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March 19, 2007
name='1'>Restructuring Industry Foresees Wave of
Insolvencies
A new wave of global
insolvencies will hit markets over the next few months with more parties
willing to profit from the downturn than five years ago, Reuters
reported today. More than 400 restructuring lawyers, accountants and
bankers will debate in
w:st='on'>Cape
Town
w:st='on'>South
Africa
next two days when the downturn is expected and who is going to profit
most from it. ”We've seen pressure in the
w:st='on'>
size='3'>U.S.
size='3'>housing market, “said James Moylan, a managing director
at Barclays Capital in charge of distressed debt. “I suppose the
market could turn quickly, but default rates remain at all-time lows.''
Concerns about the
w:st='on'>
size='3'>U.S.
size='3'>housing market have pushed down stock markets around the world,
but ample liquidity and investor appetite is suppressing debt payment
failures. A sharp increase in defaults is not seen until next year,
although pressure on sectors such as retail, chemicals and paper and
packaging may mount over the next few months, market experts have said
including credit rating agency Standard & Poor's.
href='http://www.nytimes.com/reuters/business/business-insolvency-conference-xmit.html?pagewanted=print'>Read
more.
Mortgages
name='2'>Senator Looks to Revisit Mortgage Rules
Sen. Mel Martinez
(R-Fla.) would like to revisit some of the issues he previously focused
on as Secretary of Housing and Urban Development as Congress begins to
tackle ways to curb predatory lending, which has taken on greater
importance with more subprime lenders collapsing and foreclosures among
homeowners rising,
size='3'>CongressDaily reported today. In
2002, when he was HUD secretary, Martinez proposed a sweeping rule that
would have overhauled mortgage purchases for home buyers, simplifying
good faith estimates, requiring mortgage brokers to disclose more of
their compensation and allowing lenders to offer one-stop mortgage
packaging that could save an average of $700 per closing. However, the
proposal triggered a massive backlash throughout the mortgage lending
industry as mortgage brokers protested greater disclosure of a
little-known lending practice referred to as a yield spread premium
(YSP); brokers and lenders wrangled over what should and should not be
included in the good-faith estimate; and settlement attorneys and title
companies argued that the guaranteed mortgage package would put them out
of business. Given
on the issue, Senate Banking Chairman Chris Dodd (D-Conn.) said he would
reach out to
face='Times





New
Roman'
size='3'>Martinez as he
crafts a measure. 'He can be a tremendous help to us here. He did some
great work back several years ago,' Dodd noted.
The Senate Banking Committee
will hold a hearing titled “Mortgage Market Turmoil: Causes and
Consequences” on Thursday at 10 a.m. ET. Further details to be
announced.
name='3'>New Century Receives Cease-and-Desist Orders from Four More
States
New Century Financial
Corp., the beleaguered home lender to people with weak credit, said it
has received cease-and-desist orders from more states, restraining the
company from taking new applications for mortgage loans, the
Wall Street Journal
reported today. The
face='Times New Roman' size='3'>Irvine
size='3'>,
size='3'>Calif.
filing with the Securities and Exchange Commission that
size='3'>Connecticut
size='3'>Maryland
w:st='on'>Rhode
Island
w:st='on'>
size='3'>Tennessee
the orders Wednesday and Thursday, alleging that New Century units had
violated state laws, including failure to fund mortgage loans after
closing. The company had earlier disclosed that
w:st='on'>
size='3'>Massachusetts
Hampshire
w:st='on'>New
Jersey
w:st='on'>
York issued similar orders
Tuesday. New Century, the second-largest
w:st='on'>
size='3'>U.S.
size='3'>subprime home mortgage lender last year based on loan volume,
has already stopped making new loans due to a lack of funds.
href='http://online.wsj.com/article/SB117430154712641229-search.html?KEYWORDS=bankruptcy&COLLECTION=wsjie/6month'>Read
more. (Registration required.)
