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March 14, 2007
Legislation
name='1'>
House Passes Bill to
Rename Courthouse after Judge Duberstein
The House of
Representatives yesterday passed H.R. 430, sponsored by Rep. Edolphus
Townes (D-N.Y.), to rename the U. S. Bankruptcy Courthouse in
size='3'>Brooklyn
Chief Judge Conrad B. Duberstein. The bill passed on a voice vote and
now moves to the Senate. On Sunday, the Duberstein Library Collection
will be dedicated in ceremonies at
w:st='on'>
size='3'>St. John's
w:st='on'>
size='3'>University
w:st='on'>
size='3'>School
Law. Judge Duberstein is a graduate
of
size='3'>St. John's. The
Duberstein National Memorial Moot Court Competition, sponsored by
John's
in
size='3'>New York City
size='3'>. The final round will be held at
the U.S. District Court in
size='3'>Brooklyn on
Monday.
href='http://frwebgate.access.gpo.gov/cgi-bin/getpage.cgi?dbname=2007_record&page=H2459&position=all'>Click
here to read yesterday’s congressional debate of H.R.
430.
name='2'>Credit Card Disclosure Legislation
Introduced
House Democrats on Tuesday
introduced legislation that would require credit card companies to tell
consumers more about the consequences of making only the minimum monthly
repayment, Reuters reported yesterday. Issuers would have to clearly
outline the time needed to pay off a balance if only the minimum payment
is made each month, and warn of the interest cost. Credit card companies
would also have to offer a toll-free telephone number for credit
counseling. 'Consumers deserve to have better information from credit
card companies to get themselves out of debt,' said North Carolina
Democratic Rep. David Price, who introduced the bill with eight
colleagues. Separately, Rep. Mark Udall (D-Colo.) introduced H.R. 1461,
the Credit Card Accountability Responsibility and Disclosure Act of
2007, on Friday to ban abusive credit practices, enhance consumer
disclosures and protect underage consumers.
href='http://www.abcnews.go.com/Politics/print?id=2948778'>Click
here to read the full article.
href='http://price.house.gov/News/DocumentSingle.aspx?DocumentID=60507'>Click
here to read Rep. Price’s press release on the “Credit
Card Repayment Act of 2007.”
href='http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h1461ih.txt.pdf'>Click
here to read the text of H.R. 1461, the 'Credit Card Accountability
Responsibility and Disclosure Act of 2007.'
name='3'> Treasury Secretary Looks to More
Business-Friendly Regulations
Responding to criticism
from many corporate executives and business groups that rule changes in
the wake of the Enron scandal had gone too far, Treasury Secretary Henry
M. Paulson Jr. suggested on Tuesday that the administration was
considering a more business-friendly approach to regulation, the
New York Times
size='3'>reported today. Paulson questioned whether lawmakers and
regulators had “struck the right balance between investor
protection and market competitiveness.” While his remarks were
aimed at focusing a series of public and private discussion groups, they
also signaled his agenda for the coming months on corporate law and
accounting issues. Administration officials said that they are looking
to lay the groundwork for proposing changes before the 2008 election
cycle that would make major adjustments politically difficult. Senior
officials say the changes will probably be regulatory rather than
legislative, even though many important Congressional committees are
controlled by business-friendly Democrats.
href='http://www.nytimes.com/2007/03/14/business/14regulate.html?pagewanted=print'>Read
more.
Mortgages
name='4'>Dodd Considering Bill to Protect
Homeowners
In the wake of the market
downturn over subprime lender concerns, Senate Banking Chairman
Christopher Dodd (D- Conn.) said that he is giving serious consideration
to crafting legislation that would address growing public worries about
predatory lending, the
size='3'>Wall Street Journal reported today.
Warning that 'large numbers of American homeowners' are facing
foreclosure, Dodd said that 'the federal government has a dual
obligation both to protect consumers from abusive lending practices
going forward and to work to ensure that Americans who have been
victimized by abusive products and practices are able to keep their
homes and with them, their piece of the American dream.' Since taking
over as chairman earlier this year, Mr. Dodd has raised pressure on
federal banking regulators to strengthen protections for borrowers in
the subprime market.
href='http://online.wsj.com/article/SB117382274743235961.html?mod=home_whats_news_us'>Read
more. (Registration required.)
href='http://dodd.senate.gov/index.php?q=node/3776'>Click here to
read Sen. Dodd’s statement.
name='5'>New Century Faces Grand Jury Subpoena
After recent revelations
about criminal and regulatory investigations, New Century Financial
Corp. said Tuesday that it now faces a grand jury subpoena and a U.S.
Securities and Exchange Commission investigation,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Separately, the struggling subprime
mortgage lender was dealt another blow yesterday when NYSE Regulation
Inc. said that the company's stock should be suspended immediately. NYSE
said that the company expects to have its common stock listed on the
Pink Sheets following its suspension. In an SEC filing Tuesday, New
Century revealed that it has received a subpoena from the U.S.
