src='/AM/Images/headlines/headline.gif' />
December 19, 2005
name='1'>5th
Circuit OKs Bankruptcy Lawyer’s Unique Fee Agreement
If there’s a
lesson to be
learned about representing clients who are nearly broke, it is to have
them
pay their legal fees upfront before filing bankruptcy petitions on
their behalf,
the Texas Lawyer reported today. On Dec. 7, the 5th U.S.
Circuit Court
of Appeals blessed a consumer bankruptcy lawyer’s unusual way of
securing his
fees, but frowned on another of his methods. Barron v. Countryman
centers
around Robert E. Barron, a consumer bankruptcy lawyer and managing
partner of
Nederland’s Robert E. Barron PC, who has a high-volume practice
in the Eastern
District of Texas. Under the Eastern District’s local rules,
attorneys are permitted
to charge a client a total fee of up to $2,000 for a chapter 13
bankruptcy without
filing a fee application with the court. Barron’s standard
practice was to charge
a chapter 13 client a total fee of $2,000 or less, but he did so in an
unorthodox
manner, according to the opinion.
href='http://www.law.com/jsp/article.jsp?id=1134727510628&rss=newswire'>Read
more.
id='2'>New
Rules Don’t Lessen Need for Bankruptcy
The dropoff in
consumer bankruptcy
petitions since the nation’s bankruptcy law changed belies the
fact that there
are still many Americans in serious financial trouble, the New
York Daily
News reported today. Bankruptcy filings peaked at a record of
more than
315,000 a week before the law took effect Oct. 17 but have since
fallen to a
weekly rate of about 3,500, according to financial information and
consulting
firm Lundquist Consulting. But Texas attorney John
Penn, who
is president of the American Bankruptcy Institute, and other experts
don’t expect
filings to remain so low. "We have not changed either the laws of
economics
or basic human nature," he noted.
href='http://www.nydailynews.com/business/story/375858p-319385c.html'>Read
more.
Airlines
id='3'>Bush
Battles Air Controllers as Delta, Northwest Cheer Him On
As U.S. airlines
cheer him
on, President George W. Bush is heading toward a confrontation with
air traffic
controllers over wages, the same issue that triggered a 1981 strike in
which
thousands were fired, Bloomberg News reported yesterday. Carriers such
as Delta
Air Lines Inc. and Northwest Airlines Corp., already buffeted by high
fuel costs
and stiff price competition, may see their $16 billion annual tax
burden increase
if Bush fails to get controller costs in line. The Federal Aviation
Administration
and the controllers are at odds over the government’s attempt in
contract talks
to freeze base pay for current controllers and lower it for new hires.
The airlines
say that their rising tax burden in recent years has added to their
already
formidable problems and they can’t pass any added costs on to
passengers because
customers won’t accept fare increases large enough to cover
them.
href='http://www.bloomberg.com/apps/news?pid=10000103&sid=aG2n4iaV_VcI&refer=us'>Read
more.
name='4' id='4'>United
Bankruptcy: Not Over Yet
With creditors
still squabbling,
United Airlines (UAL) obtained permission to remain under court
protection
for another two months, the Pacific Business Journal reported
yesterday.
Creditors were to vote on a reorganization plan Monday, with a final
hearing
scheduled next month. But it is beginning to look like the timetable
will slip.
U.S. Bankruptcy Judge Eugene Wedoff Friday gave UAL
extended
until March 3 the company’s exclusive right to file a
reorganization plan for
itself. More than 50 creditors objections to the reorganization plan
have been
filed. Pilots, flight attendants, mechanics and other creditors filed
objections
to a UAL motion to give $285 million in airline equity—roughly
15 percent
ownership of the airline—to 400 of its executives.
href='http://pacific.bizjournals.com/pacific/stories/2005/12/12/daily62.html'>Read
more.
