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July 9, 2007
June
Consumer Bankruptcy Filings Increase Nearly 37 Percent over Previous
Year
w:st='on'>
size='3'>U.S.
size='3'>consumer bankruptcy filings increased 37.1 percent nationwide
in June from the previous year, according to the American Bankruptcy
Institute (ABI). Relying on data from the National Bankruptcy Research
Center (NBKRC), overall consumer filings totaled 68,559 in June, nearly
a 2 percent decrease from the 69,684 filings in May. Chapter 13 filings
constituted 38.3 percent of all consumer cases in June, a slight
increase over the previous three months. 'While bankruptcy filings are
up more than 30 percent from the same period last year, they are less
than half of what they were in 2005,' said
size='3'>Samuel J. Gerdano,
w:st='on'>
size='3'>ABI
'However, the underlying concerns of high debt loads are still a
constant, pointing to rising filings in the future.'
href='http://www.abiworld.org/AM/Template.cfm?Section=Monthly_Bankruptcy_Statistics&Template=/MembersOnly.cfm&NavMenuID=3716&ContentID=46994&DirectListComboInd=D'>Click
here to view the June bankruptcy filing statistical
charts.
name='2'>Seventh Circuit Rejects Debtor’s View on
“Hanging Paragraph”
The U.S. Court of Appeals
has weighed in with its view of the so-called “hanging
paragraph” in §1325(a) of BAPCPA, holding in an opinion dated
July 3 that, in the case of a debtor who surrenders a “910
vehicle” worth less than the loan amount, the secured lender is
entitled to an unsecured deficiency judgment for the difference between
the value of the collateral and the balance of the loan. This shortfall
must be paid in the same portion of other unsecured debts in the
debtor’s chapter 13 plan. The case is Wright
v. Santander Consumer USA, No.
07-1483.
href='http://www.ca7.uscourts.gov/tmp/4N0FS4A4.pdf'>Read more.
Dana
Corp. Closer to Getting Out of Bankruptcy
Auto parts maker Dana Corp.
took a huge step Friday toward moving out of bankruptcy, striking a deal
that will free it from paying for health care for retirees, the
Associated Press reported on Friday. The company expects to save more
than $100 million per year by shifting the responsibility of retiree
health care to a union-controlled trust fund and establishing a two-tier
wage system. Dana will put a one-time payment of $800 million into the
trust fund and says retirees and the unions should not need to put any
more money toward the plan. Dana also announced Friday that Centerbridge
Capital Partners will invest $500 million in the company, giving the
investment group up to 25 percent control of Dana. Detroit automakers
are expected to propose a similar fund in national contract talks with
the United Auto Workers that formally begins later this month.
href='http://news.yahoo.com/s/ap/20070706/ap_on_bi_ge/dana_unions_5'>Read
more.
w:st='on'>
name='4'>Indiana
face='Times



New
Roman'
size='3'> Bankruptcy Filings Increase by 70 Percent for First Half
of 2007
w:st='on'>
size='3'>Indiana
size='3'>bankruptcy filings spiked nearly 70 percent in the first half
of this year, a jump experts attribute to a law change that kept 2006
totals artificially low, the Associated Press reported on Saturday.
Southern and central
size='3'>Indiana residents filed 7,694
petitions through the end of June with the U.S. Bankruptcy Court of the
Southern District of Indiana, which covers the state south of
size='3'>Kokomo. That
represents a 68 percent increase from the 4,570 filings recorded last
year. The Northern District of Indiana recorded 5,504 bankruptcy filings
from January to June, a 69 percent increase over last year's total of
3,252. 'The changes in the law have not significantly reduced the number
of Chapter 7 bankruptcy filings,' said Gary Hostetler, bankruptcy
attorney with the
face='Times New Roman'
size='3'>Indianapolis
Hostetler & Kowalik, P.C. 'In 2008 we will go back to the same basic
levels that we were at prior to the law.'
href='http://www.southbendtribune.com/apps/pbcs.dll/article?AID=/20070707/News01/707070318'>Read
more.
Funds Defend InSight Health's Reorganization Plan
InSight is due to go before a
bankruptcy judge Monday in Wilmington, Del., to seek approval of its
prepackaged chapter 11 plan, but U.S. Trustee Kelly Beaudin
Stapleton said that last-minute changes made to the plan hurt
the interests of InSight's shareholders and subordinated debtholders,
the Associated Press reported on Friday. Shareholders would get only 10
percent of the reorganized company, instead of the 13 percent they were
originally promised. Subordinated debtholders would see their stake
diluted by the addition of $15 million in new debt, although that loss
would be offset by an increased equity stake in the company. However, a
group of subordinated debtholders - mainly hedge funds - said in court
papers Thursday that they don't mind the changes and asked a judge to
confirm the chapter 11 plan.
href='http://www.forbes.com/feeds/ap/2007/07/06/ap3890080.html'>Read
more.
href='http://www.forbes.com/feeds/ap/2007/07/06/ap3890080.html'>
name='6'>Claimants Push Speedy Chapter 11 Exit for W.R.
Grace
Groups with
asbestos-related personal injury and property damage claims against W.R.
Grace & Co. Inc. want a judge to deny the company’s
exclusivity extension request,
size='3'>Bankruptcy Law360 reported on Friday.
