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February 16, 2005
Democrats to Offer Several Amendments to Bankruptcy Bill
Senate Judiciary Committee Democrats plan to offer several amendments
during Thursday’s markup of legislation to overhaul the
nation’s bankruptcy laws, Minority Whip Richard Durbin
(D–Ill.) said Tuesday, CongressDaily reported. Durbin
said some of those amendments will aim to soften the bill’s impact
on families struggling with high medical costs. Noting that a recent
Harvard study found that nearly half of all consumer bankruptcies result
from illness, Durbin said the bill in its current form would be
“cruel” to families who seek to declare bankruptcy because
of medical bills. Durbin said he also plans to offer a series of
amendments to deal with the legislation’s potential impact on
military families.
Durbin said Democrats probably will try to modify the bill’s
criteria for determining who would remain eligible for chapter 7
bankruptcy protection. “I think there will be
amendments…trying to take away this elaborate, painful process
they’ve established for means testing and make it something a lot
simpler, a lot more direct,” he said.
Rules Panel Allows Dems to Offer Class-action Amendment
Democratic opponents of a Senate-passed bill to overhaul the rules
for class-action lawsuits plan to propose several exemptions when the
House takes up the legislation later this week,
CongressDaily reported. Those exemptions, and several other
contentious provisions, are part of a substitute amendment sponsored by
House Judiciary ranking member John Conyers (D–Mich.). The House
Rules Committee voted Tuesday to allow Conyers to offer his amendment
during Thursday’s floor deliberations. Judiciary Chairman James
Sensenbrenner (R–Wis.) said Republicans do not plan to offer any
amendments, but he did not oppose a debate on the Conyers amendment.
Conyers’ amendment includes many provisions the Senate rejected
last week. One of those provisions, similar to an amendment by Sen. Mark
Pryor (D–Ark.), would clarify that the legislation would not apply
to actions brought by state attorneys general on behalf of the citizens
of their states. Another provision in the substitute, similar to
language co-sponsored by Sens. Dianne Feinstein (D–Calif.) and
Jeff Bingaman (D–N.M.), would prohibit a federal judge from
denying
certification to a class-action lawsuit on the grounds that the law of
more than one state was applicable to the case. The Democratic
substitute also includes language proposed last week by Senate Health,
Education, Labor and Pensions ranking member Edward Kennedy
(D–Mass.) to exempt wage-and-hour and civil rights claims based on
state law.
GOP Working to Strike Balance on Asbestos Legislation
Senate Judiciary Chairman Arlen Specter (R–Pa.) is reviewing
GOP concerns that could doom his flagging asbestos proposal,
CongressDaily reported. Sen. John Cornyn (R–Texas), a
Judiciary Committee member who is the GOP point person on asbestos
legislation, said today he is reaching out to Democrats and Republicans
and
meeting with Sen. Dianne Feinstein (D–Calif.), while also working
with Republicans to fashion a bill. Cornyn and Feinstein are discussing
concerns from the right and left with Specter’s draft. Republicans
have been critical of elements of the asbestos proposal, including
provisions that would allow some cases to continue in court. Despite the
GOP concerns, Democrats have yet to embrace Specter’s bill,
either. Lobbyists and staffers watching the bill say Specter is
struggling to find the right balance needed to appease all sides.
Cornyn Files Bill to End Bankruptcy Forum-shopping (Law.com)
Law.com offers an article about the legislation introduced in the
U.S. Senate on Feb. 8 by John Cornyn (R–Texas) that would require
corporations to file for bankruptcy where their principal place of
business or their principal assets are located. It would prevent a
corporation from filing for bankruptcy in a location that’s simply
the home of a subsidiary, or the state where it is incorporated.
href='http://www.law.com/jsp/article.jsp?id=1108389918065'>Read the full
article.
Retail Sales Fell in January
Retail sales fell 0.3 percent in January—the weakest showing in
five months—as a big drop in demand for cars offset strength at
clothing and department stores, CongressDaily reported.
Spending was powered mostly by consumers eager to use holiday gift
cards. The Commerce Department reported that last month’s decline
in retail sales followed a 1.1 percent surge in December. Both months
were heavily influenced by a swing in activity at auto showrooms, the
newswire reported. In January, car sales fell by 3.3 percent, the
biggest decline since last June. Car sales had surged by 4 percent in
December as buyers had flocked to showrooms to take advantage of
incentives. Consumer spending, which accounts for two-thirds of total
economic activity, is expected to remain solid this year but at a
slightly slower pace than in 2004, reflecting in part a belief that
activity will cool as the Federal Reserve keeps pushing up interest
rates. The 0.3 percent drop in retail sales in January was the biggest
setback since a similar 0.3 percent fall last August.
Russia’s YUKOS Faces Key Test in U.S. Court Battle
YUKOS, the Russian oil company under siege by the Kremlin, faces a
key test in its bid to stave off destruction when a U.S. court begins
hearings today on whether to proceed with its legal case, Reuters
reported. Bankruptcy Judge Letitia Clark will hear arguments in the
two-day hearing to determine if YUKOS can proceed with the chapter 11
bankruptcy case it filed in December as part of its unsuccessful attempt
to prevent the forced sale of its key oil producing arm. “This is
a huge stakes argument. It’s an on/off argument. The court either
has jurisdiction or it doesn’t,” said Nancy Rapoport,
a bankruptcy expert and dean of the University of Houston Law Center.
