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Hatch to Hold Hearing on Asbestos Litigation Tomorrow
Senate Judiciary Chairman Orrin Hatch (R-Utah) will convene a Tuesday
hearing to consider legislation he introduced aimed at reforming the
litigation system for asbestos-related injuries, CongressDaily
reported. Democrats key to the success of the legislation, some of whom
had withheld their full backing of the bill, are planning to suggest
changes to the legislation. Democrats and Republicans alike are hoping
to hammer out a bill that will pass the Senate, with the goal of finally
resolving the asbestos-litigation 'crisis' that both sides agree has
forced companies into bankruptcy and prevented the truly sick from being
compensated, reported the newswire.
Consumers Falter, But Factories Perk Up
Consumer spending faltered while incomes were flat in April, government
figures showed on Friday, raising worries that Americans may be
hunkering down and hurting the economy's most crucial source of growth,
Reuters reported. But other reports provided hope that the economy may
be pulling out of its current 'soft patch.' Consumer sentiment bounced
to its highest level in nearly a year in May, while a closely watched
gauge of Chicago-area manufacturing showed growth in May for the first
time in three months. That upbeat news gave stocks a boost heading into
the weekend, with the Dow Jones industrial average rising 1.7 percent,
while the benchmark 10-year Treasury yield, which moves opposite to
price, rose to 3.41 percent, reported the newswire.
Penn Traffic Files for Bankruptcy
Penn Traffic Co. a regional grocer squeezed by competition and rising
business expenses, said on Friday it has filed for voluntary chapter 11
bankruptcy protection and its chief financial officer has resigned for
personal reasons, Reuters reported. The Syracuse, N.Y.-based retailer,
with more than 200 stores, said it has secured a commitment of $270
million senior secured debtor-in-possession financing from Fleet Capital
Corp. and a syndicate of lenders that served the company prior to its
filing. Penn Traffic, which first unveiled plans to consider a possible
chapter 11 filing on May 20, listed $736.5 million of assets and the
same amount of debts in its bankruptcy petition filed in the U.S.
Bankruptcy Court for the Southern District of New York in White Plains.
'The chapter 11 filing will give us the flexibility we need to address
the financial and operational challenges that have hampered our
performance,' Penn Traffic President and CEO Joseph Fisher said in a
statement, reported the newswire.
Conseco Loses Bid to Have Bankruptcy Judge Confirm Trump
Ruling
A bankruptcy judge in Chicago declined to confirm an arbitration panel's
order that real estate developer Donald Trump sell his stake in
Manhattan's General Motors building to bankrupt Conseco Inc., ruling
that the case should go to a New York court, Bloomberg News reported. A
three-member arbitration panel in New York said on Wednesday that Trump
should sell his stake to Carmel, Ind.-based Conseco for $15.6 million.
Trump had wanted to buy out Conseco's stake in the building, and the
parties had disputed the cost. Trump on Thursday filed papers asking a
New York state court to throw out the arbitration award. U.S. Bankruptcy
Judge Carol Doyle declined Conseco's request to confirm the panel
decision, saying the case belongs in the New York court. 'I think any
court that would get this case would treat this as an emergency
matter,'' Doyle said, speaking to Conseco's concern that it wants the
matter resolved quickly. Conseco hopes to complete its bankruptcy
reorganization by July, reported the newswire.
Armstrong Wins Permission to Seek Votes on Reorganization
Plan
Armstrong World Industries Inc. won court permission to seek creditors'
support for its bankruptcy recovery plan, putting the company closer to
resolving its asbestos litigation, Bloomberg News reported. Under the
plan, the company will create a $1.8 billion trust to settle
individuals' claims that exposure to asbestos in Armstrong products made
them ill. U.S. Bankruptcy Judge Randall Newsome granted
permission to send to plan to creditors at a hearing in Wilmington, Del.
The company said it plans to seek final approval in November. Armstrong
filed for bankruptcy protection in December 2000, after facing an
onslaught of asbestos suits by former workers seeking compensation for
health problems linked to the carcinogen. Similar suits have forced more
than 60 companies, including W.R. Grace & Co., into bankruptcy since
1982. To deal with the suits, Armstrong and companies including
Federal-Mogul Corp. have sought to create trusts to pay the claims,
reported the newswire.
