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June 8, 2009
Autos
U.S. Supreme Court Asked
to Delay Fiat Deal
A group of Indiana pension funds opposed to the sale
of Chrysler LLC to Italy's Fiat SpA asked the U.S. Supreme Court on
Saturday to put the deal on hold while they continue their attempts to
block it, the Wall Street Journal reported
today. The emergency stay request came after the Second U.S. Circuit
Court of Appeals in New York approved the acquisition of most of
Chrysler's assets by Fiat. The sale, which is the cornerstone of
Chrysler's chapter 11 reorganization, was approved last week by
Bankruptcy Judge
face='Times
New
Roman' size='3'>Arthur Gonzalez. The stay asks
for the extension of a temporary hold put in place by the appeals court
until Monday at 4 p.m. EDT or when the high court decides whether to
intervene.
href='http://online.wsj.com/article/SB124434874933891793.html#mod=article-outset-box'>Read
more. (Subscription required.)
GM Says Saturn-Penske
Deal Saves 350 Dealerships, 13,000 Jobs
Each of General Motors Corp.’s 350 U.S. Saturn
dealerships will receive offers to continue selling the vehicles under a
tentative deal announced Friday to sell the brand to mega dealer Roger
Penske, Dow Jones
face='Times New Roman' size='3'>Daily Bankruptcy Review
size='3'>reported today. Penske, who runs the Penske Automotive Group
chain of dealers, will take over the brands, trademarks, service and
parts operations and distribution operations related to the Saturn. In
addition to taking over the retail network, Penske will strike deals
with various automakers, including GM and Renault SA, allowing him to
buy vehicles from those automakers’ factories to fill out the
Saturn vehicle portfolio. GM and Penske have a memorandum of
understanding signed, and the deal is considered tentative at this
point. Penske declined to disclose the price tag of the Saturn
deal.
Obama Administration to
Propose Wider Oversight of Compensation
The Obama administration plans to require banks and
corporations that have received two rounds of federal bailouts to submit
any major executive pay changes for approval by a new federal official
who will monitor compensation, the
face='Times
New
Roman' size='3'>New York Times reported today.
The proposal is part of a broad set of regulations on executive
compensation expected to be announced by the administration as early as
this week. Some of the rules are required by legislation enacted in the
wake of the worst financial crisis since the Great Depression, and they
would apply only to companies that received taxpayer money. Others,
which are being described as broad principles, would set standards that
the government would like the entire financial industry to observe as
banks and other companies compensate their highest-paid executives,
though it is not clear how stringent regulators will make them.
Citigroup, Bank of America, the American International Group, General
Motors and its finance arm, GMAC, which all received two taxpayer
infusions, will face the strictest scrutiny from the new federal
official charged with vetting compensation, Kenneth R. Feinberg. He is
known for overseeing payouts to the families of the victims of the Sept.
href='http://www.nytimes.com/2009/06/08/business/08bank.html?_r=1&hp=&pagewanted=print'>Read
more.
Analysis: Financial
Regulatory Overhaul Effort Faces Multiple Hurdles
Lawmakers will be dealing with various diverse pieces
of policy in an attempt to assemble one coherent package that will
correct the market meltdown that led to the biggest banking crisis since
the Great Depression,
face='Times New Roman' size='3'>CongressDaily
size='3'>reported today. Congress will have to balance its goal of
fixing blind spots in the current regime that led to the market plunge
with a competing desire to make various federal agencies work together,
possibly via consolidation. Policymakers are expected to address issues
outside of banking, such as further regulation of hedge funds and
insurance -- an acknowledgment that all financial services firms are
interconnected, as the downfalls of American International Group, Bear
Stearns and Lehman Brothers showed. There is a consensus that the United
States needs a super-regulator to monitor systemic risk throughout the
financial services spectrum so one company's failure does not result in
a market crash. Treasury Secretary Timothy Geithner apparently favors
the Federal Reserve taking the lead, given that it essentially plays
that role in the traditional banking system, but there is major
resistance in Congress to expanding the central bank's authority.
Another agreement centers on the need for a federal agency to be able to
take control and unwind assets of troubled nonbank firms like AIG
similar to what the FDIC does for banks. Treasury last month considered
a plan to create one main banking regulator similar to the U.K.’s
Financial Services Authority, but that idea was quickly shot down by
House Financial Services Chairman Barney Frank (D-Mass.) and lobbying
groups.
Caraustar Receives Approval
to Pay Creditors, Borrow $25 Million
Bankruptcy Judge
face='Times
New
Roman' size='3'>Mary Grace Diehl on Thursday
approved recycled paper products manufacturer Caraustar Industries Inc.
to tap up to $25 million of an offered $75 million financing package and
to pay unimpaired unsecured creditors with which the company has an
ongoing business relationship, Bankruptcy
Law360 reported on Friday. As part of Judge
Diehl’s order, the company is also authorized to reissue checks,
wire transfers or other forms of payment if they have previously been
dishonored by the bankruptcy petition. The order further allows the
debtors to seek disgorgement from creditors who fail to honor their
trade agreements and authorizes financial institutions to receive and
process payments from the bankrupt company.
href='http://bankruptcy.law360.com/articles/104936'>Read
more. (Subscription required.)
