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May 20, 2005
Specter Woos Kyl with Changes to Asbestos Legislation
Senators adopted yesterday a package of changes to the asbestos
legislation that Judiciary Chairman Arlen Specter (R–Pa.) is using
to broaden support for the bill, CongressDaily reported.
During a committee markup, Specter appeared to be reaching out most to
Sen. Jon Kyl (R–Ariz.) who has yet to give his support to the
bill. One provision in the manager’s package guarantees that the
federal government would not become liable for any borrowing by the
trust fund from the treasury. But Specter agreed with Kyl that the
change was “not an absolute safeguard” against a potential
taxpayer bailout of the trust fund. Kyl, though, cautioned that big
changes would be needed for his support. Kyl and Sen. Dianne Feinstein
(D–Calif.), one of the bill’s lead co-sponsors, said they
will work together to reach agreement on the fund’s startup. The
bill has the support of five Republicans and two Democrats on the
committee, and needs three more votes to pass.
Specter, hampered by Democrats’ invoking a procedural rule that
limits committee meetings to two hours, is pressing for the panel to
finish its work before Congress breaks next week for a weeklong recess.
He planned to continue the markup on Tuesday and have the bill ready for
a floor vote when Congress returns from recess.
Hawaiian Airlines to Exit Bankruptcy June 1
Hawaiian Airlines Inc. announced yesterday it will emerge from its
two-year bankruptcy protection on June 1, the Associated Press reported.
U.S. Bankruptcy Judge Robert Faris has issued a written order finalizing
the plan which will place the carrier under the control of Ranch Capital
LLC, the controlling shareholder of Hawaiian’s parent company, and
allow the airline to begin paying off its creditors. The approval of the
reorganization plan came after Hawaiian’s pilot union voted to
ratify a new contract earlier this month.
Union Chief Says NWA Is Facing Bankruptcy
Northwest Airlines may file for chapter 11 bankruptcy before long if
other unions don’t join its pilots in giving the struggling
carrier hundreds of millions of dollars in annual wage and other
labor-cost concessions, the Knight Ridder reported. That warning on
Wednesday came from the head of the airline’s pilots union.
“It is time for everyone at our airline to face reality,”
Mark McClain, chairman of the master executive council of the Northwest
Airlines Air Line Pilots Association, wrote in a union newsletter.
“The fact is our company is in financial jeopardy, and the other
unions need to join us in an effort to ensure NWA’s
viability.”
Diocese Bankruptcy Closer to Resolution
There was a hearing on Thursday morning in Federal Bankruptcy Court
over how to settle sexual abuse claims against the Diocese of Tucson,
kvoa.com reported. All major parties walked out of the courtroom
predicting Tucson’s Diocese could be the first in the country to
emerge from chapter 11 bankruptcy. Dioceses in Tucson, Portland and
Spokane all filed for bankruptcy court protection after they were sued
by people claiming sexual abuse by priests. Now, it appears
Tucson’s church, victims and creditors could agree to a payment
plan and a judge could approve it by July 14th.
US Airways and America West Plan to Merge
US Airways and America West Airlines said yesterday that they planned
to merge in a $1.5 billion deal that would create the nation’s
fifth-largest airline and one of the biggest low-fare carriers, the
New York Times reported. The agreement, which still faces
major hurdles, is the first significant merger in the industry in four
years. It may mark the start of a wave of industry consolidation, the
newspaper reported.
Third Agency Cuts Credit Rating of Ford Motor, but Not to Junk
The Ford Motor Company’s bruised credit rating suffered another
blow on Thursday as Fitch downgraded the automaker’s debt but left
it out of junk bond territory, the New York Times reported.
In its announcement on Thursday, Fitch said it was not likely to cut
Ford to junk status before the end of the year. Nonetheless, the news
was another blow to a company that has been downgraded this month by all
three major credit ratings agencies.
