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October 21, 2002
Details of Lame-duck Session Still Unclear, but Packed Agenda
Awaits Members' Return
The Senate late on Thursday followed the House of Representatives and
informally recessed for the Nov. 5 election, which could change party
control of both chambers, Reuters reported. House Members will not relax
for long after the elections before returning to business on Nov. 12 in
what is the beginning of a lame-duck session that could stretch through
Christmas, Roll Call reported. The length of the lame-duck
session remains uncertain, but GOP leaders anticipate it will stretch
into December and possibly as late as Christmas. John Feehery, spokesman
for Speaker Dennis Hastert (R-Ill.), said on Friday the details of the
lame-duck session, including its length and legislative agenda, likely
will be worked on when members return on Nov. 12. But leaders have
already said they expect to remain in session for only one week in
November before recessing and then coming back the following month.
House aides said they do not anticipate the chamber will get to major
legislation until after Thanksgiving. But on the table when they do
return will be appropriations, homeland security reorganization, energy
reform, bankruptcy reform, terrorism insurance and welfare
reauthorization.
Quick Labor Deal is Only Salvation for UAL
Analysts on Friday said it's possible that UAL Corp., parent of United
Airlines, will avoid bankruptcy court by striking a cost-cutting deal
with its labor unions, Dow Jones reported. The company said it's making
progress in ongoing labor negotiations, and that it has held talks with
lenders about short-term borrowing. But given the airlines' discouraging
third-quarter results, a significant deal with union employees, who also
own 51 percent of the company's stock, is essential, analysts said. At
that rate, said analyst Jamie Baker at J.P. Morgan Securities Inc.,
United will run out of money in the first quarter of next year. 'Absent
any meaningful restructuring agreement, we continue to believe that a
chapter 11 filing would likely occur in the fourth quarter.' The
carrier's third-quarter loss narrowed to $889 million, Bloomberg News
reported. UAL said for the first time that it's seeking $5.8 billion in
concessions from employees over 5 1/2 years.
Comdisco to Sell French Unit; Swiss and Austrian Units Sold
Comdisco Holding Co., the computer-services business that emerged from
bankruptcy in
August, agreed to sell its French operations and has found buyers for
its Swiss and Austrian units under a liquidation plan, Bloomberg News
reported. Comdisco, in a statement, said Brussels-based Econocom Group
SA will buy the company's Comdisco
France and Promodata SNC units. Rosemont, Ill.-based Comdisco is selling
assets to
try to pay off $4 billion in debt and expects to liquidate in the next
three years under a chapter 11 bankruptcy reorganization plan. The
company filed for chapter 11 after investing $3 billion in startups that
proved unprofitable or failed to repay loans.
Shaw Seeks Bankruptcy of Xcel Energy Power Project
Shaw Group Inc., a construction contractor seeking payment for work on
an
Xcel Energy Inc. power plant, asked a U.S. Bankruptcy Court in
Mississippi to put the project into liquidation proceedings, Bloomberg
News reported. NRG Energy, Xcel's power-generation unit, has yet to
approve an Aug. 5 agreement to settle the debt by selling the
Mississippi plant to Shaw for $43 million. The company asked the judge
to begin liquidation of the LSP-Pike LLC project under chapter 7 of the
U.S. Bankruptcy Code.
Kmart to Retain Broker to Lease/Sell Former Headquarters
Kmart Corp. is seeking court permission to retain Signature Associates
as its real estate broker in connection with the sale of its leases and
other ownership interests in its former headquarters, the Sheffield
Office Building in Troy, Mich., Dow Jones reported. The company no
longer conducts any operations at the Sheffield Office Building but
leases space there to three tenants who occupy less than half of the
floor space in the building. Chief Judge Susan Pierson Sonderby of the
U.S. Bankruptcy Court in Chicago has scheduled a hearing on Signature's
retention for Oct. 30, with objections due on Oct. 25. The Troy,
Mich.-based company filed for chapter 11 bankruptcy protection on Jan.
22.
Global Crossing Files Amended Plan, Disclosure Statement
Global Crossing Ltd. filed an amended reorganization plan and plan
disclosure statement last week, Dow Jones reported. The disclosure
statement has drawn opposition from several parties, including
bondholder group Pension Benefit Guaranty Corp. and a group of retirees.
