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October 19, 2009
Catholic Diocese Files for Chapter
11
The Wilmington, Del., Catholic diocese filed for chapter 11
protection on the eve of a civil trial involving high-profile sex abuse,
BBCNews.com reported today. The case, due to be heard today, would have
been the first to go to trial under a Delaware law creating a two-year
window allowing claims to be brought even if the statute of limitations
had expired. About 230,000 Catholics live in the Wilmington diocese,
which covers Delaware and eastern Maryland. Bishop W. Francis Malooly
said that talks with the eight victims bringing Monday's case had broken
down, and there were fears that too large a settlement would leave the
diocese without sufficient resources to compensate another 133 people
with outstanding claims. Wilmington is the seventh diocese to seek
bankruptcy protection since an abuse scandal in Boston archdiocese in
2002.
href='http://news.bbc.co.uk/2/hi/americas/8313791.stm'>Read more.
/>
House Panel to Examine Role of Bankruptcy
and Antitrust Law in Financial Reg Reform
The House Judiciary Subcommittee on Commercial and
Administrative Law will hold a hearing on Thursday titled “Too Big
To Fail – The Role for Bankruptcy and Antitrust Law in Financial
Regulation Reform.” Witnesses to be announced.
Foreclosures Force Ex-Homeowners to Turn
to Shelters
Growing numbers of Americans who have lost houses to
foreclosure are landing in homeless shelters, according to social
service groups and a recent report by a coalition of housing advocates,
the New York Times reported today. Only three years ago,
foreclosure was rarely a factor in how people became homeless. But among
the homeless people that social service agencies have helped over the
last year, an average of 10 percent lost homes to foreclosure, according
to “Foreclosure to Homelessness 2009,” a survey produced by
the National Coalition for the Homeless and six other advocacy groups.
In the Midwest, foreclosure played a role for 15 percent of newly
homeless people, according to the survey, reflecting soaring rates of
unemployment — Ohio’s reached 10.8 percent in August —
and aggressive lending to people with damaged credit.
href='http://www.nytimes.com/2009/10/19/business/economy/19foreclosed.html?_r=1&adxnnl=1&ref=business&adxnnlx=1255958013-WZHhewofSmkd8HwA%20nRagg&pagewanted=print'>Read
more.
href='http://www.nationalhomeless.org/advocacy/ForeclosuretoHomelessness0609.pdf'>Click
here to read the full survey.
SEC, CFTC Issue Oversight Proposals
The SEC and the Commodity Futures Trading Commission on Friday
issued a report recommending 20 steps to expand their oversight over
exchanges to bolster the nation's financial system, including some that
would require congressional action, CongressDaily reported on
Friday. The report calls on Congress to pass legislation that would
clarify each agency's authority over products exempted by the other. It
would also outline how to settle jurisdictional disputes within a firm
timeline. The report calls for legislation to give more power to the
CFTC over rules for exchanges and clearinghouses under the Commodity
Exchange Act, as well as require foreign boards of trade to register
with the CFTC.
href='http://www.cftc.gov/stellent/groups/public/@otherif/documents/ifdocs/opacftc-secfinaljointreport101.pdf'>Click
here to read the report.
In related news, the House Financial Services Committee on Wednesday
will continue its mark-up hearing of legislation that would establish a
Consumer Financial Protection Agency.
New York Court Says State Law Cannot Curb
Debt Buyers' Rights
Reassuring the secondary loan market, the New York Court of
Appeals has issued a ruling on Thursday clarifying the limits of the
state's arcane champerty law, ruling that the law was not designed to
curb the ability of buyers of distressed debt to enforce their rights
through litigation and collect on a legitimate claim, Bankruptcy
Law360 reported on Friday. The exact boundaries of the champerty
statute have long been unclear, and the Second Circuit in February asked
the New York Court of Appeals to provide some guidance on the matter to
help decide a case that has at its core is a complex commercial
mortgage-backed securities transaction. The dispute before the Second
Circuit was launched by a trust for Merrill Lynch investors that held a
securitized pool of mortgage loans. The trust eventually discovered that
some of the loans were fraudulent and sued financial services firm UBS
AG, which had acquired the company that had originally packaged the
loans for securitization.
href='http://bankruptcy.law360.com/articles/128671'>Read more.
(Subscription required.)
Interchange Fees Battle Continues on
Capitol Hill
After buckling to pressure on overdraft fees, the banking
industry is trying to fend off an attack from retailers on credit and
debit interchange fees, the Wall Street Journal reported today.
