April 7, 2004
ASBESTOS
LEGISLATION
Frist Plans New Effort On
Asbestos Litigation Legislation
Senate Majority Leader Bill Frist (R-Tenn.) was
reportedly planning to introduce legislation overhauling the asbestos
litigation system yesterday or today, but the bill has changed little in
the last few months from earlier versions, sources said, and labor
groups and Democrats remain as opposed to it as ever, CongressDaily reported. Even some proponents of the bill
doubt that it has the 60 votes needed to overcome a likely Democratic
filibuster when the bill comes before the chamber the week of April 19.
'We'll just have to keep trying,' said Judiciary Chairman Orrin Hatch
(R-Utah), who wrote the original asbestos legislation that formed the
basis of the bill to be introduced this week, the newswire
reported.
The bill would replace the existing court system with
a $114 billion trust fund and an additional $10 billion in contingency
funding if the trust's coffers run dry. Frist brokered that funding plan
last year, prompting an outcry from labor unions and key Democrats, who
said it was inadequate to compensate victims. Of the $114 billion, $46
billion would come from insurers and $57 billion from defendant
companies, with the rest from existing asbestos trust funds,
face='Times New Roman'>CongressDaily reported. The bill also
includes set compensation amounts for victims of asbestos diseases that
meet a set of medical criteria.
Hatch attributed Democratic opposition to the stance
of labor unions and trial lawyers, two groups that have opposed the
asbestos bill in its current form. Hatch said some unions supported the
bill, even if their leadership in
think many unions would breathe a sigh of relief if Democrats did the
right thing,' he said. Many Democrats support the concept of the
asbestos bill but differ with Republicans over its details, including
whether the trust fund is adequately funded. 'There's no reason that
Republican leadership should push a 60-vote strategy on this,' said one
Democratic aide. 'You can't work under one strategy for two years and
then change the strategy at the last minute and expect it to work,' he
said, referring to efforts to write a bill that would win a large
majority. But Hatch said after years of negotiations on the bill, the
matter should come before the chamber for a vote. 'It's just time,' he
said.
The Asbestos Blob, Continued(Wall
Street Journal)
An April 6 Wall
Street Journal editorial highlights the difficulties Congress faces
in trying
to solve the asbestos litigation mess. To read the editorial, point your
browser to:
href='http://online.wsj.com/article/0,,SB108122207194575252-email,00.html'>
face='Times New Roman'
size='3'>http://online.wsj.com/article/0,,SB108122207194575252-email,00.html
(subscription required).
Frist Threatens Friday Pension Vote In Response To
Democratic Delay Tactics
Senate Democrats are using parliamentary tactics to
delay consideration of the pension bill conference report, a strategy
that might force Senate Majority Leader Bill Frist (R-Tenn.) to file a
cloture motion today and push a vote on the bill to as late as Friday --
delaying the Senate's planned adjournment for Easter recess,
face='Times New Roman'>CongressDaily reported. Democrats
apparently would not agree Tuesday to a unanimous consent agreement to
proceed to the bill, preventing GOP leaders from holding a cloture vote,
if necessary, before Friday, the newswire reported. If legislation does
not pass before the Senate adjourns this week, businesses say they will
have to make large payments that will force them to freeze or
discontinue their pension programs. Democrats were waiting to determine
their strategy on the bill after their caucus meeting this morning, said
a spokesman for Minority Leader Tom Daschle (D-S.D.).
Meanwhile, Senate Finance Chairman Charles Grassley
(R-Iowa) said Republican backers of pension legislation hope enough
Democrats will support the bill to thwart a possible filibuster.