The U.S. court’s jurisdiction has been challenged by Deutsche Bank
AG and Gazpromneft, a former unit of Russian gas monopoly Gazprom. YUKOS
has sued both companies under a companion lawsuit. YUKOS has based its
claim for jurisdiction in U.S. courts on the early December arrival in
Houston of Chief Financial Officer Bruce Misamore.
Legal experts said the cross-border filing and relatively small
assets YUKOS has in the United States may not deter Judge Clark from
allowing the case to proceed. “On a technical level there’s
probably enough to substantiate jurisdiction,” said Prof. Jay
Westbrook, a bankruptcy expert at the University of Texas. However,
the court will also have to weigh whether the courts are the best forum
for the case, or whether its rulings will carry any force. Westbrook
said Judge Clark could decide to grant jurisdiction in the case, but put
a stay on the proceedings until the company’s battle with the
Kremlin has been resolved. Observers expect Judge Clark to issue a
ruling on the matter within days of the hearings.
Ultimate Electronics Replaces CEO, Gets Financing
Ultimate Electronics Inc. on Wednesday said a bankruptcy court has
approved $118.5 million in debtor-in-possession financing and it has
replaced its chief executive and other top executives, Reuters reported.
The company, which sought chapter 11 bankruptcy protection last month,
said David Workman will step down as CEO and president, along with the
senior vice presidents of sales and services. The board has appointed
Mark Wattles, currently chairman, as CEO. Seven others with previous
experience working with Wattles will be joining management this week, it
said.
Judge Approves UAL Chicago Airport Debt Deal
A federal bankruptcy judge on Tuesday approved a deal allowing
bankrupt United Airlines to cut its obligation to pay $600 million of
Chicago O’Hare International Airport debt by 75 percent, Reuters
reported. Under the deal, the UAL Corp. unit would no longer have to pay
off about $450 million of special facilities revenue bonds sold by
O’Hare Airport to finance projects for the airline. In general,
the agreement allows bondholders, including municipal bond funds at
Nuveen Investments Inc. and The Vanguard Group, to opt for cash payments
or new convertible debt to be issued by a reorganized UAL Corp. in
amounts less than the full principal balance due on the bonds. A
previous settlement, which surfaced in October, fizzled after some
bondholders raised objections. The new agreement includes all the
bondholders, unlike the previous deal that included only some of
them.
MCI
Some MCI Shareholders Critical of Verizon Deal
Several large shareholders of MCI Inc. say they were unhappy with the
planned $6.75 billion sale of the company to Verizon Communications Inc.
and suggested that Qwest Communications International Inc. should press
its higher offer, Reuters reported. “The company in my opinion is
being given away,” said Bruce Berkowitz, chief investment officer
at Fairholme Capital Management, which owns 11.1 million MCI shares, the
newswire reported. “This is not over. I think the owners need to
have a say.” Verizon’s bid, which beat out a $7.3 billion
offer by Qwest, includes an exchange of stock valued at $4.8 billion,
based on Friday’s closing prices, and $488 million in cash. MCI
would also pay dividends of nearly $1.5 billion from its own cash,
bringing the total value to $6.75 billion, or $20.75 a share.
Some Suppliers Seen Vulnerable in Verizon-MCI Deal
Verizon Communications Inc.’s planned $6.75 billion acquisition
of MCI Inc. could threaten the two companies’ traditional
telecommunications vendors, including Lucent, Ciena and Siemens, as the
new company looks to trim overlapping costs, analysts said, Reuters
reported. The deal, announced Monday, is likely to add to the pressure
equipment makers are feeling from a string of recent carrier
combinations, including Sprint Corp.’s planned takeover of Nextel
Communications Inc. and SBC Communications’ intended buyout of
rival AT&T Corp.
href='http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=7638302'>Read
the full story.
Judge Rejects Bid to Move Parmalat Trial from Milan
An Italian judge rejected a request to move a high-profile trial into
Parmalat’s collapse away from Milan on Wednesday, easing concerns
the proceedings could face further disruptions and delays, Reuters
reported. Defense lawyer Massimo Di Noia said last week the inclusion of
a low-level Milan judge as a civil plaintiff in the case disqualified
the Milan court from holding the trial into Parmalat’s
multi-billion-euro accounting scandal. He said the trial, which
currently involves 29 individuals and three companies including Bank of
America, should be moved to nearby Brescia. But Judge Lucia Massarotto,
one of thousands of Italians who had invested in Parmalat, removed her
name from a list of people filing for damages in the bankruptcy and
fraud case, clearing the way for the trial to stay in Milan. Prosecutors
in Milan have been investigating suspected market-rigging and other
financial crimes since Parmalat began to crumble in late 2003. They
started hearings last October.