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February 13, 2006
name='1'>Asbestos Debate Tops Senate Agenda
The early part of the
week represents a make-or-break point for the asbestos bill, which would
bring a halt to asbestos exposure lawsuits and establish a $140 billion
trust fund to compensate victims,
size='3'>CongressDaily reported today. A
showdown over a budget point of order is on tap in the Senate. Judiciary
Chairman Specter and ranking member Patrick Leahy (D-Vt.) need 60 votes
to overcome the objections of fiscal conservatives, who fear the bill
would result in higher federal spending, as well as critics who see the
vote as a chance to block the bill. Sen.
John Ensign (R-Nev.) raised the point of order last week, contending
that the legislation violated budget rules barring legislation from
increasing federal spending by more than $5 billion after the 10-year
budget window. If the bill survives the budget vote, it is expected to
be subject to amendments from both sides of the aisle. Those amendments
might include 'poison pill' provisions designed to sink the overall
measure.
New
Bankruptcy Laws Take Toll on Banks
The nation's tough new
bankruptcy laws are taking a harsh toll on the bankrupt and the banks,
according to Gannet News Service yesterday. The new law touched off a
rush to bankruptcy court as half a million Americans filed for
bankruptcy protection in the two weeks before the law took effect Oct.
17, which put a massive dent in the fourth quarter earnings of the
companies that had lobbied hardest for bankruptcy reform. Bank of
America reported $320 million in bankruptcy losses, and JPMorgan Chase
&
size='3'>Co.
credit card defaults would top $2.3 billion. Discover Card lost $180
million. It was a one-time hit for the credit card giants, which expect
to more than recover their losses over the long term. 'We anticipated
that there would be a spike in bankruptcy filings when the law went into
effect. But we anticipate fewer bankruptcy filings in the future,' said
Laura Fisher, spokeswoman for the American Bankers Association. 'This
law will be targeting people who were getting away with bankruptcy
murder by discharging bills they could pay.'
href='http://www.news-leader.com/apps/pbcs.dll/article?AID=/20060212/BUSINESS…'>Read
more.
name='3'>Bankruptcy Filings in
w:st='on'>
size='3'>Utah
Percent in January
Bankruptcy filings
in
size='3'>Utah
percent in January compared to the same month a year ago, the
Salt Lake City Desert
News reported on Saturday. The U.S. Bankruptcy
Court for the Utah District on Friday released figures showing that
there were 233 bankruptcy filings last month, down from 1,324 in January
2005. The most recent total includes 103 filings for chapter 7, 128 for
chapter 13 and two for chapter 11.
href='http://www.blackenterprise.com/yb/ybopen.asp?section=ybbf&story_id=8929…'>Read
more.
While the company
repeated in a filing made earlier this week with the Securities and
Exchange Commission that it 'could be forced to seek protection under
bankruptcy laws,'' Silicon Graphics added that it is 'continuing to
evaluate a range of strategic alternatives'' that could mean
finding a buyer or additional financing, according to the
San Jose Mercury
News on Saturday. Silicon Graphics has cut its
workforce by 12 percent since June to 2,100 employees, as the company
has also merged its sales and marketing operations, vacated some offices
and begun work to renegotiate some supplier contracts. The company's
filing said more positions are expected to be eliminated during the
current fiscal year, which ends in June. Those moves are designed to
reduce costs by $80 million to $100 million. Silicon Graphics has also
initiated a $100 million line of credit with banks including Wells
Fargo. Silicon Graphics hasn't registered a profitable year since 1999,
when it reported earnings of $7.8 million. For its fiscal year ended in
June, the company lost $76 million on sales of $730 million.
href='http://www.mercurynews.com/mld/mercurynews/business/13847630.htm?templa…'>Read
more.
name='5'>Riverstone Chapter 11 Filed, Agreement & Proposed
Settlement Announced
Riverstone Networks and its
domestic subsidiaries filed a voluntary chapter 11 petition in the U.S.