id='5'>Commentary:
Much of Delta’s Future Depends on Judge
Judge
Prudence Carter
Beatty’s out-of-the-blue digressions and caustic asides
leave lawyers
speechless and observers tittering, the Atlanta
Journal-Constitution
reported yesterday. People involved with the three-month-old case go
to Beatty’s
Lower Manhattan courtroom not just for the latest proceedings, but to
hear what
she’ll say next. Beatty has a reputation for being a slightly
out-there figure
in the bland world of bankruptcy law, and she’s burnishing it
with the Delta
case. Private descriptions of the 63-year-old jurist run the gamut:
eccentric,
blunt, intelligent, tough, deliberate, unfocused, insightful, biased,
fair,
diligent, kind, temperamental, funny. Whichever terms fit best, Beatty
will
have a huge influence on Delta’s future as it plows through
chapter 11 proceedings
for the next year or so and tries to emerge intact and poised to
regain financial
health.
href='http://www.ajc.com/business/content/business/delta/1205/18sbizjudge.html'>Read
more.
id='6'>Developer
Gets Probation in Bankruptcy Fraud
U.S. District Judge
Larry
J. McKinney on Friday sentenced Ryan A. Cottongim, 47, Indianapolis,
to two
years of probation, including six months of home detention, following
Cottongim’s
guilty plea to bankruptcy fraud, the Indianapolis Star
reported today.
The charge resulted from an investigation by the U.S. Trustee’s
Office and the
FBI. Cottongim filed for chapter 7 bankruptcy in Indianapolis on Nov.
11, 2001,
but failed to disclose all of his assets as required by federal law,
prosecutors
said. He disclosed just $500 in assets. In reality, he was a real
estate developer
with interests in several parcels of land in Hendricks and Putnam
counties.
id='7'>Credit
Cards Raise Minimums Due in Move to Control Debt
Credit-card
companies are
boosting their minimum monthly payments amid a debate about whether
the moves
will benefit consumers or hurt them, the Wall Street Journal
reported
Saturday. The Treasury Department’s Office of the Comptroller of
the Currency
began urging credit-card companies to raise minimum payments in 2003
because
they had dipped so low that cardholders were falling further into debt
each
month. Many banks now will require customers to pay at least 1 percent
of their
balance each month on top of interest and fees, which is intended to
help cardholders
whittle down at least part of their principal. Previously, they were
typically
required to pay 2 percent of their balance, but that included interest
and fees.
The OCC said they sought to change such practices to help cardholders
control
debt, reduce interest expenses through faster paydown of balances and
end the
spiral of negative amortization. Yet the new approach is still
generating controversy
and confusion, partly because card companies found the
government’s initial
guidance vague.
href='http://online.wsj.com/article/SB113478254290725382-email.html'>Read
more.
id='8'>Chain
of NYC Catholic Hospitals Puts Three Units on the Market
After closing three
hospitals
in recent years and filing for bankruptcy last summer, the main
Catholic hospital
system in New York City hopes to find someone to take over three other
hospitals,
the New York Times reported today. At a time when most of the
region’s
hospital companies are suffering financially, the prospects are
uncertain for
finding buyers that can afford to take over the hospitals and invest
tens of
millions of dollars to upgrade them. The three hospitals on the block
are St.
Vincent’s Staten Island, in the West Brighton neighborhood, and
two in Queens,
St. John’s in Elmhurst and Mary Immaculate in Jamaica. The
company reported
a $143.5 million loss in 2004, about 9 percent of revenue, and $1.1
billion
in debt, and in July, it filed for bankruptcy protection. Officials
say that
conditions have improved since then, and that the flagship St.
Vincent’s Hospital
Manhattan in Greenwich Village has begun making a slim profit.
href='http://www.nytimes.com/2005/12/19/nyregion/19hospitals.html'>Read
more.
id='9'>Ex-Dean
of Bankrupt Decker College Speaks Out
A former dean of a
failed
college run by New York gubernatorial candidate William Weld says he
was fired
after he found employees falsifying student records and recruiters
arranging
federal loans for students who couldn’t read, the Associated
Press reported
yesterday. Carlos Urquilla, who was fired from Decker College in
February, said
he signed a severance agreement months later with Weld, then
Decker’s chief
executive officer. The trade school is now under investigation for
possible
federal violations, including student loan and wire fraud. Weld, a
former Massachusetts
governor, has said repeatedly that he never saw evidence of wrongdoing
during
his time at Decker College in Louisville. The school entered
bankruptcy proceedings
in October despite efforts by Weld’s New York-based management
company, Leeds
Equity Partners, to correct its finances and keep the school open.
