#b/c that amount of level of scrutiny he's been getting?
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You know, for all the drama the W*W community gets itself embroiled in, I’m glad - in a way - the only controversy I caused was pissing off the Sylv*ina community and bringing their wrath down on my head by making that crit - not hate - post and bringing up the succession crisis regardless of how in good faith asking that question was. Was I sort of happy about the response? Kind of, but really I was bummed out - and blindsided - by the reaction it caused; I never intended to anger and shock that many people (I still remember a comment someone made in another person’s post that, last I checked, got 100+ notes on “hey, look at this person writing up several paragraphs’ worth of a ship she doesn’t care about“ and another that read “it’s like stopping to look into the window of a restaurant you’re passing on the street and deciding on the spot you hate the food that’s inside” - and this isn’t a call-out or meant to rag on that person, it’s just something that stuck with me).
I still feel bad about making that post to this day; it’s long since been deleted (although you’ll certainly find my response on that other person’s post if you look back far enough) but with the knowledge I have now I would not have made it. I even considered writing a Sylv*ina fic as a sort of olive branch to the community for angering them so viscerally. But then I remembered thinking to myself I’d probably get bullied for trying to make amends or shit on even more and decided it wasn’t worth the hassle; if there was any ragging about it on Twitter as there was here on Tumblr, I’d understand, I deserved that. I can think of a couple certain big-name WLW writers that like that ship that certainly wouldn’t be too happy seeing my name plastered with that ship tag; I’m not always nice to the girls I write about let alone always talk nicely about them. And, you know, that’s fair.
Honestly that was the first instance where I sat back and thought ‘you know, maybe I oughta step away from the fandom’ because the whole point about shipping is having fun with stuff that doesn’t even make sense, and who’s going to want to have someone around that doesn’t like 99% of W*W’s ships? But the W*W fandom has always been volatile, and a lot of other things non-ship related happened that finally got me to back off from it, but. Yeah. I still think about this now and again. And I think it’s for the best to just keep my distance and do my own thing (and I know I’ve said this a lot in the past, but it’s true).
Not going to tag this for obvious reasons, but mainly because I have a certain streamer friend that’s notable in the community who is going through a very rough patch (if you know you know, but I’ll leave it at that) and it got me thinking about the aforementioned bit the past couple of days. That’s all.
#armi rambles#idk it's been a very weird feeling going through twitter & seeing ppl just going off on my friend#do i know him personally? no but i've known him the past 4-5 years to know he's not a bad guy#but i know if i step in there and try to defend him i WILL get slaughtered by those ppl#it made me think 'so ig ppl can't make amends for the mistakes they made huh'#& so i stayed my tongue b/c really it's not worth the war it'll probably start#or worse case get harassed by the followers of other big-name w*w tweeters#watching this play out in real time this past week has been...something#but it got me thinking too#social media can be such a boon but it's shown me how terrifying it can be#i just hope that my friend - and the other parties involved in this - will be alright in the end#i can at least say in a way i'm glad i never got 'big'#b/c that amount of level of scrutiny he's been getting?#what amount i got made me feel like shit#so the backlash he's been receiving as of late would wreck me hardcore#just my two cents and food for thought - i doubt ppl will read this post
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Different anon here- just curious what your take is on Seiya's interactions with Usagi?
I dunno if i even have a 'take' per se.
When I watch those episodes I enourmously enjoy them for the drama and because I can see how Usagi and Seiya's personalities bounce off of one another and are well suited.
I'm like one of the few people who ships UsaMamo AND SeiUsa and consequently find myself in unenviable position of having to defend the ships from everyone lol.
In all honesty, I haven't dwelt deeply on whether Usagi and Seiya's relationship is 'problematic' or not. The lone exception is perhaps the 'Am I not good enough' line, which I feel is one of the greatest dramatic punches across all 200 episodes.
My defence of Seiya in that moment boils down to:
a) We are dealing with someone who watched their planet and people MASSACRED in the very recent past.*
b) In addition to an immenzse grief and trauma Seiya would be going through he finds in Usagi/Sailor Moon someone who gives them hope for the first time in a while. Yes, Seiya hopes to find Kakuyuu, but it's a LONG shot and they are desperate. But here is Sailor Moon healing villains and sparing them the horrible task of murdering Phages.
c) From Seiya's POV Mamoru has abandoned her. Not by going to America, but by ghosting her since then. He has a lowly opinion of Mamoru and here is this girl Seiya is in love with who is heartbroken about him whilst he (Seiya) is right in front of her and has been for a long while now.
d) We love Usagi because she is FLAWED. And sometimes those flaws can take the form of her being less than nice or out of line. This in fact is true of practically ALL the cast.** So, Seiya in the 'Am I not good enough moment' is exhibiting a human flaw.
Again, I've not thought deeply on this but off hand I guess I'd apply the above to Seiya and his relationship with Usagi more broadly as well, not just the iconic 'Am I not good enough' scene.
But there is an even deeper point to consider here.
Does the series even invite this level of realistic scrutiny?
I have this frustration with the fandom often when it comes to UsaMamo bashing or Mamoru bashing in general. Every story has a particular level of realism to it and Sailor Moon's level is not that high at all and NEVER was.
That isn't even because it uses magic and super powers and aliens.
If we are going to 'call out' Seiya (or Mamoru) in the anime for how they behave because by realistic standards it is bad then it's not fair to cherrypick what we are going to apply that realism too. You can't just STOP at those 2 relationships or indeed the bits you personally have a problem with.
Let me hit you with just ONE very glaring example.
If you apply REALISM to Sailor Moon the fundamental PREMISE of the entire franchise collapses morally speaking.
Why?
Because the premise of the series relies upon an older authorty figure (Luna, Artemis or in the SilMil Queen Serenity) recruiting child soldiers!
Sailor Senshi=Sailor Soldier
NONE of the Inners were over 18 when Luna or Artemis tracked them down. In the manga the Inners were even children when they became Senshi.
Whilst it is true they all WILLING decided to use their powers to fight evil...so what? REALISTICALLY it is illegal for minors to sign up for military combat because it is understood they lack the life experience and cognitive development to be in a position to make that decision responsibly. Same reason minors are not allowed to drive or drink or have sex or get married up until certain ages.
And all those things are much LESS serious than risking their lives fighting what amounts to very powerful, very well organised terrorist groups.
So, you apply REALISM to Sailor Moon Luna is a complete monster*** and the entire premise of Sailor Moon melts into a puddle.
At which point I very seriously have to ask if there is any wisedom at all in applying realism to our analyses of this series, whether that's in regards to Mamoru, Seiya or anything else?
It doesn't hold up to that scrutiny. It was never meant to.
And that's OKAY.
*Consider how in Doctor Who, the 9th Doctor was, at least initially, not clearly a good person in the immediate wake of losing his own people.
**Whilst I'm no fan of AnimeHaruka and Anime Michiru myself, how many people in the fandom ARE despite the way out of line things they did in S and Sailor Stars? I can't speak for those people but perhaps it may even be that they like the characters BECAUSE they are flawed in such a way to DO those out of line things.
***Which is literally why the villain of Madoka Magica (a deconstruction of the Magical Girl genre) was the Luna equivalent character.
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Grounded: Level 2
Level 1 | Level 3
Member: Minho (Lee Know)
Genre: idol minho x idol trainee reader, angst cause is it a dana fic if there is no angst
Taglist: @licorice526 @jaehyvnsvalentine @lolwhatameme @felixn-recs
[D E C E M B E R 2 0 1 7]
There is an earth-shattering kind of pain in your chest when the staff pushes the door open into the dressing room, and your eyes are frantic to search for the one person you cared about.
The crowds force you into the spaces between their backs, legs and bodies uncomfortably, bright fluorescent lights blinding you every time you tilt your head upwards.
All you could think of was the tears that would be flowing down his face, the sheer amount of relief he’s drowning in when JYP said he would debut Stray Kids as nine.
His parent’s voice echoes through the crevices of your skull, the words repeating themselves over and over and over again.
“Minho made it.”
Your nose sours against its will, wanting nothing but to throw your arms around him and congratulate him for the one thing he had wanted for so long.
A tap comes on your shoulders and you turn to see a swollen-faced Lee Minho grinning widely at you, his parents standing proudly behind him. The muscles in your face finally give into your overwhelming feelings, for there is nothing in the world you would exchange this look of bliss and happiness on his face for.
Minho pulls you into the hug before you can respond to him, his palm flat against the back of your head as you sob your eyes out on his shoulder.
“Why do you always cry when I’m not?”
Annoyed at his cold words (though you know he’s just teasing you), he receives a slap in his chest as you pull away. “That’s cause you’ve already exhausted all your damn tears on stage, right?”
Minho sniffles, unable to stop that grin from surfacing on his lips. But your heart stops in its ribcage, unsafe from all the feelings that were diffusing through his body and into yours.
[J U N E 2 0 1 8]
Where are you when I need you?
The last beat of NCT U’s The 7th Sense drops, and so does your butt to the wooden floorboard.
Of course this mental cry for help goes unheard. The loneliness was starting to eat away at your skin, like goosebumps in the cold weather and that horrid feeling of being lost with nowhere to go.
The silence of the dance studio was on the verge of deafening you, and your reflection in the mirror looks like someone you never expected to see. You’ve lost the concept of time, because the studio is sealed. No windows, and the only way in or out is the door, and even then the nearest window was down the corridor. There’s virtually no way to tell how long you’ve been in here unless you’ve been staring at your phone.
The other female trainees had left a few hours before, and though they did offer to bring food back for you before returning to their dorms, you know it would only hinder your progress. Stopping now will ruin your momentum.
Knock knock
Your legs have long given up on you, so you could only pray that whoever comes in could read the lack of energy in your eyes when you look up.
“I’m starting to get sick of that track because of you.”
A gasp leaves your lungs as you scrambled to your feet, nearly falling over because that’s how jelly they felt. “Yeonjun!”
The tall, brown haired boy had eyebags that could carry an elephant - it was a normal sight to see nowadays, and in his hand was a plastic bag which you could immediately tell was food. The scent of that hot soup was too recognisable.
“It’s fine, sit down,” The grin on his face pulls his cheeks apart as he gently shuts the door behind him. “How long have you been here?”
Yeonjun goes to the sound system and changes the music to something else besides your practise playlist before coming over to you, gesturing you to sit.
“I walked in at 7am.”
Yeonjun freezes for some moments, eyes looking down at you with his shoulder blocking the ceiling light from your eyes. “Do you know what time it is?”
“Do I want to know what time it is?” Squinting your eyes as he shifts to sit down opposite you, the light finally getting through and interrupting your vision for a split second.
Yeonjun pulls out a disposable bowl of soup and a box of sandwiches, a chicken salad and-- honey-glazed apples.
“I’m on a no-sugar diet--”
“And you’re still on your probationary contract, not even the idol one and yet you’re spending fifteen hours in the studio?”
The revelation catches you off guard. Your last meal was a chicken salad that one of the female trainees had gotten you -- that was dinner four hours ago?
“Here,” He shoves the food across the space between you. Now, the smell was stinking up the whole studio, but you didn’t mind it one bit. Not when it’s conjuring all these weird noises from your stomach. “You’re obligated to finish at least the soup and fried chicken. I know you’re on a chicken salad diet so you can forget about that if you don’t like it.”
“Bullshit,” There was no hesitation to claim the food on the floor he’s presented to you. “I could eat a cow right now.”
“I guessed.”
Yeonjun helps open the containers, forcing the scent to waft through the stale, slightly-sweat-smelling air and through your nostrils. Your joints are on the verge of falling apart but letting yourself come apart would mean resignation.
“Were you on the way back?” You ask right before you slurp up the soup, Yeonjun picks at some of the fries that were in the same bag as the fried chicken.
“Nah, I came from the night market.”
“Oh,” The memory of honey-glazed apples flashes through your mind for a split second. A fleeting moment; too fast to process or delve into the feelings involved. “What are you working on tonight?”
“Rapping. I have an evaluation tomorrow.”
“Haven’t you been getting first for those? And shouldn’t you be resting instead of pushing yourself over the top?”
Yeonjun raises a brow at you. “For someone who’s spent God-knows-how-long in this studio, you sure have a lot of things to say.”
A bite of the honey-glazed apple melts in your mouth.
“Anyway, when’s your first monthly evaluation - or are they only going to make you do it if you sign an idol contract?”
“Probably only after I sign the idol contract.”
Yeonjun hums in response, helping you rip open the boxes of sandwiches.
“So,” He starts again after a while. “Are you going to sign it when they ask you to?”
The thought was already intimidating in your head, and Yeonjun putting it into a proper sentence only made it worse.
“Bold of you to assume they will ask me to sign an idol contract.”
“Bold of you to assume BigHit wouldn’t use you as a source of income.”
A low chuckle escapes your throat as you finish one of the honey-glazed apples.
“Seriously though,” He places down the box of sandwiches and leans back on his hands, legs stretching out and eyes landing on yours. “What are you going to do when the idol contract’s on a desk before you? You’ve been on probationary training for what? Six months now? You would’ve wasted all your time and sweat if you don’t sign that contract.”
“But do I want to remain in public scrutiny for the rest of my life though?”
“Was that what you were worried about when you first joined? Was that what went through your head when Minho joined JYP?”
The name jolts you into an uncomfortable zone. You haven’t seen him since he debuted - because that’s how busy he was. It’s like he’s got no life outside that building and in cars that bring them back and forth entertainment buildings looking pretty for a bunch of fangirls. It’s like you’ve been left alone to deal with this trainee life on your own but you don’t have a single strand of hair on you that blames Minho for the situation you are in.
You encouraged him to go for it; he encouraged you to audition for BigHit and you signed that probationary training contract. You were sitting in a pool of your own decisions, but why does it feel like you’re sitting in a pool of sad tears?
“It was Minho’s choice to sign that contract and get to where he is now, you know that, don’t you? It’ll be the same for you. It’s your life, your choice.”
“I know,” You pull the sandwiches to yourself. “I was the one who encouraged him to do it.”
Yeonjun’s silence feels prickly on your skin, mostly because he’s made you feel guilty for something that Minho would’ve probably done otherwise any way. But the boy can probably read you - he’s noticed that you literally stop functioning normally every time he brings up the person who inspired you to continue dancing and be a part of this industry.
He knows better than you try and comfort you, because that would mean he agreed. “You do realise that him becoming a celebrity was his choice and not yours? It’s his responsibility now, the same way it’ll be mine when I debut and the same way it’ll be yours if you choose to do it.”
Shoving the last bite of the sandwich into your mouth, you pray that the chewing is going to prevent the tears from being choked up.
“Why do we choose to do this to ourselves? Work till the sun rises and get barely any sleep... for what? Pretty costumes and flashing lights and no privacy?”
His breathing is a little raspy in the dry, air-conditioned room, so you look up to match his gaze. His eyes were slightly furrowed and thinking - he knows what you mean.
“Because it’s what we want for ourselves. It’s our dream to stand on the stage and perform because we love it. It’s not about the fame or the fortune - well, for some people, maybe but--”
A smile stretches across your lips.
“If you keep thinking of it this way, then this isn’t for you, y/n. I hope you’ll know what’s best for yourself.”
The smile remains on your lips but your gaze feels like its faltering. You can feel yourself zoning out from chicken salad that you’ve eaten over and over again in the last six months.
Does Minho even think about you the way you think about him?
[N O V E M B E R 2 0 1 8]
“y/n!” The jolt awake is surprisingly contained; it doesn’t earn the attention of anybody else in the classroom when Hyunjin shoves you out of your day slumber.
“What do you do in that building to the point where you can’t stay awake?”
“Ugh,” The disgust is shown on your face when you discover a stray line of drool down the corner of your mouth, staining your black and yellow uniform. You wipe it off without much care and wipe it over your blazer before turning to Hyunjin. “It’s called training. I thought you’d know better.”
“And I do,” Hyunjin whispers back without looking at you, eyes plastered to the worksheet on his desk. “But I’m literally knee-deep in Get Cool promotions.”
“Your point being?” Rolling your eyes to yourself, you pick up your pen and begin copying whatever was on the whiteboard - not that they were even relevant.
“My point is: if you’re going to become an idol but you’re going to die throughout schooling while still a trainee, how are you going to survive after you debut?”
“For the record, I’m doing better than you in most our subjects. Despite me sleeping in class.”
Hyunjin mutely snarls at you, baring his teeth like he was a dog. The teacher’s sudden eye contact stuns you, but luckily the school bell comes to your rescue and Hyunjin instantaneously shuts his notebook while rushing you to fasten your steps too.
“Okay, no- I have a serious question for you,” Hyunjin has his hand out in mid-air with the other clutching the strap of his bag as the two of you make your way out of school. SOPA days were relatively short, especially when ten percent of the school’s population were either idols or idol trainees - you included (though you haven’t signed any idol contract).
“Will it warrant a kick in your nuts when you ask it?” Pulling out a bun from your bag, you stop by your locker and hold it in your mouth while unlocking the metal door.
“Maybe,” He admits, leaning against the locker. You can see from the corner of your eyes that there were other students staring at him as he walked by - it was Hwang Hyunjin! Main dancer and visual of the one-year-old group Stray Kids, and if you think public scrutiny only comes in after debut, you couldn’t be any more wrong.
