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April 15, 2009
Some of the nation's largest mortgage companies are
stepping up foreclosures on delinquent homeowners just as the Obama
administration's housing-rescue plan gets into gear, the
face='Times New Roman'>Wall
Street Journal reported today. JPMorgan Chase
& Co., Wells Fargo & Co., Fannie Mae and Freddie Mac all say
that they have increased foreclosure activity in recent weeks as they
say that they have lifted internal moratoriums that temporarily halted
foreclosures.Some mortgage companies had stopped foreclosing on
borrowers as they waited for details of theObama administration's
housing rescue plan, announced in February, which provides incentives
for mortgage companies and investors to reduce borrowers' payments to
affordable levels. Others had temporarily halted foreclosures while they
put their own programs in place, or in response to changes in state
laws.
href='http://online.wsj.com/article/SB123975395670518941.html#mod=testMod'>Read
more. (Subscription required.)
Pay Off Loans
The U.S. government is considering swapping some of
the $13.4 billion it lent General Motors Corp. for ownership in a
stripped-down version of the automaker, a move that it hopes will push
the United Auto Workers union and bondholders to accept similar
concessions, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. Interim GM Chairman Kent Kresa said that the
company would welcome the government's willingness to let it pay off
some of the loans with stock. The government is considering the step
because it hasn't had success finding outside private investors for a
revamped GM. The government hasn't said how much of its loans it is
willing to swap for GM equity, but doesn't seem to be opposed to
swapping all the debt.
href='http://online.wsj.com/article/SB123972054506117179.html'>Read
more. (Subscription required.)
Hedge Fund Executive Pleads
Guilty to Securities Fraud
Hedge fund executive Barrett Wissman has pleaded
guilty to securities fraud and is cooperating with New York Attorney
General Andrew M. Cuomo’s investigation of corruption at the New
York state pension fund, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today.Wissman is the first investment executive to be
implicated in the inquiry and will pay $12 million over several years as
part of a settlement under his felony plea. Wissman received millions of
dollars in fees as an intermediary between the pension fund and other
investment firms. Such fees are not illegal, but often raise concerns
about conflicts of interest and would be illegal if used to generate
kickbacks to public officials.
href='http://www.nytimes.com/2009/04/15/business/15indict.html?ref=business&pagewanted=print'>Read
more.
Government Plans to Reveal
Data on Health of Top Banks
The Obama administration is drawing up plans to
disclose the conditions of the 19 biggest banks in the country as it
tries to restore confidence in the financial system without unnerving
investors, the
size='3'>New York Times reported today.The
administration has decided to reveal some sensitive details of the
stress tests now being completed after concluding that keeping many of
the findings secret could send investors fleeing from financial
institutions rumored to be weakest.While all of the banks are expected
to pass the tests, some are expected to be graded more highly than
others. Officials have deliberately left murky just how much they intend
to reveal — or will encourage the banks to reveal — about
how well they would weather difficult economic conditions over the next
two years.
href='http://www.nytimes.com/2009/04/15/business/economy/15bailout.html?_r=1&ref=business&pagewanted=print'>Read
more.
Commentary: Reinventing
Regulation
As President Obama continues to press Congress to come
up with a new financial regulatory regime by the end of the year, the
first step should be to consolidate day-to-day 'safety and soundness'
regulation of all financial firms -- banks, investment banks, bank
holding companies, insurance companies, hedge funds, housing finance
agencies-- into a single government entity, according to a commentary in
today’s
size='3'>Washington Post. Financial firms
previously became adept at getting around regulations by finding the
cracks between the agencies and playing one regulator off another. The
best fit for this single regulator is to build it around the Federal
Deposit Insurance Corp. As an independent agency, the FDIC is a bit more
insulated from the political influence wielded by banks and Wall Street
firms. In addition to the prudential regulator, there will be a need for
a separate agency to protect investors and supervise the markets in
which stocks, bonds and futures are traded. There is absolutely no
credible rationale for dividing the investor-protection responsibility,
as we do now, between the Securities and Exchange Commission and the
Commodity Futures Trading Commission. Nor, as we've learned from the AIG
debacle, is there any reason to continue to exempt credit-default swaps
and other derivative instruments from all regulation. Read the
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/04/14/AR2009041402852_pf.html'>full
commentary.
