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May 16, 2007
Foreclosures
Fuel
size='3'>
name='1'>Alabama's
Rising Bankruptcy Rate
The number of personal
bankruptcies in
face='Times New Roman' size='3'>Alabama
last year fell to the lowest level in two decades, but
some lawyers say escalating foreclosure filings helped to worsen the
state's bankruptcy ranking, the
size='3'>Birmingham News reported today. While
the number of personal bankruptcies in
w:st='on'>
size='3'>fell to 19,420 in 2006, down from 47,515 a year earlier, the
state's bankruptcy rate, measured in terms of the number of households
for each filing, rose to No. 3 last year from No. 8 in 2005. Only
size='3'>Tennessee
size='3'>Georgia
size='3'>had worse rates.
size='3'>An analysis by the American Bankruptcy Institute show there
were slightly more than 107 households per filing in the state last
year.
size='3'>Alabama trailed
size='3'>Tennessee
per filing, and
w:st='on'>
size='3'>Georgia
with 96 per filing.
size='3'>Birmingham bankruptcy lawyers
Brad Botes and Ted
Stuckenschneider said
w:st='on'>
size='3'>Alabama
to the top five is partly due to a jump in foreclosures.
size='3'>Alabama reported 4,348
foreclosure filings last year, up 1 percent, with the Birmingham-Hoover
area accounting for more than half of those filings, according to
RealtyTrac, a
face='Times New Roman'
size='3'>California
that tracks foreclosures across the nation.
href='http://www.al.com/business/birminghamnews/index.ssf?/base/business/1179303790284960.xml&coll=2'>Read
more.
href='http://www.abiworld.org/statcharts/householdStat2006.pdf'>Click
here to view ABI’s Households per Filing chart for
2006.
Denies Request for Trustee in New Century Case
A bankruptcy judge has
rejected a government request that a U.S. Trustee be appointed to
oversee subprime lender New Century Financial Corp.’s chapter 11
case, Bankruptcy
Law360 reported yesterday. Judge
size='3'>Kevin Carey said that he was
satisfied with efforts of New Century and the unsecured creditors’
committee to maximize assets, Power said. However, Judge Carey urged the
parties to negotiate the appointment of an examiner with limited scope.
In documents filed Monday, the office of the U.S. Trustee argued that
NewCentury had sold
a portfolio of loans for $58 million, identified a stalking-horse bidder
for its servicing business, shuttered its loan origination platform, and
laid off the vast majority of its employees while seeking permission to
pay substantial bonuses.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=24731'>Read
more. (Registration required.)
In related news, HSBC
Bank USA and Washington Mutual have objected to New Century’s
motion for relief from its automatic stay, arguing that the
company’s suggested protocol for handling foreclosure proceedings
is unfair, Bankruptcy
Law360 reported yesterday. New Century filed
for relief from the automatic stay on May 3 to allow foreclosures of
senior liens, but the move has drawn protests from HSBC and Washington
Mutual. The investment banks hold thousands of first mortgages in which
the debtors may hold junior liens, and these mortgages may become
delinquent in the wake of the company’s bankruptcy, according to
court papers. Both HSBC and Washington Mutual have taken issue with the
debtor’s idea of how relief from the stay should be handled,
especially the $1,000 payment New Century has requested for each notice
of foreclosure.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=24810'>Read
more . (Registration required.)
size='3'>Airlines
name='3'>Creditors Defend Northwest Plan
Responding swiftly to
objections of Northwest Airlines Corp.’s strategy for exiting
bankruptcy, a creditors' group has thrown its weight behind the plan,
saying the carrier is poised to emerge a healthy and viable
company, Bankruptcy
Law360 reported yesterday.
face='Times New Roman' size='3'>The unsecured creditors’ committee
insisted that the airline’s controversial management equity plan
(MEP), which has raised a storm with Northwest’s union workers,
was both reasonable and “necessary to ensure the retention of the
debtors’ talented management team.” Northwest filed its
disclosure statement on Feb. 15, estimating the airline’s
post-bankruptcy value at $6.45 to $7.55 billion and promising its
unsecured creditors up to 83 percent of their claims before allocation
of stock options under the MEP. The MEP sets aside 7.7 percent of the
reorganized debtors’ equity for distribution to 5,200 employees in
the form of 8 million shares of restricted stock units and another 5.5
million in stock options to Northwest directors, managing directors and
officers. Under the plan, a further 1.6 million shares would be granted
to top employees below the director level and 6 million shares would be
kept in reserve for future employees. Opponents of the MEP, which
include the airline's unionized workers, claim the equity awards are
excessive and that the plan breaches the Bankruptcy Code.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=24775'>Read
more. (Registration required.)
