href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='http://www.abiworld.org/AM/Images/headlines/headline.gif'>
December 7, 2006
name='1'>BAPCPA Defenders, Critics Reprise Roles at Senate
Hearing
Wednesday's oversight
hearing before the Senate Subcommittee on Courts on the first- year
experience under BAPCPA gave the new law's defenders and opponents
another chance to renew their familiar arguments. Sens. Jeff
Sessions (R-Ala.) and Chuck Grassley (R-Iowa) interpreted the sharp drop
in filings this year and the slight increase in chapter 13s as signs
that the law is working as Congress intended. This view was shared
by Clifford White, Acting Director of the U.S. Trustee program, who
pronounced the reforms 'workable,' though he acknowledged that it was
too early to assess the long-term effects of the law. White
applauded the 'new tools' permitted by BAPCPA to continue the DOJ's
efforts to prosecute fraud and abuse, which he said had returned more
than $878 million to the bankruptcy system. He termed the means
test as a 'useful screen' to increase transparency in the consumer
bankruptcy system, while providing enough discretion to allow the vast
majority of consumer debtors to still be eligible for relief under
chapter 7. As for the law's mandate of credit counseling before filing,
the consensus of witnesses is that there is adequate capacity in the
industry for now, but the requirement could be a problem in the future
if more people attempt to file or the ability to pay the counseling fee
is not adjusted upward to a level where the providers can at least break
even on their costs. Critics of the law, such as Judge
face='Times New Roman' size='3'>Randy Newsome (N.D.
Calif.), asserted that the law 'can't change economic reality of high
debts' and that higher filing rates will soon return. Prof.
Bob Lawless of
the
w:st='on'>University
w:st='on'>Illinois
'promised benefits haven't been realized' in that interest rates on
credit cards haven't fallen, while late fees and sharp credit card
practices continue to rise. Sen. Charles Schumer (D-N.Y.)
characterized the law as a 'too blunt instrument' to address problems in
the bankruptcy system. Read the
available
href='http://judiciary.senate.gov/hearing.cfm?id=2442'>witness
statements.
href='http://www.abiworld.org/pdfs/OneYearProgramTranscript.pdf'>Click
here to read the statement ABI provided to the
subcommittee in the form of the transcript from its comprehensive Oct.
16 program on the One-Year Anniversary of BAPCPA.
Clears Bankruptcy “Tithing” Bill for White
House
The House of
Representatives passed S. 4044, the “Religious Liberty and
Charitable Donation Clarification Act,” by a voice vote on
Wednesday. The bill, sponsored by Sen. Orrin
Hatch (R-Utah), had previously passed the Senate and is now ready
for enactment. The bill overturns a
bankruptcy case from the Northern District of New York (
face='Times









New
Roman' size='3'>In re DiAgostino) from earlier
this year which held that under BAPCPA, above-median income chapter 13
debtors could not make “continued charitable deductions”
from CMI, where the plan did not devote all of their projected monthly
income to plan payments. IRS guidelines do
not allow such payments under the “other necessary expense”
provisions so as to make them eligible for deduction.
size='3'>The opinion, based on a literal reading of the new law and IRS
regulations, triggered an immediate and loud response from some
religious groups and charities. The new
legislation is designed to allow above-median debtors to continue to
make such donations.
href='http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=109_cong_bills&docid=f:s4044rfh.txt.pdf'>Click
here to read S. 4044.
Cost
of Solutia's Bankruptcy Passes $120 Million
U.S. Bankruptcy Judge
Prudence Carter Beatty approved over $17
million in fees and expenses for Solutia’s bankruptcy proceedings
incurred between April 1 and July 31, bringing the total cost of
Solutia's bankruptcy up to approximately $123 million,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Debtor counsel Kirkland & Ellis LLP
will receive the lion’s share of the recently approved $17 million
payout, having requested more than $7.4 million in fees and expenses.
That $7.4 million raises the total amount of fees the firm has charged
the debtors for bankruptcy work to over $27 million, in addition to more
than $1.2 million in expenses. Kirkland & Ellis has been working on
the case since Feb. 3, 2005.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=14585'>Read
more . (Registration required.)
Approves Calpine's Extension Request
U.S. Bankruptcy
Judge Burton
Lifland approved Calpine Corp.'s request for
six more months of exclusively to file its reorganization plan, although
the company has said the extension may not provide enough time,
Bankruptcy Law360
reported yesterday. Last month, Calpine requested the
extension, saying that the complexity of the case, which involves 274
debtors and $18 billion of funded debt, warranted an extension of the
exclusivity cut-off date. The company now has until June 20 to file a
reorganization plan, with creditor support due on Aug. 20.
