Author: Charles Crumpley

Lots of businesses know about the magic of bankruptcy court. There, heavy debt
can be lifted. Expensive leases can be undone. Burdensome contracts can
be erased.

Indeed, a bankruptcy judge can make your bad decisions disappear like magic. You can get a do-over.

Businesses know this, which may explain why some business people, including former
Mayor Richard J. Riordan, are urging the city of Los Angeles to file
for bankruptcy.

If you’ve been to a lunch meeting, a cocktail reception or most any
gathering of business people in Los Angeles in the last few weeks,
you’ve probably talked about the economy.

Suddenly, it seems, everybody’s asking: Is the economy really recovering? Do you see a turnaround in your business?

The picture is jumbled partly because economic forecasts now are highly
politicized. Liberal organizations and individuals are trumpeting a
Great Recovery, while conservative ones are dismissing any alleged
comeback as too meek or as a temporary bounce. Those divergent stances
are understandable since the economy may play a big role in the
critical elections this fall.

The fight to keep LegalZoom.com in Los Angeles was a compelling story. After all, it’s refreshing and fairly rare to see City Hall work with business groups in a business-friendly way.

Los Angeles can seem numbingly inured to the routine in which businesses often leave the city because of high costs, while City Hall seems not to care. But about 18 months ago, when LegalZoom started making noises about moving, it was as if the community stood together and said, “No, not this one. Not this time.”

The Hollywood Chamber of Commerce, City Council President Eric Garcetti and the Mayor’s Office, among others, worked together for months to come up with a way to keep LegalZoom tethered to Los Angeles.

The group’s task was a clear one: They only had to figure a solution or a compromise to a high tax rate that LegalZoom and some similar Internet businesses suddenly had to pay.

Last week we saw two attempts to rein in executive compensation in Los Angeles. One attempt was the right way. The other was not only the wrong way, but it could be disastrous for the company. Maybe even lethal.

Let’s look at the right way first.

Barington Capital Group, a New York investment firm with an activist bent, last Monday sent a five-page letter of complaint to the chief of Ameron International Corp. in Pasadena. Barington, claiming to represent a group of shareholders who own 3.7 percent of the company, precisely and dispassionately laid out its argument. Its letter included a chart showing how the stock of the company lagged its peer group as well as two broader market indexes over five time spans.

Barington made other intelligent arguments. It said, for example, that Ameron should cut internal costs since they equal 6 percent of sales vs. only 2 percent at a group of peer companies.

Carmen Trutanich has complained that since he came into office as city attorney on July 1, he’s done little but cut.

He faced an immediate 18 percent budget cut. He cut 100 lawyers. Now he faces more cuts. The poor guy. He just keeps cutting and cutting. (Well, one thing he doesn’t seem eager to cut is his own $214,000 salary.)

But I’ve got a question. If he’s really hurting all that much, why is he spending so much time and creative energy on something as silly as his war on supergraphics?

Trutanich a month ago jailed a Hollywood building owner for draping a supergraphic on his building. The jailing was shocking enough, but Trutanich did it late on Friday so the guy would have to spend a whole weekend in the hoosegow. I mean, that’s deviously creative. And bail was set at $1 million. One million? For hanging a big sign?

Will someone please send Mayor Antonio Villaraigosa a gift subscription to the Wall Street Journal? Or maybe Investor’s Business Daily? (I wouldn’t object if you sent him the Los Angeles Business Journal instead.)

You see, there’s a recession going on. It’s a nasty one. It’s not a secret; it’s been in all the papers. But Villaraigosa apparently hasn’t read about it.

How else can you explain his proposal last week to assess a shocking surcharge on electricity customers of the city’s Department of Water & Power?

Hey, this is a time of deflation. Prices are going down, not up. Wages are being cut. Rents are being chopped, even before leases expire.

The only reason anyone should think – even for a moment – about raising prices now is if they absolutely, positively can’t avoid it. And the reason for raising DWP rates?

When I wanted to try out a restaurant or a store or hotel that’s new to me, I’d first go online to check out the reviews by patrons.

I wrote that in past tense for a reason: I don’t do that too much anymore. I grew too suspicious of supposed critiques by supposed customers.

You’ve probably noticed that many online reviews fall into one of two categories. Using restaurant reviews as an example, there are the flowery critics (“This breathtaking restaurant is amazingly superb in every imaginable way!”) and there are the snarky ones (“Expensive mush served by resentful dropouts in a hard-to-find place with sticky floors.”).

Reviews in the first category apparently are ginned up by restaurant owners or their mothers or their bankers. Those in the second apparently are written by competitors or ticked-off ex-employees.

I’m writing this column from City Hall. I came down here to get a business permit, and I’m waiting in this line. Judging from how slow this line is moving, and if I stand on my tiptoes and look at how many people are in front of me, it looks like it’ll take me, oh, maybe 18 months more. This could be a long column.

I guess it’s not so bad waiting here. I’ve got this cozy tent. I hired a maid twice a week. Good cable service.

Nice neighbors, too. Todd, a guy in a different line, the one to the left of mine, is a fine middle-age man (just don’t lend him money before the Friday night poker game). His line’s even slower than mine. He came a long time ago to get a license to open a shop because he had this innovative idea to rent videos so people can watch movies at home. He’s worried that if his line doesn’t move more quickly, by the time he gets his permit, VHS tapes may be passé.

Los Angeles fancies itself the capital of the alternative-energy world. Electric car companies are clustering here along with the startups to create the new-age batteries for them. Wind farms are popping up outside the city and solar electricity is hot.

On the one hand, all that’s promising. Alternative energy is, after all, the future. But on the other hand, it’s risky. Virtually every form of alternative energy today is either unproven, expensive, limited in capacity or dangerous in its own right.

We got a good reminder of that last week in a special section in the Wall Street Journal headlined “The Long Road to an Alternative-Energy Future.” It took a look at several alternative-energy initiatives and pointed out the significant challenges of each.