href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
April 13, 2006
name='1'>Congoleum Insurers' Examiner Request Denied
A federal judge ruled
that Gilbert Heintz & Randolph LLP doesn’t deserve to be paid
for its work in Congoleum Corp.'s asbestos-related bankruptcy case, but
it won’t be put under a microscope either,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. U.S. Bankruptcy Judge
face='Times New Roman' size='3'>Kathryn Ferguson
size='3'>, currently overseeing the bankruptcy proceedings of the
flooring materials manufacturer, brushed aside the insurance carriers'
request to appoint a special investigator to examine Gilbert Heintz.
Gilbert Heintz was originally hired as special insurance counsel by
Congoleum in January 2004, a month after the New Jersey-based flooring
materials business filed for bankruptcy. But the firm has recently found
itself at the center of controversy in the bankruptcy case, with Judge
Ferguson voiding $13 million in attorney fees sought by Gilbert Heintz
due to an alleged conflict of interest.The firm is
currently appealing the judge’s decision.
name='2'>Allied Holdings Wins Extension for Chapter 11
Plan
Despite opposition from
unsecured creditors over Allied Holdings Inc.’s request for an
exclusive extension, a bankruptcy judge has granted the car transporter
company an additional three months to retain sole right over its chapter
11 reorganization plan,
size='3'>Portfolio Media reported yesterday.
Judge W. Homer Drake of the U.S. Bankruptcy Court in
the Northern District of Georgia ruled Tuesday to extend Allied’s
control over its plan through July 15 and its exclusive right to
petition for creditor support of its plan through Sept. 13. While Allied
was not granted its initial request for a five-month extension over its
bankruptcy case, it still gained a few extra months. The company's
exclusive right to file a plan was initially set to end April 28 and its
right to gain support of its plan from creditors was to end June
27.
name='3'>Interim Trustee Named for
face='Times New Roman' size='3'>Kansas
size='3'>,
size='3'>Oklahoma
size='3'>
Mexico
Felicia S.
Turner, U.S. Trustee for
w:st='on'>
size='3'>Georgia
size='3'>Florida
U.S. Virgin Islands (Region 21), will also be serving as trustee
for
size='3'>Kansas
w:st='on'>
size='3'>Oklahoma
size='3'>New Mexico
size='3'>(Region 20) for an interim period, the U.S. Trustee Program
announced yesterday. Turner is temporarily filling the vacancy left by
the U.S. Trustee Mary E. May, who died on March 25,
2006, after having served with great distinction since September 2002.
Turner has been the U.S. Trustee for Region 21 since August 2003. Prior
to her appointment, she was a partner in an Atlanta-based law firm,
where she was a member of the bankruptcy practice group and the
litigation section.
name='4'>Pension Accounting Change Rule May Wipe Out
Equity
Pending changes in the
way corporations are required to account for the costs of their pension
plans would have wiped out more than $220 billion in shareholder equity
at the nation's largest companies, according to a study released
yesterday, and reduced the 'net worth' of some them, including General
Motors Corp., to less than zero had they been in effect last December,
the Washington
Post reported today. The study of 100 of the
nation's largest private pension plans by the Milliman consulting firm
found that the new accounting rules may pose a serious threat to the
shrinking number of companies that sponsor these traditional
'defined-benefits' pensions. The rules could make balance sheets look
weaker, sometimes even when pension plans are fully funded, the study
said. The rules, promulgated recently by the Financial Accounting
Standards Board, a private group that sets the standards for financial
statements by public companies, are designed to provide more clarity
about a company's true assets and liabilities. This will cause 'a
significant hit' to shareholder equity of many companies, Milliman's
John W. Ehrhardt said.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/04/12/AR20060…'>Read
more.
name='5'>Commentary: The Trojan Pension Bill
Pension reform was among
the unfinished business left behind last week when Congress adjourned
for a two-week recess, but long before that, the bill had ceased to be
only about pensions, according to an editorial in today’s
New York Times
size='3'>. As the lawmakers were preparing to go home, the efforts
became increasingly focused on tax cuts. Before the recess,
Congressional Republicans renewed their efforts to pass another round of
tax cuts, and it quickly became clear that they wanted more than would
fit into one tax bill without busting yet another budget. They then
began 'cross negotiating' and they raised the possibility of stuffing
the excess tax cuts into the pension reform package. So far, the ploy
has served only to highlight the extent to which the pension bill is
already a grab bag of bad tax ideas.
href='http://www.nytimes.com/2006/04/13/opinion/13thu3.html?_r=1&oref=slogin&…'>Read
more.
