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April 25, 2006
id='1'>City of
size='3'>Los Angeles
Delta Out of LAX
The city of
Angeles
out of
face='Times New Roman' size='3'>Los Angeles
size='3'>International
w:st='on'>
size='3'>Airport
has gone to court to hasten the process, according to
face='Times New Roman' size='3'>Portfolio Media
size='3'>yesterday. The city has opposed a Delta request that, if
granted, would allow the carrier more time to decide whether it wants to
continue operating a terminal at LAX. The city told a bankruptcy court
that it plans to end Delta’s lease to satisfy safety and security
requirements, and that an extension would just delay the process. Delta
was originally given until May 15 to decide what to do with nearly 400
airport leases across the country. The airline has asked for a 180-day
extension. The Delta terminal at LAX is currently the airport’s
most underused terminal. The city has argued that evicting the carrier
would allow the airport to use the space to alleviate the crowding in
other, more populous terminals. Additionally, Delta owes the airport
more than $1 million in lease payments from before the carrier filed for
chapter 11 protection, the city said in court papers.
id='2'>Unsecured Creditors Object
to Tower’s Retiree Plan
Tower Automotive’s
official committee of unsecured creditors filed an objection to the
company’s motion to enter into settlement agreements with the
Milwaukee Unions and the official committee of retired employees,
BankruptcyData.com reported today. Separately, in response to the
company’s motion for an extension of the exclusive period during
which the company can file a plan of reorganization and solicit
acceptances thereof, the creditors’ committee filed a statement
with the court, asserting that the committee does not oppose a short
exclusivity extension, but that the committee does have “certain
concerns” with the current request and any future extension
requests that the company may file. The committee expressed its concerns
with the proposed settlement agreements with the Milwaukee Unions and
the official committee of retired employees.
Firm
Edges Toward
Malpractice Suit in the Congoleum Case
In yet another
professional setback for the law firm Gilbert Heintz & Randolph LLP,
a bankruptcy judge overseeing chapter 11 proceedings for flooring
materials’ company Congoleum Corp. has paved the way for a
bondholder lawsuit against the firm for alleged conflict of
interest, Portfolio
Media reported yesterday. The current ruling,
in the U.S. Bankruptcy Court for the District of New Jersey, is setting
the stage for a showdown that bondholders hope will result in recovering
some of the allegedly squandered funds. Washington, D.C.–based
Gilbert Heintz, which was ordered to disgorge $13 million in attorney
fees in February, has been accused of conflict of interest for
representing Congoleum in its defense of asbestos-related claims, as
well as representing thousands of claimants against the company. The
official bondholders’ committee, which was put together in
January, includes HSBC Bank USA NA, Deutsche Asset Management and Wells
Capital Management. The committee moved to take action against Gilbert
Heintz on April 3.
id='4'>Kaiser Net Operating Losses
Order Upheld
A U.S. Bankruptcy Court issued
an order in the Kaiser Aluminum case restricting the Pension Benefit
Guaranty Corporation (PBGC) and the Voluntary Employees' Beneficiary
Association (VEBA) Trusts benefiting certain hourly and salaried
retirees of the company from entering into certain agreements that could
jeopardize the debtors' ability to use net operating losses,
BankruptcyData.com reported today. The official committee of unsecured
creditors supported the move, while the PBGC, the VEBA Trust and
retirees’ committee objected. The order maintains that “all
sales by the PBGC and VEBA Trusts prior to the effective date of the
plan are only permitted to the extent authorized pursuant to the
protocol for pre-effective date sales.” The order continues to say
that “any sale in violation of this order shall be null and void
and shall have no force or effect.”
