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August 15, 2005
Consumer Inflation Probably Stayed Tame: U.S. Economy Preview
href='http://www.bloomberg.com/apps/news?pid=email_us&refer=top_world_news&si…'>Americans
are still finding discount prices when they shop, unless
they’re buying gasoline, a government report this week will
probably show, Bloomberg News reported Saturday. Prices for goods and
services other than fuel and food rose 0.2 percent in July, according to
a survey of economists before the Aug. 16 Labor Department report. The
rise follows a 0.1 percent June increase and would leave prices up 2.1
percent from the same month last year. That’s less than in
February, when the year-over-year increase was 2.4 percent. While higher
costs for fuel and food are easily passed on to the consumer at
supermarkets and service stations, some companies selling other types of
goods are holding the line on prices or slashing them to gain market
share.
href='http://www.bloomberg.com/apps/news?pid=email_us&refer=top_world_news&si…'>Read
the full story.
Small U.S. Firms Less Optimistic on Economy
Accountants who are also CEOs and CFOs of small U.S. corporations are
less optimistic about the U.S. economy than they were six months ago,
Reuters reported on Friday. The semi-annual Business and Industry
Economic Outlook, conducted by the American Institute of Certified
Public Accountants (AICPA), said 57 percent of CPAs, who are also senior
corporate executives, now have a positive outlook on the state of the
economy, as opposed to 71 percent in December, 2004. AICPA surveyed 1465
of its members and found that rising energy and employee costs and the
cascading effect of regulations under the Sarbanes–Oxley Act were
fueling concerns about the economy. AICPA surveyed both private and
public companies with less than a $1 billion in turnover and 205 CEOs
and 830 CFOs. The survey respondents were also concerned about
escalating home prices, corresponding levels of financing and the high
degree of consumer debt.
Reform Blamed for Bankruptcy Spike
In Dayton, Ohio, the
href='http://www.bizjournals.com/industries/economic_view/bankruptcies/2005/0…'>bankruptcy
reform legislation signed by President Bush in April is being blamed for
the spike in chapter 7s filed at the U.S. Bankruptcy Court Southern
District of Ohio, the Dayton Business Journal reported
today. The new law takes effect Oct. 17, a date burned into the mind of
Michael Webb, clerk of the courts. Webb said Montgomery County’s
foreclosure rate seems to be boosting the filings a bit, but that the
main driver appears to be the upcoming changes in bankruptcy law. Ohio
is again on track to break its record of annual bankruptcy filings. But
the number of filings in the first six months of 2005 in Ohio undid the
slight gains and experts say the number will grow even more before the
end of year. Hon. William Bodoh, who retired in 2004 as chief
justice of the U.S. Bankruptcy Court Northern District of Ohio and
served on the board of the American Bankruptcy Institute, seconded
Webb’s assessment of the impending Oct. 17 change, but added that
the lagging economy and high foreclosure rate aren’t really
factors.
href='http://www.bizjournals.com/industries/economic_view/bankruptcies/2005/0…'>Read
the full story.
Former Kmart CEO Cleared
An arbitration panel
href='http://www.kansas.com/mld/kansas/business/12387681.htm'>cleared
former Kmart Chairman and CEO Charles Conaway of accusations that he
squandered millions of dollars as the discount retailer slid into
bankruptcy, the Associated Press reported today. The panel unanimously
voted to deny damages to Kmart Creditor Trust, an organization formed to
recover billions of dollars the retailer owed creditors when it filed
for bankruptcy protection in January 2002. A copy of the panel’s
23-page opinion, signed July 25 and expected to be made public soon, was
obtained by the Detroit News. The newspaper reported the
findings in its Monday editions.
href='http://www.kansas.com/mld/kansas/business/12387681.htm'>Read the
full story.
Lear Eyeing Collins & Aikman
U.S. auto interiors supplier
href='http://money.cnn.com/2005/08/15/news/fortune500/lear_collinsaikman.reut/'>Lear
Corp. is considering a bid for bankrupt rival Collins & Aikman,
an industry paper said Monday, citing unidentified sources close to
Lear, Reuters reported. A full takeover would create North
America’s largest interiors supplier with combined sales that
could total $13.2 billion. Collins & Aikman, which filed for chapter
11 protection from creditors in May only days after it warned of a
significant liquidity crunch, has already received a takeover offer from
privately held Plastech Engineered Products Inc.
href='http://money.cnn.com/2005/08/15/news/fortune500/lear_collinsaikman.reut/'>Read
the full story.
Indicted Lobbyist Abramoff and Partner Reject Fraud Charges
Attorneys for indicted Washington lobbyist Jack Abramoff and business
partner Adam Kidan
href='http://www.law.com/jsp/article.jsp?id=1123837516576'>insist that
their clients acted appropriately in their 2000 purchase of Fort
Lauderdale’s troubled SunCruz Casinos in a deal that resulted in
fraud and conspiracy charges, the Daily Business Review
reported today. Miami attorney Neal Sonnett, who represents Abramoff,
said the longtime Republican lobbyist who formerly worked for Greenberg
Traurig, the Miami–based law firm, was a “victim.”
href='http://www.law.com/jsp/article.jsp?id=1123837516576'>Read the full
story.
Birch Telecom Files for Bankruptcy
Birch Telecom Inc. and its subsidiaries have filed for chapter 11
bankruptcy protection, the company said Friday, according to the
Associated Press. The move comes after the Kansas City-based company
announced Tuesday that it was laying off a third of its workforce as it
continues to struggle under new rules restricting its access to local
phone lines. The company also announced that CEO Mike Cassity has
resigned, effective immediately. Gregory C. Lawhon, who has served as
senior vice president and general counsel of Birch since it was founded
in 1997, will replace him. Birch said that the chapter 11 process will
allow it to substantially improve its balance sheet and capital
structure and continue to operate the business.