Memo Details Brobeck's Future Fees
As they face suits from creditors and try to squelch rumors that the
firm will file for bankruptcy, Brobeck, Phleger & Harrison's former
partners are counting on at least $13 million in fees from clients of
the now-defunct firm -- including $10 million expected in October from
Tickets.com, law.com reported. In a February memo to Citibank,
former Brobeck partner Stephen Snyder outlined fee revenue Brobeck
anticipated receiving through Dec. 31. But former Brobeck partner
Franklin 'Brock' Gowdy, who previously represented Tickets.com, said he
thought the firm's fee agreement with Tickets.com was 'still considered
to be a contingent asset of Brobeck in liquidation.'
Law.com reported that ex-employees have been speculating
online that the firm would soon seek bankruptcy protection. But the
lawyer for the firm's liquidation committee says that's not true.
Kenneth Brown, a partner at Pachulski, Stang, Ziehl, Young, Jones &
Weintraub who represents the liquidation committee, called The Recorder
to say the speculation was unfounded after learning a reporter was
asking former Brobeck partners about the possibility of a bankruptcy
filing. 'At the present time there's no intention of filing a
bankruptcy,' Brown said, nor does the committee intend to file an
assignment for the benefit of creditors. To read the full story, point
your browser to
href='http://www.law.com/jsp/pubarticleCA.jsp?id=1052440817492'>http://www.law.com/jsp/pubarticleCA.jsp?id=1052440817492.
GLOBAL CROSSING
Global Crossing Posts Narrower Loss in April
Bankrupt telecommunications company Global Crossing Ltd. on Friday
posted a narrower monthly net loss in April compared with March even
though revenue fell slightly, Reuters reported. The Florham Park,
N.J.-based company said its net loss for April was $75 million compared
with $89 million in March. Its revenue for the month fell slightly to
$228 million from $231 million in March. It ended the month with a cash
balance of $584 million. Global Crossing filed for bankruptcy protection
in January 2002 with $12.4 billion in debt and $22.4 billion in assets,
reported the newswire.
Icahn's XO Makes Bid for Global Crossing
XO Communications Inc., the telecommunications company controlled by
billionaire investor Carl Icahn, said on Friday it has offered more than
$700 million to acquire bankrupt high-speed communications company
Global Crossing Ltd., Bloomberg News reported. Singapore Technologies
Telemedia already has an agreement to pay $250 million for a
61.5-percent stake in Global Crossing, which filed for bankruptcy
protection in January 2002 under a massive debt load and slack demand
for high-speed network services. XO said its $700 million offer is
comprised of $250 million in cash, as well as secured debt, junior
preferred stock and warrants. The company said its offer would increase
the proceeds available to Global Crossing creditors by more than $100
million, reported the newswire.
ST Telemedia Has Binding Deal on Global X
Singapore Technologies Telemedia has a binding contract to buy Global
Crossing Ltd. that forbids the bankrupt telecom firm from considering an
offer from investor Carl Icahn, a source close to the deal said on
Monday, Reuters reported. In the purchase agreement that Global Crossing
filed with the U.S. Bankruptcy Court in New York in August last year,
there is a 'non-solicitation clause' that forbids Global Crossing from
soliciting any other offer or proposal, the source added. 'ST Telemedia
is proceeding ahead to get regulatory approval for the deal, which they
hope to close before the end of the year,' the source said, reported the
newswire. Global Crossing filed for bankruptcy protection in January
2002 under a massive debt load, a glut of high-speed network capacity
and slim demand.
Malden Mills Post-bankruptcy Plan Looks to Asia
Malden Mills Industries Inc. expects to post a $10 million profit in its
first full year out of bankruptcy protection as the company tries to
reverse years of declining sales in Asia for its Polartec fleece,
recently filed financial projections show, Reuters reported. Malden
Mills expects to emerge from chapter 11 bankruptcy protection sometime
this summer under a reorganization plan supported by a creditor group
that includes General Electric Co.'s finance arm, according to the
newswire. While a majority of the company's Polartec fleece will be made
at its hometown plant in Lawrence, Mass., an increasing amount of
production will take place in Shanghai, China. The company expects to
earn $9.78 million on net sales approaching 178 million in fiscal 2004,
which begins Nov. 1. A loss of nearly $9 million is forecast for fiscal
2003, reported the newswire.