At Sunbeam, Big Guys Won, Public Lost
Seven years ago, two financiers sat down to make a deal that turned
out to be disastrous for almost everyone involved, the New York
Times reported. Everyone, that is, except for the men most
directly involved. Read the full article at
href='http://www.nytimes.com/2005/05/20/business/20norris.html?pagewanted=all'>www.nytimes.com/2005/05/20/business/20norris.html?pagewanted=all
Grubman Supervisors Settle with U.S. Regulators
Jack Grubman’s former supervisors at Salomon Smith Barney, John
Hoffmann and Kevin McCaffrey, settled enforcement actions over their
failure to properly supervise the former star telecommunications
analyst, the U.S. Securities and Exchange Commission (SEC) said on
Thursday, Reuters reported. Without admitting or denying any wrongdoing
in SEC administrative proceedings, the two men each agreed to a 15-month
ban as supervisors and to pay civil penalties of $120,000, the SEC
said.
Interstate Bakeries to Slash 1,400 Jobs
Interstate Bakeries Corp. on Thursday said it will close its New
Bedford, Massachusetts, bakery and consolidate other operations, costing
as many as 1,400 jobs, Reuters reported. The company, which is in
bankruptcy, said it will record charges of $17 million, including about
$7 million in severance costs.
Jury Begins Deliberations in Scrushy Trial
Jurors began deliberations on Thursday in the fraud trial of Richard
Scrushy, the first CEO charged under the Sarbanes–Oxley corporate
reporting law for allegedly directing a $2.7 billion earnings
overstatement at HealthSouth Corp., ABC reported. After hearing final
instructions from U.S. District Judge Karon Bowdre, the 12-member panel
went to the jury room to consider weeks of testimony and thousands of
pages of exhibits and recordings from the 3½-month trial.
Delta CEO Vows to Cut $1 Billion in Costs
Delta Air Lines Inc. will do whatever necessary to achieve the
remaining $1 billion of its targeted cost cuts and tough decisions may
have to be made, CEO Gerald Grinstein said Thursday, ABC reported.
“There is no area that will be safe from scrutiny,”
Grinstein told shareholders at the carrier’s annual meeting.
Grinstein said the airline is on target to achieve a total of $5 billion
in annual cost savings by the end of 2006, though he did not specify
what it will do to reach that goal.
Judge Rules Out Confession
A confession by a bankruptcy lawyer accused of stealing millions from
his clients can’t be used against him, but federal prosecutors may
use recordings of incriminating conversations he had with a co-worker, a
judge recently ruled, the Pittsburgh Tribune Review
reported. In July 2003, a federal grand jury charged Daniel Gates with
stealing more than $3 million from his clients, including former
Pittsburgh Steeler Rod Woodson, who lost more than $118,000 when Gates
handled the bankruptcy of Woodson’s Station Square restaurant, the
All-Star Grille. U.S. District Judge Joy Flowers Conti last Friday
declined to dismiss the indictment against Gates of Zelienople. Conti
ruled that Gates’ Feb. 28, 2002 confession during a meeting with
federal prosecutors was off limits because Gates thought he was
negotiating a plea agreement and didn’t believe his statements
could be used against him.
Judge Approves Sale Of Second Winn-Dixie Corporate Jet
A federal bankruptcy judge approved the sale of a second Winn-Dixie
corporate jet Thursday for $16.4 million, the Palm Beach News reported.
U.S. District Bankruptcy Judge Jerry Funk ordered the sale of the
Gulfstream G-200 and two jet engines to Leading Edge Aviation Solutions
of Franklin Lakes, N.J.
Avado Brands Emerges From Chapter 11
Avado Brands, the parent company of Don Pablo’s Mexican Kitchen
and Hops Grillhouse and Brewery, announced on Thursday that it has
emerged from chapter 11 bankruptcy after 15 months of reorganization,
the Miami Herald reported. Avado filed for protection from
creditors on Feb. 4, 2004, after struggling for years and selling off
chains such as Applebee’s, McCormick & Schmick’s and
Canyon Cafe.