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November
30, 2007
Mortgage
Lending
name='1'>Bush Administration, Banks Near A Plan to Freeze Subprime
Rates
The Bush administration
and major financial institutions are close to agreeing on a plan that
would temporarily freeze interest rates on certain troubled subprime
home loans, the Wall
Street Journal reported today. The plan is
being negotiated between regulators including the Treasury Department
and a coalition of mortgage-related companies including Citigroup Inc.,
Wells Fargo & Co., Washington Mutual Inc. and Countrywide Financial
Corp. Individual members have agreed to follow any agreement reached by
the coalition, which is called the Hope Now Alliance. Details of the
plan, which could be announced as early as next week, are still being
worked out. In general, the government and the coalition have largely
agreed to extend the lower introductory rate on home loans for certain
borrowers who will have trouble making payments once their mortgages
increase.
href='http://online.wsj.com/article/SB119638615868608863.html?mod=hps_us_whats_news'>Read
more. (Registration required.)
name='2'>People's Choice Home Loan Looks to Recover Transfers Made
to
size='3'>Mutual
People's Choice Home Loan
Inc. sought to recover several monetary transfers it made to Washington
Mutual Bank at the beginning of the year, which it said should
rightfully be avoided under the Bankruptcy Code,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. The dispute centers around a 2006 Flexible
Early Repurchase Facility, or repo contract, between People's Choice and
Concord Minutemen Capital Company LLC, to which WaMu is successor and
assignee, according to the complaint. Within the three months before
People's Choice petitioned for bankruptcy in March 2007, several
People's Choice subsidiaries and affiliates transferred their security
interests to WaMu under that repo contract, People's Choice
said.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=41178'>Read
more. (Registration required.)
name='3'>American Home to Pay $9 Million in Executive
Bonuses
Bankruptcy Judge
size='3'>Chris
size='3'>topher S. Sontchi allowed American
Home Mortgage Investment Corp. to pay $9 million in bonuses to
executives of the failed company, the Associated Press reported
yesterday. Judge Sontchi approved the bonuses at a hearing Wednesday but
denied the company's bid to not to reveal the names of executives
receiving the bonuses. Michael Strauss, American Home's founder and CEO,
bypassed the bonus pool. The Melville, N.Y., company paid him almost
$3.6 million in the 12 months before the bankruptcy filing. He sold
three million shares of company stock at $1.17 per share a few days
before American Home went under, a transaction the company said was
forced by a margin call.
href='http://biz.yahoo.com/ap/071129/american_home_bankruptcy.html?.v=1'>Read
more.
name='4'>Calpine to Abandon $80 Million in Claims
Bankruptcy Judge
Burton R. Lifland
on Tuesday approved Calpine's request to abandon
preference claims under $1 million, totaling $80 million of the $2
billion in potential claims, the Associated Press reported yesterday.
Calpine has since revised its estimate for what creditors will receive,
and now expects they will see a 96.7 percent recovery. Still, Calpine
said in court papers that given a 95 percent recovery, there is 'little
value' to pursuing the payments. If creditors see a 95 percent recovery,
it said, the company would only recover $4 million from pursuing those
smaller payments. Calpine will decide later whether to pursue the
remaining payments. Under Lifland's order, it has permission to file the
complaints under seal.
href='http://biz.yahoo.com/ap/071129/calpine_bankruptcy.html?.v=1'>Read
more.
name='5'>Asarco Settles Some of Its Environmental
Disputes
A bankruptcy court on
Tuesday approved four settlements between bankrupt copper-mining company
Asarco, the U.S. government and the state of Washington, under which the
company will allow general unsecured claims of over $23 million to pay
for environmental damage at several mining sites,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday.
size='3'>The first settlement involving the so-called Azurite site
in
size='3'>Whatcom County
size='3'>Wash.
size='3'>U.S.
million claim, and a second, involving the so-called Golinsky site
near
size='3'>Redding,
w:st='on'>
size='3'>Calif.
government a claim of $4.05 million. The settlements also grant the
government limited access to a trust fund set up with Asarco assets to
pay for environmental cleanup costs. The third splits liability for
cleaning up a site near
face='Times New Roman' size='3'>Taylor
size='3'>Springs
size='3'>Ill.
Asarco and Blue Tee Corp., which will cover 80 percent of the cost.
