href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
April 21, 2009
name='1'>Lenders Battle Lawmakers over Letting Courts Modify
Mortgages
As lenders begin to implement the
Obama administration's foreclosure rescue program, Senate Democrats are
negotiating with the financial services industry over a key part of the
plan that would permit bankruptcy judges to cut the principal owed on a
mortgage by chapter 13 debtors, the
size='3'>Washington Post reported today. The
negotiations, which have also included the Credit Union National
Association, have touched on provisions pushed by the financial services
industry to blunt the impact of the change. For example, lenders want
the cramdown authority to expire by 2014 and there is also debate about
how to make bankruptcy modification the last resort for borrowers. It is
currently unclear whether even the support of major lenders would be
enough to bring along the rest of the financial services industry, which
has argued that mortgage cramdown would drive up losses and that
homeowners would flood bankruptcy courts.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/04/20/AR2009042003230_pf.html'>Read
more.
Commentary:
California Bill Would Prohibit Builders from Doubling as
Lenders
A bill currently being considered
in the California Legislature would prohibit homebuilders from issuing
mortgages on the homes they build, according to an editorial in
today’s New York
Times. The bill’s sponsor, California
Assemblyman V. Manuel Pérez, said that the problem is that many
consumers who bought homes from corporate builders ended up caught in a
closed loop: forced by hard-sell tactics and deception to use the
builders’ in-house mortgage and title companies. Homeowner
advocates say that the system is rigged against the consumer and riddled
with inherent conflicts of interest. Many of the loans extended by
homeabuilders in California, according to the editorial, included
interest-only loans that were affordable for a few years, but then
exploded with single balloon payments of tens of thousands of
dollars.
href='http://www.nytimes.com/2009/04/21/opinion/21tues3.html?ref=opinion&pagewanted=print'>Click
here to read the full editorial.
Judge Keeps
Madoff Assets Secure for Forfeiture
The government won a battle
yesterday in its effort to maintain control over Bernard Madoff's assets
when a judge protected the assets from being disturbed by investors
seeking to force the jailed financier into personal bankruptcy, the
Associated Press reported. U.S. District Judge Denny Chin signed a
restraining order preventing more than $100 million in personal assets
from being moved, sold or dissipated. Judge Chin said that the order was
necessary because there is probable cause to believe the property would
be subject to forfeiture to the U.S. government because of crimes
committed by Madoff. Additionally, Bankruptcy Judge
face='Cambria' size='3'>Burton R. Lifland
size='3'>yesterday ordered the appointment of a temporary trustee to
handle issues regarding assets that must be protected for the case to
force Madoff into personal bankruptcy that was brought last week by
several investors. Judge Lifland ordered the temporary trustee to
coordinate with a trustee overseeing the bankruptcy case involving
Madoff's business assets so that any disputes over what happens to
assets and how claims can be made are resolved.
href='http://news.yahoo.com/s/ap/20090420/ap_on_bi_ge/madoff_scandal_2/print'>Read
more.
Autos
Treasury
Report Claims Pay Rule Led Chrysler to Spurn Loan
Treasury's special inspector
general for the federal bailout said that top officials at Chrysler
Financial turned away a government loan because executives didn't want
to abide by new federal limits on pay, the
face='Cambria' size='3'>Washington Post
size='3'>reported today. The government had offered a $750 million loan
earlier this month as part of its efforts to prop up the ailing auto
industry, including Chrysler, which is trying to avoid bankruptcy.
Chrysler Financial officials denied that the company's executives had
refused to accept new limits on their pay, adding that the firm turned
down the loan because it no longer needed it. Their account, however,
conflicts with a report set to be released today by Treasury special
inspector general Neil M. Barofsky, saying that the executives' refusal
led Treasury to withdraw the loan offer.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/04/20/AR2009042002156_pf.html'>Read
more.
Dealer
Jobs Disappear as GM, Chrysler Bankruptcy Threat
Looms
Thousands of GM and Chrysler LLC
dealers across the United States are preparing for the probability that
as many as 5,000 of them will be forced to close because of an
automaker’s bankruptcy, Bloomberg News reported yesterday. Dealers
say they’re ordering fewer vehicles, cutting expenses, retiring
debt and firing workers to preserve cash. U.S. auto dealers have been
protected for decades by state franchise laws, which make unilateral
termination of their franchises difficult. The federal code trumps state
law, say bankruptcy experts, allowing the automakers to shrink their
retail networks at will.Anticipating weak demand for vehicles as well as
the potential collapse of Detroit automakers, AutonationInc., the
biggest dealer chain in the U.S., cut vehicle orders 60 percent in the
first quarter. GM, facing a June 1 deadline to come up with a
restructuring plan to receive more government funding, said in February
that it intended to shut down 2,100 of the 6,248 dealers it had at the
end of 2008.
href='http://www.bloomberg.com/apps/news?pid=20601109&sid=aSefFiFMRV2I&refer=home'>Read
more.