Attorney’s Office for the Central District of
face='Times New











Roman'>
w:st='on'>
size='3'>California and
learned Monday that the SEC’s Pacific Regional Office is
conducting a preliminary investigation into its financial reporting
practices. The filing also detailed the termination of funding
agreements between many of its lenders. New Century said Barclays Bank
PLC, Morgan Stanley Mortgage Capital Inc. and State Street Global
Markets LLC are among the lenders that have cut off funding since the
company revealed it was planning to restate historical financial
statements.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=20368'>Read
more. (Registration required.)
name='6'>Commentary: Mutual Funds at Some Risk on
Mortgages
Mutual funds held
mortgage-related debt securities issued by the subprime lenders New
Century Financial, NovaStar Financial and others at the end of last
year, indicating that everyday investors are among those who will
probably be hurt by the turmoil that is tearing through the residential
mortgage market, according to a commentary in the
face='Times New Roman' size='3'>New York Times
size='3'>today. While mutual funds are considerably safer than more
concentrated holdings with their holdings spread out among hundreds of
issuing companies, funds that invested in the mortgage securities market
are beginning to feel the effects of the downturn. The Regions Morgan
Keegan Select High Income Fund, for example, a $1.2 billion portfolio
run by Morgan Keegan, a regional brokerage firm based in
size='3'>Memphis
million, or 13 percent of its portfolio, in unrated mortgage-backed
securities, or those below investment grade. Among the issues in its
portfolio at the end of the year: a $3.4 million holding in home equity
loans underwritten by New Century in 2006.
href='http://www.nytimes.com/2007/03/14/business/14debt.html?ref=business&pagewanted=print'>Read
more.
name='7'>Massachusetts
face='Times New Roman' size='3'> Subpoenas Firms on Subprime
Research
size='3'>Massachusetts ordered two
prominent Wall Street financial firms on Tuesday to provide information
on their subprime research in the first probe by a
w:st='on'>
size='3'>U.S.
size='3'>state into possible conflicts of interest over the troubled
mortgage lenders, Reuters reported yesterday. State authorities
subpoenaed UBS AG's UBS Securities LLC and Bear Stearns Cos. over their
research analysis of lenders specializing in making loans to high-risk
borrowers, including New Century Financial Corp., one of the
biggest
face='Times New Roman'
size='3'>U.S.
size='3'>subprime lenders. Galvin said UBS upgraded New Century 16 days
after its February 7 earnings restatement, while Bear Stearns upgraded
the lender on March 1, the day it said its annual report was delayed.
The subpoenas, which require responses by March 27, seek all documents
created by any subprime lending analyst at the two investment
firms.
href='http://www.nytimes.com/reuters/business/business-massachusetts-research.html?pagewanted=print'>Read
more.
name='8'>Shareholders Group Objects to Northwest's Extension
Request
A group of Northwest
Airlines shareholders has objected to the airlines' request for an
extension to file a reorganization plan,
size='3'>Bankruptcy Law360 reported yesterday.
The equity securityholders’ committee claimed Northwest did not
deserve a third extension of exclusivity because the carrier had made
little progress since September 2005.
size='3'>The committee claims that among its alleged defects, the
proposed plan undervalues the debtors by billions of dollars, improperly
consolidates the parent company with other debtors, and
“inexplicably” provides company management with $129 million
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=20362'>Read
more. (Registration required.)
Dana
Agrees to $78 Million Trust for Nonunion Retirees
Bankrupt auto parts maker Dana
Corp. has committed $78 million to a trust for nonunion retirees, even
as a hearing got underway to determine if the company can reject its
labor contracts and benefits for two major unions, Bankruptcy Law360
reported yesterday. Dana agreed to immediately put $25 million into the
new trust and committed to add another $53 million when the company
emerges from bankruptcy. The company added that the trust applies to
about 6,300 retirees, surviving spouses and dependents. The developments
arrived as Dana’s lawyers tried to win permission from the
Bankruptcy Court for the Southern District of New York to cancel its
contracts with the United Auto Workers and the United Steelworkers,
developments that would help the company save up to $180 million per
year.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=20362'>Read
more. (Registration required.)
name='10'>Bankruptcy Judge Rejects Nellson Deal
A federal bankruptcy
judge Tuesday denied a settlement between Nellson Nutraceutical Inc.'s
second-lien lenders and its controlling shareholder, Fremont Capital,
that the diet-food maker had said would speed its exit from bankruptcy,
the Associated Press reported yesterday. Bankruptcy Judge
Christopher S.
Sontchi tossed out the deal that would have
given Fremont, Nellson's out-of-the-money owner, a stake in the
reorganized business.
size='3'>Separately, Judge Sontchi gave Nellson two more weeks to file a
bankruptcy plan explaining how it intends to pay its debts. Judge
Sontchi's order extended Nellson's exclusive right to file a plan though
March 26 without interference from creditors.
href='http://biz.yahoo.com/ap/070313/nellson_nutraceutical_bankruptcy.html?.v=1'>Read
more.
name='11'>Pearlman Creditors Seek Chapter 11 Trustee
A bankruptcy court will
consider today whether to appoint a chapter 11 trustee over the
financial affairs of music producer Lou Pearlman and Trans Continental
Airlines, the Orlando
Sentinel reported today. The hearing comes
after three banks and a venture-capital company filed earlier this month
to force Pearlman and his flagship company into involuntary bankruptcy.
