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February 28, 2006
Study
on Medical Bankruptcies Challenged
A report that expensive
illnesses lead to nearly half of all personal bankruptcies is being
challenged by researchers who looked at the same data and concluded that
such costs lead to fewer than one in five bankruptcies, the Associated
Press reported today. The study looked at 1,771 bankruptcy filers
in
size='3'>California
w:st='on'>
size='3'>Illinois
w:st='on'>
size='3'>Pennsylvania
size='3'>Tennessee
w:st='on'>
illnesses and medical bills were cited as the cause, at least in part,
of 46 percent of the bankruptcies. That original study, by Dr. David
Himmelstein of
w:st='on'>
size='3'>Harvard
face='Times New Roman' size='3'>Medical
size='3'>School
colleagues, was published on the Internet by the journal
face='Times New Roman' size='3'>Health Affairs
size='3'>last year. The challenge, by David Dranove and Michael L.
Millenson of the Kellogg School of Management at
w:st='on'>
size='3'>Northwestern
w:st='on'>
size='3'>University
appears in Tuesday's Internet edition of that journal. A reanalysis,
funded by the health insurance trade group America's Health Insurance
Plans, identified people who said illness or injury was the cause of
bankruptcy and also said medical bills contributed to it. That led
Dranove and Millenson to conclude that ''medical expenditure
bankruptcies'' constituted 17 percent of all bankruptcies.
href='http://www.nytimes.com/aponline/business/AP-Medical-Bankruptcies.html?_…'>Read
more.
name='2'>Creditors Object to Terms of Musicland Asset
w:st='on'>
The committee of unsecured
creditors for bankrupt Musicland Holding Corp. is accusing the company
of trying to stifle competition from other buyers through the terms of
its $104 million
asset sale to rival Trans World Entertainment Corp.,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. The creditors specifically objected to a
so-called breakup fee valued at $3.1
million, which would be paid to Trans World if it fails to emerge as the
final bidder for the entertainment retailer's assets after a March 21
auction. 'The breakup fee, given its size and payment triggers, is
little more than a penalty which serves to discourage other prospective
parties from entering the bidding arena and impedes the debtors' ability
to consider other meaningful competitive bids,' the creditors said in
their filings. The judge overseeing the case has scheduled a hearing on
the objection for Wednesday. The case is Musicland Holdings Corp., case
number 06-10064, in the U.S. Bankruptcy Court for the Southern District
of New York.
w:st='on'>
name='3'>Showdown
w:st='on'>
size='3'> Begins
w:st='on'>
size='3'>over
face='Times New Roman'
size='3'>Tower
face='Times New Roman' size='3'>’s Union
Contracts
Despite the looming
threat of a union strike, Tower Automotive Inc. pressed on to reject
collective bargaining agreements on Monday, with the auto parts maker
claiming that it would not be able to emerge from chapter 11 proceedings
if the contracts were upheld,
size='3'>Portfolio Media reported yesterday.
Monday marked the first day of arguments at the U.S. Bankruptcy Court
in
size='3'>Manhattan
hearing over bargaining agreements, a year after the struggling auto
parts maker first filed for bankruptcy protection. Tower, a producer of
metal vehicle frames, filed motions in January to void its labor
contracts and amend health coverage and retiree benefits as part of its
restructuring plan, a move that outraged the company’s 3,000
unionized workers. The unions are concerned that Tower has an unworkable
capital structure and may not be viable, even with union concessions, if
bondholders refuse to compromise as well, according to Lowell Peterson,
an attorney for the United Auto Workers and Communications Workers of
America unions. A formal bargaining session between the two sides is
scheduled for Monday, but may be moved up at Judge
face='Times New Roman' size='3'>Allan Gropper's
size='3'>discretion. The hearing is expected to last
approximately 10 days, with a strike likely if the sides cannot
reach any agreement. The case is Tower
Automotive, case number 05-10601-alg, in the
U.S. Bankruptcy Court for the Southern District of New
York.
In related news, Tower
Automotive Inc. said it reached a tentative deal with seven unions about
closing its
face='Times New Roman' size='3'>Milwaukee
plant, United Press International reported yesterday.
Tower said it and the unions agreed in principle to 'modify benefits and
resolve outstanding issues' related to the planned March closing of
its
size='3'>Milwaukee
The deal, which depends on Tower meeting certain financial targets,
obligates the company to keep paying health care coverage for employees
through the end of June and assist with the establishment of a
'Voluntary Employee Beneficiary Association' trust to administer the
health care benefits of retirees and their dependents. Both the
bankruptcy court and unions' members must approve the agreement.
href='http://www.upi.com/NewsTrack/view.php?StoryID=20060227-033953-1449r'>Read
more.
name='4'>Riverstone Triumphs in Bid to Auction Off
Assets
Amid shareholder
objections and creditor concerns, a federal bankruptcy judge has decided
to allow telecommunications’ company Riverstone Networks Inc. to
auction off its assets, with Lucent Technologies Inc. entering an
opening bid of $170 million,
size='3'>Portfolio Media reported yesterday.
