href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
March 30, 2010
SEC Probes Other Firms for Use of Lehman
Accounting Trick
U.S. securities regulators are demanding detailed reports from major
financial firms in an attempt to uncover any accounting tricks like the
'Repo 105' method Lehman Brothers used to mask its losses, Reuters
reported yesterday. The U.S. Securities and Exchange Commission said
yesterday that it is sending letters to the chief financial officers of
about 24 large financial instiutions and insurers. SEC Chairman Mary
Schapiro said yesterday that the agency would be probing every major
financial institution over the coming weeks. Earlier this month, a
court-appointed examiner found that Lehman used Repo 105 for the sole
purposes of manipulating its books and helping hide that it had been
insolvent for weeks before its collapse in September 2008.
style='COLOR: #551a8b' id='od70' title='Read more.'
href='http://www.reuters.com/article/idUSN2925892820100329'>Read
more.
Trustee Eyes Chapter 7 Conversion for East
Coast Sanitation
According to documents filed with the U.S. Bankruptcy Court for the
District of New Jersey in Newark in the case of the liquidating trash
collector East Coast Sanitation Co. LLC (ECS), chapter 11 trustee
Charles Forman plans to convert the proceedings to a chapter 7
liquidation, the Deal Pipeline reported yesterday. ECS was a
privately owned sanitation company that collected, hauled and disposed
of solid waste and recyclable materials via contracts with various
municipalities in New Jersey. Upon filing for chapter 11 in August last
year, ECS provided waste collection services through contracts with the
City of East Orange, the City of Orange Township, the Borough of
Roseland, the Township of Cedar Grove, the Town of Harrison and the
Township of Randolph. Only two months into its chapter 11 proceeding,
however, ECS was stripped of control of its assets. Judge Donald
Steckroth appointed Forman as chapter 11 trustee in response to a
motion by Suburban Disposal Inc., which won a roughly $25 million
judgment against the debtor on July 9.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005408098'>Read
more.(Subscription required.)
Foreclosure Fund Gets $600 Million to Help
Residents of 5 More States Save Homes
The Obama administration announced yesterday that it is expanding by
$600 million a fund aimed at helping states tackle the foreclosure
crisis with locally tailored approaches, the Washington Post
reported today. State housing finance agencies from North Carolina,
South Carolina, Ohio, Oregon and Rhode Island will share $600 million to
test new approaches to helping borrowers save their homes from
foreclosure. That is in addition to the $1.5 billion set aside for
California, Nevada, Arizona, Michigan and Florida when the program was
initially announced in February. Both initiatives will be financed
through the government's Troubled Assets Relief Program. While the first
round of funding targeted states that had seen home values decline more
than 20 percent, the second round of states were picked because they had
high concentrations of people living in economically distressed areas,
including counties where the unemployment rate exceeded 12 percent in
2009.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/03/29/AR2010032902213_pf.html'>Read
more.
Lehman: Creditor Claims Should be Cut to
$605 Billion
Lehman Brothers Holdings Inc. said yesterday that it believes claims
from creditors against its bankruptcy estate should be cut to $605
billion, Reuters reported yesterday. Last November, Lehman Chief
Executive Bryan Marsal said the claims had a face value
of more than $820 billion and that it was possible the claims could
reach $1 trillion. Over the past few months Lehman has objected to
hundreds of claims, saying that they didn't meet certain requirements.
The case is In re Lehman Brothers Holdings Inc., U.S. Bankruptcy
Court, Southern District of New York, No. 08-13555.
href='http://www.reuters.com/article/idUSN2911065920100329'>Read
more.
