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February 23,
2007
name='1'>Trustee Objects to
w:st='on'>
size='3'>London Fog Bonus
Plan
U.S. Trustee
Sara L. Kistler
has objected to London Fog Group Inc.’s plan to pay
incentive bonuses to its chief financial officer and retention payments
to three accounting professionals, Bankruptcy Law360 reported
yesterday. The bankrupt rainwear maker wants the court to approve a
“winddown” pact with CFO Marv Toland that would pay him $300
an hour for services unrelated to the collection of assets. It would
also pay him 1 percent of all settlement assets collected and
liquidated, 5 percent of all other assets valued at up to $1 million,
and 10 percent of all assets valued at more than $1 million. In
addition, three accounting professionals would receive retention
payments totaling $20,250 for analyzing claims, collecting remaining
assets and terminating pension plans.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=19147'>Read
more. (Registration required.)
name='2'>Commentary: Ruling in Hedge Fund Bankruptcy Garners the
Attention of Wall Street
Bankruptcy Judge
Burton R.
Lifland’s order last week for Bear
Stearns to pay almost $160 million to investors in a hedge fund for
failing to detect fraud has caught the attention of many professionals
on Wall Street, the New
York Times reported today.
face='Times New Roman' size='3'>The case involving Bear Stearns had its
origins in 1996, when Manhattan Investment Fund manager Michael Berger
bet that technology stocks would fall; when they didn’t, he
constructed an elaborate scheme to hide his losses — about $400
million. The SEC sued, and Berger pleaded guilty to securities fraud in
2000. The fund declared bankruptcy and Berger fled the country. Angry
investors tried to sue a number of deep-pocketed parties, including Bear
Stearns, who was the prime broker, for aiding and abetting the fraud,
but a federal judge threw that case out in 2001. Then the trustee tried
something different: they sued Bear Stearns in bankruptcy court for
$141.4 million — money that Manhattan Investment gave to Bear
Stearns in the year before the collapse to allow Berger to trade. Bear
Stearns, the trustee argued, was not merely a “conduit” for
funds, but an actual “transferee.” They argued that Bear
Stearns did not accept the transfers in good faith — essentially
saying that the investment bank should have known about the
fraud.
href='http://www.nytimes.com/2007/02/23/business/23insider.html?ref=business'>Read
more.
Bush
Administration Rejects Call for Increased Oversight of Hedge
Funds
The Bush administration said
Thursday that there was no need for greater government oversight of the
rapidly growing hedge fund industry and other private investment groups
to protect the nation’s financial system, the New York
Times reported today. Instead, the administration, in an agreement
it reached with the independent regulatory agencies, announced that
investors, hedge fund companies and their lenders could adequately take
care of themselves by adhering to a set of nonbinding principles. The
decision came after months of study by a presidential working group of
top officials and regulators. They looked at both the hedge fund
industry, which has more than $1 trillion in assets, and the management
of private equity firms, which take direct control and ownership of
companies rather than relying on large numbers of outside
stockholders.
href='http://www.nytimes.com/2007/02/23/business/23hedge.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='4'>Trustee Disputes Disclosure Statement and Attorney’s
Fees in
face='Times New Roman' size='3'>Spokane
Diocese Bankruptcy
U.S. Trustee
Gary Dyer
size='3'>filed objections yesterday to the
w:st='on'>
size='3'>Spokane
w:st='on'>
size='3'>Wash.
disclosure statement as well as the billing statements of attorneys for
both the Spokane Diocese and alleged abuse victims, KXLY.com reported
today. The trustee objected to the Diocese disclosure statement, saying
that the plan does not have enough information, and that makes
evaluating the risk to Diocese churches and schools nearly impossible.
Dyer asked the bankruptcy judge to deny the plan in its current form.
Dyer also questioned the billing of Paine Hamblin, who billed for as
many as four attorneys to review a single document. The firm is also
being questioned for sending and billing for multiple attorneys to
attend the same meetings.
href='http://www.kxly.com/news/?sect_rank=2§ion_id=560&story_id=8757'>Read
more.
w:st='on'>
name='5'>Pittsburgh
face='Times New Roman' size='3'>Brewing Moves Closer to Bankruptcy
Exit
Pittsburgh Brewing
intends to propose its reorganization plan next Tuesday for ending its
14-month bout of bankruptcy, the
size='3'>Pittsburgh Post-Gazette reported
today. The deadline for filing the plan has been delayed twice in the
hope that the proposed buyer, an investment group led by John N. Milne
of Unified Growth Partners, will be able to negotiate a reorganization
plan that would satisfy the brewer's creditors. Among those creditors
who may not be satisfied is the Pittsburgh Water and Sewer Authority,
whose threat to terminate service over more than $2 million in unpaid
bills triggered the bankruptcy. Wholesalers who distribute the
brewery's
face='Times New Roman' size='3'>Iron
size='3'>City
Light products also may have objections.
href='http://www.post-gazette.com/pg/07054/764320-28.stm'>Read
more.
name='6'>Collins & Aikman Reaches Deal with
Nissan
Bankrupt auto parts firm
Collins & Aikman Corp. has reached a deal with Nissan Motor Co. in
which the Japanese car maker has approved of the company’s
recently filed reorganization plan,
size='3'>Bankruptcy Law360 reported yesterday.
