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October 25, 2005
name='1'>District
Court Nearly Ready to Return to New Orleans
The U.S. District Court for the Eastern District of Louisiana,
which moved
out of New Orleans after Hurricane Katrina, will be back in business
at its
Poydras Street headquarters as of Nov. 1, the Times-Picayune
reported
today. While most of the judges and court employees will return to
work at
the 400 Poydras St. courthouse Nov. 1, the court will keep its
temporary offices
open to receive filings and conduct proceedings as needed.
href='http://www.nola.com/news/t-p/neworleans/index.ssf?/base/news-4/11302211…'>Read
more.
Meanwhile, Reuters reported that New Orleans Mayor Ray Nagin said
yesterday
that he had asked for temporary federal funding for courts, a
jailhouse and
other critical functions in the storm-ravaged city, which he
suggested was
near bankruptcy.
id='2'>Changes
to Ontario Asbestos Regulations Take Effect Nov. 1
Ontario has adopted
new standards
for handling asbestos, replacing previous requirements dating back 20
years,
the National Union of Public and General Employees reported today. The
new regulations,
which apply to the use of asbestos in construction projects and in
buildings
and repair operations, become effective Nov. 1. Known officially as
Regulation
278, the changes will apply to most buildings containing asbestos and
include
new provisions for the appropriate removal and sealing of asbestos.
They also
set out new training requirements for workers exposed to asbestos and
establish
stricter requirements for employers in monitoring the use of asbestos.
Read
more.
id='3'>Bankruptcy
Filings Surprise Bankers
Bankruptcy filings
were supposed
to snowball in the months before the tough new law went into effect on
Oct.
17, the New York Times reported today. But the avalanche of
petitions
and the lines of debtors streaming out the courthouse doors caught
even the
credit card issuers who supported the new law by surprise. In recent
days, the
nation’s five biggest credit-card-issuing banks have said that
the unexpectedly
large flood of filings shaved hundreds of million of dollars off their
earnings
in the third quarter. But with tens of thousands of petitions still
being processed
and Hurricane Katrina’s impact on cardholders still being sorted
out, the bankruptcy
rush is likely to result in well over $1 billion worth of losses by
the end
of the year. Of course, most banks projected a tidal wave of filings
in anticipation
of the new rules. They weighed the long-term benefits of a bankruptcy
overhaul
against the short-term costs of the expected surge of bad,
uncollectible debts.
What they misjudged, however, was the extent. More than 500,000
Americans filed
for bankruptcy protection in the 10 days before the law took effect on
Oct.
17, according to estimates by Lundquist Consulting. And though the
number is
expected to soon slow to a trickle, some bankruptcy courts were so
inundated
with filers that thousands more could be counted this week.
href='http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/…'>Read
the full story.
id='4'>Flowers
Ends $768M Refco Bid
Private equity firm J.C. Flowers & Co. withdrew its bid
yesterday for
the futures brokerage business of bankrupt Refco Inc. as other
suitors joined
the bidding race and pushed the purchase price up by nearly $100
million,
Reuters reported yesterday. J.C. Flowers, a private equity firm led
by former
Goldman Sachs banker Christopher Flowers, pulled its bid after a
U.S. bankruptcy
judge said that he would only approve of the unit’s proposed
sale to Flowers
for $768 million if it sharply reduced a break-up fee.
Flowers’ withdrawal
has left U.S. broker-dealer Interactive Brokers Group with the
highest known
offer on the table after it raised its bid to about $858 million to
top a
new joint bid worth $828 million from a Dubai-based investment group
and Yucaipa
Cos., the private equity firm run by billionaire grocery magnate
Ronald Burkle.
Judge Robert Drain said that he was inclined to approve of
J.C. Flowers’
sale agreement if the group lowered the break-up fee to $5 million
from around
$20 million and the expense reimbursement fee to $1 million from $5
million.
After Drain laid out his inclinations, Christopher Flowers, seated
in the
packed courtroom, stood and whispered in the ear of James
Sprayregen
of Kirkland & Ellis, who represented the Flowers group. Shortly
afterward,
Sprayregen told the judge that the firm would no longer proceed with
its bid.
href='http://money.cnn.com/2005/10/24/markets/refco.reut/index.htm'>Read
the full story.
In other news,
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/10/21/AR20051…'>Moscow-based
hedge fund VR Group, named by Refco as a major creditor, said that
it would
challenge the U.S. broker’s bankruptcy filing and that its
operations
were not under threat from the case, Reuters reported on Friday.
