starting to fall.”

More than 3,500 stores are expected to close over the next several months, BI reported.

Annual retail bankruptcies peaked at a total of 20 in 2008. The U.S. could hit that dismal milestone by September if the rate is sustained, CNBC has reported.

The pace of store closings this year is already ahead of 2008, that measurement’s most recent peak, according to Credit Suisse Group AG.

In the past year, companies including American Apparel and Limited Stores have begun shutting down retail operations, while dressmaker BCBG Max Azria, discount shoe seller Payless Inc., and department store operator Gordmans Stores have filed for bankruptcy.

The rapid descent of so many retailers has left shopping malls with hundreds of slots to fill, and the pain could be just beginning, Bloomberg reported. 

More than 10 percent of U.S. retail space, or nearly 1 billion square feet, may need to be closed, converted to other uses or renegotiated for lower rent in coming years, according to data provided to Bloomberg by CoStar Group.

“It’s an industry that’s still in search for answers,” said Noel Hebert, an analyst at Bloomberg Intelligence. “I don’t know how many malls can reinvent themselves.”

With retail rents on the rise due to record-low vacancies, and e-commerce continuing to generate more sales, more stores going dark is inevitable, said Marshal Cohen, chief industry analyst at NPD Group. Now that so many retailers have announced closings, investors may be less skittish when a company does the same, he said.

“This is now a commonplace opportunity for retailers to evaluate and cleanse, looking at every single store and determining whether or not they need that,” Cohen told Bloomberg. “When so many are doing it, they don’t look so bad. It’s almost wrong if you don’t close a store.”

Steve Beaman, chairman the Society to Advance Financial Education, recently told Newsmax TV that mass store closures and layoffs by Sears, Macy’s and Kmart only prove that the retail industry continues to undergo a sea change because of online shopping.

And this seismic shift may soon extinguish a cultural landmark of the recent past – the American shopping mall.

JD Hayworth asked Beaman on Newsmax TV’s “America Talks Live” if malls are a relic of a bygone era.

“My personal opinion is they are,” he said. He cited many many requiring adults to chaperone those under the ages of 21 or 18.

“So we’re already going to see the demise of it being the hang out for kids and I think that will change the retailing habits of it. The overall security concerns of the brick-and-mortar retailers is going to become a draining cost on them. So, they’re going to think more and more let’s go to the internet,” he said.

To be sure, Newsmax Finance Insider Jeff Snyder said the retail malaise just may be indicative of a deeper economic malady.

“When analyzing the shift in consumer preferences it is usually presented as “all or nothing,” meaning that shoppers leaving brick-and-mortar stores are bestowed with a convenience option that they are exercising,” Snyder wrote for Newsmax Finance.

Instead, the shift toward online may not be separable from the “weak demand environment” at all. In other words, if consumers have become fickle about bargains and finding the lowest price, that may be just as much macro-economic as micro-economic.
It may be that online retailers are best positioned in a downward economic transition because they can offer better prices without having the burden of the huge sales distribution costs that come with operating physical stores.

That seems to be the judgment of the world’s producers as this “manufacturing recession” continues on and on.

Click here for the original article.

‘The dominoes are starting to fall’: Retailers are going bankrupt at a staggering rate

By Hayley Peterson

Retailers are filing for bankruptcy at an alarming rate that’s quickly approaching recessionary levels.

It’s only April, and nine retailers have already filed for bankruptcy since the start of the year — as many as all of last year.

“2017 will be the year of retail bankruptcies,” Corali Lopez-Castro, a bankruptcy lawyer, told Business Insider after she attended a recent distressed-investing conference in Palm Beach, Florida. “Retailers are running out of cash, and the dominoes are starting to fall.”

Payless ShoeSource, hhgregg, The Limited, RadioShack, BCBG, Wet Seal, Gormans, Eastern Outfitters, and Gander Mountain are among the retailers that have filed for bankruptcy so far this year, and most are closing hundreds of stores as a result. On top of those closures, retailers that are staying in business — at least for now — are shutting down a record number of stores.

More than 3,500 stores are expected to close over the next several months.

Annual retail bankruptcies peaked at a total of 20 in 2008 — a level that the US could reach by September if the current rate of filings continues, according to CNBC.

During the recession, private equity firms and banks came to the rescue of some retailers and brought them out of bankruptcy through restructuring.

But there aren’t many firms willing to rescue dying retailers these days, according to RBC Capital Markets.

“Private-equity firms [and]  banks seem less willing now to step in to save these failing retailers as the issues this time around are more structural rather than quick operational fixes,” RBC analysts wrote in a recent research note.

Mike Nudelman

In other words, shoppers’ habits are fundamentally changing, and some retailers just aren’t cut out to survive in the new retail environment.

Traditional retailers with large fleets of physical stores have been hit the hardest.