Bankruptcy Court for the District of Delaware, BankruptcyData.com
reported today. The company also announced that it and certain of its
subsidiaries entered into a definitive asset purchase agreement to sell
substantially all of its assets to Lucent Technologies. The agreement
provides that Lucent will pay the company $170 million in cash, of which
$10 million will be held in escrow for 90 days to secure any purchase
price adjustment to be made based upon changes from an agreed balance
sheet to be delivered at the closing of the transaction, plus the
assumption of certain liabilities and contracts.
href='http://www.bankruptcydata.com/BankruptcyDataNewsNEW.asp'>Read
more.
w:st='on'>
name='6'>Chesapeake
face='Times New Roman' size='3'>Knife & Tool Files for Chapter
11
Specialty retailer
Chesapeake Knife & Tool has filed to reorganize its debts in chapter
11 bankruptcy with plans to emerge focused on more-profitable locations
and expanded Internet offerings, the
size='3'>Baltimore Business Journal reported
on Friday. '9-11 had a chilling effect on the entire industry,' said
David Kowalski, communications coordinator for the American Knife and
Tool Institute. After the blows to the industry, a sluggish 2005 holiday
season forced Chesapeake Knife & Tool to file chapter 11, which will
allow the chain to unload long-term leases at unprofitable locations.
The retailer has lost money since 2003, with a $282,000 loss in the most
recent fiscal year, court documents show.
face='Times New


Roman'>
size='3'>Chesapeake Knife & Tool Co. filed bankruptcy in
size='3'>Baltimore
District Court Jan. 31, listing assets between $1 million and $10
million and liabilities in the same range.
href='http://www.bizjournals.com/baltimore/stories/2006/02/13/story1.html?fro…'>Read
more.
Refco
Asks Court to Transfer Unit Back to Chapter 11
Refco has requested that
its core futures business be moved back into chapter 11, only two months
after asking that it be moved out,
size='3'>Portfolio Media reported on Friday.
Refco filed the motion in U.S. Bankruptcy Court in
w:st='on'>
size='3'>Manhattan
Wednesday, pleading for the court to shift its former futures brokerage
Refco LLC back from chapter 7 proceedings.
face='Times New Roman'>Refco had previously requested
that Refco LLC be transferred to chapter 7 proceedings, the traditional
venue for liquidating companies, stemming from its deal with
size='3'>London
firm Man Group PLC. 'Bringing its estate into the fold of other jointly
administered cases will result in a more efficient and effective
administration of the estates for all creditors and parties in
interest,' the company said in its filing.
J.L.
French files for bankruptcy
A struggling automotive
industry has put Sheboygan, Wis.-based J.L. French Automotive Castings
Inc. and eight affiliates into $741.6 million in debt, forcing the
company to file for chapter 11 protection, the
face='Times New




Roman'
size='3'>Sheboygan Press reported on Saturday.
The company already had trimmed its workforce in
w:st='on'>
size='3'>Sheboygan
1,300 in 2004 to less than 1,000, Kellner said. The company has
downsized from 11 to five plants worldwide in the last five years and
employed three different CEOs. Since 2004, the company has reduced its
international workforce from 3,700 to 1,800. J.L. French, which had
sales of $482 million in 2005, accumulated the majority of the debt in
the 1999 purchase of the
face='Times New Roman' size='3'>Mexico
size='3'>plant and five
w:st='on'>
size='3'>U.K.
size='3'>plants. The bankruptcy filing also blamed declining sales of
light trucks and SUVs by Ford and General Motors, which comprise the
bulk of J.L. French's sales. J.L. French and eight affiliates filed for
bankruptcy Friday in the U.S. Bankruptcy Court for the District of
Delaware, a process that could conclude by the end of
June.
href='http://www.htrnews.com/apps/pbcs.dll/article?AID=/20060211/SHE0101/6021…'>Read
more.
name='9'>Judge Approves
w:st='on'>
size='3'>Oregon
size='3'>Legislator's Bankruptcy
U.S. Bankruptcy Court
Judge Albert Radcliffe agreed to free former Oregon Representative
Kelley Wirth from paying at least $44,500 in unpaid bills as he approved
her chapter 7 bankruptcy filing after nobody filed objections to
discharging her debts, the
size='3'>Salem Statesman Journal reported on
Saturday. Wirth claimed total debts of $92,027 in her bankruptcy filing.
