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Consumer Spending Rises in December
Consumer spending rose 0.9 percent in December, the largest increase in
five months, even while personal income increased by just 0.4 percent,
according to data released by the Commerce Department,
CongressDaily reported. It was a significant increase over the
0.4 percent hike reported in November and the biggest since July. The
increase in personal income was also an increase over the previous
month, a 0.3 percent rise in November. December's spending and income
figures were stronger than analysts had expected. They had predicted a
rise in spending of 0.7 percent and income growth of 0.2 percent,
reported the newswire.
Senators To Unveil Class Action Bill This Week
Senators favoring moving most class-action lawsuits with national
implications from state to federal court plan this week to unveil a
reform measure, CongressDaily reported. The class-action bill
will be essentially identical to legislation voted out of the Senate
Judiciary Committee in the 107th Congress that failed to make it to the
floor. Sens. Charles Grassley (R-Iowa), Herb Kohl (D-Wis.) and Senate
Judiciary Chairman Orrin Hatch (R-Utah) were the primary sponsors.
Lobbyists from the Financial Services Roundtable and the Business
Roundtable are readying a lobbying campaign this week in support of such
legislation, reported the newswire. A companion House class-action
reform bill is expected to be unveiled later this month.
San Francisco Law Firm Expected to File for Bankruptcy
Protection
San Francisco-based Brobeck, Phleger & Harrison, a leading law firm
during the dot.com boom, announced on Thursday that it will dissolve,
crushed by debts and the collapse of merger talks with Philadelphia's
Morgan, Lewis & Bockius, Law.com reported. The 518-lawyer
firm is expected to file for bankruptcy protection, according to staff
and associates, and they said the dissolution will probably take effect
in 30 to 45 days, reported the news service.
'…The continued down economy, the troubled technology sector
and the departures of partners make it unlikely that Brobeck can
generate sufficient revenue to continue as a free-standing law firm,'
John Pachtner, Brobeck's director of communications, said. But the real
killer may have been Brobeck's debt, Law.com reported. Sources
familiar with the firm's finances said the firm's debt load at the end
came close to $90 million and that Citibank had declared the firm in
default. One of those sources said the debt was principally related to
the acquisition of office space and the cost of building out that space.
To read the full story, point your browser to
href='http://www.law.com/jsp/article.jsp?id=1043457946111'>http://www.law.com/jsp/article.jsp?id=1043457946111.
UNITED
UAL Fourth-quarter Loss Widens as Costs Increase
United Airlines parent UAL Corp., the world's second-largest airline
company, said its fourth-quarter loss widened to $1.5 billion as the
carrier failed to bring costs in line with lower sales, Bloomberg News
reported. The net loss at UAL, which filed for bankruptcy protection on
Dec. 9, was $20.70 a share, more than the loss of $308 million, or
$5.68, in the same period of 2001, the company said in a statement
distributed by PRNewswire.
United is trying to reduce expenses, especially for labor, and is
scaling back flights about 6 percent this year to adapt to sales that
are about 20 percent lower across the U.S. airline industry. The carrier
is in negotiations with workers, aircraft lenders, suppliers and
manufacturers for relief on payments, reported the newswire.
General Foods Credit Unit May Take Back 18 United Airlines
Jets
General Foods Credit Corp., a unit of Altria Group Inc., said it plans
to repossess 18 jetliners from UAL Corp.'s United Airlines on Feb. 8 if
it can't reach agreement with the carrier on new lease terms, Bloomberg
News reported. United on Wednesday asked the U.S. Bankruptcy Court in
Chicago to let the airline extend lease talks. The unit of Altria, which
also is the parent of Kraft Foods and Philip Morris, doesn't want
further talks, said Larry Snider, a lawyer representing General Foods
Credit, reported the newswire.
