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May 7, 2009
Public
Company Filings Increase 26 Percent during First Four Months of
2009
The total number of public company
filings for the first four months of 2009 increased 26 percent over the
same period in 2008, according to a report issued yesterday by
BankruptcyData.com. Eighty-two public companies filed during the first
four calendar months of 2009, compared with 65 in 2008. Public company
filings totaled 14 in April this year after registering 18 in January,
19 in February and 31 in March.To view or search public company filings
on BankruptcyData.com, please
href='http://www.bankruptcydata.com/findabrtop.asp'>click
here.
Won't Put Cramdown Measure Back Into Housing Bill
House Speaker Nancy Pelosi
(D-Calif.) strongly indicated yesterday that House lawmakers won't try
to put back into a housing bill a bankruptcy provision that had been
stripped out in the Senate, Dow Jones’
face='Cambria' size='3'>Daily Bankruptcy Review
size='3'>reported yesterday. 'It's clear that the votes are not there in
the Senate,' Pelosi said. 'It's really a major disappointment that
homeowners will not have the ability to declare bankruptcy on their
primary residence while wealthier people can declare bankruptcy on their
second, third and fourth homes.'The provision, known as cramdown, was
defeated in a vote in the Senate last week. The House had previously
passed a bill that included the cramdown provision.Given Pelosi's
comments, the House would either have to take up the Senate version of
the bill with the cramdown provision stripped out, or House negotiators
would have to abandon any attempts to add the measure back in when House
and Senate lawmakers meet to iron out differences between the two
versions of the bill.
House Looks
to Pass Mortgage Reform Legislation Today
The House is expected to pass
legislation today that would curb predatory home loans, such as banning
compensation to loan originators for steering borrowers into
higher-priced loans, requiring lenders to ensure borrowers have an
ability to repay a loan and mandating that refinancings contain a 'net
tangible benefit' for homeowners,
size='3'>CongressDaily reported today. H.R.
1728, sponsored by Rep. Brad Miller (D-N.C.), contains provisions that
the lending community opposes, such as establishing a target that banks
retain 5 percent of a loan before they sell it onto the secondary
market. Under the bill, lenders and securitizers would face additional
liability for offering risky loans and could be forced to rescind such
mortgage loans, or have the option to rework the mortgage into a more
stable, 30-year fixed rate.The House approved a similar measure in the
110th Congress, but Senate Banking Chairman Christopher Dodd (D-Conn.)
has not indicated whether he will try to push through a companion
bill.
FDIC Seeks a
Monitor for 'Too Big to Fail' Entities
Federal Deposit Insurance Corp.
Chair Sheila Bair told a Senate panel yesterday that Congress should
create an oversight council made up of the nation’s top financial
regulators to scrutinize “too big to fail” institutions for
risky practices that could lead to the next financial crisis, the
New York Times
size='3'>reported today. It was the second significant regulatory
proposal offered in recent weeks by Bair, who suggested last week that
her agency be given greater powers to take over and close bank holding
companies, not just the failing commercial banks. Bair’s idea for
a “systemic risk council” would include members of the
Federal Reserve, Securities and Exchange Commission, Treasury Department
and FDIC, rather than assigning a single agency to the task.The current
regulatory structure is too fractured to identify dangerous practices
that can, with little notice, cause a global financial institution like
Lehman Brothers to collapse, Bair said.
href='http://www.nytimes.com/2009/05/07/business/07fail.html?ref=business&pagewanted=print'>Read
more.
href='http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=7d66a948-69e4-407e-a895-04cec6a4f541'>Click
here to read Bair’s prepared testimony before the
Senate.
Autos
Names of
Lenders Opposing Chrysler’s Bankruptcy Released
The names of a handful of
Chrysler debt holders who oppose the automaker's bankruptcy were
disclosed yesterday, but a number of others dropped their opposition, a
week after President Barack Obama publicly chastised the group for not
supporting his plan to help remake the company, the Associated Press
reported today. The names of the investment firms representing nine
funds, disclosed in a court filing by the group's lawyers, comes amid
reports of death threats against the dissident creditors. The list
includesOppenheimerFundsInc., Stairway Capital Management, Schultze
Asset Management LLC, Arrow Hedge Partners Inc. and Group G Capital
Partners LLC. Bankruptcy Judge
size='3'>Arthur Gonzales on Tuesday ruled that
a filing revealing the identities of the dissident group's members
didn't need to be sealed, despite allegations of death threats against
them.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/05/06/AR2009050600824_pf.html'>Read
more.
