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Carper Heads Up Democratic Move In Favor Of Bankruptcy
Bill
Sen. Thomas Carper (D-Del.) circulated a letter intended for Senate
Majority Leader Bill Frist (R-Tenn.) on Tuesday, expressing commitments
of support from Democratic colleagues for pending bankruptcy reform
legislation, CongressDaily reported. 'With our economy
struggling, bankruptcy reform is needed now more than ever,' the
Democratic letter reads. 'As many of our colleagues have invested a
great deal of time and energy in this effort over the years, we urge
that the Senate take up a bankruptcy reform bill modeled after last
year's conference report as soon as possible,' according to
CongressDaily. The letter adds: 'After years of negotiation and
compromise, a balanced bill emerged out of conference last year that
would have addressed the worst flaws in federal bankruptcy law. We
strongly believe that that bill should be the foundation from which we
work in the 108th Congress,' reported the newswire. While some sources
familiar with the effort say they believed that as many as a dozen
Democrats could sign the letter, critics of the pending legislation also
remain convinced that there are enough Democratic votes in the Senate to
uphold a filibuster against the bill.
Sensenbrenner Introduces Legislation to Combat Frivolous Involuntary
Bankruptcy Cases
House Judiciary Chairman James Sensenbrenner (R-Wis.) on Tuesday
introduced legislation designed to combat 'the growing trend of
frivolously-filed involuntary bankruptcy cases, ' reported
CongressDaily. According to Sensenbrenner, 'Under current law,
anyone can be a potential target of a frivolous bankruptcy case filed by
someone acting in bad faith or solely for the purpose of harassment.'
Under certain circumstances, a person can be involuntarily forced into
bankruptcy by the filing of an involuntary bankruptcy case against that
person, the newswire reported. Even if the case is dismissed, a person's
credit rating, ability to obtain future credit, and reputation in the
community can be devastated severely,' Sensenbrenner said. Sensenbrenner
said his bill eliminates incentives for filing frivolous involuntary
bankruptcy cases against innocent persons, reported the newswire.
Hatch Drafting New Asbestos Litigation Reform Legislation
Aides to Senate Judiciary Chairman Orrin Hatch (R-Utah) were drafting
new concepts for asbestos litigation reform legislation on Tuesday, the
rough outlines of which Hatch had sketched at a private meeting last
week with insurance and other business executives, CongressDaily
reported. Hatch and Senate Democrats publicly and privately have
emphasized the importance of keeping the legislation bipartisan, and
sources asserted that Sens. Christopher Dodd (D-Conn.), Hatch, Senate
Judiciary ranking member Patrick Leahy (D-Vt.) and Sen. Mike DeWine
(R-Ohio) already are working closely together. Sources said that the
Dodd 'summit,' as it was billed, included some heated exchanges,
including one between representatives for the American Bar Association
and the Association of Trial Lawyers of America, but that it ended on a
positive note, reported the newswire.
Fleming Files for Chapter 11 Bankruptcy Protection
Fleming Cos. sought chapter 11 bankruptcy protection after Kmart Corp.,
its biggest customer, ended a supply contract and regulators
investigated its accounting, Bloomberg News reported. Fleming, unable to
replace $4.5 billion in lost revenue from Kmart, said it had no choice
but to file to ensure its vendors will continue to supply. Kmart, which
accounted for about 20 percent of Fleming's revenue, canceled the
contract in January, reported the newswire.
AMERICAN AIRLINES
On Brink of Bankruptcy Filing, AMR Reaches Deal With
Unions
American Airlines averted a flight into bankruptcy court by reaching
tentative agreements with its three unions for wage and benefit
concessions, just as a company-imposed deadline ran out, the Wall
Street Journal reported. If ratified, the sizable cost cuts --
coupled with reductions in aircraft leases and financing that the
company is negotiating -- could help American restructure to compete
more effectively with a wide range of rivals. The combination of pay
cuts and productivity improvements will cut the payroll at American by
21 percent -- saving the company nearly $5 million a day. If the economy
revives and traffic rebuilds, that should be enough to get American back
to profitability, although maybe not until 2005, reported the
Journal.
Separately, Bloomberg News reported that American Airlines parent AMR
Corp. delayed filing its 2002 annual report with the U.S. Securities and
Exchange Commission, citing its efforts to cut operating costs by $4
billion a year and stem losses.
AMR's American Airlines Will Delay Some Lease, Debt
Payments
AMR Corp.'s American Airlines said that it will delay making some lease
and debt payments, using the grace periods while it negotiates
restructuring agreements with stakeholders, Bloomberg News reported.
