href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='http://www.abiworld.org/AM/Images/headlines/headline.gif'
/>
2007
id='1'>Judge Expects to Decide on
w:st='on'>
size='3'>Oregon
size='3'>Archdiocese Bankruptcy Plan by End of the
Week
Bankruptcy Judge
Elizabeth
Perris, who is overseeing the bankruptcy for
the Archdiocese of Portland, Ore., said Tuesday that she expects to
decide by the end of the week whether to approve the plan, the
Associated Press reported yesterday. Judge Perris heard only one
objection to the reorganization plan during final arguments over a
proposed $75 million settlement for alleged victims of sexual abuse by
priests. So far,
about 175 people who claimed they were molested by priests or other
church officials have agreed to settle their cases for about $52
million. Another $20 million has been set aside for those who come
forward after an agreed-upon deadline.
href='http://www.oregonlive.com/newsflash/regional/index.ssf?/base/news-19/117626019036430.xml&storylist=orlocal'>Read
more.
Mortgages
id='2'>Borrowers Struggling to Find Refinancing Solutions Amid
Increasing Delinquencies
While lenders say that
they are taking new steps to work with homeowners in financial trouble,
many borrowers say red tape and other obstacles are keeping them from
resolving their problems, the
size='3'>Wall Street Journal reported today.
The sharp rise in delinquencies in recent months is straining mortgage
companies' ability to respond quickly to borrowers with such solutions
as new repayment plans or modifications to loan agreements. Borrowers
often must make many calls before finding someone in a position to help
them, by which point their problems may have worsened. The process can
be particularly complicated when mortgages have been packaged into
securities and sold to investors, which can limit the mortgage company's
flexibility in working out a solution. For some borrowers, there may not
be a good solution, apart from the sale of their home or foreclosure.
'If you're a borrower trying to deal with [a mortgage company] ... or
even a private attorney, you're likely to run into brick walls,' says
Iowa Assistant Attorney General Patrick Madigan, whose job includes
working on behalf of Iowa homeowners.
href='http://online.wsj.com/article/SB117624718322565654.html?mod=home_whats_news_us'>Read
more. (Registration required.)
id='3'>Consumer Advocates Take Aim at Wall Street over Subprime
Crisis
Consumer advocates are
urging Congress to apply 'assignee liability' not only to brokers and
lenders who originate deceptive loans but those who later package and
purchase them as mortgage-backed securities in the secondary
market,
size='3'>CongressDaily reported today.
Advocacy groups contend that the explosion in subprime lending could not
have come about without the money pumped into it by Wall Street firms
that bought such loans, pooled and securitized them, and later sold them
off to hungry investors such as insurance companies, pension funds and
hedge funds.'They are providing the liquidity through the investments in
this market and are responsible for really setting the standards that
loan originators apply at the front end of the market,' said Allen
Fishbein, director of housing policy for the Consumer Federation of
America. 'Since March of 2006, I have stated that a workable national
standard on assignee liability would be helpful in any subprime reform
and that the New Jersey statute provisions on assignee liability have
been shown to be effective and could be the starting point for national
legislation,' Senator Max Bachus (R-Ala.) said. One lobbyist for a
securities firm acknowledged that the
w:st='on'>
Jersey standard is one
that many are discussing as a model for a national
standard.
id='4'>New Century Seeks Faster
w:st='on'>
Loan Business
Subprime lender New
Century Financial Corp. has asked a federal bankruptcy judge to speed up
the auction and sale of its main lending business while it still has
value, Reuters reported yesterday. New Century wants to sell its loan
origination business by early May, and sees an “exigent and
immediate need'' to set up bidding procedures, according to a late
Monday filing with the U.S. Bankruptcy Court in Wilmington, Del. The
Irvine, Calif.-based company previously said it planned to sell major
assets within 45 days of its April 2 bankruptcy filing, or around May
17. New Century asked U.S. Bankruptcy Judge Kevin Carey to schedule an
April 17 hearing to set up bidding procedures, and a May 15 hearing to
approve a successful bid.
href='http://www.nytimes.com/reuters/business/business-newcentury.html'>Read
more.
id='5'>Ex-Mortgage CEO May Face Criminal Charges
Connecticut Attorney
General Richard Blumenthal said that the state had won a court order
that may clear the way for it to file criminal charges against former
Mortgage Lenders Network USA Inc. CEO Mitchell Heffernan over the
company's bankruptcy, Reuters reported yesterday. The state's Department
of Labor has said it applied last month for an arrest warrant charging
Heffernan with failing to pay about $3 million, mostly sales
commissions, to 61 former employees of the Middletown-based provider of
subprime mortgages. Any charges would be the first against a former top
executive of a large
w:st='on'>
size='3'>U.S.
size='3'>subprime lender since the industry began struggling in recent
months under a surge of homeowner delinquencies and defaults. Mortgage
Lenders had been the 15th-largest
w:st='on'>
size='3'>U.S.
size='3'>subprime home loan provider before seeking chapter 11
protection on Feb 5. 'The judge rightly ruled that the federal
bankruptcy court lacks authority to halt a state criminal prosecution,'
Blumenthal said. It was not immediately clear whether or when Heffernan
would be charged.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/04/10/AR2007041001337.html'>Read
more.