Analysis: State Debt Woes Grow Too Big to
Camouflage
California, New York and other states are showing signs of debt
overload, including budgets that will not balance, accounting that masks
debt, the use of derivatives to plug holes and armies of retired public
workers who are counting on benefits that are proving harder and harder
to pay, the New York Times reported today. New
Hampshire was recently ordered by its State Supreme Court to put back
$110 million that it took from a medical malpractice insurance pool to
balance its budget. Colorado tried, so far unsuccessfully, to get a $500
million surplus for its university system from Pinnacol Assurance, a
state workers' compensation insurer that was privatized in 2002.
California accelerated its corporate income tax this year, making
companies pay 70 percent of their 2010 taxes by June 15. Many states
have also balanced their budgets with federal health care dollars that
Congress has not yet appropriated.
id='x_7c' title='Read more.'
href='http://www.nytimes.com/2010/03/30/business/economy/30states.html?ref=business&pagewanted=print'>Read
more.
Pacific Ethanol Unit Files Reorganization
Plan
Energy company Pacific Ethanol Inc. said that its wholly owned
subsidiary Pacific Ethanol Holding Co. LLC filed a reorganization plan
in bankruptcy court and that it expects the unit to exit chapter 11 near
the end of the second quarter of this year, Reuters reported yesterday.
The proposed plan restructures $293.5 million of the unit's debt to a
combination of equity and $115 million of secured and subordinated debt.
It also provides for up to $35 million in a new line of credit to
support current and future plant operations, the company said. Pacific
Ethanol also said it was in talks with its lenders regarding a potential
acquisition of ownership interests in the reorganized unit and that it
would amend its plan if the negotiations resulted in an agreement.
id='a2kh' title='Read more.'
href='http://www.reuters.com/article/idUSSGE62S0H520100329'>Read
more.
Extended Stay Creditors Demand Findings of
Examiner Probe
Extended Stay Inc.'s creditors are clamoring to see the results of a
court-ordered investigation into the hotel chain's bankruptcy, which
they hope to use as ammunition for future lawsuits in the case, Dow
Jones Daily Bankruptcy Review reported today. The report by the
court-appointed examiner was filed under seal earlier this month, and
now creditors say that they should have access to the findings as a
deadline approaches for filing lawsuits. Two Extended Stay lenders and
the committee representing unsecured creditors are asking the judge
overseeing the bankruptcy case to order the examiner to provide them a
copy of the report. Unsecured creditors say that gaining access to the
results of the probe is crucial because the examiner was tasked with
identifying legal claims that creditors could pursue on behalf of the
company.
GM Says It Will Not Meet Deadline for
Filing Its Annual Report
General Motors Co. said that it will be late in filing its 2009
annual report as it works through accounting matters related to its
bankruptcy reorganization last year, the Associated Press reported
yesterday. GM said yesterday in a filing with the U.S. Securities and
Exchange Commission that it will not meet a March 31 deadline to file
its 2009 10-K with the regulatory agency. The automaker says that it is
working to determine the fair value of the assets and liabilities of the
'new' GM that emerged from chapter 11 in June, a task it said was made
difficult by the sheer size of the largest U.S. auto company.
id='ia.q' title='Read more.'
href='http://www.google.com/hostednews/ap/article/ALeqM5idHRPBQIfOXWzV-QYdlxf…'>Read
more.
Lenny Dykstra Drops JPMorgan Suit,
Foreclosure Looms
Lenny Dykstra has dropped his $100 million predatory lending lawsuit
against JPMorgan Chase & Co., and the bank has reached an agreement
with a bankruptcy trustee to let it foreclose on the former baseball
center fielder's California mansion, Reuters reported today. Dykstra had
alleged that Washington Mutual Inc., now owned by JPMorgan, fraudulently
induced him to borrow more than he could afford to buy the $17.4 million
Thousand Oaks home from hockey legend Wayne Gretzky, only to renege on a
promise to let him refinance. The agreement with JPMorgan calls for the
bank to pay $400,000 to Dykstra's estate and give up its interest in a
possible $500,000 insurance settlement claim. Read
more.
International
Click here to review
today's global insolvency news from the GLOBAL INSOLvency site.