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May 25, 2006
PBGC
Objects to Delta Pilot
Deal
The Pension Benefit Guaranty
Corp. (PBGC) filed a court objection on Wednesday to a Delta Air Lines
pensions deal with its pilots' union, calling it an abuse that could
cost the government billions of dollars, Reuters reported today. The
agency criticized bankrupt Delta Air Lines Inc.'s plan to compensate
pilots for unfunded benefits by giving them $650 million in notes should
their retirement plan be terminated. It said the agreement with the Air
Line Pilots Association ''appears to pose a substantial abuse of the
federal pension plan termination insurance program.'' If the retirement
plan terminates, 'the federal pension insurance program will sustain a
multi-billion dollar loss as a consequence,'' the PBGC said.
href='http://www.nytimes.com/reuters/business/business-airlines-delta.html?pagewanted=print'>Read
more.
id='2'>Unions and
Stakeholders Insist
size='3'>Delphi Has Big Financial
Cushion
Lawyers for Delphi
Corp.'s labor unions and stakeholders insisted Wednesday that the auto
parts supplier has a bigger financial cushion than company officials
admit, the Associated Press reported today. Glenn Kurtz, a lawyer
for
size='3'>Delphi
said at a hearing in U.S. Bankruptcy Court that the supplier's
financial results are running ahead of expectations.
w:st='on'>
size='3'>Delphi
in available liquidity, Delphi Chief Restructuring Officer John Sheehan
said, including $1.9 billion in cash and $1.7 billion in bank
credit.
size='3'>Delphi
underfunded by about $4 billion, Sheehan said, but the company, whose
unions represent about 12,000 retirees, doesn't intend to cancel its
pensions.
href='http://www.nytimes.com/aponline/business/AP-Delphi-Bankruptcy.html?pagewanted=print'>Read
more.
In related news, the
federal judge overseeing Delphi Corp.'s bankruptcy case turned down a
request from General Motors Corp. to postpone a hearing on the
auto-parts maker's request for permission to void its labor contracts,
the Wall Street
Journal reported today. Judge
face='Times New Roman' size='3'>Robert Drain
size='3'>of the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Manhattan
hearings, which resumed Wednesday after a week-and-a-half break, should
continue as planned 'because people need to be assured there is some
structure to the process.' GM, which is in discussions with
size='3'>Delphi
Workers, was seeking more time to avoid a disruptive strike at its
former auto-parts subsidiary. After the judge's denial, GM spokesman
Jerry Dubrowski said the auto maker remained committed to reaching a
consensual agreement.
href='http://online.wsj.com/article/SB114847834492861857.html?mod=us_business_whats_news'>Read
more. (Registration required.)
id='3'>Business Roundtable Leader
Calls for Congressional Action on Pensions
Business Roundtable
President John Castellani demanded immediate action from Congress on
pension overhaul legislation, saying the bill must clear Congress by
June because companies are set to begin their business planning for next
year,
size='3'>CongressDaily reported today. 'You'll
start to see the corporate business plans being put together in August
and September,' Castellani said, asserting, 'it puts us in an artificial
and untenable position next year if we don't have this done.' He listed
pensions among the list of items the group is pushing Congress to
act upon. Although business interests have not been solidly behind all
aspects of the pension legislation, they say they want the certainty of
a new formula they must use for calculating their pension
contributions.
Judge
Approves Enron’s
Civil Settlement with Three Banks
A federal judge approved
a $6.6 billion civil settlement on Wednesday by three banking companies
accused in a lawsuit of helping the Enron Corporation hide financial
abuses that led to its collapse, Reuters reported yesterday. The
settlements, to be paid to former Enron shareholders, include $2.4
billion from the Canadian Imperial Bank of Commerce, $2.2 billion from
J. P. Morgan Chase and $2 billion from Citigroup. Judge Melinda Harmon
of the U.S. District Court in
w:st='on'>
size='3'>Houston gave
preliminary approval to the settlement with the three banks in February.
Including earlier settlements with companies like Lehman Brothers and
Bank of America, shareholders are now to receive more than $7.2 billion
of the $40 billion that plaintiffs in the cases have said they lost in
Enron's collapse.
href='http://www.nytimes.com/2006/05/25/business/businessspecial3/25enron.html?pagewanted=print'>Read
more.
In related news, more
than two dozen former employees of Enron Corp., who received millions of
dollars in accelerated deferred salary payments just before the energy
giant went bankrupt, will pay $21.1 million to Enron’s creditors
under a court-approved settlement,
size='3'>Portfolio Media reported yesterday.
The settlement was a victory for Enron’s employee committee, which
argued in a November 2003 lawsuit that the defendant former employees
were unsecured creditors of Enron and were therefore not entitled to
preferential payments. The settlement was reached in March between the
committee and 27 defendants and was approved May 18 by Judge
Arthur J. Gonzalez
of the U.S. Bankruptcy Court for the Southern District of
New York. The Bankruptcy & Restructuring Group of New York-based
Kronish Lieb Weiner & Hellman LLP, which represents the employee
committee, is still trying to recover accelerated deferred compensation
made to additional “top hat” employees of
Enron.
w:st='on'>
size='3'>
id='5'>Indianapolis
face='Times New Roman' size='3'> Man Indicted on Charges of
Bankruptcy Fraud
An
w:st='on'>
size='3'>Indianapolis
has been indicted by a grand jury on charges of bankruptcy fraud after
filing seven times for bankruptcy from October 2002 to March 2005,
the Indianapolis
Star reported today. The
size='3'>U.S.
