The BLBlog

The embattled Peanut Corp. of America has filed for bankruptcy in the Western District of Virginia.

The Lynchburg-headquartered company is facing a federal criminal investigation and an expected flood of lawsuits over peanut products allegedly tainted with salmonella bacteria.  PCA’s insurance company recently filed suit in Lynchburg, asking a judge to limit the insurer’s exposure for liability claims.

“Given the events of the past month, including the broad-based recalls of the products sold by the company and its subsidiary in Plainview, Texas, the company has no alternative but to cease operations,” said Roanoke lawyer Andrew S. Goldstein in a news release published by WDBJ.

The News & Advance has details and copies of the bankruptcy petition and the corporate resolution authorizing the chapter 7 filing.

By Peter Vieth

After a merger bid failed, the Roanoke-based Shenandoah Life Insurance Company has been placed in receivership.

The news comes from the State Corporation Commission, which says both the company and the SCC agreed “the receivership was necessary to protect the interests of policyholders and creditors.”

From the SCC news release:

Shenandoah Life lost approximately $50 million when the value of its equity position in Fannie Mae and Freddie Mac preferred stock was significantly diminished.

Virginia Commissioner of Insurance Alfred W. Gross has been appointed deputy receiver in an effort to rehabilitate the company. A moratorium has been placed on the payment of claims and benefits, except for accident & health claims, death claims, and periodic annuity payments, until the deputy receiver completes his evaluation of Shenandoah Life’s financial condition. The company currently will no longer issue new insurance policies.

Posted by Peter Vieth

Virginia-based title insurer LandAmerica will be out of business by the end of the year.

The Richmond Times-Dispatch reports on a notice filed with the state indicating that 291 LandAmerica employees will be let go, including the chief financial officer and the chief legal officer.

Bankruptcy law professor Robert M. Lawless said, “This is what’s known as turnip law.  You can’t get blood out of a turnip.”

Posted by Peter Vieth

Richmond-based Circuit City Stores said today it was unable to find a buyer for its business.  Instead, Circuit City plans to sell all the merchandise from its stores.  The plan is being presented to the U.S. Bankruptcy Court in Richmond today, according to the Richmond Times-Dispatch.

Posted by Peter Vieth

You and some old college pals are on your way to Charlottesville or Blacksburg for a big game. You’re the designated driver, so it’s only Co-cola or a cup of joe for you while your buddies in the car enjoy something a little…happier.

Those car rides likely will come to an end if House Bill 1614 is passed. That measure, proposed by Del. Harry R. Purkey, R-Virginia Beach, would prohibit possession of open-container alcoholic beverages by the passenger in a car.

Section 18.2-323-1 of the Virginia Code already makes it illegal for a driver to have an open container in a car.

But this measure says no to the passenger area as well. And drivers, designated and otherwise, should pay attention.

The bill states, “An open container shall be considered to be in the possession of the driver of a vehicle if the open container is in the passenger area of a vehicle, but is not in the possession of a passenger. An open container shall be considered to be in the possession of a passenger of a vehicle if the open container is in the physical control of the passenger.”

In other words, if you’re driving and the cops pull you over, and your buddy’s cup of Jim Beam is in the cup holder, you’re in trouble, and face the open-container law. If he’s holding the cup himself, he’s in trouble, and faces a $25 fine.

— Paul Fletcher

Lawmakers can expect pressure to cap interest rates for car title lenders.

The Free Lance-Star reports that Del. Joe Morrisey, D-Henrico, is drafting a bill that would cap the annual interest rates of car title loans at 36 percent. Currently, most car title lenders have an interest rate of nearly 10 times that amount.

In addition to Morrisey’s efforts, various faith-based and anti-poverty organizations have banded together to form the Virginia Partnership to Encourage Responsible Lending. The coalition, whose mission includes educating the public about high interest loans, is urging the General Assembly to amend the Consumer Finance Act so that it applies to car title lenders. Currently, most car title lenders are exempt from the cap because they offer open-end credit.

The group is also advocating for payday lenders to be regulated by the Consumer Finance Act.

— Sarah Rodriguez

Del. Brian J. Moran, D-Alexandria, resigned from the House of Delegates on Dec. 12 to run full-time for governor. Moran is in a three-way race for the Democratic nomination. According to the Washington Post, there is no indication yet of a similar move by fellow contender Sen. R. Creigh Deeds, D-Bath County. The latest addition to the field, Terry McAuliffe, is unencumbered by any legislative duties.

Gov. Timothy M. Kaine has called a special election for Moran’s seat in the 46th District for Jan. 13. That date ensures that the seat will be filled by a new delegate in time to begin the 2009 General Assembly session on Jan. 14.

— Peter Vieth

Writing a deed or deed of trust would become more complicated under a bill prefiled earlier this month by Del. Robert G. Marshall, R-Manassas.

House Bill 1640 would affect instruments in which the grantee is not an individual.

If the grantee is a corporation, the deed would need to include the names of all the corporate officers and the company’s registered agent at the time the deed was made.

If the grantee is a limited liability company, the deed would need to name all the members and the RA at the time the deed was made.

If the grantee is a partnership, the deed would need to name all partners or limited partners and the RA at the time the deed was made.

Same rules would apply to drafting deeds of trust.

Sounds like time for a clause in the closing documents requiring the grantee to pony up all that information so the deed-drafter can get it right.

— Paul Fletcher

You may have noticed the new photo banner at the top of the Business Law Blog.

Well, we’ve installed a new, cleaner “theme” for the BLBlog that provides an opportunity to post a picture.

The banner is designed to represent all parts of the commonwealth. Here’s a rundown (from left to right):
• Northern Virginia – the Iwo Jima memorial in Arlington
• The Valley – Shenandoah Caverns
• Central Virginia – the Washington statue on the Capitol Grounds in Richmond
• The Peninsula – the Colonial Capitol in Williamsburg
• Hampton Roads – the Chesapeake Bay Bridge
• Southside – the Tobacco Warehouse District in Danville
• Southwest Virginia – White’s Mill outside of Abingdon

By Paul Fletcher

Sometimes state agents and even federal revenooers bust up stills making illegal moonshine. Sometimes, vice squads raid crack parlors, brothels and other houses of ill repute.

In Kentucky, they’ve gone to court to crack down on illegal online gambling.

Yep, the commonwealth of Kentucky now owns the domain names of numerous illegal gambling sites (141 to be exact), after a judge ordered their seizure yesterday.

By seizing the domain names, Kentucky can require illegal casino operators to block their domains from access by Kentuckians.

Gov. Steve Breshear noted in a press release that the state loses tens of millions of dollars each year to unlicensed Internet gambling operations.

Those operations undermine and threaten horseracing, “Kentucky’s signature industry and a key tourism industry,” he said. That must be the reason that Kentucky, first and so far alone among the 50 states, has gone after Internet gambling this way.

Lots of interesting legal issues to note, though, including state ownership of Web sites, status of domain names as property, jurisdiction, online blocking, among others. A brave new world, indeed.

By Paul Fletcher