General
Motors Reports $6 Billion Loss in First Quarter
General Motors Corp.'s loss
expanded to $6 billion in the first quarter as the global sales slump
deepened and fears mounted that the company is headed for bankruptcy
court, the Wall Street
Journal reported today. The automaker burned
through $10.2 billion in the quarter as revenue plunged 47 percent, the
latest sign GM is running out of options as it races to meet a June 1
restructuring deadline set by the Obama administration. The company is
surviving on $15.4 billion in federal loans and has said it needs
another $11.6 billion to stay afloat.
href='http://online.wsj.com/article/SB124169438005795681.html#mod=testMod'>Read
more. (Subscription required.)
Analysis:
Detroit's Troubles Lure World of Bidders
Foreign bidders are lining up to
pick off parts of General Motors Corp. as the contraction of the U.S.
auto industry sets the stage for a global reshuffling, the
Wall Street Journal
size='3'>reported today. French auto maker Renault SA has opened
discussions about possibly supplying cars to be sold through GM's Saturn
dealers, if GM lines up an owner for the Saturn network. Separately,
China's Geely Automobile Holdings Ltd. has submitted a bid to acquire
GM's Saab unit, Geely said today. If Chrysler is able to exit bankruptcy
protection, Fiat SpA of Italy is poised to become a major shareholder.
Fiat is also trying to work out an agreement to purchase a majority
stake in German automaker Adam Opel GmbH, the core of GM's European
operations, and possibly Sweden's Saab as well.
href='http://online.wsj.com/article/SB124162175673192025.html'>Read
more. (Subscription required.)
Effort to
Lift Consumer Lending Is in Question
The Congressional Oversight Panel
released a report today that said that a $1 trillion federal program to
spark consumer lending may not have any significant impact on the
ability of consumers and small businesses to borrow money, the
Washington Post
size='3'>reported today. The panel, a five-member body headed by Prof.
Elizabeth Warren, questions whether the lending program is well-designed
and also whether it will ultimately help Americans gain access to
credit. The program—the Term
Asset-Backed Securities Loan Facility (TALF)—has generated
far less interest from investors than expected. Operated by the Federal
Reserve with up to $100 billion in funding from the Treasury Department,
the initiative seeks to jump-start lending by having taxpayers share
some of the risk involved in the process. The report also points out
that banks have raised interest rates and fees on borrowers even as they
received bailout funds from the government. From November to February,
for example, average interest rates on credit cards rose to 13.08
percent from 12.02 percent, according to the report.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/05/06/AR2009050604143_pf.html'>Read
more.
Lehman, CDO
Issuer Spar over Credit Default Swap
Lehman Brothers Holdings Inc. and
the issuer of a collateralized debt obligation (CDO) are fighting over
whether the failed investment firm's bankruptcy should have ended a deal
protecting the bank from up to $1 billion in mortgage-backed securities
losses, Bankruptcy
Law360 reported yesterday. On Tuesday, both
Lehman and Libra CDO Ltd. and the CDO's trustees, including Bank of
America NA, filed adversary proceedings in the U.S. Bankruptcy Court for
the Southern District of New York. The agreement at issue is a credit
default swap between Lehman and Libra. Under the deal, Lehman agreed to
pay Libra periodically in exchange for protection against losses from
mortgage-backed securities. Libra's investors would have profited if
there weren't any losses, the Lehman complaint argues, but the mortgage
crisis has created an imperative that the CDO pay up under the deal.
Libra contends that Lehman defaulted on the credit default swap, though,
when it filed for chapter 11 and stopped making payments under the
deal.
href='http://bankruptcy.law360.com/print_article/100144'>Read
more. (Subscription required.)
Seven Big
Banks Need at Least $65 Billion in Capital
The Federal Reserve directed at
least seven of the nation's biggest banks to bolster their capital
levels by $65 billion while effectively blessing the stability of six
others, the Wall Street
Journal reported today. As a result of the
government's two-and-a-half-month examination of the U.S.'s 19 largest
financial institutions, at least half a dozen firms, including JPMorgan
Chase & Co., Goldman Sachs Group Inc., MetLife Inc., American
Express Co., Bank of New York Mellon Corp. and Capital One Financial
Corp., won't be told to raise additional capital. By contrast,
regulators have told Bank of America Corp. thatit must take steps to
address a roughly $34 billion capital shortfall, the biggest gap among
its peers. Wells Fargo & Co. needs to find $13 billion to $15
billion, GMAC LLC, $11.5 billion, Citigroup Inc., $5 billion and Morgan
Stanley $1.5 billion, according to the regulators.
href='http://online.wsj.com/article/SB124163049445592523.html'>Read
more. (Subscription required.)
