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August 1, 2006
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Alabama
Down 66.4 Percent Since Last Year
The number of personal
bankruptcies filed in
from Jan. 1 to March 31 of this year was 66.4 percent
lower than in the first quarter of 2005, the
w:st='on'>
size='3'>Birmingham
size='3'>(
face='Times New Roman' size='3'>Ala.
size='3'>) News reported today. The drop from
10,965 filings a year ago to 3,687 was largely due to the new law.
Despite the decline, Alabama's per-capita filings of 3.19 per 1,000
consumers ranked third-highest in the nation in the first quarter, up
from 10th in 2005, according to the Federal Deposit Insurance Corp.
Birmingham bankruptcy lawyer
size='3'>Brad Botes and chapter 7
trustee Andre
Toffel said a misconception that bankruptcy is
no longer an option accounts for much of the big
drop.Toffel
said he is now hearing up to 50 bankruptcy cases a month compared to 150
per month shortly before the new law went into effect. 'Congress hoped
the new law would reduce the number of new consumer bankruptcies, and
the latest figures reflect that intention, though there are still many
families under financial stress,' said Samuel J. Gerdano, ABI
executive director.
href='http://www.al.com/business/birminghamnews/index.ssf?/base/business/11544240776210.xml&coll=2'>Read
more.
Kaiser Wins Bid to Void
Multiple Pension Plans
Upholding a district
court’s decision, Judge
size='3'>Marjorie O. Rendell found that a
bankruptcy court in
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size='3'>Delaware
size='3'>correctly used a single reorganization test that allowed Kaiser
Aluminum Corp., an aerospace and automotive aluminum producer that
emerged from chapter 11 earlier this month, to terminate six of its
pension plans, Portfolio
Media reported yesterday. The Pension Benefit
Guaranty Corp. had appealed the district court’s ruling, claiming
that the bankruptcy court should have used the reorganization test on a
plan-by-plan basis in Kaiser’s case. The court applies a
reorganization test to decide whether a company in chapter 11 can
terminate a pension plan under the Employee Retirement Income Security
Act. Judge Rendell found that using the same reorganization test for
multiple plans was a straightforward process in comparison to a
plan-by-plan approach, which she criticized as “unworkable.”
The case is In re Kaiser Aluminum
Corp., case number 05-2695, in the U.S. Court
of Appeals for the Third Circuit.
Adelphia’s DIP Loan
Extension Approved
A judge has approved
bankrupt cable provider Adelphia Communications Corp.’s bid to
extend its $1.3 billion debtor-in-possession (DIP) loan, extending the
maturity date from Aug. 7 to Nov. 7, according to court filings,
Portfolio Media
reported yesterday. Adelphia asked the bankruptcy court
to extend the DIP financing in mid-July in order to avoid running out of
funding before its sale to rivals Comcast Corp. and Time Warner Inc. is
complete. None of the fees for an extended DIP facility would become
payable unless the sale to its cable rivals fails to close prior to the
Aug. 7 maturity date.
size='3'>The $1.3 billion extended DIP facility comprises an $800
million revolving credit facility and a $500 million term loan, with a
maturity date of Nov. 7. Its DIP lenders are led by J.P. Morgan
Securities Inc. and Citigroup Global Markets Inc., according to court
documents. The case is
size='3'>Adelphia Communications Corp. et al.,
case number 02-41729-reg, in the U.S. Bankruptcy Court for the Southern
District of New York.
In related news, Time Warner
Inc. and Comcast Corp. said that they completed a deal to buy the assets
of Adelphia Communications Corp. valued at around $17 billion, Reuters
reported yesterday. Time Warner's cable unit will take on 3.3 million
Adelphia subscribers, bringing its total to 14.4 million, while Comcast
will take on 1.7 million Adelphia subscribers, meaning it will have a
total of 23.3 million subscribers. Time Warner and Comcast will pay
$12.5 billion in cash and Time Warner Cable common stock representing
about 16 percent of the equity in Time Warner Cable, in a deal that
Adelphia said in April was worth $16.9 billion.
href='http://www.nytimes.com/reuters/business/business-media-adelphia-timewarner-comcast.html?pagewanted=print'>Read
more.