id='6'>Senate Inquiry in Loan Case Is Studying Stock
Transfer
Senate officials said
that an Education Department official and financial aid directors at
three universities received stock in a student loan company from the
company’s current president in what may have been a violation of
securities law, the New
York Times reported today. In various
documents that have been turned over to staff members working for Senate
Education Committee Chairman Edward M. Kennedy (D-Mass.), the president
of the company described the transfers as gifts, but at least one
recipient of the shares has said he paid for the stock. Because the
executive, Fabrizio Balestri of Student Loan Xpress, had acquired the
shares in a private placement of stock that restricts how it can be
transferred, the gifts — or sale — may have run afoul of
federal securities laws, Kennedy said. Yesterday he called on the
Securities and Exchange Commission to investigate the transactions. The
senator’s staff has been investigating relations between loan
companies and universities. The disclosures last week that the financial
aid administrators owned the stock have prompted concerns that they had
an incentive to steer students to the loan company. The government
official helped oversee lenders in the federal student loan
program.
href='http://www.nytimes.com/2007/04/11/education/11loans.html?ref=business'>Read
more.
UAW
Defends Collective Bargaining Agreement with Dana
The United Autoworkers
union has filed a limited objection to bankrupt Dana Corp.’s sale
of its fluid products group, saying it wants to protect the collective
bargaining agreement at its plant in
w:st='on'>
size='3'>Archbold
w:st='on'>
size='3'>Ohio
Bankruptcy Law360
reported yesterday.
size='3'>In court papers filed Thursday before the U.S. Bankruptcy Court
in
the International Union, United Automobile, Aerospace and Agricultural
Implement Workers of America said the stock and asset purchase agreement
signed by Dana and Orhan Holding AS appeared to contradict itself. On
the one hand, it implied that Orhan, a Turkish industrial firm, would
assume the Archbold collective bargaining agreement, but it also said
Orhan and the union would bargain in good faith regarding any
modifications to the agreement, the UAW said. Though the UAW made sure
to point out it was not objecting to the sale itself, it added that it
wanted to meet with Dana and Orhan to address its concerns.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22270'>Read
more. (Registration required.)
Fund
Accuses Calpine of Underestimating Value
One of the major
shareholders of Calpine Corp. said that the company has underestimated
its value by about $11 billion,
size='3'>Bankruptcy Law360 reported yesterday.
Hedge fund Rainmac Fund Ltd., which owns $26 million in Calpine stock,
has accused the company of underestimating its worth as it puts together
a reorganization plan for emerging from chapter 11. Rainmac claimed that
Calpine is looking to shortchange shareholders and that the
company’s current share price and debt value indicates that the
true worth of the energy provider is about $18 billion, as opposed to
the $7 billion estimated by the company. London-based Rainmac has also
criticized Calpine’s move to prevent its official shareholder
committee from hiring financial advisor Perella Weinberg Partners LP.
Calpine has opposed the retention of the firm, claiming that it will
cost the company $40 million.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22341'>Read
more. (Registration required.)
id='9'>Water Authority Contests
w:st='on'>
size='3'>Pittsburgh
Bankruptcy Plan
The Pittsburgh Water
& Sewer Authority is contesting Pittsburgh Brewing Co.’s
reorganization plan, the Associated Press reported yesterday. The
reorganization plan filed by the brewery's potential buyer doesn't
include enough information about how much it would pay to settle more
than $2.8 million in unpaid water and sewer bills, authority attorneys
said in a court filing Tuesday. A bankruptcy judge has set a hearing
Thursday on the reorganization plan put forth by equity fund manager
John Milne of
face='Times New Roman' size='3'>Westport
size='3'>,
size='3'>Conn.
to keep the brewery open. The water authority contends it would get more
money if the brewery were closed and sold to pay its debts. Pittsburgh
Brewing's creditors were owed about $26 million when the brewery filed
for chapter 11 in December 2005. Milne has proposed paying them $3.98
million in his bid to keep it operating.
href='http://www.centredaily.com/129/story/65414.html'>Read
more.
id='10'>Closing Arguments Begin in Trial of Ex-Qwest
Chief
As the trial begins to
wrap up, Federal prosecutor Colleen Conry portrayed Joseph P. Nacchio,
former CEO of Qwest International, on Tuesday as a man who knowingly and
unlawfully concealed Qwest’s growing money troubles while
simultaneously cashing in on his stock options, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. Nacchio faces 42 counts of insider trading
related to his sale of more than $100 million in Qwest stock in
2001. Conry
told jurors that Nacchio had deceived analysts by exaggerating
Qwest’s internal financial projections, despite knowing that Qwest
was facing a significant shortfall because of the company’s
failure to increase revenue. Nacchio’s
lawyer, Herbert Stern, sought to paint his client as an ambitious and
passionate executive who may have misjudged Qwest’s financial
prognostications, but believed deeply in his own numbers.