NextWave, Clarity Seek Pact for Spectrum Deals
NextWave Telecom Inc. on Friday sought bankruptcy court permission to
forge a partnership with venture capital firm Clarity Partners LP to
explore the purchase of up to $150 million in new wireless airwaves
capable of handling new generation services, Reuters reported. NextWave,
which is in talks to sell about 20 percent of its wireless airwaves to
Cingular Wireless, said it has been actively mulling the purchase of
other airwaves that would complement its existing holdings, and make
easier its plans to deploy a nationwide broadband wireless service.
NextWave, which is operating under bankruptcy protection and recently
won a court battle to keep its wireless licenses, said it has studied
several alternatives that would allow it to efficiently use their
spectrum licenses, 'including selling, leasing or swapping some of their
spectrum, and possibly supplementing their licenses with the acquisition
of complementary spectrum,' reported the newswire. Beverly Hills,
Calif.-based Clarity is a private equity firm focused exclusively on
investments in the communications and media industries.
Mirant Gets Extension on Bank Loan Waivers
Mirant Corp on Friday said its bank lenders have extended the power
company's loan waivers for the second time, to July 14, an announcement
that boosted its stock by as much as 5 percent, Reuters reported. The
Atlanta, Ga.-based company, which has $1.125 billion in debt due in
mid-July, said it continues to be in discussions with its creditors to
refinance $5.3 billion of debt, a refinancing that could avert a
bankruptcy filing. Earlier this year, Mirant hired Blackstone Group to
advise it on restructuring its estimated $8.6 billion debt load. Mirant
has struggled with an industrywide cash crunch since the collapse of
energy trader Enron Corp. and earlier this month missed a deadline to
file its quarterly report with regulators because of delays caused by a
recent reaudit, reported the newswire.
Air Canada, Pilots Pressured to Cut Deal
A court-appointed monitor of Air Canada's bankruptcy restructuring says
the airline and its pilots union must agree on cost-cutting concessions
to help restore solvency, the Associated Press reported. Lawyers for Air
Canada and the Air Canada Pilots Association appeared before Justice
James Farley on Friday to report on the impasse three days after a
deadline for agreements between the airline and its unions. A lawyer
representing the pilots association, the only one of nine Air Canada
unions yet to accept a tentative cost-cutting agreement, said on
Thursday that the group representing more than 3,000 pilots still was
willing to negotiate. Pilot association lawyer Richard Jones said the
pilots would accept some concessions, but were being asked to provide 31
percent of the cost cuts when they comprise only 10 percent of the
workforce, reported the newswire.
Judge Rules Farmland Can Strip Benefits
Bankrupt Farmland Industries Inc. can strip away millions of dollars
worth of benefits for former executives, but cannot touch life insurance
for 2,200 retired workers, a judge has ruled, the Associated Press
reported. Farmland, which was weighing whether to challenge U.S.
Bankruptcy Judge Jerry Venters' ruling, sought to eliminate the benefits
as part of its effort to reorganize under bankruptcy court protection.
Venters ruled late on Wednesday that retiree insurance policies are
protected while the company is in bankruptcy, although Farmland could
cancel the insurance policies and other retiree benefits after a
reorganization plan is approved. The judge granted Farmland's request to
stop payment on about $2 million due to former CEOs Harry Cleberg and
Bob Honse and two other former Farmland executives. The money was part
of the separation packages they were to receive when leaving the
company, AP reported.
Venters said Farmland also could reclassify almost $17 million in
deferred compensation and retirement adjustment payments owed to 138
current and former professional-level employees. Cleberg is owed about
$2.8 million under the deferred compensation program, which is money
employees chose to receive at a later date for tax reasons. If the
program is canceled, those former employees become unsecured creditors,
reported the newswire.
