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November 21, 2002
Congress Approves Chapter 12 Extension
The Senate by voice vote approved legislation that extends chapter 12 of
the U.S. Bankruptcy Code for an additional six months beyond its
expiration on Jan. 1, reported the Associated Press. Chapter 12, the
only temporary chapter in the federal bankruptcy code, allows farmers to
reorganize their debts without having to sell their farms and equipment.
Sen. Patrick Leahy (D-Vt.) said President Bush is expected to sign the
bill. About 800 to 1,100 farmers apply for chapter 12 bankruptcy each
year, according to congressional estimates, reported the newswire. Leahy
and others want to make chapter 12 permanent.
House, Senate Planning Sine Die Adjournment by
Friday
The Senate adjourned sine die yesterday afternoon after approving
dozens of measures and nominations in a last-minute push Tuesday night,
CongressDaily reported. Senate leaders unanimously approved a
resolution to adjourn until Jan. 7. A spokesman for House Majority
Leader Dick Armey (R-Texas) said the House plans to take up a sine
die adjournment resolution on Friday that would officially end the
107th Congress. 'We're going to go sine die on Friday,' he said.
House members cast their final votes last week; the adjournment
resolution would come up under unanimous consent in a pro forma
session.
National Century's Fast Cash Lured Ailing Clients
National Century Financial Enterprises Inc., a health care finance firm
whose failure pushed some clients toward bankruptcy, offered services
tailored for companies that were already ailing, Bloomberg reported.
National Century, which filed for bankruptcy protection on Monday, buys
medical bills from health care providers at a discount and packages them
for sale as bonds. An Ohio lawsuit involving National Century disclosed
that its clients included a 43-bed hospital in Los Angeles, 21 different
entities or company subsidiaries listed at one address in North Miami
Beach, Fla., 19 at one address in Durham, N.C. and 27 listed at one
address in Lake Success, N.Y., according to the newswire. They also
included subsidiaries of PhyAmerica Physician Group Inc., which filed
for chapter 11 bankruptcy protection last week.
Calls to company headquarters in Durham weren't returned, reported
Bloomberg. Lincoln Hospital Medical Center filed for chapter 11
protection in U.S. Bankruptcy Court in Los Angeles on Monday. An
administrator and employees at the hospital declined to comment.
LifeCare Solutions Inc., another National Century customer, filed for
chapter 11 bankruptcy protection in San Diego on Monday, the newswire
reported.
Owner of D.C. Hospitals Files for Bankruptcy Protection
The firm that owns two District of Columbia hospitals filed for
bankruptcy yesterday in an attempt to stave off creditors while battling
to take back control of its own revenues from an Ohio lender that
collapsed last month, the Washington Post reported. Lawyers for
Scottsdale, Ariz.-based Doctors Community HealthCare Corp. filed their
request only two days after the lender, Dublin, Ohio-based National
Century Financial Enterprises, filed for bankruptcy protection in Ohio.
Doctors Community HealthCare Corp. owns Greater Southeast Community
Hospital and Hadley Memorial Hospital, and is the largest private
employer in the District's Ward 8. The privately held firm also owns
Pine Grove Hospital in Canoga Park, Calif., Michael Reese Medical Center
in Chicago and Pacifica of the Valley Hospital in Sun Valley, Calif.
'With the 'breathing spell' afforded by the automatic stay under the
Bankruptcy Code, the debtors believe that they should be able to
successfully reorganize their affairs,' wrote the company's lead
attorneys, Deryck A. Palmer and Peter D. Isakoff, the Post
reported.
Court Approves Jarden Plan to Acquire Diamond Brands
Jarden Corp., a maker of home vacuum-packaging systems and Ball jars,
said a U.S. Bankruptcy Court approved its plan to buy Diamond Brands
Operating Corp., a maker of matches, toothpicks and clothespins, for
about $90 million, Bloomberg News reported. The U.S. Bankruptcy Court in
Delaware approved the plan, which still requires a vote by the company's
creditors, Jarden said in a press release distributed by PR Newswire.
The company expects the acquisition to close in January.
Capellas Welcomes Rudy Giuliani's Help for WorldCom
WorldCom Inc.'s new Chief Executive, Michael Capellas, says he welcomes
help from former New York Mayor Rudolph Giuliani in guiding the
second-largest U.S. long-distance telephone company out of bankruptcy,
Bloomberg News reported. Capellas said he's discussed a role for
Giuliani with David Matlin, who runs MatlinPatterson Global Advisors
LLC, a WorldCom bondholder that's pushing for Giuliani's involvement.
According to the newswire, however, former New York Mayor Rudolph
Giuliani said it's 'way premature' to discuss the prospect that he may
become chairman of bankrupt WorldCom Inc., the second-largest U.S.
long-distance telephone company. 'What we have been doing and continue
to do is to give advice on how to restructure the company,' Giuliani
said at a press conference. His firm, Giuliani Partners LLC, is helping
bondholders draft a plan that includes an independent board, an audit
committee and separate roles for the chairman and chief executive at
WorldCom, he said.
