Sunday, October 06, 2013

End Of The Line for Silver State Helicopters Bankruptcy

On February 4, 2008, Sliver State Helicopters filed a voluntary Chapter 7 petition.  On December 29, 2009, I was the first and only person to publicly give an estimated value for the student creditor proof of claims in the Silver State Helicopters Bankruptcy Case.  In a Q and A on this blog, I wrote, " My best estimate is that each one of the former SSH students proof of claim will be worth somewhere between $0 and $3,000.00." Based on this valuation, most of my clients traded their proofs of claims for tens of thousands of dollars in discounts on their student loans.  This turned out to be a wise move, as on September 24, 2013 United States Bankruptcy Court Judge Mike K. Nakagawa issued his Order on the Trustee's Final Report and Application for Compensation and Expenses.  This Order, made over my objection on behalf of the Student Creditors, confirmed that the Student Creditors will get nothing in the Silver State Bankruptcy. Judge Nakagawa's order notes that "The Student Creditors object to the lack of any payments on their . . . claims.  They argue that professionals employed in the case are being paid an excessive amount and that professional fees generally should be reduced by the court so that funds will be available for distribution to general unsecured claims."  The Silver State Helicopters case ended up being a liquidation proceeding for the benefit of the secured creditor Orix and for the benefit of the professionals (attorneys and accountants) and other administrative claimants, with no benefit to the unsecured creditors. Judge Nakagawa found that under the bankruptcy code, the secured and Administrative claim creditors had priority over the student creditors, and in total approved $8,106,011.54 in "approved administrative expenses of the bankruptcy estate, . . . including professional fees." Not one penny will be paid out for student creditor claims.  Judge Nakagawa notes that "While the Student Creditors are perhaps unique victims of what may have been an airborne Ponzi Scheme, Congress has not afforded their claims a priority of payment ahead of the categories set forth in Section 507(a) that the Trustee must follow under Section 742(b)(2) and Section 726(a)(1).

Thursday, June 13, 2013

Defending Preference Claims In Bankruptcy: In re New Meatco Provisions, LLC, d/b/a/ King Seafood

This week,  I was contacted by several creditors that received letters from Arent Fox LLP demanding repayment of payments that they received within 90 days of the filing of a Chapter 11 bankruptcy for New Meatco Provisions, LLC, d/b/a/ King Seafood. In each case, Arent Fox listed all payments that the creditor had received and demanded repayment, but failed to provide any information regarding the defenses that are available to the creditors.  The fact that a payment is received within 90 days of a bankruptcy filing is only one part of the preference analysis.  In each case, my new clients had a complete defense to the preference claim -- something that was not mentioned anywhere in the threatening demand letters that they received. 

Based on my review of New Meatco's bankruptcy schedules, it appears that their attorneys sent out approximately 200 letters demanding a return of alleged preference payments ranging from $6,225.00 to more than $2,000,000.  If you have received a letter demanding repayment of an alleged preference, you should immediately consult with a certified specialist in bankruptcy law (like me) to see if you have defenses to the claim.   I have extensive experience representing debtors and creditors in Chapter 11 cases.  I offer a free consultation to anyone with a bankruptcy question or problem.  Call me at (310) 271-6223.

New Meatco's bankruptcy schedules list more than $33,000,000.00 in debts and less than $1,000,000.00 in assets. The vast majority of these assets are security deposits for 2 leases. Debtor's secured claims exceed $16,000,000.00 suggesting that there may be little if anything for unsecured creditors if the company ends up being liquidated in a Chapter 7.  Many of the companies that New Meatco is threatening to sue in order to recover preference payments are also creditors, with amounts still owed by New Meatco ranging from less than $100.00 to more than $4,500,000.00. 

The judge originally assigned to the New Meatco Provisions Chapter 11 was United States Bankruptcy Court Judge Richard Neiter, a judge that knows me well and that I have appeared before successfully many times since he was first appointed as a Bankruptcy Court Judge in 2006. Judge Neiter is highly intelligent, compassionate, and a leader in the Jewish community.  He was born in 1937 and practiced for many years as a bankruptcy attorney before becoming a Bankruptcy Court Judge.