Autos
name='4'>More Auto Suppliers Looking at Pre-Packaged
Bankruptcies
Pre-negotiated or
prepackaged corporate bankruptcies are expected to be more prevalent
in
size='3'>Michigan as the
state's struggling auto supplier industry looks for ways to shepherd
reorganizations quickly under the new bankruptcy law, the
Detroit Free Press
reported yesterday. While prepacks
look to afford a speedy recovery, less time in the chapter 11 process
can be a downside for those companies that need more than financial
restructuring, said
size='3'>Nicholas Kajon, a bankruptcy attorney
with Stevens & Lee P.C. in New York.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20070318/BUSINESS01/703180581'>Read
more.
name='5'>Daimler Unions Vow to Fight Bid by Private
Equity
Union leaders on both
sides of the
size='3'>Atlantic
a sale of DaimlerChrysler AG's Chrysler Group to a private-equity buyer,
throwing a potential hurdle in front of a deal, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The opposition comes as Cerberus Capital
Management LLC is piecing together a team of auto-industry veterans
headed by former Chrysler executive Wolfgang Bernhard to bolster its
expected bid for the
w:st='on'>
size='3'>U.S.
size='3'>unit. Cerberus, the tandem of private-equity groups Blackstone
Group and Centerbridge Partners LP, and Canadian supplier Magna
International Inc. have met with Chrysler executives and begun reviewing
financial and product-development information. They are expected to
present proposals by month's end.
href='http://online.wsj.com/article/SB117426075445040934.html?mod=home_whats_news_us'>Read
more. (Registration required.)
w:st='on'>
name='6'>San Diego
face='Times New Roman' size='3'> Diocese Follows Lead of Others in
Bankruptcy
When the Roman Catholic
Diocese of San Diego filed for bankruptcy last month, it will be
following the path of many diocese and companies that have determined
that chapter 11 is the best way to consolidate and manage the
potentially runaway costs posed by a host of related personal-injury
lawsuits, the San Diego
Union Tribune reported yesterday. The concept
of using bankruptcy as part of a corporate strategy to manage private
rights of action was pioneered by the Johns-Manville Corp., a
suburban
face='Times New Roman' size='3'>Denver
mining and materials company that filed for chapter 11 in
1982. Though Johns-Manville was a successful company at the time, it
also faced about 16,500 product liability lawsuits based on studies that
linked asbestos fibers to respiratory diseases, including certain forms
of lung cancer. Johns-Manville was a pioneering, precedent-setting case,
said University of Illinois College of Law professor
face='Times New Roman' size='3'>Robert Lawless
size='3'>. In what was then a novel argument, Johns-Manville filed for
chapter 11 not because of an inability to meet its current debts, but
rather because of future liabilities the company anticipated from its
asbestos-related claims.
href='http://www.signonsandiego.com/news/business/20070318-9999-1b18bankrup1.html'>Read
more.
Airlines
name='7'>Delta Receives Extension to Gain Creditor Approval for
Plan
A
w:st='on'>
York federal bankruptcy
court judge gave Delta Air Lines Inc. more time to get creditor approval
of its reorganization plan before competing plans are allowed to be
filed, the Associated Press reported on Friday. Judge
face='Times New Roman' size='3'>Adlai Hardin
size='3'>granted the Atlanta-based company's request to extend its
so-called exclusivity period from April 16 to June 1. Delta has said the
extension -- its fourth such request -- was necessary because a
confirmation hearing on its chapter 11 plan is scheduled for April 25,
after the exclusivity period was set to expire. Delta has projected it
will be worth $9.4 billion to $12 billion after it exits
bankruptcy.
href='http://biz.yahoo.com/ap/070316/delta_bankruptcy.html?.v=1'>Read
more.
name='8'>Northwest Receives Extension to File Chapter 11
Plan
Despite objections from
its shareholders, Northwest Airlines Corp. was given permission Thursday
to retain exclusive control over its reorganization process until June
30, Bankruptcy
Law360 reported on Friday.
JudgeAllan
Gropper
size='3'>ruled Thursday that Northwest Airlines deserved its third
extension of exclusivity over its chapter 11 plan. Judge Gropper also
ordered the shareholder committee to publicly disclose data about trades
in Northwest Airlines shares and delayed a decision on whether to
appoint an investigator to see if the company had engaged in merger
talks.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=20694'>Read
more. (Registration required.)
name='9'>Officials Say There Is No Need for City of
size='3'>Toledo
Bankruptcy
Though
w:st='on'>
size='3'>Toledo
w:st='on'>
size='3'>Ohio
tough financial times financially, city and state officials said
bankruptcy is not an option, the
size='3'>Toledo Blade reported yesterday.
'It's not even worth talking about,' said Jerry Dendinger,
size='3'>Toledo
City Council. 'We're not even close to bankruptcy.' Mayor Carty
Finkbeiner has proposed a general fund budget of $241.7 million for 2007
that includes an $11.9 million deficit, which is projected to grow to
$17 million next year. All
required by state law to pass a balanced budget, and
w:st='on'>
size='3'>Toledo is
considering many actions to make its revenues match its expenditures.
