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June 30, 2008
E.D.N.Y. Courthouse to Be Named in
Honor of Conrad Duberstein
In honor of former ABI Director the late Chief Judge Conrad B.
Duberstein, the Senate last week approved H.R. 430 to designate the U.S
Bankruptcy Court for the Eastern District of New York located at 271
Cadman Plaza East, Brooklyn, N.Y., as the 'Conrad B. Duberstein United
States Bankruptcy Courthouse.' The bill, introduced by Rep. Edolphus
Towns (D-N.Y.) in January 2007, passed out of the Senate on June 24 and
now awaits President Bush's signature.
href='http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:h430enr.txt.pdf'>Click
here to read the full text of the legislation.
Dura Emerges from
Bankruptcy
Dura Automotive Systems Inc. emerged from chapter 11 protection Friday,
making it the fourth largest auto supplier to leave bankruptcy in
the last year, the Detroit Free Press reported on Sunday. Dura
was part of a wave of multibillion-dollar auto suppliers that racked up
debt acquiring other companies in the 1990s. The Rochester Hills,
Mich.-based company then was squeezed by rising steel prices and
production cuts from customers. In 2006, Dura lost a key contract with
Lear for seat adjusters on GM's large truck line, prompting its chapter
11 filing in October of that year. Even as Dura emerges, the industry's
troubles have only worsened. Steel prices have more than doubled since
January, prompting Dura to join customers' bulk purchasing
programs.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20080628/BUSINESS01/806280321'>Read
more.
Corporate-Debt Costs Stay
High
More than three months after the rescue of Bear Stearns Cos., investors
are still demanding hefty premiums on corporate debt to compensate for
risk, the Wall Street Journal reported today. The riskiest
portion of the corporate-debt market looks most vulnerable, as companies
with triple-C ratings are still enjoying yields that look low as the
default rate ticks up. The deterioration in the riskier high-yield
market has been more pronounced than the decline in the investment-grade
universe in June. The high-yield derivative index, called the Markit CDX
HY-10, that many use as a proxy for the health of the high-yield market,
has fallen to 94 cents from 97.25 cents since the start of June. That's
around where the market was before Bear Stearns was bailed out in late
March (becoming a subsidiary of J.P. Morgan Chase & Co.), said
Kingman Penniman, president of KDP Investment Advisors.
href='http://online.wsj.com/article/SB121478933437514815.html'>Read
more. (Registration required.)
Fed Releases Details of Bear Stearns
Rescue
The Federal Reserve said that it was looking to prevent a 'contagion'
from infecting the nation's financial system when it took unprecedented
actions this spring to back a Bear Stearns rescue package and provide
emergency loans to big Wall Street firms, the Associated Press reported
on Saturday. Given the financial markets' fragile condition at that
time, the Fed said it felt compelled to intervene because an 'immediate
failure' of Bear Stearns would bring about an 'expected contagion.' Fed
Chairman Ben S. Bernanke and his colleagues initially moved on March 14
to provide temporary emergency financing to investment bank Bear Stearns
through an arrangement with J.P. Morgan Chase. Two days later, as Bear
Stearns teetered on the brink of bankruptcy, the Fed agreed to provide
backing for up to $30 billion for a deal in which J.P. Morgan would take
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/06/27/AR2008062703103_pf.html'>Read
more.
Municipalities
Vallejo's Workers Fight Bankruptcy
Effort
A lawyer for employees of Vallejo, Calif., filed legal documents in
court on Friday challenging city officials who are seeking approval for
a chapter 9 bankruptcy, Reuters reported on Friday. Vallejo's city
council voted unanimously in early May to approve a petition for a
bankruptcy filing amid falling revenues because of the housing slump and
rising employee costs. The officials believe the bankruptcy process,
especially within the municipal debt market, may give them leverage in
talks regarding wages and benefits with city employees, specifically
public safety workers. Spending on public safety employees currently
takes up three-quarters of the city's general fund.
href='http://news.yahoo.com/s/nm/20080627/us_nm/california_bankruptcy_vallejo_dc_1&printer=1;_ylt=Auj73Fu_Xu5Wy4QjxZCIzqEXIr0F'>Read
more.