On June 3, 2013, Judge Neiter signed an order recusing himself, and the case was transferred to Bankruptcy Judge Peter Carroll for all further proceedings.  Judge Carroll is one of my favorite Bankruptcy Court Judges. In 2002, Judge Carroll was appointed to serve as a Bankruptcy Judge in the Central District of California.  In January of 2011, he was appointed to be the Chief Judge of the Bankruptcy Court for the Central District of California, an appointment that he still holds and will maintain until the end of 2014.  Judge Carroll is super smart, caring, patient, fun and a real problem solver.  He is a leader in  promoting pro bono work to help debtors and a frequent participant in educational programs for bankruptcy attorneys. I have appeared successfully before him many times and enjoyed his company at many educational functions.

For a little self-help, start by looking at 11 U.S.C. Section 547 Preferences.  This bankruptcy code section defines what a preference is and outlines what is needed to establish certain defenses to preference claims, such as the "new value" exception and the "ordinary course of business" exception.  Don't let aggressive attorneys for the bankruptcy debtor trick you into paying money that you do not owe.  Above all, do not let attorneys take your default based on a complaint with false or incomplete allegations.  Know and protect your rights.

Here is a copy of 11 USC § 547 - Preferences

(a)In this section—
(1)“inventory” means personal property leased or furnished, held for sale or lease, or to be furnished under a contract for service, raw materials, work in process, or materials used or consumed in a business, including farm products such as crops or livestock, held for sale or lease;
(2)“new value” means money or money’s worth in goods, services, or new credit, or release by a transferee of property previously transferred to such transferee in a transaction that is neither void nor voidable by the debtor or the trustee under any applicable law, including proceeds of such property, but does not include an obligation substituted for an existing obligation;
(3)“receivable” means right to payment, whether or not such right has been earned by performance; and
(4)a debt for a tax is incurred on the day when such tax is last payable without penalty, including any extension.
(b)Except as provided in subsections (c) and (i) of this section, the trustee may avoid any transfer of an interest of the debtor in property—
(1)to or for the benefit of a creditor;
(2)for or on account of an antecedent debt owed by the debtor before such transfer was made;
(3)made while the debtor was insolvent;
(A)on or within 90 days before the date of the filing of the petition; or
(B)between ninety days and one year before the date of the filing of the petition, if such creditor at the time of such transfer was an insider; and
(5)that enables such creditor to receive more than such creditor would receive if—
(A)the case were a case under chapter 7 of this title;
(B)the transfer had not been made; and
(C)such creditor received payment of such debt to the extent provided by the provisions of this title.
(c)The trustee may not avoid under this section a transfer—
(1)to the extent that such transfer was—
(A)intended by the debtor and the creditor to or for whose benefit such transfer was made to be a contemporaneous exchange for new value given to the debtor; and
(B)in fact a substantially contemporaneous exchange;
(2)to the extent that such transfer was in payment of a debt incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee, and such transfer was—
(A)made in the ordinary course of business or financial affairs of the debtor and the transferee; or
(B)made according to ordinary business terms;
(3)that creates a security interest in property acquired by the debtor—
(A)to the extent such security interest secures new value that was—
(i)given at or after the signing of a security agreement that contains a description of such property as collateral;
(ii)given by or on behalf of the secured party under such agreement;
(iii)given to enable the debtor to acquire such property; and
(iv)in fact used by the debtor to acquire such property; and
(B)that is perfected on or before 30 days after the debtor receives possession of such property;
(4)to or for the benefit of a creditor, to the extent that, after such transfer, such creditor gave new value to or for the benefit of the debtor—
(A)not secured by an otherwise unavoidable security interest; and
(B)on account of which new value the debtor did not make an otherwise unavoidable transfer to or for the benefit of such creditor;
(5)that creates a perfected security interest in inventory or a receivable or the proceeds of either, except to the extent that the aggregate of all such transfers to the transferee caused a reduction, as of the date of the filing of the petition and to the prejudice of other creditors holding unsecured claims, of any amount by which the debt secured by such security interest exceeded the value of all security interests for such debt on the later of—
(i)with respect to a transfer to which subsection (b)(4)(A) of this section applies, 90 days before the date of the filing of the petition; or
(ii)with respect to a transfer to which subsection (b)(4)(B) of this section applies, one year before the date of the filing of the petition; or
(B)the date on which new value was first given under the security agreement creating such security interest;
(6)that is the fixing of a statutory lien that is not avoidable under section 545 of this title;
(7)to the extent such transfer was a bona fide payment of a debt for a domestic support obligation;
(8)if, in a case filed by an individual debtor whose debts are primarily consumer debts, the aggregate value of all property that constitutes or is affected by such transfer is less than $600; or
(9)if, in a case filed by a debtor whose debts are not primarily consumer debts, the aggregate value of all property that constitutes or is affected by such transfer is less than $5,000.
(d)The trustee may avoid a transfer of an interest in property of the debtor transferred to or for the benefit of a surety to secure reimbursement of such a surety that furnished a bond or other obligation to dissolve a judicial lien that would have been avoidable by the trustee under subsection (b) of this section. The liability of such surety under such bond or obligation shall be discharged to the extent of the value of such property recovered by the trustee or the amount paid to the trustee.
(1)For the purposes of this section—
(A)a transfer of real property other than fixtures, but including the interest of a seller or purchaser under a contract for the sale of real property, is perfected when a bona fide purchaser of such property from the debtor against whom applicable law permits such transfer to be perfected cannot acquire an interest that is superior to the interest of the transferee; and
(B)a transfer of a fixture or property other than real property is perfected when a creditor on a simple contract cannot acquire a judicial lien that is superior to the interest of the transferee.
(2)For the purposes of this section, except as provided in paragraph (3) of this subsection, a transfer is made—
(A)at the time such transfer takes effect between the transferor and the transferee, if such transfer is perfected at, or within 30 days after, such time, except as provided in subsection (c)(3)(B);
(B)at the time such transfer is perfected, if such transfer is perfected after such 30 days; or
(C)immediately before the date of the filing of the petition, if such transfer is not perfected at the later of—
(i)the commencement of the case; or
(ii)30 days after such transfer takes effect between the transferor and the transferee.
(3)For the purposes of this section, a transfer is not made until the debtor has acquired rights in the property transferred.
(f)For the purposes of this section, the debtor is presumed to have been insolvent on and during the 90 days immediately preceding the date of the filing of the petition.
(g)For the purposes of this section, the trustee has the burden of proving the avoidability of a transfer under subsection (b) of this section, and the creditor or party in interest against whom recovery or avoidance is sought has the burden of proving the nonavoidability of a transfer under subsection (c) of this section.
(h)The trustee may not avoid a transfer if such transfer was made as a part of an alternative repayment schedule between the debtor and any creditor of the debtor created by an approved nonprofit budget and credit counseling agency.
(i)If the trustee avoids under subsection (b) a transfer made between 90 days and 1 year before the date of the filing of the petition, by the debtor to an entity that is not an insider for the benefit of a creditor that is an insider, such transfer shall be considered to be avoided under this section only with respect to the creditor that is an insider.