US Airways Seeks to End 29 Plane Leases, to Change Airbus
Order
Bankrupt US Airways Inc., the seventh-largest U.S. airline, would scale
back the number of planes it intends to buy in an agreement with Airbus
SAS and asked a bankruptcy judge to free it from lease agreements on as
many as 29 jetliners currently in its fleet, Bloomberg News reported. US
Airways will now receive 10 A330-200 aircraft and 19 A320s, instead of
one A330-300 and 37 A320s under a previous contract, reported the
newswire.
Honeywell Records Big Loss After Charge for Asbestos
Morris Township, N.J.-based Honeywell International Inc. announced a
fourth-quarter loss of $1.47 billion, taking a big charge to resolve
asbestos-related claims, the Wall Street Journal reported. The
loss Honeywell reported amounted to $1.78 a share, compared with net
income of $118 million, or 14 cents a share, a year earlier, according
to the online newspaper. Sales were little changed at $5.86 billion from
$5.85 billion, the Journal reported.
The latest results matched a forecast Honeywell issued in December, when
it warned of the charges. Its dealing with the liability costs has been
viewed positively by Wall Street, since it marked an important step
toward resolving asbestos claims stemming from Honeywell's former North
American Refractories Co. unit, reported the Journal.
More Insurance Firms Go Bust, Blocking Collection on Claims
Over the past two years, huge losses on everything from workers'
compensation insurance to the terrorism attacks of Sept. 11, 2001, have
caused a growing number of insurers to file for bankruptcy protection,
the Wall Street Journal reported. Reliance Insurance Co.'s
collapse in 2001 resulted in delays to some individual policy-holders,
even though the company was primarily a commercial insurer. In both 2000
and 2001, there were 30 insurance-company insolvencies each year, a huge
increase from previous years, according to Robert Klein, a professor at
Georgia State University, reported the Journal.
Adding to the problem is the fact that insurance premiums are soaring
nationwide. In the search for cheaper coverage, many consumers are
turning to the very companies most likely to go out of business,
according to the online newspaper. To read the full article, point your
browser to www.wsj.com (subscription required).
Uniroyal Technology Asks For Court OK To Change Retiree
Benefits
Uniroyal Technology Corp. is seeking bankruptcy court approval to modify
benefits payments to retirees, Dow Jones reported. The company says its
distressed financial condition make the changes necessary, according to
court papers. Uniroyal Technology has been under chapter 11 protection
in the U.S. Bankruptcy Court in Wilmington, Del., since Aug. 25, 2002. A
hearing on this issue has been scheduled for Feb. 12 in Wilmington.
Court papers said 'an unrelenting cash burn' drained the company's
reserves and forced it into bankruptcy, according to the newswire. To
continue operations, the company obtained a debtor-in-possession loan,
which came with budget guidelines, reported Dow Jones.
StarBand Gets Court OK For Microsoft Agreement
StarBand Communications Inc. on Thursday won court approval of an
agreement with Microsoft Corp. that will give the debtor company the
first crack at signing up Microsoft customers, Dow Jones reported. The
order signed by Chief Judge Peter J. Walsh of the U.S. Bankruptcy
Court in Wilmington, Del., which is overseeing StarBand's chapter 11
proceedings, terminates a contract between StarBand and Microsoft. In
exchange for terminating its contract with StarBand early, Microsoft
will make StarBand's services the first option for its customers,
reported Dow Jones. As part of the agreement, Microsoft and StarBand
agreed to release each other from any liability or obligations arising
out of the original contract, according to Judge Walsh's order, reported
the newswire.
Seven Seas Petroleum Trustee Seeks Power To Close Asset Sale
The chapter 11 trustee overseeing Seven Seas Petroleum Inc.'s bankruptcy
case is asking the court for the power to close a proposed sale of the
assets of the company's subsidiaries, according to court documents
obtained on Friday by Dow Jones Newswires. Payments under the proposed
plan would range from 17 percent to 50 percent of a worker's annual
salary and would be contingent on a key employee remaining with the firm
through specific dates during the bankruptcy proceedings. Payments under
the plan would total $246,000, according to Dow Jones. The U.S.
