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April 26, 2006
Key
Provision Dispute Threatens to Stall Pension Reform
As the debate over how
best to reform
w:st='on'>
size='3'>U.S.
size='3'>pension law continues to rage in Congress, a proposed special
provision for bankrupt airlines is threatening to derail the
finalization of a bill intended to force businesses to honor their
pension obligations,
size='3'>Portfolio Media reported yesterday.
With a slew of airlines and automotive businesses falling prey to
bankruptcy over the last year, the question of how to ensure that
defined benefit pension plans remain adequately funded in the face of
financial difficulties has taken center stage in Congress. “The
major players wanted to create some greater stability and flexibility on
the private pension system that the PBGC oversees,” says
R. Scott
Williams, co-chair of the Legislation
Committee for the American Bankruptcy Institute and a partner at Haskell
Slaughter Young and Rediker LLC. But for the last month, a 26-member
House and Senate conference has been unable to resolve the differences
between the House and Senate editions of the pension bill, running into
serious roadblocks in their efforts to agree on one version. A new
target date of May 29 has been set, but several sticking points remain,
such as the Senate bill’s provision that would provide relief for
struggling airlines, including bankrupt Northwest Airlines and Delta
Airlines, by granting them an extra 20 years to fully fund their pension
plans.
name='2'>Talks Collapse Between Delphi and Its Second-Largest
size='3'>Union
Talks between bankrupt
Delphi Corp. and its second-largest labor union have broken down over
the auto supplier's plan to drastically cut wages and slash thousands of
factory jobs through early retirement offers, the
face='Times New Roman' size='3'>Detroit News
size='3'>reported today. Officials with the International Union of
Electronic Workers-Communications Workers of America (IUE-CWA), which
represents 8,500
size='3'>Delphi
negotiations late last week when 'it became clear they weren't making
any progress,' said IUE spokeswoman Lauren Asplen. The standstill comes
two weeks before U.S. Bankruptcy Judge
size='3'>Robert D. Drain considers a
size='3'>Delphi
dismantling its union contracts, absent concessions by the unions. The
situation highlights growing tensions between Delphi and the IUE-CWA,
which has plotted a more militant course in dealings with
size='3'>Delphi
Workers, the supplier's largest union with 24,000 members. It may push
the union closer to a strike that would have disastrous effects on
the
size='3'>U.S.
but particularly on General Motors Corp.,
w:st='on'>
size='3'>Delphi
customer.
href='http://www.detnews.com/apps/pbcs.dll/article?AID=/20060426/AUTO01/60426…'>Read
more .
Refco
Creditors Take Aim at Bennett Financier BAWAG
Seeking more than $1.3
billion, unsecured creditors for Refco Inc. are suing Austrian bank
BAWAG PSK Group, accusing the financier of helping propel the futures
broker into bankruptcy through a series of fraudulent loans to
Refco’s embattled former chief,
size='3'>Portfolio Media reported yesterday.
Central to the allegations is a $420 million loan from BAWAG to former
Refco chief executive officer Phillip R. Bennett in October 2005, just
days before Refco stunned Wall Street with its massive insolvency. In an
initial victory for the creditors, Bankruptcy Judge
size='3'>Robert D. Drain (S.D.N.Y.)
size='3'>, froze up to $1.3 billion of Bawag's assets in the
size='3'>United States
size='3'>as an initial response to the suit. Bennett used the BAWAG loan
to repay $430 million in bad debt to Refco’s Bennett-controlled
subsidiary, Refco Group Holdings Inc., the last place plaintiffs say
Bennett floated the debt in an effort to hide it. In addition, the
lawsuit refers to a “complicated web of secret relationships and
historical transactions between BAWAG, Bennett, Bennett’s company
[Refco Group Holdings] and certain of the debtors,” the motion
said.
ABB
Receives Court Approval to Tap $51 Million in Funding
A recently bankrupt
unit of Swiss engineering giant ABB Ltd. has received court approval to
tap more than $50 million in financing to maintain operations during
what the company plans to be a brief stint in chapter 11,
Portfolio Media
reported yesterday. The approval was granted to the
company’s Houston-based oil and petrochemical technology service
unit, ABB Lummus Global Inc., which filed a pre-arranged bankruptcy
petition and plan April 21 in the U.S. Bankruptcy Court for the District
of Delaware. Bankruptcy Judge
size='3'>Judith Fitzgerald approved
ABB’s request to tap, on an interim basis, up to $25 million in
financing and as much as $26 million in loan guarantees from various
corporate affiliates. Judge Fitzgerald also scheduled a June 21 hearing
to consider the
size='3'>company’s chapter 11 plan, which was arranged to help the
company navigate complicated asbestos-related claims that have mired a
number of ABB’s units over the years.
Bear
Stearns Seeks Back-Up Bid in PlusFunds Sale
Bear Stearns Asset
Management Inc. is still looking to purchase PlusFunds Group Inc.,
even though the sale of the investment-fund manager to private equity
firm FTVentures has already been cleared by the bankruptcy judge,
Portfolio Media
reported yesterday. Bear Stearns has asked the U.S.
