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January 25, 2008
name='1'>Bankruptcy Judge Approves Marcal
w:st='on'>
Bankruptcy Judge
size='3'>Morris Stern cleared the way for
hedge fund Highland Capital Management to buy
Marcal Paper Mills Inc. for about $160 million, closing the book on the
New Jersey paper maker's 75 years as a
family-owned business, the Associated Press reported yesterday. Some of
Marcal's creditors claimed that
size='3'>Highland, which
held the bulk of the company's second-lien
debt, was using the bankruptcy sale process to obtain the company at a
discount.
w:st='on'>
size='3'>Highland
size='3'>offered to pay $9.45 million in cash, credit-bid $35 million of
its secured claim against the company
and assume $121.6 million in liabilities.
face='Times New Roman'>
w:st='on'>
size='3'>Highland
size='3'>said that the sale is subject to reaching a deal with the
New Jersey Department of Environmental
Protection. The company also faced $946 million in environmental claims
filed by the federal government related
to the cleanup of
Jersey
size='3'>Passaic
w:st='on'>
size='3'>River.
Earlier
in the bankruptcy case, the company reached a deal to settle those
claims for $3 million.
href='http://biz.yahoo.com/ap/080123/marcal_bankruptcy.html?.v=1'>Read
more.
name='2'>Lender Asks Court to Liquidate NovaStar
Unit
American Interbanc
Mortgage LLC is trying to force a NovaStar
Financial Inc. subsidiary into chapter 7 in order to collect the $48.9
million it won last year in an antitrust
lawsuit, Bankruptcy
Law360 reported
yesterday. The petition came just two weeks after Novastar announced it
was ending all mortgage origination
operations, slicing its already-thinned staff to just 30 employees
charged with managing its mortgage portfolio.
American Interbanc also on Wednesday filed an emergency motion asking
the court to appoint an interim trustee for
the subsidiary. American Interbanc accused the subsidiary of
transferring its assets to affiliates in an effort
to avoid paying its judgment. A hearing has been for Jan. 31 on the
motion.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=45078'>Read
more. (Registration
required.)
face='Times New Roman' size='3'>
name='3'>Wisconsin
size='3'> Bankruptcy Filings Up in 2007
The subprime mortgage
crisis and interest rate resets for
adjustable rate mortgages contributed to a 39 percent increase in
size='3'>bankruptcy filings in 2007 and local bankruptcy
attorneys say their caseloads are booming, the Wisconsin State
Journal reported today. The state's
15,650 filings last year were up from 11,257 in 2006, according to
statistics compiled by the
size='3'>U.S. Bankruptcy
Courts for
w:st='on'>
size='3'>Wisconsin's
Eastern and Western Districts. Roughly
two-thirds of the filings were in eastern
w:st='on'>
size='3'>Wisconsin, an area that
includes
w:st='on'>
size='3'>Milwaukee.
size='3'>Madison had 2,512
bankruptcy filings in 2007, up 30 percent
from 1,936 filings the year before. Filings in 2006 were the lowest in
more than a decade because a record 38,357
people filed in 2005 in advance of the new bankruptcy law.
href='http://www.madison.com/wsj/home/biz/269183&ntpid=3'>Read
more.
Gives Early Approval to Hancock Fabrics
Settlement
Bankruptcy Judge
size='3'>Brendan L. Shannon gave preliminary
approval to a settlement in a class action
that alleges that bankrupt Hancock Fabrics printed credit card
expiration dates on consumer receipts in violation
of the Fair and Accurate Credit Transactions Act,
face='Times New Roman' size='3'>Bankruptcy
Law360 reported yesterday. The agreement says
that Hancock will conduct a 10
percent-off sale event for class members later this year at all of its
retail locations. The settlement agreement
also stipulates that class counsel in the matter will be paid $75,000
and up to $5,000 in expenses. Hancock urged
the court to approve the settlement in a motion filed earlier this
month, saying the claims at issue were complex
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=45064'>Read
more. (Registration required.)