Visits to shopping malls have been declining for years with the rise of e-commerce and titanic shifts in how shoppers spend their money. Visits declined by 50% between 2010 and 2013, according to the real-estate research firm Cushman & Wakefield.

And people are now devoting bigger shares of their wallets to restaurants, travel, and technology than ever before, while spending less on apparel and accessories.

Business Insider/Sarah Jacobs

Malls across the country are struggling to stay open as stores close in droves. But it’s getting increasingly more difficult to find replacements for lost tenants, according to RBC Capital Markets.

“Over the last few years, we believe most of the emptied store space has been taken over by expansion of restaurants, entertainment spaces/movie theaters, and health & wellness destinations (hair/nail salons and fitness studios),” analysts wrote. “If store closures continue, we find it harder to imagine there is a solid supply of concepts willing to take over these [locations].”

Click here for the original article.


The retail apocalypse is having a terrifying impact on one corner of Wall Street

By Hayley Peterson 

  • Department stores are shutting hundreds of locations, many of which are anchor tenants in malls.
  • When the malls lose such huge tenants, they can wind up defaulting on debt that has been bundled with other mall loans into a bond called a CMBS.
  • Investors are betting against the CMBS like they did before the housing crisis, and shares of mall real-estate investment trusts are also falling fast. Losses on the loans are also causing a pullback in new lending, creating a downward spiral.

One of the biggest waves of retail closures in decades is killing off malls across the US and taking some Wall Street investments with it.

Struggling with online competition, huge retailers like Sears, JCPenney, and Macy’s are closing hundreds of stores that typically anchor malls, meaning they occupy the largest spaces at mall entrances and drive most shopper traffic.

When a big store shuts down, it triggers a chain reaction that can end with the shopping mall being unable to collect enough rent to cover its debts, forcing it to default. By one measure, as many as a third of the malls in the US are at risk of facing this situation.

This has become a nightmare for investors who are expecting to collect on those debts. They own bonds — called commercial mortgage-backed securities, or CMBSs — that are backed by the mall properties’ rents.

Echoes of the housing crisis

If this sounds familiar, that’s because it’s similar to one element of the financial crisis. Back then, mortgage-backed securities, which pooled homeowners’ mortgages into a multitrillion-dollar financial market, were part of the problem. They encouraged risky lending, and together with derivatives on the bonds that were ginned up by Wall Street, they left banks and investors with massive losses that threatened the financial system.

Nobody is predicting anything that dire today, but CMBSs, which Morgan Stanley says account for nearly 10% of the $3.6 trillion commercial real-estate mortgage market, work similarly. They pool debt payments from several malls or other commercial properties and then splice them so that investors can buy the segment and take on the kind of risk they want.

What’s happening in the retail market, though, is worse than anyone who invested in the bonds could’ve imagined a few years ago.

“Malls are hard to turn around once they go downhill,” said Steve Jellinek, vice president of CMBS analytical services for Morningstar Credit Ratings. As a result, many CMBS investments are getting wiped out, and “retail lending has really taken a beating,” he said.

About $48 billion in loans backed by mall properties are at risk of default, according to Morningstar.

Jellinek points to Hudson Valley Mall in Kingston, New York, as an example of the domino effect triggered by a mall’s demise. The mall’s decline was profiled by DeadMalls.com, a site dedicated to dying retail, which says this about its recent history:

“The recent recession and downturn of retail sales as a whole has started to take hold of the mall in rapid succession. Many smaller stores have vacated, and both Buffalo Wild Wings and Friendly’s (a staple since the mall opened) have left. The big blows came when both JCPenney and Macy’s shuttered in 2015 and 2016, respectively. Sears and Target remain as the only major anchors, along with Best Buy and Dick’s, but they have not been enough to draw traffic.”

The mall defaulted on its $49.1 million loan in 2015 and was put into receivership last summer, according to the Daily Freeman, a newspaper based in Kingston. In January, it was sold for $9.4 million, a fraction of the property’s $66 million assessment.

Jellinek says this kind of fire sale is common with distressed mall properties.

“A lot of times, these malls decrease in value so fast,” he said. “There is very little the servicer can do to maintain the value once tenants start leaving.”

The CMBS that backed the property took a hit worth $42 million. In this scenario, the lowest class of bondholders will likely end up empty-handed. It could also affect the second and third classes of investors from the bottom.

It’s not just the debt market that’s taking a hit. Real-estate investment trusts that own the malls are suffering, and investors are being advised to avoid them.

For example, in a lengthy research note discussing the real-estate market, Morgan Stanley identified CBL & Associates as a “highest conviction underweight recommendation,” citing “elevated risk from lease modifications and store closures.”

Markets Insider

CBL was managing the Hudson Valley Mall, a job that required it to find new tenants for the empty space. Its shares are down more than 50% over the past two years.

