January 20, 2006
Advocacy Group Calls for Asbestos-related Claim Reform
An advocacy group is calling for Congress to pass a resolution to limit the amount of fraudulent asbestos cases filed in court, All Headline News reported yesterday. The Council for Citizens Against Government Waste (CCAGW) yesterday encouraged Congress to pass S. 852, the Fairness in Asbestos Injury Resolution Act (FAIR Act). The legislation would create a trust fund to reimburse actual victims of asbestos exposure, thereby limiting the actions of trial lawyers. Legal analysts and medical studies have shown that up to 90 percent of these claims were filed by individuals who have no physical impairment. Corporations and their insurers would fund the trust fund established by the FAIR Act; no taxpayer or government funds would be involved.
Winn-Dixie Asks Court for Extra Pay for CEO
Winn-Dixie Stores Inc. has requested an additional $2 million retention incentive for CEO Peter Lynch, according to court documents filed Wednesday with the U.S. Middle District of Florida bankruptcy court, the Jacksonville Business Journal reported today. The payment would be contingent upon Lynch remaining as company CEO until the end of 2006, and is the second retention payment agreement between Lynch and Winn-Dixie. The grocer and Lynch agreed on a $1.5 million retention payment on Feb. 17, 2005, that was also contingent upon Lynch remaining with the company until the end of the year. Lynch would receive the $2 million payment "as soon as practicable," after approval by the bankruptcy court, the filing states. Feb. 9 has been set as the hearing date for the company's motion. The payment would be forfeited by Lynch if he terminates his employment with the company without good reason before Dec. 31, 2006. Read more.
McDermott Closer to Asbestos Settlement
A bankruptcy court judge has approved McDermott International Inc.'s plan to settle asbestos claims for somewhere between $375 and $955 million, CFO.com reported today. The final amount depends on whether Congress creates a national trust fund for asbestos claims, according to the Associated Press. The settlement agreement was part of the reorganization plan for Babcock & Wilcox Co., a McDermott subsidiary that was the target of the claims and that filed for chapter 11 protection in 2000. U.S. District Judge Sarah Vance signed off on the reorganization earlier this week.
Babcock & Wilcox (B&W) could emerge from six years of chapter 11 bankruptcy protection from asbestos-related lawsuits as soon as Feb. 22, the Akron Beacon Journal reported today. Shareholders in Louisiana-based parent company McDermott International Inc. on Wednesday approved a settlement for the Barberton boilermaker that creates a $1.9 billion fund to resolve asbestos claims. The U.S. District Court for the Eastern District of Louisiana approved the reorganization plan; McDermott will pay $355 million into the fund.
Airlines
NWA Bankruptcy Hearings Near End
Northwest Airlines used its time before bankruptcy Judge Allan Gropper to argue that it can't successfully reorganize without cutting its labor costs by $1.4 billion, Minnesota Public Radio reported yesterday. The airline called expert witnesses to the stand who testified that Northwest's labor costs are the highest in the industry. They also stated that Northwest's proposals to cut jobs, wages, and benefits and change work rules would leave the airline with lower labor costs than American, United, Delta and Continental Airlines. But Northwest insisted to the court even then its labor costs would remain higher than those of the recently merged US Airways and America West, as well as several "low-cost" airlines. Northwest made its case with urgency, telling the court the airline was losing $4-5 million a day. Northwest introduced testimony that without the labor cost reductions, it could lose $1.1 billion this year. Airline officials testified that Northwest's cash reserves could drop to levels that could create problems with vendors and credit card companies and invite attacks on its market share from more health airlines. Read more.
UAL Board, Committee Members Announced
In a release issued by UAL Corp., the company announced the members of its new board of directors, BankruptcyData.com reported today. The new board is to begin service on the effective date of the United Airlines’ reorganization plan. Those named by the company are: current directors W.
James Farrell, Robert S. Miller, Jr., James J. O'Connor, Glenn F. Tilton and John H. Walker. Those named by the official committee of unsecured creditors are Richard J. Almeida, Walter Isaacson, Janet Langford Kelly, Robert D.
Krebs and David Vitale. Upon the effective date of the plan, the following
members will depart the board: W. Douglas Ford, Dipak C. Jain, Paul E.
Tierney, Jr. and George B. Weiksner, Jr.
