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OCC Issues Guidelines to Banks to Guard Against Abusive Lending
Practices
The Office of the Comptroller of the Currency (OCC) on Friday issued two
advisory letters establishing nationwide guidance to guard against
predatory lending practices, CongressDaily reported.
Concurrently, OCC published for comment a request for an opinion that a
Georgia law concerning predatory lending is pre-empted as it might apply
to national banks, according to the newswire. In two separate letters to
national banks, OCC noted that many common types of abusive practices
are already illegal under federal law. But even in the absence of
specific legal prohibitions, OCC believes abusive lending practices may
involve unfair and deceptive practices in violation of the Federal Trade
Commission Act, reported CongressDaily. The advisory letters
emphasized that national banks should have policies and procedures in
place to ensure that neither they nor their subsidiaries engage in any
practices that might be considered predatory and that their lending
complies with safety and soundness standards and consumer protection
laws, the newswire reported.
UNITED AIRLINES
UAL CEO's Pay Contract Can Stand, Bankruptcy Judge Rules
United Airlines parent UAL Corp. can retain its employment contract with
Chief Executive Officer Glenn Tilton, a U.S. bankruptcy judge ruled over
objections by the carrier's flight attendants union, Bloomberg News
reported. U.S. Bankruptcy Judge Eugene Wedoff ruled that the
company's board used 'reasonable business judgment'' in seeking to keep
intact Tilton's contract, which was reached before the company filed for
chapter 11 bankruptcy protection in December. United's Association of
Flight Attendants had objected to the pay package, saying that it didn't
represent a 'shared sacrifice'' given concessions by employees,
including a 9 percent wage reduction and benefit cuts for flight
attendants, according to the newswire.
Court Blocks UAL ESOP From Selling Remaining Shares
The judge overseeing UAL Corp.'s bankruptcy case ruled late on Friday
that the trustee of the company's employee stock ownership plan cannot
sell its remaining shares, preserving potentially billions of dollars in
future tax benefits for the beleaguered airline, Dow Jones reported. UAL
in December asked Judge Eugene R. Wedoff to grant an injunction
barring the trustee, State Street Bank & Trust Co., from selling the
shares it oversees on behalf of United Airlines' pilots, flight
attendants and others. In court documents and proceedings, UAL attorneys
argued that such stock sales would trigger an ownership change that
ultimately would have prevented the airline from spreading net operating
losses over several years' worth of future tax returns. UAL expects
total net operating losses between $3.1 billion and $4.3 billion,
reported the newswire. Judge Wedoff said that the net operating losses
constituted a major asset in UAL's reorganization and would help make
the company more attractive to new shareholders upon emergence from
federal bankruptcy protection, according to Dow Jones.
Conseco Still Seen On Track To Emerge From Chapter 11 In May
A bankruptcy judge on Friday approved court scheduling that's expected
to bring Conseco Corp. out of bankruptcy in May, Dow Jones reported.
Attorneys for the company had asked Judge Carol A. Doyle of the U.S.
Bankruptcy Court of Northern District of Illinois to approve a formal
schedule of hearings that would conclude with a confirmation hearing on
April 21. Although Judge Doyle granted several continuances on Friday to
give some creditors more time to work out their differences, the
debtor's attorneys said the overall schedule looks to be on track.
Attorneys for Conseco said the fast-track schedule will help ensure the
continued health of Conseco's insurance business, its core operation,
reported the newswire.
Globalstar Gets Court Approval Of $4 Million Interim DIP Loan
Globalstar L.P. received bankruptcy court approval to borrow up to $4
million on an interim basis under the company's proposed $10 million
debtor-in-possession financing agreement, a spokesman for the company
said on Friday, Dow Jones reported. Mac Jeffery told Dow Jones Newswires
that Chief Judge Peter J. Walsh of the U.S. Bankruptcy Court in
Wilmington, Del., approved the loan on Thursday and scheduled a final
hearing on March 6 to consider the total financing package, reported the
newswire. Globalstar L.P. filed for chapter 11 bankruptcy protection on
Feb. 15, 2002.