The settlement, filed with the court on Tuesday, must now win approval
from Bankruptcy Judge
size='3'>Steven W. Rhodes, who scheduled a
hearing on the matter for March 15. Details of the settlement, which was
reached with Nissan North America Inc., the company’s
size='3'>U.S.
size='3'>subsidiary, were confidential, and parts of it may be filed
with the court under seal. Collins & Aikman’s reorganization
plan will be the subject of a hearing on April 19.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=19119'>Read
more. (Registration required.)
name='7'>Northwest Creditors Oppose Shareholder
Committee
The unsecured creditors
involved in the bankruptcy case of Northwest Airlines have objected to a
motion that would create an official shareholder committee, arguing that
formalizing the group would detract from the proceedings,
Bankruptcy Law360
reported yesterday. The airline itself has also opposed
the creation of an official shareholder committee, claiming that the
interests of the shareholders are adequately represented.
However, in a motion filed on Jan.
11 requesting the official committee, attorneys for the shareholders
said that Northwest is now a profitable airline, with estimated equity
of more than $1.5 billion, and is ripe for a merger.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=19108'>Read
more. (Registration required.)
Grants Lionel Exclusivity Extension
Lionel LLC was granted a
fourth extension to exclusively file its chapter 11 plan Thursday,
allowing the model train maker additional time to solve a trade-secret
dispute that has derailed its reorganization planning, the Associated
Press reported yesterday. The judge said Lionel could have extra time to
file it plan after the Sixth Circuit Court of Appeals in
size='3'>Cincinnati
final decision in the trade-secrets lawsuit filed by the company's
rival, Mike's Train House. The company told the judge it couldn't file a
plan until the decision is handed down. Lionel will keep control of its
chapter 11 case for another 60 days after the Sixth Circuit's ruling.
The solicitation period will be extended from April 30 for an additional
href='http://www.woodtv.com/Global/story.asp?S=6128503&nav=0Rce'>Read
more.
name='9'>TROUBLED COMPANIES IN THE NEWS
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quarter.
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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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size='3'>Alcatel-Lucent, the Franco-American
manufacturer of telecommunications equipment which recently said it
wants to cut nearly 1,500 French jobs, or about 12% of its workforce in
France, by 2008, could face strikes by unionized workers in that
country. The French job cuts are part of a broader plan by
Alcatel-Lucent to slash its worldwide payroll by 12,500
positions.
size='3'>General Maritime Corp., a
size='3'>Manhattan
w:st='on'>
size='3'>N.Y.
operator, reported its fourth quarter net income tumbled 79%--to $22.4
million, on a 56% drop in revenue--to $52.6 million. For the year, its
net income slid 26%--to $157 million, while revenue was down 43%--to
nearly $246 million.
size='3'>Krispy Kreme Doughnuts Inc.,
the
size='3'>N.C.
donut shops, will take another $16 million in noncash charges in
connection with a settlement of shareholder litigation. The company
earlier took $35.8 million in charges related to the matter, as it
continues trying to overcome past accounting and investigation problems
so that it can focus on its donut business.
size='3'>Lexicon Genetics Inc., the Woodlands,
Tx., reported a fourth quarter net loss of $13.8 million. Revenue
declined 53%--to $16.1 million. For the year, it lost $54.3 million on a
4% revenue decline--to $72.8 million. Lexicon Genetics uses special
genetically manipulated mice for studying the effects of
drugs.
size='3'>Sento Corp., a
w:st='on'>
Lake City,
w:st='on'>
size='3'>Ut.
customer-contact outsourcing and software, reported a third quarter net
loss of $3.2 million. Revenue declined 17%--to $12.5
million.
size='3'>Veritas Software Corp. agreed to pay
$30 million in civil penalties in order to settle Securities and
Exchange Commission allegations that it engaged in fraud to manipulate
its earnings and that it supposedly went along with another fraud
attempt at the America Online unit of Time Warner Inc. of New
York. Veritas neither admitted nor denied any wrongdoing in the
matter.