SEC
Queries May Hinder IES'
Chapter 11
A recent filing with the
Securities and Exchange Commission reveals that bankrupt power and
communications provider Integrated Electrical Services is in
federal
size='3'>regulators’ crosshairs, Portfolio Media
reported yesterday. The Houston-based company, its chief
financial officer and certain former executives received Wells Notices
from the SEC on April 20, according to a form filed with the SEC on
Monday. The form—labeled Form 8-K—says that the Wells
Notices refer to possible “violations of the books and records,
internal controls and antifraud provisions of the Securities Exchange
Act of 1934.” The form also says that the Wells Notices stem from
an SEC investigation
size='3'>that has been ongoing since at least November 2004. IES has
taken out an $80 million debtor-in-possession loan from Bank of America,
and has secured additional bonding from Federal Insurance Company. The
case is In re Integrated
Electrical Services Inc. et al., case number
06-30602, in the U.S. Bankruptcy Court for the Northern District of
Texas.
w:st='on'>
size='3'>
id='6'>Oneida
Limit Information Sharing
Following in the steps of
other creditors’ committees that have found ambiguities in the
U.S. Bankruptcy Code, Oneida Ltd.’s committee of unsecured
creditors is requesting that the court confirm that it is not entitled
to disclose confidential information to the creditors it
represents, Portfolio
Media reported yesterday. The committee
members were concerned that the New York-based flatware manufacturer,
which filed for bankruptcy last month, may stop sharing sensitive
information with the group if the information was required to be passed
along to individual creditors, according to a court filing
Friday.
size='3'>“Through these agreements and other arrangements, a
debtor can ensure that a committee’s members will keep its
information confidential and will not use confidential information
except in connection with the chapter 11 case and on terms acceptable to
the debtor,” the motion states. The case is
face='Times New Roman' size='3'>Oneida Ltd.,
case no. 06-10489, in the U.S. Bankruptcy Court for the Southern
District of New York.
Drop
in Bankruptcies Aid in
Profit at American Express
American Express Co., the
credit card and travel services company, said first-quarter profit rose
18 percent, helped by increased spending by consumers and small
businesses, a decline in bankruptcies and new partnerships with large
banks, Reuters reported yesterday. American Express added 1.5 million
cardholders in the quarter, giving it 72.5 million. Of these, about
three-fifths are in the United States. A decline in bankruptcy filings
from the fourth quarter and lower-than-expected costs for Hurricane
Katrina added $98 million to profit. Credit losses fell 18 percent from
the fourth quarter to $668 million.
href='http://go.reuters.com/newsArticle.jhtml?type=businessNews&storyID=11943589&src=rss/businessNews'>Read
more.
id='8'>Cemetery Operator Could Face
Bankruptcy if State Probe Reveals Illegal Financing
size='3'>Michigan
size='3'>Tennessee
whether a company that operates cemeteries illegally removed millions of
dollars from trust fund accounts and put the money into businesses
in
size='3'>Nevada
w:st='on'>
size='3'>Oklahoma
Associated Press reported today. Mikocem LLC operates 28 cemeteries
in
size='3'>Michigan
cemeteries such as Woodlawn in
face='Times New Roman' size='3'>Detroit
size='3'>and Cadillac Memorial Gardens East in
w:st='on'>
size='3'>Macomb
face='Times New Roman' size='3'>County
size='3'>’s
w:st='on'>
size='3'>Clinton
face='Times New Roman'
size='3'>Township
size='3'>. In
w:st='on'>
size='3'>Halls
face='Times New Roman' size='3'>Memorial
size='3'>Gardens
size='3'>Knoxville
state regulators stepped in last fall after customers filed complaints
that they paid for services that were never received, including burial
plots that were being sold and resold. Michigan Attorney General Mike
Cox’s office says the probe began last month and says it involves
a review of finances by the state Bureau of Commercial Services,
enforcer of
face='Times New Roman'
size='3'>Michigan
cemetery rules.
w:st='on'>
size='3'>Michigan
size='3'>regulators say $61 million in trust funds earmarked for future
burials and maintenance at 28 cemeteries may be at risk. If the funds
fail, thousands of people who bought contracts for future burials would
lose money that they paid years ago, and cemeteries could face
bankruptcy.
href='http://www.knoxnews.com/kns/local_news/article/0,1406,KNS_347_4646723,00.html'>Read
more.