Calpine’s exclusivity period would have ended Dec. 31.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=14585'>Read
more. (Registration required.)
name='5'>Commentary: Settlement Might be Close in
w:st='on'>
size='3'>Portland
Bankruptcy
The Archdiocese of
Portland (Ore.) is looking toward joining the Archdiocese of Tucson
(Ariz) in closing the book on its bankruptcy proceedings, according to a
commentary today in the
size='3'>Oregonian. Both sides are under a gag
order and cannot disclose activity of the proceedings, but a recent
pretrial conference for the $135 million lawsuit that sent the Portland
Archdiocese into bankruptcy 29 months ago was ignored by both the
plantiff and defendant’s counsel, and three routine hearings have
been canceled, making it appear that both sides are putting the
finishing touches on a settlement.
size='3'>Multimillion-dollar settlements involving allegations of sex
abuse by priests have cost the Roman Catholic Church more than $1.5
billion since 1950, including the $60 million payout announced last
Friday by the Los Angeles Archdiocese, the nation's largest.
href='http://www.oregonlive.com/news/oregonian/steve_duin/index.ssf?/base/news/1165460105118250.xml&coll=7&thispage=1'>Read
more .
Airlines
name='6'>Delta Wants Permission to Sell Aircraft
Delta Air Lines Inc.,
which is operating under bankruptcy protection, asked for court
permission late Wednesday to sell certain Boeing aircraft and acquire
others that are either smaller or have longer ranges as it cuts domestic
flights and increases international ones, the Associated Press reported
yesterday. The Atlanta-based carrier also is seeking the release of $115
million in a blocked account that's being held as collateral as part of
certain aircraft agreements. A hearing on Delta's motion to approve the
deal is scheduled for Dec. 20 in U.S. Bankruptcy Court in
size='3'>New York
company has asked that the financial terms of the deal be filed under
seal.
href='http://www.nytimes.com/aponline/business/AP-Delta-Bankruptcy.html?pagewanted=print'>Read
more .
name='7'>Airline Chiefs Press Congress on USAirways Merger
Bid
Chief executives of Delta Air
Lines Inc. and US Airways Group Inc. pressed Congress on Wednesday on
their opposing views on merging their companies, Reuters reported
yesterday. Doug Parker of US Airways met with incoming Democratic House
Transportation Committee Chairman James Oberstar (D-Minn.), who also
held discussions with Gerald Grinstein of Delta about US Airway's $8.6
billion hostile bid.Oberstar has said he may hold hearings if the two
sides agree to merge. Opposition by key lawmakers, concerned about
shrinking competition and the impact of mergers on consumers, helped
scuttle the proposed marriage of US Airways and United Airlines in 2001.
Delta opposes the bid by the smaller US Airways, which reached out to
its bankrupt rival's creditors last month with the surprise
offer.
href='http://www.nytimes.com/reuters/business/business-delta-usair-merger.html?pagewanted=print'>Read
more .
In related news, the leader of
the pilots union at Delta Air Lines Inc. said Wednesday that he opposed
a US Airways Group proposal to take over Delta, warning that about 1,000
Delta pilots would lose their jobs, Reuters reported yesterday. Lee
Moak, the leader of the Delta chapter of the Air Line Pilots
Association, said if US Airways' $8.7 billion takeover of Delta
succeeds, it would mean that 'several thousand employees' would lose
their jobs at Delta overall. The pilots union, on the nine-member
official committee of Delta unsecured creditors, is the first Delta
creditor to publicly oppose the bid since US Airways made a presentation
to Delta and the committee last week. The union represents about 6,500
pilots and holds $2.1 billion in claims against Delta, which has been
operating under bankruptcy protection since September 2005. Delta has
some 47,000 employees overall.
href='http://money.cnn.com/2006/12/06/news/companies/bc.delta.usair.pilots.reut/index.htm?section=money_email_alerts'>Read
more.
name='8'>Singer Retains Right to Name in Bankruptcy
Proceeding
Chart-topping 1960s
performer Jay Black of the group Jay and the Americans won a legal
battle in his bankruptcy case this week for the right to perform under
his stage name after lawyers suggested it be auctioned off to help pay
his creditors, the Associated Press reported yesterday. Black owed
$500,000 in back taxes due to a gambling addiction that plunged him
into debt. He filed for bankruptcy protection in U.S. Bankruptcy Court
in
size='3'>Central Islip
Black said he's conquered his habit, is free of debt and is eager to
start performing again under his stage name.
href='http://ny.metro.us/metro/local/ap/NY_Singers_Bankruptcy.html'>Read
more.