Business groups that want the estimated $80 billion in pension payment
waivers included in the main part of the pension bill have been
furiously lobbying Democrats in hopes of securing 60 votes. But Grassley
said he was not sure whether the bill's most vocal critic—Health,
Education, Labor and Pensions ranking member Edward Kennedy
(D-Mass.)—would mount a filibuster. 'I hope we won't have to go
that far,' he said, CongressDaily
reported. A Kennedy spokesman said the senator is 'reserving all his
options' for dealing with the bill and is still committed to blocking
it, according to the newswire. Kennedy and other Democrats oppose the
bill because they say it does not provide enough aid to companies that
sponsor 'multi-employer' pension plans, which often cover unionized
workers. Kennedy and other Democrats objected in conference to paring
Senate-passed multi-employer provisions.
GOP Holding Back On Comptroller's Pre-emption
Rule
As the Senate Banking Committee gears up for today's
hearing on the Office of the Comptroller of the Currency's new rule
exempting national banks from many state consumer protection laws, many
Democrats are expected to oppose the measure, while Republicans appear
to be taking a wait-and-see approach, CongressDaily
reported. Banking Chairman Richard Shelby (R-Ala.) has not taken a
position on the OCC pre-emption, which took effect in February. 'It's
something he's interested in taking a close look at, and that's the
purpose of the hearing,'
newswire reported.
John Gorman, general counsel to the Conference of
State Bank Supervisors, noted that the pre-emption rule had not drawn
protests from Senate Republicans, but he said his group had not seen any
of them embrace it, either. Banking ranking member Paul Sarbanes (D-Md.)
and all other committee Democrats made their opposition clear before the
OCC had even finalized the rule, CongressDaily
reported. 'The OCC's actions and proposals would dramatically alter
established pre-emption standards and would radically affect
state-federal relations and consumer protection in the areas of
banking,' the Democrats told Comptroller of the Currency John Hawke in a
letter last November.
The new OCC rule exempts national banks from most of
the state laws from which nationally chartered thrift institutions
already are exempt under Office of Thrift Supervision rules. The new
rule also would establish new federal anti-predatory lending standards
for national banks and restrict state agencies' authority to take action
against those banks. James McLaughlin, the American Bankers
Association's director of regulator and trust affairs, said he had not
seen the Senate leaning 'in a strong direction one way or the other' on
the OCC pre-emption. McLaughlin, whose group supports the pre-emption,
is scheduled to testify at today's hearing. Hawke also plans to testify,
along with state officials and other stakeholders. McLaughlin said the
OCC rule provided national banks with greater certainty regarding the
pre-emption issue.
Retailers Plan Lobbying On Bankruptcy Reform,
Trade
Representatives of the National Retail Federation
(NRF) will meet with three House members in the lawmakers' district
offices during the Easter recess to discuss tax and trade legislation,
class action lawsuit reforms and the bankruptcy overhaul bill that has
passed the House and is currently at the desk in the Senate, an NRF
spokeswoman said Tuesday, CongressDaily
reported. The lobby group will sit down with Reps. Mark Kennedy
(R-Minn.), David
Scott (D-Ga.), and Carolyn Maloney (D-N.Y.).
When lawmakers return from the Easter break, NRF will continue lobbying
on those issues and others, included an expected Senate fight over
changes to overtime rules, the newswire reported.
Fewer Job Cuts Announced
Job cuts planned by big
corporations fell 12 percent last month from February, though businesses
are still cautious about hiring, an outplacement firm reported Tuesday,
CNN
reported.
businesses announced 68,034 job cuts in March, down from 77,250 job cuts
in February, according to Chicago-based Challenger, Gray &
Christmas, which keeps track of monthly job-cut announcements. March's
announcements were about 20 percent lower than those of March 2003, when
85,396 cuts were announced, the news outlet reported.