Autos
GM
Doesn't Expect Strike at
w:st='on'>Delphi
General Motors Corp.
executive Robert Lutz said the auto maker's executives 'absolutely
refuse to believe that there's going to be a strike' at top supplier
Delphi Corp., the Wall
Street Journal reported today. However, GM
asked the federal judge overseeing Delphi's bankruptcy reorganization to
deny the
size='3'>Troy
w:st='on'>
size='3'>Mich.
scrap 5,472 money-losing GM contracts to give GM more time to analyze
Delphi's request, an indication that Delphi's efforts to streamline its
operations could hurt its No. 1 customer. GM has said it is stockpiling
parts in case of a strike and has sought to diversify its supplier base
as
size='3'>Delphi
lines of business. Delphi's unions, most notably the United Auto Workers
union, have said a strike would be likely if
w:st='on'>
size='3'>Delphi
No action is expected until early to mid-June. Lutz said that GM,
size='3'>Delphi
Workers union would benefit from a strike.
href='http://online.wsj.com/article_print/SB114487321588124323.html'>Read
more. (Registration required)
name='7'>Commentary: Road to Possible Bankruptcy for
GM
The crisis engulfing the
UAW and the companies entered a new stage with last year's bankruptcy of
Delphi, the nation's largest manufacturer of automobile parts, which was
the pebble of a potential avalanche, according to a commentary in
today’s
face='Times New Roman'
size='3'>Washington
face='Times New Roman' size='3'>Post. Perhaps
it means the bankruptcy of GM. Certainly it means, for the UAW and for
organized labor generally, the worst crisis since the National Labor
Relations Act of 1935 enabled private-sector unionization. Detroit's
Jobs Bank, which was GM's idea, is a product of an oligopoly's misplaced
sense of permanent abundance: They assumed that layoffs, if any, would
be brief because expansion of demand for their products would generally
be automatic. Under contracts negotiated, beginning in 1984, with the
United Auto Workers (UAW), there are about 14,700 laid-off autoworkers
in the 'Jobs Bank.' About 7,500 of them are from GM. They get paid most
of their wages and benefits -- between $100,000 and $130,000 a year, for
an annual cost to GM of $750 million to $900 million. The former workers
-- expected to be 17,000 by next year -- are required to do nothing that
adds value to the auto companies.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/04/12/AR20060…'>Read
more.
name='8'>Northwest Pilots to Get Equity in
Reorganization
Northwest Airlines Corp. pilots
will hold an $888 million claim to be paid in stock when the carrier
emerges from bankruptcy, the pilot's union said in a presentation to
members, the Associated Press reported today. Northwest pilots are
voting through May 3 on the tentative agreement reached with the airline
last month. The deal came after a strike threat and tough negotiations
that blew past two deadlines set by a bankruptcy court judge. The union
believes Northwest will have $5 billion to $6 billion in unsecured
claims, chief union negotiator Bill Dollaway said. At $888 million, the
pilots' share amounts to 13 percent of all the unsecured claims, and
will be paid in shares in the reorganized company, Dollaway
said.
href='http://www.nytimes.com/aponline/business/AP-Northwest-Bankruptcy.html?p…'>Read
more.
name='9'>Adelphia Proposes Deal to End Creditor Fight
Cable-television operator
Adelphia Communications Corp., which has been operating under bankruptcy
protection since 2002, is growing increasingly concerned that fighting
among its creditors may derail plans to sell itself to Time Warner Inc.
and Comcast Corp. in a transaction now valued at $16.9 billion,
the Wall Street
Journal reported today. Adelphia's management
yesterday proposed a settlement in the creditor battle between holders
of $4.9 billion in senior notes issued by Adelphia's holding company and
those holding $1.7 billion in debt issued by Adelphia's Arahova
Communications Inc. operating subsidiary. The proposal, included in
Adelphia's latest reorganization plan filed with the bankruptcy court,
roiled the debt market because it favored the Arahova side over the
holding company creditors. If it is approved, Arahova creditors
initially would get $1.04 for every $1 of notes they hold.