Employee Incentive Plan
Acting U.S. Trustee
face='Times
New
Roman' size='3'>Roberta A. DeAngelis on
Thursday objected to Tronox Inc.'s bid for bankruptcy court approval of
its key employee incentive plan, accusing the company of trying to do an
end-run around a federal law designed to restrict insider retention
bonuses, Bankruptcy Law360 reported on
Friday. Tronox sought approval to pay bonuses to four insiders, plus
other unidentified people who performed extraordinarily during the
bankruptcy, DeAngelis said. According to the objection, the four
insiders are interim chairman and CEO Dennis Wanlass, general counsel
Michael J. Foster, John D. Romano, vice president of sales and
marketing, and Robert C. Gibney, vice president of human resources and
corporate affairs. While the motion claims that the plan is not a
retention plan, “it is apparent that the true nature of the
proposed bonuses is retention,” DeAngelis said.
href='http://bankruptcy.law360.com/print_article/105063'>Read more.
(Subscription required.)
Lenders Vie for Control of
Tribune Co.
Chicago-based Tribune Co. and its creditors are in the
early stages of negotiating a reorganization plan that could transfer
control of the troubled media conglomerate from Chicago billionaire Sam
Zell to a group of large banks and investors that hold $8.6 billion in
senior debt, the
face='Times New Roman' size='3'>Chicago Tribune
size='3'>reported today. Negotiations currently center on a
debt-for-equity swap that probably would give the senior lenders a large
majority ownership stake in the reorganized company. In its current
form, the plan would wipe out a $90 million warrant Zell negotiated as
part of his $8.2 billion deal to take the company private in 2007. The
warrant gives the Tribune Co. chairman the right to buy about 40 percent
of the company for $500 million and is the basis of his control over
Tribune Co. Zell also holds a $250 million note representing a loan he
made to the company as part of the going-private transaction. Bankruptcy
experts said the plan's outline raises questions about whether the
senior lender group would want to retain Zell and his management team or
seek new leadership for the company.
href='http://www.chicagotribune.com/business/chi-mon-tribune-0608-jun08,0,490071,print.story'>Read
more.
Asarco Receives Approval on
$1 Billion Environmental Settlement
In the largest environmental bankruptcy in U.S.
history, Asarco LLC has won final court approval to settle approximately
$3.6 billion in environmental claims at 46 sites nationwide for a total
of $1.1 billion,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported on Friday. Bankruptcy Judge
face='Times New Roman'>Richard
S. Schmidt of the U.S. Bankruptcy Court for
the Southern District of Texas signed off on Asarco's motion to approve
the settlement, which resolves claims filed against the company by 48
federal and state agencies. Under the terms of the finalized settlement,
first announced in March, the company will allow general unsecured
claims totaling approximately $835 million and give $275 million in cash
to federal and state governments to cover its share of environmental
liability at the affected sites. The settlement provides that owned,
nonoperating sites with environmental issues will be placed into
custodial trusts along with approximately $233 million for remediation
and an additional $27.5 million for administration costs.
href='http://bankruptcy.law360.com/articles/105173'>Read
more. (Subscription required.)
U.S. Trustee Objects to
Aleris' Bid to Hire Deloitte
Acting U.S. Trustee
face='Times
New
Roman' size='3'>Roberta A. DeAngelis on
Thursday objected to the aluminum recycler Aleris International
Inc.’s bid to hire Deloitte Tax LLP, saying that the debtors
haven't provided any justification for the request,
face='Times New Roman'>Bankruptcy Law360 reported on
Friday. In their application, filed May 20, the debtors sought to hire
Deloitte Tax as a tax services provider retroactive to March 18. The
application says Deloitte Tax's service would include assistance in
preparing tax projections, as well as other advice, and the work would
involve fees exceeding $100,000. The application notes that Deloitte
workers bill at rates from $325 per hour to $575 per hour depending upon
their seniority. Citing case law, the objection notes that “the
bankruptcy court may be overly inclined to grant such approval
influenced by claims of hardship due to work already performed”
and argues that is not justification for approving such
employment.
href='http://bankruptcy.law360.com/print_article/105012'>Read more.
(Subscription required.)
Victims of Madoff Seek
Claims Overhaul
In a step that would substantially increase the price
tag for Bernard L. Madoff’s long-running Ponzi scheme, lawyers for
a group of his victims are asking a federal bankruptcy judge to reject
the way their losses in the fraud are being calculated, the
face='Times New Roman'>New York
Times reported today. The customers say that,
by law, they should be given credit for the full value of the securities
shown on the last account statements they received before Madoff’s
arrest in mid-December, even though they were bogus and none of the
trades were ever made. According to court filings, those account
balances add up to more than $64 billion. After months of private
negotiations and Internet arguments, lawyers for these customers
formally put the issue before the federal bankruptcy court in New York
in a lawsuit filed late Friday evening, less than a month before the
deadline for filing claims for compensation. Trustee
face='Times New Roman'>Irving
H. Picard is currently calculating investor
losses as the difference between the total amount a customer paid into
the scheme and the total amount withdrawn before it collapsed.
href='http://www.nytimes.com/2009/06/08/business/08madoff.html?ref=business&pagewanted=print'>Read
more.
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