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January 11, 2010
House Oversight Committee to Question
Geithner on AIG Deal
House Oversight and Government
Reform members will question Treasury Secretary Geithner at a hearing
during the week of Jan. 18 about his role in the massive bailout of
failed insurer American International Group Inc.,
CongressDaily reported on Friday. The committee will look
into e-mail exchanges between attorneys at the Federal Reserve Bank of
New York, where Geithner served as president, and AIG, which indicate
the firm was advised to withhold key details from the public about the
terms of the insurer's federal bailout. 'More than one year after the
first federal bailout of AIG, the American people continue to question
where their tax dollars were really sent when the government rescued
this company,' said House Oversight and Government Reform Chairman
Edolphus Towns.
In related news, Thomas Baxter Jr., general counsel at
the New York Fed, wrote a letter on Friday to Rep. Darrell Issa
(R-Calif.) that Treasury Secretary Timothy Geithner wasn't involved in
deliberations between the Federal Reserve Bank of New York and American
International Group Inc. over what the insurer should disclose in
regulatory filings, the Wall Street Journal reported today.
Baxter said that Geithner, the former president of the New York Fed,
'played no role in, and had no knowledge of, the disclosure
deliberations and communications referenced in those emails.' The emails
in question, released by Issa's office on Thursday, show that officials
at the regional Fed bank told AIG not to disclose key details of their
agreements to make big payouts to banks in late 2008. AIG later had to
amend its regulatory filings several times and provide the information
after the Securities and Exchange Commission requested more
disclosure.
href='http://online.wsj.com/article/SB10001424052748704500104574651163865009196.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more. (Subscription required.)
Group Liquidation Completed
The estate remaining from the
sale of bankrupt Lenox Group Inc. has completed its wind-down, the
Deal’s
Pipeline reported on Friday. CAC Group Inc., the name given
to the estate of what used to be Lenox Group, filed a notice with the
U.S. Bankruptcy Court for the Southern District of New York in Manhattan
on Jan. 6 indicating that its liquidation plan has gone effective. The
plan's effective date occurred on Dec. 31, filings show. Lenox Group, a
tableware and giftware maker, sold its assets to Clarion Capital
Partners LLC in March in a deal worth about $100 million that included a
credit bid of term loan debt totaling $44.5 million. In the transaction,
Clarion purchased the Lenox, Dansk, Gorham and Department 56
brands.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005374637'>Read
more. (Subscription required.)
Former GM Objects to $1.4 Billion in
Claims
Motors Liquidation Co. (MLC),
the remains of the former General Motors Corp. still in bankruptcy, is
crying foul over nearly $1.35 billion in mostly unsecured claims against
the company, Bankruptcy Law360 reported on Friday. MLC and
its affiliated debtors submitted four omnibus objections on Thursday in
the U.S. Bankruptcy Court for the Southern District of New York, seeking
to disallow and expunge 360 claims that allegedly are duplicates, carry
insufficient documentation or have been amended and superseded by
subsequent, corresponding claims. Objections to the allegedly amended
and superseded claims, while fewest in number at 60, constitute the bulk
of the money, at $868.7 million, while the allegedly duplicate claims
account for about $432 million. Expected recovery for claimants remains
unclear. The bankruptcy court in September granted an extension giving
the troubled auto giant until Jan. 27 to file its chapter 11 exit
plan.
href='http://bankruptcy.law360.com/print_article/142420'>Read more.
(Subscription required.)
GM Names Firm to Wind Down Saab, Continues
Weighing Bids
General Motors named a
restructuring firm to run the winding-down of Swedish carmaker Saab on
Friday, even as it reviewed several bids that included an offer
from Formula One supremo Bernie Ecclestone, Reuters reported on Friday.
GM, which has been trying to sell Saab for over a year, has already seen
two buyout proposals fall apart and is preparing to shut down the
60-year old company if it doesn't receive a suitable bid -- a
move that would lead to thousands of job losses. GM named
AlixPartners -- already closely involved in GM's restructuring -- to run
Saab's liquidation. Dutch luxury carmaker Spyker made an improved bid
for Saab, while Ecclestone joined forces with Luxembourg-based private
investment company Genii Capital to pitch a rival proposal. A group of
Swedish investors also scrambled to submit a bid.
href='http://www.reuters.com/article/idUSLDE6070TP20100108'>Read
more.