Tuesday, May 21, 2013


Here are 15 Tips to help you avoid filing bankruptcy. It took me 30 years to learn what I will now teach you in 5 minutes:

1.    Don’t make your happiness depend on buying things that you can’t afford.  To be more happy and healthy, try eating healthy, exercising and enjoying time with friends and loved ones.  Studies show that buying things does not work as well as you might think in terms of making you happy.  Sharing experiences with loved ones and friends does help.


2.    Avoid buying a car that you cannot afford.  Avoid car payments that you cannot afford.  Car repossessions almost always are accompanied by a large balance due that the lender sues for and gets.


3.    To the maximum extent possible, use debit cards, not credit cards.  If you don’t have the money now, you can’t afford it.  This is really an extension of #1 – don’t buy things that you cannot afford.


4.    If you have a job, be a good employee.  Many of my clients find that losing their job is what drives them into bankruptcy.  Being unemployed makes it harder to get the next job and harder to pay your bills.

If you can, get a job that also provides good health insurance.  Health insurance is expensive and even more expensive for individuals than for group plans.  Many of my clients have large medical bills as a factor that contributes to their having to file bankruptcy.


5.    When times are good, save money for a rainy day.  Don’t assume that your income will always continue at its highest level.


6.      Buy and learn how to use personal financial software like Quicken or QuickBooks.  It gives you a great way to see, understand and manage your finances, and it helps motivate you to make more money and hold your expenses down.  What you measure is easier to improve.  If you do not pay attention to something, it usually does not get better by itself.