Ohio Gift Certificate
Company Files for Bankruptcy
A company that sold gift certificates to thousands of
businesses and individuals around the country has filed for bankruptcy
protection, the Associated Press reported today. CertifiChecksInc.,
which abruptly closed in February, filed for chapter 7 on Monday in the
U.S. Bankruptcy Court for the Southern District of Ohio. CertifiChecks
listed assets of $1 million in personal property that included funds in
savings and checking accounts in the filing. It also listed liabilities
of $460,000. CertifiChecks Inc. had operated in 47 states. Its gift
certificates, worth up to $100, were offered as promotional items by
companies and chambers of commerce to steer business to local
restaurants and retailers that accepted the certificates.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/04/14/AR2009041401898_pf.html'>Read
more.
Station Casinos Delays
Bankruptcy Filing
Station Casinos Inc. saidyesterday that it delayed an
expected bankruptcy filing to continue negotiating with lenders on a
pre-packaged bankruptcy plan, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today.The Las Vegas-based casino company, its lenders
and bondholders have accepted a 30-day extension, until May 15, to reach
agreement on a plan. If the parties do not agree on a plan by then, they
could extend negotiations, or the company could file for bankruptcy
court protection without a pre-packaged plan.
href='http://online.wsj.com/article/SB123975617355119135.html'>Read
more. (Subscription required.)
California Medical Center
Emerges from Chapter 11
Brotman Medical Center in Culver City, Calif., with
the help of the Jewish Home for the Aging, emerged from chapter
11protectionyesterday, the
face='Times New Roman' size='3'>Los Angeles Times
size='3'>reported today.The 420-bed hospital said it returned to
profitability after securing $29 million in financing, including $23
million in loans from the Jewish home. A subsidiary of Tenet Healthcare
Corp., one of the nation's largest hospital chains, sold Brotman in 2005
for $27 million to a group that included staff physicians, a subsidiary
of Prospect Medical Holdings Inc. and private investors.In 2007, with an
annual loss of $12 million, the hospital filed for bankruptcy protection
and said it planned to remain open and reorganize.
href='http://www.latimes.com/business/la-fi-brotman15-2009apr15,0,4723360,print.story'>Read
more.
DIP Package to $11.5 Million
The debtors in the Flying J Inc.bankruptcy case have
asked a judge to approve changes to the terms of a $10 million
debtor-in-possessing financing facility provided by Merrill Lynch
Commodities Inc. that allow for a $1.5 million increase and extended
maturity date on the loan,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. The original DIP loan approved on March 9
and expires today allows affiliated debtor Longhorn Pipeline Inc. (LPI)
to access a maximum aggregate principal amount of $10 million at any
time outstanding.LPI said that it needed quick access to the cash to
facilitate Flying J's sale of more than 900,000 barrels of 'winter mix'
fuel that had to be unloaded from the company's 700-mile carrier
pipeline in Texas by April, according to court documents.
href='http://bankruptcy.law360.com/articles/96617'>Read
more. (Subscription required.)
Liquidating Trustee
Appointed in Semiconductor Company’s Chapter 11
Case
Bankruptcy Judge
face='Times New Roman' size='3'>Laurel M. Isicoff
size='3'>on Friday confirmed All American Semiconductor Inc.’s
third amended plan of liquidation, establishing a liquidating trustee
who promptly unleashed a score of lawsuits to recover money and property
for the benefit of the creditors, Bankruptcy Law360 reported
yesterday. Once the court appointed Kenneth A. Welt, from Trustee
Services Inc., as liquidating trustee, attorneys for the unsecured
creditors launched a flurry of adversary cases to retrieve hundreds of
thousands of dollars in preferential payments.The SEC had earlier
objected to the proposed sale of All American’s corporate shells
through a reverse merger, claiming the mechanism did not comply with
chapter 11 provisions.Having made minor adjustments to its second
amended plan last week, the creditors’ committee promptly received
the court’s approval.
href='http://bankruptcy.law360.com/articles/96616'>Read
more. (Subscription required.)
Six Flags CEO May Get $3
Million Restructuring Bonus
Six Flags Inc., the U.S. theme-park owner facing
possible bankruptcy, set a $3 million “success bonus” for
CEO Mark Shapiro to be awarded if the company restructures its debt out
of court or goes through chapter 11, Bloomberg News reported
yesterday.The bonus is part of an employment agreement with Shapiro
extended through April 1, 2013, Six Flags said in a regulatory filing
yesterday. Five other managers also had contracts extended with such
bonuses. The accords keep the base salaries at current levels.Six Flags
hasn’t posted a profit since 1998. The New York- based company
faces bankruptcy if it fails to restructure $287.5 million in preferred
income equity redeemable shares plus accrued dividends before a
mandatory Aug. 15 redemption.
href='http://www.bloomberg.com/apps/news?pid=20601087&sid=aIiePxq5Z2Fs&refer=home'>Read
more.
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