BigHit’s already given you one of those lessons - don’t make your name a household name before you even debut. Unfortunately, your candid friendship with Hyunjin’s stirred up some stuff, and many facts about your life have already been made public.
BigHit trainee, ex-dance crew member for BTS with Lee Know from Stray Kids, one of the 20 girls who received the casting call, BigHit’s first female trainee who passed only through dancing. Just what do these people not know about you?
“How long has it been since you’ve met Lee Know hyung?”
The name strikes a chord in you against your wishes. Your nerves falter for a moment as you shove the textbooks back into your locker, but your system turns back online after some moments.
“Didn’t we agree not to mention his name here? Half the school already knows who I am, I don’t need them to know we actively talk about Minho.”
“No, I just-” Hyunjin watches you dump the last of your notebooks and textbooks in your locker. “I’ve never heard stories about you from Lee Know... all I remembered was you showing up at the finale and then our debut showcase.”
“And that’s the last time I met Minho in person. He’s not a great texter so let’s not have that conversation,” You shut the locker door and side-eye Hyunjin, hoping that he doesn’t pick up the pang of hurt and missing you have for Minho.
But Hwang Hyunjin isn’t emotionally unaware, is he?
“You mean to tell me that you last met Lee Know hyung at our debut showcase?”
Choosing not to engage, you take off in the opposite direction, heading for the exit of the school.
“Hey! Where are you going?!”
“BigHit!” You yell back without turning behind. “Where else?!”
“This conversation’s not over, I’m warning you!”
“Oh, boohoo!”
[D E C E M B E R 2 0 1 8]
The night market is nauseatingly reminiscent, with all the wild flavours wafting about in the air and people crunching on fried Oreos or drooling over some spicy tteokbokki. It feels like you’re back home in your hometown.
“Are you sure you wouldn’t get into trouble for frolicking about in public?” Watching him pay the stall holder for the cheese fries, you cannot help but gleam at his innocent grin on his lips.
“Nah, I’ve asked Soobin if it’s alright.”
“Soobin?” A frown conquers your forehead, for you know that Soobin doesn’t exactly have the greatest power over Yeonjun. “Soobin’s literally the last person who would tell you you can’t do something.”
A cheeky grin surfaces on his lips, but not as much as his eyes whelm with mischief. “Exactly.”
“So, how long more do you have before-”
“My introduction film’s going to be released in Jan.”
A short pause at the realisation of the lack of time you have with Yeonjun before he debuts. The situation stabs you in the spine and forces chills through you - it’s happening all over again.
“If you’re worried about losing time with me, I hope you know that I’ll still try my best to come back to help you with your training if you need it.”
A dry scoff runs off your tongue, the heat from the cheese fries Yeonjun wasn’t even bothering to offer you coming out in puffs as he struggles with the temperature.
“Well, I shall be honored that BigHit’s number one trainee is willing to be my personal coach.”
Yeonjun finally stabs a fry and offers you the stick. “This personal coach is picky with who he wants to help, so be--”
The abrupt stop in his words surprises you, because he’s doing nothing but staring straight ahead of him, at the crowd.
“Yeonjun?” You wave your hand before his eyes. Yeonjun points through the crowd, beckoning you to follow his direction.
It takes you a few seconds to notice what - or who - he’s looking at as the crowd challenges your vision. Then you see a black cap and a black mask that should’ve been adequate to hide his identity - that was the purpose of that disguise anyway.
But never in a million years will you forget those feline, brown orbs.
Minho.
#skz lee know#lee know#lee minho#skz lee minho#skz minho#stray kids#skz#stray kids lee know#skz lee know scenarios#skz scenarios#lee know scenarios
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My notes/loose transcription of the NCAA v. Alston Supreme Court hearing, March 31, 2021
I am going to try to keep my SCOTUS commentary in this thread and try to be factual (albeit sarcastic, when warranted). Stay tuned.
And we're up with Roberts introducing the case and asking Seth Waxman to start. Bang... we're off.
Waxman begins with a myth, that college sports have always been amateur. he says 2 errors:
lower courts redefined amateurs too narrowly.
Then allowed cash payments.
This would make college sports professional, he says. He argues the NCAA rules are so clearly good that subjecting them to a full rule of reason is a nightmare. Roberts asks: SO you want Quick Look?
Waxman, yes, but we also realize it's a little weird to say we lost at trial but we were so clean there's no way we should have been asked to defend ourselves. Roberts says we've never used Quick Look to dismiss a case.
Waxman agrees in a "look over here" way by pivoting to other cases outside of SCOTUS. Roberts interrupts. Asks "pay for play" question WHICH I DID NOT EXPECT. A factual question about amateurism.
This bodes well for athletes, I think Thomas up -- says he is curious why coaches aren't also paid less than pro coaches.
Waxman explains Law v. NCAA prevents them from doing this. Claims that Law says Amateurism is good but capping coaches pay is wage fixing. Will be interesting what Thomas responds Thomas says it's odd to him coaches pay has ballooned.
Now he turns to Board of Regents.
Thomas asks if SCOTUS did a quick look re: amateurism in BoR.
Waxman has to explain BoR was unrelated to amateurism, but rather TV. He explains the TV restraint was explored under FULL rule of reason. Then he tries to explain the way you get from that to the Quick Look, and cites American Needle "twinkling of an eye"/
Breyer is up. Breyer asks "what are you complaining about?"
The injunction? Breyer than says "that could be VERY expensive"
(sounds like Breyer is pro-Amateurism, sadly)
is that what you are attacking? Waxman says antitrust courts lack the ability to judge amateurism.
Breyer is like "what is the line in the injunction that allows the [dreamed of craziness]"
Waxman lists some "pay for play" things in the injunction Waxman focuses on the schools' ability to essentially label as educational thing that are not "necessary or reasonably limited" to education Waxman says -- look at college coaches salaries -- they went through the roof.
Alito up. Alito lists some of the amici who explain how everything other than college athlete spay is outrageously professional.
Waxman embraces the State Law NIL stuff -- look this will allow them to be paid, so they will ignore academics and focus on money.
List the 35 hour rule (is it 35?)
Says only 24-25 schools make money. We have an Everybody's Broke moment!
Alito is going on on the statistical shenanigans of NCAa grad rates., Asks what the P5 FB grad rate is -- Alito understand those #s are padded with crew and fencing teams.
Surprising! omg, Alito paraphrases Schwarz saying Athletes are already paid. Scholarships are a form of pay.
Waxman says "not under our definition of pay"
Will Alito come back with the idea that the definition game is circular logic?
[SPOILER ALERT -- Kavanaugh did just this later!]
Alito says his time is up. Sotomayor up.
Why aren't the conferences, which remain allowed to enforce amateurism, still able to to enforce?
Waxman claims its a prisoner's dilemma, but the prisoner's dilemma was rejected in this case record. Ken Elzinga explicitly claimed Prisoner's dilemma. Roger Noll demolished the argument. Elzinga dropped it at trial. Waxman answers Sotomayor with slippery slopes, OMG to much judicial supervision. It will be a parade of law suits, with people who were harmed asking for justice. (why is that bad?)
Elena Kagan brings the FIRE: Isn't amateurism just a price fixing cartel? Why not think of this as competitors getting together with total market power and fixing prices?
Waxman says the product is not a new thing ( think he's implying this is not a sham).
Kagan interrupts. Things have change since 100 years ago. Says she's unmoved. Says "competitors as to labor combining to fix prices"
I'm thinking I may propose to J. Kagan. Kagan continues, "Why does there need to be coordination on the cost of labor?"
Waxman says "b/c we define the product" by price-fixing.
Kagan says that might work except isn't the court's evidence that "lack of pay to play" was not what drives demand. Waxman disputes. Says 10% of people would watch less if $10K grants were given.
Then he says this is about product differentiation.
She thanks him. Gorsuch up.
Gorsuch gives a long preamble on how he loves loose JV rules. But then Gorsuch says the same thing as Kagan: Here we have Monopsony control over labor price. That's not the usual JV situation. Why isn't Monopsony control over labor, at least, enough to get to a full rule of reason
<OMG FREUDIAN SLIP>Waxman says the NCAA is defined as the reduction of COMPETITION. Then corrects himself to Compensation.
He says as long as you accept the NCAA is defined by capped pay, then all you need is abbreviated review. Points to pro-NCAA cases in other circuits. Gorsuch says Waxman did not answer his question.
Gorsuch asks "does the monopsony status matter for level of rule of reason scrutiny?"
Waxman: What level of inquiry rests in step 3.
(But I think that admits Rule of Reason, no?)
Kavanaugh turns to the baseball exemption, as having not been replicated. Suggests Board of reasons is dicta (first "dicta" quote I think). Kavanaugh says it seems "schools are conspiring ... to pay no salaries" He calls NCAA's logic circular Kavanaugh comes close to asking the Schwarz question (the Schwarz question is: if school all hate "pay for play," why do you need a rule against it? Who's going to pay?)
Waxman say the NCAA is the most successful product in the history of America. Or he said something close to that. wow. I'd go with the automobile, maybe.
Waxman says EVEN IF CONSUMERS WERE TOTALLY FINE WITH PAID COLLEGE ATHLETES, we still should be allowed to price fix.
Kavanaugh says if consumers are ok what's wrong with $6K? (btw, I think focusing on the amount is the wrong approach, but the fact that Kavanaugh is doing that strikes me a good sign for athletes).
Coney Barrett up. She asks "why does the NCAA get to define what pay is?" She suggests a lot of people play college sports explicitly for the compensation -- getting to go to college.
Waxman says "well producers get to define their products" So we get to define what we think not-pay is, and so we can say "you aren't being paid"
C-B asks "is it procompetitive to say people like to watch unpaid people playing sports?" Very unexpected from her!
Coney Barrett asks about the effect if NCAA loses. If we rule against you, what's the impact on Title IX. Waxman admits that schools still have to follow Title IX. (which is correct)
Then Waxman claims evidence in the case shows that schools would cut other sports, men and women. (I believe that is a false statement of the evidence in this case. The only evidence I know shows the money would come from coaches and facilities.)
Waxman summarizing his argument again. Dogs and Cats will live together. Focuses hard on Our Product is Wage-Fixed Sports.
Jeffrey Kessler up. He must be nervous b/c I think he said "lawful" when he meant "unlawful"
He is focused on the quick look vs. full rule of reason as his opening statement. Kessler list off all the past times the NCAA has claimed if they had to relax their cartel rules, college sports would die. Each time, the Courts struck the rule down, college sports did not die. "this is more of the same"
Roberts interrupts. Roberts asks a question about whether it was wrong to look at a single rule or if the rules should be viewed in their totality. Likens it to Jenga, suggesting there might be a rule-by-rule approach that eventually leads to it all tumbling down. Kessler says the court didn't do that -- rather it started with ALL rules and then looked at the individual rules after.
Roberts passes to Thomas. Thomas asks "what if consumers are shown to be fine with $20K, are we back in Court?"
Kessler points to the "Patently and Inexplicably" language (in O’Bannon) and says incrementalism of that sort won't happen. Kessler explain that it was the NCAA that said the $5,980.
Thomas asks a very knowledgeable sports question: "won't schools cherry pick athletes from the portal" Kessler explains the NCAA did not assert competitive balance b/c that argument was demolished prior to trial. he explains the Patriot league is not competing with the SEC. [This is true, the NCAA lost their competitive balance argument at summary judgment, meaning it was so weak it didn’t even earn the right to be trotted out at trial]
Breyer up. Breyer says it is tough for him. he says it's only partly economic. he sounds VERY much to be in the White dissent camp.
He lays out that it could be that the way of viewing the case aren’t really economics. Kessler explains the Society of Engineers case says antitrust is about economics. if you want to go outside of economics, that's Congress, not the court.
He then pushes back to Breyer that this would change the sport. Alito tosses Kessler a softball: what is the distinction b/w P5 sports and pro sports.
Kessler: The differentiation is that they are students. The educational payments.= may even help that Alito asks whether the NCAA can set *any* educational limits.
Kessler says the injunction already does. Quotes Emmert saying it was a good thing.
Alito: Is this case the outer limit, or do antitrust laws allow athletes to bargain for things like guaranteed scholarships? Kessler says if they have a restriction that prevents guaranteed scholarships, that might lose. But he emphasizes it would NOT mandate guarantees -- it's about market competition.
Sotomayor offers Kessler a chance to ask for a better injunction. He declines (I would have taken it, but maybe that's why I am tweeting and he's arguing in Court) Sotomayor asks: isn't the $5,980 just judicial price setting?
Kessler answers the Court didn't pick that number. the NCAA did.
Kagan up. Kagan offers Kessler the same chance to ask for more again.
Kessler takes it this time, says We advocated for Conference competition. Essentially asks for the clean injunction.
Kagan focuses on the amount. Kessler explains survey showing $10K was ok. Mentions $50K insurance Kagan follows up, asking whether $5,980 is too arbitrary. Kessler focused on the words of the injunction.
Gorsuch now comes back to his love of JV law. Mentions the "new product that otherwise would not exist" standard. He asks, about law (not facts). What makes a searching inquiry into the JV appropriate?
Kessler says, the easier standard IS the Rule of Reason.
Gorsuch begs Kessler to say the Monopsony power of the NCAA makes JV scrutiny important.
Kessler takes the bait, explains that unlike other JVs, there's no market test of whether the JV is picking a pro-comp.
Points to FN7 of AmNeedle. Kavanaugh asks whether Kessler agrees athletes must be enrolled student in good standing. Then says we need to ask what the NEXT case would be. What is the end game for athlete litigation? Kavanaugh echoes Breyer saying he is concerned.
Kessler focuses on antitrust. Says the end game is the NCAA to be subject to rule of reason. Says facts would have to change in the future but today they are no different than yesterday.
Coney Barrett up, suggests both courts were concerned about doing too much. She thinks the lower Courts were being tepid (my word). Given all of that, how is the injunction is a substantially less restrictive?
Kessler says these are life-changing benefits, hence substantial.
Kessler summarizing now:
He turns to the rule of reason issue again -- they failed to show their rules were reasonable under rule of reason and rule of reasonable provides ample latitude (using NCAA's favorite).
Mentions there will be no parade of horribles, and other pro-Defendant rules
Now the gov't is up.
Elizabeth Prelogar is acting Solicitor General.
She is arguing about the Monopsony Power & Rule of reasons things Roberts says the rules changes may be moderate but the legal concepts were not.
Should Courts micromanage joint ventures. Prelogar says the Rule of Reason is the proper deference for JVs.
She also says step 3 of RoR is not for marginal changes.
Thomas up. Thomas says -- won't any NCAA rule be a litigation-palooza?
Prelogar leans into the PCJ the NCAA advances. I am not feeling the love for Solicitor Prelogar for being so into amateurism. However, she redeems herself in my book by explaining that Amateurism is not an antitrust good in an of itself. Rather, it needs to be tied to consumer demand.
Thomas asks about the $10K... $20K.. etc.
if the facts change, Prelogar says, then yes, we should re-examine. She explains if NCAA continues to restraint trade, it SHOULD be subject to more litigation. [THIS IS THE RIGHT ANSWER --- if you want people to stop suing you for price fixing, stop fixing prices!]
Breyer up. Asks, don't some JVs have non-economic goals? Prelogar explains that SCOTUS has said many times that Socially beneficial goals is not "cognizable" (allowed as a reason) under antitrust laws. Unless Congress carves out NCAA, the Court needs to think about economics.
Alito asks what is the NCAA's differentiation. Prelogar says Bona Fide Students but then adds And Not Paid beyond Education. Obviously I don't love the second half.
Alito asks: Let's say fans don't like highly paid PRO athletes either... these are not pro-NCAA questions.
Sotomayor asks "how can we be sure we won't destroy college sports?"
Instead of going Andy Schwarz an explaining how labor markets set pay vis-a-vis consumer demand, Prelogar just says the injunction was very narrow. Sotomayor asks about the $5,980. Prelogar focuses on how the amount was based on the athletic awards that don't ruin college sports, so academic rules are ok.
Kagan asks whether the $5,980 is arbitrary. Prelogar says it's not a requirement to give this amount. it's an allowance not requirement. She also focuses on how the NCAA can define restriction to make it bona fide.
Kagan: Could the court have gone further?
Prelogar: yes,
Gorsuch on "light look" for JV's that create new products again. he says "that assumes a competitive market." But here NCAA has Monoposny, and that justifies stricter look. Gorsuch channels Rascher & Schwarz (2000) saying that if conference set rules, this would be different.
Prelogar also goes all Rascher & Schwarz (2000) saying that no one conference had market power. Gorsuch says the same. This is like they read our paper! Gorsuch even says fans could root for more amateur teams if that what they want.
Kavanaugh asks Prelogar whether these are just sham payments.
She explains the injunction allows NCAA prevention of scams.
I am still reveling that Gorsuch and Prelogar essentially parrotted the paper @daniel_rascher and I wrote back in 1999 and published in 2000.
Coney Barrett is up. She is asking about whether cross-market balancing is good or bad.
Prelogar says this is a bad case to consider that major issue b/c no one briefed it. She is like Don't GO Here.