CMBS heyday

Ten years ago, before the recession, retail investments appeared much rosier, and CMBS loans skyrocketed.

“Lenders were falling over themselves to make loans on mall properties,” and their terms were overly optimistic in expecting revenue to improve, Jellinek said. “When the economy went into the dumpster, cash flow fell, and that led to outsized losses.”

Now, Morningstar expects CMBS lending overall to drop about 15%, from $70 billion last year to $60 billion this year.

Not everyone is suffering. As with the residential-mortgage crisis, some investors, like Jason Mudrick of the $1.6 billion Mudrick Capital Management, have been betting on the decline in CMBS by shorting some securities.

“This is a forever trend,” he told Bloomberg, referring the retail industry’s struggles. “When you think about how things are going to look 10 years from now or 20 years from now, our parents will be dead, our kids will be adults — you think more people are going to be shopping online or less? This is the Amazon effect, and it’s here forever.”

Mike Nudelman

Not all malls are under threat. The industry categorizes malls by their location and the quality of their anchors.

Class A malls — those in wealthy areas with high occupancy rates and upscale anchors such as Nordstrom and Neiman Marcus — are doing fine. But class B malls and those in the C and D territories are at risk of default.

The real-estate research firm Green Street Advisors estimates that 30% of all malls fall under the C and D classifications. That means at least a third of shopping malls are at risk of dying off.

“This year will be the year of retail bankruptcies,” Corali Lopez-Castro, a bankruptcy lawyer, told Business Insider after she attended a recent distressed-investing conference in Palm Beach, Florida. “Retailers are running out of cash, and the dominoes are starting to fall.”

Click here for the original article.

New York City’s high-end restaurants are disappearing

By John Aldan Byrne

New York City’s higher-end restaurant scene is now experiencing what some national dining chains have been going through for the past year or so — closing the kitchen.

Le Cirque, the tony French restaurant on East 58th Street, has just filed for bankruptcy; the Michelin-starred Public, a 14-year-old Nolita restaurant, will close in the next month or so; and Nick & Toni’s Cafe at Lincoln Center — an offshoot of the famed Hamptons eatery — shuttered earlier this year after 23 years.

“The cost of doing business in the city no longer allows us to operate our business,’’ Nick and Toni’s managing partner Mark Smith told the Web site Eater.

In an industry challenged by changing eating habits, rising labor costs and oversupply, the latest declines locally are also another stark sign of how the average American consumer is tapped out, according to analysts.

Patrons are staying home, or are switching over to fast-food joints, which offer cheaper alternatives and special deals, data shows. And that’s not a good omen for the economy.

Across the nation, more than a dozen restaurant chains with thousands of workers in hundreds of locations have collapsed or filed for bankruptcy in the past year.

Bold-faced names include Bob Evans, Ruby Tuesday’s and Logan’s Road House.

“It is a harbinger of a decline in the economy,” David Rosendorf, a restaurant bankruptcy attorney and food blogger, told The Post.

“The restaurant industry is getting hard hit just like the retail sector, where consumers are pulling in their discretionary spending,” added Rosendorf, a partner at KozyakTropin& Throckmorton in Miami. “It’s a leading indicator of a pending recession.”

While analysts are divided on some of the biggest negatives hurting restaurants — from over-saturation to shifting consumer tastes — none dispute that sales have plunged.

Millennials, many working in the low-wage labor economy, are among the clientele staying home more often. Cowen analyst Andrew Charles, joining a chorus that sees an industry shakeout, with closures and consolidations lasting as long as a decade, says consumer spending pressures are an industry headwind.

“Customers are not coming out in the same numbers,” Rosendorf said. “These restaurant businesses are lucky if they are operating on a 5 percent profit margin.”

Those margins take a lot of work. The industry employs about 14 million Americans, and racks up $710 million in annual sales, about 4 percent of US gross domestic product.

But thousands in the business could see pink slips in the months ahead. In the past 12 months, the total number of US restaurants declined by 2 percent, according to the NPD Group.

And in a bleak admission, it only sees customer growth happening in the fast-food sector this year. Nomura analyst Mark Kalinowski has his only buy rating on McDonald’s.

“To manage growing costs, some full-service restaurants are consolidating jobs, using new technology to analyze and streamline the operations of their businesses, while cutting costs and trying not to reduce the quality of food and service,” said Andrew Rigie, executive director of the NYC Hospitality Alliance.

Unfortunately, added Rigie, “there’s no magic recipe for success” in the restaurant industry.

Click here for the original article.

State, former healthcare provider agree to settle suit over prisoners’ untreated hernias

About 1,800 current and former Florida prison inmates who were denied medical care for hernias will be entitled to divide $1.7 million in damages from a class-action lawsuit under a conditional settlement agreed to by the Department of Corrections and its former prison health-care provider, Corizon, and filed in federal court in Tallahassee last week.

Click here to read the full article.