7.    Don’t personally guarantee debts for anyone.  In my experience, people often get sued for debts that they personally guaranteed for others.  Personally guaranteeing debts looks easy at first – just sign here –  but then ends up very hard when you get sued.  Personal guarantees alone can be enough to force you info bankruptcy


8.    If you own a business, avoid signing long term leases.  One broken lease can drive you into bankruptcy.


9.    If you have employees, use a payroll tax service.  Don’t risk having the IRS come after you for the unpaid trust fund portion of your payroll taxes.  If you cannot afford the payroll tax, you cannot afford the employee.


10.  File your tax returns on time.  If you don’t, you will incur substantial penalties and risk having the IRS create returns for you that invariably result in you owing much more to the IRS.


11.     Limit your student loans.  Think about your realistic prospects for a job with and without the education that you are borrowing money for, and what your income is likely to be.  Many people come to me with student loans of $100,000.00, $200,000.00 or more.  These loans can almost never be discharged in bankruptcy.  Like personal guarantees, signing for a student loan seems easy at first but can make life very difficult in the end.  Think carefully about whether or not the student loan will increase your earning potential.


12.    Avoid gambling and drugs – either one can lead to bankruptcy.


13.   Cut Personal Expenses. If you really care about avoiding bankruptcy, you can sacrifice some luxuries, such as eating out, buying new clothes or getting premium cable or cell phone service, for a while. Also consider moving to a less expensive home or renting out a room in your home.


14. Before you decide to file bankruptcy, get expert free advice from an expert bankruptcy attorney to see if bankruptcy is  your best option.  You may be able to avoid bankruptcy by simply waiting to see what happens.  If no one is suing you, you made decide to wait and see what happens next.  Don’t Panic. 


15.   Last words:  There is absolutely nothing to lose by getting a free consultation with a certified specialist in bankruptcy law to see if bankruptcy is right for you.

Friday, May 10, 2013

Proposed California Class Action for Former Silver State Helicopters Students Shot Down

On April 11, 2013 the United States Court of Appeals for the Ninth Circuit published its Opinion in a proposed class action case against KeyBank National Association, Key Education Resources, and Great Lakes Education Loan Services, Inc. This case was heard by all judges of the court, rather than by a panel selected by them. The legal phrase for this is "en banc."

The court's decision included both a victory for the Plaintiffs -- 2 California resident former students of SSH (the reversal of the district court's dismissal of plaintiff's claims) -- and a victory for KeyBank -- the instructions to the district court to compel arbitration. The larger victory was won by KeyBank, which has now effectively killed any chance of a California class action against it based on the claims asserted in the Kilgore case. Plaintiffs' counsel have informed me that they will not try to appeal this ruling to the United States Supreme Court, so this ruling will be final.

Here is the link to the complete Opinion:

The court's ruling orders the individual arbitration of the claims brought by the 2 Plaintiffs Matthew C. Kilgore and Willaim Bruce Fuller. The court rejects the Plaintiffs' claim that the Promissory Note's ban on class action arbitration is unconscionable under California Law and also rejects the Plaintiffs' claim that individual arbitrations would be too costly.

Here is a summary of the Court's opinion:  
The en banc court reversed the district court’s dismissal of plaintiffs’ claims, reversed the denial of defendants’ motion to compel arbitration, and remanded with instructions to the district court to compel arbitration. In an appeal involving a putative class action by former students of a failed flight-training school who seek broad injunctive relief against the bank that originated their student loans and the loan servicer, the en banc court held that the district court should have compelled arbitration under California law. The en banc court held that the arbitration clause was neither substantively nor procedurally unconscionable under California law. The en banc court held also that this case does not fall under the narrow “public injunction” exception to the Federal Arbitration Act that was recognized in Davis v. O’Melveny & Myers, 485 F.3d 1066, 1082-84 (9th Cir. 2007).

