My apologies but I gave you incorrect information on one point. The
litigation trust was actually funded with $14.5 million, not $25
Again, my apologies.
Sitrick And Company
1840 Century Park East
Los Angeles, CA 90067
In the last three years, Colorado Springs Utilities has been forced to eat nearly $1.5 million in uncollectible accounts due to bankruptcy filings. That includes a sizable bill incurred by the Gazette, an obligation shed by the newspaper's parent company during its bankruptcy proceedings.
According to bankruptcy documents filed in January, Utilities is owed $16,144 because the debt was "disallowed" by the bankruptcy court. In other words, Utilities can probably kiss that money goodbye.
Another document states the sum was disallowed from collection from Gazette parent Freedom Communications due to "insufficient documentation to determine whether and/or to what extent the claim constitutes a 503(b)(9) claim."
Documents show that Utilities stood to lose more, but did recover a payment of $72,628 from Freedom.
Freedom spokesman Bob Emmers says Utilities' bill, along with many others, were to be paid from a $25 million litigation trust account set up during the bankruptcy proceedings. Problem is, Freedom owed way more than the $25 million, so some creditors took it in the shorts.
"Freedom is out of it at this point," Emmers says. "This trust has final say if those remaining creditors will get paid. Unfortunately, there were a lot of folks who got lots of money disallowed."
That's nice. Getting a pass on part of your utility bill, while you increase costs to your customers. Which is to say subscribers are reporting their renewal notices come with a jacked-up price, and some are saying, "No, thanks." One recent renewal notice told the customer the price would increase to $225 a year from $168. All while the newspaper that hits the driveway is getting smaller.
Anyway, Freedom isn't alone in its bankruptcy situation. Utilities spokesman Steve Berry says bankruptcies that affect the city-owned utility are going up. Here's the data Berry provided.
In 2008, Utilities wrote off $402,734 because of 1,493 bankruptcy filings.
In 2009, Utilities wrote off $302,695 because of 1,828 bankruptcy filings.
In 2010, Utilities wrote off $740,370 because of 1,835 bankruptcy filings.
Generally speaking, the data show that commercial accounts are responsible for the biggest write-offs, though they comprise the smaller segment of bankruptcy filings, as compared to residential. For example, last year, 26 percent of the bankruptcies affecting Utilities were commercial, but they accounted for 73 percent of the amount Utilities wrote off.