Bankruptcy Court in Houston, Texas, is scheduled to consider the
trustee's motion at a hearing on Monday, reported the newswire.
Medical Staffing Network Sees One-time Change
Medical Staffing Network Holdings Inc. plans to book a fourth-quarter
charge of about $3.8 million for receivables related to a client that
sought bankruptcy-court protection, but added that operating profit for
the period remains on target to meet guidance, Dow Jones reported. The
company, which places temporary nurses, physicians and other medical
workers in health care facilities, has said it expects fourth-quarter
operating earnings of 20 cents a share, reported the newswire. The
company, which plans to report fourth-quarter results on Feb. 18, said
the $3.8 million charge fully covers all of the receivables owed by
Doctors Community HealthCare Corp., the parent of the Medical Staffing
client that sought bankruptcy protection, according to Dow Jones.
AK Steel Loss Widens On Charge For Pension Losses
Middletown, Ohio-based AK Steel Holdings Corp.'s announced a
fourth-quarter net loss amid a hefty charge for pension costs, Dow Jones
reported. AK Steel on Friday reported a net loss of $489.7 million, or
$4.54 a share, compared to a net loss of $76.4 million, or 71 cents a
share, a year earlier.
Late on Thursday, bankrupt National Steel Corp. of Mishawaka, Ind.,
agreed to sell its assets to AK Steel in a sweetened deal valued at
$1.125 billion, reported the newswire. The price includes $925 million
in cash and the assumption by AK Steel of $200 million in debt. The bid
topped an offer by U.S. Steel Corp. worth $950 million, including
assumed debt, which had been approved by the boards of U.S. Steel and
National Steel, reported Dow Jones. The U.S. Bankruptcy Court in Chicago
set a Feb. 6 hearing to consider bidding procedures granting AK Steel
priority status, reported the newswire.
American Commercial Lines LLC Files To Reorganize Under Chapter
11
Danielson Holding Corp.'s American Commercial Lines LLC marine
transportation unit filed for bankruptcy protection under chapter 11,
Dow Jones reported. The company received a $75 million
debtor-in-possession financing commitment from a group led by J.P.
Morgan Chase Bank. In a press release on Friday, Danielson Holding, a
financial service provider, said the unit plans to reorganize its
capital and debt structure while continuing normal business operations
and paying employees and suppliers, Dow Jones reported.
Epiq Systems Has Antitrust OK For Bankruptcy Systems Buy
Epiq Systems Inc. received antitrust clearance from the Federal Trade
Commission (FTC) for its proposed acquisition of Bankruptcy Services
LLC, Dow Jones reported. The FTC said on Friday that it granted the
companies early termination of the waiting period required under the
Hart-Scott-Rodino Antitrust Improvements Act, according to the newswire.
Earlier on Friday, Epiq Systems said it agreed to acquire Bankruptcy
Services for $66 million, in a deal expected to close Friday. Bankruptcy
Services provides technology-based case-management services for
high-profile chapter 11 cases, including WorldCom Inc., Enron Corp.,
Global Crossing Ltd. and Adelphia Communications Corp., reported the
newswire.
Probex Can't Repay Debt When Due
Probex Corp. said it will be unable to repay its debt of about $26.4
million before a Feb. 28 deadline and may file for chapter 11 bankruptcy
protection if it fails to either restructure the debt or extend the due
date, Dow Jones reported. In a press release on Friday, the lubricating
base oil technology company also said it doesn't expect to secure
financing for a planned Wellsville, Ohio-based reprocessing plant before
the deadline. The company has been seeking plant investors since
October, when it sought $130 million for the project, reported the
newswire. Probex said it is currently working with creditors and lenders
to settle its debt concerns.
Pathmark Says Lenders Agree To Amend Credit Pact
Pathmark Stores Inc. amended its bank credit line, easing some financial
covenants and increasing the interest rate, according to a regulatory
filing on Friday, Dow Jones reported. The credit agreement Pathmark
established in September 2000, when the company emerged from chapter 11
bankruptcy protection, consisted of $425 million in term loans and a
$175 million revolver portion, according to Dow Jones. In its last
quarterly filing, the company said it had $218 million outstanding under
the term loan and $27 million borrowed under the revolver, in addition
to $38.5 million of letters of credit, reported the newswire.