Judge Pregerson dissented. Judge Pregerson would hold that the arbitration clause was unconscionable, and thus unenforceable. Judge Pregerson's dissent makes great reading for any former SSH Student. With headings like "Hustled by the school; hustled by the bank" and "Ignored by the Court," Judge Pregerson makes a strong case that the arbitration agreements enforced by the Court are both "Procedurally Unconscionable" and "Substantively Unconscionable." Here is a sample from Judge Pregerson's dissent:

"Silver State Helicopter School did not do a good job training helicopter pilots, placing them in jobs, or managing its own finances. But it did make a convincing sales pitch. Silver State promised its students that they would get the training required to get good paying jobs as commercial helicopter pilots.At flashy career fairs around California, Silver State worked hard to sign up prospective students for its helicopter pilot training program. Former Silver State student, Mathew Kilgore, declared under penalty of perjury:

The seminar was very impressive and glitzy. There were numerous helicopters onsite and the school appeared to be very professional. [Silver State’s CEO, Jerry Airola] was very convincing and portrayed Silver State as a top flight school. The presentation made clear that Silver State was very selective about which students would be chosen to attend the school . . . Mr. Airola emphasized that all of the tuition to fund the entire Silver State education could be obtained through Silver State’s partner lender, KeyBank. Mr. Airola also emphasized that . . . the loans would only cost the students about [a] hundred dollars a week at 4% interest.

Airola’s claims were not true. Silver State accepted almost all applicants who could get their loans approved. Silver State lacked sufficient equipment or instructors to properly train its students. The variable rate interest on the loans would rise far above four percent. Matthew Kilgore, William Fuller, and the other 120 putative class members believed what Airola told them and signed up. They took out $55,950 loans, which KeyBank promptly forked over to Silver State before students took a single class. But Silver State knew it was headed for a crash landing. By 2008, Silver State had racked up ten million dollars in debt against fifty thousand dollars in assets. Moreover, despite Silver State’s alluring promises, there was no significant demand for helicopter pilots with a Silver State degree. And it wasn’t just the school that knew it. Defendant KeyBank knew it, too.

KeyBank, an Ohio-based lending giant, participated in the fraud that Silver State perpetrated on unwitting students. From 2003 to 2005 KeyBank financed ninety-five percent of the tuition students paid to Silver State. KeyBank printed up lengthy loan papers that lacked the Federal Trade Commission’s Holder Rule Notice. 16 C.F.R. § 433.2 The Holder Rule required the loan contracts to notify students that KeyBank was subject to the same claims and defenses as Silver State. Id. The Holder Rule protects borrowers, such as the students, from being legally obligated to pay a creditor like KeyBank “despite breach of warranty, misrepresentation, or even fraud on the part of the seller.” 40 Fed. Reg. 53,506, 53,507 (Nov. 18, 1975). By omitting that notice from its printed loan contracts, KeyBank may have sought to insulate itself from liability for Silver State’s misleading promises. Silver State then presented those faulty loan contracts to prospective students and “pressure[d] the students to sign the [master promissory notes] as soon as possible,” according to an affidavit of Silver State’s former student finance manager Jody Pidruzny. And sign up they did.Once a student signed the promissory note, KeyBank immediately transferred the full amount of the loans to Silver State. KeyBank then turned a profit by selling the students' loans on the securities market to investors. Defendant Great Lakes Educational Loan Services, Inc. continues to service those loans by collecting payments from students, and notifying credit reporting agencies when students fail to pay. KeyBank loaned students tuition money to attend Silver State knowing that Silver State was financially volatile. See Editorial, Student Debt and the Economy, N.Y. Times, March 10, 2
2013, at SR 10 (“Because private loans offer little flexibility, borrowers in bad straits have few options except default, which makes it difficult for them to get jobs or credit, or even to rent apartments.”) 2004 email between KeyBank Vice Presidents Paul McDermott and Rodney Landrum predicted that Silver State “could be the next ‘big one’ to go under.” Nevertheless, KeyBank made more than ten million dollars in loans to Silver State students over the following two years. In 2008, Silver State filed for bankruptcy and closed its doors. Students could not recoup the amount of their unused tuition because Silver State sought protection under Chapter 7 bankruptcy proceedings. Kilgore, Fuller, and their classmates were left holding the bag with no degree, no helicopter piloting career, and no opportunity to train. The students’ failed attempts to launch flight careers saddled them with huge private loans that are collecting interest and weighing them down. The private loans students incurred to pay for Silver State helicopter pilot training were not subsidized or insured by the federal government. Private student loans are generally more expensive than federal loans, especially for students with lower credit scores or limited credit histories. Students could borrow larger amounts because there are no loan limits for private loans. Moreover, students who hold private loans are not eligible for federal programs that allow them to reduce their monthly payments based on their income, or have their loans forgiven after working for ten years in public service jobs.