Prelogar summarizes that the NCAA is wrong to say their rules must be immune from analysis b/c it is amateur. Instead they must show that amateurism itself is procompetitive. (more Rascher & Schwarz language).
Waxman up on rebuttal. Waxman: Monopony power does NOT change the NCAA's right to define their product and receive deference for that definition. Waxman directly addresses Breyer, who was clearly the most pro-NCAA in his rhetoric.
"Net consumer demand IS NOT the test." (wow) The test is whether a business can define its product definition.
[I think if this is true, "Unpaid-Labor Produced Sneakers" would be legal] "once it is determined that 'no-pay amateurism'" differentiates the NCAA, that basically means they can't be questioned on those rules.]
Then he whines about lots of litigation.
---end of hearing---
Ok, well that was NOT at all what I expected. I think Waxman should be glad for Justice Breyer. I was pleasantly surprised by the Kagan-Gorsuch-Coney Barrett axis focusing on the Rascher-Schwarz hypothesis. here's the paper I was referencing: Rascher and Schwarz Neither Reasonable nor Necessary.pdf
If you'd asked me beforehand what the odds are of it being a hourlong /barf session of paeans to Amateurism, I would said even odds or higher. So I am still a little in shock at how differently it went.
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The Standard of Review for Dell’s IPO
Dell Technologies Inc. (Dell) has been planning to eliminate its tracking stock (Class V common; NYSE: DVMT) through a merger with a wholly-owned subsidiary that effectively converts the outstanding DVMT shares into a new class of publicly traded Dell common stock. Each DVMT share (which collectively track about half of VMware Inc. [1]) will be cancelled and converted into the right to receive, at the election of the holder, either: (1) 1.3665 shares of Dell Class C common stock, which will be listed on the New York Stock Exchange, or (2) $109 in cash, without interest (subject to a $9 billion cap) (the DVMT Exchange). [2]
However, many tracking stock holders have been reluctant to support the DVMT Exchange. [3] On October 15, activist shareholder Carl Icahn released an open letter to DVMT shareholders disclosing that he had increased his stake from 1.2 percent (as of June 30) to 8.3 percent and that he will do everything in his power “to stop this proposed DVMT merger” including, possibly, offering “a competing partial bid that provides partial liquidity without forcing a merger.” [4]
The DVMT Exchange will only pass if holders of a majority of the outstanding DVMT shares (excluding shares held by Dell affiliates) vote in favor of the transaction—not a simple majority of those in attendance at the special meeting. [5] Despite the uncertainty about the level of DVMT shareholder support for the transaction, Dell had been planning to move forward with it. As of last week, the company still expected to file its definitive proxy statement by the end of this month, around which time it was also planning to also announce the date for its special shareholder meeting, which was expected to occur before the end of this year.
It is too early to say whether the Icahn letter will change that. However, in his letter, Icahn argued that the DVMT shares are massively undervalued and that the DVMT Exchange would amount to a “grand expropriation” of about $11 billion of value—the full discount at which the DVMT shares are trading relative to their stake in VMware [6]—by Michael Dell and Silver Lake.
Icahn is claiming that, were Dell to pursue a traditional IPO followed by a charter-authorized conversion of the DVMT shares into Class C shares, he thinks courts will find that such a conversion “was pursued in retaliation against DVMT stockholders.” Because it would be “tainted by coercion,” Icahn thinks such a “forced IPO conversion” would be evaluated under entire fairness and DVMT stockholders would have “valid claims for substantial damages” that could take “many years” for Dell to fight out in court.
Explaining the “Forced IPO Conversion”
On October 3, Dell filed a Form 8-K disclosing that “as a potential contingency plan in the event that the DVMT Exchange is not consummated, Dell has met with certain investment banks to explore a potential initial public offering of its Class C Common Stock.” [7] We previously wrote about how Dell’s charter provides that once Dell’s Class C stock is publicly traded, Dell’s Board of Directors may (at any time and without any other approval) decide to convert all of its outstanding shares of DVMT into Class C stock, pursuant to a conversion formula set out in the charter. [8] The formula is based on the trailing 10-day volume-weighted average price (VWAP) for the Class C and the DVMT, so that at the time of conversion, the Board will know the exact conversion ratio. [9]
Because of how the formula works, if the DVMT share price drops even a small amount relative to the Class C price during the applicable period (reducing the amount of Class C stock a DVMT holder would receive upon conversion), that could create selling pressure that would further reduce the conversion ratio. This risky spiral is something that DVMT investors presumably want to avoid (see our February 9 report “What Could Happen If a Dell IPO and Anticipated Tracking Stock Conversion Reduces the Value of the Tracking Stock”).
Icahn describes Dell’s consideration of a traditional IPO of its Class C stock as “an empty and ridiculous IPO threat” given that, among other things, it could trigger “up to $20 billion of backflowing shares that could hit the market following a forced conversion of DVMT stock.”
Entire Fairness Might Now Apply to the DVMT Exchange
Under Delaware law, [10] in a transaction with a controlling shareholder, the following six requirements must be satisfied in order to avoid application of entire fairness:
The controller must condition the procession of the transaction on the approval of both a special committee and a majority of the minority stockholders;
The special committee must be independent;
The special committee must be empowered to freely select its own advisors and to reject the transaction;
The special committee must meet the duty of care standard in negotiating a fair price;
The minority shareholders must be fully informed; and
The vote of the minority shareholders must not have been coerced.
This last requirement—no coercion of the minority shareholders (in Dell’s case, the DVMT holders)—could be in jeopardy now that Dell is floating the possibility of a traditional IPO plus a charter-authorized conversion. One could argue that by re-raising the IPO plus conversion option, Dell is attempting to coerce (or, at the very least, pressure) the DVMT shareholders into voting to approve the DVMT Exchange.
Dell’s Board (aka Michael Dell) exclusively controls the timing of a DVMT into Class C conversion and can authorize it when the conversion ratio is most advantageous to Dell and least favorable to the DVMT holders.
A reasonable investor may feel pressured into voting in favor of the DVMT Exchange rather than rolling the dice and giving Dell the discretion to convert its shares following an IPO of the Class C.
We tend to agree that the timing of Dell’s consideration of a traditional IPO as a potential contingency were the DVMT Exchange not approved has jeopardized the application of the business judgment rule and created an argument that entire fairness applies.
Would Entire Fairness Apply to the IPO?
Under Delaware law, a decision by Dell’s Board to IPO the Class C, in and of itself, generally would not be subject to any form of heightened scrutiny—that is, it should be reviewed under the business judgement rule. There are independent business reasons for doing an IPO (e.g., deleveraging, providing liquidity, acquisition currency, etc.), and the decision to IPO, by itself, does not result in the DVMT holders losing their shares. Nevertheless, if a DVMT holder could prove that the IPO was timed in such a way as to purposefully drive down the value of the DVMT stock prior to a conversion of the DVMT into Class C, the shareholder may have a claim against the Board.
Under Dell’s charter, the conversion of DVMT into Class C occurs “[a]t the option of the corporation” (essentially at the option of Dell’s Board). Michael Dell, who is not only the CEO of Dell, but also the Chairman of its Board, has seven of the 13 total votes on the Board, which means that the decision to convert the DVMT to Class C belongs exclusively to him. [11] Mr. Dell is also the majority stockholder. [12]
Because the conversion mechanic is in the charter, that means DVMT holders are deemed to have acquired their shares with full knowledge that this decision was not delegated to the capital stock committee. Also, the decision to convert, if made when optimal for the DVMT shareholders, almost by definition will be made when suboptimal for the Class A, B and C holders, and the Dell Board still owes a fiduciary duty to them, further complicating the entire fairness analysis. Even though this transaction might otherwise implicate heightened scrutiny under Delaware law, as a result of these facts (and other arguments), that outcome is not clear-cut.
The Tax Implications of Icahn’s Potential Partial Bid
Both the DVMT Exchange (where the exchange precedes the IPO) and the traditional IPO plus conversion alternative (where the IPO precedes the exchange) would likely constitute nonrecognition transactions under the tax rules, meaning that neither Dell nor the DVMT shareholders (assuming they elected all stock in the DVMT exchange) would have to pay any tax.
But if Icahn were to announce a competing tender offer (giving DVMT shareholders that want to sell the opportunity to get cash without forcing all DVMT shareholders out in an exchange/merger), participating DVMT shareholders would recognize capital gain or loss on the sale. For foreign investors who might otherwise be inclined to participate in the DVMT Exchange, selling all of their shares to Icahn would eliminate any risk of dividend withholding tax.
While an Icahn tender could marginally increase Icahn’s leverage over Dell’s Board, such leverage would be largely a matter of optics given that DVMT shareholders currently only have a say over three of the 13 votes on the Board, and even then, they only have about 26 percent of a say (as DVMT only makes up about 26 percent of all of Dell’s outstanding common stock). [13]
Endnotes
1The Class V stock is intended to track the economic performance of about 61% of Dell’s economic interest in the Class V Group, which as of Aug. 3, consisted solely of about 331 million shares of VMware or about 81% of the outstanding equity interest in VMware, according to Dell’s Form 10-Q filed Sept. 11 (and 61% of 81% equals about 50%) (https://www.sec.gov/Archives/edgar/data/1571996/000157199618000034/delltechnologiesq2fy1910q.htm).(go back)
2Dell’s outstanding shares of Class A Common Stock, Class B Common Stock and Class C Common Stock will not be converted or exchanged in the DVMT Exchange and will remain outstanding following the completion of the merger and the DVMT Exchange. If all DVMT holders elect stock, Dell estimates that it would issue a total of approximately 272,420,782 shares of Class C Common Stock, which would represent approximately 30.7% of Dell’s total common stock on a fully diluted basis outstanding immediately after the DVMT Exchange, and approximately 4.6% of the total voting power of Dell’s outstanding common stock. If DVMT holders elect more than $9 billion of cash (the cap), Dell estimates that it would issue a total of approximately 159,590,507 shares of Class C Common Stock, which would represent approximately 20.6% of Dell’s total common stock on a fully diluted basis outstanding immediately after the DVMT Exchange, and approximately 2.8% of the total voting power of Dell’s outstanding common stock.(go back)
3On Oct. 5, a Sept. 27 letter from a Dell shareholder to Dell’s Board was released to the public. In it, a registered investment advisor asked Dell to increase the consideration by 20 percent (from $109 in cash or 1.3665 shares of Class C to $130.80 in cash or 1.6398 shares of Class C, preserving the $9 billion cash cap). (See https://www.sec.gov/Archives/edgar/data/1040198/000090266418003638/p18-1878px14a6g.htm.) In addition, shareholder advisory firm Institutional Shareholder Service Inc. (ISS) issued a report Oct. 5 indicating that a DVMT Exchange at an increased price would be a better option than the traditional IPO plus charter-conversion alternative.(go back)
4Icahn’s Oct. 15 letter to DVMT shareholders, “Icahn Beneficially Owns Over 16.5 Million Shares, or 8.3%, of Dell’s DVMT Stock; Icahn Will Vote AGAINST Dell’s Proposed DVMT Merger,” (https://www.sec.gov/Archives/edgar/data/921669/000114420418053722/tv504782_ex-1.htm).(go back)
5According to amendment no. 2 to Dell’s preliminary proxy statement/prospectus dated Oct. 4, “If you fail to vote or abstain from voting on the adoption of the merger agreement or the amended and restated certificate of incorporation of the Company, the effect will be the same as a vote against the Class V transaction” (https://www.sec.gov/Archives/edgar/data/1571996/000119312518293366/d681091ds4a.htm).(go back)
6As of Sept. 5, there were about 199 million DVMT shares outstanding, which collectively represent an economic interest in about 61.1% of 331 million shares of VMware (or about 202.241 million shares of VMware). Using Icahn’s recent trading prices for DVMT ($91.74) and VMware ($141.29), the DVMT shares are collectively trading at about $18 billion when they represent an economic interest in VMware that is worth about $29 billion, a difference of about $11 billion.(go back)
7The Form 8-K went on to state that “[t]here is no assurance that the Board will determine to proceed with an initial public offering of its Class C Common Stock in the event that the DVMT Exchange is not consummated,” (https://www.sec.gov/Archives/edgar/data/1571996/000119312518291390/d633285d8k.htm). On Oct. 4, Dell filed an amendment to its preliminary proxy statement that also addressed this contingency plan: “Since the announcement of the DVMT Exchange, the Company has conducted meetings with various Class V stockholders. In those meetings a number of Class V stockholders expressed concerns regarding the economic terms of the DVMT Exchange. The board of directors and the Special Committee continue to believe that the DVMT Exchange is in the best interests of the Class V stockholders and the Company remains committed to the DVMT Exchange. However, in light of such feedback and the continued strength of the Company’s financial and operational performance, in late September 2018, the Company began to re-evaluate an initial public offering of the Class C Common Stock as a potential contingency plan in the event that the DVMT Exchange is not consummated. As part of that evaluation, representatives of the Company and Silver Lake Partners recently met with certain investment banks to explore a potential initial public offering.”(go back)
8 See Section 5.2(r) “Conversion of Class V Common Stock into Class C Common Stock at the Option of the Corporation” of Dell’s fourth amended and restated certificate of incorporation, dated Sept. 6, 2016: https://www.sec.gov/Archives/edgar/data/1571996/000119312516703370/d253636dex31.htm.(go back)
9The formula also applies a conversion premium (20 percent if converted in the first year following the IPO, 15 percent if converted in the second year and 10 percent thereafter) to the trailing 10-day VWAP of the DVMT divided by the trailing 10-day VWAP of the Class C over that same period.(go back)
10Kahn v. M&F Worldwide Corp. (Del. Supreme Court Mar. 14, 2014).(go back)
11See pages 212, 256 and 257 of Dell’s Oct. 4 amendment to its preliminary proxy statement.(go back)
12See pages 212 (“Mr. Michael Dell, who is Chairman of the Board and Chief Executive Officer of the Company, and his wife’s trust together beneficially owned common stock representing approximately 66.2% of the total voting power of our outstanding common stock as of August 31, 2018, through ownership of Class A Common Stock and Class C Common Stock.”) and 271 of Dell’s Oct. 4 amendment to its preliminary proxy statement (reporting beneficial ownership of 350,859,401 shares of Class A Common Stock and 526,921 shares of Class C Common Stock).(go back)
13 https://www.sec.gov/Archives/edgar/data/1571996/000119312518293366/d681091ds4a.htm and https://www.sec.gov/Archives/edgar/data/1571996/000157199618000034/delltechnologiesq2fy1910q.htm(go back)
Source: https://corpgov.law.harvard.edu/2018/11/19/the-standard-of-review-for-dells-ipo/
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10 things that will trigger a tax audit
It's official. House Democrats have formally requested copies of the last six years of Donald J. Trump's personal and business federal tax returns.
Trump has steadfastly refused to make public his taxes, breaking a modern-day tradition set by presidential candidates — and in-office presidents (and vice presidents) — of letting the public have a glimpse of White House 1040s.
The main reason Trump has given for keeping his taxes private is that his personal and business filings are under audit.
Tax experts throughout the media agree that no sane person would give their tax returns during an audit. After the audit, no problem!
— Donald J. Trump (@realDonaldTrump) February 27, 2016
But that's precisely why Rep. Richard Neal (D-Mass.), chairman of the House Ways and Means Committee, says his Congressional panel should see them.
"The IRS has a policy of auditing the tax returns of all sitting presidents and vice-presidents, yet little is known about the effectiveness of this program," Neal said in a statement announcing the letter he sent Wednesday, April 3, to Internal Revenue Service Commissioner Charles Rettig seeking Trump's returns.
"On behalf of the American people, the Ways and Means Committee must determine if that policy is being followed, and, if so, whether these audits are conducted fully and appropriately," said Neal.
"In order to fairly make that determination, we must obtain President Trump's tax returns and review whether the IRS is carrying out its responsibilities," added Neal. "The Committee has a duty to examine whether Congressional action may be needed to require such audits, and to oversee that they are conducted properly."
After hearing of Neal's request, Trump reiterated that he was "not inclined" to release his tax return until he no longer was under audit.
Yeah, stock up on popcorn and settle in folks. This is going to take a while.
Audits decreasing: This next phase of the great Trump Tax Return Quest, however, does make me think about what prompts the IRS to take an extra-long look at anyone's taxes.
Granted, the tax audit rate has been minuscule in recent years, in large part because of the IRS hasn't had a lot of money to spend on examining returns.
According to the IRS' Data Book for 2017, released in March 2018, the percentage of individual tax audits that year fell to its lowest level since 2002. It also was the sixth consecutive year that audits have declined.
Just 1 in about 160 individual tax returns were audited in 2017. The biggest drop in audits was of those aimed at high-income household filings, although those returns still were examined (that's the word the IRS likes to use instead of audited) at a higher rate than filers in other income levels.
That trend has continued into fiscal year 2018, according to research by TRAC, a nonpartisan, nonprofit data research center affiliated with the Newhouse School of Public Communications and the Whitman School of Management, both at Syracuse University.
Avoid tax audit triggers: So if there are fewer audits examinations, should we non-wealthy quit worrying whether we'll hear from the IRS after we file?
I'm not. I'm worrier by nature and I'm always rethinking what I put on my 1040 and wondering if it will cause the IRS pause.