American said that because of its 'precarious financial condition,'' it
wants to reduce payments to vendors, aircraft lessors and suppliers. The
carrier has said it needs to cut costs to avoid a chapter 11 bankruptcy
filing, reported the newswire.
Air Canada Seeks Protection From Creditors in Toronto
Court
Air Canada filed for protection from creditors, Bloomberg News reported.
The Montreal-based company made the application in a Toronto courtroom,
where Air Canada submitted an affidavit from Chief Financial Officer
Robert Peterson. The company got $700 million of debtor-in-possession
financing from General Electric Co.'s GE Capital unit, reported the
newswire.
Government Takes Over US Airways Pilot Pension Plan
The government's pension protection program assumed control on Tuesday
of US Airways pilots' underfunded pension plan, but only will fund about
half of the losses, the Associated Press reported. That means
significant cuts in retirement pensions for the 6,000 pilots of US
Airways, which emerged from bankruptcy protection on Monday. The pension
issue was the remaining hurdle for the airline's restructuring. The
plan, which has $1.2 billion in assets, was underfunded by $2.5 billion.
The Pension Benefit Guaranty Corp. will add about $600 million to help
pay benefits, reported the newswire.
Judge Removes Pilots From UAL Request To End Contracts
UAL Corp. on Tuesday received bankruptcy court approval to exclude its
pilots union from an earlier request to reject all of its existing union
labor contracts, Dow Jones reported. Judge Eugene R. Wedoff of
the U.S. Bankruptcy Court for the Northern District of Illinois said the
agreement 'makes a great deal of sense.' Late last week, UAL and the Air
Line Pilots Association said they had reached a deal that would cut more
than $6 billion in labor expenses over the next six years. The pilots
union has sent the agreement out for ratification by its membership with
a deadline of April 11, reported the newswire.
Separately, Bloomberg News reported that United Airlines expects to lay
off more pilots because ticket sales remain weak as a result of the war
in Iraq.
Reliant Resources Rises After $5.9 Billion Refinancing
Shares of Reliant Resources Inc. rose after the company refinanced $5.9
billion in debt before a midnight deadline, averting bankruptcy,
Bloomberg News reported. The agreement with lenders refinanced existing
debt and gave the company $300 million in new credit, company
spokeswoman Sandy Fruhman said late on Monday. Reliant also will be
allowed to exercise an option to buy the Texas power-generation business
of
CenterPoint Energy Inc., which spun off Reliant in September, reported
the newswire.
Grant Geophysical In Default Of 9.75 Percent Notes Due To Missed
Payment
Grant Geophysical Inc. said it's in default of its 9.75 percent senior
notes maturing in 2008 because it didn't make a $2.1 million interest
payment due Feb. 18 within a 30-day grace period, Dow Jones reported.
The company is in discussions with the ad hoc steering committee of the
holders of the senior notes concerning a debt-for-equity exchange or
other restructuring of the company's debt that would resolve the
interest payment default, according to an 8-K filed on Tuesday with the
Securities and Exchange Commission. The company said it didn't have
enough cash on hand to make the notes payment and its lender has refused
to make any additional credit available to it for the interest payment.
The company has said that if any of its debt were accelerated, it's
unlikely it would be able to continue operations without seeking
bankruptcy protection, reported the newswire.
National Steel Sees Pension Agency's Claim At $760 Million-$1.6
Billion
National Steel Corp. said the Pension Benefit Guaranty Corp. (PBGC)
expects a bankruptcy court to value the agency's claims against the
company at between $760 million and $1.6 billion, Dow Jones reported.
The PBGC sued to take over most of National Steel's pension plans last
year. Should the PBGC gain control of the plans, National Steel would be
required to record a settlement on termination of the plans, the company
said in its annual report filed on Monday with the Securities and
Exchange Commission. National Steel also said in the filing that it
expects the 'vast majority of claims asserted by the PBGC will be
unsecured,' and subject to its reorganization plan, reported the
newswire.
Allegiance Telecom Auditor Raises Going Concern Doubt
Allegiance Telecom Inc.'s independent auditor raised substantial doubt
about the company's ability to continue as a going concern, according to
the company's annual report filed with the Securities and Exchange
Commission, Dow Jones reported. The auditor, KPMG LLP, cited the
company's recurring losses from operations and said the company is
dependent on additional external financing to meet its current debt
repayment requirements. In 2002, the company had a net loss from
operations of $471.2 million, compared with a net loss from operations
of $373.2 million a year ago. Currently, Allegiance Telecom is exploring
various alternatives including purchasing debt for cash and exchanging
debt for common stock or other securities, including debt, through
privately negotiated transactions, exchange offers or a prepackaged
bankruptcy filing, reported the newswire.