Auto
name='4'>Pilots Take to Annual Meeting to Protest AMR
Executives’ Pay
While many companies
encounter only shareholders at their annual meetings, AMR, the parent of
American Airlines, executives and its board are expected to face many
employees angered by $21 million in bonuses received by top executives
last month, the New York Times reported today. These workers,
who took pay cuts and made other concessions worth $1.62 billion a year
through 2008, say they want the company to tie executive pay to
performance more closely and to put that pay to an advisory vote of its
investors. American Airlines, one of the few
major airlines able to avoid bankruptcy after the terrorist attacks of
September 2001, is having something of a rebound. AMR earned $231
million in 2006, its first profit since 2000. Passenger revenue last
year was almost 30 percent higher than it was in 2002. The Allied Pilots
Association sponsored one of the proposals on the ballot at AMR this
year; it would require that the company put its executive compensation
to an advisory vote of shareholders each year. Such proposals have been
common at public companies this year but, with the exception of last
week’s vote at Blockbuster, have not received support from a
majority of shareholders.
href='http://www.nytimes.com/2007/05/16/business/16proxy.html?pagewanted=print'>Read
more.
Real
Estate Tax Firm Files for Bankruptcy
The 1031 Tax Group said
that it owed nearly $151 million as it filed for chapter 11 protection
on Monday, the Denver
Post reported today. The company's owner
borrowed about $132 million from investor funds and invested it in other
ventures, according to court documents. 1031, based in
w:st='on'>
size='3'>Richmond
w:st='on'>
size='3'>Va.
companies, such as Denver-based Investment Exchange Group, that
temporarily hold investor proceeds from real-estate transactions for tax
purposes. The
size='3'>U.S. attorney's
office in
face='Times New Roman' size='3'>Richmond
is investigating the 1031 Tax Group, according to a
statement filed by James Lukenda, a consultant hired by the company to
oversee its restructuring. Federal agents seized documents from the
company April 27, Lukenda said. The company owes its top 20 creditors
$68 million.
href='http://www.denverpost.com/ci_5904266?source=rss'>Read
more.
Autos
name='6'>Analyst Says that
face='Times New Roman' size='3'>Delphi
size='3'>May Be Nearing Deal with Unions, GM
A leading auto industry
analyst said that Delphi Corp. may be nearing agreements with the United
Auto Workers and former parent General Motors Corp. the auto parts maker
needs to exit bankruptcy, Reuters reported yesterday. “From what I
understand, Delphi is very close to putting the final deal together,
that would be in the next week or so,'' said David Cole, chairman of the
Center for Automotive Research. If
face='Times New Roman' size='3'>Delphi
size='3'>does reach agreements with GM and the UAW, it would follow
tacit UAW approval of private equity firm Cerberus Capital Management's
plans to buy Chrysler. Cerberus is also co-leader of a $3.4 billion
equity investment proposal for
face='Times New Roman' size='3'>Delphi
size='3'>.
size='3'>Delphi
reorganization plan by the end of July, but may need to find a
replacement for Cerberus in the proposed equity investment and revise
its outline for treating creditor claims. The equity investment,
and
size='3'>Delphi's plans to divest
several business lines, depend on the company reaching agreements with
its unions and GM on myriad issues including wages, benefits, work
rules, plant closings and long-term customer contracts.
href='http://www.nytimes.com/reuters/business/business-delphi.html?pagewanted=print'>Read
more.
name='7'>Commentary: Chrysler Deal Heralds New Direction for
w:st='on'>Detroit
By effectively agreeing
to sell 80.1 percent of Chrysler Group to private-equity firm Cerberus
Capital Management LP, German auto maker DaimlerChrysler AG has set the
table for a potentially far-reaching restructuring of Detroit's
faltering auto giants, according to a Wall Street Journal
commentary today. The
size='3'>New York investment firm and
the German auto company have set an ambitious goal: to work with the
powerful United Auto Workers union to restructure the $18 billion
that
size='3'>Detroit's No. 3
auto maker estimates it will eventually owe for UAW retiree health care
benefits. Daimler, Chrysler's German parent, was unwilling to shoulder
that burden. Many big airlines and steelmakers have chosen to file for
chapter 11 bankruptcy protection to reduce such liabilities. If Cerberus
can devise a formula for doing so outside of bankruptcy court, Ford
Motor Co. and General Motors Corp. would almost certainly try to follow
suit, potentially affecting some $95 billion in total retiree health
care obligations.
href='http://online.wsj.com/article/SB117913164108101758.html?mod=hpp_us_at_glance_most_pop'>Read
more. (Registration required.)