However, she itemized only about $44,500 of it. Most of her debts were
to banks, credit card companies and doctors. In her bankruptcy filing,
Wirth claimed personal belongings valued at $5,395. All were exempt from
seizure by the court under bankruptcy law, leaving no assets to pay her
debts.
href='http://159.54.226.83/apps/pbcs.dll/article?AID=/20060211/STATE/60211031…'>Read
more.
Pension
href='http://159.54.226.83/apps/pbcs.dll/article?AID=/20060211/STATE/60211031…'>
name='10'>House Majority Leader's Views Differ with GOP on Pension
Reform
As Rep. John A. Boehner
(R-Ohio) moves to unite House Republicans, the newly elected House
majority leader will also have to finesse his own views on some key
issues including pension reform, the
size='3'>Washington Post reported yesterday.
He helped pass a business-friendly revision of the private pension
system late last year that included a Boehner-written measure that would
allow major investment companies to provide investment advice to
employees of companies whose retirement plans offer the advisers'
investment products. That provision -- and much of the broader House
bill -- is ardently opposed by a key Republican, Senate Finance
Committee Chairman Charles E. Grassley (
w:st='on'>
size='3'>Iowa
squaring off with the Senate Finance Committee chairman as the House
Education Committee chairman is a far cry from facing Grassley as
majority leader, Armey said. 'Boehner, as education and labor
[chairman], would have lost,' said Richard K. Armey, a retired GOP House
majority leader from
w:st='on'>
size='3'>Texas
as majority leader will likely win.'
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/02/11/AR20060…'>Read
more.
name='11'>Public Pension Plans Turn to Hedge
Funds
Many public pension
funds, like other investors, have turned to hedge-fund managers to boost
returns amid sluggish stock and bond markets, according to the
Arizona Republic
on Sunday. Pension funds in
w:st='on'>
size='3'>Virginia
w:st='on'>
size='3'>Texas
w:st='on'>
Mexico
use hedge funds to manage a portion (usually small) of their
assets.
face='Times New Roman'
size='3'>Arizona
public fund, the Arizona State Retirement System, uses hedge tactics in
moderation. Although
hedge funds have a reputation for being risky, many are highly
conservative, seeking to eke out modest gains regardless of whether
stocks are rising or falling. A key reason hedge funds are growing
popular with pension funds is their ability to diversify away
risk.
href='http://www.azcentral.com/arizonarepublic/business/articles/0212Hedgefun…'>Read
more.
name='12'>Bankruptcy Judge Approves
w:st='on'>
size='3'>Delphi
Bonuses
A federal bankruptcy
court judge in
face='Times New Roman' size='3'>Manhattan
approved a scaled-back version of Delphi Corp.'s
executive bonus plan, overcoming objections from the autoparts
supplier's unions and creditors, the
size='3'>Wall Street Journal reported today.
Judge Robert Drain on Friday approved earnings-linked
bonuses for 466
size='3'>Delphi
the period starting Jan. 1, 2006, and ending June 30, 2006. Judge Drain
said the compensation plan 'puts the debtor in the bottom quarter in
executive compensation with regard to its competitors.' A provision
allowing for non-earnings-based bonuses was cut. In a court filing last
week, the company acknowledged that implementing the full incentive
program now could impair its chances of reaching an agreement with the
union. The latest offer from
face='Times New Roman' size='3'>Delphi
size='3'>offers wages around $25 an hour, and union officials have
countered that a strike is likely if that offer isn't improved.
href='http://online.wsj.com/article/SB113980698978272289.html?mod=us_business…'>Read
more.
name='13'>Bankruptcy an Option for Alaskan Diocese
Bishop Donald Kettler
announced to parishioners Saturday and Sunday that the
w:st='on'>
size='3'>Fairbanks
w:st='on'>
size='3'>Alaska
Diocese may have to consider bankruptcy among other options if the
church loses pending court decisions in sexual abuse lawsuits,
the Fairbanks Daily
News-Miner reported today. 'We know what's
happening in other dioceses, with bankruptcies,' said Anne Aleshire, a
13-year parishioner at St. Raphael Catholic Parish. 'It's not surprising
that that's one of the options.' The 'least desired option,' he said,
would be to file for chapter 11 bankruptcy protection.
href='http://www.news-miner.com/cda/article/print/0,1674,113%257E7244%257E323…'>Read
more.
