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August 22, 2005
Russell-Stanley Files for Chapter 11 in Delaware
href='http://www.newsday.com/news/local/wire/newjersey/ny-bc-nj--russell-stan…'>Russell-Stanley
Holdings Inc., a maker of industrial containers, filed for chapter 11
bankruptcy and agreed to sell itself to a joint venture of
Mauser-Werke GmbH & Co. of Germany and JPMorgan Chase & Co., the
Associated Press reported Friday. Mauser-Werke and One Equity,
JPMorgan’s private-equity arm, will pay $96.4 million for the
assets, which include the company’s Hunter Drums unit, subject to
a bankruptcy court auction. Russell-Stanley listed assets of $50 million
to $100 million and debts of more than $100 million, in its filing with
the U.S. Bankruptcy Court in Wilmington, Del. The privately held company
owed a group led by Bank of America Corp. about $76 million on May 31.
It listed the Bank of New York Co., owed about $28 million, as its
largest unsecured creditor. The note holders have agreed to support the
company’s sale and yet-to-be-filed reorganization plan.
href='http://www.newsday.com/news/local/wire/newjersey/ny-bc-nj--russell-stan…'>Read
the full article.
Bankruptcy Law Hits Bonuses
Considering how some executives have been paid when their companies
file for bankruptcy,
href='http://www.mysanantonio.com/business/stories/MYSA082005.16P.BizEx.beck…'>running
a failing business may seem like a profitable proposition, the
Associated Press reported Saturday. Although workers often get fired and
shareholders watch the value of their investments sink when a company
enters bankruptcy court protection, corporate leaders have been known to
secure “retention” bonuses that pay them to stay while a
company reorganizes. But they won’t be able to get that kind of
pay-to-stay cash much longer. Not only are the courts cracking down on
overly generous retention agreements, but thanks to a new bankruptcy
law, such bonuses will become a lot tougher for companies to dole out.
href='http://www.mysanantonio.com/business/stories/MYSA082005.16P.BizEx.beck…'>Read
the full story.
Federal-Mogul Asbestos Liability Is Estimated
Federal-Mogul Corp., an auto parts supplier that once made brake pads
using asbestos, is subject to an estimated $9 billion in death and
injury claims in the U.S. and about $411.3 million in Britain, a U.S.
judge decided, Bloomberg News reported Saturday. In a recently released
opinion, U.S. District Judge Joseph H. Rodriguez in Camden, N.J., said
that he reviewed trial evidence and data from an asbestos personal
injury committee in the company’s bankruptcy case before making
the ruling. Rodriguez said his 64-page ruling wasn’t a
confirmation of the company’s reorganization plan but “an
estimation of liability for the creation of a personal injury
trust” as part of the bankruptcy process.
GM Expected to Stave Off Bankruptcy
With its offer of employee discounts to the public,
href='http://www.azcentral.com/arizonarepublic/business/articles/0821gmwoes21…'>General
Motors addressed its short-term woes: it had two months of robust
sales and cleared out its bloated inventory, the New York
Times reported yesterday. But the fire sale did not solve
GM’s fundamental problems, which raises the question of whether
this former bulwark faces the prospect of bankruptcy. Wall
Street’s answer? Not any time soon. Financial analysts and bond
investors say that they do not expect that GM will go bankrupt in the
next few years because it has too much cash on hand. Beyond that limited
time frame, however, the company’s prospects are debatable, with
much depending on how the chairman and chief executive, Rick Wagoner,
remakes the company’s North American operations.
href='http://www.azcentral.com/arizonarepublic/business/articles/0821gmwoes21…'>Read
the full story.
KB Toys to End Chapter 11 Status
Toy store giant KB Toys, which has recently been in financial
disarray, is ready to step out of chapter 11 status, according to a
company statement, All Headline News reported Saturday. KB Toys is
currently expected to leave chapter 11 status on or about August 29,
2005, says Gregory R. Staley, a former president of Toys ‘R’
Us’ USA and international divisions, and is expected to become KB
Toys’ new president and CEO. The plan provides for PKBT Funding
LLC, an affiliate of Prentice Capital Management LP, to invest $20
million in the reorganized KB Toys and provide the company and its
subsidiaries with a seasonal over-advance credit facility of up to $25
million. In exchange, PKBT will receive 100 percent of the preferred
stock and, together with certain members of the KB Toys management team,
90 percent of the common stock of the reorganized company. The remaining
common stock will be held in a trust for the benefit of the unsecured
creditors of KB Toys and certain subsidiaries.