Says Private Equity Isn’t Big Job
Killer
The World Economic Forum
will release the results today of a
yearlong examination of 5,000 private equity transactions from 1980
through 2005 looking at the issue of whether
buyouts create jobs or result in more layoffs, the
face='Times New Roman' size='3'>New York
Times reported. Among the most interesting
findings: two years before a buyout, a
company cuts, on average, 4 percent more of its work force compared with
its peers, probably because it is
struggling or trying to prepare for a sale. After a buyout, the acquired
company, on average, cuts 7 percent of
its work force over two years, but at the same time, it added jobs
— usually new positions and in new
locations — at a pace of about 6 percent, resulting in a net loss
of 1 percent. The study, “Economic
Impact of Private Equity,” was led by Josh Lerner, professor
at
face='Times New
&
#13; 



&
amp;amp;amp;#13;
Roman'
size='3'>Harvard
face='Times New Roman' size='3'>Business
J. Davis, professor at the
size='3'>University of
size='3'>’s Graduate School of
href='http://www.nytimes.com/2008/01/25/business/worldbusiness/25davos.html?_r=1&sq=bankruptcy&st=nyt&
;oref=slogin&scp=2&pagewanted=print'>Read
more.
name='6'>Northwest Pilots File Complaint Alleging
Pension Plan Bias
A group of Northwest
Airlines Corp. pilots who believe a revised
company pension plan discriminates against older aviators brought an
amended complaint against the carrier and
the Air Line Pilots Association union in federal court in
face='Times New Roman' size='3'>Seattle
late Wednesday, the
Wall Street
Journal reported today. At
issue are modifications Northwest made Jan. 1 to its
defined-contribution pension plan for its 4,500 pilots. The
airline and ALPA negotiated the changes late last year in order to
produce similar levels of final retirement
income for all the pilots instead of the previously sharp disparities
based on pilots' years of service and the
sums they already had accrued in a prior pension plan. While Northwest
was in bankruptcy court protection from
2005-07, it cut the wages and benefits of all of its employees. The
company won legislative relief to preserve
its defined-benefit pension plans by freezing them instead of
terminating them. From that point on, pilots and
some other unionized groups switched to defined-contribution pension
plans. In the pilots' case, Northwest
contributed 5 percent of their income in 2007, a sum that will increase
to 8 percent of income in 2011.
href='http://online.wsj.com/article/SB120120172564214089.html'>Read
more. (Registration
required.)
name='7'>Economic Stimulus Package Exposes Fannie Mae
and Freddie Mac to Greater Credit Risk
One of the features of
the economic stimulus package fashioned
yesterday by Congress and the Bush administration would provide
guarantees to more mortgages in an effort to
boost the housing market, exposing the nation's two government-sponsored
mortgage companies to greater credit
risk, the Wall Street
Journal reported
today. With defaults rising, investors lately have shunned nearly all
mortgages not guaranteed by Fannie Mae and
Freddie Mac. Democrats and Republicans provided conflicting versions of
how much more leeway the companies will
get. The package agreed upon by Congress would temporarily allow Fannie
and Freddie to buy or guarantee mortgages
as high as $729,750 in cities with high housing prices, according to
House Speaker Nancy Pelosi (D-Calif.). House
Republican Leader John Boehner (R-Ohio) put the ceiling at $625,000,
according to a news release. The higher
allowance would expire Dec. 31, though it would be permanent for loans
guaranteed by the Federal Housing
Administration, the New Deal-era agency that typically helps low- and
middle-income home buyers qualify for
low-interest mortgages. Currently, FHA can't guarantee mortgages higher
than $367,000.
href='http://online.wsj.com/article/SB120123250591916143.html?mod=us_business_whats_news'>Read
more. (Registration required.)
Gallery Wins Chapter 11
Extension
Movie Gallery Inc. won
the right to keep exclusive control of its
chapter 11 case for four extra months while it works toward confirmation
of its plan to reorganize and repay
creditors, the Associated Press reported today. Bankruptcy Judge
size='3'>Douglas O. Tice Jr. said that the
video-rental chain may retain the exclusive
right to file its chapter 11 plan of reorganization through June 13,
preventing creditors from proposing
competing plans.
size='3'>Movie Gallery has already filed a disclosure
statement, which Judge Tice is set to consider at a Jan. 29
hearing.
href='http://www.forbes.com/feeds/ap/2008/01/24/ap4571864.html'>Read
more.
Bankruptcy
Florida-based call center
company PRC, formerly known as Precision
Response, filed for bankruptcy yesterday, the Associated Press reported.
The Plantation, Fla.-based company has
call centers in
w:st='on'>
size='3'>Marshalltown, and
face='Times New Roman' size='3'>Cedar
Falls, Iowa. Court
documents
indicate PRC owes more than $100 million. PRC was acquired about a year
ago by a unit of Diamond Castle Holdings,
a New York-based private equity firm.
href='http://www.action3news.com/Global/story.asp?S=7770994&nav=menu550_2'>Read
more.
href='http://www.action3news.com/Global/story.asp?S=7770994&nav=menu550_2'>
href='http://online.wsj.com/article_print/SB120115814649013033.html'>