Delta Exploring Bankruptcy Financing
Delta Air Lines has begun arranging the financing it would need
should it seek bankruptcy protection, the New York Times
reported on Saturday. Citing “people with direct knowledge of
Delta’s actions,” the Times reported that Wall
Street analysts, industry executives and finance experts said that the
troubled airline could seek the protection within weeks. The
Atlanta-based airline is holding the discussions with lenders including
GE Commercial Finance, which provided restructuring money in 2004, the
Times said, citing both airline employees and members of
the financial community. The domestic airline is also exploring selling
or refinancing its commuter lines, Comair and Atlantic Southeast
Airlines, and is seeking more savings from employees, according to the
report.
Intermet Gets Nearer to Chapter 11 Exit
Automotive castings supplier
href='http://www.crainsdetroit.com/cgi-bin/article.pl?articleId=27597'>Intermet
Corp. could be on its way out of bankruptcy after a judge last week
approved an updated commitment letter by two hedge funds that want to
buy control of the company, Crains reported today. U.S. Bankruptcy
Judge Marci McIvor also approved the disclosure statement, which
means that voting will begin on the reorganization plan. Creditors can
still submit a competing plan. Intermet filed its chapter 11 petition on
Sept. 29 in U.S. Bankruptcy Court in Detroit.
href='http://www.crainsdetroit.com/cgi-bin/article.pl?articleId=27597'>Read
the full story.
Adult Filmmaker Files for Chapter 11
href='http://www.latimes.com/news/local/valley/la-fi-porn13aug13,1,6775668.st…'>One
of the better-known San Fernando Valley adult filmmakers has bared its
precarious financial condition in a federal bankruptcy filing, the
Los Angeles Times reported today. Jill Kelly Productions
Inc. filed for chapter 11 bankruptcy protection in Los Angeles as one of
its creditors was about to foreclose on its property and seize its
library of more than 250 films. The North Hollywood company lists about
85 creditors, more than $3 million in liabilities, and assets of $1.5
million to $3 million.
href='http://www.latimes.com/news/local/valley/la-fi-porn13aug13,1,6775668.st…'>Read
the full story.
Mechanics Deal Might Not Save Northwest
Looming right behind the question of whether Northwest Airlines Corp.
mechanics will strike this week is another: Has the airline moved too
late to avoid bankruptcy? Analysts are starting to wonder—even
assuming that Northwest gets the $1.1 billion in cuts it wants from its
unions, the Beatrice Daily Sun reported today. Northwest
lost more money in its last quarter alone than it proposes to save from
mechanics each year. It faces hundreds of millions of dollars in pension
payments next year. And jet fuel remains stubbornly expensive.
href='http://www.beatricedailysun.com/articles/2005/08/13/ap/business/d8bvu4j…'>Read
the full story.
$10 Million Judgment Against Big Idea Reversed
href='http://dallas.bizjournals.com/dallas/stories/2005/08/15/story6.html'>An
appeals court panel has reversed a $10 million decision that helped
push the company behind the animated Christian series
VeggieTales into bankruptcy, the Dallas Business
Journal reported Friday. The verdict resulted from a failed
distribution deal between VeggieTales’ creator, Big
Idea Productions Inc., and Allen, Texas–based Lyrick Studios Inc.,
the company behind Barney, the purple dinosaur. A jury found in April
2003 that Big Idea had violated its deal with Lyrick, and awarded $10.3
million plus related fees to Lyrick. Five months later, Big Idea filed
for chapter 11 bankruptcy protection. Big Idea remains in bankruptcy and
is in the process of liquidating its assets to pay off creditors.
Clearing that judgment means that Big Idea’s creditors are one
step closer to receiving some payment, said bankruptcy attorney Matt
Gensburg.
href='http://dallas.bizjournals.com/dallas/stories/2005/08/15/story6.html'>Read
the full story.
Credit Bureaus Battle Negative Image
After 100 years,
href='http://www.thestate.com/mld/thestate/business/12385424.htm'>the
credit-reporting industry is leaving the shadows and moving into more
direct dealings with consumers, the Dallas Morning News
reported today. As Americans come face to face with a $3 billion-a-year
business that can influence their ability to get a loan, land a job and
buy insurance, they confront an industry that long considered consumers
commodities and financial institutions its paying customers. The result
is an uneasy, changing relationship that experts predict will result in
continued consumer aggravation and calls for more government regulation.
Led by the Big Three credit bureaus—Experian, Equifax and
TransUnion—the industry positions itself as a consumer-friendly
service provider that lets lenders offer easy, equitable credit.
href='http://www.thestate.com/mld/thestate/business/12385424.htm'>Read
the full story.
Colorado City School District Faces Bankruptcy
Under a sweeping new law that takes effect today, the Arizona state
attorney general will ask education officials to
href='http://www.azcentral.com/arizonarepublic/local/articles/0812coloradocit…'>force
a northern Arizona school district into bankruptcy after it buried
itself in $1.8 million debt while it purchased a plane and cars for its
administrators, the Arizona Republic reported on Friday.
Attorney General Terry released a copy of the 11-page petition detailing
allegations against Colorado City Unified District, which sits on the
Utah border and has about 250 to 300 students and 18 administrators.
Goddard will officially file the petition under the new law today.
Goddard said that the state is carefully heading into new legal
territory because the law is broadly written and has few details.
Legislators approved the new law after Colorado City Unified began
bouncing teacher paychecks in October and Goddard found himself
powerless to do anything about it. The law allows the state to push any
Arizona school district into bankruptcy if it “grossly
mismanages” its money.
href='http://www.azcentral.com/arizonarepublic/local/articles/0812coloradocit…'>Read
the full story.