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May 1, 2006
name='1'>Ex-Playboy Model Smith Wins
w:st='on'>
size='3'>U.S.
Appeal
Former Playboy model Anna
Nicole Smith won a U.S. Supreme Court ruling that revives her $89
million claim in a fight over the estate of her late husband,
size='3'>Texas
J. Howard Marshall II, Bloomberg News reported today. The justices,
reversing a federal appeals court, unanimously said a federal bankruptcy
judge had jurisdiction to consider Smith's claim against her stepson, E.
Pierce Marshall. The Supreme Court sent the case back to the appeals
court level to consider additional arguments by
w:st='on'>
size='3'>Marshall
the award. Smith, who was 26 when she married the 89-year-old Howard
Marshall in 1994, says Pierce Marshall destroyed some documents and
altered others to ensure she didn't receive the half-billion dollar
trust her husband had set up for her before his 1995
death. The San
Francisco-based 9th U.S. Circuit Court of Appeals said a federal
bankruptcy judge lacked jurisdiction to consider Smith's claim that
Pierce Marshall illegally interfered with the trust. Writing for the
Supreme Court, Justice Ruth Bader Ginsburg said the 9th Circuit had
improperly created a 'sweeping extension'' of the rule that federal
courts should defer to state judges on probate issues. The case
is Marshall v.
Marshall, 04-1544.
href='http://www.bloomberg.com/apps/news?pid=10000103&sid=aL9aN5CK3iJA&refer=…'>Read
more.
Click
here to read the full text of the Supreme Court's opinion.
New
Bankruptcy Law Does Have Supporters
Supporters of BAPCPA are
countering critics' claims and asserting that the law's demands are
reasonable and address a mushrooming problem with bankruptcy fraud that
was costing consumers billions of dollars, according to Bankrate.com
Friday. Consumer advocates argue that most bankruptcies are caused by
medical problems, unemployment or divorce. Proponents of the new law
acknowledge that these factors play a role, but say they are greatly
overstated. Stuart Feldstein of SMR Research Corp., a market research
firm in
face='Times New Roman' size='3'>Hackettstown
size='3'>,
size='3'>N.J.
company's bankruptcy-rates database identified no correlation between
bankruptcy rates and unemployment rates, but found a close correlation
with a number of other factors. 'Among them were the percentage of
adults who were divorced, the percentage of the population covered by
health insurance, overall consumer debt levels, ages, nearness of
gambling casinos, lawyer advertising, minimum auto insurance coverage
requirements by state, growth of adjustable-rate consumer debt and a few
other things,' Feldstein said. Supporters of the law frequently cite
fraud as the catalyst for change and point to findings by the Federal
Bureau of Investigation, which estimated that 10 percent of bankruptcies
have involved fraud, with 'hiding of assets' as the most common type.
Feldstein believes, based on bankruptcy petitions his researchers have
examined, that the percentage is an understatement. He says the
researchers found numerous incidents where the person's income was
higher than stated.
href='http://www.bankrate.com/brm/news/bankruptcy/20060428a1.asp'>Read
more.
name='3'>Creditors May Force LG.Philips into Chapter
7
The troubled flat-screen
television producer LG.Philips Displays USA Inc. took another blow on
Wednesday when creditors threatened to have its case converted to a
chapter 7 bankruptcy liquidation if it failed to meet certain
terms, Portfolio
Media reported Friday. The creditors said
LG.Philips should be denied cash collateral after the company requested
to continue using it past its current deadline of April 30. The
creditors argued that unless it preserves the estate’s causes of
action and rights while an investigation is conducted, permits a sale
process to be conducted for the benefit of the creditors and allows for
the ability to make distributions to other creditors, a new
cash-collateral budget should not be approved. They also pointed out
that in May 2004, LG.Philips stated that its debt was around $20
million. Now, less than two years later, the company’s obligation
has suddenly ballooned to $573 million, which raised suspicion. Another
issue was the provisions of the cash-collateral proposal LG.Philips put
before the bankruptcy court, which would require a quick sale of the
company’s assets, which, according to the docket,
“effectively places a stranglehold on the debtor, the committee
and the estate.”
name='4'>Winn-Dixie Trade Creditors Seek to Probe Note
Underwriters
A group of Winn-Dixie
Stores Inc. trade creditors is seeking bankruptcy court permission to
investigate the supermarket chain's $300 million note issuance in
December 2000, according to MarketWatch.com on Friday. The facts
surrounding the note issuance are 'very relevant' to one of the key
issues in the chapter 11 case - substantive consolidation, the trade
group said in a papers filed Wednesday with the U.S. Bankruptcy Court
in
size='3'>Jacksonville
size='3'>Fla.
holding more than $54.9 million in trade claims against the company,
wants the chapter 11 cases of Winn-Dixie and its 23 units and affiliates
to be substantively consolidated, allowing their assets and liabilities
to be pooled to pay creditors.
