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March 10, 2005
Senate Bankruptcy Overhaul Measure Appears Poised to Pass
A bipartisan bill to overhaul the bankruptcy law neared Senate
passage yesterday, as the chamber continued rejecting amendments that
sponsors of the legislation said would jeopardize its prospects for
enactment, CongressDaily reported. Senate Majority Leader
Bill Frist (R–Tenn.) announced last night a number of amendments
would be considered when the Senate resumes work this morning, with a
vote on final passage expected later today. One of those pending
amendments, by Senate Judiciary ranking member Patrick Leahy
(D–Vt.), Senate Banking ranking member Paul Sarbanes (D–Md.)
and Sen. John Warner (R–Va.) would modify the bill’s repeal
of a 67-year-old “conflict of interest” standard regarding
investment banks. The amendment would prohibit investment banks from
serving as bankruptcy advisers to companies on which they had offered
securities during the previous five years. Five consumer advocacy groups
have
href='http://www.consumersunion.org/pub/core_financial_services/002046.html'>endorsed
the amendment. Earlier on Wednesday, the Senate rejected, 47–53,
an amendment by Sen. Edward Kennedy (D–Mass.) to establish a
nationwide, $300,000 cap on homestead exemptions.
The Republican-controlled House Judiciary Committee is tentatively
scheduled to approve the Senate version of the bill next Wednesday, the
Wall Street Journal reported. The full House probably will
vote to approve the measure in the first week of April after a day or
two of debate following the two-week spring recess. It would then be
signed into law by President Bush, who has said he supports the
overhaul.
SEC Chief Says Guidance Coming on Stock Options Value
SEC Chairman William Donaldson said yesterday his agency plans to
issue guidance this month on how to calculate the value of employee
stock options in compliance with the Financial Accounting Standards
Board’s new expensing rule, CongressDaily reported.
Testifying at a Senate Banking Committee hearing, Donaldson also said
SEC experts could brief lawmakers on the stock options valuation
issues.
Jobless Claims Up More Than Expected
The number of American applying for first-time jobless benefits
exceeded expectations, climbing 17,000 last week to its highest level in
two months, a government report showed today, Reuters reported.
First-time initial claims rose to 327,000 last week from 310,000 in the
previous week and well above Wall Street economists’ forecasts for
310,000, the Labor Department said. New claims rose to their highest
level since 367,000 in the week ended Jan. 8.
Economy Expanding with Little Inflation
The U.S. economy expanded at a moderate pace in late January and
February with little inflation, although businesses in some areas were
finding it easier to raise prices, the Federal Reserve said yesterday,
Reuters reported. “The economy has continued to expand at a
moderate pace,” the Fed said in its beige book summary of economic
conditions, the newswire reported.
Man Charged with Fraud in Airline Bankruptcy
A St. Louis man was arrested yesterday on charges that he gave a
bankruptcy court false financial information in a proposal to reorganize
Hawaiian Airlines Inc., a unit of Hawaiian Holdings Inc., Reuters
reported. Paul Boghosian was charged with conspiracy to commit
bankruptcy fraud and commercial bribery. The complaint is filed in
Manhattan federal court.
Former AgriBioTech Chief Files for Bankruptcy
Richard P. Budd, the former chairman and chief executive officer of
Henderson, Nev.–based AgriBioTech Inc. (ABT), has filed for
chapter 11 bankruptcy protection in the United States Bankruptcy Court
for the Middle District of North Carolina, it was announced in a press
release. The bankruptcy filing follows a $14.87 million judgment entered
in Las Vegas bankruptcy court against Budd and a related entity on Jan.
26, 2005.
Newfoundland Catholic Diocese Seeks Bankruptcy Protection
A Roman Catholic diocese in Newfoundland is filing for bankruptcy
protection, saying the move is necessary in order to give sexual abuse
victims the best possible compensation package, cbc.ca.com reported. The
St. George’s diocese announced its action on Tuesday. Bishop
Douglas Crosby said the diocese does not have the $50 million in
compensation that the 36 victims of Father Kevin Bennett are seeking,
and bankruptcy protection will allow the diocese to negotiate a
realistic package for the victims.
Ebbers Jury Asks Judge for Guidance
The judge in the criminal trial of Bernard J. Ebbers, the former
WorldCom CEO, told jurors yesterday that they did not need to consider
the size and scope of the WorldCom fraud in reaching a verdict on the
charges of filing false claims that Ebbers faces, the New York
Times reported. Late in the afternoon, the jurors sent a note to
Judge Barbara S. Jones of United States District Court in Manhattan
asking for clarification on how to interpret several supplemental
allegations, which are related to seven counts of filing false claims
with securities regulators.
Delta Sees ‘Substantial’ Net Loss in 2005
Delta Air Lines Inc. expects to post a “substantial” net
loss in 2005 and will struggle to meet its cash needs amid low margins
and high fuel prices, the carrier said in a regulatory filing today,
Reuters reported. “We believe that we will record a substantial
net loss in 2005 and that our cash flows from operations will not be
sufficient to meet all of our liquidity needs for that period,”
the airline said in a filing with the Securities and Exchange
Commission.
U.S. Judge Mulling YUKOS Appeal for Protection
A federal judge said on Wednesday she expected to rule in about a
week on whether to grant an emergency request by embattled Russian oil
company YUKOS to preserve its Russian assets, Reuters reported. YUKOS
asked Judge Nancy Atlas of the U.S. District Court for the Southern
District of Texas for the move while it prepares its appeal designed to
keep alive its U.S. bankruptcy claim.
Four Banks Settle in WorldCom Case for $428.4 Million
Four investment banks have agreed to pay $428.4 million to settle the
class-action lawsuit by investors accusing them of hiding risks at
WorldCom before its collapse, the New York state comptroller said
yesterday, Reuters reported. In a statement, comptroller Alan Hevesi
said ABN AMRO Inc. will pay $278.4 million, while Mitsubishi Securities
International will pay $75 million and BNP Paribas Securities Corp. and
Mizuho International will pay $37.5 million each.