Holding-company creditors would get 14 cents to 43 cents on the dollar,
depending on what notes they own. Adelphia's latest reorganization plan
also resets the value of its planned sale to Time Warner and Comcast,
reflecting the overall decline in cable-company stocks. Originally the
deal, which was announced last year, called for Adelphia creditors to
get $12.7 billion in cash and stock valued at $4.9 billion in the new
company Time Warner plans to create out of its existing cable operation
and the new subscribers it would add from the deal. The latest plan
reduces the value of the stock to about $4.25 billion. Adelphia's deal
with Time Warner and Comcast calls for it to close no later than July
31.
href='http://online.wsj.com/article_print/SB114485549441524034.html'>Read
more. (Registration required)
name='10'>O'Sullivan Industries Emerges from
Bankruptcy
O'Sullivan Industries Inc. has
come out of chapter 11 protection successfully and closed on an exit
financing loan, getting a revolving credit facility of up to $50
million, the Atlanta Business Chronicle reported today. The
Roswell, Ga.-based office, home, storage and organizational products
company reported it already has drawn $27.3 million. Also, $2.7 million
of letters of credit are outstanding under the loan agreement.
href='http://www.bizjournals.com/atlanta/stories/2006/04/10/daily15.html?t=pr…'>Read
more.
name='11'>Michael
w:st='on'>
size='3'>Jackson
Said to Be Close
Michael Jackson, the
onetime pop-music king who has endured a lengthy slide toward
insolvency, is close to a deal that would keep him from bankruptcy by
refinancing hundreds of millions of dollars in loans, the
New York Times
size='3'>reported today. As part of the transaction, he will also agree
at some point in the future to give up a part of a prized asset, a song
catalog that includes Beatles' hits, to the Sony Corporation, people
briefed on the plan said. Jackson, who spent years racking up debt to
underwrite his lifestyle even as his music career faded, has appeared to
teeter on the brink of ruin several times in recent years. Last month,
he all but closed his sprawling
face='Times New Roman' size='3'>California
size='3'>ranch called Neverland, a move that came after the
size='3'>California
size='3'>authorities threatened to sue over unpaid wages to ranch
employees. Mr. Jackson used his stake in the song catalog as part of the
collateral for about $270 million in loans from Bank of America. The
bank sold the loans last year to Fortress Investment Group, a New
York-based investment company that buys distressed debt. The entire
catalog, of which Jackson owns 50 percent, has been valued around $1
billion.
href='http://www.nytimes.com/2006/04/13/business/media/13music.html?pagewante…'>Read
more.
name='12'>Activist Attorneys General Go After Business
A combination of eased federal business regulation and corporate
consolidation has dramatically transformed the role of state attorneys
general, increasing their clout to shape national public policy through
aggressive litigation, according to the
size='3'>Leonard Post yesterday. The shifting
legal and corporate landscape has now made unified action among state
attorneys general -- combined with creative individual actions -- a
strategic necessity. 'For AGs to do what they did in the past, today
often requires crossing state lines,' said James Tierney, a
former
face='Times New Roman' size='3'>Maine
attorney general. 'When I sued a pharmacy 25 years ago
for price-posting violations, that pharmacy didn't have stores in 30
states, and it didn't have an online sales presence. That's no longer
true.' Recent victories by AGs working together have included a $295
million settlement among 49 states, the
w:st='on'>
size='3'>District of Columbia
size='3'>and Ameriquest over the mortgage loan company's alleged
predatory lending practices, reached in January. As attorneys general
attend to enforcement issues, their activism has led to fierce
opposition from major national players on the corporate end of commerce.
The pharmaceutical industry, energy companies, securities dealers,
insurers and auto and cigarette manufacturers say that many state
enforcement actions have unsettled the marketplace, which relies on a
predictable nationwide regulatory environment. 'Attorneys general can
set policy through litigation in a state court or a federal court
lawsuit for the whole nation,' said Lisa Ricard, president of the U.S.