href='http://www.marketwatch.com/News/Story/Story.aspx?dist=newsfinder&siteid…'>Read
more.
name='5'>Adelphia Judge Approves Interest Payments
The federal bankruptcy
judge overseeing Adelphia Communication’s chapter 11 case
streamlined the proceedings by approving $1.23 billion in interest
payments to the Colorado-based cable company’s unsecured
creditors, Portfolio
Media reported Friday. The ruling establishes
a blanket interest rate to be paid to Adelphia’s unsecured
creditors, whose various individually determined interest rates and
procedures for dealing with past-due debt threatened to hamper the
proceedings, according to a source close to the case. This move by
Judge Robert E.
Gerber will halt what would have been an
arduous process of handling each company’s policies regarding
interest rates individually, and moves Adelphia a little closer to the
proposed sale of its assets to Time Warner and
Comcast.
name='6'>Milbank Tweed Will Fight Dismissal in
w:st='on'>
size='3'>Meridian
size='3'>Case
The law firm Milbank
Tweed Hadley & McCloy is firing back after its dismissal from the
chapter 11 proceedings of Meridian Automotive Systems Inc., filing an
appeal of the decision by a federal judge who disqualified the law firm
from involvement in the automotive parts supplier’s
bankruptcy, Portfolio
Media reported on Friday. Milbank Tweed made
clear its intentions to appeal by filing a notice with the U.S.
Bankruptcy Court for the District of Delaware, but did not specify
exactly how it planned to do so.
size='3'>The dismissal was a result of a brawl triggered by
size='3'>hedge fund Stanfield Capital Partners LLC, which accused
Milbank Tweed in February of exploiting insider information in the case
and working against the fund’s interest, charges Milbank Tweed has
strongly denied. Milbank Tweed warned in court papers that its dismissal
from the case threatened to upset the negotiating balance in Meridian
Auto's bankruptcy.
Airlines
name='7'>Employees Leaving Mesaba Airlines
As Mesaba Airlines argues with
its unions over proposed pay cuts before a bankruptcy judge, a growing
number of the regional carrier's employees are leaving rather than see
their pay slashed, the Associated Press reported Friday. Mesaba wants to
cut its labor costs by 19.4 percent. If the airline and its unions don't
reach new labor agreements by May 11, a bankruptcy judge could allow the
carrier to impose pay rates. The airline wants to lock union employees
into six-year concessionary contracts. According to the Aircraft
Mechanics Fraternal Association, 33 technicians -- 13 percent -- have
resigned since Mesaba filed for bankruptcy in October.
href='http://www.duluthsuperior.com/mld/duluthsuperior/news/local/14471146.ht…'>Read
more.
name='8'>Government Takes over Aloha Airlines Pension
Plans
The Pension Benefit Guaranty
Corporation (PBGC) said it has taken responsibility for three pension
plans covering nearly 4,000 workers and retirees of Aloha Airlines, the
Associated Press reported on Saturday. The federal agency estimated that
together the three plans are 55 percent funded. The PBGC says it will be
liable for $117 million of the $155 million dollar shortfall.
href='http://www.kpua.net/news.php?id=8133'>Read more.
Judge
Asked to Dismiss Bankruptcy Case Against Maryland Health Care
Company
Atlantic Health Services
Inc., a Rockville, Md.-based health care company that provides speech
therapists for D.C. public school children, is asking a judge to dismiss
its bankruptcy case, saying the filing has scared off at least one big
customer and that it is losing employees, the
face='Times New Roman' size='3'>Washington Times
size='3'>reported today. The company said in court records filed last
week that it has lost eight employees and a state contract in
size='3'>Maryland
wake of its bankruptcy filing three months ago. Since January, the
company has been attempting to restructure its debts, including
financing on a 2004 Mercedes-Benz and $550,000 in personal loans by the
chief executive and chief financial officer, bankruptcy records show.
The company filed for bankruptcy weeks after losing a D.C. Superior
Court case in which another contractor won a judgment of more than
$600,000 related to a business deal during the 1990s.
href='http://www.washtimes.com/functions/print.php?StoryID=20060430-114809-82…'>Read
more.
name='10'>Heartland Partners Files for Chapter 11
Heartland Partners LP has
started the process of dissolving and liquidating the Chicago-based real
estate limited partnership,
size='3'>Crain’s Chicago Business
size='3'>reported on Friday.
size='3'>The voluntary chapter 11 bankruptcy filing was made Friday in
the Northern Illinois District of the U.S. Bankruptcy Court. Heartland,
which owns the CMC Heartland subsidiary, will become
debtors-in-possession. Although Heartland recently received $3.25
million in a settlement against
w:st='on'>
size='3'>Milwaukee
Redevelopment Authority, sold one property for $2.85 million and has a
$2.85 million contract for a second property, the company is beset with
financial, legal and environmental troubles. Heartland posted a $4.71
million loss in 2005 and a $4.36 million loss in 2004.
href='http://www.chicagobusiness.com/cgi-bin/news.pl?id=20407'>Read
more.
name='11'>Monro Muffler Brake Reveals Court Approval to Acquire
ProCare Automotive
Monro Muffler Brake, Inc., a
provider of automotive undercar repair and tire services, announced that
a U.S. Bankruptcy Court had approved its acquisition of substantially
all of the assets of bankrupt ProCare Automotive Service Solutions,
L.L.C. for about $14.65 million in cash, RTTNews.com reported on Friday.