Caterer to the Airlines Weighs Bankruptcy for Its British Unit
Gate Gourmet, the in-flight caterer whose labor dispute sparked major
flight cancellations at Heathrow Airport this month, said that
href='http://www.nytimes.com/2005/08/22/business/worldbusiness/22gate.html?ex…'>it
might put its British unit into bankruptcy as early as Tuesday, the
New York Times reported yesterday. In a letter to British
Airways, Gate Gourmet said that unless it could agree to a new contract
with the airline by then, it would be forced to put the business into
administration, or bankruptcy protection, an airline spokeswoman said.
href='http://www.nytimes.com/2005/08/22/business/worldbusiness/22gate.html?ex…'>Read
the full story.
Northwest Keeps Flying as Strike Enters Second Day
Northwest Airlines mechanics walked the picket line for a second day
on Sunday, but
href='http://www.nytimes.com/reuters/news/news-airlines-northwest-strike.html'>the
carrier kept flying without any major disruptions as it called in 1,500
replacement workers, Reuters reported yesterday. In the first U.S.
airline strike since 2001, Aircraft Mechanics Fraternal Association
(AMFA) workers walked off their jobs at Northwest on Friday after
failing to reach a new contract. The strike by the 4,400 mechanics and
maintenance workers has not been joined by other unions at Northwest,
and the carrier has been able to keep its planes in the air with few
disruptions. The spokeswoman said no further talks have been scheduled
between the AMFA and Northwest.
href='http://www.nytimes.com/reuters/news/news-airlines-northwest-strike.html'>Read
the full story.
ABB Shares up after Settlement Approved
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=97811+22-A…'>Shares
in Swiss engineering group ABB Ltd. rose on Monday after a U.S.
bankruptcy court on Friday gave its permission for ABB to move forward
with its $1.4 billion asbestos settlement plan, Reuters reported today.
The maker of industrial robots and electric motors said that after the
court’s endorsement, it could present its settlement plan to
claimants in the case. ABB shares, which have risen more than 40 percent
so far this year, firmed another 1.7 percent to 9.13 francs by 0925 GMT.
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=97811+22-A…'>Read
the full story.
Penguins Paying Creditors 100 Percent
The NHL’s
href='http://www.pennlive.com/newsflash/pa/index.ssf?/base/news-29/1124571292…'>Pittsburgh
Penguins are crafting an unlikely success story: a chapter 11
bankruptcy in which all creditors will receive 100 percent of what
they’re owed. “Pennies on the dollar is what I’m used
to,” said attorney Joel Walker, who along with Duane Morris and
Phil Uher, represents some 200 unsecured creditors.
href='http://www.pennlive.com/newsflash/pa/index.ssf?/base/news-29/1124571292…'>Read
the full story.
Birch’s New CEO: Confident of Company’s Future
Newly installed Birch Telecom Inc. CEO Greg Lawhon is very similar to
his predecessors—he doesn’t think the company is in a bad
position, the Kansas City Journal reported today. Just like
co-founder Dave Scott and previous CEO Mike Cassity,
href='http://www.bizjournals.com/industries/economic_view/bankruptcies/2005/0…'>Lawhon
views Birch’s prospects favorably despite its Aug. 12 filing for
bankruptcy protection, a tough regulatory climate and published
willingness to sell off assets. Kansas City, Mo.–based
Birch’s bankruptcy filing was its second in the past three years.
The company aims to pare its $108.7 million in debt while getting its
costs in line with a lower-margin business environment. Such competitive
telecoms as Birch are struggling after a decision by federal regulators
to discontinue requiring Baby Bells to lease lines at a discount. The
change has forced Birch to discontinue direct sales efforts in Missouri,
Kansas, Texas and Oklahoma, where it competes against supplier SBC
Communications Inc. It continues to sell aggressively in the part of its
territory served by BellSouth Corp.
href='http://www.bizjournals.com/industries/economic_view/bankruptcies/2005/0…'>Read
the full story.