Office in
face='Times New Roman'
size='3'>Indianapolis
Billy Reed Roach II, 34, was indicted on seven counts of making false
statements and one count of bankruptcy fraud. Roach filed his bankruptcy
petitions the day before or the day of scheduled sheriff's sales of his
home because he hadn't made mortgage payments since 1999, the
size='3'>U.S.
size='3'>attorney's office said. All of Roach's bankruptcy petitions
were dismissed.
id='6'>Bankrupt Diocese Selling
Property to Pay Settlements
The bankrupt Catholic
Diocese of Spokane is selling its bishop's office building and hopes to
sell all of its other property to raise money to pay victims of clergy
sex abuse, the Associated Press reported today. The
w:st='on'>
size='3'>Pastoral
face='Times New Roman'
size='3'>Center
known as the Chancery, is among $11 million in assets the diocese
claimed when it filed for chapter 11 bankruptcy protection in December
2004, citing more than $81 million in claims.
w:st='on'>
size='3'>Spokane
size='3'>U.S.
size='3'>dioceses that have filed for bankruptcy because of the abuse
crisis. The diocese has announced settlements of about $10 million with
insurance carriers and is negotiating possible settlements with other
insurance companies. A federal bankruptcy judge recently ruled that $80
million in churches, schools and other properties in 82 parishes are
owned by the bishop and could be sold to satisfy creditors, who are
mostly people who claim they were abused by priests and other clergy.
The diocese has appealed that ruling.
href='http://www.nytimes.com/aponline/us/AP-Church-Abuse-Spokane.html?pagewanted=print'>Read
more .
id='7'>Aphton Files for
Bankruptcy
Aphton Corp., a
size='3'>Philadelphia
company, has filed for bankruptcy in the U.S. Bankruptcy
Court in
face='Times


New
Roman' size='3'>Delaware
the Philadelphia
Business Journal reported yesterday. Details
about Aphton's assets and liabilities were not available. Aphton
suffered a major setback last year when it halted development of its
lead experimental cancer drug, Insegia, after determining it could not
afford the costs associated with further development and
manufacturing.
href='http://biz.yahoo.com/bizj/060524/1292746.html?.v=3&printer=1'>Read
more.
id='8'>Quigley Seeks Approval of
Trust for Asbestos Claims
Despite opposition from
insurance companies, Pfizer Inc.’s defunct unit Quigley Co. Inc.
will ask a bankruptcy court to approve its reorganization plan,
which will establish a trust to pay asbestos-related injury claims
to help siphon off the claims from Pfizer, Portfolio Media
reported yesterday. Under the chapter 11 plan, Quigley and Pfizer will
shell out $645 million for existing and future asbestos-related claims.
The reorganization plan has already won the conditional support of the
court-appointed representative for future asbestos claimants, but the
plan has drawn fire from insurance companies, which alleged
that the plan protects Pfizer from dealing with asbestos
liabilities by designating insurers’ policies to the trust without
their permission. The insurers claimed that the plan
“significantly dilutes” the insurers’ rights as well
as the responsibilities of Quigley and Pfizer under the policies. A
number of insurers argued that their policies do not include coverage
for asbestos claims. The case is
size='3'>Quigley Co. Inc., case number
04-15739-smb, in the U.S. Bankruptcy Court for the Eastern District of
New York.
id='9'>Hiring of Temporary Workers
Pushes GM Shares Up
Shares of the General
Motors Corp. rose yesterday after the company began replacing union
employees lost to buyouts and retirements with temporary workers,
Bloomberg News reported. The company is using the temporary employees to
avoid hiring at factories that are closing and to cover shortages caused
by the departures. The automaker wants as
many as possible of its 113,000 union employees to leave after a $10.6
billion loss last year, and hiring the temporary replacements will help
GM close nine factories and three parts depots by 2008.
href='http://www.nytimes.com/2006/05/25/automobiles/25auto.html?_r=1&oref=slogin&pagewanted=print'>Read
more .
International
id='10'>British Prime Minister
Unveils Flagship Pension Reforms
British Prime Minister Tony
Blair said that Britain's planned pension reforms, geared toward making
people work longer and save more to avert a crisis caused by an aging
population, will lay the foundation for provision for generations to
come, Reuters reported yesterday. The government's eagerly awaited
proposals are the most ambitious overhaul of the system in 60 years and
follow years of fierce debate. They aim to provide a more generous state
pension by relinking increases in the state pension to rises in earnings
between 2012 and 2015, according to a government source. Britons are
also expected to see their retirement age raised to 68 from 65. The
country’s pension shortfall is equivalent to about 5 percent of
GDP.
href='http://today.reuters.co.uk/news/newsArticle.aspx?type=topNews&storyID=2006-05-25T103915Z_01_L24661815_RTRUKOC_0_UK-BRITAIN-PENSIONS.xml'>Read
more .