Judge Christopher S. Sontchi of the
w:st='on'>
size='3'>U.S. Bankrupcty Court
size='3'>in
face='Times New Roman' size='3'>Wilmington
size='3'>,
size='3'>Del.,
the proposed auction late Friday, scheduling a hearing to approve the
sale for March 23. The decision is a boost for Riverstone, which had
been seeking court permission to accept a $170-million bid from Lucent,
or a higher offer at auction, despite the protestations of shareholders
and creditors alike. Per the judge’s ruling, competing bids are
now due on March 16, with an auction to be held on March 20 if any
qualified offers are submitted. Lucent is entitled to a breakup fee of 3
percent of the total sale price, according to court papers. The
case is Riverstone
Networks Inc., case number 06-10110-CSS, in
the U.S. Bankruptcy Court for the District of
Delaware.
Dana
Nears Pact with Its Lenders Over Financing
Dana Corp. said it
expects to reach an agreement with its lenders on new financing terms
within two weeks, a move aimed at helping the ailing auto-parts maker
avoid filing for bankruptcy protection, the Wall Street
Journal reported today. Meanwhile, several of
Dana's suppliers have told the company they want to be paid cash when
supplies arrive or in advance of deliveries. 'Letters seeking adequate
assurance of payment from Dana have started to go out,' said
Lynn Brimer, a bankruptcy attorney with the
size='3'>Southfield
w:st='on'>
size='3'>Mich.
Raymond & Prokop, which represents many suppliers, including some
that do business with Dana. Dana had $700 million in cash at the end of
the third quarter. For the period, the company reported a $1.27 billion
loss and sales of $2.4 billion. In October, Dana announced it would
restate its 2004 and first-half 2005 results after an internal
investigation showed it didn't properly account for certain items,
primarily in its commercial-truck operations. The restatements cut $44
million from net income for the 18-month period from Jan. 1, 2004, to
June 30, 2005.
href='http://online.wsj.com/article/SB114108871943984832-email.html'>Read
more.
Cost
of WCI Bankruptcy Passes $20 Million
The cost of WCI Steel
Inc.'s chapter 11 bankruptcy reorganization passed $20 million in
January with the company reporting $1.1 million in fees for attorneys,
appraisers and other professionals when it filed its January financial
report, according to the
size='3'>(
face='Times New Roman' size='3'>Ohio
size='3'>) Tribune Chronicle today. The
company's confirmation hearing still is expected to start March 13, even
though opposing lawyers Monday failed to resolve some legal issues in a
long-distance telephone battle, an attorney said. The battle for
1,600-worker WCI, which in January earned $1.7 million on sales of $74.4
million, is between current owner The Renco Group Inc., controlled
by
York
Rennert, and holders of $300 million in notes secured by the company's
steelmaking assets. The noteholders' modified plan to reorganize the
company will be the subject of the confirmation hearings in
Marilyn Shea-Stonum's federal bankruptcy court
in
Renco has objected to the plan as it fights efforts to force it to
shoulder the company's hourly workers' pension plan and its estimated
$117 million unfunded liability. The Pension Benefit Guaranty Corp. said
last week the noteholders' plan isn't feasible unless they can show the
company won't face liquidation or further reorganization if it winds up
with the pension plan's liabilities.
href='http://www.tribune-chronicle.com/business/story/0228202006_biz01wci28.a…'>Read
more.
w:st='on'>
name='7'>Vermont
face='Times New Roman'
size='3'> Clothing and Home Furnishing Retailer Likely to Convert
to Chapter 7
Williston,Vt.-based
Cornell Trading, which filed chapter 11 bankruptcy protection in
January, will most likely have to file for chapter 7 bankruptcy,
according to WCAX-TV3 News. 'When we declared chapter 11 on Jan. 4, we
truly felt we had a chance to fix the company and rebuild it,”
said owner April Cornell. “Unfortunately the time has been too
short and we have not been able to come up to the banks' expectations,
and they are no longer in funding us through this process.' Barring
a last-minute deal, Cornell Trading will most likely close its doors
Tuesday afternoon, impacting 75 retail outlets across the
States
href='http://www.wcax.com/Global/story.asp?S=4559585&nav=4QcS'>Read
more.
name='8'>Hollister
w:st='on'>
size='3'>Independence
Committee Bankrupt
The Hollister
Independence Rally Committee (HIRC), which organized Hollister, Calif.'s
signature event for nine years, has filed for bankruptcy after giving
thousands of dollars to local charities, but before paying more than
$350,000 to 94 creditors, including vendors, phone companies and the
city, the Gilroy
Dispatch reported yesterday.
