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Senate Democrats Ask SEC To Comment On Bankruptcy Bill
Provision
Senate Judiciary ranking member Patrick Leahy (D-Vt.) and Banking
ranking member Paul Sarbanes (D-Md.) on Thursday asked SEC Chairman
William Donaldson to weigh in on a portion of pending bankruptcy
legislation the senators said would weaken corporate conflict of
interest standards, CongressDaily reported. 'We have concerns
about the wisdom of weakening conflict of interest standards when our
financial markets are still plagued by a lack of confidence in the
standards of corporate behavior,' Sarbanes and Leahy wrote in a letter
to Donaldson. 'Because these changes raise concerns about the proper
role for investment banks during the bankruptcy process, we believe the
expertise of the commission may be helpful in evaluating them,' they
added. At issue is a section of the comprehensive bankruptcy reform bill
passed by the House and pending before the Senate that the Democratic
lawmakers said would allow investment banks that have had a close
financial relationship with the debtor to play a major role in the
bankruptcy process, reported the newswire.
Under existing bankruptcy law, if an investment bank has recently
handled financings for a company, an 'automatic disqualification' will
bar the firm from representing that company in bankruptcy proceedings.
In the House-passed bankruptcy legislation, provisions have been added
to eliminate such automatic disqualification. 'Allowing banks that were
an active part of a company's financial decline to profit from
restructuring the company's assets may be unjust, especially to
investors and pensioners who have suffered financial damage,' the
senators wrote, reported the newswire.
Industry Welcomes Dooley Bill On Asbestos Litigation
Industry supporters of asbestos litigation reform on Thursday applauded
the introduction of a new bill by Rep. Calvin Dooley (D-Calif.), which
uses medical criteria to screen uninjured litigants out of the court
system, CongressDaily reported. 'The current system is a national
disgrace,' said Leigh Ann Pusey, senior vice president of federal
affairs at the American Insurance Association, which backs the Dooley
legislation. Dooley is the first Democratic lead sponsor of asbestos
litigation reform legislation this year. Rep. Chris Cannon (R-Utah)
introduced his own bill last week, and Senate Judiciary Chairman Orrin
Hatch (R-Utah) also is working on a bill. Michael Baroody, executive
vice president of the National Association of Manufacturers and chairman
of the Asbestos Alliance Steering Committee, called the Dooley bill 'the
latest evidence of momentum for reform,' reported the newswire.
Fleming Taps Kmart Treasurer Stenger to Lead Restructuring
Fleming Cos. will hire Ted Stenger, who most recently served as
Kmart Corp.'s treasurer, to lead its chapter 11 reorganization efforts,
Bloomberg News reported. The board approved the appointment of Stenger,
a principal at AlixPartners LLC, as chief restructuring officer, Fleming
attorney Richard Wynne said during a U.S. Bankruptcy Court hearing in
Wilmington, Del. Fleming is seeking $150 million in bankruptcy financing
to help pay suppliers. The company filed for chapter 11 protection
last week after losing a contract to supply Kmart, its largest customer,
and regulators began investigating its accounting. Fleming ousted Chief
Executive Mark Hansen last month and is seeking a replacement, Bloomberg
reported.
Fidelity, HealthSouth's Biggest Investor, Sells 89 Percent of
Stake
Fidelity Investments sold 89 percent of its investment in the operator
of rehabilitation hospitals, which is being investigated for accounting
fraud, Bloomberg News reported.
Fidelity said its U.S. and international funds owned 4.4 million shares
at the end of the first quarter, down from 40.1 million Dec. 31,
according to a filing with the Securities and Exchange Commission. The
SEC on March 19 accused HealthSouth and its chairman and chief executive
at the time, Richard Scrushy, of inflating earnings by $1.4 billion
since 1999. In the past month, nine HealthSouth executives have pleaded
guilty to criminal charges and the scope of the fraud has widened to
$2.5 billion, reported the newswire.
Separately, Bloomberg reported that HealthSouth Corp. said bankers
have agreed to wait until May 1 before making a possible move to force
the company into bankruptcy.
AK Steel Says Disagreements With Union Hinders National
Bid
AK Steel Corp. said disagreements with workers' unions about changes in
staffing and
compensation would make it unable to profitably run National, Bloomberg
News reported. AK Steel missed a deadline yesterday for bidders to reach
an agreement with National's employees, while rival suitor U.S. Steel
Corp. announced a tentative contract. AK Steel's $1.13 billion offer for
National's assets still stands, the company said in a statement. An AK
Steel spokesman wasn't available to elaborate, reported the newswire.