US Airways Defaults on Special-facility Bonds at Logan
Airport
US Airways Group Inc. has committed a third technical default on $82.1
million of bonds for its terminal space at Boston's Logan International
Airport, according to a letter from the bonds' trustee, State Street
Bank and Trust Co., Bloomberg News reported. US Airways, which filed for
chapter 11 bankruptcy protection in August and operates 17 gates at
Logan, did not make required payments to its debt-service reserves for
the special-facility revenue bonds issued in 1996 and 1999. The bonds,
which are backed by lease payments, were issued by the Massachusetts
Port Authority, which operates Logan, and are insured by MBIA Inc.
L&H Seeks Bankruptcy Court OK to Settle SEC Fraud Suit
Lernout & Hauspie Speech Products NV has asked the bankruptcy court
handling its chapter 11 case for approval to settle a fraud suit by the
Securities and Exchange Commission, Dow Jones reported. In a civil
complaint, the SEC alleged that the defunct software maker engaged in a
variety of fraudulent schemes to inflate income and revenue from 1996 to
2000. The SEC doesn't seek monetary damages, but seeks a permanent
injunction against future violations by the company, which is seeking to
liquidate its remaining assets under chapter 11.
L&H said in court papers obtained by Dow Jones Newswires that the
parties have reached a tentative resolution to the SEC's complaint and
its investigation into accounting practices at the company. The U.S.
Bankruptcy Court in Wilmington, Del., is scheduled to consider approving
the settlement at a hearing on Friday. The hearing will be held before
U.S. Bankruptcy Judge Judith H. Wizmur in Camden, N.J.
Sunbeam Seeks Approval for Recovery Plan Bondholders
Rejected
Sunbeam Corp. is seeking a judge's approval for its plan to emerge from
chapter 11 bankruptcy after 22 months, though most bondholders, who
stand to recover almost nothing, oppose it, Bloomberg News
reported. The plan calls for lenders, led by Morgan Stanley & Co.,
Wachovia Corp. and Bank of America Corp., to own nearly all of the
equity shares of the new company, plus about $100 million in five-year
notes, reported the newswire. The lenders, which hold about $1.6 billion
in claims, have approved the plan. The largest U.S. small appliance
maker is being investigated by the Justice Department for alleged fraud
during the tenure of former Chief Executive Officer Albert J. Dunlap.
The company said its future is tenuous, even if the plan is approved.
Bondholders who own $1.09 billion in debt—or about 92 percent of
the class of subordinated noteholders—have rejected Sunbeam's
recovery plan, Harvey Miller, an attorney for Sunbeam told U.S.
Bankruptcy Judge Arthur Gonzalez, reported Bloomberg. Another
group holding about $89 million in debt has approved it, Miller
said.
Enron Asks Court to Bar Dynegy Unit Sales Proceed Transfer
Enron Corp. has asked a bankruptcy court to bar a unit of Dynegy Inc.
from transferring its asset-sale proceeds to its parent company,
claiming that such a transfer could jeopardize Enron's recovery of more
than $54 million it claims it's owed by the Dynegy unit, reported Dow
Jones. In a motion filed Wednesday with the U.S. Bankruptcy Court in New
York, Enron says that given 'the precarious financial condition' of
Dynegy, any such asset transfer would leave the Dynegy Canada unit
'unable to meet its contractual obligations to Enron Canada,' a
non-bankrupt Enron subsidiary, the newswire reported.
Dynegy is selling its Canadian nature gas marketing assets as part of
the Houston company's efforts to exit energy trading, a business that
has been roiled by the disclosure of sham transactions. The company
expects to close on the asset sale by the end of the month. Dynegy
spokesman David Byford said the company 'would reserve comment' until
after it reviews Enron's motion. Judge Arthur Gonzalez, presiding
over Enron's Chapter 11 proceeding in New York, will hear Enron's
injunction request on Monday. Once the seventh-largest U.S. company,
Enron filed for protection against creditors after revelations of
massive accounting irregularities.
Newcor Resolves Objections to Disclosure Statement
Newcor Inc. yesterday resolved the two objections to its disclosure
statement for a reorganization plan that calls for the debtor company to
emerge from chapter 11 bankruptcy as a going concern, reported Dow
Jones. The company said it would revise the document Wednesday evening
and add language agreed to by the objectors, the committee of unsecured
creditors and the office of the U.S. trustee, the newswire reported.
Transamerica Equipment Financial Services Corp. and Pension Benefit
Guaranty Corp. filed the objections. Judge Mary F. Walrath of the U.S.
Bankruptcy Court in Wilmington, Del., was notified of the changes and
said she would approve the disclosure statement this week if all the
interested parties agree on the revisions. Walrath scheduled a hearing
to consider confirmation of the proposed reorganization plan for Dec.
30. Bloomfield Hills, Mich.-based Newcor, a vehicle component maker,
filed for chapter 11 bankruptcy protection on Feb. 25. The company
listed assets of $141 million and debts of $181 million as of Dec. 31,
2001.
Immune Response Warns of Possible Bankruptcy
Immune Response Corp., an HIV vaccine development company, warned in a
regulatory filing late on Tuesday that it may have to file for
bankruptcy within the next few days, reported Reuters. In a filing to
the U.S. Securities and Exchange Commission, Carlsbad, Calif.-based
Immune Response said that as of Sept. 30 its liabilities exceeded assets
by about $4.8 million, reported the newswire. The company, whose
founders include polio-vaccine pioneer Jonas Salk, said it has limited
cash resources and if it cannot obtain funding in the next few days, it
will have to cease operations and file for bankruptcy.
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