name='14'>Retailer's Bankruptcy Puts
w:st='on'>
size='3'>Washington
size='3'>Customers in Bind
Hundreds of Levitz
customers are learning difficult lessons about doing business with
companies that go bankrupt after the company filed for bankruptcy in
October in the U.S. Bankruptcy Court for the Southern District of New
York, the Seattle
Times reported today. It estimated that it
owed more than $100 million to creditors and had less than $50,000 in
assets. After it filed, all of its assets were controlled by the
bankruptcy court, and individual customers became some of the retailer's
many creditors. 'You can imagine it's a very large crowd,' said Douglas
Walsh, senior counsel in the
w:st='on'>
size='3'>Washington
Office of the Attorney General's Consumer Protection Division.
href='http://seattletimes.nwsource.com/html/localnews/2002802074_bankruptbiz1…'>Read
more.
name='15'>Commentary: Corporate Accountability Measures Still Not
Effective
With CEOs routinely
taking home hundreds of times what the average worker is paid, whether
or not the company is doing well, the governance system for many
corporations has simply stopped working, according to a
New York Times
editorial on Sunday. United Airlines has emerged from
bankruptcy with a mighty flourish along with an allowance of hundreds of
millions of dollars for its top executives.
w:st='on'>
size='3'>Delphi
bankruptcy, but proposed to the bankruptcy court a payment of well over
$100 million to its top executives to keep them happy while it was in
bankruptcy. Government and courts, especially bankruptcy courts, do
nothing, while employees, stockholders and the whole society are
looted.
href='http://www.nytimes.com/2006/02/12/business/yourmoney/12every.html?pagew…'>Read
more.
name='16'>Enron Trial Pace Slows
The slow pace of the
fraud trial of former Enron Corp. executives Kenneth Lay and Jeffrey
Skilling has been largely because of the defense's lengthy
cross-examination of the government's lead witness, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The questioning of Enron's former
investor-relations chief, Mark Koenig, grinds into a third week starting
today. When the trial began on Jan. 30,
w:st='on'>
size='3'>Judge
face='Times New Roman' size='3'>Sim
size='3'>Lake
prospective jurors that he figured it would last four months or less.
The government has sought to present a quick, straightforward and simple
case: Lay and Skilling allegedly lied and profited from their lies. The
defense has incentive to slow things down to undercut the prosecution's
notion of simplicity, emphasizing the complexity of Enron's operations
and the nuances of the defendants' public statements. The government's
next scheduled witness is Kenneth Rice, a longtime close associate of
Skilling and former head of Enron's once highly touted
telecommunications unit.
href='http://online.wsj.com/article/SB113980347288072253-email.html'>Read
more.
Airlines
name='17'>Bankruptcy Judge to Rule on Northwest's Bid to Void Labor
Pacts
The dispute between
Northwest Airlines and its unionized pilots has potential ramifications
for the entire
w:st='on'>
size='3'>U.S.
size='3'>airline industry as a federal judge nears a crucial ruling this
week in the airline's bankruptcy, the
size='3'>Wall Street Journal reported today.
The carrier's 5,000 pilots are resisting Northwest's bid to increase
contracting with commuter airlines to provide more flights on larger
regional jets with lower-paid pilots, rather than continuing to provide
those services on larger jets flown by Northwest pilots. Northwest's
pilots say they will strike if Judge Allan Gropper
allows the airline to void its labor contract and impose those and other
terms. The issue, unfolding in a bankruptcy court in
w:st='on'>
York
industry's attention partly because a strike by pilots, who aren't
easily replaced, is the kind of event that could force the nation's
fourth-largest airline by traffic to liquidate. If Northwest can hire
regional carriers to fly new, efficient planes in the growing 70- to
90-seat class, other big airlines will be tempted to do the same or more
of it. The carrier has no backup plan for a strike by pilots, other than
vowing to seek a judicial injunction against such a job action. Judge
Gropper is expected to rule by Friday.
href='http://online.wsj.com/article/SB113979669866672105-email.html'>Read
more.