Employers have announced 262,840 job cuts so far this
year, 26 percent fewer than in the first quarter of 2003, when companies
said they were cutting 355,795 jobs, the firm said, CNN reported. The
12-month moving average of cut announcements fell to 95,289 from 96,793
in February. The average had been higher than 100,000 from June 2001 to
January 2004. But John Challenger, the firm's CEO, warned that
businesses still seemed cautious about hiring. Financial firms led the
job cutting in March, announcing 16,120 cuts. Telecom firms announced
9,823 cuts, government and non-profit employers announced 8,725 cuts,
and industrial goods firms announced 6,634 cuts. Challenger's numbers
shouldn't be confused with actual tallies of layoffs. They include moves
to trim payrolls by not replacing workers who leave voluntarily,
offering early retirement or other measures.
Hayes Lemmerz Finances Get Boost from Bankruptcy
Emergence
Northville, Mich.-based Hayes Lemmerz International
Inc. reported a slight revenue increase for 2003, but its net income
figure benefited significantly from its emergence from bankruptcy last
June, according to Crains Detroit Business. Combining its pre-emergence
and post-emergence numbers, the company reported net income of $996.5
million on revenue of $2.1 billion for the year that ended Jan. 31.
However, the company recorded an extraordinary gain of $1.1 billion on
discharge of debt through the bankruptcy. The debt discharge permitted
the company to reduce its liabilities from $2.9 billion to $1.7 billion,
Crains reported. Those numbers compare with a net loss of $634.5 million
on revenue of $2 billion for the year before. That figure included a
$554.4 million charge for changes in accounting for good will. For the
eight months beginning June 3, 2003, when the company emerged from
bankruptcy, and ending Jan. 31, 2004, the company reported a loss of
$46.5 million or $1.55 a share on revenue of $1.4 billion.
Air
Extension; Chief Says Airline Needs Long-term Investor
Air
needs a long-term investor, not an opportunistic vulture fund, as its
partner when the airline emerges from restructuring, Chief Executive
Robert Milton said Tuesday, the Associated Press reported. 'The issue
for us and for our employees in particular is to find the right
investor,' Milton said in his first public comments since Trinity Time
Investments announced plans to walk away from a planned $650 million
investment in the airline unless significant changes are made, the
newswire reported.
maintained there was still a possibility that Trinity, owned by Hong
Kong billionaire Victor Li, may proceed with its investment in the
airline. 'He has said he's still in if there's sufficient progress for
him to proceed. At this stage, I'm not optimistic that he will proceed,
I'm hopeful, but I am confident that others are there,'
largest pension funds as well as
Corp. and several
vulture funds have been mentioned as possible replacement investors in
the airline, AP reported.
investor like Li, who can help grow the business in the
future.
Air
also filed a motion with the court overseeing its restructuring Tuesday
to have its creditor protection, currently set to expire on April 15,
extended one month until May 14. The airline said it needed the time to
stabilize the current situation, develop a process to find a new equity
sponsor and finalize a timeline to exit from creditor protection. The
bankruptcy monitor overseeing the airline has recommended that the
extension be approved.
Weirton Steel Gets Competing Bid for Assets
A group of bondholders of bankrupt steelmaker Weirton
Steel Corp. emerged as a last-minute bidder for the company's assets in
a challenge to International Steel Group Inc. as the deadline for offers
drew to an end on Tuesday, Reuters reported. The Informal Committee of
Senior Secured Noteholders of Weirton Steel offered $138.74 million and
a credit of $25.5 million. In addition, noteholders would assume $97
million in liabilities, the group said in a statement, the newswire
reported. International Steel Group bid $158 million for most of
assumption. Weirton Steel said in a statement it does not plan to
disclose the number of bids or bidders submitted to its legal counsel.
If
competing bids qualify for a bankruptcy auction, it will be conducted on
April 12. The company plans to present a recommended bid for its assets
to the bankruptcy court on April 14.
US Airways Looking for Deep Reductions
US Airways is looking at ways to make deep reductions just a year
after
cutting costs dramatically and emerging from bankruptcy. The airline's
president and chief executive, David Siegal, has said that further
reductions are necessary for the carrier's survival when Southwest
Airlines commences operations at Philadelphia on May 9, 2004.