Chamber of Commerce’s
w:st='on'>
size='3'>Institute
Reform
href='http://www.law.com/jsp/ihc/PubArticleIHC.jsp?id=1144845715769'>Read
more.
name='13'>Supreme Court Votes to Allow Citation to Unpublished
Opinions in Federal Courts
The Supreme Court adopted
a historic rule change that will allow lawyers to cite so-called
unpublished opinions in federal courts starting next year, the
Legal Times
size='3'>reported yesterday. The new rule takes effect unless Congress
countermands it before Dec. 1.
size='3'>The justices' vote represents a major milestone in the
long-running debate over unpublished opinions, the sometimes-cursory
dispositions that resolve upward of 80 percent of cases in federal
appeals courts nationwide. In some circuits these dispositions have no
precedential value and cannot be cited. Under the new rule, circuits
will still be able to give varying precedential weight to unpublished
opinions, but they can no longer keep lawyers from citing them -- in the
same way lawyers cite rulings from other circuits or other authorities,
such as law review articles.
href='http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1144845716431'>Read
more.
International
name='14'>British Unions Suspend Planned Pension
Strikes
British unions battling local
government over pensions have agreed to suspend plans for more strikes
like that which shut thousands of schools last month -and return to
negotiations, Reuters reported yesterday. The GMB and Unison unions had
previously said they would hold regional strikes across the country
later this month, following up on industrial action by more than a
million workers in March. However, a meeting between the unions
representing workers under the Local Government Pension Scheme on
Wednesday ended in agreement to suspend planned strikes and re-start
talks with employers, the Trades Union Congress said. The umbrella group
said unions were on the way to agreeing a new bargaining framework to
thrash out new pension conditions.
href='http://today.reuters.co.uk/news/newsArticle.aspx?type=topNews&storyID=2…'>Read
more.
name='15'>Retiring Canadian Judge Calls for Pension Legislation
Overhaul
Retiring
size='3'>Ontario
James Farley is calling for an overhaul of Canadian
pension laws as scores of companies struggle with huge deficit
assessments, the Canadian Press reported yesterday. Farley, 65, the
country's top insolvency judge presiding at Ontario Superior Court, has
been involved with numerous large firms that obtained bankruptcy
protection and reported seriously underfunded pension plans, including
Stelco Inc., Algoma Steel and Air Canada. 'It's a very unfortunate
situation where people have worked hard, they've made contributions to
their pension, the company has made contributions to the pension, but
come the day that the pension is drawn upon, there isn't the funding,'
Farley said. In his most recent case, with
Hamilton, Ont.-based steelmaker Stelco, the union was pushing for an
up-front contribution of hundreds of millions of dollars into Stelco's
pension deficit. Creditors argued that the money would be better spent
cleaning up Stelco's debts, and the steelmaker cited the need for funds
to upgrade its operations. Of the problems with pension deficits, Farley
said, 'in one example, I was shown an actuarial chart that showed a very
significant increase in unfunded pension liabilities, literally
overnight.”
href='http://www.canada.com/nationalpost/news/story.html?id=4b387135-9e8d-411…'>Read
more.
w:st='on'>
name='16'>Russian
Court
size='3'> Includes Oil Company in Yukos
Bankruptcy
A
w:st='on'>
size='3'>Moscow
included a former unit of the shattered OAO Yukos oil company in the
list of Yukos creditors, a move that could strengthen the hand of state
oil company Rosneft as Yukos goes into bankruptcy procedures, the
Associated Press reported today.
size='3'>According to the RIA-Novosti news agency, the
Arbitration Court
Yukos owed the Yuganskneftegaz unit -- today owned by OAO Rosneft --
nearly $1 million
size='3'>Yukos still owes Russian tax authorities billions of dollars
after Yuganskneftegaz was sold in a state-ordered auction to pay off
part of a $28 billion tax bill. Observers have suggested that Rosneft is
hoping to acquire Yukos' remaining assets if it is liquidated. Rosneft
has said its plans to increase output do not include buying Yukos
assets, however.
href='http://biz.yahoo.com/ap/060413/russia_yukos.html?.v=2&printer=1'>Read
more.