Enron
Founder Blames Other
Executives for Company’s Collapse
Enron Corp. founder
Kenneth L. Lay, taking the stand for the first time in his fraud trial,
told jurors he took 'full responsibility' for the Houston energy
company's collapse, even as he went on to blame others for the company's
misfortune, the
size='3'>Washington Post reported today. Lay
showed more hard edge than his trademark charm as he singled out short
sellers who bet the company's stock would sink, skeptical media reports
and illegal dealings by then-finance chief Andrew S. Fastow for the
market unrest that led to Enron's undoing. He also, ever so subtly,
attributed problems to the resignation of the man who has sat at the
defense table with him for 13 weeks, his protege and the firm's former
chief executive Jeffrey K. Skilling. Lay told jurors that Enron failed
after several factors colluded to create 'an environment very ripe to
set off an investor panic,' including questions about outside business
partnerships run by Fastow, who later admitted to siphoning millions of
dollars from Enron.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/04/24/AR2006042401610_pf.html'>Read
more.
id='10'>Software Company Executives
Admits to Guilt in Fraud Case
Just two weeks before
they were to go on trial, two former top executives of Computer
Associates International, a once-booming software company, pleaded
guilty yesterday to eight counts each of securities fraud and
obstruction of justice in
w:st='on'>Federal District
Court
size='3'>Brooklyn
face='Times New Roman' size='3'>New York Times
size='3'>reported today. Sanjay Kumar, the former chief executive of
Computer Associates, and Stephen Richards, the company's former top
salesman, confessed to a wide-ranging conspiracy to inflate the
company's sales in 1999 and 2000 and interfere with the subsequent
federal inquiry. The men repeatedly lied to their own lawyers and to
federal investigators, according to the indictment, which also said that
Kumar even authorized paying $3.7 million to buy the silence of a
potential witness. The men had maintained their innocence for years and
had previously pleaded not guilty to the charges, which carry prison
terms of as much as 20 years apiece. Read
more.
International
id='11'>British Airways to Meet
Unions on Pension Plan
British Airways,
size='3'>Europe
airline, will meet union officials on Wednesday to sell its plans to
raise the staff retirement age, one of various measures aimed at cutting
its pension deficit, Reuters reported today. The union
officials, who have said they may fight the proposals, said on
Tuesday the meeting was a key step but that they did not expect a firm
outcome until the latest actuarial review of the deficit is released in
the summer. BA announced proposals last month to raise the retirement
age of its 2,500 pilots to 60 from 55. For most BA staff, including
cabin crew, the retirement age would increase by 10 years to 65. To
soften the blow, the retirement age for cabin crew would rise only to 60
in the first five years. The airline also wants to introduce a slower
pension accrual rate and a cap on pension rises. It proposed paying
£500 million to tackle the deficit. The airline has still not
received a formal response to the measures from the pilots union BALPA
(British Airline Pilots Association).
href='http://today.reuters.co.uk/news/newsArticle.aspx?type=businessNews&storyID=2006-04-25T112805Z_01_L25446332_RTRUKOC_0_UK-AIRLINES-BA.xml'>Read
more.
id='12'>One-Third of
size='3'>Russia
Strategic Defense Companies at Risk of
Bankruptcy
About one-third of
strategic companies in
face='Times New Roman' size='3'>Russia
size='3'>are at risk of bankruptcy according to documents of the
national scientific conference held in
w:st='on'>
size='3'>Moscow
prevention of the bankruptcy of strategic institutions, according to
Interfax Newswire yesterday. The Russian Federal
size='3'>Tax Service
size='3'>reported signs of
bankruptcy at 198 strategic
companies and
organizations, 170
of which belong to the
defense industry.
size='3'>Tax authorities have issued resolutions with regard to 150 of
them on recovering their debts set off against property and sent them to
court bailiffs. The report says there are 948 strategic ventures in the
defense industry to which special bankruptcy rules apply, and
that bankruptcy procedures have been launched against 44 of
them.