Burlington Industries' Unsecured Creditors Oppose Auction
Rules
The committee of Burlington Industries Inc.'s unsecured creditors has
told a bankruptcy court that it opposes the company's proposed auction
procedures, including a $14 million breakup fee for lead bidder
Berkshire Hathaway Inc., Dow Jones reported. According to court papers
obtained on Thursday by Dow Jones Newswires, the committee said the
procedures would 'chill' bidding for the new equity of the fabric-making
company, which is under chapter 11 bankruptcy protection. The committee,
led by WL Ross & Co., said the company is rushing the auction and
bid procedures hearing to result in a bargain for Berkshire at the
expense of unsecured creditors, reported the newswire. A hearing on the
bid procedures is set for Feb. 27 before the U.S. Bankruptcy Court in
Wilmington, Del.
ALPA Defends US Airways Pilots' Earned Pension Benefits
The union representing pilots for US Airways Group Inc. is proceeding
with its legal case against the airline carrier's plan to end their
pension plan, Dow Jones reported. US Airways, attempting to emerge from
chapter 11 bankruptcy, asked the bankruptcy court on Jan. 30 to allow it
to make a distress termination of the pilots' pension plan and replace
it with another plan. In a press release on Friday, the Air Line Pilots
Association International (ALPA) said it filed a motion on Feb. 14 to
deny US Airways' request, reported the newswire. The union maintains
that the pension plan dispute should be resolved through labor
arbitration and not the courts.
ALLEGHENY ENERGY
Allegheny Banks Agree In Principle On New Loans
Allegheny Energy Inc.'s lenders have agreed in principle to give the
company a new package of credit facilities, a person familiar with the
situation said, Dow Jones reported. Allegheny, which owns the company
delivering electricity and natural gas to about three million people has
said it's trying to negotiate a yet-to-be disclosed amount of new
facilities and last year received approval from the Securities and
Exchange Commission for up to $2 billion in secured loans, reported the
newswire. The company defaulted in October on credit agreements with
some of its trading partners after Moody's Investors Service downgraded
its debt to junk status. The downgrade triggered cash-collateral calls
at its trading unit that it was unable to post, putting it in technical
default on $1.3 billion in loans, reported the newswire. It has received
six extensions to waivers on the defaults to work out new credit
agreements with its lenders. The company has warned that failure to
reach an agreement could result in a bankruptcy filing.
Allegheny Energy Units Get Extensions From Bank
Lenders
Allegheny Energy Inc. said its Allegheny Energy Supply Company LLC and
Allegheny Generating Co. units received an extension on the default
waivers of its credit agreement, based on continuing talks with its
lenders to refinance its debt, Dow Jones reported. In a press release,
Allegheny said the waivers have been extended through Monday. Allegheny
Energy and its units are continuing discussions with bank lenders under
these and other facilities, as well as with other lenders and trading
counterparties, regarding outstanding defaults, required amendments to
existing facilities, and additional secured financing, reported the
newswire.
Video Network Communications Buys Webcasting Assets For
$750,000
Video Network Communications Inc. said it purchased some equipment and
other Webcasting assets from subsidiaries of WilTel Communications Group
Inc. for $750,000 in cash and the assumption of liabilities, Dow Jones
reported. WilTel, a spinoff of Williams Cos., was known as Williams
Communications Group Inc. before it emerged from chapter 11 bankruptcy
in October.
Wherehouse Wins Court Approval to Close 85 Stores, Start
Sales
Wherehouse Entertainment Inc., a music and movie retailer that sought
bankruptcy protection last month, won court approval to begin closing 85
locations to reduce expenses and shed unprofitable stores, Bloomberg
News reported. U.S. Bankruptcy Judge Peter Walsh in Wilmington,
Del., approved the closures and going-out-of-business sales at a hearing
on Friday after granting permission to shutter 113 stores last week. The
company expects the sales, which have already started, to be completed
by May 31, reported the newswire. Dow Jones reported that Wherehouse
Entertainment Inc. won authority to continue to use the cash collateral
of its secured lenders to fund operations.
Court Extends US Airways' Turnaround Plan Exclusivity
The bankruptcy court overseeing US Airways Group Inc.'s case has
extended the period in which only the company may file a chapter 11
reorganization plan, according to court papers Dow Jones Newswires
obtained on Friday. The airline, which filed a reorganization plan in
late December 2002, said it sought the exclusivity extension only as a
protective measure. The U.S. Bankruptcy Court in Alexandria, Va.,
approved the disclosure statement to the plan in January, authorizing US
Airways to solicit votes for it from creditors, reported the newswire.