New Uses for Shuttered Auto Plants
Of 128 manufacturing plants in North America closed
since 1980 by the Detroit Three automakers and their largest suppliers,
three of every five now sit idle, according to an Associated Press
report today.Those 128 plants had a payroll of 196,000 workers at the
time they closed. Today, only 36,500 people work at those sites that
have been redeveloped, and at only three of the revived plants does the
number of employees match or exceed the number in their carmaking past.
When factories closed decades ago, many workers just moved to a new
plant nearby. However, sharp cutbacks in the auto industry mean those
jobs will probably never return.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/01/11/AR2010011100636_pf.html'>Read
more.
name='6'>Bankruptcy Case of Ex-NFL Star Bernie Kosar Converted to
Chapter 7
Bernie Kosar, the former
quarterback for the National Football League
lang='EN'>’s Cleveland Browns, had his
bankruptcy converted to a chapter 7 liquidation after a judge granted a
court-appointed trustee’
lang='RU'>s request, Bloomberg News reported on Friday. Bankruptcy Judge
Raymond B. Ray ordered Kosar
lang='EN'>’s
bankruptcy case to be changed to chapter 7, according to court papers
filed Jan. 6. The case is In re Bernard J. Kosar Jr., 09-22371,
U.S. Bankruptcy Court, Southern District of Florida (Fort
Lauderdale).
Bankrupt Luna Soars on Extension of Supply
Deal with Intuitive
Bankrupt molecular technology
company Luna Innovations Inc. said that it will extend its
development-and-supply agreement with Intuitive Surgical Inc., with
Intuitive continuing to use Luna's technology in its products, Dow Jones
reported on Friday. Shares of Luna, which is expected to emerge from
chapter 11 protection this week, jumped 18 percent in pre-market trading
to $3.08. The deal extends a 2007 agreement under which Luna licensed
its fiber optic-based shape-sensing system, which helps surgeons
navigate through the body, for integration into Intuitive's medical
robotics products. Financial terms of the extension weren't disclosed.
Luna's original agreement with Intuitive--which specializes in
robotic-assisted, minimally invasive surgery products--ended in
December.
href='http://online.wsj.com/article/BT-CO-20100108-707610.html?mod=wsjcrmain'>Read
more. (Subscription required.)
U.S. Trustee Calls for Partial Termination of
TMST’s
Professional Fee Structure
The U.S. Trustee overseeing the
bankruptcy of real estate investment firm TMST Inc., formerly known as
Thornburg Mortgage Inc., has asked the court to partly terminate a pay
structure that lets attorneys and financial advisers submit fee requests
every month, Bankruptcy Law360 reported on Friday. U.S. Trustee
W. Clarkson McDow Jr. said in a motion on Thursday that
representative firms' fee statements
size='2'>“are
lengthy,”
face='Times New Roman' size='2'>seek
size='2'>“hundreds of
thousands of dollars in compensation and contain voluminous pages of
time records in varying degrees of detail,
size='2'>” the
trustee said. “
face='Times New Roman' size='2'>The United States Trustee attempted to
diligently review and analyze the monthly fee statements
face='Verdana' size='2'>…
size='2'>[but] given the amount of fee statements, the complexity of the
fee statements, and the complexity of the issues being dealt with by the
professionals in this case, it is unduly burdensome for the United
States trustee to review all of the fees statements in the time
permitted for objection,
size='2'>” McDow
said. The interim fee order calls for the Trustee to file any objections
within 15 days of receiving the application for payment, and the
objection must set forth
size='2'>“the
specific items and amount of fees and expenses to which the reviewing
party [objects] and the basis for the objection,
face='Verdana' size='2'>”
size='2'>the trustee said.
href='http://bankruptcy.law360.com/print_article/142429'>Read
more. (Subscription required.)