U.S. banks raked in $45.3 billion last year from credit and debit card
fees charged to merchants, of which nearly 75 percent comes from
interchange fees set by Visa Inc. and MasterCard Inc. Overall merchant
fees, including other revenue collected by banks and processing
middlemen, are up 78 percent from $25.5 billion in 2003, according to
the Nilson Report. While card companies and merchants have long battled
over interchange fees, the feud is intensifying because of the banking
industry's political vulnerability in the wake of government bailouts
and the passage of tough new rules on credit card fees and rates set to
take effect in February. At a House Financial Services Committee hearing
earlier this month, some lawmakers expressed interest in potential rules
on interchange fees, and legislation has been introduced that would set
or change limits. The Government Accountability Office, the
investigative arm of Congress, is expected to release a report on
interchange fees next month.
href='http://online.wsj.com/article/SB125590252696692963.html'>Read
more. (Subscription required.)
Pilgrim's Pride Deal Receives FTC,
Justice Deptartment Approval
Pilgrim's Pride Corp. said Thursday that the Federal Trade
Commission and Department of Justice have cleared the way for its deal
with Brazilian beef producer JBS SA, which would help pull the chicken
producer out of bankruptcy, the Associated Press reported on Friday.
Last month, JBS said it would buy a majority stake in Pilgrim's Pride
for $800 million, in a transaction that would include paying off
Pilgrim's Pride's creditors in full and distributing new stock to
current shareholders. Pilgrim's Pride and six of it subsidiaries filed a
reorganization plan in September with the U.S. Bankruptcy Court for the
Northern District of Texas. The Pittsburg, Texas-based company will sell
64 percent of the stock in the reorganized company to JBS, implying a
total company value of $1.25 billion. Existing shareholders will receive
shares in the remaining 36 percent of Pilgrim's Pride worth $450
million.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/10/15/AR2009101500677_pf.html'>Read
more.
Hydrogen Energy California Prevails in
$9.7 Million Flying J Credit Sale
Thwarting Calpine Energy Services LP’s late grab for
Flying J Inc.’s emission reduction credits, the bankruptcy court
has approved the $9.7 million deal with Hydrogen Energy California, a
low-carbon power company forged by BP PLC and Rio Tinto, Bankruptcy
Law360 reported on Friday. Bankruptcy Judge Mary F.
Walrath on Thursday authorized the sale of Flying J’s
nitrogen oxide and sulfur dioxide emission credits to Hydrogen Energy.
Calpine had urged Judge Walrath to prevent the private sale from going
forward, noting that the absence of an auction process barred the
bankrupt oil company from properly contemplating Calpine’s
superior bid for the credits. Calpine was willing to match the $9.7
million offered by its rival, but on preferable terms that provided the
debtor and its creditors hundreds of thousands of dollars more than
Hydrogen Energy, according to Calpine’s objection to the sale.
href='http://bankruptcy.law360.com/print_article/128810'>Read
more. (Subscription required.)
Ex-Worker Hits WL Homes with WARN Class
Action
A former employee of a subsidiary of bankrupt homebuilder WL
Homes LLC has filed a putative class action alleging that about 100
employees were fired without the 60-day notification required by federal
and state law, Bankruptcy Law360 reported on Friday. Lyne Decuir
filed the adversary proceeding Thursday in the U.S. Bankruptcy Court for
the District of Delaware, seeking to recover the 60 days of wages and
benefits the company owes to its employees by levying a first priority
administrative claim against the bankruptcy estate of WL Homes, which
did business as John Laing Homes. Decuir's complaint alleges that JLH
Realty & Construction Inc., the WL Homes subsidiary, violated the
federal Worker Adjustment and Retraining Notification Act and similar
California state statutes. The workers were laid off from an office in
Irvine, Calif., on or around June 5, the same day WL Homes' bankruptcy
was converted from chapter 11 to chapter 7. It first filed for chapter
11 protection in February.
href='http://bankruptcy.law360.com/print_article/128694'>Read
more. (Subscription required.)
CIT Sweetens Debt Exchange Offer
To attract more bondholder support, CIT Group Inc. sweetened
parts of its debt exchange plan, but even though some investors
expressed satisfaction with the changes, the embattled lender could
still end up in bankruptcy court, the Wall Street Journal
reported today. CIT is asking holders of $31 billion in bonds to cut
this debt by at least $5.7 billion and extend the debt maturities.
Bondholders are also voting on a prepackaged bankruptcy plan, which many
see as the more likely outcome. The amendments, which were announced by
the company on Friday, improve the terms of the exchange offer for some
junior bondholders by increasing the amount of stock they will receive
in exchange for their bonds, raise the interest on new debt to be issued
by its Canadian unit as part of the restructuring, and expand the
bondholders involved in the exchange to include investors holding debt
maturing after 2018. The exchange offer runs until Oct. 29, except for
investors holding debt maturing after 2018, who have until Nov. 13 to
tender their bonds.
href='http://online.wsj.com/article/SB125590110088792889.html'>Read
more. (Subscription required.)
Stallion Oilfield Services Files for
Chapter 11
Stallion Oilfield Services, a Houston-based oil services
company, filed for chapter 11 protection today, Reuters reported. In a
filing with the U.S. Bankruptcy Court for the District of Delaware,
Stallion listed both estimated assets and liabilities in the range of
$500 million to $1 billion.
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