Ford
Gets More Financial Flexibility
Ford Motor Co. has added
as much as $5 billion more to its $18 billion financing package, gaining
even more flexibility to restructure its loss-plagued North American
operations, the Wall
Street Journal reported today. However, the
move to increase the package will add significantly more debt to
the
size='3'>Mich.
balance sheet. Ford, which carries a high-yield credit rating, said in a
filing with the Securities and Exchange Commission that it will increase
an $8 billion revolving credit facility to between $10.5 billion and
$11.5 billion, underscoring Wall Street's appetite for riskier debt. The
credit facility is backed by North American assets. To expand it, the
company must pay down borrowings under a $7 billion term loan it agreed
to last month or pledge its 33 percent stake in Mazda Motor Corp.
of
face='Times New























Roman'
href='http://online.wsj.com/article/SB116543513156742550.html?mod=home_whats_news_us'>Read
more . (Registration required.)
name='10'>Credit Managers Daily Business News
Report
1000’s of companies lose
money or experience some form of difficulty each
quarter.
Below are just a few of these
companies, taken from the latest Daily e-Summary of
Financially-Challenged U.S. Companies.
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.
Receive an ABI
member’s discount of 50% off the $500 annual subscription
fee. Indicate “ABI CODE 27” in
your email.
size='3'>Bandag Inc., a
w:st='on'>
size='3'>Muscatine
w:st='on'>Iowa
maker of retread tires and related materials and
equipment, entered into an agreement to be acquired by Bridgestone
Americas Holding Inc., a unit of
w:st='on'>
size='3'>Japan
Bridgestone Corp., for just over $1 billion.
size='3'>Recently, Bandag has been cutting back its operations, partly
by streamlining its international operations through job cuts in Europe
and
face='Times New Roman'
size='3'>Canada
size='3'>and freezing some pension plans. In 2005, Bandag reported sales
of $915 million.
size='3'>Eden Bioscience Corp., a
Bothell,
face='Times New Roman' size='3'>Wash.
crop biotechnology company, said that it will
'substantially' cut its workforce by the end of the year as part of a
restructuring aimed at cutting costs by $1.4 million annually. The firm
will also sell a large chunk of its assets to Plant Health Care Inc.
of
size='3'>Pittsburgh,
w:st='on'>
size='3'>Pa.
million. In its third quarter,
w:st='on'>
size='3'>Eden
million, following a loss of $5.6 million in its second quarter, during
which it announced that it was looking into strategic
alternatives.
size='3'>Ford Motor Co.,
w:st='on'>
size='3'>Dearborn
w:st='on'>
size='3'>Mich.
no trouble selling its recently announced $3 billion convertible debt
offering, according to analysts, since the favorable terms of the
offering will likely encourage investors despite the speculative ratings
on the notes involved. Convertible debt is a kind of security that pays
interest but that can be later converted into shares of the company if
certain conditions are met. The convertible
debt offering is part of a Ford refinancing package that also calls for
an $8 billion credit facility and a $7 billion term loan to help it
through a wrenching restructuring of its automotive operations in
size='3'>North America
size='3'>.
size='3'>Gap Inc., after two and half years of
flagging results, is still having a hard time finding the right formula
to revive sales. While the
w:st='on'>
size='3'>, Ca. apparel retailer has tried partnering with designers to
spiff up the fashions on its racks for the holiday season, the company
apparently failed to adequately advertise, neglecting to publicize the
name brands in its windows, inside its stores or even on the designer
clothing itself. Observers are criticizing
the retailer, with one analyst saying that Gap 'already blew' the
holiday season and another saying that many have lost confidence in
Gap's management's ability to hit the right product and strategy. Gap,
which has seen same-store sales decline in twenty-seven of the last
thirty months, will likely see its fiscal profit decline for the second
straight year, according to analysts, as it discounts merchandise in
order to move inventory. Gap operates the Gap, Old Navy and Banana
Republic chains.
size='3'>Handleman Co., a
w:st='on'>
size='3'>Troy
distributor, reported a second quarter net loss of $14.2 million,
including an operating loss of $14.2 million. Revenue rose 9%--to more
than $330 million.
size='3'>Wilsons The Leather Experts Inc.,
a
size='3'>Brooklyn Park,
size='3'>Minn.
men's and women's leather outerwear and accessories, reported that its
same-store sales plummeted 19.1% for the four weeks ended 11/26. Total
sales for the period were down more than 23%--to $31.6
million.