The company had earlier entered into an asset purchase agreement with
ProCare on March 6, subject to an auction process and bankruptcy court
approval. The transaction is expected to close on April 29,
2006.
href='http://www.tradingmarkets.com/tm.site/news/BREAKING%20NEWS/238887/'>Read
more.
GM
Chief Apologizes to Shareholders for Series of Accounting
Errors
General Motors Corp.
Chairman and Chief Executive Rick Wagoner, in a letter to shareholders,
apologized for a series of accounting errors and promised the auto maker
is 'working diligently to get things moving in the right direction --
quickly' following a huge loss last year, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. In a letter to shareholders released Friday in
conjunction with the firm's proxy statement, the CEO said GM has 'a
renewed commitment to excellence and transparency in our financial
reporting.' The proxy also disclosed that his 2005 compensation fell by
nearly 50 percent. GM faces six separate Securities and Exchange
Commission investigations of accounting problems and has received a
subpoena from a federal grand jury in connection with its accounting for
payments received from suppliers.
href='http://online.wsj.com/article_print/SB114625862781139134.html'>Read
more. (Registration required).
Fee
Puts Mortgage Brokers on Defensive Before Congress
As the House attempts to
craft a bill to curb predatory lending, the flourishing mortgage broker
industry is on the defensive over a common fee used in the home loans of
many subprime borrowers,
size='3'>CongressDaily reported today. House
Financial Services Financial Institutions Subcommittee Chairman Spencer
Bachus (R-Ala.) has found himself stymied in his bid to move a consensus
bill regulating a little-known lending practice referred to as a 'yield
spread premium.' Under the practice, mortgage brokers are eligible to
receive fees from lenders for issuing a loan with a higher interest rate
than the minimum rate the borrower would have qualified for. Consumer
activists and some lawmakers call YSPs nothing more than a kickback,
part of abusive lending practices that are lightly regulated and cost
Americans more than $9 billion annually. 'I have been shocked by this
practice and brokers are less shocked. They sort of say, 'What's wrong
with that?'' said Rep. Brad Miller (D-N.C.). Miller has sponsored a bill
that would include YSPs as part of a trigger that would determine
whether a subprime mortgage would be classified as a high-cost loan
under federal law, which would ban certain lending practices such as
pre-payment penalties, and force more disclosure. But Bachus did not
include similar language in a draft bill he released in
March.
name='14'>Commentary: The Chilling Effects of Pension
Freezes
While the federal government's
Pension Benefit Guaranty Corporation (PBGC) insures the benefits of most
participants when pension plans terminate, usually because of a
bankruptcy, nobody insures lost benefits because of a freeze, according
to a commentary in Friday’s TheStreet.com. The decline in the
equities market since 2000, along with long-term interest rates, tempted
companies to lower their costs by redesigning plans and freezing
benefits, says analysis from the PBGC last December. The agency studied
the most recent pension information filed with the Internal Revenue
Service and found that 10 percent 'hard-froze' their benefits in 2003.
But that's only the tip of the iceberg: from 2001 to 2004, the number of
Fortune 1000 companies that froze benefits more than doubled, increasing
from 5 percent to 11 percent, reported the consulting firm of Watson
Wyatt last June.
href='http://www.thestreet.com/pf/university/personalfinance/10282419.html'>Read
more.
w:st='on'>
name='15'>Alaska
size='3'> Legislation Looks to
w:st='on'>
size='3'>Alleviate
face='Times New Roman' size='3'>State
size='3'>, Municipal Pension Liability
A bill is moving through
the
size='3'>Alaska
help to alleviate a $6.9 billion pension liability now faced by the
state government and
w:st='on'>
size='3'>Alaska
size='3'>municipalities,
size='3'>Alaska Journal of Commerce reported
yesterday. The legislation would allow local governments and the state
to use a new form of financing instrument to meet the pension liability
passed the state House unanimously April 21 and is now in the Senate
Community and Regional Affairs Committee. A hearing was scheduled
on Friday. House Bill 278, sponsored by Rep. Mike Hawker (R-Anchorage),
would allow
face='Times New Roman' size='3'>Alaska
governments to use pension obligation bonds or other
forms of financing instruments to fund future retirement and
health-benefit obligations for public employees and teachers. The bonds
could be structured in a variety of ways and sold by municipalities,
according to Hawker. Proceeds of the bonds would be invested along with
other funds set aside to meet pension and retiree benefit obligations,
including past contributions from the employees and contributions by the
municipal, school district or state agency employer.
