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October 25, 2004
Delta and Pilots to Resume Talks
Delta Air Lines Inc. and its pilots’ union recessed talks
Sunday without reaching an agreement on pay cuts that the company says
are crucial to its effort to avoid bankruptcy, the Associated Press
reported. A spokeswoman for the union, Karen Miller, said the two sides
would resume talks today. Delta says it needs $1 billion in concessions
from its pilots—roughly two-thirds of which would come from pay
cuts—to avoid bankruptcy. The pilots have publicly offered up to
$705 million in savings.
Ex-CEO, Buyout Firms Eye Toys R Us
Toys R Us Inc. has opened its financial records to more than a dozen
prospective buyers, including a consortium being led by the
retailer’s former chairman and CEO Michael Goldstein, sources
familiar with the situation said on Friday, Reuters reported. Toys R Us
is weighing the sales of its toy business to focus on its fast-growing
Babies R Us unit, which sells baby furniture, clothing and bedding. But
unloading Toys R Us could be tough at a time when it is struggling to
compete against discounters like Wal-Mart Stores Inc., which have deeply
cut prices to lure shoppers into its stores, analysts said, the newswire
reported.
Once-Ignored Consumer Debts Are Focus of Booming Industry
As more Americans are juggling more debt than ever before,
newly-emerged collection agencies are going after debtors who previously
would have been left alone, the Wall Street Journal
reported. Unlike old-fashioned collection agencies, which pursue debtors
on behalf of a client company and keep a set percentage of what they
gather, the newer debt-buying companies typically acquire large
portfolios of bad debt at a discount. Read the full article at
href='http://www.wsj.com/'>www.wsj.com (subscription required).
PG&E Set to Reinstate Dividend Next Year
PG&E Corp. on Friday said it plans to reinstate its dividend next
year and hopes to make its first payment as early as April at an annual
rate of $1.20 per share, Reuters reported. The San Francisco-based
parent of utility Pacific Gas & Electric suspended its dividend
during California’s energy crisis in 2000–01 after amassing
billions of dollars of debt buying power for its customers at high
prices. The company said in a statement that it could declare an initial
quarterly dividend as early as February 2005 if a bond issue planned for
early next year was successful, the newswire reported.
US Airways Sets Deadline for Concessions
US Airways Group Inc. has given its machinists, flight attendants and
ground workers until the middle of November to reach long-term
concession agreements or the bankrupt airline will seek court approval
to throw out their contracts, court documents show, Reuters reported.
The airline also said in court filings late last week that it would
proceed with plans to cut retiree medical benefits, and would seek to
force cuts in this area if unions do not agree voluntarily. The airline
hopes to begin negotiations on retiree benefit reductions soon.
Jury Clears Union Carbide in Asbestos Fraud Case
Dow Chemical Co.’s Union Carbide unit was cleared on Friday by
a Texas jury of a claim that it failed to disclose the dangers of
asbestos in products sold to Kelly-Moore Paint Co., the Wall
Street Journal reported. Kelly-Moore had sued Union Carbide for
$1.4 billion plus punitive damages, claiming the Dow Chemical subsidiary
had hidden from it the dangers of asbestos. Kelly-Moore is facing more
than 40,000 lawsuits from people claiming to be injured by asbestos, the
newspaper reported.
AMR Announces Plans to Furlough Pilots, Maintenance Workers
As part of its new round of cost-cutting efforts announced earlier
this week, AMR Corp, parent of American Airlines, will furlough up to
650 maintenance workers in Kansas City and St. Louis and up to 450
pilots, the Wall Street Journal reported. AMR, which
announced a net loss in the third quarter, will also downsize at some of
its airports and is mulling over which locations and how many customer
service positions will be impacted, according to the memo.
Iowa Diocese Says It’s Near Bankruptcy
A judge on Thursday rejected a request by the Roman Catholic Diocese
of Davenport to delay a trial dealing with alleged sex abuse by priests,
a ruling the diocese said would force it to file bankruptcy, the
Associated Press reported. The trial, to hear the first of several
lawsuits against the diocese dealing with sex-abuse allegations, is set
to begin Nov. 1. The diocese had pleaded for one more month to negotiate
with its insurance company and lawyers for 38 men who say they were
abused by priests when they were minors. But District Judge C.H. Pelton
found that church officials did not have a solid reason for asking for
more time in the case, which was filed 17 months ago, the newswire
reported.
Former Employees Call Bankruptcy Deal Lousy
Former employees have entered the fray over Brobeck, Phleger &
Harrison’s bankruptcy, hoping to prevent a deal that could
short-circuit their claims against the failed firm, law.com reported. On
Thursday, a group of former staffers objected to a proposed settlement
in which Morgan, Lewis & Bockius would pay $10.2 million to the
Brobeck estate. The deal would avoid potential claims by the estate,
including claims to revenue from unfinished business that Brobeck
lawyers took with them to Morgan Lewis. Read the full
href='http://www.law.com/jsp/article.jsp?id=1098217039779'>article.
Court Approves Adelphia Auction Rules, Breakup Fee
A federal judge on Friday approved bid rules and proposed breakup
fees for the sale of Adelphia Communications Corp.’s assets, the
online Wall Street Journal reported. The court didn’t
disclose the proposed breakup fee for the sale, the terms of which
Adelphia filed under seal with the U.S. Bankruptcy Court in Manhattan.
According to the order, Adelphia can reimburse bidders $3 million in
expenses for each transaction it undertakes.