Judge Rules that Six Flags Group Does Not Have
to Reveal Holdings
Bankruptcy Judge Christopher
Sontchi ruled on Friday that a group of investors who crafted
Six Flags
lang='EN'>’ reorganization plan do not have
to reveal the size of their bond holdings issued by the bankrupt theme
park operator, Reuters reported on Saturday. Judge Sontchi said that the
ad hoc noteholders’
lang='RU'>committee were not subject to Bankruptcy Rule 2019,
which requires disclosure by committees in a bankruptcy. 'The law
contemplates a subset of a larger group authorized by the larger group
to act on its behalf. That is not the case here,' Sontchi said. 'I don't
think ad hoc committees are subject to rule 2019.' The official
unsecured creditors’
lang='RU'>committee made the request for the information that the the ad
hoc noteholders’
lang='RU'>committee had presented
themselves to the company's management as representatives of a broad
number of creditors. The case is In re Premier International
Holdings Inc., U.S. Bankruptcy Court, District of Delaware, No.
09-12019.
href='http://www.reuters.com/article/idUSN0826288720100108'>Read
more.
Tops
to Pay $85 Million for Penn Traffic's
Supermarkets
Tops Friendly Markets said on Friday that it is buying
all 79 stores run by bankrupt rival Penn Traffic Co. for $85 million in
cash, a move that would deepen its roots in New York and Pennsylvania
and extend its reach into other Northeastern states, the Associated
Press reported on Friday. Along with its cash bid, Tops said it would
eliminate about $100 million in unsecured claims against Penn Traffic's
estate. That includes a $72 million claim for withdrawal liability from
the United Food and Commercial Workers Union, which represents all of
Tops' work force and about 85 percent of Penn Traffic's.Tops, a 76-store
chain based in suburban Buffalo, said its bid has been accepted by
Syracuse-based Penn Traffic and recommended to the U.S. Bankruptcy Court
in Wilmington, Del., for approval. A ruling on the offer could early
this week.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/01/08/AR2010010801539_pf.html'>Read
more.
Fury
While critics of Wall Street firms are grumbling that
this year's bonuses are far too generous, some recipients are none too
happy either as they complain that too much of the payout is coming in
stock instead of cash, the Wall Street Journal reported today.
Banks and securities firms have told workers their bonuses will contain
a bigger percentage of stock to demonstrate that Wall Street is
sensitive to public anger over the big paychecks. The idea is that stock
reduces employees' temptation to take too many financial risks, since
they have an ownership stake. Some employees say that the shift could
leave them short of cash, since stock comes with restrictions on how
quickly it can be sold. Despite the mortgage meltdown, financial firms
are coming off a blockbuster year. Revenue has rebounded to pre-crisis
levels, and 2009 compensation is on pace to approach or surpass the
record payouts of 2007.
href='http://online.wsj.com/article/SB126317064618124057.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more. (Subscription required.)
Regulators Seize
Bank, Credit Union
Regulators seized a small bank and a tiny credit
union, the first two failures in a year that is expected to bring the
collapse of many more financial institutions reeling from the economic
downturn and other woes, the Wall Street Journal reported today.
The Washington State Department of Financial Institutions closed Horizon
Bank, an 18-branch bank based in Bellingham, Wash. Its $1.1 billion of
deposits and nearly all of its $1.3 billion assets were assumed by
Washington Federal Savings and Loan Association, of Seattle. Washington
Federal didn't pay a premium to assume the deposits. It also entered
into a loss-sharing agreement with the Federal Insurance Deposit Corp.
on roughly $1 billion of Horizon's assets. The FDIC estimates that the
collapse of Horizon will cost the agency's deposit-insurance fund $539.1
million. Like many small U.S. banks, Horizon was hobbled by bad real
estate loans. Regulators closed 140 banks in 2009, the highest number of
banks to collapse since the end of the savings-and-loan crisis in 1992,
when 181 lenders failed.
href='http://online.wsj.com/article/SB10001424052748703535104574647141197555718.html?mod=WSJ_business_whatsNews'>Read
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