No, I don't push the tax envelope. But part of the reason for my concern is that I once got an IRS notice, also known as a correspondence audit, about one of my returns. I've saved the document, which started out:
Dear Taxpayer,
Some of the information that you provided to us does not agree
with the information we received from other sources.
— The Internal Revenue Service
So I still flinch a bit when I get anything from the IRS, like the transcript that arrived last week. I forgot I ordered it online to check out the system for an article.
If you're there with me in stressing at least a little over whether you'll get audited, here some tax issues we should avoid, if all possible.
These 10 things are what typically tempt the IRS to take another look at tax returns.
1. You earned a lot of money.
As noted earlier, the IRS tends to focus on high earners when it conducts audits. That's not a bad plan for an agency that has, thanks to Congressional budget cuts, limited resources. Going after wealthy taxpayers provides a bigger bang for the audit buck.
2. You are self-employed.
Being your own boss has a lot of benefits. It's also easier to cheat on your taxes because many transactions aren't documented in a way that helps the IRS. Unlike when you work for a company where your salary is set and taxes are withheld and sent to the IRS throughout the year, self-employment gives filers, shall we say, wiggle room in reporting income and the taxes due on it. The IRS essentially has to trust a self-employed filer to honestly report income and expenses. Since we know that doesn't happen 100 percent of the time, the IRS tends to take a greater interest in the returns of self-employed workers.
3. You are part of the gig economy.
The self-employment tax reporting has been complicated by the explosive growth in gig workers. Often these are folks who freelance in addition to holding down full-time wage paying jobs. And often, they are unaccustomed to dealing with 1099 income. Since 1099s are copied to the IRS, when a contractor forgets to include this money on his or her tax return, that filer is guaranteed to get an IRS notice about the unreported income.
This so-called correspondence audit (like the one I got, mentioned earlier in this post) is much less invasive than a full-scale audit, but it's an audit nonetheless. You need to clear up the discrepancy ASAP since Uncle Sam has been tallying interest and penalty charges for your oversight.
4. You overlooked other income.
Investment earnings are a big part of many folks' income, especially those in or near retirement. As with contract payments, unearned income from stocks and bonds and other investments generate 1099 forms, usually in the INT, DIV and B versions. These, too, are copied to the IRS. If you have investments, keep track of them not just for portfolio tweaking purposes, but also to note your earnings. And make sure you get all your 1099s before you file.
5. You have overseas accounts.
If you own an account in a foreign country, you must report it. Failure to comply with the Foreign Account Tax Compliance Act, or FATCA, will cost you. A lot. Then there's Foreign Bank and Financial Accounts, or FBAR, reporting that is filed with the Financial Crimes Enforcement Network (FinCEN). If you're thinking that secret Swiss bank account will protect your privacy, think again. As with other earnings, the IRS has a way to find out about your offshore money. Foreign financial institutions are required to tell Uncle Sam of U.S. citizens' account holdings.
6. You claim large itemized or business deductions.
Thanks to the dramatically increased standard deduction amounts under the Tax Cuts and Jobs Act (TCJA), fewer taxpayers are expected to itemize. But those who do will be looking to maximize the amounts the TCJA still allows to be claimed on Schedule A. That's fine. You always should use the deduction method that gives you the best tax result, even under the new tax law.
But do so legally. Don't go padding the remaining itemized expenses you can claim. Unusually large write-offs, which are those that seem to be excessive in relation to your income, will attract IRS scrutiny thanks to its computer scoring system, aka DIF, the acronym for discriminant information function.
The same deduction issue comes into play for the self-employed, mentioned in tax trigger #2. Don't try to fudge your business' expenses on your Schedule C. Unusually high amounts on that form draw added attention from an IRS that already skeptical of many independent contractor claims.
7. You made a mistake on your Obamacare reporting.
Despite campaign promises and some chipping away at it, the Affordable Care Act (ACA), still popularly called Obamacare, remains the law. That means you still must let the IRS know when you file that you had the required minimum coverage.
If you signed up for medical coverage through a health care marketplace, you might be eligible for the federal subsidy, aka the premium tax credit, to help pay some of the insurance policy's costs. This also will get you a 1095-A form, which you'll need to help reconcile your credit, either advance or claimed at filing, or determine whether you owe an ACA-related penalty.
Although folks have been dealing with Obamacare for years, it still can be confusing. If you mess up any part of it, the IRS will let you know.
8. You have rental real estate activity.
Real estate is an attractive investment, in part because rental properties offer real property owners some advantageous tax treatment. Under the TCJA, rental owners generally will enjoy lower ordinary income tax rates that apply to more inclusive income brackets. Plus, the new tax law retains the long-term capital gains tax rates for when you get around to selling your property. However, if your rental property generates a tax loss, and most do at least early in their rental lives, things get complicated. And complicated is where IRS examinations thrive. If you have rental property, you also should have a tax professional who can help you maneuver the intricacies and answer any questions the IRS might have about your real estate tax claims.
9. You filed the old-fashioned paper way.
Yes, this still happens. Although most of us or our tax preparers now e-file, there still is a die-hard group of old-fashioned pen-and-paper tax filers. Hey, to each his or her own. But by using software to complete your returns, many common mathematical errors are eliminated (as long as you enter the correct info to start with), along with fewer transposed digits or missing of required entries. But filing by hand means your data has to be entered by IRS employees, providing another chance for human error in connection with those entries. Plus, there's the added chance that the IRS worker may notice one of your mistakes.
10. You fell for one of the Dirty Dozen tax scams.
The IRS' annual Dirty Dozen tax scam list tracks the schemes that regularly appear as crooks try to steal identities and file for fraudulent tax refunds. But even when an honest taxpayer falls prey to one of these scams, it's the taxpayer who ends up holding the bag. If you used filing methods associated with one of the terrible 12 scams, such as letting a paid tax preparer enter false claims on your 1040 to boost your refund, filing for bogus tax credits or making donations to fake charities, the IRS will spot it. And you, the taxpayer who signed the 1040, will face an IRS examiner and a bigger tax bill.
Are you scared now? Don't be. I know most of the ol' blogs readers are honest taxpayers. And ever if you do make an innocent error, that won't spark a full-blown audit.
As long as you have good records for everything you enter on your tax return — and hire a tax pro who's experienced in the audit process — you should come through any IRS examination unscathed.
And you'll definitely escape the IRS' additional prying eyes when you don't wave any of these 12 audit red flags.
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from Tax News By Christopher https://www.dontmesswithtaxes.com/2019/04/tax-audit-triggers-red-flags.html
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The Great Statin Debate — Why Cholesterol Is Misunderstood
youtube
The health editor for the Daily Mail recently published an article touting the merits of statin cholesterol-lowering drugs and, worse, eschewing the “deadly propaganda of the statin deniers.”1
Pointing to an analysis published in BMJ, which suggested 200,000 patients may have stopped taking statins due to negative media reports about the drugs,2 the article attacks those who question statins’ merits and claims the notion that statins reduce the risk of a major cardiac event as “indisputable scientific fact.”3
The real story is far from black and white, however, which is why the great statin debate continues — and experts in the field continue to speak out against statins in an attempt to clear the widespread myths about cholesterol and your health.
Are Concerns Over Statins ‘Fake News’?
The Daily Mail examined what it said amounted to “fake news” on statins, including the idea that having high cholesterol is harmless. The fact is, “high cholesterol” as defined by many health organizations is not one in the same with the levels of high cholesterol that can actually harm your health.
Here the article points to familial hypercholesterolaemia,4 an inherited condition characterized by abnormally high cholesterol, which tends to be resistant to lowering with lifestyle strategies like diet and exercise. I have long stated that the only group of people who may benefit from a cholesterol-lowering medication are those with genetic familial hypercholesterolemia. This is the vast minority of people taking these drugs, probably far less than one in 1000.
However, according to the U.S. Centers for Disease Control and Prevention (CDC), these drugs are also indicated for anyone who has already had a heart attack or stroke or been diagnosed with peripheral arterial disease, has an LDL cholesterol of 190 mg/dL or higher, or is between the ages of 40 and 75 with an LDL level of 70 mg/dL or higher and diabetes or a high risk of developing heart disease or stroke.5
In short, a staggering number of Americans are “eligible” for cholesterol-lowering drugs. According to the CDC, that number is more than 78 million Americans, who are either eligible for the drugs or already taking them.6 Yet, the Daily Mail article pointed out that “millions of middle-aged people who would benefit from taking statins, don’t,” which could be “because they’ve been led to believe that the drugs don’t work.”7
There’s More to Heart Disease Than Cholesterol
Statins are effective at lowering cholesterol, but whether this is the panacea for helping you avoid heart disease and extend your life span is a question worthy of closer scrutiny.
Such has been done by Dr. Malcolm Kendrick, a British physician and author of “Doctoring Data: How to Sort Out Medical Advice from Medical Nonsense,” “The Great Cholesterol Con” and “A Statin Nation: Damaging Millions in a Brave New Post-Health World” — and also one of the “statin deniers” targeted by the Daily Mail. Kendrick is among those who believe cholesterol does not cause heart disease — and he fires back at the Daily Mail article in the video above.
Kendrick states the most concerning risk factors for cardiovascular disease are actually insulin resistance, Type 2 diabetes and the chronic inflammation associated with these conditions, along with factors such as how you eat — whether you’re rushing or taking your time — and other stress-related factors, both physical and psychological.
He believes the conventional LDL/cholesterol hypothesis is flawed, in part because damage of the interior layers of your arteries precedes heart disease,8 and this damage can be induced by a number of factors, including smoking, high blood pressure, elevated blood sugar and inflammation.
Once the artery is damaged, cholesterol-rich plaque begins to build up as a protective mechanism. Problems arise when the rate of damage and resultant blood clot formation outpace or outstrip your body’s ability to repair. As noted by Kendrick, “For good health, you want to maintain a balance between the blood being too ready to clot, and the blood not clotting when you need it to.”9
So, what factors might lead to a situation in which the arterial damage is greater than your body’s ability to repair it? Kendrick’s “short list” includes over 30 factors alone, which include:
Use of certain drugs, including oral steroids, omeprazole, Avastin and thalidomide
Diseases such as Cushing’s disease, Kawasaki disease, rheumatoid arthritis, systemic lupus erythematosus, chronic kidney disease and acute renal failure, sickle cell disease, malaria and Type 2 diabetes, as well as bacterial and viral infections
Acute physical and mental stress, and chronic mental stress
Heavy metal exposure, including lead and mercury
Certain nutritional deficiencies, including vitamins B and C deficiencies
Without Cholesterol in Your Body, You Would Die
Another “statin denier” outed by the Daily Mail is Zoe Harcombe, Ph.D., nutritional researcher, author and public speaker. She states, “It is virtually impossible to explain how vital cholesterol is to the human body. If you had no cholesterol in your body you would be dead.”10
Your liver manufactures most, about 80 percent, of the cholesterol your body requires, which in and of itself suggests your body cannot survive without it. The remaining 20 percent comes from your diet. However, dietary cholesterol is absorbed at a rate of 20 to 60 percent, depending on the individual, and if you consume less, your body will compensate by making more and vice versa.
Contrary to popular belief, cholesterol is a crucial molecule necessary for optimal health, and not nearly the damaging culprit it’s been made out to be. Since cholesterol is a fatty substance, it does not travel well through your water-based bloodstream. Hence it is encapsulated in a lipoprotein.
As noted by Harcombe, the notion that there is good and bad cholesterol is also wrong. Low-density lipoprotein (LDL) and high-density lipoprotein (HDL) are not even actually cholesterol; they’re carriers and transporters of cholesterol, triglycerides (fat), phospholipids and proteins. “LDL would more accurately be called the carrier of fresh cholesterol and HDL would more accurately be called the carrier of recycled cholesterol,” she says.11
Ivor Cummins, a biochemical engineer with a background in medical device engineering and leading teams in complex problem-solving, similarly likens the very low-density lipoprotein (VLDL) your liver makes to a boat that shuttles not only cholesterol but also triglycerides through your bloodstream to your tissues.
The VLDL will dock onto receptors in your muscle tissue, where it releases triglycerides to be used for energy. If your triglycerides are high, it means you’re eating too many net carbohydrates, because it’s actually sugar that causes triglycerides to rise, not dietary fat.
Once the VLDL has dropped off the triglycerides to be burnt for energy (or stored as fat if you’re not using the energy due to inactivity), the VLDL becomes a low-density lipoprotein (LDL), which in conventional thinking is a “bad” kind of cholesterol.
High-density lipoprotein (HDL) is colloquially known as “good” cholesterol, and the HDL is indeed beneficial in that it acts as a master manager, helping protect the LDL against oxidation and transporting triglycerides and cholesterol in and out of the VLDL. In a healthy person, the LDL will be reabsorbed by the liver after about two days, where it gets broken up and recycled.
As a general rule, a high-sugar diet will cause damaged LDLs to rise, beneficial HDLs to drop, triglycerides and, often, total cholesterol to rise. Coming full circle, all of these are conventional indicators of atherosclerosis or inflammation in your arteries that can precipitate a heart attack.
For Those at Low Risk, Eating an Apple a Day Will Lower Your Heart Attack Risk as Much as a Statin
youtube
Dr. Aseem Malhotra, an interventional cardiologist consultant in London, U.K., is the third “statin denier” attacked by the Daily Mail. He gained quite a bit of publicity after the publication of his peer-reviewed editorial in BMJ in 2013, which argued that you should ignore advice to reduce your saturated fat intake, because it’s actually increasing your risk for obesity and heart disease.12
In addition to defending the merits of healthy saturated fats, Malhotra highlights the risks of statin drugs, noting that more than half of statin users stop using the drugs within a year, most citing side effects as the reason.13
Fatigue, nausea, joint and muscle pain and increases in blood sugar have all been associated with statin drug use, most of which cease when the drugs are stopped. He also points out that unhealthy diet, including excess sugar consumption, is the true culprit in heart disease:
“Over 80 percent of CVD [cardiovascular disease] is attributable to environmental factors, notably unhealthy diet and also smoking, alcohol and physical inactivity. Diet has primacy, accounting for a larger burden of CVD disease and death than tobacco, alcohol and inactivity combined. For those at low risk eating an apple a day has an equivalent risk reduction for myocardial infarction [heart attack] as taking a statin.”14,15
Statins Increase Diabetes Risk
Statins have been shown to increase your risk of diabetes via a number of different mechanisms. The most important one is that they increase insulin resistance, which can be extremely harmful to your health. Secondly, statins increase your diabetes risk by raising your blood sugar. Statins work by preventing your liver from making cholesterol.
As a result, your liver returns the sugar to your bloodstream, which raises your blood sugar levels. These drugs also rob your body of certain valuable nutrients, which can also impact your blood sugar levels. Two nutrients in particular, vitamin D and CoQ10, are both needed to maintain ideal blood glucose levels.
Importantly, statins deplete your body of CoQ10, vitamin K2, dolichol and selenium, thereby threatening your heart and overall health even further. Statins’ ability to lower the risk of minor heart attacks may actually be related to their ability to lower C-reactive protein, far more so than the lowering of cholesterol.
Researchers with the Erasmus Medical Center in the Netherlands recently analyzed data from more than 9,500 patients. Those who had ever used statins had a 38 percent higher risk of Type 2 diabetes, with the risk being higher in those with impaired glucose homeostasis and those who were overweight or obese.16
The researchers concluded, “Individuals using statins may be at higher risk for hyperglycemia, insulin resistance and eventually Type 2 diabetes. Rigorous preventive strategies such as glucose control and weight reduction in patients when initiating statin therapy might help minimizing the risk of diabetes.”
But a far better strategy may be preventing insulin resistance in the first place, by avoiding statin drugs and eating a healthy diet. According to Malhotra and a colleague:17
“In young adults, preventing insulin resistance could prevent 42 percent of myocardial infarctions, a larger reduction than correcting hypertension (36 percent), low high-density lipoprotein cholesterol (HDL-C) (31 percent), body mass index (BMI) (21 percent) or LDL-C (16 percent).18
It is plausible that the small benefits of statins in the prevention of CVD come from pleiotropic effects which are independent of LDL-lowering. The focus in primary prevention should therefore be on foods and food groups that have a proven benefit in reducing hard endpoints and mortality.”
How to Identify and Lower Your Heart Disease Risk
Rather than focusing on cholesterol, two tests that are far more important for assessing your CVD risk are the serum ferritin and gamma-glutamyl transpeptidase (GGT) tests.
The GGT test can be used as a screening marker for excess free iron and is a great indicator of your sudden cardiac death risk. The recommended, ideal levels, of ferritin and GGT are as follows. For more information about these tests, read “Cholesterol Does Not Cause Heart Disease.”
• Ferritin — Adult men and nonmenstruating women: 30 to 40 nanograms per milliliter (ng/mL) or 75 to 100 nanomoles per liter (nmol/L).
The most commonly used threshold for iron deficiency in clinical studies is 12 to 15 ng/mL (30 to 37 nmol/L). You do not want to be below 20 ng/mL (50 nmol/L) or above 80 ng/mL (200 nmol/L). High iron during pregnancy is also problematic; having a level of 60 or 70 ng/mL (150 or 175 nmol/L) is associated with greater odds of poor pregnancy outcomes.
