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May 4, 2005
Fed Raises U.S. Rates to 3 Percent
The Federal Reserve raised interest rates by a quarter-percentage
point, as expected, yesterday, and signaled that rates will continue to
rise at a “measured” pace, CBS MarketWatch
reported. The policy-setting Federal Open Market Committee blamed high
energy prices for the slowdown in consumer spending, suggesting that the
economy’s resulting softness could be temporary.
Forum Shopping Alleged in Chapter 11 Cases
Florida food retailer Winn-Dixie’s bankruptcy filing in New
York has renewed allegations that a forum-shopping war between the
states includes bankruptcy judges engaging in competition for cases, the
National Law Journal reported. It has become common for big
corporations to file bankruptcy reorganization cases in either Delaware
or New York, no matter where the headquarters are. Read the full article
at
href='http://www.law.com/jsp/article.jsp?id=1114679111369'>www.law.com/jsp/article.jsp?id=1114679111369.
New Bankruptcy Law Includes Changes Affecting Employee Benefit Plans
and Executive Compensation
A mondaq.com article highlights the most significant
provisions of the Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005 affecting employee benefit plans and executive compensation.
These include amendments providing additional protection from creditors
for employee contributions to and interests in retirement plans and
education savings plans, facilitating employees’ repayment of plan
loans and placing significant additional restrictions on pre– and
postpetition payments to insiders and on pre-petition modifications to
retiree health plans. Read the full article at
href='http://www.mondaq.com/i_article.asp_Q_articleid_E_32295'>www.mondaq.com/i_article.asp_Q_articleid_E_32295
(registration required).
Cone Mills’ Bankruptcy Plan Approved and Completed
Cone Mills’ plan to emerge from its chapter 11 bankruptcy has
been officially completed, bizjournals.com reported. Under the plan,
approved in April by a federal bankruptcy court judge, Cone Mills Corp.,
along with Cone Foreign Trading LLC and Cornwallis Development Co., have
sold all of their assets to WL Ross & Co. Proceeds from the sale
will be used to pay creditors. Some holders of Cone Mills–issued
debt will receive ITG stock.
Northwest Finance Chief Resigns from Position
Northwest Airlines’ CFO resigned from the company, and a
Northwest executive who helped steer US Airways Group Inc. through its
first bankruptcy reorganization was named to succeed him, the Wall
Street Journal reported. Northwest is losing money and facing
union unrest over its pressure for labor concessions, the newspaper
reported.
AT&T, Comcast to Settle At Home Corp. Claims
AT&T Corp. and Comcast Corp. will together pay $340 million to
settle claims related to the bankruptcy of At Home Corp., an Internet
access company previously controlled by AT&T, the online Wall
Street Journal reported. AT&T said it reached the agreement
to pay $340 million to a bondholders liquidating trust that was pursuing
claims on behalf of the At Home estate. Comcast, as part of the terms of
its 2002 purchase of AT&T’s broadband assets, will pay $170
million of the settlement.
US Airways Restates Net Loss
Bankrupt US Airways today said it took a $91 million charge in its
recently reported first quarter related to the termination of three
benefit pension plans, Reuters reported. The company’s net loss
for the quarter was $282 million, or $5.13 a share, as opposed to the
net loss of $191 million reported for the quarter last Friday. The
carrier repeated that it plans to exit bankruptcy in mid-2005. US
Airways has until May 31 to file a business plan without interference
from creditors.
Sherritt Seeks Approval to Bid Again for Stelco
Sherritt International said yesterday it wants to make another
takeover bid for Stelco Inc., Canada’s biggest steelmaker, which
is currently under bankruptcy protection, Reuters reported. The
Toronto-based resource company said it has asked the Ontario Superior
Court to lift confidentiality restrictions the court has imposed on
Stelco’s restructuring process.
Disappointing Forecast Dulls Tyco Turnaround
Tyco International Ltd.’s turnaround disappointed investors
yesterday when the company’s full-year outlook for earnings and
free cash flow fell short of Wall Street estimates, Reuters reported.
The company lowered the high end of its fiscal-year earnings forecast
range by a nickel and cut its full-year free cash flow view by about
$500 million.