The amended disclosure statement provides more details about the
reorganization plan than the first version of the document, which was
filed with the plan on Sept. 16 with the U.S. Bankruptcy Court in
Manhattan.
Under the plan, the company's lenders-whose claims total $2.24
billion-would receive about $305 million in cash, $175 million in new
senior secured notes, 6 percent of the new common stock and 50 percent
of the beneficial interests in a litigation trust to be created to
pursue actions against third parties. At today's hearing, Global
Crossing will ask Judge Robert E. Gerber to extend, for the
second time, its exclusive periods to file a chapter 11 plan and solicit
plan acceptances. The company's senior secured lenders, led by JPMorgan
Chase Bank, opposed the exclusivity extension request, saying that it
would likely take the bankruptcy case into 2003. Bermuda-based Global
Crossing filed for chapter 11 bankruptcy protection on Jan. 28, listing
assets of $22.4 billion and debts of $12.4 billion.
Vision Metals Wins Approval of $3 Million Sale of Michigan Steel
Mill
Vision Metals Inc. on Friday won approval of the $3 million sale of its
Michigan Specialty Tube steel mill to Michigan Seamless Acquisition LLC,
Dow Jones reported. The net proceeds of the sale will be used to repay a
portion of amounts owed to the debtor's secured lenders, according to
the terms of the order signed by Judge Mary F. Walrath of the U.S.
Bankruptcy Court in Wilmington. Along with the $3 million cash purchase
price, Michigan Seamless is also assuming various liabilities, according
to court documents. The sale is expected to close later this month. The
sale puts to end a volatile sale process. In February, Judge Walrath
said she would convert Vision Metals' chapter 11 case to a chapter 7
case if the company was unable to find a purchaser for the Michigan
steel mill and its Texas steel mill. Vision Metals received similar
warnings in March and April. The company avoided a conversion to chapter
7 when it inked a deal to sell the Michigan mill to R&K Holdings
Inc. for $3.8 million in May. The R&K deal eventually fell through.
Shortly after, Michigan Seamless submitted the $3 million offer. Vision
Metals filed for bankruptcy on Nov. 14, 2000, along with its parent
company, Vision Metals Holding Inc., listing assets of $67 million and
debts of $74.5 million.
Examiner to Review American Classic's Creditor Treatment
A bankruptcy court on Friday appointed a special examiner to investigate
whether American Classic Voyages Co.'s treatment of customer claims in
its chapter 11 liquidation plan is fair and reasonable, Dow Jones
reported. The debtor and its committee of unsecured creditors asked the
court to appoint the examiner to have an objective party review the
treatment to 'avoid even a hint of impropriety and to ensure that the
settlement is fair and reasonable to the creditors,' American Classic
said in its motion. The customer claimants assert more than $10 million
in claims, the newswire reported. The customers want to be reimbursed
funds they paid in advance to book reservations on American Classic's
cruise ships for trips that never took place, because of the company's
chapter 11 bankruptcy filing, according to court documents. Under the
terms of the order signed by Judge Jerry W. Venters of the U.S.
Bankruptcy Court in Wilmington, the office of the U.S. Trustee will
appoint the examiner later this month. The examiner will likely be a
local bankruptcy attorney, said Josef S. Athanas, an attorney with
Latham & Watkins, the firm representing American Classic. On Oct.
19, 2001, the company filed for chapter 11 protection, listing assets of
$37.4 million and liabilities of $452.8 million. Nineteen subsidiaries
filed for chapter 11 protection on Oct. 22. American Classic Voyages has
seven subsidiaries that haven't filed for bankruptcy.
Retailers Head to Clouded Holiday Season
U.S. retailers are heading for the make-or-break holiday shopping
season, facing a struggling economy, consumers who are skittish about
job security and the possibility of a war with Iraq, Reuters reported.
As a consequence, the holidays could be less than festive for retailers,
which book the majority of their profits in the fourth quarter.
Lackluster sales could push some retailers over the brink into
bankruptcy and further drag down the U.S. economy. With the U.S. holiday
shopping season shaping up to be mediocre at best this year, the big
question is not whether stores will run out of PlayStations, but which
of the once mighty may fall.