In related
news, Cerberus Capital Management
LP founder Stephen Feinberg met yesterday with leaders of Chrysler's two
main unions in an effort to ease labor worries about Cerberus' planned
acquisition of 80.1 percent of Chrysler, the Wall Street Journal reported
today. Daimler said today that its supervisory board approved the sale
of its stake in Chrysler to Cerberus. Cerberus Capital Management LP
founder Stephen Feinberg offered assurances that the company plans
no immediate job cuts beyond the 13,000 previously proposed. One key
labor leader, Canadian Auto Workers union leader Buzz Hargrove, who
previously had expressed opposition to a private equity takeover,
praised the decision. Hargrove said that Cerberus committed to not
cutting additional hourly jobs in
w:st='on'>
size='3'>Canada
size='3'>until at least September 2008, when the current CAW contract
with Chrysler expires.
href='http://online.wsj.com/article/SB117924979402803621.html?mod=home_whats_news_us'>Read
more. (Registration required.)
International
name='8'>Calpine Settles with Canadian
Subsidiaries
Bankrupt energy company
Calpine Corp. has reached a settlement with its Canadian subsidiaries
that, if approved, will eliminate $1.1 billion in claims in the
company’s chapter 11 proceedings,
size='3'>Bankruptcy Law360 reported yesterday.
The agreement, disclosed on Tuesday in an 8-k filing with the U.S.
Securities and Exchange Commission, will resolve $250 million in
inter-company claims, filed against Calpine by several of its Canadian
branches that have also filed for bankruptcy. Calpine expects to emerge
from chapter 11 protection by the end of June, according to a recent
filing with the U.S. Securities and Exchange Commission. In the 10-Q
form, filed with the SEC on May 9, the company outlined milestones
reached during its stay in bankruptcy protection, and stated that
although the bankruptcy has been anything but smooth, “we believe
our accomplishments to date have positioned us to capitalize on our core
competencies and successfully emerge from chapter
11.”
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=24786'>Read
more. (Registration required.)
name='9'>TROUBLED COMPANIES IN THE NEWS
1000’s of companies lose
money or experience some form of difficulty each
quarter.
The business news
articles below are taken from the
size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and
Other Business News published by Bastien
Financial Publications.
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Daily e-Summary, that emails you information on over 70 such companies
each morning, email
face='Times New Roman' color='#0000ff'
size='3'>steve@creditnews.com
size='3'>your name, company name, address, phone and fax.
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size='3'>Allied Defense Group Inc., a
size='3'>Vienna
w:st='on'>
size='3'>Va.
manufacturer, reported a first quarter net loss of $17.9 million.
Revenue sank 44%–to $19.6 million.
size='3'>Decorator Industries Inc., a
size='3'>Pembroke Pines
Fl. maker and seller of window coverings, reported a first quarter net
loss of $90,000. Revenue declined 16%–to $12.2
million.
size='3'>Emmis Communications Corp., an
size='3'>Indianapolis
operator of radio stations, reported a fourth quarter net loss of $10.5
million. Revenue declined nearly 5%–to $78.6 million. For
the year, its net income sank 68%–to $114 million. Revenue
declined 5%–to $360 million.
size='3'>Environmental Tectonics Corp.,
size='3'>Southampton
w:st='on'>
size='3'>Pa., reported a
fourth quarter net loss of $2.9 million. Revenue declined 43%–to
$3.8 million. For the year, it lost $8.7 million on a 31% revenue
decline–to $17.4 million. The company makes simulators and other
products.
size='3'>EXCO Resources Inc., a
size='3'>Dallas
and gas exploration and production company, reported a first quarter net
loss of $87.7 million. Revenue tumbled 75%–to $28.5
million.
size='3'>InPhonic, a
w:st='on'>
size='3'>Washington
w:st='on'>
size='3'>D.C.
phone-service plans, will restate its results for the second, third and
fourth quarters of 2006 to now include widened losses of as much as
$24.3 million, up from an earlier reported $17 million loss. The net
loss for the year will be upped from $2 million to $7
million.