FiNet.com and Monument Mortgage Announce Plan to Reorganize Under
Chapter 11
FiNet.com Inc. and its wholly owned subsidiary Monument Mortgage Inc.
filed voluntary petitions on May 28 for reorganization under chapter 11
of the U. S. Bankruptcy Code with the U. S. Bankruptcy Court in San
Francisco, Calif., the company announced in a press release. The
protection of chapter 11 allows the companies to reorganize their
business operations and finances. The companies plan to use existing
cash, revenue generated from certain business activities, the sale of
certain assets, and post-petition financing to finance operations and
seek business relationships that will enable them to benefit from their
mortgage assets.
FiNet.com Inc. also announced the appointment of Harry R. Kraatz as CEO
and Chairman of the Board of Directors. Kraatz, who has assisted the
companies for the past few weeks as their Chief Restructuring Officer
replaces L. Daniel Rawitch as Chairman and CEO.
United, US Airways Contract Out Maintenance, Pressuring
Rivals
United Airlines and US Airways Group Inc. are turning over more aircraft
maintenance work to outside contractors to reduce costs, moves that may
pressure rivals to cut expenses to remain competitive, Bloomberg News
reported. United has closed two maintenance centers and says it will
save $75 million a year by increasing the use of outside companies. US
Airways has shut down a maintenance center and hired General Electric
Co. to do most engine work. U.S. airlines need to reduce costs after a
record loss of $11.3 billion last year and continued losses this year
amid a persistent travel slump, reported the newswire.
WestPoint Stevens Declares Bankruptcy
WestPoint Stevens Inc., which makes Ralph Lauren Home and Martha Stewart
bedding and bath products, sought bankruptcy protection to reorganize
more than $2.1 billion in debt and survive three straight money-losing
years, Bloomberg News reported. The company, which has about 15,000
workers, has been shifting production to lower-cost areas of the United
States or buying from overseas while posting more than $103 million in
total losses since 2001. The company said in April it would shut two
plants and a distribution center by June 28 and fire about 320 workers
to cut costs, Bloomberg News reported. The WestPoint, Ga.-based company,
which also operates retail outlets, joins dozens of clothing and fabric
makers that have filed for bankruptcy protection in the past several
years, including Burlington Industries Inc., Fruit of the Loom Inc. and
Pillowtex Corp. Textile makers, already weakened from years of battling
lower-cost imports, have been among the hardest hit by the U.S. economic
slowdown, analysts say, reported the newswire. WestPoint Stevens listed
$1.33 billion in assets and $2.16 billion in debt in chapter 11 papers
filed Sunday in the U.S. Bankruptcy Court in Manhattan.
Halliburton to Settle Suits Over Accounting Practices
Halliburton Co. said it is close to settling shareholder lawsuits that
accuse the oil-services company of inflating revenue for major
construction projects, although the company continues to use the same
accounting method and hasn't resolved a separate investigation by the
Securities and Exchange Commission, the Wall Street Journal
reported. If the settlement is completed, Halliburton said it would pay
$6 million to settle any liability related to claims from shareholders
who bought its stock between May 1998 and May 2002. Settling these
lawsuits would further reduce the morass of asbestos and other
litigation that has been a drag on Halliburton's stock for the past
couple of years. In December, the company agreed with plaintiffs to pay
$4 billion, and to put some of its subsidiaries into bankruptcy, to
resolve more than 300,000 asbestos-related lawsuits, reported the
Journal.
Marriott to Enter Bidding For Aladdin Hotel, Casino
Marriott International Inc. is entering the bidding for the Aladdin
hotel and casino in Las Vegas, the Wall Street Journal reported.
Aladdin is currently in bankruptcy proceedings in Las Vegas. Marriott's
main rival, Starwood Hotels & Resorts Worldwide Inc. has linked up
with restauranteur Robert Earl and New York vulture fund Bay Harbour
Management LC as the so-called stalking horse bidder for the Aladdin
with a deal that would cost less than half the $1.4 billion originally
invested in the property,according to the online newspaper. That group
has agreed to spend $90 million to renovate the place over three years
and to assume $510 million in refinanced debt from the original lenders,
turning the Arabian-themed place into a Planet Hollywood casino and a
Sheraton hotel with Westin timeshares built nearby. Starwood agreed to
invest $20 million in cash in the venture. Earl is the founder of Planet
Hollywood International Inc., which recently emerged from bankruptcy
protection, reported the Journal.
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