Tatonka Capital Corp., Integra Bank, American Bank of
w:st='on'>
Paul
Bank & Trust Co. of Williston, N.D., said in the filing that they
are collectively owed more than $112 million and they believe 'assets
are being diverted farther and farther from the reach of creditors as
each day passes.' In a letter to investors, receiver Jerry McHale said
that many of the would-be assets in the proceeding-- from airplanes to
Pearlman's mansion to his Rolls-Royce Phantom -- are encumbered with
debt. It looks unlikely that he will be able to gather up even $100,000
in cash from various accounts, McHale said, and virtually all of the
royalties from bands such as the Backstreet Boys have been pledged as
collateral for bank loans.
href='http://www.orlandosentinel.com/business/orl-pearlman1407mar14,0,2143389,print.story?coll=orl-business-headlines'>Read
more.
name='12'>TROUBLED COMPANIES IN THE NEWS
1000’s of companies lose
money or experience some form of difficulty each
quarter.
The business news
articles below are taken from the
size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and
Other Business News published by Bastien
Financial Publications.
To begin receiving the COMPLETE
Daily e-Summary, that emails you information on over 70 such companies
each morning, email
face='Times New Roman' color='#0000ff'
size='3'>steve@creditnews.com
size='3'>your name, company name, address, phone and fax.
We’ll set you up within 24 hours.
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your email.
size='3'>Aerosonic Corp., a
w:st='on'>
size='3'>Clearwater
aviation products, is closing its manufacturing facility in
size='3'>Earlysville
w:st='on'>Va.
as part of a consolidation of operations at its
size='3'>Clearwater
size='3'>facilities. The move will affect 100
employees.
size='3'>Beckman Coulter, a biotechnology
firm, announced plans to close a facility in
w:st='on'>
size='3'>Hialeah
100 workers as it transfers some operations to another facility
in
size='3'>Porterville,
Ca.
size='3'>Caribou Coffee Co. Inc., the
size='3'>Brooklyn Center
Mn. operator of coffeeshops, received a warning from the Nasdaq Stock
Market that its shares could be delisted for violating rules about the
makeup of its board of directors. Caribou, whose board doesn’t
currently have a majority of independent directors, now has until
September to regain compliance with Nasdaq rules and says it will
correct the situation by appointing an independent director to a vacant
seat on the board.
size='3'>Coast Distribution System Inc., the
Morgan Hill, Ca. firm and provider of replacement parts and supplies to
the recreational vehicle market, reported a fourth quarter net loss of
$1.8 million, on a 10% sales decline–to $26.5
million. For
the year, the company reported its net declined 21%–to $2.9
million, on a 2% sales increase–to $179 million.
size='3'>Ford Motor Co., Dearborn, Mi., has
investors wondering if it will end up selling its remaining luxury car
brands such as its Jaguar and Land Rover lines in the
w:st='on'>
size='3'>United Kingdom
size='3'>. While the
w:st='on'>
size='3'>Dearborn
carmaker says it isn’t currently looking for any buyers, neither
has it ruled out the possibility of further sales of its luxury lines.
Ford recently announced a deal to sell off a majority interest in Aston
Martin, the maker of British sports cars, for nearly $850 million,
although it will maintain a $77 million interest in Aston Martin. Ford
continues revamping its North American operations, following last
year’s $12.6 billion loss.
size='3'>Krispy Kreme Doughnuts Inc.’s
CEO, Daryl Brewster, said that the
w:st='on'>
size='3'>Winston-Salem,
size='3'>N.C.
donut shops is now looking at growth, having overcome “survival
mode”, which involved striving to achieve stability following a
spate of litigation, settlements, restatements and refinancing. The firm
will improve its marketing, provide better customer service and increase
international growth for franchises. Meanwhile, Krispy Kreme will
continue trying to increase efficiency and reduce costs. In fiscal 2006,
the company lost more than $135 million on sales of more than $540
million, but things seem to be improving. In its third quarter of 2007,
Krispy Kreme was still in the red, to the tune of $7.2 million, but
that’s a vast improvement over its $29.7 million loss in 2006's
third quarter.
size='3'>LCC International Inc., a
McLean,
face='Times New Roman' size='3'>Va.
size='3'>engineering and consulting firm for wireless companies,
reported a fourth quarter net loss of more than $2.1 million, including
an operating loss of $1.3 million. Revenue declined 29%–to $28.3
million. For the year, it lost $5.5 million, including a restructuring
charge of $108,000. Fiscal revenue fell 11%–to $130
million.
size='3'>Sharper Image Corp., a
size='3'>San Francisco
specialty retailer, reported that its sales in February sank
29%–to $22.1 million, including a 24% drop in same-store sales.
Sharper Image, with 187 stores, added that its Internet sales fell 35%
in the period–to $3.5 million.
size='3'>Williams Industries Inc., a
size='3'>Manassas
w:st='on'>
size='3'>Va.
steel products, reported a second quarter net loss of $1400,000. Revenue
declined 15%–to $9.5 million.