Some action has been taken, including 23 layoffs and cuts in 124 city
jobs, as part of the mayor's plan to cut the deficit. Toledo Director of
Finance John Sherburne said bankruptcy is not a worry because the city
traditionally doesn't finish the year in deficit spending.
href='http://www.toledoblade.com/apps/pbcs.dll/article?Date=20070318&Category=NEWS16&ArtNo=703180333&SectionCat=&Template=printart'>Read
more.
name='10'>Bankruptcy Court Approves Asarco Labor
Agreement
A federal bankruptcy
judge approved a labor deal between Tucson, Ariz.-based Asarco LLC and
the United Steelworkers over the strong objections of the copper miner's
corporate parent, Grupo Mexico SA, the Associated Press reported on
Friday. Judge Richard S.
Schmidt of the U.S. Bankruptcy Court in
Christi
w:st='on'>
size='3'>Texas
Asarco's $94.5 million labor pact, which parent Grupo
w:st='on'>
size='3'>Mexico
size='3'>had called a 'giveaway' designed to strip the Mexico City-based
company of its controlling stake in its subsidiary. Judge Schmidt
rejected Grupo
w:st='on'>
size='3'>Mexico
size='3'>'s arguments that the new collective bargaining agreement
effectively shut it out from playing any role in Asarco's
reorganization. The deal, which includes wage and benefit increases, is
retroactive to Jan. 1 and runs through June 30, 2010.
href='http://biz.yahoo.com/ap/070316/asarco_bankruptcy.html?.v=1&printer=1'>Read
more.
size='3'>Bally's Stock Plummets on Bankruptcy
Warning
Shares of Bally Total Fitness
Holding lost more than half their value Friday after the struggling
fitness center operator said it may file for bankruptcy protection, the
Associated Press reported on Friday. The slide accelerated a steep
decline in the company's stock that began last year amid questions about
management and failed efforts to sell the company. Bally’s stock
plummeted as low as 52 cents a share on Friday and has fallen more than
90 percent in the past year. Bally said late Thursday it might file for
chapter 11 because it has $827 million in outstanding debt, with an
additional $300 million coming due in October, and just $45 million in
cash. The company has interest payments due on its public notes in
April, July and October.
href='http://www.usatoday.com/money/industries/2007-03-16-bally_N.htm?csp=34'>Read
more.
name='12'>Payton Construction Files for Chapter 11
Payton Construction Corp.
filed a voluntary petition on Friday to reorganize under chapter 11
due to losses suffered primarily from three residential projects,
the Boston Business
Journal reported on Friday. The Boston-based
construction management firm suffered $15 million in losses resulting
from residential projects in
face='Times New Roman' size='3'>Malden
size='3'>and
size='3'>Boston
company's attorney, Peter J. Haley of the
w:st='on'>
size='3'>Boston
Haley LLP. Haley said the projected $15 million in losses cut into
Payton's 3 percent to 5 percent profit margin. Payton's annual revenue
is $300 million.
href='http://www.bizjournals.com/boston/stories/2007/03/12/daily53.html?t=printable'>Read
more.
name='13'>Blackstone Group May Go Public
The Blackstone Group, the
world’s largest private equity firm, is preparing for an initial
public offering that could value the firm at more than $30 billion,
though a final decision to proceed has not yet been made, the New
York Times reported on Saturday. If Blackstone went ahead, it would
be the first time a large private equity firm has sought a public
listing. A public offering by Blackstone would be a remarkable
about-face for an industry that has long extolled the virtues of being
private. A surge in buyout activity in the last few years has showered
Blackstone and other private equity firms with billions in fees and
allowed them to raise record-breaking amounts for ever-larger deals.
Last month, Blackstone acquired the Equity Office Properties Group in
what was then the largest leveraged buyout in history, only to be
eclipsed by the $45 billion takeover of TXU just weeks later. Now
Blackstone is about to complete a new $20 billion private equity
fund.
href='http://www.nytimes.com/2007/03/17/business/17blackstone.html?pagewanted=print'>Read
more.
name='14'>Report: Pension Outlays May Cost New
w:st='on'>
size='3'>Jersey $132.1
Billion
A report by Ryan Labs
Inc. presented to state officials this week said that
w:st='on'>
Jersey may have to make
$132.1 billion in pension payments to retirees in the next 30 years,
according to Bloomberg News on Friday. The analysis provided
size='3'>New Jersey
size='3'>officials with another way of calculating and estimating the
cost of pension benefits the state will have to pay to employees.