Airlines
Northwest Air Flight
Attendants Reject Contract Again
For the second time in
less than two months, flight attendants at Northwest Airlines overruled
their union leaders, rejecting a proposed contract that includes
concessions and threatening a strike that could put Northwest out of
business, the New York
Times reported today. The contract calls for
$195 million in annual concessions. The vote, which was announced
yesterday, was 3,266 to 2,637, the union said, or about 55 percent
against the contract. Flight attendants, along with other work groups
across the industry, are upset about facing pay cuts after seeing many
airlines return to profitability in recent quarters. Managements contend
that the cuts are needed for the carriers to survive and to compete
against lower-cost airlines.
href='http://www.nytimes.com/2006/08/01/business/01northwest.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
As New Fees Crop Up,
Delta & Creditors Seek Oversight
The deadline to object to
a joint motion to establish a fee committee to oversee costs in Delta
Air Lines Inc.'s chapter 11 proceedings passed Friday, which could bring
the bankrupt airline closer to reining in the costs it has incurred in
its bankruptcy,
size='3'>Portfolio Media reported yesterday.
The motion was filed jointly by Delta and its unsecured creditors’
committee. The joint motion to establish a committee to monitor fees
encountered no objections, according to an attorney for the unsecured
creditors' committee. The fee committee will be unpaid, although it will
be reimbursed for expenses by Delta’s estate.
face='Times New Roman' size='3'>The joint motion argued that the
requested fee committee was the most “efficient and effective way
to review the interim and final fee applications of the retained
professionals,” and that the committee would cut back on redundant
work and maximize Delta’s value. In June, the court gave Delta
approval to pay out more than $41 million in fees. That total only
covered the period between Delta’s chapter 11 filing on Sept. 14,
2005, to Jan. 31, 2006.
UAL Posts First Quarterly
Profit in 6 Years
United Airlines parent
UAL Corp. on Monday formally announced its first true quarterly profit
since 2000, punctuating a turnaround quarter for
w:st='on'>
size='3'>U.S.
size='3'>carriers despite record fuel prices, the Associated Press
reported yesterday. The five largest
w:st='on'>
size='3'>U.S.
size='3'>airline companies to have reported so far posted a collective
profit of $1.25 billion in the quarter, led by Southwest Airlines Co.'s
$333 million, US Airways Group Inc. with $305 million and American
Airlines parent AMR Corp. with $291 million. Reaffirming the $119
million profit it announced last week, UAL's earnings for the quarter
trailed those three carriers as well as Continental Airlines Inc.'s $198
million, with the parent firms of Delta Air Lines Inc. and Northwest
Airlines Corp., both restructuring in chapter 11, yet to
report.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/07/31/AR2006073100286_pf.html'>Read
more.
Mutual Fund Files for
Bankruptcy
Sphinx Managed Fund,
which has been embroiled in litigation because of its ties to bankrupt
Refco Inc., filed its own bankruptcy petition in New York today to
protect its U.S. assets while it liquidates overseas, Bloomberg News
reported yesterday. Sphinx is liquidating in a
w:st='on'>Cayman
Islands
filed in the U.S. Bankruptcy Court in
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York yesterday bars
creditors from trying to seize its U.S.-based assets during the
liquidation. Most of the fund's $100 million-plus in assets are in
the
face='Times New Roman' size='3'>United
States
to court documents. Refco creditors sued Sphinx in December to recover
$312 million they said Sphinx wrongfully withdrew days before the
trader's collapse while other customers were barred from doing so. As a
result of the lawsuit, a
w:st='on'>
size='3'>U.S.
size='3'>judge limited Sphinx's ability to trade. Sphinx in April agreed
to pay the Refco creditors $263 million to settle the suit.
href='http://www.theroyalgazette.com/apps/pbcs.dll/article?AID=/20060801/BUSINESS/108010117'>Read
more.
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Entergy
size='3'>New Orleans
Third Bankruptcy Extension
Saying it can't emerge from
bankruptcy without knowing whether it will receive federal aid, Entergy
New Orleans has requested a third extension of time to file its
reorganization plan, the Associated Press reported yesterday. The filing
requests that Entergy New Orleans be given until Dec. 19 to file its
reorganization plan, which was due Aug. 21. Entergy New Orleans filed
for chapter 11 protection weeks after Hurricane Katrina hit.