HIRC, which was set up in part to funnel rally money to
local charities, spent the majority of the $455,000 it earned last year
paying for staff, security, entertainers, merchandise and traffic
control, according to Hollister City Manager Clint Quilter. While the
nonprofit organization reimbursed the city for $57,000 in rally costs
last year, it still owes Hollister more than $250,000 for law
enforcement, Quilter said.
href='http://www.gilroydispatch.com/news/'>Read
more.
Enron
Figures Tell How Financial Results Were Manipulated
Two minor figures in the
Enron story added on Monday to testimony that the company had padded
earnings and shifted hundreds of millions in losses from one division to
another to disguise problems that might have concerned investors,
the New York
Times reported today. The former chief
accountant of Enron's wholesale energy-trading unit, Wesley H. Colwell,
testified that in 2000, the company dipped into reserve accounts set up
for problem contracts to illegally pad earnings. Wanda Curry, a former
internal accountant, said she had led a project that uncovered problems
with Enron Energy Services, the retail energy unit, that were
covered up in part by the transfer of more than $500 million in losses
to the wholesale energy unit. As part of her inquiry, Curry and her team
also discovered that the retail unit was owed $511 million by two
size='3'>California
size='3'>utilities on the verge of declaring bankruptcy.
href='http://www.nytimes.com/2006/02/28/business/businessspecial3/28enron.htm…'>Read
more.
Airlines
size='3'>ATA Set to Emerge from
Bankruptcy
ATA Airlines, once the
nation's 10th-largest carrier, will emerge from bankruptcy as a leaner
airline having scaled back their fleet of jets, slashed destinations and
cut by half their labor force since filing for chapter 11 bankruptcy
protection in October 2004, the Associated Press reported yesterday.
ATA's emergence plan, which focuses on such destinations as
Cancun,
size='3'>Los Angeles
size='3'>Las Vegas
includes an increase in military charter business, was approved by a
federal bankruptcy judge on Jan. 30.
href='http://news.yahoo.com/s/ap/20060227/ap_on_bi_ge/ata_bankruptcy_1'>Read
more.
name='11'>Mesaba Pilots Give Union the OK to Call a
Strike
Pilots at Mesaba Aviation, a
unit of MAIR Holdings Inc., have authorized union leaders to call a
strike should a bankruptcy court let the airline impose unacceptable
contract terms, the workers' union, Reuters reported yesterday. The Air
Line Pilots Association said 98 percent of the pilots who voted approved
the strike authorization. The company said it must reduce its expenses
by $66.4 million annually, including $17.1 million in labor costs, to
emerge from bankruptcy. Mesaba has asked for court permission to
terminate the pilots' labor deals.
href='http://asia.news.yahoo.com/060227/3/2gjjb.html'>Read
more.
name='12'>Delta, Northwest have until Wednesday for Labor
Deals
Delta and Northwest
airlines, the U.S.'s No. 3 and No. 4 carriers, face Wednesday
deadlines for reaching labor concession deals,
face='Times New Roman' size='3'>USA Today
size='3'>reported today.
size='3'>Failure to reach the agreements could trigger showdowns that
are likely to push workers at both carriers closer to threatened
strikes, particularly at Northwest. Northwest, which is seeking total
annual labor cost savings of about $1.4 billion, is in the most
immediate danger of a confrontation with its union. Delta's management
is seeking about $325 million a year from its pilots, who already have
given up $1 billion a year in pay and benefits. Both airlines have said
that if necessary they will seek injunctions to block strikes, arguing
that under the Railway Labor Act, transportation unions can't strike
without first going through a process that concludes with a 30-day
cooling-off period.
href='http://www.usatoday.com/money/biztravel/2006-02-27-airlines-usat_x.htm'>Read
more.
International
name='13'>British Public Sector Pension Liability at £81
Billion
The annual provision required
to cover public sector pension deficit has grown to £81 billion
from £24 billion last year, ABCMoney.co.uk reported today. The
government had previously used a formula including a 3.5 percent
discount rate on its liabilities, but this rate has now been reduced to
2.8 percent, nearer to what is used by the private sector. While the
total present value of the liability to buy pension for all the workers
in the public sector stood at £540 billion, estimates under the
revised formula will mean that the liability will be of the order of
£800 million. The increases are reflected in the government's
spring supplementary estimates.
href='http://www.abcmoney.co.uk/news/2820062045.htm'>Read
more.
href='http://www.abcmoney.co.uk/news/2820062045.htm'>