Future asbestos personal injury claimants, the official asbestos
personal injury claimants’ committee and the official asbestos
property damage claimants’ committee said in court documents filed
Friday that W.R. Grace & Co. Inc.’s motion to further extend
its period of exclusivity to file a reorganization plan should be denied
because the debtors have failed to demonstrate any cause for such an
extension. Grace, which currently has until July 23 to file and solicit
votes on its reorganization plan, has asked the court to push back the
deadline until 90 days after a final order is issued in separate
proceedings to estimate its asbestos liabilities, scheduled to begin in
January 2008.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=28834'>Read
more. (Registration required.)
name='7'>Travelers Pays $365 Million in Asbestos Deal
Still haunted by asbestos
liabilities, the Travelers Cos. Inc. has agreed to pay
face='Times New Roman'>$365 million to put to rest a
longstanding lawsuit brought by bankrupt floor manufacturer ACandS Inc.,
which sought to hold the insurer accountable for billions of dollars in
damages, Bankruptcy
Law360 reported on Friday. The funds will help
finance a $449 million trust that has been set up to help insulation
contractor ACandS finally move out of bankruptcy protection after the
company filed in 2002. In anticipation of the settlement, Travelers
already reserved the money, so the agreement is not expected to affect
its financial results, according to the company. Final approval of the
deal hinges on the bankruptcy court's acceptance of the agreement and
ACandS' reorganization plan, according to Travelers.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=28750'>Read
more. (Registration required.)
Faces Rival Chapter 11 Plan
Bally Total Fitness
Holding Corp. is now facing some stiff competition over its proposed
exit strategy as a shareholder group tries to muscle its way into the
process with a rival restructuring plan of its own,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported on Friday. Led by hedge funds Harbinger Capital
Partners and Liberation Investment Group,
the shareholder group on Friday,urged the embattled fitness
chain to delay its bankruptcy proceedings while unveiling a second plan
for noteholders to consider. Under the alternative proposal, Harbinger
Capital Partners would receive 80 percent ownership of the fitness giant
while shareholders could receive up to 20 percent of a reorganized Bally
Total Fitness, according to a filing with the U.S. Securities &
Exchange Commission.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=28762'>Read
more. (Registration required.)
name='9'>Sanitec Industries Files for Bankruptcy
Sanitec Industries Inc.,
a medical waste disposal firm, filed for chapter 11 bankruptcy in the
U.S. Bankruptcy Court in
w:st='on'>San Fernando
Valley
w:st='on'>
size='3'>Calif.
Associated Press reported on Friday. The company's bankruptcy petition
on Thursday listed assets and debts each of more than $1 million and
less than $100 million. The law firm Patton Boggs was listed as the
holder of the largest unsecured claim against Sanitec, with a $1.6
million claim for legal services. Among others holding large unsecured
claims against Sanitec are: MicroWaste Corp., Intertech Corp., Weston
Benshoof, and Bank of America.
href='http://www.forbes.com/feeds/ap/2007/07/06/ap3890059.html'>Read
more.
name='10'>Increasing Rate of Foreclosures Upsets
w:st='on'>
size='3'>Atlanta
Despite a vibrant local
economy,
face='Times New Roman' size='3'>Atlanta
homeowners are falling behind on mortgage payments and
losing their homes at one of the highest rates in the nation, offering a
troubling glimpse of what experts fear may be in store for other parts
of the country, the New
York Times reported today. A big reason the
fallout is occurring faster here is a
w:st='on'>
size='3'>Georgia
size='3'>law that permits lenders to foreclose on properties more
quickly than in other states. The problems include not just people
losing their homes, but also sharp declines in property values,
particularly in lower-income and working-class neighborhoods. For
example, a three-bedroom house near Turner Field, where the Atlanta
Braves baseball team plays, fetched a high bid late last month of
$134,000 at an auction by the bank that took possession of it, though it
was bought for $330,000 nearly three years ago. While the surge in
foreclosures in other big cities like
face='Times New Roman' size='3'>Cleveland
size='3'>,
size='3'>New Orleans
size='3'>Detroit
local economic challenges,
w:st='on'>
size='3'>Atlanta
closely reflects the nation. Its unemployment rate, 4.9 percent in May,
is low and close to the national average of 4.5 percent.
href='http://www.nytimes.com/2007/07/09/business/09auctions.html?_r=1&hp=&oref=slogin&pagewanted=print'>Read
more.
International
name='11'>U.K.
face='Times New Roman' size='3'>Banks Rein in Risks of Bad
Debt
In the
w:st='on'>
size='3'>United Kingdom
size='3'>, where concern continues to increase about rising levels of
consumer debt and bad mortgages, banks have been having some early
success in reining in many delinquent consumer loans, even as interest
rates rise, the Wall
Street Journal reported today. Barclays PLC,
Lloyds TSB Group PLC and others are becoming tighter with the credit
they give as well as tougher in collecting from customers. Last week,
the Bank of England raised its official bank rate to 5.75 percent from
5.5 percent. At Lloyds, however, finance director Helen Weir says that
if the rate in the United Kingdom increases to 6
percent, 'we can live with that,' but an increase to 6.5 or 7 percent
would reverse the favorable trends of the bank's consumer-loan book. The
rise in the number of consumers needing special debt-workout programs,
called Individual Voluntary Arrangements is slowing,
too. Meanwhile, U.S. banks are expected
to mirror moves by their
face='Times New Roman' size='3'>U.K.
size='3'>counterparts as
w:st='on'>
size='3'>U.S.
size='3'>consumers face a tougher time borrowing amid sharper increases
in interest rates.
href='http://online.wsj.com/article/SB118394344396960533-search.html?KEYWORDS=bankruptcy&COLLECTION=wsjie/6month'>Read
more. (Registration required.)
href='http://online.wsj.com/article/SB118394344396960533-search.html?KEYWORDS=bankruptcy&COLLECTION=wsjie/6month'>