href='http://www.nytimes.com/2007/04/11/business/11qwest.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
International
w:st='on'>
id='11'>Japan
face='Times New Roman' size='3'> Bankruptcy Debt Hits 16-Year Low
in 2006-07
The total debt of
size='3'>Japan's
corporate bankruptcies hit a 16-year low in the financial year just
ended, as the world's second-largest economy continued to improve,
Reuters reported today. The combined debt of bankruptcies in the year to
March totalled 5.4 trillion yen ($45.3 billion), down 11.03 percent from
the previous year to the lowest amount since 1990, data from Tokyo Shoko
Research showed. There were 13,337 bankruptcies during the year, up 1.26
percent. In addition to the economic turnaround, greater support
from
face='Times New Roman'
size='3'>Japan
government has helped keep bankruptcies on an overall downward trend,
the research firm said. In March, the total debt at firms that went
bankrupt fell 4.79 percent from a year earlier to 488.7 billion yen. The
number of bankruptcies edged down 0.63 percent from a year earlier to
1,247 cases.
href='http://www.reuters.com/article/economicNews/idUST30161220070411'>Read
more.
TROUBLED
COMPANIES IN THE NEWS
1000’s of companies lose money or
experience some form of difficulty each quarter.
The business news articles below are
taken from the Daily Summary of Troubled & Fast Growing U.S.
Companies and Other Business News published by Bastien Financial
Publications.
To begin receiving the COMPLETE Daily
e-Summary, that emails you information on over 70 such companies each
morning, email
face='Times New Roman'
color='#0000ff'>steve@creditnews.comyour
name, company name, address, phone and fax. We’ll set you up
within 24 hours.
Tax Time Special! Now through April 15,
you can receive an annual subscription to the U.S. Business
Journal¹s weekly summary of troubled
w:st='on'>
w:st='on'>U.S.
Indicate “ABI CODE 27” in your email.
size='3'>American Performance Industries Inc.,
a
size='3'>Sanford,
w:st='on'>
size='3'>N.C.
which recently filed Chapter 7, laid off its remaining fifty-five
employees as it wraps up a liquidation of its operations. The
company’s bankruptcy filing listed assets and liabilities of $1.4
million and $5.7 million respectively.
size='3'>Conversion Services International Inc.
size='3'>, an
face='Times New Roman' size='3'>East Hanover
size='3'>,
size='3'>N.J.
business-intelligence services, reported a fiscal net loss of $9.6
million, including a debt-extinguishment loss of $2.3 million. Revenue
declined 7%–to $25.7 million.
size='3'>Dimensions Healthcare System’s
executives are meeting to consider the possible closure or bankruptcy
filing of its
size='3'>Prince George
hospitals in
face='Times New Roman'
size='3'>Maryland
following the collapse of talks with state and local officials to get
approval for a large funding plan to keep the hospital system
operating.
size='3'>International Rectifier Cop., an El
Segundo, Ca. semiconductor manufacturer, said that its financial reports
going back more than a year and a half should be considered unreliable
because of various errors in them. The company, whose products control
power flow, added that it will be late in filing its financial report
for its third quarter ended 3/31. The company’s stock price sank
7% on the news.
size='3'>Jackson Hewitt Tax Service Inc.,
the
face='Times New Roman'
size='3'>U.S.
size='3'>’s second-biggest tax-preparation company, said that it
will temporarily shut down its offices in five regions around the
country while it continues to be investigated by the Department of
Justice on charges of tax-return fraud. All the offices to be shuttered
are controlled by a single owner. Those offices are being accused of
submitting fraudulent tax returns at a cost to the
w:st='on'>
size='3'>U.S.
size='3'>government of about $70 million. The Justice Department
announced last week that it would sue to have 125 of the Jackson Hewitt
franchises closed.
size='3'>Pier 1 Imports Inc., the
size='3'>Fort Worth
Tx.-based specialty retailer of household goods, has seen Elliott
Associates LP, a 5.5% shareholder, urge the retailer to shutter between
250 and 300 of its underperforming stores and add new directors to its
board. Pier 1, which has endured a string of seven-straight quarters in
the red, recently laid off 175 workers as part of an effort to save $17
million in annual expenses. The retailer, with nearly 1,200 stores
as of the end of 2006, is expected to file its fourth quarter results
this week.
size='3'>Skyline Corp., an
w:st='on'>
size='3'>Elkhart
of manufactured homes, reported a third quarter net loss of $2.2
million. Revenue sank 44%–to $66.3 million.
size='3'>Student Loan Xpress Inc. put three of
its managers on leave, following a probe that is charging that
financial-aid directors at three universities received nearly $160,000
in consulting fees, reimbursements and other payments from the company.
Student Loan Xpress is a unit of financial-services firm CIT Group inc.
of
size='3'>Manhattan,
w:st='on'>
size='3'>N.Y.
size='3'>3D Systems Corp.,
w:st='on'>
Hill,
face='Times New Roman' size='3'>Md.
size='3'>, announced that it will appeal the possibility of being
delisted by the Nasdaq Stock Market. 3-D is late in filing its
annual report because it needs extra time to restate its third quarter
results. The firm produces equipment that makes three-dimension
prototypes for various industries.