Bally's Yo-Yo Bankruptcy Diet

Photo by Boso

I just can't resist the pun opportunities presented by Bally's second bankruptcy filing in 14 months. Apparently, Bally has not internalized its own core message to its customers: you have to burn more calories than you take in (in other words, burn off more debt than you take on). With $1.4 billion in assets and only $479.5 million in net revenue for the 9 months ended September 30, 2008, Bally's $1.5 billion in debt leaves its balance sheet looking almost as flabby as it did when the company went on its first crash bankruptcy diet in 2007. Bally's personal trainer--Bankruptcy Judge Burton Lifland in the Southern District of New York--now has the second case, even before he had finished up the final details on the last one! Rather than focusing on toning up its balance sheet, Bally appears ready to throw in the towel and pursue a negotiated sale. One hopes the new owners will impose a stricter nutrition/workout regime on Bally, unlike the bloated hedge-fund firm that now owns it (these hedge funds are becoming infamous for their force-feeding of other formerly fit companies like Mervyn's).

Time to Refinance?

Photo by woodleywonderworks

Exams have me sidelined recently, but I wanted to be sure to point out one very nice effect of the Fed's most recent efforts at loosening up lending markets. Mortgage rates have fallen precipitously in the past two weeks. My lender, JPMorgan Chase, is offering 5.25% today, though this lowest rate requires payment of a point. Even for no points, many qualified borrowers can likely reduce their interest rates and monthly payments substantially in this new mortgage climate. Caveat: "qualified borrower" is a much more restrictive term today than in recent years. High credit ratings, substantial equity (at least 80% LTV), and documentable income are back in vogue. Indeed, the W$J reported this morning that self-employed professionals, even those with substantial equity, liquid assets, and reported incomes are having a hard time obtaining loans due to difficulty in documenting their pre-income-tax-deduction incomes.

If you qualify, look into refinancing. At current rates, it may well be worth it.