Entergy is requesting $719
million in federal Community Development Block Grant money for lost
revenue and to repair its local gas and electric network. Entergy New
Orleans also has asked the court to extend its lending agreement with
parent company Entergy Corporation by a year, until Aug. 23, 2007,
citing lack of 'sufficient liquidity' to pay its bills. Judge
Jerry Brown
size='3'>says he will hear Entergy's request on Sept. 18.
href='http://www.wreg.com/global/story.asp?s=5222990&ClientType=Printable'>Read
more.
Ipix Corp. Files for Chapter
7
Ipix filed for chapter 7
protection yesterday with listed assets of $7.67 million and debts of
$7.87 million, the
size='3'>Knoxville
size='3'>(
face='Times New Roman'
size='3'>Tenn.
Sentinel reported yesterday. After
unsuccessfully attempting to sustain profitability through online uses
of its 360-degree imaging technology, Ipix was seeking to develop a
Homeland Security niche. In the past month, four Ipix directors and the
company’s independent accounting firm resigned. The company, which
employed about 35 late last year, told employees Friday it would go out
of business today.
href='http://www.knoxnews.com/kns/business/article/0,1406,KNS_376_4883003,00.html'>Read
more.
International
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U.K.
face='Times New Roman' size='3'> Pension Deficits Steady in
July
An Aon Consulting survey of the
U.K.'s 200 largest company pensions showed Monday that the collective
deficit held at £41 billion ($76.48 billion) at the end of July, as
falling bond yields offset the impact of stronger equities, Reuters
reported yesterday. The £41 billion shortfall in defined benefit
pensions—which typically base a pension on a person's final
salary—was the same as June's figure. However, it is down from a
deficit of £72 billion ($123.75 billion) at the end of last year.
During July, a fall in long-maturity bond yields added to the deficits
by £8 billion ($14.92 billion), while stronger stock markets cut
them by the same amount, so the overall financial position of pension
schemes was unchanged.
href='http://www.businessinsurance.com/cgi-bin/news.pl?newsId=8125&print=Y'>Read
more.
Bad Debts Take Shine Off
Record HSBC Profit
HSBC reported record
first-half pre-tax profits of £12.5 billion (£6.7 billion)
yesterday, despite global bad debt charges soaring by $613 million to
$3.89 billion, the
size='3'>London Times reported today. In the
HSBC personal financial services division in the
w:st='on'>
size='3'>U.K.
which includes the retail bank First Direct and M&S Money, bad debts
jumped by 36 percent to £361 million. The increase came as
bankruptcies and individual voluntary arrangements (IVAs) rose to
account for a third of the losses on unsecured lending, up from 22
percent in the second half of last year. HSBC called for tighter
regulation of companies that provide advice to over-indebted consumers.
Dyfrig John, chief executive of HSBC’s
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size='3'>U.K.
that bad debt losses from IVAS and bankruptcies would continue to rise
in the United Kingdom after the passage of
bankruptcy reform legislation.
href='http://www.timesonline.co.uk/article/0,,29390-2293749,00.html'>Read
more.
Yukos Faces Bankruptcy,
Sealing Putin's Control of Russian Oil
OAO Yukos Oil Co.,
once
face='Times New Roman'
size='3'>Russia
biggest crude producer, may be declared bankrupt today, sealing
President Vladimir Putin's victory in his campaign to reclaim control
over the country's oil industry, Bloomberg News reported today. The
Moscow Bankruptcy Court may uphold a July 25 vote by creditors including
OAO Rosneft and Russian tax authorities to liquidate the company. Yukos,
valued at $43 billion less than three years ago, is today just 3.5
percent the size, with its former chief executive officer imprisoned
in
size='3'>Siberia
href='http://www.bloomberg.com/apps/news?pid=20601085&sid=aAlf8rCJPCMI&refer=europe'>Read
more.
href='http://www.bloomberg.com/apps/news?pid=20601085&sid=aAlf8rCJPCMI&refer=europe'>