Provost R.L.
Barnett said that Urquilla had made complaints, but said he had not
reported
the falsification of records.
id='10'>Solutia
Files Protective Actions in Chapter 11 Case
Solutia Inc., a
manufacturer
and provider of performance films, specialty chemicals and an
integrated family
of nylon products, filed several protective actions in its chapter 11
case,
according to a press release yesterday. According to federal
bankruptcy law,
Solutia has two years from its chapter 11 petition (Dec. 17, 2003) to
file certain
types of actions. As a result, the company is filing approximately 90
avoidance
actions prior to this deadline, including one such action against
Monsanto/Pharmacia,
to preserve the legal rights of the bankrupt estate.
href='http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/12-16-2005/0004235647&EDATE='>Read
more.
id='11'>Delphi
Extensions Sought
Delphi filed a
motion seeking
court approval of an extension of the time period within which the
debtors may
remove actions under 28 U.S.C. §1452 and Fed. R. Bankr. P. 9006
and 9027,
BankruptcyData.com reported today. The company also filed a motion
seeking an
extension of the time during which the company can file a plan of
reorganization
and solicit acceptances thereof until August 5, 2006 and Oct. 4, 2006,
respectively.
The company’s motion asserts that the extension is justified
because the company’s
operations are "extensive and complex." The court scheduled
a Jan.
5, 2006 hearing to consider the motions.
id='12'>Collins
& Aikman K.E.R.P. Approved
Documents were
filed for
the Collins & Aikman case authorizing the implementation of the
key employee
retention program, BankruptcyData.com reported today. The documents
state that
the program states that key employees in tier A of the retention plan
are entitled
to a retention payment totaling between 40-50 percent of such key
employee’s
base salary, key employees in tier B are entitled to a retention
payment totaling
between 30-35 percent of such key employee’s base salary and the
key employees
in tier C are entitled to a retention payment totaling between 20-25
percent
of such key employee’s base salary.
International
id='13'>Australian
Tax Office Rules Against Hardie on Asbestos
The Australian Tax
Office
will not allow James Hardie Industries Ltd. to take tax deductions for
payments
to its proposed new asbestos compensation fund, but Australia’s
Treasurer said
a tax break was still possible, PlanetArk.com reported today. The
building materials
maker said on Friday that it continued to talk to the Federal Treasury
to find
a way around the ruling, which came two weeks after it signed a final
agreement
to pay more than A$3 billion ($2.3 billion) to victims of
asbestos-related diseases
in Australia over the next 40 years. Australian Treasurer Peter
Costello provided
some reassurance, saying that Hardie could deduct payments into the
fund over
five years under provisions allowing tax breaks on "black
hole" expenditures.
The tax office’s ruling initially sent Hardie shares down as
much as 8.5 percent
to a 2-month low of A$7.79, as investors saw tax breaks as key to
ending the
uncertainty surrounding the asbestos row that has dogged the company
over the
past two years.
href='http://www.planetark.com/dailynewsstory.cfm/newsid/34098/story.htm'>Read
more.
id='14'>Unwins
Examines Bids as Bankruptcy Looms
Unwins, a U.K.
off-license
chain, is examining several takeover bids ahead of a court hearing
tomorrow
that will determine if it has to go into administration, the U.K.
Independent
reported today. The private-equity owned group is in talks with
several bidders
after receiving more than 25 expressions of interest for all or parts
of the
business. Trade buyers and private equity firms are in the running,
with Terra
Firma, which owns the off-license chain Threshers, mooted as one
possible suitor.
The directors of Unwins filed an application to the High Court last
week to
place the business into administration. It is in limbo until tomorrow,
when
a court hearing will decide its fate. The move came just nine months
after the
chain—the biggest in southeast England—was acquired by DM
Private
Equity for £32 million, including debt. It already secured an
emergency
cash injection from its owner recently to see it through Christmas.
href='http://news.independent.co.uk/business/news/article333935.ece'>Read
more.