name='18'>Uncertain Future May Force More Airline
Consolidation
As the airline industry
bleeds profits and two major carriers, Delta and Northwest, are in
bankruptcy, experts are predicting a major union in the coming year,
the New Jersey
Star-Ledger reported today. The most likely
scenario would be for Delta and Northwest, which are both in chapter 11
bankruptcy protection, to merge or for another major carrier, such as
Continental, to acquire one of the airlines in bankruptcy, said Philip
Baggaley, a senior analyst with Standard & Poor's, in an interview
after the conference. U.S. Transportation
Secretary Norman Mineta kindled renewed speculation earlier this month
when he publicly mused about whether Delta and Northwest would come out
(of bankruptcy) as a merged carrier. Last year, a similar merger
occurred between US Airways and America West, stunning some industry
observers who had expected US Airways to liquidate rather than emerge
from bankruptcy prepared to take on its old rivals.
href='http://www.nj.com/business/ledger/index.ssf?/base/business-2/1139809173…'>Read
more.
name='19'>Job Cuts and Bankruptcies Affecting
size='3'>
w:st='on'>Ohio
The area's largest industrial
employers in Mahoning, Trumbull and Columbiana (Ohio)
counties,
size='3'>General Motors and Delphi Packard Electric Systems,
have cut thousands of
positions in recent years as workers have retired and not been replaced,
according to the
size='3'>Youngstown Vindicator. WCI Steel
in
size='3'>Warren
making money, but intends to emerge from bankruptcy court protection
with a scaled-down work force. Many companies want to be sure additional
business is going to be there for three to five years before they hire,
said Reid Dulberger, executive vice president of the Mahoning Valley
Regional Chamber. Large cuts at Packard, however, will be felt at many
area businesses that either supply Packard or rely on the spending of
Packard workers.
href='http://www.vindy.com/content/local_regional/287869079166207.php'>Read
more.
International
name='20'>British Pension Funds Seek Bail-Out
Britian’
size='3'>s pensions industry is urging the government to issue up to
£100 billion ($174 billion) of additional long-dated gilts, to
help solve the crisis of low returns affecting many funds, according to
the London Times on Sunday. The National Association of Pension
Funds (NAPF) has written to the Debt Management Office (DMO), which
handles issuance of gilts (
w:st='on'>
size='3'>U.K.
size='3'>government bonds) for the Treasury, calling for urgent action.
According to the letter to the DMO from Chris Hitchen, chairman of the
NAPF’
size='3'>s investment council, there is '
size='3'>a strong possibility that real yields may even turn negative.'
London’s economy is threatened by
poor infrastructure and low skills, a report commissioned by London
First will say this week. It says that London, which contributes nearly
a fifth of Britain’s gross domestic product, needs £4.6 billion
($8 billion) of transport investment over the period of the 2008-11
comprehensive spending review, and an extra £200 million ($348
million) a year in state spending on the 1.5 million Londoners
with low skills.
href='http://www.timesonline.co.uk/article/0,,2095-2036011,00.html'>Read
more.
size='3'>AOL Latin
w:st='on'>
size='3'>America
Seeks Delay On Chapter 11
Plan
Bankrupt AOL Latin
America Inc. has asked a federal court to delay ruling on the
company’s reorganization plan for two months so that the company
can court votes approving the plan from its unsecured creditors,
Portfolio Media
reported on Friday. The extension would allow AOL's Latin
American unit to solicit creditor support for its liquidation plan
without the distraction of alternative plans, the U.S.-based holding
company said in court papers. The proposed chapter 11 reorganization and
liquidation plan, originally scheduled for March 21, promises unsecured
creditors to recover the full
size='3'>amount of their claims if they agree to free AOL and its chief
shareholders from various liabilities, but only 14-17 percent of their
claims if they resist the releases. AOL filed its plan and a
corresponding disclosure statement, describing the plan in lay terms, on
Jan. 17, and hopes to win court approval of the disclosure statement at
a Feb. 23 hearing. The company filed for chapter 11 protection last
June, along with affiliates AOL Management LLC, Puerto Rican Management
Services and AOL Caribbean Basis.
size='3'>If the creditors ok the plan, they would free shareholders AOL
Online, Time Warner Inc. and the Cisneros Group of
w:st='on'>
size='3'>Venezuela
size='3'>, as well as the four creditors, from all liability related to
the filing.