Asarco's share will consist of three payments of $300,000 each. The
fourth settlement approved on Tuesday, with the state of
size='3'>Washington
peripheral issues in an ongoing dispute over a contaminated site
near
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=41096'>Read
more. (Registration required.)
name='6'>Solutia to Emerge from Bankruptcy
Bankruptcy Judge
Prudence Beatty's
confirmation yesterday of Solutia Inc.’s
reorganization plan will allow the chemical company to emerge from
bankruptcy in about a month, the
size='3'>St. Louis Business Journal reported
yesterday. Solutia’s reorganization plan calls for $250 million to
be raised from the sale of rights to buy newly issued stock, and for
Solutia to borrow up to $2 billion to fund its future operations. The $2
billion package includes a $400 million senior secured asset-based
revolving credit facility, a $1.2 billion senior secured term loan
facility, and a $400 million senior unsecured bridge facility. The
company said that it anticipates that the reorganization plan to become
effective in late December or January.
href='http://www.bizjournals.com/stlouis/stories/2007/11/26/daily51.html?t=printable'>Read
more.
face='Times New Roman' size='3'>
name='7'>Delphi
size='3'> Postpones Hearing on Bankruptcy
Proceedings
Auto-supplier Delphi Corp.
delayed a hearing scheduled yesterday on its chapter 11 disclosure
statement as the company tries to resolve objections to its proposed
plan amendments, Dow Jones Newswires reported yesterday. The Troy,
Mich.-based company has proposed changes in recoveries to creditors,
current shareholders and former parent General Motors Corp. after
credit-market turmoil forced it to seek a smaller exit financing
package. Committees for unsecured creditors and shareholders objected to
the amendments, though GM supported the changes.
href='http://online.wsj.com/article_print/SB119635553386308155.html'>Read
more. (Registration reqired.)
name='8'>Bankruptcy Court Approves NYRA’s Amended
Reorganization Plan
A bankruptcy court on
Wednesday approved an amended reorganization plan submitted by the New
York Racing Association and set a date for creditors to vote on the plan
by Dec. 21, according to the
size='3'>Daily Racing Form yesterday. Though
the approval of the plan will provide creditors of NYRA with an
opportunity to weigh the association's proposals to emerge from
bankruptcy, the plan itself is based on a deal with Gov. Eliot Spitzer
that also needs the approval of both houses of the state legislature in
order to go forward. Under the Spitzer plan, which is supported by New
York Assembly Speaker Sheldon Silver, the NYRA would receive a 30-year
extension on its franchise - which expires at the end of this year - in
exchange for the state taking title to its three racetracks:
Aqueduct,
size='3'>Belmont
w:st='on'>
size='3'>Saratoga
the deal, the state would provide NYRA with $75 million to satisfy some
existing debts and provide operating cash as it emerges from bankruptcy
protection.
href='http://sports.espn.go.com/sports/horse/news/story?id=3133619'>Read
more.
Fed
Chief Offers New Hint on a Rate Cut
Federal Reserve chairman
Ben S. Bernanke acknowledged yesterday that a “fresh wave of
investor concern” had led to tougher credit conditions that posed
new risks to the economy, reinforcing the view that the Fed is likely to
cut interest rates again, when it meets on Dec. 11, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. Speaking one day after another top Fed official
signaled that policy makers might have to reduce interest rates to head
off trouble, Bernanke pledged that the Fed would remain
“exceptionally alert and flexible” in setting policy. Noting
that investors have been shaken by losses and write-downs on soured
mortgages, Bernanke said that a new round of turbulence in financial
markets had reversed some of the recovery in credit markets after a
first round of panic broke out in August over subprime
mortgages.
href='http://www.nytimes.com/2007/11/30/business/30forecast.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more. (Registration required.)
name='10'>Commentary: The Trial Bar on Trial
While the tort bar must
have thought that 2007 would be comfortable year with big cases related
to Hurricane Katrina and Enron set to pay out, the year ends the
dismantling of what are alleged to be major tort criminal enterprises,
according to an editorial in today’s
size='3'>Wall Street Journal. Bill Lerach, the
king of class actions, stands disgraced as an admitted felon and his
former partners at Milberg Weiss face trial for being part of the same
kickback scheme as Lerach. Federal prosecutors continue to pursue a
criminal probe into asbestos and silicosis litigation fraud. On
Wednesday, Richard 'Dickie' Scruggs and four colleagues were indicted
for trying to bribe a state judge in exchange for favorable
rulings.
href='http://online.wsj.com/article_print/SB119638926368209011.html'>Read
more. (Registration required.)
name='11'>Florida Freezes State-Run Investment Fund
Facing a run by panicked
local government investors,
w:st='on'>
size='3'>Florida
yesterday suspended withdrawals from a state-run, short-term investment
fund that has shrunk to $15 billion from $26 billion over the past two
weeks, Reuters reported today. By unanimous vote, a three-member panel
led by Florida Gov. Charlie Crist ordered state financial managers to
temporarily shut down the fund used by local governments and school
districts. Meeting in an emergency session, the State Board of
Administration suspended withdrawals from the Local Government
Investment Pool, which has been rocked by uncertainty over the national
subprime mortgage crisis. The decision came after panelists were told
that another $3.5 billion in withdrawals had been made on yesterday
morning, leaving the fund with about $15 billion in assets as of 11 a.m.
EST. The panel plans to meet again on Tuesday to consider more long-term
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/11/30/AR2007113000312.html'>Read
more.