href='http://www.alaskajournal.com/stories/043006/hom_20060430003.shtml'>Read
more.
name='16'>Commentary:
w:st='on'>
size='3'>California
size='3'>Nibbling at the Pension Problems
The Schwarzenegger
administration moved last Tuesday to close a loophole in the way state
pension laws are administered that has allowed some retiring firefighter
supervisors to receive pensions as high as 115 percent of their highest
salaries when they were working, according to an editorial in the
Orange County
Register today. If the loophole is not closed,
some retiring managers could theoretically haul in as much as 180
percent of their working salaries, and people drawing 125 percent to 140
percent might not be uncommon, according to reporting by the
Sacramento Bee
size='3'>. Under
face='Times New Roman'
size='3'>California
the fattest pension a retired state worker is supposed to receive is 90
percent of his final and highest year's salary. But decisions made five
years ago under the Davis administration created an anomaly for
firefighting managers where they are eligible to collect '3 percent at
50,' i.e., they get 3 percent of their highest salary for every
year they have worked.
href='http://www.ocregister.com/ocregister/opinion/homepage/article_1122675.p…'>Read
more.
International
name='17'>Court Blocks Yukos Sale of Refinery
Stake
A bankruptcy judge has
extended an order to prevent OAO Yukos management from selling the
company’s stake in a Lithuanian oil refinery,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported on Friday. Judge
size='3'>Robert Drain ruled that Yukos
managers will not be allowed to part with its 53.7 percent claim in an
oil refinery in
w:st='on'>
size='3'>Lithuania
size='3'>’s Mazeikiu Nafta, for which they have received offers of
approximately $1.5 billion. Judge Drain hoped the companies would work
out a deal that would allow the sale and also direct the proceeds to a
Yukos-owned Dutch company, which would likely transfer the dispute into
a Dutch court. He scheduled a second hearing for Thursday and extended
the restraining order preventing the sale until the hearing. Meanwhile,
Judge Drain again has made no determination whether to recognize
under
face='Times New Roman'
size='3'>U.S.
the Yukos receiver designated by a Russian court several weeks
ago.
name='18'>Canadian Ephedra Supplier Now Facing
Bankruptcy
For the low-profile but
high-profit Canadian company MuscleTech Research and Development that
produced ephedra supplements, a Canadian ban on the supplements and a
deluge of product-liability lawsuits brought the rags-to-riches company
to the brink of bankruptcy, the Toronto
size='3'>National Post reported today. The
state of
face='Times New Roman' size='3'>Missouri
took MuscleTech to civil court, accusing it of false and
deceptive marketing that hid the product's dangers and overstated its
benefits. None of the suits has gone to trial, although about two-thirds
have been settled out of court. MuscleTech, which maintains that its
supplement Hydroxycut did no harm, commissioned its own series of
studies to try to demonstrate the pills' safety and efficacy. But
company documents filed in court reveal the results were often
unflattering and that negative findings were kept largely under wraps.
The Mississauga, Ontario-based firm launched proceedings under the
Companies' Creditors Arrangement Act (CCAA) this January and proposed
negotiating a global settlement with the many Hydroxycut users still
suing the firm.
href='http://www.canada.com/nationalpost/news/story.html?id=49d17cb1-4b4e-490…'>Read
more.
name='19'>NTT Says It May Sue Japan for Rejecting Pension Plan
Switch
Nippon Telegraph and
Telephone Corp.,
w:st='on'>
size='3'>Japan
largest telephone company, said it may file suit against the
government's refusal to approve changes to its pension program,
Bloomberg News reported yesterday. NTT is close to a decision on asking
the court to overturn the government's decision, said Hideki Ohmichi, a
NTT spokesman in
face='Times New Roman' size='3'>Tokyo
size='3'>. NTT and 67 group firms will ask the Tokyo District Court to
overturn the government ruling the Nihon Keizai newspaper reported
earlier today. The labor ministry in February rejected NTT's switch to a
pension system linking benefits to market interest rates instead of
fixed payouts, it said. The suit may affect corporate pension policy
in
face='Times New Roman'
size='3'>Japan
many companies are considering similar moves to stem increases in the
costs of pension programs, the paper said. NTT and group firms will
argue that the government's rejection prevents them from taking
steps to improve their finances even when such moves are approved by
both management and labor, the report said.
href='http://www.bloomberg.com/apps/news?pid=10000101&sid=aYVGb56BvDFc&refer=…'>Read
more.