• GGT — Below 16 units per liter (U/L) for men and below 9 U/L for women. Above 25 U/L for men and 18 U/L for women, your risk of chronic disease increases significantly.
In order to protect yourself against heart disease, here are a number of suggestions that can help you lower your insulin resistance and restore your insulin sensitivity, among other heart-protective mechanisms:
Avoid environmental pollutants and toxins, including smoking, vaping, heavy metals, herbicides and pesticides, especially glyphosate.
Minimize your exposure to electromagnetic fields and wireless radiation from cellphones, Wi-Fi, routers, smart meters and more, as this kind of radiation has been shown to cause serious free radical damage and mitochondrial dysfunction.
Eat an unprocessed whole food-based diet low in net carbs and high in healthy fats. A ketogenic diet — which is very low in net carbohydrates and high in healthy fats — is key for boosting mitochondrial function.
When your body is able to burn fat for fuel, your liver creates water-soluble fats called ketones that burn far more efficiently than carbs, thereby creating fewer reactive oxygen species and secondary free radicals. Ketones also decrease inflammation and improve glucose metabolism.19
Eat nitrate-rich foods to help normalize your blood pressure. Good sources include arugula, cilantro, rhubarb, butter leaf lettuce, mesclun mixed greens, beet greens, fresh beet juice, kvass (fermented beet juice) and fermented beet powder.
Get plenty of nonexercise movement each day; walk more and incorporate higher intensity exercise as your health allows.
Intermittently fast. After you’ve become accustomed to intermittently fasting for 16 to 18 hours, you can try a stricter fast once or twice a week, when you eat a 300- to 800-calorie meal loaded with detox supporting nutrients, followed by a 24-hour fast. So, in essence, you’re then only eating one 300- to 800-calorie meal in 42 hours.
If you have heart disease, consider enhanced external counterpulsation (EECP). To find a provider, see EECP.com.20
If you have heart disease, you may also consider taking g-strophanthin, an adrenal hormone that helps create more parasympathetic nervous system neurotransmitters, thereby supporting your parasympathetic nervous system. It also helps flush out lactic acid. Strophanthus is the name of the plant, the active ingredient of which is called g-strophanthin in Europe, and ouabain in the United States.
Get sensible sun exposure to optimize your vitamin D status and/or take an oral vitamin D3 supplement with magnesium and vitamin K2.
Implement heart-based wellness practices such as connecting with loved ones and practicing gratitude.
from Articles http://articles.mercola.com/sites/articles/archive/2019/03/19/why-are-statins-bad-for-you.aspx
source https://niapurenaturecom.tumblr.com/post/183557908421
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Text
The Great Statin Debate Why Cholesterol Is Misunderstood
The health editor for the Daily Mail recently published an article touting the merits of statin cholesterol-lowering drugs and, worse, eschewing the "deadly propaganda of the statin deniers."1
Pointing to an analysis published in BMJ, which suggested 200,000 patients may have stopped taking statins due to negative media reports about the drugs,2 the article attacks those who question statins' merits and claims the notion that statins reduce the risk of a major cardiac event as "indisputable scientific fact."3
The real story is far from black and white, however, which is why the great statin debate continues — and experts in the field continue to speak out against statins in an attempt to clear the widespread myths about cholesterol and your health.
Are Concerns Over Statins 'Fake News'?
The Daily Mail examined what it said amounted to "fake news" on statins, including the idea that having high cholesterol is harmless. The fact is, "high cholesterol" as defined by many health organizations is not one in the same with the levels of high cholesterol that can actually harm your health.
Here the article points to familial hypercholesterolaemia,4 an inherited condition characterized by abnormally high cholesterol, which tends to be resistant to lowering with lifestyle strategies like diet and exercise. I have long stated that the only group of people who may benefit from a cholesterol-lowering medication are those with genetic familial hypercholesterolemia. This is the vast minority of people taking these drugs, probably far less than one in 1000.
However, according to the U.S. Centers for Disease Control and Prevention (CDC), these drugs are also indicated for anyone who has already had a heart attack or stroke or been diagnosed with peripheral arterial disease, has an LDL cholesterol of 190 mg/dL or higher, or is between the ages of 40 and 75 with an LDL level of 70 mg/dL or higher and diabetes or a high risk of developing heart disease or stroke.5
In short, a staggering number of Americans are "eligible" for cholesterol-lowering drugs. According to the CDC, that number is more than 78 million Americans, who are either eligible for the drugs or already taking them.6 Yet, the Daily Mail article pointed out that "millions of middle-aged people who would benefit from taking statins, don't," which could be "because they've been led to believe that the drugs don't work."7
There's More to Heart Disease Than Cholesterol
Statins are effective at lowering cholesterol, but whether this is the panacea for helping you avoid heart disease and extend your life span is a question worthy of closer scrutiny.
Such has been done by Dr. Malcolm Kendrick, a British physician and author of "Doctoring Data: How to Sort Out Medical Advice from Medical Nonsense," "The Great Cholesterol Con" and "A Statin Nation: Damaging Millions in a Brave New Post-Health World" — and also one of the "statin deniers" targeted by the Daily Mail. Kendrick is among those who believe cholesterol does not cause heart disease — and he fires back at the Daily Mail article in the video above.
Kendrick states the most concerning risk factors for cardiovascular disease are actually insulin resistance, Type 2 diabetes and the chronic inflammation associated with these conditions, along with factors such as how you eat — whether you're rushing or taking your time — and other stress-related factors, both physical and psychological.
He believes the conventional LDL/cholesterol hypothesis is flawed, in part because damage of the interior layers of your arteries precedes heart disease,8 and this damage can be induced by a number of factors, including smoking, high blood pressure, elevated blood sugar and inflammation.
Once the artery is damaged, cholesterol-rich plaque begins to build up as a protective mechanism. Problems arise when the rate of damage and resultant blood clot formation outpace or outstrip your body's ability to repair. As noted by Kendrick, "For good health, you want to maintain a balance between the blood being too ready to clot, and the blood not clotting when you need it to."9
So, what factors might lead to a situation in which the arterial damage is greater than your body's ability to repair it? Kendrick's "short list" includes over 30 factors alone, which include:
Use of certain drugs, including oral steroids, omeprazole, Avastin and thalidomide
Diseases such as Cushing's disease, Kawasaki disease, rheumatoid arthritis, systemic lupus erythematosus, chronic kidney disease and acute renal failure, sickle cell disease, malaria and Type 2 diabetes, as well as bacterial and viral infections
Acute physical and mental stress, and chronic mental stress
Heavy metal exposure, including lead and mercury
Certain nutritional deficiencies, including vitamins B and C deficiencies
Without Cholesterol in Your Body, You Would Die
Another "statin denier" outed by the Daily Mail is Zoe Harcombe, Ph.D., nutritional researcher, author and public speaker. She states, "It is virtually impossible to explain how vital cholesterol is to the human body. If you had no cholesterol in your body you would be dead."10
Your liver manufactures most, about 80 percent, of the cholesterol your body requires, which in and of itself suggests your body cannot survive without it. The remaining 20 percent comes from your diet. However, dietary cholesterol is absorbed at a rate of 20 to 60 percent, depending on the individual, and if you consume less, your body will compensate by making more and vice versa.
Contrary to popular belief, cholesterol is a crucial molecule necessary for optimal health, and not nearly the damaging culprit it's been made out to be. Since cholesterol is a fatty substance, it does not travel well through your water-based bloodstream. Hence it is encapsulated in a lipoprotein.
As noted by Harcombe, the notion that there is good and bad cholesterol is also wrong. Low-density lipoprotein (LDL) and high-density lipoprotein (HDL) are not even actually cholesterol; they're carriers and transporters of cholesterol, triglycerides (fat), phospholipids and proteins. "LDL would more accurately be called the carrier of fresh cholesterol and HDL would more accurately be called the carrier of recycled cholesterol," she says.11
Ivor Cummins, a biochemical engineer with a background in medical device engineering and leading teams in complex problem-solving, similarly likens the very low-density lipoprotein (VLDL) your liver makes to a boat that shuttles not only cholesterol but also triglycerides through your bloodstream to your tissues.
The VLDL will dock onto receptors in your muscle tissue, where it releases triglycerides to be used for energy. If your triglycerides are high, it means you're eating too many net carbohydrates, because it's actually sugar that causes triglycerides to rise, not dietary fat.
Once the VLDL has dropped off the triglycerides to be burnt for energy (or stored as fat if you're not using the energy due to inactivity), the VLDL becomes a low-density lipoprotein (LDL), which in conventional thinking is a "bad" kind of cholesterol.
High-density lipoprotein (HDL) is colloquially known as "good" cholesterol, and the HDL is indeed beneficial in that it acts as a master manager, helping protect the LDL against oxidation and transporting triglycerides and cholesterol in and out of the VLDL. In a healthy person, the LDL will be reabsorbed by the liver after about two days, where it gets broken up and recycled.
As a general rule, a high-sugar diet will cause damaged LDLs to rise, beneficial HDLs to drop, triglycerides and, often, total cholesterol to rise. Coming full circle, all of these are conventional indicators of atherosclerosis or inflammation in your arteries that can precipitate a heart attack.
For Those at Low Risk, Eating an Apple a Day Will Lower Your Heart Attack Risk as Much as a Statin
Dr. Aseem Malhotra, an interventional cardiologist consultant in London, U.K., is the third "statin denier" attacked by the Daily Mail. He gained quite a bit of publicity after the publication of his peer-reviewed editorial in BMJ in 2013, which argued that you should ignore advice to reduce your saturated fat intake, because it's actually increasing your risk for obesity and heart disease.12
In addition to defending the merits of healthy saturated fats, Malhotra highlights the risks of statin drugs, noting that more than half of statin users stop using the drugs within a year, most citing side effects as the reason.13
Fatigue, nausea, joint and muscle pain and increases in blood sugar have all been associated with statin drug use, most of which cease when the drugs are stopped. He also points out that unhealthy diet, including excess sugar consumption, is the true culprit in heart disease:
"Over 80 percent of CVD [cardiovascular disease] is attributable to environmental factors, notably unhealthy diet and also smoking, alcohol and physical inactivity. Diet has primacy, accounting for a larger burden of CVD disease and death than tobacco, alcohol and inactivity combined. For those at low risk eating an apple a day has an equivalent risk reduction for myocardial infarction [heart attack] as taking a statin."14,15
Statins Increase Diabetes Risk
Statins have been shown to increase your risk of diabetes via a number of different mechanisms. The most important one is that they increase insulin resistance, which can be extremely harmful to your health. Secondly, statins increase your diabetes risk by raising your blood sugar. Statins work by preventing your liver from making cholesterol.
As a result, your liver returns the sugar to your bloodstream, which raises your blood sugar levels. These drugs also rob your body of certain valuable nutrients, which can also impact your blood sugar levels. Two nutrients in particular, vitamin D and CoQ10, are both needed to maintain ideal blood glucose levels.
Importantly, statins deplete your body of CoQ10, vitamin K2, dolichol and selenium, thereby threatening your heart and overall health even further. Statins' ability to lower the risk of minor heart attacks may actually be related to their ability to lower C-reactive protein, far more so than the lowering of cholesterol.
Researchers with the Erasmus Medical Center in the Netherlands recently analyzed data from more than 9,500 patients. Those who had ever used statins had a 38 percent higher risk of Type 2 diabetes, with the risk being higher in those with impaired glucose homeostasis and those who were overweight or obese.16
The researchers concluded, "Individuals using statins may be at higher risk for hyperglycemia, insulin resistance and eventually Type 2 diabetes. Rigorous preventive strategies such as glucose control and weight reduction in patients when initiating statin therapy might help minimizing the risk of diabetes."
But a far better strategy may be preventing insulin resistance in the first place, by avoiding statin drugs and eating a healthy diet. According to Malhotra and a colleague:17
"In young adults, preventing insulin resistance could prevent 42 percent of myocardial infarctions, a larger reduction than correcting hypertension (36 percent), low high-density lipoprotein cholesterol (HDL-C) (31 percent), body mass index (BMI) (21 percent) or LDL-C (16 percent).18
It is plausible that the small benefits of statins in the prevention of CVD come from pleiotropic effects which are independent of LDL-lowering. The focus in primary prevention should therefore be on foods and food groups that have a proven benefit in reducing hard endpoints and mortality."
How to Identify and Lower Your Heart Disease Risk
Rather than focusing on cholesterol, two tests that are far more important for assessing your CVD risk are the serum ferritin and gamma-glutamyl transpeptidase (GGT) tests.
The GGT test can be used as a screening marker for excess free iron and is a great indicator of your sudden cardiac death risk. The recommended, ideal levels, of ferritin and GGT are as follows. For more information about these tests, read "Cholesterol Does Not Cause Heart Disease."
• Ferritin — Adult men and nonmenstruating women: 30 to 40 nanograms per milliliter (ng/mL) or 75 to 100 nanomoles per liter (nmol/L).
The most commonly used threshold for iron deficiency in clinical studies is 12 to 15 ng/mL (30 to 37 nmol/L). You do not want to be below 20 ng/mL (50 nmol/L) or above 80 ng/mL (200 nmol/L). High iron during pregnancy is also problematic; having a level of 60 or 70 ng/mL (150 or 175 nmol/L) is associated with greater odds of poor pregnancy outcomes.
• GGT — Below 16 units per liter (U/L) for men and below 9 U/L for women. Above 25 U/L for men and 18 U/L for women, your risk of chronic disease increases significantly.
In order to protect yourself against heart disease, here are a number of suggestions that can help you lower your insulin resistance and restore your insulin sensitivity, among other heart-protective mechanisms:
Avoid environmental pollutants and toxins, including smoking, vaping, heavy metals, herbicides and pesticides, especially glyphosate.
Minimize your exposure to electromagnetic fields and wireless radiation from cellphones, Wi-Fi, routers, smart meters and more, as this kind of radiation has been shown to cause serious free radical damage and mitochondrial dysfunction.
Eat an unprocessed whole food-based diet low in net carbs and high in healthy fats. A ketogenic diet — which is very low in net carbohydrates and high in healthy fats — is key for boosting mitochondrial function.
When your body is able to burn fat for fuel, your liver creates water-soluble fats called ketones that burn far more efficiently than carbs, thereby creating fewer reactive oxygen species and secondary free radicals. Ketones also decrease inflammation and improve glucose metabolism.19
Eat nitrate-rich foods to help normalize your blood pressure. Good sources include arugula, cilantro, rhubarb, butter leaf lettuce, mesclun mixed greens, beet greens, fresh beet juice, kvass (fermented beet juice) and fermented beet powder.
Get plenty of nonexercise movement each day; walk more and incorporate higher intensity exercise as your health allows.
Intermittently fast. After you've become accustomed to intermittently fasting for 16 to 18 hours, you can try a stricter fast once or twice a week, when you eat a 300- to 800-calorie meal loaded with detox supporting nutrients, followed by a 24-hour fast. So, in essence, you're then only eating one 300- to 800-calorie meal in 42 hours.
If you have heart disease, consider enhanced external counterpulsation (EECP). To find a provider, see EECP.com.20
If you have heart disease, you may also consider taking g-strophanthin, an adrenal hormone that helps create more parasympathetic nervous system neurotransmitters, thereby supporting your parasympathetic nervous system. It also helps flush out lactic acid. Strophanthus is the name of the plant, the active ingredient of which is called g-strophanthin in Europe, and ouabain in the United States.
Get sensible sun exposure to optimize your vitamin D status and/or take an oral vitamin D3 supplement with magnesium and vitamin K2.
Implement heart-based wellness practices such as connecting with loved ones and practicing gratitude.
from
http://articles.mercola.com/sites/articles/archive/2019/03/19/why-are-statins-bad-for-you.aspx
source http://niapurenaturecom.weebly.com/blog/the-great-statin-debate-why-cholesterol-is-misunderstood
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Procedure of mutual divorce under Hindu law
Divorce by mutual consent.
Divorce is the process of putting an end to the marital union of two married individuals. It usually entails the canceling or reorganizing of the legal duties and responsibilities of marriage, thus dissolving the bonds of matrimony between a married couple under the rule of law of the particular country or state.
Divorce under Hindu law are of two types.
1. Contested- Here one spouse decides to get divorced from the other on the grounds mentioned under sec 13 apart from sec 13(b) of the Hindu marriage act , 1955 . Either the husband or the wife files a suit for divorce in the nearest District court where the parties are residing. The grounds for contested divorce can be adultery, cruelty , conversion to other religion, civil death etc. Contested divorces mean that one of several issues are required to be heard by a judge at trial level—this is more expensive, and the parties will have to pay for a lawyer's time and preparation. In such a divorce the spouses are not able to agree on issues for instance child custody and division of marital assets. In such situations, the litigation process takes longer to conclude. The judge controls the outcome of the case.
2. Mutual Divorce - Sec 13(b) of The Hindu Marriage Act explains the process of divorce by mutual consent. Here a petition for divorce by mutual consent may be presented jointly by both the spouses with the following averments. :
A. That they have been living separately for a period of one year
B. That they have not been able to live together ,and
C. That they have mutually agreed to live separately.
For instance, if the husband and wife have been living separately for a period of one year or more and are further unable to live together, and both have mutually agreed that the marriage has totally collapsed, they can be granted the divorce.