AT&T Canada Exits Bankruptcy Protection Six Months After
Filing
AT&T Canada Inc. said it emerged from bankruptcy protection with no
long-term debt, Bloomberg News reported. The Toronto-based company has
C$139 million of cash, it said in a statement. AT&T Canada, which
sought protection from creditors in October, had said it would exit
bankruptcy on Tuesday. New York-based AT&T agreed to hand control of
the unit to creditors owed C$4.7 billion after demand for AT&T
Canada's services failed to meet expectations. AT&T Canada said
yesterday it will continue to work with the former parent when it is in
customers' 'best interest.'' The company will seek global partnerships
and create a new brand name by September, reported the newswire.
HEALTHSOUTH
HealthSouth Delays 2002 Report Amid Fraud Charges
HealthSouth Corp. delayed filing a 2002 annual report with the
Securities and Exchange Commission as the company figures out its
finances, Bloomberg News reported. HealthSouth will submit the report
'as soon as practicable,'' it said in an SEC filing. The company said
last week that previously filed financial statements may be unreliable
back to 1986, the year HealthSouth began selling shares to the public.
HealthSouth has hired independent auditors to review its financial
statements and investigate U.S. allegations that the company and former
CEO Richard Scrushy falsified earnings and assets, reported the
newswire.
HealthSouth's Ex-CFOs Sold $12.9 Million in Stock
HealthSouth Corp. former Chief Financial Officers William T. Owens and
Weston L. Smith sold $12.9 million in company stock during a period when
they have admitted helping to inflate earnings, records show, Bloomberg
News reported. The U.S. Securities and Exchange Commission sued them for
insider trading and fraud, alleging they were 'intimately involved'' in
a conspiracy to inflate earnings at HealthSouth. Owens sold $11.3
million in stock, sales records filed with the SEC show. Smith sold $1.6
million in shares, reported the newswire.
Court Approves STM Wireless Asset Sales To Sloan Capital
STM Wireless Inc. said in a Form 8-K filed with the Securities and
Exchange Commission on Tuesday that the bankruptcy court handling its
chapter 11 proceedings approved the sale of substantially all of its
assets to Sloan Capital Partners LLC, Dow Jones reported. The Irvine,
Calif.-based company has been under chapter 11 protection since Feb. STM
Wireless said the price for its assets totaled $3.6 million, which
consisted of $1.6 million in cash and the assumption of some
liabilities, reported the newswire.
Conseco Seeks $25 Million Credit Facility Extension On DIP
Conseco Inc. and its Conseco Finance unit this week asked a bankruptcy
judge to approve a $25 million increase to its revolving credit facility
under the terms of its debtor-in-possession loan, Dow Jones reported.
Indianapolis, Ind.-based Conseco said in court documents that the money
will enable Conseco Finance to continue to operate as a 'going concern'
pending the deal's closing, which is expected in May. The companies also
asked Judge Carol A. Doyle of the U.S. Bankruptcy Court for the Northern
District of Illinois for an extension of the scheduled termination date
of the debtor-in-possession facility by more than a month, reported the
newswire.
Altria Debt-Insurance Costs Rise as Appeal Falters
The cost of insuring debt obligations of Altria Group Inc. climbed for a
fourth day as efforts by its Philip Morris USA unit to reduce a $12
billion deposit demanded by a judge faltered, Bloomberg News reported.
Philip Morris must make the deposit by April 20 if it wants to appeal a
lawsuit it lost about misleading advertising. Company representatives
failed yesterday to reach a compromise with plaintiffs about reducing
the amount, which rating companies said may bankrupt the company,
reported the newswire.
Enron Creditors' Committee Loses Bid to Control Whitewing
Case
A group of Enron Corp. creditors lost a bid to take over litigation
against Whitewing Associates LP, one of thousands of partnerships Enron
established to shift debt off its books, a lawyer for the energy company
said, Bloomberg News reported. U.S. Bankruptcy Judge Arthur Gonzalez
denied a request by a committee of unsecured creditors to pursue a
broader lawsuit against Whitewing than Enron filed, said Enron attorney
Martin Bienenstock, reported the newswire.
Tokheim Wins Four-week Extension Of Plan Exclusivity
Tokheim Corp. on Tuesday won a roughly four-week extension of the time
during which it has the exclusive right to file a reorganization plan
and solicit plan acceptances, Dow Jones reported. The company will use
the time to negotiate the terms of a chapter 11 reorganization plan with
interested parties, including its secured lenders, according to court
documents. The order, signed by Judge Randall J. Newsome of the
U.S. Bankruptcy Court in Wilmington, Del., extends Tokheim's exclusive
plan-filing period through April 15. The order also extends the period
during which the company has the sole right to obtain votes for the plan
through June 14, reported the newswire.
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