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May 18, 2006
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name='1'>U.S.
face='Times New Roman' size='3'> Treasury Sees Acceptable Pension
Bill Emerging
A U.S. Treasury pension
expert on Wednesday said he was 'cautiously optimistic' that Congress
would soon send President George W. Bush a pension reform bill that the
president would accept, Reuters reported yesterday. The optimism from
Assistant Treasury Secretary Mark Warshawsky was in stark contrast to
earlier veto threats issued by the Bush administration against pension
legislation that it expected to get from Congress. House and Senate
negotiators are trying to finalize a bill to shore up the
size='3'>U.S.
size='3'>system of traditional pensions, now underfunded by $450
billion. Warshawsky said that while the House and Senate each approved
pension reforms weaker than those sought by the White House, the
administration still hoped provisions could be toughened in a compromise
version of the legislation now being drafted.
href='http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&s…'>Read
more.
Autos
GM
Shakes Up Finance Unit, Retains Restructuring Firm
Reeling from a host of
accounting errors that have led to embarrassing financial restatements,
General Motors Corp. announced plans Wednesday to retain the
restructuring firm AlixPartners as its financial adviser and to
reassemble its corporate controller’s office,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. GM, which suffered a $10.6 billion loss in
2005 as it attempted to regain market share and control costs, is
involved in six separate U.S. Securities and Exchange Commission
investigations over its accounting activities. In addition, a federal
grand jury served GM a subpoena in relation to its accounting for
payments received from suppliers. GM said it intended to retain
AlixPartners, a major turnaround firm that is heading up the
restructuring for auto parts supplier Dana Corp., which filed for
chapter 11 in March. GM said AlixPartners will guide the company under a
new accounting structure, and will help GM with day-to-day financial
reporting, including evaluating the corporation’s internal
accounting reports and disclosure controls.
In related news,
GM’s 105,000 United Auto Workers Union (UAW) workers are now
considering whether or not to accept the company’s buyout offers
ranging from $35,000 to $140,000, the
size='3'>Wall Street Journal reported today.
Workers have until June 30 to decide. The buyouts are crucial to the
future of GM, which lost $10.6 billion last year, and its former
parts-supplier Delphi Corp., now in bankruptcy. Last week, the UAW
argued in U.S. Bankruptcy Court in
face='Times New Roman' size='3'>New York
size='3'>that because the buyouts could provide huge savings to GM and
Delphi, it is too soon for
labor contracts. About 13,000 UAW workers at
w:st='on'>
size='3'>Delphi
early retirement. The UAW, in a recent filing, estimates
size='3'>Delphi
billion a year if 75 percent of hourly eligible employees take the
offer. So far, about 12,400 UAW workers at GM and about 3,600 at
size='3'>Delphi
according to the UAW.
href='http://online.wsj.com/article/SB114791725054956211.html?mod=home_whats_…'>Read
more. (Registration required.)
name='3'>Icahn Seeks to Boost Dana Debt
Securities
Billionaire investor Carl
Icahn is seeking to acquire another sizable portion of debt securities
issued by bankrupt Dana Corp., potentially putting him in a position to
help mold the beleaguered supplier’s reorganization,
Portfolio Media
reported yesterday. Icahn’s company, American Real
Estate Holdings LP, revealed its designs on Dana in a filing with the
U.S. Bankruptcy Court in
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size='3'>Manhattan
court prepares to hold a hearing on the matter this week. Currently,
American Real Estate possesses at least $101.25 million of Dana's $2.25
billion unsecured debt and is mulling over acquiring even more, the
court documents revealed. Icahn’s recent bid for more of
Dana’s debt securities serves to underscore the investor’s
desire to become a major player in the slew of bankruptcies that have
hit the
face='Times New Roman'
size='3'>U.S.
size='3'>automobile industry.
name='4'>Trustee, Creditors Object to Costs in Refco
Case
The U.S. Trustee
overseeing Refco Inc.’s bankruptcy proceedings in
size='3'>Manhattan
taken issue with the costs associated with the case, filing an objection
to interim applications for payment Tuesday, Portfolio Media
reported yesterday. Two similar objections, one on behalf
of the official committee of unsecured creditors and one on behalf of a
group of customers/creditors that had $800 million dollars in
Refco’s brokerage accounts, were also filed with the court on
Tuesday. The bankruptcy cases of Refco and its subsidiaries have cost
the company more than $33 million, according to U.S. Trustee
Diana G. Adams
size='3'>’ objection to Refco’s retained
professionals’ fee applications. More than
face='Times New Roman' size='3'>$31 million of that total represents
fees by professionals retained by the debtors to administer their cases,
while professionals’ expenses account for just over $1.8
million.The trustee’s objection calls for a general 20 percent
“holdback” of fees, as well as further review of whether the
services provided by respective professionals were “inappropriate,
duplicative, excessive or simply unnecessary.”