ITC-DeltaCom to Emerge from Bankruptcy This Month
ITC-DeltaCom Inc. said on Friday its proposed reorganization plan was
confirmed by the U.S. Bankruptcy Court in Delaware, allowing the
provider of telecommunications and technology solutions to emerge from
bankruptcy protection later this month, Reuters reported. The West
Point, Ga.-based company said the court's confirmation follows
acceptance of the plan by more than 99 percent of the senior note
holders, all of the convertible note holders and more than 98 percent of
the shareholders voting on the plan. ITC-DeltaCom filed for
reorganization on June 25. 'The pre-negotiated reorganization plan filed
by our holding company and now confirmed by the court will allow our
quick emergence as a free cash flow positive business,' ITC-DeltaCom
Chief Executive Larry Williams said in a statement. The reorganization
plan eliminates $515 million in senior note and convertible subordinated
note debt, and provides for a $30 million preferred equity financing to
further strengthen its balance sheet. ITC-DeltaCom's operating
companies-ITC-DeltaCom Communications Inc. and Interstate FiberNet
Inc.-were not included in the court-supervised proceeding and have
continued to operate in the ordinary course of business throughout the
restructuring process.
Trustee Wants Napster to Use Cash Collateral to Pay Staff
The U.S. Trustee overseeing the Napster Inc. chapter 11 case is asking
the court to allow the company to use a limited amount of cash
collateral to pay employee expenses, reported Dow Jones. Court papers
said the trustee has reached an agreement with Bertelsmann AG that would
allow the former music exchange company to use a limited amount of cash
collateral, the newswire reported. A hearing on the issue is scheduled
for Oct. 21 in the U.S. Bankruptcy Court in Wilmington, Del. Objections
are due Friday.
Under the Bertelsmann DIP, Napster also gained consent to use cash
collateral, but on Sept. 4, the bankruptcy court turned down the
Napster's sale to Bertelsmann and the DIP loan commitment was
terminated, Dow Jones reported. Under the Trustee's request, Napster
would be able to use cash collateral to pay employees for accrued and
unpaid vacation and other paid time off in an amount not to exceed
$64,000, court papers said. Napster would also be able to cover general
expenses up to $70,000 and make a payment to employee Carolyn Jensen for
salary and wages up to $40,000. In consideration for Bertelsmann's
concession, the trustee proposed that Napster, the official committee of
unsecured creditors, music publishers and the recording companies
forever give up their right from asserting court actions against
Bertelsmann, its employees and units, the newswire reported. The company
filed for chapter 11 bankruptcy protection on June 3, listing assets of
$7.9 million and liabilities of $101 million as of April 30.
Farmland Eliminates Top Job at Its Biggest Unit to Cut Costs
Farmland Industries Inc. fired the president of its biggest business as
the largest U.S. farm cooperative seeks to cut costs and reorganize
under bankruptcy protection, Bloomberg News reported. Kansas City,
Mo.-based Farmland filed for protection from its creditors in bankruptcy
court on May 31 after widening losses in its second-largest business,
fertilizer production, left it unable to service $1.5 billion in debt.
The cooperative put its fertilizer division up for sale last month.
There is no plan to sell the refrigerated foods business, the
cooperative's largest based on assets, reported Bloomberg News. Farmland
has until Nov. 27 to file a reorganization plan with the U.S. Bankruptcy
Court in Kansas City. Farmland's main lender, Deutsche Bank AG, last
month said continuing losses at the cooperative will prevent unsecured
creditors from collecting all of the $907 million they are owed,
according to a court filing.
U.S. Lead Smelter Operator Reaches Deal to Avert Bankruptcy
The company that operates the nation's largest lead smelter, which was
blamed for exposing scores of children to dangerous lead levels, said it
has reached a deal to avert bankruptcy, Dow Jones reported. Doe Run Co.
had become so cash-strapped that it recently scaled back a cleanup of
yards and homes in Herculaneum, ordered by the government after soil
tests found dangerous lead levels. On Friday, the St. Louis-based
company said it reached an agreement with creditors that would pare its
debt. In February, state health officials called lead levels in children
living near the smelter 'an urgent public health hazard' after more than
a quarter of them were found to have too much lead in their blood. Under
the deal announced on Friday, Doe Run must use proceeds from any asset
sales of at least $20 million to pay off debts. Bondholders also get
options to buy up to 40 percent of Doe Run's common stock.
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