U.S. Bankruptcy Judge Stephen S. Mitchell signed an order on
Thursday to extend US Airways' exclusive plan proposal period through
March 31.
Actrade, in Bankruptcy, Sues Former Chairman for $31.6
Million
Bankrupt Actrade Financial Technologies Ltd. sued former Chairman Amos
Aharoni to recover $31.6 million it says he took illegally, Bloomberg
News reported. The suit in Delaware Chancery Court accuses Aharoni, who
resigned in August and moved to Israel, of transferring the money for
his own use, the newswire reported. Aharoni left the country after
refusing to cooperate fully in an accounting probe of the company.
Actrade, under investigation by the U.S. Securities and Exchange
Commission, the Nasdaq Stock Market and federal prosecutors, filed for
protection from creditors in U.S. Bankruptcy Court in New York in
December. The electronic finance and payment company, based in New York,
listed $29.3 million in assets and $6.3 million in debts.
USG Must Face Cancer-Related Asbestos Claims First, Judge
Rules
USG Corp., the biggest U.S. wallboard maker, must deal with cancer
sufferers'
asbestos claims first as part of its bankruptcy reorganization bid to
wipe out the company's asbestos liability, a judge ruled, Bloomberg News
reported. U.S. District Judge Alfred Wolin, who is overseeing seven
asbestos-related bankruptcy suits filed in Delaware, said it's 'far more
practical'' to deal with the sickest claimants first rather than process
all 190,000 asbestos claims against USG at the same time, reported the
newswire. 'By focusing on those claimants who have indisputably been
damaged,'' USG and plaintiffs' lawyers can avoid squabbles over whether
an asbestos claimant deserves compensation, Wolin said on Wednesday,
Bloomberg reported.
Enron Sues Whitewing Partnership, Bondholders Seeking $957
Million
Enron Corp. sued Whitewing Associates LP, seeking the return of $956.7
million that the
bankrupt energy company said it transferred to one of thousands of
partnerships created to hide debt, Bloomberg News reported. The lawsuit
claims Whitewing and its Osprey Trust affiliate got preferential
transfers in connection with Enron's repayment of a $1.72 billion note.
Houston-based Enron said in court papers that it made 14 payments on the
note from Dec. 7, 2000, through June 29, 2001, reported the newswire.
The suit is part of Enron's escalating effort to recover funds to help
repay creditors owed more than $50 billion.
US Airways May Liquidate Without Resolution of Pension
Issue
US Airways Group Inc. told a federal judge it will have to liquidate
unless it gets approval to terminate a pilot pension plan covering 7,000
to 8,000 people, Bloomberg News reported. The seventh-largest U.S.
carrier has asked U.S. Bankruptcy Judge Stephen Mitchell for
permission to end the plan as of March 31, saying last month that it
can't make $2 billion in pilot payments due over the next seven years. A
lawyer for Arlington, Va.-based US Airways told Mitchell that the
pension issue is preventing the company from accessing the final $200
million of a $500 million bankruptcy loan from Retirement Systems of
Alabama. As a result, US Airways missed payments totaling $19.7 million
on debt related to five Airbus A330 airplanes, reported the
newswire.
Texas Pacific Meets UAL Unions To Discuss a Possible Investment
Texas Pacific Group, a private equity firm that has made money in the
past by betting on troubled airlines, made a second presentation on
Thursday to the unions representing workers at UAL Corp.'s United
Airlines, the Wall Street Journal reported. The discussions,
according to people familiar with them, are preliminary and center on
TPG's potential interest in investing in United in some fashion to help
it out of bankruptcy-court protection, reported the Journal.
Boutiques San Francisco Subsidiary Plans Bankruptcy Filing
Boutiques San Francisco Inc.'s subsidiary West Coast has filed a notice
of intention to make a proposal to its creditors under the Bankruptcy
and Insolvency Act to facilitate the implementation of its action plan,
Dow Jones reported. In a news release, the parent company said it won't
provide West Coast with additional advances over those previously
committed over the last years. West Coast operates 23 stores in Quebec
and Ontario and employs about 330 people, reported the newswire.
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