Airlines
name='5'>Mesaba Airlines May Face Labor Showdown
Mesaba Airlines is
headed toward a possible showdown with its workers depending on how
the bankruptcy judge rules on whether the feeder carrier for Northwest
Airlines can reject its union contracts, the Associated Press reported
today. The unions have warned they'll strike if Mesaba imposes its pay
cuts and other demands. Mesaba is the only air service in many of the 98
mostly Midwestern cities it serves. Mesaba is asking Judge
Gregory Kishel
size='3'>for permission to throw out its union contracts with the three
groups. Mesaba gets all of its planes and passengers and nearly all its
revenue from Northwest, which filed for bankruptcy protection in
September. Mesaba, a unit of MAIR Holdings Inc., followed about a month
later.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/05/18/AR20060…'>Read
more.
name='6'>American Air CEO Says Cost Cuts are Top
Priority
American Airlines, a unit
of AMR Corp., seeks to return to profitability by cutting costs
everywhere possible, Chief Executive Gerard Arpey told reporters
yesterday at an annual shareholders' meeting in
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Worth
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size='3'>Texas
reported yesterday. American, which lost $92 million in the first
quarter, has said it needs to cut costs by more than $1 billion to keep
its expenses in line with 2005 levels. The airline currently has a plan
to trim costs by $700 million a year. The carrier aims to consume fuel
more efficiently and streamline all operations to improve productivity.
American said on Tuesday it hopes to cut its fuel consumption by some 30
million gallons in 2006. Arpey said other carriers that have
restructured in bankruptcy have had an advantage over American as they
have had court protection to slash all costs, including labor costs. UAL
Corp's United Airlines, for example, exited bankruptcy in February after
slashing costs by $7 billion a year.
href='http://go.reuters.com/newsArticle.jhtml?type=businessNews&storyID=12241…'>Read
more.
name='7'>SeraCare Objects to Call for Equity
Committee
Unsecured creditors of
bankrupt diagnostics company SeraCare Life Sciences Inc. have objected
to the proposed formation of an equity-committee, arguing that the
equity-holders are mostly concerned with control over the company and
not inadequate representation,
size='3'>Portfolio Media reported yesterday.
An ad hoc committee representing equity holders, which represents about
one-third of SeraCare’s outstanding shares, filed the disputed
motion to create an equity committee on April 3. A hearing on the
appointment is scheduled for May 24. SeraCare, which also filed an
objection to the request, filed for chapter 11 bankruptcy protection on
March 22 in the U.S. Bankruptcy Court for the Southern District of
California. It continues to manage its property as a
debtor-in-possession, and no trustee has been appointed in the case. The
case is SeraCare Life
Sciences Inc., case number 06-00510, in the
U.S. Bankruptcy Court for the Southern District of
California.
name='8'>Attorney's Affair with Criminal Leads to Litigation and
Bankruptcy
The story of Anthony
Scaffidi and Karen DeSoto combines the elements of legal malpractice,
bankruptcy and tort law, with allegations of domestic violence and even
a palimony claim, the New Jersey Law
Journal reported today. Scaffidi claims he put
DeSoto through law school and that she used that legal training to dupe
him out of more than $1 million in real estate, fancy cars, jewelry and
other property. Scaffidi is suing DeSoto and her husband, Joseph
Olszewski, a
face='Times New Roman' size='3'>Jersey City
size='3'>,
size='3'>N.J.
officer. DeSoto has counterclaimed, accusing Scaffidi of years of
threats, abuse and harassment. She has filed a chapter 7 petition as a
result of what she claims is the cost of defending Scaffidi's
claims. The chapter 7 filing halted the trial in
face='Times New Roman' size='3'>Scaffidi v. DeSoto
size='3'>, HUN-L-521-02, but on April 20, U.S. Bankruptcy Judge
Donald Steckroth lifted the automatic stay so that
Scaffidi could pursue malpractice claims against DeSoto's carrier and
claims against the other defendants, including Olszewski.
href='http://www.law.com/jsp/article.jsp?id=1147856731107'>Read
more.
size='3'>Sarbanes-Oxley Exception Denied for
Small Public Companies
The Securities and Exchange
Commission (SEC) announced yesterday that it will not exempt small
companies from a key set of new, post-Enron investor-protection rules,
the Washington Post reported today. The SEC said all firms must
eventually adhere to the rules that require companies to document -- and
an outside auditor to confirm -- that adequate internal controls are in
place to ensure that financial statements filed with the SEC are
accurate and paint a realistic picture for investors. The impact of the
rules on small and mid-size public companies has been debated since they
were enacted as part of the Sarbanes-Oxley Act of 2002. Many executives
and members of Congress had called for small businesses to be exempt
from the rules altogether, saying they were too expensive.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/05/17/AR20060…'>Read
more.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/05/17/AR20060…'>