FAO Wins Approval to Use Collateral to Finance Reorganization
FAO Inc., owner of the FAO Schwarz and Zany Brainy toy store chains,
received bankruptcy court approval to continue using cash and other
collateral assets to fund operations during its reorganization,
Bloomberg News reported. U.S. Bankruptcy Judge Lloyd King agreed to let
the company use the collateral based on weekly budgets, reported
Bloomberg. FAO will pay secured lender Wells Fargo Retail Finance $6.3
million on its loan, which totaled more than $74 million when FAO filed
for bankruptcy, court papers show. King granted temporary approval to
use the collateral on Jan. 14, reported the newswire.
Federal-Mogul and Creditors Agree on Reorganization Plan
Federal-Mogul Corp., an auto-parts maker that filed for bankruptcy
protection to deal with asbestos claims, said it has reached an
agreement with creditors on its reorganization plan, Bloomberg News
reported. The agreement would give 49.9 percent of the new common stock
to noteholders and 50.1 percent would go to a trust for existing and
future asbestos claimants, the company said in a statement.
Federal-Mogul said it plans to file a plan by the end of March. The plan
would be subject to court approval.
Metawave Files for Bankruptcy Protection; Five Directors
Resign
Redmond, Wash.-based Metawave Communications Corp., a maker of antennas
for wireless networks, filed for chapter 11 bankruptcy protection from
creditors and said it will liquidate, Bloomberg news reported. Five of
the company's board members resigned after the filing, the company said
in a statement distributed by Business Wire. The company plans to sell
most of its assets, including its patents and other intellectual
property, reported the newswire.
Conseco Files Plan With Court To Emerge From Bankruptcy
Conseco Inc., the third-largest U.S. company to file for bankruptcy
protection, filed a reorganization plan in an effort to emerge from
chapter 11 bankruptcy and stick to its traditional insurance business
while selling off its money-losing consumer finance operations, the
Associated Press reported. The reorganization plan will be reviewed by
Judge Carol A. Doyle, with a hearing scheduled for March 5. Later,
creditor groups will vote on whether to accept the plan, Conseco said in
a news release accompanying the filing, reported the newswire.
Allegheny Gets Still More Time To Negotiate New Loans
Allegheny Energy Inc. received another week to restructure credit
agreements, obtaining its fourth extension on default waivers from its
lenders, Dow Jones reported. Allegheny said that 'based on continuing
negotiations with lenders,' its subsidiaries, Allegheny Energy Supply
Company LLC and Allegheny Generating Company, received extensions to
Feb. 7 on default waivers. The last extension, which it received on Jan.
14, was set to expire on Friday. The latest extension is the fourth one
that banks have given the company since it defaulted on about $1.3
billion in loans in October, reported the newswire. If the company isn't
able to reach a refinancing agreement with its lenders, it could be
forced to file for bankruptcy, Allegheny Energy has said, Dow Jones
reported.
Producer of Comdex Shows Is About to Seek Bankruptcy
The technology trade show company Key3Media Group, crippled by the
plunge of technology industries and cutbacks in corporate travel, is
planning to file for bankruptcy protection today, the company said
yesterday, the New York Times reported. The company, which
produces big trade shows like Comdex, Seybold Seminars, NetWorld+Interop
and JavaOne, is proposing a reorganization plan that would be backed by
the private equity arm of Thomas Weisel Partners and would keep it in
business, reported the Times. Under the plan, which is to be
filed today in Federal Bankruptcy Court in Delaware, the Weisel unit,
Thomas Weisel Capital Partners, will take control of the company and
provide $30 million in debtor-in-possession financing, allowing
Key3Media to continue operating while it reorganizes, the New York
Times reported.
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