Treasury
Secretary Weighs Bank Repayments
Treasury Secretary Timothy
Geithner indicated that the health of individual banks won't be the sole
criterion for whether financial firms will be allowed to repay bailout
funds, the Wall Street
Journal reported today. Geithner laid out
broad principlesin judging whether banks can repay their government
investment, including the need to consider the overall health of the
financial system and the flow of credit. Among large banks, Goldman
Sachs Group Inc.and J.P. Morgan Chase & Co. have both said they want
to repay the government.'We want to make sure that the financial system
is not just stable, but also not inducing a deeper contraction in
economic activity. We want to have enough capital that it's going to be
able to support a recovery,' Geithner said.
href='http://online.wsj.com/article/SB124027087650836931.html#mod=testMod'>Read
more. (Subscription required.)
Asyst
Technologies to File for Chapter 11
Chip manufacturing equipment
maker Asyst Technologies Inc. said yesterday that it plans to file for
chapter 11 protection, the San
Jose Business Journal reported today. Fremont,
Calif.-based Asyst also said that its Japanese subsidiaries, Asyst
Technologies Japan Holdings Company Inc. and Asyst Technologies Japan
Inc., have made related filings under Japan’s corporate
reorganization law.The company, which supplies the world's top 20
chipmakers, blamed falling demand in the semiconducter markets amid the
global recession. It said it expects to continue essential operations,
including product support, service and warranty programs, during
bankruptcy reorganization.
href='http://www.bizjournals.com/sanjose/stories/2009/04/20/daily5.html?t=printable'>Read
more.
Bankruptcy
Judge Approves Magna Financing
Bankruptcy Judge
face='Cambria' size='3'>Mary Walrath agreed to
grant final approval of a modified financing plan for horse-track owner
Magna Entertainment Corp. (MEC), the Associated Press reported
yesterday. Ontario-based Magna Entertainment is the largest horse track
owner in the United States. Its holdings include Golden Gate Fields in
Northern California, Gulfstream Park in Florida, Lone Star Park in Texas
and Baltimore's Pimlico racetrack.
size='3'>The financing plan calls for $38.4 million to be provided to
MEC by a subsidiary of its parent company, MI Developments. The amount
was reduced from the $62.5 million initially proposed, and the maturity
extended 60 days until Nov. 6, allowing a longer marketing period for
potential sales of MEC's assets.
href='http://www.forbes.com/feeds/ap/2009/04/20/ap6314026.html'>Read
more.
Buffets
Holdings’ Chapter 11 Plan Approved
The U.S. Bankruptcy Court for the
District of Delaware on Friday confirmed
size='3'> Buffets Holdings Inc.'s chapter 11
reorganization plan following the restaurant chain's securing of exit
financing, Bankruptcy
Law360 reported yesterday. Under the newly
confirmed plan, Buffets is scheduled to receive an estimated $117.5
million in new first-lien exit financing from various lenders and an
additional $139.8 million in second-lien rollover financing will remain
from the prepetition lenders.The case is
size='3'>In re Buffets Holdings Inc., case
number 08-10141.
href='http://bankruptcy.law360.com/articles/97485'>Read
more. (Subscription required.)
Six Flags
Urges Debt Exchange to Avoid Early Default
Struggling theme-park giant Six
Flags Inc. is asking bondholders holding $588.3 million in senior
secured notes to take a proffered equity exchange, warning that failure
to do so could result in significant losses to shareholders if the
company is forced into chapter 11 by early default,
face='Cambria' size='3'>Bankruptcy Law360
size='3'>reported yesterday.Under the proposed terms, holders of $131.1
million in 8 7/8 percent senior notes due in 2010 would received 19.24
shares of common stock per thousand dollars of note value.Bondholders
with $142.4 million in 9 3/4 percent senior notes due in 2013 would
receive 18.93 shares of stock per thousand-dollar value, and owners of
$314.8 million in 9 5/8 percent senior notes, coming due in 2014, would
get 19.6 shares per thousand dollars, the company said.Six Flags also
announced that it would take advantage of a 30-day grace period to delay
payment of $7 million previously due on April 15 for bondholders in
possession of the 9 5/8 notes maturing in 2013. It said that if it was
unable to come up with the interest payment by May 15, it could be
forced into an early default.
href='http://bankruptcy.law360.com/articles/97734'>Read
more. (Subscription required.)
Judge
Orders Creditors to Probe Taping Claim in Philadelphia Newspapers’
Case
Bankruptcy Judge
face='Cambria' size='3'>Jean K. FitzSimon told
bankrupt Philadelphia Newspapers to focus on its financial
reorganization while others investigate claims that an investor
illegally tape-recorded a sensitive meeting, the Associated Press
reported yesterday. Judge FitzSimon yesterday appointed unsecured
creditors to pursue the company's charge that a senior lender recorded a
key financial meeting in November, allegedly souring the pre-bankruptcy
negotiations. Philadelphia Newspapers, which operates
face='Cambria' size='3'>The Philadelphia Inquirer
size='3'>and Philadelphia Daily
News, filed for bankruptcy in February citing
nearly $395 million in debt.
href='http://www.nytimes.com/aponline/2009/04/20/business/AP-Philadelphia-Newspapers-Bankruptcy.html?dbk=&pagewanted=print'>Read
more.
International
Click here to review
today's global insolvency news from the GLOBAL INSOLvency site.