size='3'>New Jersey
almost $78.4 billion on hand for retirees, has an unfunded pension
liability of $24.8 billion, according to an actuary's report released
last month by the Treasury Department. Orin Kramer, the board's
chairman, said he looked at the system's funding requirements in terms
of 'how much money you have and how much you ought to have to make the
payments you have to make' over several years. The state is short as
much as $45 billion to $50 billion under that model, said Kramer, who is
a general partner at Boston Provident L.P., a hedge fund. 'The bottom
line is the public pension problem is massive and is more significant
than is implied by the actuarial figures,' he said.
href='http://www.philly.com/inquirer/local/nj/20070317_Report__Pension_outlays_may_cost_N_J___132_1_billion.html'>Read
more.
name='15'>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
size='3'>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'
size='3'>steve@creditnews.com
size='3'>your name, company name, address, phone and fax.
face='Times New Roman' size='3'> We’ll
set you up within 24 hours.
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member’s discount of 50% off the $500 annual subscription
fee. Indicate “ABI CODE 27” in
your email.
size='3'>American Italian Pasta Co., a Kansas
City-based maker of pasta products, received an extension, from 3/31 to
12/31, to filed its annual reports for both 2005 and 2006. The
company hopes to file the older report by the end of the May and the
2006 report by the end of June. American Italian added that it paid down
$10 million of its debt, leaving it with debt of $244 million. Its debt
net of cash stands at $229 million.
size='3'>Autobytel Inc., an
w:st='on'>
size='3'>Irvine
car retail firm, reported a fourth quarter net loss of $7.3 million.
Revenue declined 8%–to $26.7 million. For the year, it lost $31.5
million on a 9% revenue decline–to $111 million.
size='3'>Bally Total Fitness Holding Corp.,
the
size='3'>Chicago,
w:st='on'>
size='3'>Il
fitness centers, warned that it may file for protection under Chapter 11
unless it can arrange to restructure its debt. Now with about $827
million in debt and $45 million in cash on hand, Bally must make
interest payments in April, July and October. The company added
more bad news, saying it will delay filing its 2006 annual report, which
puts the company into technical default on certain of its senior
notes. Bally, which hasn’t reported a fiscal profit since
2001, also expects to report an operating loss for
2006.
size='3'>Celebrate Express Inc., a
size='3'>Kirkland
w:st='on'>
size='3'>Wa
party products, took itself off the selling block. Last summer,
the retailer said it would consider strategic alternatives but it has
now decided that it’s in the best interests of the comapny and its
shareholders to continue operating independently. Also, Celebrate warned
that it will report a loss for its third quarter of between 2 cents and
4 cents a share on revenue of about $16.5 million.
size='3'>General Motors Corp.,
size='3'>Detroit
announced that it had “ineffective” controls over its
financial reports, including more than forty specific problems of weak
auditing controls, improperly trained personnel and other issues. The
carmaker warned that the weaknesses in its internal controls could hurt
its financial condition and affect its reorganization plans. The
company, continuing to overhaul its North American operations, will
strive to further reduce operating costs. Last year, GM slashed its
fixed costs in
size='3'>North America
billion.
size='3'>Hexion Specialty Chemicals Inc.,
Columbus, Oh., reported a fourth quarter loss of $55 million, compared
to a $14 million loss in the year-earlier period. Profits were
hurt by increased costs for raw materials. Revenue, however, rose
14.5%–to $1.3 billion. For the whole year, Hexion’s
losses amounted to $109 million, up from an $87 million loss in
2005. Fiscal revenue jumped 17%–to $5.2 billion. The 2006
results included $60 million in expenses related to price adjustments
for customers. Hexion was formerly known as Borden Chemical
Inc.
size='3'>Hooper Holmes Inc., a Basking Ridge,
N.J. health-information company, reported a fourth quarter net loss of
$41.4 million. Revenue declined 7%–to $71.2 million. For the year,
it lost $85.2 million on an 8% revenue decline–to $294 million.
Revenue fell 8%–to $294 million. The quarter and year included a
$4.7 million gain and $48.5 million in charges respectively related to
restructuring and impairment.
size='3'>Integrated Alarm Services Group Inc.,
an Albany, N.Y. alarm monitoring concern, reported a fourth quarter net
loss of $4.7 million, down from a loss of nearly $8 million a year ago.
Revenue was down 6% in the recent quarter–to $24.1 million. For
the year, it lost $83.9 million on a 5% revenue decline–to $94.4
million. The fiscal results included a $65 million goodwill
impairment.