VR-related
entities were named in Refco’s chapter 11 suit as creditors to
the tune of
$472 million, making VR Refco’s biggest creditor. But Richard
Deitz, founder
and president of distressed debt specialist VR, vowed to fight
Refco’s filing,
arguing that the money was being held in custody by Refco on
VR’s behalf and
should thus not be included in the bankruptcy process.
id='5'>Commentary—Companies
Use Bankruptcy Threats and Courts to Force Bigger Givebacks, Break
Unions
Employers in heavily
unionized
U.S. industries are turning to bankruptcy courts as a strategy for
gutting union
contracts and imposing layoffs and givebacks even deeper than those
workers
made in the concessions of the early 1980s, a Monthly Review
opinion
piece said today. Bankruptcy-as-a-strategy first became prominent
during the
restructuring of the steel industry in the late 1990s, then spread to
the airlines
after 9/11, leading to a virtual freefall in the bargaining power of
unions
there. With the Oct. 8 chapter 11 filing by Delphi, bankruptcy could
become
the strategy of choice for executives in other heavily unionized core
industries.
Read
more.
id='6'>Delphi
CEO Says Business May Shrink
Delphi Corp. CEO
Steve Miller
expects the biggest U.S. automotive parts supplier to emerge from
chapter 11
roughly a fifth smaller than it is now, Reuters reported yesterday.
Cutting
its business by a fifth would mean that Delphi will shed plants and
lines of
business with revenue totaling about $5 billion before it leaves
chapter 11
protection sometime in 2007. Rivals including Germany’s Robert
Bosch and France’s
Valeo have expressed interest in buying parts of Delphi. Miller has
said that
Delphi must cut wages and benefits to match competitors, who pay their
hourly
workers a half to a third as much as Delphi does. It also expects to
sell or
close a substantial part of its U.S. operations.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/10/21/AR20051…'>Read
more.
Airlines
id='7'>Northwest
Labor Deal Fell Apart Just Before Filing
A possible pay-cut
package
aimed at keeping Northwest Airlines Corp. out of bankruptcy failed
after the
flight attendant’s union refused to sign on, the Minneapolis
Star Tribune
reported Friday. After mechanics went on strike in August, Northwest
union heads
began meeting to come up with concessions that would keep the carrier
out of
bankruptcy. The leaders of five unions eventually agreed to a package
that would
have saved Northwest about $1 billion a year, union leaders said. But
the president
of the Professional Flight Attendants Association (PFAA) decided not
to attend
a crucial Sept. 13 meeting where the other union heads signed off on
the outlines
of the proposal. PFAA President Guy Meek said that he skipped the
meeting because
the striking mechanics had not been included.
href='http://www.grandforks.com/mld/grandforks/12962357.htm'>Read
more.
id='8'>UAL
on Course for Chapter 11 Exit
Judge Eugene R.
Wedoff
of the U.S. Bankruptcy Court for the Northern District of Illinois
approved
UAL Corp.’s disclosure statement Friday, keeping the parent of
United Air Lines
Inc. on pace to emerge from chapter 11 protection in early 2006, the
National
Law Journal reported today. Among the dissenting creditors was the
Pension
Benefit Guaranty Corp. (PBGC), the federal agency that has had to
assume United’s
terminated pensions. Although the approval of the disclosure statement
was expected,
resistance from the PBGC had created some fear among creditors that
United might
be forced to delay seeking Wedoff’s endorsement. The PBGC
earlier this month
filed an objection stating that United had changed the terms of a pact
that
the parties reached last spring, when the PBGC agreed to assume more
than $6
billion in United obligations in exchange for common and preferred
stock in
the company.
href='http://www.law.com/jsp/article.jsp?id=1130157957664'>Read
the full story.
id='9'>Mesaba
Bankruptcy Burdens Corporate Parent
The bankruptcy of
regional
carrier Mesaba Airlines is turning attention toward its parent
company, MAIR
Holdings. MAIR has avoided bankruptcy, even though Mesaba is
responsible for
97 percent of MAIR’s revenue and all of its profits, WOOD TV
reported yesterday.
Mesaba’s only customer is Northwest Airlines, Michigan’s
biggest passenger air
carrier. MAIR and Mesaba maintain separate corporate headquarters.
Critics say
that MAIR contributed to Mesaba’s bankruptcy by creating two
sets of high-paid
executives.