Research says that one of the fastest ways of being granted a divorce in India is through mutual consent as other options linger on for too long. The law says that all marriages which have been solemnized before or after the Marriage Laws (Amendment) Act 1976 can be annulled, provided the parties to marriage consent for the same in front of the court.All the above conditions should be fulfilled before divorce can be granted.
Step by step procedure for filing divorce under Mutual consent.
In order to get the divorce under mutual consent , the following steps are to be followed.
1. Joint petition - The very first step for filing a divorce petition by mutual consent is to present a joint petition before the Honourable Court . One party can be called the Petitioner and the other to be called the Co- petitioner. The time since when the parties are living separately from each other and that the presentation of this petition is out of no coercion or undue influence has to be specifically mentioned in the petition.
Along with the petition, address proof of both the spouses, an affidavit and verification of both the petitioner and co- petitioner and a vakalat nama with a bar sticker with a court fee of Rs 100 /- (hundred) , photograph of both petitioner and co- petitioner and a copy of marriage certificate has to be submitted in the filling department of the specific court where the parties are residing. The joint petition is to be signed by both the parties.
2. Appearance of the parties - The second step is the appearance of both the parties at the concerned family court after the filing procedure is completed. The court fixes the day and calls both the parties to present themselves before the court on that concerned date .
3. Scrutiny of the documents - The court goes through the petition and scrutinizes the documents filed by the parties. On being satisfied, the court records the statement of both the parties. In some cases the court brings about a reconciliation between the parties , and the process of divorce stops then and there whereas in other cases where the court fails to bring about reconciliation between the parties , the divorce process continues.
4. Cooling off period - After the statement of both the parties been recorded , the court gives a date not less than 6 months. Order of first motion is passed then. The court mostly gives this time to the parties to bring about a reconciliation between them.
5. Second motion - After the passing of the first motion, the parties appear before the court on the date that was given. The court records the statement of both the parties and if satisfied, grants divorce and if not , gives a day after 6 months but not less than 18 months from the date of filling for second hearing and the final hearing. Besides, according to the section, as well as the settled law, it is clear that one of the parties may withdraw their consent at any time before the passing of the decree.
6. Final Hearing and passing of the order of divorce - Upon the basis of the statements recorded by both the parties and the facts and circumstances of the case, the court on being satisfied that the divorced is being claimed not out of any coercion or undue influence and that there is absolutely no chance of reconciliation between the parties, the order of divorce is given.
Is the cooling off period mandatory ?
Some courts held that the requirement of waiting of six months is mandatory . Some high courts do not share this view . A Hindu married couple may not need to wait six months for a separation order in case of mutual consent and the marriage can be legally terminated in just a week as the Supreme Court on September 12, 2017, held that the "cooling off" period is not mandatory and can be waived off.
The court ruled that the stipulation under the Hindu Marriage Act for a six-month wait can be done away with if all efforts for mediation and conciliation intended to reunite the parties fail. The waiving off can be considered if the parties had already lived separately for at least a year. In such situations, the court could take a view that delay in proceedings will only prolong subsequent resettlement.
The object of the cooling off period was to safeguard against a hurried decision if there was otherwise possibility of differences being reconciled.
A bench of Justices A.K.Goel and U.U.Lalit, after examining all the issues, came to the conclusion that Section 13B(2) was not mandatory but directory. It said that the concerned court was to waive off the six-month period after being convinced that the parties were living separately for more than a year with no chance of reconciliation and further waiting period would only prolong their agony.
Is personal appearance of the parties mandatory. ?
The Punjab and Haryana High Court has held that it is not necessary. The parties can be represented by their duly appointed attorneys. Also while passing the decree under this section the court has to be satisfied that the consent was not obtained by force, fraud or undue influence.
Is a decree under this provision appealable. ?
It is, according to Susma Pramod Taksande vs Pramod Taksande . The question raised was that since decree under this provision is like a consent decree, it is not appeal-able . But it was held that since Sec 28 of the Hindu Marriage Act gives a right to appeal against all original decrees passed under this act by the trial court it is.
Maintenance and child custody
When two spouses decides to get divorced mutually then the amount to be given for maintenance and the custody of the child has to be decided by the parties prior to the submission of the petition and the decision by the court will be given in accordance with that.
Conclusion.
Mutual divorce is the easiest and the fastest way to get rid of the marital ties that a married couple share. The maximum time that can be taken for a mutual divorce to get granted is 18 months. Regardless of the procedure and the time taken, you still would require an experienced lawyer to get this done as he/ she will be able to guide you better and represent you in the court.
Topics reference from latest legal blog
#Mutual Consent Divorce#Mutual Divorce#Divorce Procedure#Hindu Marriage Act#Hindu Marriage Act Divorce#Bonds of Matrimony#Marriage
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QVC and HSN Merger Creates E-Commerce Powerhouse
As e-commerce continues to explode, consolidating the two largest home shopping TV/media brands is a strategic move to batten down the hatches while expanding reach—and locking arms against Amazon.
Media mogul John C. Malone is merging his Liberty Interactive, owner of QVC, with long-standing competitor, Home Shopping Network, in a $2.1 billion deal that gives QVC the portion of HSN that it doesn’t already own—assuming the merger passes federal anti-trust scrutiny.
Both brands have seen sales slow as Amazon’s online dominance soars, so combining the now digital-first QVC (located in West Chester, Pennsylvania, with corporate at Liberty’s HQ of Englewood, Colorado) and HSN (based in St. Petersburg, Florida) at this moment in time is not a huge surprise. Even so, QVC still did $8.7 billion in sales last year and HSN has revenue of $3.5 billion. In May, Liberty CEO Greg Maffei said he saw “some synergy values” in a combination.
youtube
As Fortune notes, the times have been a-changing for home shopping, which is now more about online and mobile than TV and still fighting to become an everyday retail choice and not just at the holidays. “Over the past decade, QVC has seen many of its customers shift from the traditional call-in and desktop orders to mobile. Of the company’s $3.9 billion in e-commerce annual revenue in Q3 of 2016, almost 60% came from a mobile device, a 10% jump from the same period in 2015.”
Click here to download Interbrand’s M&A handbook
The two will remain standalone brands under a new QVC Group corporate structure in an all-stock transaction where Liberty Interactive is buying the 62 percent of HSN it does not already own. “The increased scale of this combination will allow us to more effectively compete, we think, in a changing and evolving retail and digital environment,” Maffei commented to the New York Times.
“Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms,” Maffei stated in the press release announcing the merger. “The value of the combined QVC, HSNi and Zulily will be further highlighted when later this year QVC Group becomes an asset-backed stock as part of the previously announced split-off of Liberty Ventures.”
The Times notes that “such a spinoff is a classic Malone maneuver meant to avoid running up corporate taxes, since shareholders will receive shares in the newly-christened QVC Group rather than a cash payout.”
Under the proposed terms of the deal, investors would receive 1.65 shares of QVC Series A stock for each share of HSN they own, valuing HSN at $40.36 a share, a 29 percent premium to its closing price on Wednesday. The transaction is expected to close in Q4 subject to shareholder and regulatory approval.
QVC has grown internationally since it was founded in 1986 to pitch wares from Sears and other retailers to customers at home, and now broadcasts to more than 350 million households in seven countries: the US, UK, Germany, Japan, Italy, China and France.
“HSN founded the industry 40 years ago and helped it grow with exciting initiatives like Shop By Remote and media integrations with leading content producers,” QVC president and CEO Mike George stated.
“By creating the leader in discovery-based shopping, we will enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth. As the prominent global video commerce retailer and North America’s third-largest mobile and e-Commerce retailer, the combined company will be well-positioned to help shape the next generation of retailing.”
Liberty’s Maffei said the deal will “enhance QVC’s position as the leading global video e-commerce retailer,” as the two former rivals join forces to reassert their stake and navigate an omnichannel world.
♀️♀️Take your workouts to a new level with our TOPfind of the day! Tap the link in our profile to shop the Pilates PRO Chair Max with Sculpting Handles for under $230, choice of 6 colors, FREE S&H and on 5 Easy Pays! Plus, join @therealsusanlucci throughout the day on-air! #pilatespro #pilates #pilatesbody #instafit #fitmom #fitness #fitgirl #workoutmotivation #workoutdaily #loveqvc
A post shared by QVC (@qvc) on Jun 25, 2017 at 5:18am PDT
//platform.instagram.com/en_US/embeds.js
QVC’s popular brands include homewares and apparel by Ellen DeGeneres, Josie Maran, IT Cosmetics, Isaac Mizrahi along with younger brands such as Daya by Zendaya, who also promoted a FFANY shoe sale for last October’s breast cancer awareness month.
vimeo
HSN, meanwhile, has been selling off brands to off-set its sales slump, but one notable exception is its Cornerstone Brands subsidiary, which was purchased under then-owner IAC (Barry Diller’s InteractiveCorp) in 2005 for $720 million.
Cornerstone President Judy Schmeling tells the Tampa Bay Times that HSN was attracted to the brand to help grow its apparel and home business. “We have the consumer insights to share across all the brands and customer experience online. It’s beneficial both ways.”
Cornerstone’s five online/catalog brands:
• Ballard Designs for home interior decorators specializing in product customization
• Frontgate caters to a higher demographic and as users tell their stories at home through products
• Garnet Hill, a stylish adult and children’s apparel catalog
• Improvements, a sub-brand under Frontgate that offers affordable, colorful items for the home.
• Cornerstone Brands, which is opening stores now, just as peers and rivals are closing them en masse.
“Retailers are shedding stores because they’re completely ‘over-stored.’ The vast majority of retail sales is still done in retail stores. We don’t have the baggage others do with a bunch of stores including less-productive ones. We are selectively going into locations only in A-plus malls, no B or C malls at all,” Schmeling explained.
“We are considering some lifestyle centers that aren’t traditional mall locations, too. It’s about creating an experience for those customers where we offer a lot of events, pair with restaurants and bars, and tailor each experience to one of brands,” she added.
“It’s so highly customizable and we’re making sure it’s (a) 360-degree experience from design consultations that compliment our services over the phone and online. It’s a complete offering. We’re getting a significant amount of new customers from digital means too. But the retail footprints help bring the brand to life. The flat digital experience is hard to get across.”
The post QVC and HSN Merger Creates E-Commerce Powerhouse appeared first on brandchannel:.
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QVC and HSN Merger Creates E-Commerce Powerhouse
As e-commerce continues to explode, consolidating the two largest home shopping TV/media brands is a strategic move to batten down the hatches while expanding reach—and locking arms against Amazon.
Media mogul John C. Malone is merging his Liberty Interactive, owner of QVC, with long-standing competitor, Home Shopping Network, in a $2.1 billion deal that gives QVC the portion of HSN that it doesn’t already own—assuming the merger passes federal anti-trust scrutiny.
Both brands have seen sales slow as Amazon’s online dominance soars, so combining the now digital-first QVC (located in West Chester, Pennsylvania, with corporate at Liberty’s HQ of Englewood, Colorado) and HSN (based in St. Petersburg, Florida) at this moment in time is not a huge surprise. Even so, QVC still did $8.7 billion in sales last year and HSN has revenue of $3.5 billion. In May, Liberty CEO Greg Maffei said he saw “some synergy values” in a combination.
youtube
As Fortune notes, the times have been a-changing for home shopping, which is now more about online and mobile than TV and still fighting to become an everyday retail choice and not just at the holidays. “Over the past decade, QVC has seen many of its customers shift from the traditional call-in and desktop orders to mobile. Of the company’s $3.9 billion in e-commerce annual revenue in Q3 of 2016, almost 60% came from a mobile device, a 10% jump from the same period in 2015.”
Click here to download Interbrand’s M&A handbook
The two will remain standalone brands under a new QVC Group corporate structure in an all-stock transaction where Liberty Interactive is buying the 62 percent of HSN it does not already own. “The increased scale of this combination will allow us to more effectively compete, we think, in a changing and evolving retail and digital environment,” Maffei commented to the New York Times.
“Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms,” Maffei stated in the press release announcing the merger. “The value of the combined QVC, HSNi and Zulily will be further highlighted when later this year QVC Group becomes an asset-backed stock as part of the previously announced split-off of Liberty Ventures.”
The Times notes that “such a spinoff is a classic Malone maneuver meant to avoid running up corporate taxes, since shareholders will receive shares in the newly-christened QVC Group rather than a cash payout.”
Under the proposed terms of the deal, investors would receive 1.65 shares of QVC Series A stock for each share of HSN they own, valuing HSN at $40.36 a share, a 29 percent premium to its closing price on Wednesday. The transaction is expected to close in Q4 subject to shareholder and regulatory approval.
QVC has grown internationally since it was founded in 1986 to pitch wares from Sears and other retailers to customers at home, and now broadcasts to more than 350 million households in seven countries: the US, UK, Germany, Japan, Italy, China and France.
“HSN founded the industry 40 years ago and helped it grow with exciting initiatives like Shop By Remote and media integrations with leading content producers,” QVC president and CEO Mike George stated.
“By creating the leader in discovery-based shopping, we will enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth. As the prominent global video commerce retailer and North America’s third-largest mobile and e-Commerce retailer, the combined company will be well-positioned to help shape the next generation of retailing.”
Liberty’s Maffei said the deal will “enhance QVC’s position as the leading global video e-commerce retailer,” as the two former rivals join forces to reassert their stake and navigate an omnichannel world.
♀️♀️Take your workouts to a new level with our TOPfind of the day! Tap the link in our profile to shop the Pilates PRO Chair Max with Sculpting Handles for under $230, choice of 6 colors, FREE S&H and on 5 Easy Pays! Plus, join @therealsusanlucci throughout the day on-air! #pilatespro #pilates #pilatesbody #instafit #fitmom #fitness #fitgirl #workoutmotivation #workoutdaily #loveqvc
A post shared by QVC (@qvc) on Jun 25, 2017 at 5:18am PDT
//platform.instagram.com/en_US/embeds.js
QVC’s popular brands include homewares and apparel by Ellen DeGeneres, Josie Maran, IT Cosmetics, Isaac Mizrahi along with younger brands such as Daya by Zendaya, who also promoted a FFANY shoe sale for last October’s breast cancer awareness month.
vimeo
HSN, meanwhile, has been selling off brands to off-set its sales slump, but one notable exception is its Cornerstone Brands subsidiary, which was purchased under then-owner IAC (Barry Diller’s InteractiveCorp) in 2005 for $720 million.
Cornerstone President Judy Schmeling tells the Tampa Bay Times that HSN was attracted to the brand to help grow its apparel and home business. “We have the consumer insights to share across all the brands and customer experience online. It’s beneficial both ways.”
Cornerstone’s five online/catalog brands:
• Ballard Designs for home interior decorators specializing in product customization
• Frontgate caters to a higher demographic and as users tell their stories at home through products
• Garnet Hill, a stylish adult and children’s apparel catalog
• Improvements, a sub-brand under Frontgate that offers affordable, colorful items for the home.
• Cornerstone Brands, which is opening stores now, just as peers and rivals are closing them en masse.
“Retailers are shedding stores because they’re completely ‘over-stored.’ The vast majority of retail sales is still done in retail stores. We don’t have the baggage others do with a bunch of stores including less-productive ones. We are selectively going into locations only in A-plus malls, no B or C malls at all,” Schmeling explained.
“We are considering some lifestyle centers that aren’t traditional mall locations, too. It’s about creating an experience for those customers where we offer a lot of events, pair with restaurants and bars, and tailor each experience to one of brands,” she added.
“It’s so highly customizable and we’re making sure it’s (a) 360-degree experience from design consultations that compliment our services over the phone and online. It’s a complete offering. We’re getting a significant amount of new customers from digital means too. But the retail footprints help bring the brand to life. The flat digital experience is hard to get across.”
The post QVC and HSN Merger Creates E-Commerce Powerhouse appeared first on brandchannel:.
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QVC and HSN Merger Creates E-Commerce Powerhouse
As e-commerce continues to explode, consolidating the two largest home shopping TV/media brands is a strategic move to batten down the hatches while expanding reach—and locking arms against Amazon.
Media mogul John C. Malone is merging his Liberty Interactive, owner of QVC, with long-standing competitor, Home Shopping Network, in a $2.1 billion deal that gives QVC the portion of HSN that it doesn’t already own—assuming the merger passes federal anti-trust scrutiny.
Both brands have seen sales slow as Amazon’s online dominance soars, so combining the now digital-first QVC (located in West Chester, Pennsylvania, with corporate at Liberty’s HQ of Englewood, Colorado) and HSN (based in St. Petersburg, Florida) at this moment in time is not a huge surprise. Even so, QVC still did $8.7 billion in sales last year and HSN has revenue of $3.5 billion. In May, Liberty CEO Greg Maffei said he saw “some synergy values” in a combination.
youtube
As Fortune notes, the times have been a-changing for home shopping, which is now more about online and mobile than TV and still fighting to become an everyday retail choice and not just at the holidays. “Over the past decade, QVC has seen many of its customers shift from the traditional call-in and desktop orders to mobile. Of the company’s $3.9 billion in e-commerce annual revenue in Q3 of 2016, almost 60% came from a mobile device, a 10% jump from the same period in 2015.”