Report: Napa Valley Risks
Bankruptcy Unless Pensions, Benefits Reduced
The city and county of Napa, Calif., could risk bankruptcy if they do
not reduce their generous pensions and post-employment benefits,
according to a report by the Napa County Grand Jury, the Napa Valley
Register reported today. In order to avoid a fiscal situation like
that of Vallejo, which recently filed for chapter 9 bankruptcy, the
grand jury said that Napa County and the city of Napa must reduce the
escalating costs of employee benefits. According to the report, the city
of Napa and Napa County pay 80 percent and 54 percent of their annual
budgets respectively for wages and benefits. The total cost to Napa
County taxpayers for county employee benefits over the next two years
will be more than $39 million, the report concluded. The estimated cost
to fund city employees' pension benefits is $44 million over the next
six years.
href='http://www.napavalleyregister.com/articles/2008/06/30/news/local/doc4867e8e1d0cf4383876758.prt'>Read
more.
Airlines
Delta, Northwest Pilots Approve
Pact
Leaders of the unions representing pilots at Delta Air Lines Inc. and
Northwest Airlines Corp. unanimously approved a tentative joint contract
that will go into effect if the airlines' merger is approved and cover
their combined 11,000 pilots, the Wall Street Journal reported today.
Now the contract terms will be put to each pilot group for separate
ratification votes. If approved, the four-year contract would go into
effect upon the merger closing, which is expected late this year.
Leaders of the Air Line Pilots Association branch at Northwest, which
represents 5,000 pilots, approved the new accord Friday. Their Delta
counterparts in another branch of the same union, representing 6,000
pilots, agreed to the tentative agreement Wednesday.
href='http://online.wsj.com/article_print/SB121478488318214557.html'>Read
more. (Registration required.)
Northwest Aims to Settle Ex-CFO's
Bankruptcy Claim
Northwest Airlines Inc. has asked a bankruptcy court to approve a deal
granting former CFO Mickey P. Foret more than $1 million and other
perks to settle his management compensation and other claims against the
estate, Bankruptcy Law360 reported on Friday. Foret, also the
former CEO and chairman for Northwest Airlines Cargo Inc., had sought
about $5.9 million that he alleged Northwest owed him under an October
2001 management compensation agreement. Foret also filed claims for an
unspecified amount of indemnification payment for prepetition litigation
against Northwest that named him as a defendant.
href='http://bankruptcy.law360.com/secure/printview.aspx?id=60608'>Read
more. (Registration required.)
Property Insurers Confront Rising
Catastrophe Losses
Bad weather has cost U.S. property insurers more than $5 billion so far
in second-quarter catastrophe-related claims -- equal to about
three-quarters of all catastrophe claims during 2007 -- and could push
the industry to an underwriting loss, the Wall Street Journal
reported today. According to the property-claims services division of
the Insurance Services Office, an insurance-service provider, there have
been 15 weather-related catastrophes since April 1, resulting in more
than one million claims for a total of around $5.5 billion. For the
year, there have been total claims of $8.9 billion for 24 catastrophe
events. Claims for all of 2007 amounted to $6.7 billion.
href='http://online.wsj.com/article_print/SB121478498855014559.html'>Read
more. (Registration required.)
Delphi to Sell Exhaust
Business
Auto parts supplier Delphi Corp. said that it is seeking buyers for its
vehicle exhaust equipment business as it reorganizes under chapter 11
protection, the Associated Press reported on Friday. The company's
global exhaust business serves more than 10 customers and includes sites
in Poland, Australia, India and South Africa, as well as joint ventures
in China and Mexico. Delphi also said that it will retain global
investment bank Lincoln International to explore sale opportunities
pending bankruptcy court approval.
D.C. Book Retailer Braces for
Chapter 11
Olsson's Books, one of the oldest independent booksellers in Washington,
D.C., plans to file for chapter 11 protection, the Washington
Post reported on Saturday. Pressed by creditors who have filed
claims against the company's inventories and by rising overhead costs,
Olsson's said that it is closing at least one store and will evaluate
its ability to operate its remaining five properties. Last week, two of
its biggest publishers, Random House and Penguin Group, as well as
Hachette Book Group petitioned the U.S. Bankruptcy Court in Greenbelt,
Md., to place Olsson's in involuntary chapter 7 bankruptcy.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/06/27/AR2008062703194_pf.html'>Read
more.