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August 31, 2005
Damage to Economy Is Deep and Wide
As Hurricane Katrina plowed through the Mississippi River basin,
shutting down ports, flooding cities and cutting power lines,
href='http://www.nytimes.com/2005/08/31/business/31econ.html?ex=1283140800&en…'>economists
warned that it was likely to leave a deeper mark on the national economy
than previous hurricanes because of its profound disruption to the
Gulf of Mexico’s complex energy supply network, the New York
Times reported today.
href='http://www.nytimes.com/2005/08/31/business/31econ.html?ex=1283140800&en…'>Read
the full story.
Pension Trustees Vote to Release Documents to Investigators
The board of trustees of the San Diego City Employees Retirement
System voted Tuesday to
href='http://www.signonsandiego.com/news/metro/pension/20050830-1621-pensiond…'>turn
over documents subpoenaed by investigators, a move that could hasten
completion of a long-awaited audit, San Diego News Service reported
yesterday. Board President Peter Preovolos, answering reporters’
questions after the announcement of the vote results, said that the move
did not amount to a waiver of attorney-client privilege. The documents
will go to the Securities and Exchange Commission, U.S. Attorney’s
Office and District Attorney’s Office. Members of the city’s
audit committee will also be allowed access to the documents, but not
the city attorney, Preovolos said.
href='http://www.signonsandiego.com/news/metro/pension/20050830-1621-pensiond…'>Read
the full story.
Equitas Settles Asbestos Liabilities for $300 Million
Equitas, the reinsurer set up to rescue Lloyd’s of London from
collapsing under the influx of asbestos-related claims in the 1990s, has
settled some of its largest remaining direct liabilities with a $300
million payment, the Insurance Business Review reported
yesterday. The reinsurer has agreed to settle with six major U.S.
policyholders, including Kaiser Aluminum Corporation, a producer of
fabricated aluminum products, Crane Company, an engineering group, and
Congoleum, a manufacturer of sheet and tile floor coverings. Three other
companies have also been included in the settlement but have yet to be
named.
Encore Capital Group Acquires Leading Bankruptcy Service Provider
Ascension Capital Group Ltd.
Encore Capital Group Inc., an accounts receivable management firm,
href='http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/…'>has
acquired Ascension Capital Group Ltd., a provider of bankruptcy
services to the finance industry, for a combination of $17.8 million in
cash, $4.0 million in common stock and assumption of approximately
$450,000 in debt, according to a news release on PRNewsire today. Based
in Arlington, Texas, Ascension Capital Group serves as the outsourced
manager of secured bankrupt accounts for many of the nation’s
leading lenders.
href='http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/…'>Read
the full story.
Insurers Obligated to Defend in Asbestos Claims
The commercial liability insurers for shipping and engineering giant
Kvaerner are obligated to defend the company against thousands of
asbestos actions filed against it since the fall of 2001, a Philadelphia
judge has ruled. Kvaerner U.S. Inc. v. One Beacon Insurance
Co. was handled in Philadelphia’s Commerce Case Management
Program, the Legal Intelligencer reported today.
Interpreting the language of policies issued to Kvaerner by One Beacon,
Judge Albert W. Sheppard Jr. held that the asbestos-related personal
injury claims at issue did not, as One Beacon had contended, stem from
“a single occurrence” as defined in the policies. Sheppard
ordered the insurance companies to pay 100 percent of the defense costs
incurred by the company after September 2001 in defense against asbestos
claims. Timothy Russell of Spector Gadon & Rosen, the attorney who
represented Kvaerner in the matter, said that Sheppard’s ruling
means that the liability limits on Kvaerner’s One Beacon policies
could be applied several times over, instead of just once.
Trustee Sues Bankrupt Videogame Maker Acclaim for More Than $150
Million
Almost exactly a year after videogame maker Acclaim Entertainment
declared bankruptcy, the trustee overseeing its liquidation has sued
former company officials, alleging that they used the company “as
if it were a personal piggy bank,” Newsday reported.
The filing of the 47-page suit, which is seeking damages in excess of
$150 million, follows an extensive examination by the trustee of books
and records belonging to Acclaim, the former publisher of such hits as
Mortal Kombat and Turok: Dinosaur Hunter.
Airlines
Delta’s Cash Holdback Lower Than Thought
In a Securities and Exchange Commission filing last week, Delta Air
Lines Inc. estimated that it will need a $625 million cash reserve at
the end of October in order to extend its contract with its credit card
processor, the Business Journal of Jacksonville reported
today. The Atlanta-based airline’s original contract was set to
expire on Aug. 29, but it extended the contract to Oct. 31 earlier this
month. At the time, Delta estimated its cash holdback would need to be
$750 million. Now it says it needs $625 million.
Airlines Eye U.S. Oil Reserve for Relief
Hurricane Katrina’s impact on oil production and refining has
added yet another hurdle for the struggling airline industry,
MarketWatch reported yesterday. This year, there have been few empty
seats because aggressive competition is keeping airfares low. Yet jet
fuel prices remain high, giving the industry little ability to offset
billions more in expenses. Katrina sent oil futures past $70 a barrel to
a record high yesterday. In response, some airline industry officials
are hoping that President Bush will tap the almost 700-million barrel
strategic petroleum reserve. The White House has asked the Energy
Department to consider opening the reserve, stored underground in
Louisiana and Texas—a move that the Air Transport Association, an
airline industry trade group, endorses.
Kmart Charges Settled
Two former Kmart Corp. employees and two from Newell Rubbermaid Inc.
have settled civil charges that they conspired to falsify financial
reports that inflated Kmart’s earnings, the Chicago
Tribune reported today. Former Kmart employees David Levine and
Michael Spake, and Rubbermaid employees Barry Berlin and Douglas Ely
agreed to the settlement, according to Securities and Exchange
Commission orders filed yesterday. The SEC said that the four helped
Kmart improperly book millions of dollars of payments from Atlanta-based
Rubbermaid. According to the complaint, the employees’ actions
caused Kmart’s net income for the fourth quarter and fiscal year
ended Jan. 31, 2001, to be overstated by approximately $4.8 million.
Kmart restated financial reports after it filed for bankruptcy in
January 2002. Kmart acquired Sears, Roebuck and Co. in March. The new
company, called Sears Holdings Corp., is based in Hoffman Estates.