Competition will
become even more intense when Frontier Airlines begins services from
Philadelphia to Denver and Los Angeles on May 23, 2004, the Associated
Press reported.
Smith Barney Broker
Testifies On Margin Loans To Rigases
As Adelphia Communications Corp.'s stock price tanked
in late 2001 and 2002, tens of millions of dollars in cash were wired to
Smith Barney to cover the Rigas family's margin loan, a broker testified
Tuesday. Highland Communications, a Rigas-owned entity, had a $100
million margin loan through Citigroup Inc. subsidiary Smith Barney,
broker Richard Cavallaro testified in the fraud trial of former Adelphia
Chairman John Rigas, two of his sons, and a fourth former executive.
Citigroup investment-banking officials were involved in setting up the
loan for the Rigases, said Cavallaro. Asked whether it was Adelphia that
paid the cash to increase the amount pledged as collateral on the Rigas
margin loan, which was backed by Adelphia securities, Cavallaro said he
did not know. The government alleges the Rigases had Adelphia pay $252
million to satisfy margin calls on loans to the family.
Provided by Daily Bankruptcy Review (
href='http://mail.abiworld.org/exchweb/bin/redir.asp?URL=http://www.djnewsletters.com/trial-form.html?promo=TDBRABI2'>
face='Times New Roman'
size='3'>http://www.djnewsletters.com/trial-form.html?promo=TDBRABI2
size='3'>)
Copyright (c) 2003 Dow Jones & Company, Inc.
All Rights Reserved
NorthWestern Creditors, Trustee Oppose Chapter 11
Equity Panel
NorthWestern Corp. is hopelessly insolvent and won't be able to
provide any return to stockholders when it emerges from bankruptcy, so
stockholders shouldn't get their own committee in the case, NorthWestern
creditors and the federal government said. The official committee of
unsecured creditors and the U.S. Trustee's Office both filed objections
with the U.S. Bankruptcy Court in
pressing for official representation in the power company's bankruptcy
case. Stockholders RCG Carpathia Master Fund Ltd., Performance Capital
and Smith Management LLC said NorthWestern's reorganization plan, which
would wipe out their holdings, is based on too low an estimate of the
company's enterprise value. The investors said they collectively own
more than 5.4 million NorthWestern shares, for a 14.4% stake.
Provided by Daily Bankruptcy Review (
href='http://mail.abiworld.org/exchweb/bin/redir.asp?URL=http://www.djnewsletters.com/trial-form.html?promo=TDBRABI2'>
face='Times New Roman'
size='3'>http://www.djnewsletters.com/trial-form.html?promo=TDBRABI2
size='3'>)
Copyright (c) 2003 Dow Jones & Company, Inc.
All Rights Reserved
KB Toys' Web Site May Join Bankruptcy
Denver-based KBToys.com may be on the auction block,
if a bankruptcy court approves a request by KB Toys Inc. to sell the
Internet operation along with the web site Etoys.com, the
face='Times New Roman'>Denver Post reported. KB Toys wants to
sell its Internet business to Toy Acquisition Corp. for $6.5 million and
license royalties of about $1.5 million over three years, according to
papers filed with the U.S. Bankruptcy Court in
29 in
SES Americom Signs Deal to Acquire Verestar Assets
Out of Bankruptcy
SES Americom has received U.S. Bankruptcy Court
approval to acquire the assets of Verestar Inc. for a total cash
consideration of $18.5 million, SpaceDaily
reported. The Fairfax, Va.-based company focuses on managed solutions
for satellite communications in government, broadcast, enterprise and
international services markets with strategically located teleport
facilities in the United States and abroad. Since December 2003
Verestar has been operating under the protection of the bankruptcy
court. In an auction conducted in
York
successful bid to acquire substantially all of Verestar's business and
operations, which was approved yesterday by the U.S. Bankruptcy Court
for the Southern District of New York in