Unlike federally guaranteed loans, private student loans are not discharged should the school go out of business. The students themselves cannot discharge these loans in bankruptcy proceedings unless they can prove that “excepting such [student] debt from discharge . . . would impose an undue hardship.” 11 U.S.C. § 523(a)(8).


There are 2 different schools of thought as to what former SSH students with KeyBank loans should do next. One school, led by Andrew August and Kevin Rooney of Pinnacle Law Group, is that the students should file individual arbitration proceedings against KeyBank. Although the costs of these arbitration proceedings is estimated by Andrew at between $10,000 - $15,000.00 arbitration costs + legal fees, Andrew believes that he may be able to compel KeyBank to pay these arbitration costs. The prevailing party can be awarded legal fees under the terms of the promissory notes that former SSH students would be litigating about. If you are a former SSH student, a California resident, have an unresolved KeyBank loan, want to take action now to seek a final resolution with KeyBank as opposed to doing nothing, feel that an arbitration now is in your best interest, and are willing to assume the cost of litigating and the risk that you may not prevail, I recommend that you contact Andy and Kevin at the following special email address:

The other school of thought, led by me, Michael Jay Berger, is to do nothing. That may sound funny but here is my reasoning: In the more than 5 years that I have been representing former students of Silver State Helicopters, KeyBank has never sued any of my clients and never filed an arbitration proceeding against any of my clients. Why is that? I presume that KeyBank always does what it thinks is in its best interests. Therefore, for the last 5 years, KeyBank must have felt that filing a lawsuit or an arbitration proceeding against any of one my clients is not in its best interests. Based on KeyBank's efforts to enforce the arbitration provision in its agreement with former SSH students, it seems unlikely that it will reverse course and now claim that it is free to file lawsuits against former SSH students instead of complying with the arbitration provisions that it put in the student loan agreements. Private arbitration is expensive and KeyBank would have to pay the costs to initiate each and every arbitration proceeding that it wants to start. Between the initial costs and the costs for retired Judge's time, Andrew August's estimate for the cost of these private arbitration proceedings is $10,000 - $15,000.00 per student. Many of these students don't have the money and will not be able to pay even if an arbitration award is entered against them.

Students who initiate arbitration proceedings against KeyBank need to be prepared for the possibility that they will lose. In that case, KeyBank is likely to move to confirm any arbitration action and turn the awards into fully enforceable state court judgments. This could lead to all of the usual judgment enforcement collection actions, including, but not limited to, bank account levies, wage garnishments, the filing of abstracts of judgment to create liens on any real property owned by the debtors and examinations of judgment debtors. I like finality when it is good, but prefer delay if the finality will be bad.

It is interesting to note that Citibank, which forgave 100% of my client's SSH Student Loan Debt, and SLX, which settled with the vast majority of my SSH Loan clients, also never filed a lawsuit or arbitration proceeding against any of my clients. Seen in this light, it seems possible that KeyBank will continue to make negative reports on nonpaying borrowers' credit reports, continue to send collection letters, and continue to make collection calls, but not actually sue or institute arbitration proceedings against former SSH student borrowers. For the students that I represent, there is an additional level of deterrence, as KeyBank and its counsel are aware that these students are represented by competent counsel.

In the 5+ years that I have been representing former SSH students, I have settled the vast majority of their student loans at a large discount. In each case, I charged the former student a flat fee of $800.00. This is something that I am proud of, as the law on student loans favors the banks and is not good for the students. For the remaining former SSH students with loans from KeyBank that I have not been able to settle, there is now a choice to be made.

Thursday, April 11, 2013

Student Loan Xpress Loans Sold

Several of my clients that obtained loans from Student Loan Xpress to attend Silver State Helicopters School and were not part of the class action settlement have received notices informing them that Student Loan Xpress has sold their loan(s) to FCBD PSL & NPSL, effective March 28, 2013 and that "AES will continue to service the loan(s). Under the heading, "What This Means To You," the letters state that "The transfer in ownership of your loan(s) will not result in any inconvenience to you. You can continue to send your payments and correspondence to the usual addresses." My clients typically borrowed $69,900.00 to attend SSH and if they have not already settled their debts at a large discount with my help, they now have loan balances in excess of $100,000.00. These clients are generally not able to make the payments that are being demanded by AES.