Clear Thinking Group and Joseph Myers, a partner and managing director in the firm and Creditor Representative for Medical Windown Holdings Inc. (formerly knows as Maxxim Medical Inc.), has announced that an approximate 9 percent initial distribution has been sent to the general unsecured creditors in its bankruptcy case, BankruptcyData.com reported today. The initial distribution, which was made in conjunction with the plan administrator, was based on undisputed claims or the undisputed portion of disputed claims. Medical Windown Holdings is the successor corporation created by the bankruptcy court when the assets of Maxxim were sold.
NHL's Pittsburgh Penguins May Be for Sale
The Pittsburgh Penguins are considering several offers to buy the team, and
keeping it in Pittsburgh will remain a priority but is not guaranteed, the
Associated Press reported yesterday. A recent offer by a casino firm to
build a new arena, an influx of young talent and the NHL's new collective
bargaining agreement have made the time right to consider selling, Penguins
owner-player Mario Lemieux said Thursday. "We've had quite a few inquiries
over the last few months," Lemieux said. "I think the timing was right to
look at them and explore them and see what our options are." Lemieux and
team president Ken Sawyer wouldn't identify the interested parties, but most
of the prospective buyers approached them before Isle of Capri Casinos Inc.
offered last month to pay $290 million for a new arena, if the gambling firm
gets a license to operate a slot machine parlor in Pittsburgh. Lemieux has
said the team would stay in Pittsburgh if Isle of Capri gets the slots
license and that any new owner would be bound by that agreement. The
Penguins' lease on 45-year-old Mellon Arena, the smallest and oldest
facility in the NHL, runs through June 2008, and Lemieux has said the team
could leave the city if it doesn't have a new arena by then. The team filed
for chapter 11 bankruptcy protection in 1998, after running up $120 million
in debt under former owners Howard Baldwin and Roger Marino. Read more.
FERC Issues Rules Against Market Manipulation
The Federal Energy Regulatory Commission (FERC) on Thursday issued rules to
prevent a repeat of massive market manipulation by Enron Corp. and others
during the 2000-01 Western energy crisis, Reuters reported yesterday. The
rules, which Congress ordered FERC to issue as part of a $14.5 billion
energy bill passed last year, ban "any manipulative or deceptive device or
contrivance" in the U.S. wholesale natural gas and electricity markets. The
rules apply to all entities, not just public utilities and natural gas
companies, FERC said. Manipulation by Houston-based Enron caught the
commission unprepared, FERC Commissioner Nora Brownell said. FERC can now
levy civil penalties of $1 million per day per violation. The bankrupt
Enron, using trading schemes it dubbed "Death Star," "Fat Boy" and "Get
Shorty," manipulated markets during the power crisis in Western states in
2000 and 2001, when California endured a huge jump in natural gas and
electricity prices, rolling blackouts and the bankruptcy of its biggest
utility. FERC recently said it had ended all but one of the 60
investigations it launched into market manipulation during the Western
energy crisis, and oversaw settlements totaling more than $6.3 billion.
Refco Gains Court Approval to Pay Retention Bonuses
Refco Inc. won bankruptcy-court approval to pay $1.4 million in bonuses to
32 key employees to keep them from jumping ship as the company winds down
its business, according to a Dow Jones Newswire report yesterday. Judge
Robert D. Drain of the U.S. Bankruptcy Court in Manhattan signed off
on the retention plan Tuesday following a hearing. Under the plan, key
employees with "the knowledge and expertise necessary to lead the wind-down"
will receive a year-end bonus equal to four months' base salary. They'll
also get performance bonus equal to one month's salary for each month they
stay with Refco from Dec. 1, 2005, through March 31. Read more.
International
Seoul Lawyers to Offer Bankruptcy Aid
The Seoul Bar Association (SBA), chaired by Lee Jun-beom, announced yesterday that it will organize and run a lawyer group on personal bankruptcy starting late next month in order to help individuals reduce their bankruptcy and liability exemption filing costs, Donga.com reported today. Starting next month, those requiring the service can visit the law center hall in Seoul and fill out an application form. The advantage of SBA personal bankruptcy aid is that the lawyer's fee is set at 450,000 won. In general, personal bankruptcies cost approximately 1.5 to 2.0 million won (excluding delivery and notification charges). Read more.