Click here to download Interbrand’s M&A handbook
The two will remain standalone brands under a new QVC Group corporate structure in an all-stock transaction where Liberty Interactive is buying the 62 percent of HSN it does not already own. “The increased scale of this combination will allow us to more effectively compete, we think, in a changing and evolving retail and digital environment,” Maffei commented to the New York Times.
“Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms,” Maffei stated in the press release announcing the merger. “The value of the combined QVC, HSNi and Zulily will be further highlighted when later this year QVC Group becomes an asset-backed stock as part of the previously announced split-off of Liberty Ventures.”
The Times notes that “such a spinoff is a classic Malone maneuver meant to avoid running up corporate taxes, since shareholders will receive shares in the newly-christened QVC Group rather than a cash payout.”
Under the proposed terms of the deal, investors would receive 1.65 shares of QVC Series A stock for each share of HSN they own, valuing HSN at $40.36 a share, a 29 percent premium to its closing price on Wednesday. The transaction is expected to close in Q4 subject to shareholder and regulatory approval.
QVC has grown internationally since it was founded in 1986 to pitch wares from Sears and other retailers to customers at home, and now broadcasts to more than 350 million households in seven countries: the US, UK, Germany, Japan, Italy, China and France.
“HSN founded the industry 40 years ago and helped it grow with exciting initiatives like Shop By Remote and media integrations with leading content producers,” QVC president and CEO Mike George stated.
“By creating the leader in discovery-based shopping, we will enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth. As the prominent global video commerce retailer and North America’s third-largest mobile and e-Commerce retailer, the combined company will be well-positioned to help shape the next generation of retailing.”
Liberty’s Maffei said the deal will “enhance QVC’s position as the leading global video e-commerce retailer,” as the two former rivals join forces to reassert their stake and navigate an omnichannel world.
♀️♀️Take your workouts to a new level with our TOPfind of the day! Tap the link in our profile to shop the Pilates PRO Chair Max with Sculpting Handles for under $230, choice of 6 colors, FREE S&H and on 5 Easy Pays! Plus, join @therealsusanlucci throughout the day on-air! #pilatespro #pilates #pilatesbody #instafit #fitmom #fitness #fitgirl #workoutmotivation #workoutdaily #loveqvc
A post shared by QVC (@qvc) on Jun 25, 2017 at 5:18am PDT
QVC’s popular brands include homewares and apparel by Ellen DeGeneres, Josie Maran, IT Cosmetics, Isaac Mizrahi along with younger brands such as Daya by Zendaya, who also promoted a FFANY shoe sale for last October’s breast cancer awareness month.
vimeo
HSN, meanwhile, has been selling off brands to off-set its sales slump, but one notable exception is its Cornerstone Brands subsidiary, which was purchased under then-owner IAC (Barry Diller’s InteractiveCorp) in 2005 for $720 million.
Cornerstone President Judy Schmeling tells the Tampa Bay Times that HSN was attracted to the brand to help grow its apparel and home business. “We have the consumer insights to share across all the brands and customer experience online. It’s beneficial both ways.”
Cornerstone’s five online/catalog brands:
• Ballard Designs for home interior decorators specializing in product customization
• Frontgate caters to a higher demographic and as users tell their stories at home through products
• Garnet Hill, a stylish adult and children’s apparel catalog
• Improvements, a sub-brand under Frontgate that offers affordable, colorful items for the home.
• Cornerstone Brands, which is opening stores now, just as peers and rivals are closing them en masse.
“Retailers are shedding stores because they’re completely ‘over-stored.’ The vast majority of retail sales is still done in retail stores. We don’t have the baggage others do with a bunch of stores including less-productive ones. We are selectively going into locations only in A-plus malls, no B or C malls at all,” Schmeling explained.
“We are considering some lifestyle centers that aren’t traditional mall locations, too. It’s about creating an experience for those customers where we offer a lot of events, pair with restaurants and bars, and tailor each experience to one of brands,” she added.
“It’s so highly customizable and we’re making sure it’s (a) 360-degree experience from design consultations that compliment our services over the phone and online. It’s a complete offering. We’re getting a significant amount of new customers from digital means too. But the retail footprints help bring the brand to life. The flat digital experience is hard to get across.”
The post QVC and HSN Merger Creates E-Commerce Powerhouse appeared first on brandchannel:.
0 notes
Text
QVC and HSN Merger Creates E-Commerce Powerhouse
As e-commerce continues to explode, consolidating the two largest home shopping TV/media brands is a strategic move to batten down the hatches while expanding reach—and locking arms against Amazon.
Media mogul John C. Malone is merging his Liberty Interactive, owner of QVC, with long-standing competitor, Home Shopping Network, in a $2.1 billion deal that gives QVC the portion of HSN that it doesn’t already own—assuming the merger passes federal anti-trust scrutiny.
Both brands have seen sales slow as Amazon’s online dominance soars, so combining the now digital-first QVC (located in West Chester, Pennsylvania, with corporate at Liberty’s HQ of Englewood, Colorado) and HSN (based in St. Petersburg, Florida) at this moment in time is not a huge surprise. Even so, QVC still did $8.7 billion in sales last year and HSN has revenue of $3.5 billion. In May, Liberty CEO Greg Maffei said he saw “some synergy values” in a combination.
youtube
As Fortune notes, the times have been a-changing for home shopping, which is now more about online and mobile than TV and still fighting to become an everyday retail choice and not just at the holidays. “Over the past decade, QVC has seen many of its customers shift from the traditional call-in and desktop orders to mobile. Of the company’s $3.9 billion in e-commerce annual revenue in Q3 of 2016, almost 60% came from a mobile device, a 10% jump from the same period in 2015.”
Click here to download Interbrand’s M&A handbook
The two will remain standalone brands under a new QVC Group corporate structure in an all-stock transaction where Liberty Interactive is buying the 62 percent of HSN it does not already own. “The increased scale of this combination will allow us to more effectively compete, we think, in a changing and evolving retail and digital environment,” Maffei commented to the New York Times.
“Every year they together produce over 55,000 hours of shoppable video content and have strong positions on multiple linear channels and OTT platforms,” Maffei stated in the press release announcing the merger. “The value of the combined QVC, HSNi and Zulily will be further highlighted when later this year QVC Group becomes an asset-backed stock as part of the previously announced split-off of Liberty Ventures.”
The Times notes that “such a spinoff is a classic Malone maneuver meant to avoid running up corporate taxes, since shareholders will receive shares in the newly-christened QVC Group rather than a cash payout.”
Under the proposed terms of the deal, investors would receive 1.65 shares of QVC Series A stock for each share of HSN they own, valuing HSN at $40.36 a share, a 29 percent premium to its closing price on Wednesday. The transaction is expected to close in Q4 subject to shareholder and regulatory approval.
QVC has grown internationally since it was founded in 1986 to pitch wares from Sears and other retailers to customers at home, and now broadcasts to more than 350 million households in seven countries: the US, UK, Germany, Japan, Italy, China and France.
“HSN founded the industry 40 years ago and helped it grow with exciting initiatives like Shop By Remote and media integrations with leading content producers,” QVC president and CEO Mike George stated.
“By creating the leader in discovery-based shopping, we will enhance the customer experience, accelerate innovation, leverage our resources and talents to further strengthen our brands, and redeploy savings for innovation and growth. As the prominent global video commerce retailer and North America’s third-largest mobile and e-Commerce retailer, the combined company will be well-positioned to help shape the next generation of retailing.”
Liberty’s Maffei said the deal will “enhance QVC’s position as the leading global video e-commerce retailer,” as the two former rivals join forces to reassert their stake and navigate an omnichannel world.
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A post shared by QVC (@qvc) on Jun 25, 2017 at 5:18am PDT
QVC’s popular brands include homewares and apparel by Ellen DeGeneres, Josie Maran, IT Cosmetics, Isaac Mizrahi along with younger brands such as Daya by Zendaya, who also promoted a FFANY shoe sale for last October’s breast cancer awareness month.
vimeo
HSN, meanwhile, has been selling off brands to off-set its sales slump, but one notable exception is its Cornerstone Brands subsidiary, which was purchased under then-owner IAC (Barry Diller’s InteractiveCorp) in 2005 for $720 million.
Cornerstone President Judy Schmeling tells the Tampa Bay Times that HSN was attracted to the brand to help grow its apparel and home business. “We have the consumer insights to share across all the brands and customer experience online. It’s beneficial both ways.”
Cornerstone’s five online/catalog brands:
• Ballard Designs for home interior decorators specializing in product customization
• Frontgate caters to a higher demographic and as users tell their stories at home through products
• Garnet Hill, a stylish adult and children’s apparel catalog
• Improvements, a sub-brand under Frontgate that offers affordable, colorful items for the home.
• Cornerstone Brands, which is opening stores now, just as peers and rivals are closing them en masse.
“Retailers are shedding stores because they’re completely ‘over-stored.’ The vast majority of retail sales is still done in retail stores. We don’t have the baggage others do with a bunch of stores including less-productive ones. We are selectively going into locations only in A-plus malls, no B or C malls at all,” Schmeling explained.
“We are considering some lifestyle centers that aren’t traditional mall locations, too. It’s about creating an experience for those customers where we offer a lot of events, pair with restaurants and bars, and tailor each experience to one of brands,” she added.
“It’s so highly customizable and we’re making sure it’s (a) 360-degree experience from design consultations that compliment our services over the phone and online. It’s a complete offering. We’re getting a significant amount of new customers from digital means too. But the retail footprints help bring the brand to life. The flat digital experience is hard to get across.”
The post QVC and HSN Merger Creates E-Commerce Powerhouse appeared first on brandchannel:.
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Automobile Dealerships - Out of Trust - Keepers
The Necessity of a Keeper
When a lender feels its security is in jeopardy, it frequently places a keeper in the dealership. This action is usually precipitated by the lender losing its “comfort level” with the dealer.
While many dealers interpret the placing of a keeper in their dealership as a hostile action on the part of the lender, their reaction is based more on emotion than logic. The lending officer works for a corporation and the corporation is owned by shareholders. The officer has a duty to the company and to the shareholders to protect their security.
“The act of (a lender) in placing its representatives at the plant of its debtor reflected only the natural instincts, interest and solicitude of any other creditor then in its position, and (the lender) is not on that account alone to be penalized by being declared the principal.” Commercial Credit Co. v. L.A. Benson Co., Inc. 184 A. 236, at 240 (Md. 1936).
See too: Cosoff v. Rodman (In re W.T. Grant Co.), 699 F.2d 599 (2d Cir.) cert. denied, at 104 S.Ct. 89 (1983) where the court said the banks would have been derelict in their duty to their creditors and stockholders if they did not keep a careful watch on the debtor.
The lending officer did not wake up one morning and decide it would be a good idea to put a keeper in the dealership. In the typical case, the dealership had either been experiencing financial difficulties for a period of time, or a series of floor checks revealed the dealer had “sold and unpaid” vehicles of such an unusually high proportion of monthly sales, that the lender classified the vehicles as being sold out of trust. In either situation, a prudent lender must view the dealer from a different perspective.
No one can predict what a person will do under the continued pressure of serious financial difficulties. By the time a lender puts a keeper in a dealership, the burdens the dealer is shouldering have been growing for some time. The dealer usually does not fully comprehend the extent of the strain under which he or she has been functioning; but, when one faces numerous negotiations with creditors, endless days of chasing cash to make payroll and pay bills and does not have enough cash to purchase and keep a good trade, one’s judgment becomes clouded. An experienced lender knows that a normally rational person can do most anything when placed under a sufficient amount pressure, for a sufficient amount of time.
When the keeper appears, the dealer rather than being vengeful or hurt should realize the dealership needs professional help and seek it. There are many ways to continue operating a dealership with a keeper and to resolve the situation, re-capitalize the store, or sell the dealership at a fair price, vis-à-vis a fire sale.
In most instances, a keeper is placed in a dealership upon the mutual consent of the dealer and the finance company. At the meeting preceding such an action, it is wise for the parties to identify, agree to and understand the specific duties and corresponding actions, of the keeper.
The Keeper’s Affirmative Duties
Although the primary concern of the keeper lies in the care and custody of the floored vehicles, in most instances the lender also holds a security interest in all or part of the dealership’s assets. Consequently, the keeper will want to be and should be aware of the dealer’s attitude towards assets other than the floored vehicles and should report to the credit company any indication on the part of the dealer to dispose of any such assets.
The keeper, usually more than one person, will be at the dealership every business day from the time the first employee arrives, until the last employee leaves. The keeper should be responsible for:
(1) The condition, location and security of the pledged assets;
(2) Keeping the vehicles’:
a. Ignition Keys
b. Dealer License Plates
c. MSOs and/or Invoices and other documentation required to transfer title.
(3) Being present when the mail is opened;
(4) Taking custody of the cash and checks;
(5) Taking custody of the unused check stock;
(6) Supervising preparation of the bank deposit and agreeing upon whom will make the deposit;
(7) The disposition of proceeds from contracts of sold vehicles, to be sure the money gets to the proper parties;
(8) Arranging for third party finance companies, which purchase the dealer’s contracts, to include the lender’s name on proceeds checks, or, in the alternative, to refuse to permit the dealer to contract a sale to other finance companies;
(9) Being responsible for protecting the vehicles after the dealership closes; if the vehicles cannot be blocked from exiting the facility, via a fence and “blockers”, a security guard should be hired;
(10) Establishing a means of maintaining a running, daily, or semi-daily, inventory control of unsold vehicles. Only one vehicle at a time, for which the lender has not received payment, should leave the dealership, whether of not that vehicle is floored;
(11) Being aware of the activities in the Parts Department and its employees.
Courts have approved of lenders controlling the release of the bank’s collateral, depositing all accounts receivable in a special banking account and requiring the counter-signature of the bank’s agent for all payments from the special account [Ford v. C.E. Wilson & Co. Inc., 120 F.2d 614 (2d Cir. 1942)], receiving regular reports on the accounts payable activity, receiving estimated weekly expense budgets [Edwards v. Northeastern Bank, 39 N.C. App. 261, 250 S.E. 2d 651 (1979)], proffering advice to the dealer, even coupled with a decision to withhold credit [In re Beverages International, Ltd., 50 Bank 273 (D. Mass 1985), requiring the debtor to hire a consultant acceptable to the bank in the management and sale of the company, requiring the debtor to implement a lockbox with respect to its receivables and requiring certain individuals to pledge their stock in the debtor, to the bank [In re. Technology for Energy Corp, 56 Bankr. 307 (E.D. Tenn. 1985).
Acts a Keeper Should Not Perform
If the workout plan ever deteriorates and/or the relationship becomes hostile between the lender and the dealer, or creditors or employees of the dealer, the keeper’s will come under the scrutiny of a court. In such a case, those actions could be the beginning of a basis of liability or exoneration for the lender. In order to best protect the lender, the keeper should be aware of the following:
(1) The lender has an affirmative duty not to unnecessarily, maliciously or promiscuously disclose the financial condition of its debtor and any unauthorized disclosure could be a basis for both compensatory and punitive damages. Rubenstein v. South Denver Nat’l Bank, Case No 86CA0840 (Colo. 1988);
(2) Participating in board meetings and exercising decision-making authority with respect to the day to day operations of the business could make the lender liable for all of the debts of the debtor. Lurgan, Liability of a Creditor in a Control Relationship With Its Debtor, 67 Marq. Law Review 523 (1984); See too: Restatement (Second) Agency, Section 14-0, Comment “a”;
(3) Evidence of personality conflicts with the borrower could support a bad faith claim against the debtor. K.M.C. v. Irving Trust Co., 757 F.2d 752 (6th Cir. 1985)
(4) Making threats which the lender is not prepared to carry out, may support a fraud action against the lender. State Nat’l Bank of El Paso v. Farah Manufacturing Co. 678 S.W.2d 661 (Tex. App. El Paso 1984).
(5) Misleading a lender who intends to refinance the debtor, as to the debtor’s financial condition may result in liability to the third party lender. General Motors Acceptance Corporation v Central National Bank of Mattoon, 773 F.2d 771 (7th Cir. 1985).
Note too: while a factory does not seem to owe a duty to protect a lender’s floor plan status, to inform the lender of the fact that the dealer is going to sell, there is a triable issue of fact as to whether or not the factory has a duty to disclose the foreseeability of the dealer going out of trust. Beneficial Commercial Corp. v. Murray Glick Datsun, Inc. 601 F.Supp. 770 S.D.N.Y. 1985).
Procedures for Handling Insurance and Service Contract Monies
Some lenders have experienced staffs, which understand the above issues and problems. In any case, the dealer should be aware of them and should open new trust accounts. The accounts should be opened at a separate bank, in order to avoid any misunderstandings. If the lender wishes to audit these new accounts, that is fair. If a lending officer threatens to penalize the dealer for protecting the customer’s money, he or she is being unreasonable and the dealer should ascend the chain of command until reason prevails. If reason does not prevail, the dealer has hard evidence of the lender creating an untenable position, which evidence may prove useful at a later date.
The handling of the premiums for life, accident and health insurance, and for service contracts, does not create a problem if a routine is established. Always, with respect to insurance premiums, and usually with service contracts, the sale is covered under a security agreement. The lender and dealer should agree that all “time sales” will be restricted to the lender unless a third party financing company agrees to put the lender’s name on the proceeds check, which usually does not happen.