Bankruptcy Court in
w:st='on'>
size='3'>Manhattan
revise the sale in order to squeeze itself into the fine print and be
named the back-up bidder in the PlusFunds auction. As a back-up, Bear
Stearns would take over PlusFunds if FTVentures fumbles the deal. The
company spoke up after PlusFunds neglected to appoint it as a back-up
bidder after last week’s auction. Last week, Judge
face='Times New Roman' size='3'>James M. Beck
size='3'>signed off on the $5 million sale of PlusFunds to FTVentures, a
San Francisco-based firm, which will purchase the investment-fund
manager as a going concern. Under the sale terms, PlusFunds is required
to obtain authority to transfer two critical licenses over to
FTVentures, but the licenses are tying up the closing of the deal.
PlusFunds depends on one license to use the Standard & Poor Hedge
Fund Index, and yet another license to use software by OTC Inc., but
both S&P and OTC Inc. have opposed the PlusFunds
sale.
name='6'>Pennsylvania Coal Company Faces Bankruptcy
For the second time in
two years, Pottsville, Pa.-based Lehigh Coal and Navigation Co. (LCN) is
facing involuntary bankruptcy proceedings in federal court, the
Lehighton (Pa.) Times
News reported today. Clerks in both the
Harrisburg and Wilkes-Barre locations of the U.S. Bankruptcy Court for
the Middle District of Pennsylvania confirmed that a petition has been
filed on behalf of creditors. The papers were originally filed to
the
size='3'>Harrisburg
week and then referred on Friday to the
face='Times New Roman' size='3'>Wilkes-Barre
size='3'>court due to LCN's location in
w:st='on'>
size='3'>Schuylkill
w:st='on'>
size='3'>County
was granted a $9 million federal loan in part to re-hire workers
following a shutdown five years ago, but the company is in default of
that repayment.
href='http://www.tnonline.com/apps/pbcs.dll/article?AID=/20060425/TN_NEWS/104…'>Read
more .
name='7'>Northwest Pilots Drop Effort to Recall Union
Leader
Leaders of the Northwest
Airlines pilots union have dropped, for now, their effort to oust union
leader Mark McClain over frustrations with the pay cuts he has endorsed
to keep the bankrupt airline aloft, the Associated Press reported today.
The possibility of McClain's recall was being watched as a barometer of
pilot support for the tentative agreement between the carrier and the
union, which averted a possible strike. Voting on the agreement runs
through May 3. Just last week, seven of the 12 voting members of the
Master Executive Council called a special meeting to consider recalling
McClain, who has led the union since 1999. Eagan, Minn.-based Northwest
Airlines Corp. began looking for union givebacks in 2003, saying it
needed them to stay out of bankruptcy. McClain, alone among Northwest's
union leaders, agreed that the cuts were necessary.
href='http://www.nytimes.com/aponline/business/AP-Northwest-Pilots.html'>Read
more .
name='8'>Clarion Technologies Not Planning Bankruptcy
Filing
A Clarion Technologies
Inc. executive said that the company has no plans to file for bankruptcy
and hopes to have issues related to recent loan defaults worked out over
the next few weeks, the
face='Times New



Roman'
size='3'>Grand Rapids
size='3'>(
face='Times New Roman'
size='3'>Mich.
Press reported yesterday. BDO Seidman LLP said
there is substantial doubt about the company's ability to remain
financially stable, citing unresolved loan defaults, ongoing losses from
operations and substantial debts.
size='3'>Chief Financial Officer Edmund Walsh said the company is
working through the situation and has no plans to file for bankruptcy.
The company is a major supplier of plastic shelving and panels to
Swedish refrigerator manufacturer
w:st='on'>
size='3'>Electrolux
face='Times New Roman' size='3'>AB
size='3'>and also makes parts for the automotive and office furniture
industries. Seidman based its conclusion on recurring losses from
operations, a deficit of $85.9 million and recent defaults on the
company's loan agreements, according to Clarion's annual report.
href='http://www.mlive.com/business/grpress/index.ssf?/base/business-3/114597…'>Read
more .
Former Enron Corp.
chairman Kenneth L. Lay told jurors in his fraud trial that he never
doubted the integrity of the company's finance chief until a day in late
October 2001, when he was 'shocked' to learn that Andrew S. Fastow had
collected $45 million from secretive business partnerships, the
Washington Post
reported today. The disclosure that Fastow had profited
handsomely contradicted previous assurances that his moonlighting would
not get in the way of his responsibility to Enron, Lay testified. A day
before Fastow left the company, Lay told employees he was certain his
chief financial officer 'operated in the most ethical and appropriate
manner possible.' Lay, 64, has blamed improper dealings by Fastow, a
campaign by short sellers to drive down Enron's stock price and
aggressive media reports for Enron's spiral into bankruptcy court. Lay
contends he believed then -- and still believes -- that Enron was
'fundamentally sound.'
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/04/25/AR20060…'>Read
more .
w:st='on'>
name='10'>Maryland
face='Times



New
Roman' size='3'>Public Pension Bill Signed into
Law
w:st='on'>
size='3'>Maryland
teachers and state employees will get better retirement pensions, thanks
to $120 million in improvements signed into law yesterday, the
Associated Press reported today. The pension bill allows people hired
after 1998 to retire with 54 percent of their pre-retirement income, up
from about 42 percent. The new law calls for the workers to contribute
more money toward their retirement, from 2 percent to 5 percent over
three years. It raises the multiplier, or the percentage of the average
salary that is paid for each year of service, from 1.4 percent to 1.8
percent. That means monthly payments to retirees would increase.
href='http://www.washtimes.com/functions/print.php?StoryID=20060425-113107-75…'>Read
more .
href='http://www.washtimes.com/functions/print.php?StoryID=20060425-113107-75…'>