The company said it will apply bankruptcy laws to show how it can still
get the cost savings it wasn't able to secure through labor
negotiations, and will then persuade National creditors and a bankruptcy
judge to approve its bid over U.S. Steel's. U.S. Steel yesterday reached
an agreement with the United Steelworkers of America union that covers
its workers and those at National and would result in the elimination of
about 5,700 jobs, Bloomberg reported.
Creditors to Form Team to Monitor Asia Pulp Trading
Activities
Creditors of Asia Pulp & Paper Co. plan to form a team to monitor
the company's trading activities, production and cash as a condition for
a $13 billion debt restructuring, Bloomberg News reported.
Representatives of export credit agencies from countries
including Germany, Japan and U.S. have yet to get approval for the plan
from their principal offices, said Syafruddin Temenggung, chairman of
Indonesian Bank Restructuring Agency, which is owed about $1 billion.
IBRA has approved the plan, reported the newswire.
Hana Bank Moves to Block SK Global Foreign Creditors
Hana Bank, the main creditor of SK Global Co., took legal action in New
York to try to block overseas creditors of the company from filing suits
to get their money back
ahead of a proposed bailout of the trading company, Bloomberg News
reported. Hana filed a petition with the U.S. Bankruptcy Court Southern
District of News York to block moves by overseas lenders who rejected
South Korean creditor proposals for delayed payments by the company of
its debt, reported the newswire.
U.S. Airlines Would Get $3 Billion in Tentative Deal, Senator
Says
U.S. carriers including AMR Corp.'s American Airlines and UAL Corp.'s
United Airlines would receive about $3 billion in aid to cover Iraq
war-related losses under a tentative agreement reached by House and
Senate negotiators, Senator Ted Stevens said, Bloomberg News reported.
The agreement largely follows the House approach of reimbursing airline
fees in proportion to how much each company paid the government for
security, Stevens, an Alaska Republican who chairs the Senate
Appropriations Committee, told reporters, reported the newswire. The
proposal also includes some money for laid-off airline workers and
language that restricts the pay of carrier executives, Stevens said,
without offering details.
WorldCom Plans to Change its Name to MCI Next Week
WorldCom Inc. will change its name to MCI next week, a person familiar
with the matter said, Bloomberg News reported. WorldCom became the No. 2
U.S. long-distance telephone company in 1998 when it bought MCI
Communications Corp. A new name may help new WorldCom Chief Executive
Officer Michael Capellas break with the company's past, analysts have
said. Capellas is trying to clean up WorldCom's finances to guide it out
of bankruptcy this year. The Clinton, Mississippi-based company, which
sought protection from creditors in July, plans to file a reorganization
plan with the New York bankruptcy court next week, reported the
newswire.
AMR Employees Consider Incentive to Back Cost Cuts
Union leaders representing pilots and flight attendants at AMR Corp.'s
American Airlines were considering a company-offered bonus program that
sweetens the pot for cost-concession agreements the airline says it
needs to stay out of bankruptcy court, the Wall Street Journal reported.
American offered the program after union leaders said ratification of
the tentative agreements, which would slice $1.8 billion in annual
costs, was in doubt. Employees complained the deals were too long at six
years and pay raises were too small at 1.5 percent annually beginning
next year, reported the online newspaper.
Uniroyal Tech Gets Extensions On DIP Loan, Plan Filing
Uniroyal Technology Corp. on Thursday got court approval for one-month
extensions of its interim debtor-in-possession financing facility and
the periods during which it has the exclusive right to file a
reorganization plan and solicit plan votes, Dow Jones reported.
According to D. Farrington Yates, an attorney representing the company
in its bankruptcy case, lender CIT Group/Business Credit Inc. agreed to
extend the loan through May 8 and increase the availability by $500,000,
to $10.5 million. It is the sixth time the interim loan has been
extended. Chief Judge Peter J. Walsh of the U.S. Bankruptcy Court
in Wilmington first approved the loan in October 2002. A hearing to
consider final approval of a $15 million DIP facility is scheduled for
May 8, reported the newswire.
Babcock & Wilcox To Alter Chapter 11 Disclosure
Statement
Babcock & Wilcox Co. will revise the chapter 11 disclosure statement
it submitted to creditors to address objections, attorneys involved in
the boiler maker's bankruptcy case said, Dow Jones reported. Gay Mayeux,
a spokeswoman for Babcock & Wilcox' parent company, McDermott
International Inc., which isn't under chapter 11 protection, told Dow
Jones Newswires on Thursday that no major changes will be made to the
plan. She said another hearing on the disclosure statement is scheduled
for May 8. Mayeux said Babcock & Wilcox is hopeful the bankruptcy
court will set a confirmation hearing for its chapter 11 plan after the
May 8 hearing, reported the newswire.
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