When a time-sale is being arranged, advance approval of the lender is should be required. Subsequently, when the contract is offered to the lender for purchase, the lender should deduct the amount necessary to release the flooring. If the proceeds of the sale are insufficient to clear the flooring, the keeper should have already deposited the cash down payment, and/or have taken possession of the title to the trade-in.
The proceeds of the sale, in excess of the flooring, are given to the keeper, who supervises the deposit of the service contract and insurance monies to the trust account and the mailing of the premiums to the appropriate insurance companies. If possible, the pay-off for the traded vehicle is also made from the general account of the dealership.
The above process, while time-consuming, is necessary. The parties should appreciate the understanding, patience, and cooperation needed from each other in order to make the operation run smoothly. If either the keeper, or the dealer, has a problem working with the other, the problem should be discussed with the keeper’s superior and resolved, or a new keeper assigned.
Procedures for Handling Payroll Monies
With respect to payroll monies, the dealership should continue with separate payroll account and the lender should agree to permit a payroll large enough for sufficient personnel to run the dealership in order to complete whatever stage of the work-out plan the parties have reached. If the dealership is winding down sufficient payroll should be allowed for a “skeleton crew” to prepare the dealership for sale or closing. Equipment will have to be guarded and maintained. Secretarial and accounting work will have to be completed. With respect to sales people, although they do fall within the minimum wage laws, they only get paid a commission if they make a sale and, if they do, they probably will have sold the asset for more money than the lender would get at an auction. The source of funds to cover the dealership operations is discussed in the next section.
Commissioned Salespeople
As mentioned, the commissioned salesperson gets paid a commission if and only if a contract for the sale of a vehicle crashes. They represent the best means of obtaining full value for the lender’s security. Consequently, the lender, regardless of its security interest, would probably be wise to subordinate its interest to the extent necessary for the sales people to earn a reasonable commission.
Closing a dealership is covered in another article. At this point, it is enough to mention that a lender, liquidating foreclosed vehicles, would have to deduct transportation, insurance, storage and auction fees from the forced liquidation sales prices of any vehicles it sold, before receiving any monies itself. Therefore, the amount of a salesperson’s commission for selling vehicles, net of the foreclosure costs, would appear to be a good investment, on the part of the lender.
An interesting question arises as to whether or not the lender has an implied duty, knowing the sales people are liquidating the inventory for the benefit of the lender, to inform the sales people that it, the lender, intends to keep all of the gross profit from the sale; and, further, if the lender, knowing it does not intend to allow the sales people to be reimbursed for their efforts, says nothing, do the sales people have an action against the lender?
In any event, the payment of employees (salaried or commissioned) should be made by the dealer from a separate payroll account. The account should be funded under the supervision of the keeper, but the lender’s employees should not participate in distributing the funds. Note: Participation in distributing the company payroll could make the lender liable for taxes. 26 USC 3505 and 6672.
Division of the Discretionary Income
Vehicle Income
If a lender maintains a security interest in the dealer’s vehicle inventory and if the dealership has collected and spent money for vehicles which have been sold, without reimbursing the lender for those vehicles, then the dealership’s gross profits from all future vehicle sales should be applied to reduce the number of sold and unpaid units. The cash profits from such sales should be applied immediately to the lender’s debt, such as vehicle gross profit, finance and insurance commissions and service contract profits. Factory rebate money and incentive monies should be assigned to the lender and applied to the borrower’s debt only upon receipt of the actual cash.
Service Department Income
Unless the dealership is averaging a 100% service absorption rate of its fixed overhead expense, which is unlikely, trying to operate a dealership on the service department’s income will be difficult, if not impossible. If the lender is unable or unwilling to allow these monies to be applied to the general operating fund of the dealership, it means the lender has decided to close the dealership, whether it believes so or not.
The service department monies include gross profits from parts, service, labor and the body shop if the dealership has one. The percentage of all fixed overhead expenses covered by this profit reflects the dealership’s absorption rate.
If the dealership is being sold or closed, these monies should be used to complete the payrolls necessary to accomplish an orderly transition or liquidation.
As always, consult with a qualified attorney whenever dealing with out of trust situations.
John Pico is the managing partner of Advising Automobile Dealers LLC. Mr. Pico served as a court appointed “Consultant to Debtor” in bankruptcy cases, a “Court Appointed Mediator” in automotive disputes, the “Court Appointed Arbitrator / Appraiser” in partnership disputes, a “Court Approved Consultant to Receiver” in a check-kiting case, as a “Superior Court Mediator” in dealership/lender litigation and has been recognized as an expert witness on both State and Federal levels.
He has consulted on upside-down positions of over $50 Million, out of trust position of over $4 Million and a bank overdraft of $30 Million. Since 1972, Mr. Pico has completed over 1,000 automobile dealership transactions, whose combined values exceed One Billion Dollars.
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Automobile Dealerships - Out of Trust - Keepers
New Post has been published on https://netmaddy.com/automobile-dealerships-out-of-trust-keepers/
Automobile Dealerships - Out of Trust - Keepers
The Necessity of a Keeper
When a lender feels its security is in jeopardy, it frequently places a keeper in the dealership. This action is usually precipitated by the lender losing its “comfort level” with the dealer.
While many dealers interpret the placing of a keeper in their dealership as a hostile action on the part of the lender, their reaction is based more on emotion than logic. The lending officer works for a corporation and the corporation is owned by shareholders. The officer has a duty to the company and to the shareholders to protect their security.
“The act of (a lender) in placing its representatives at the plant of its debtor reflected only the natural instincts, interest and solicitude of any other creditor then in its position, and (the lender) is not on that account alone to be penalized by being declared the principal.” Commercial Credit Co. v. L.A. Benson Co., Inc. 184 A. 236, at 240 (Md. 1936).
See too: Cosoff v. Rodman (In re W.T. Grant Co.), 699 F.2d 599 (2d Cir.) cert. denied, at 104 S.Ct. 89 (1983) where the court said the banks would have been derelict in their duty to their creditors and stockholders if they did not keep a careful watch on the debtor Jacc Blog.
The lending officer did not wake up one morning and decide it would be a good idea to put a keeper in the dealership. In the typical case, the dealership had either been experiencing financial difficulties for a period of time, or a series of floor checks revealed the dealer had “sold and unpaid” vehicles of such an unusually high proportion of monthly sales, that the lender classified the vehicles as being sold out of trust. In either situation, a prudent lender must view the dealer from a different perspective.
No one can predict what a person will do under the continued pressure of serious financial difficulties. By the time a lender puts a keeper in a dealership, the burdens the dealer is shouldering have been growing for some time. The dealer usually does not fully comprehend the extent of the strain under which he or she has been functioning; but, when one faces numerous negotiations with creditors, endless days of chasing cash to make payroll and pay bills and does not have enough cash to purchase and keep a good trade, one’s judgment becomes clouded. An experienced lender knows that a normally rational person can do most anything when placed under a sufficient amount pressure, for a sufficient amount of time.
When the keeper appears, the dealer rather than being vengeful or hurt should realize the dealership needs professional help and seek it. There are many ways to continue operating a dealership with a keeper and to resolve the situation, re-capitalize the store, or sell the dealership at a fair price, vis-à-vis a fire sale.
In most instances, a keeper is placed in a dealership upon the mutual consent of the dealer and the finance company. At the meeting preceding such an action, it is wise for the parties to identify, agree to and understand the specific duties and corresponding actions, of the keeper.
The Keeper’s Affirmative Duties
Although the primary concern of the keeper lies in the care and custody of the floored vehicles, in most instances the lender also holds a security interest in all or part of the dealership’s assets. Consequently, the keeper will want to be and should be aware of the dealer’s attitude towards assets other than the floored vehicles and should report to the credit company any indication on the part of the dealer to dispose of any such assets.
The keeper, usually more than one person, will be at the dealership every business day from the time the first employee arrives, until the last employee leaves. The keeper should be responsible for:
(1) The condition, location and security of the pledged assets;
(2) Keeping the vehicles’:
a. Ignition Keys
b. Dealer License Plates
c. MSOs and/or Invoices and other documentation required to transfer title.
(3) Being present when the mail is opened;
(4) Taking custody of the cash and checks;
(5) Taking custody of the unused check stock;
(6) Supervising preparation of the bank deposit and agreeing upon whom will make the deposit;
(7) The disposition of proceeds from contracts of sold vehicles, to be sure the money gets to the proper parties;
(8) Arranging for third party finance companies, which purchase the dealer’s contracts, to include the lender’s name on proceeds checks, or, in the alternative, to refuse to permit the dealer to contract a sale to other finance companies;
(9) Being responsible for protecting the vehicles after the dealership closes; if the vehicles cannot be blocked from exiting the facility, via a fence and “blockers”, a security guard should be hired;
(10) Establishing a means of maintaining a running, daily, or semi-daily, inventory control of unsold vehicles. Only one vehicle at a time, for which the lender has not received payment, should leave the dealership, whether of not that vehicle is floored;
(11) Being aware of the activities in the Parts Department and its employees.
Courts have approved of lenders controlling the release of the bank’s collateral, depositing all accounts receivable in a special banking account and requiring the counter-signature of the bank’s agent for all payments from the special account 120 F.2d 614 (2d Cir. 1942)], receiving regular reports on the accounts payable activity, receiving estimated weekly expense budgets , 39 N.C. App. 261, 250 S.E. 2d 651 (1979)], proffering advice to the dealer, even coupled with a decision to withhold credit 50 Bank 273 (D. Mass 1985), requiring the debtor to hire a consultant acceptable to the bank in the management and sale of the company, requiring the debtor to implement a lockbox with respect to its receivables and requiring certain individuals to pledge their stock in the debtor, to the bank.
Acts a Keeper Should Not Perform
If the workout plan ever deteriorates and/or the relationship becomes hostile between the lender and the dealer, or creditors or employees of the dealer, the keeper’s will come under the scrutiny of a court. In such a case, those actions could be the beginning of a basis of liability or exoneration for the lender. In order to best protect the lender, the keeper should be aware of the following:
(1) The lender has an affirmative duty not to unnecessarily, maliciously or promiscuously disclose the financial condition of its debtor and any unauthorized disclosure could be a basis for both compensatory and punitive damages. Rubenstein v. South Denver Nat’l Bank, Case No 86CA0840 (Colo. 1988);
(2) Participating in board meetings and exercising decision making authority with respect to the day to day operations of the business could make the lender liable for all of the debts of the debtor. Lurgen, Liability of a Creditor in a Control Relationship With Its Debtor, 67 Marq. Law Review 523 (1984); See too: Restatement (Second) Agency, Section 14-0, Comment “a”;
(3) Evidence of personality conflicts with the borrower could support a bad faith claim against the debtor. K.M.C. v. Irving Trust Co., 757 F.2d 752 (6th Cir. 1985)
(4) Making threats which the lender is not prepared to carry-out, may support a fraud action against the lender. State Nat’l Bank of El Paso v. Farah Manufacturing Co. 678 S.W.2d 661 (Tex. App. El Paso 1984).
(5) Misleading a lender who intends to refinance the debtor, as to the debtor’s financial condition may result in liability to the third party lender. General Motors Acceptance Corporation v Central National Bank of Mattoon, 773 F.2d 771 (7th Cir. 1985).
Note too: while a factory does not seem to owe a duty to protect a lender’s floor plan status, to inform the lender of the fact that the dealer is going to sell, there is a triable issue of fact as to whether or not the factory has a duty to disclose the foreseeability of the dealer going out of trust. Beneficial Commercial Corp. v. Murray Glick Datsun, Inc. 601 F.Supp. 770 S.D.N.Y. 1985).
Procedures for Handling Insurance and Service Contract Monies
Some lenders have experienced staffs, which understand the above issues and problems. In any case, the dealer should be aware of them and should open new trust accounts. The accounts should be opened at a separate bank, in order to avoid any misunderstandings. If the lender wishes to audit these new accounts, that is fair. If a lending officer threatens to penalize the dealer for protecting the customer’s money, he or she is being unreasonable and the dealer should ascend the chain of command until reason prevails. If reason does not prevail, the dealer has hard evidence of the lender creating an untenable position, which evidence may prove useful at a later date.
The handling of the premiums for life, accident and health insurance, and for service contracts, does not create a problem, if a routine is established. Always, with respect to insurance premiums, and usually with service contracts, the sale is covered under a security agreement. The lender and dealer should agree that all “time sales” will be restricted to the lender, unless a third party financing company agrees to put the lender’s name on the proceeds check, which usually does not happen.
When a time-sale is being arranged, advance approval of the lender is should be required. Subsequently, when the contract is offered to the lender for purchase, the lender should deduct the amount necessary to release the flooring. If the proceeds of sale are insufficient to clear the flooring, the keeper should have already deposited the cash down payment, and/or have taken possession of the title to the trade-in.
The proceeds of sale, in excess of the flooring, are given to the keeper, who supervises the deposit of the service contract and insurance monies to the trust account and the mailing of the premiums to the appropriate insurance companies. If possible, the pay-off for the traded vehicle is also made from the general account of the dealership.
The above process, while time consuming, is necessary. The parties should appreciate the understanding, patience and cooperation needed from each other in order to make the operation run smoothly. If either the keeper, or the dealer, has a problem working with the other, the problem should be discussed with the keeper’s superior and resolved, or a new keeper assigned.
Procedures for Handling Payroll Monies
With respect to payroll monies, the dealership should continue with separate payroll account and the lender should agree to permit a payroll large enough for sufficient personnel to run the dealership in order to complete whatever stage of the work-out plan the parties have reached. If the dealership is winding-down sufficient payroll should be allowed for a “skeleton crew” to prepare the dealership for sale, or closing. Equipment will have to be guarded and maintained. Secretarial and accounting work will have to be completed. With respect to sales people, although they do fall within the minimum wage laws, they only get paid a commission if they make a sale and, if they do, they probably will have sold the asset for more money than the lender would get at an auction. The source of funds to cover the dealership operations is discussed in the next section.
Commissioned Salespeople
As mentioned, the commissioned salesperson gets paid a commission if and only if a contract for the sale of a vehicle cashes. They represent the best means of obtaining full value for the lender’s security. Consequently, the lender, regardless of its security interest, would probably be wise to subordinate its interest to the extent necessary for the sales people to earn a reasonable commission.
Closing a dealership is covered in another article. At this point, it is enough to mention that a lender, liquidating foreclosed vehicles, would have to deduct transportation, insurance, storage and auction fees from the forced liquidation sales prices of any vehicles it sold, before receiving any monies itself. Therefore, the amount of a salesperson’s commission for selling vehicles, net of the foreclosure costs, would appear to be a good investment, on the part of the lender.
An interesting question arises as to whether or not the lender has an implied duty, knowing the sales people are liquidating the inventory for the benefit of the lender, to inform the sales people that it, the lender, intends to keep all of the gross profit from the sale; and, further, if the lender, knowing it does not intend to allow the sales people to be reimbursed for their efforts, says nothing, do the sales people have an action against the lender?
In any event, the payment of employees (salaried or commissioned) should be made by the dealer from a separate payroll account. The account should be funded under the supervision of the keeper, but the lender’s employees should not participate in distributing the funds. Note: Participation in distributing the company payroll could make the lender liable for taxes. 26 USC 3505 and 6672.
Division of the Discretionary Income
Vehicle Income
If a lender maintains a security interest in the dealer’s vehicle inventory and if the dealership has collected and spent money for vehicles which have been sold, without reimbursing the lender for those vehicles, then the dealership’s gross profits from all future vehicle sales should be applied to reduce the number of sold and unpaid units. The cash profits from such sales should be applied immediately to the lender’s debt, such as vehicle gross profit, finance and insurance commissions and service contract profits. Factory rebate money and incentive monies should be assigned to the lender and applied to the borrower’s debt only upon receipt of the actual cash.
Service Department Income
Unless the dealership is averaging a 100% service absorption rate of its fixed overhead expense, which is unlikely, trying to operate a dealership on the service department’s income will be difficult, if not impossible. If the lender is unable or unwilling to allow these monies to be applied to the general operating fund of the dealership, it means the lender has decided to close the dealership, whether it believes so or not.
The service department monies include gross profits from parts, service, labor and the body shop, if the dealership has one. The percentage of all fixed overhead expenses covered by this profit reflects the dealership’s absorption rate.
If the dealership is being sold or closed, these monies should be used to complete the payrolls necessary to accomplish an orderly transition or liquidation.
As always, consult with a qualified attorney whenever dealing with out of trust situations.
John Pico is the managing partner of Advising Automobile Dealers LLC. Mr. Pico served as a court appointed “Consultant to Debtor” in bankruptcy cases, a “Court Appointed Mediator” in automotive disputes, the “Court Appointed Arbitrator / Appraiser” in partnership disputes, a “Court Approved Consultant to Receiver” in a check-kiting case, as a “Superior Court Mediator” in dealership/lender litigation and has been recognized as an expert witness on both State and Federal levels.
He has consulted on upside-down positions of over $50 Million, out of trust position of over $4 Million and a bank overdraft of $30 Million. Since 1972, Mr. Pico has completed over 1,000 automobile dealership transactions, whose combined values exceed One Billion Dollars.
0 notes
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