Senate
Panel Examines Struggling Newspaper Industry
A Senate panel yesterday looked
into the question of whether struggling newspapers should be allowed to
operate as nonprofits similar to public broadcasting stations, the
Associated Press reported yesterday. Under a bill proposed by Sen. Ben
Cardin (D-Md.), newspapers turning to nonprofit status would no longer
be able to make political endorsements but could report on all issues
including political campaigns. Advertising and subscription revenue
would be tax-exempt and contributions to support coverage could be tax
deductible. Former Washington
Post managing editor Steve Colltestified
before the Senate Communications, Technology and the Internet
Subcommittee that he supports Cardin's proposal, but he does not think
many papers would be able to change to nonprofit status. Sen. John Kerry
(D-Mass.), the chairman of the Senate Communications, Technology and the
Internet Subcommittee, said that layoffs, closings and cutbacks have
turned the nation's newspapers into an 'endangered species' as readers
and advertisers turn to the Web.
href='http://commerce.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=7f8df1a5-5504-4f4c-ba34-ba3dc3955c61'>Click
here to read the prepared testimony from the
hearing.
Fitness
Chain Operator Files for Bankruptcy Protection
AGT Crunch Acquisition LLC, the
operator of the high-end health-club chain Crunch, filed for
chapter 11 protection yesterday with a deal in hand to be acquired by
two private-equity firms, the
size='3'>Wall Street Journal reported today.
Crunch said that the deal, which is subject to higher bids at a
bankruptcy auction, would keep all but one of Crunch's 30 locations open
and would retain the chain's existing senior management team.Instead of
paying cash, New Evolution Fitness Co. and certain investing affiliates
of Angelo, Gordon & Co. are offering to credit bid as much as $40
million that they are owed under various financing agreements with
Crunch, the company said in a filing with the U.S. Bankruptcy Court in
Manhattan.
href='http://online.wsj.com/article/SB124163144443692581.html?mod=googlenews_wsj'>Read
more. (Subscription required.)
U.S.
Trustee Requests Conversion to Chapter 7 for SCO Group
U.S. Trustee
face='Cambria' size='3'>Roberta A. DeAngelis
size='3'>requested that SCO Group Inc.'s chapter 11 cases be converted
to chapter 7 because the debtors have been hemorrhaging money and have
made three failed bids to resolve the cases,
face='Cambria' size='3'>Bankruptcy Law360
size='3'>reported today. DeAngelis’ motion said that SCO Group and
subsidiary SCO Operations Inc. have had negative cash flow of more than
$3.5 million since filing for bankruptcy in September 2007, and that
there's no reasonable likelihood that the debtors will be rehabilitated.
Three times over the past 21 months, the debtors have started sale
and/or plan processes designed for liquidation or reorganization, and
all three bids to resolve the cases failed, according to the conversion
motion.
href='http://bankruptcy.law360.com/print_article/100099'>Read more.
(Subscription required.)
Flooding,
Financial Crunch Push Norwood into Chapter 11
Norwood Promotional Products
Holdings Inc. filed for chapter 11 protection on Tuesday citing its
inability to pay off creditors after being hit by a devastating
combination of general financial decline and losses from a July 2008
flood that closed one of the company's most profitable factories,
Bankruptcy Law360
size='3'>reported yesterday. The Indianapolis-based company said that it
hoped to continue operating during bankruptcy proceedings and complete a
swift sale of its operations through the court with a $132.5 million
stalking-horse bid from Promotional Holdings LLC and an agreement with
private-equity firm Aurora Capital in the works.
href='http://bankruptcy.law360.com/print_article/100218'>Read
more. (Subscription required.)
Start Pension Inquiries
What started as an investigation
by New York Attorney General Andrew M. Cuomo into New York’s
comptroller’s office — where Cuomo alleges that favors were
being exchanged for contracts to invest pension money — has
mushroomed into a broad look at more than 100 firms by attorneys general
in at least 30 other states, the
size='3'>New York Times reported today. Given
the web of investigations taking place across the country, the
Securities and Exchange Commission might look to strengthen controls at
the federal level. The commission has jurisdiction over investment
firms, but not local politicians. In 2007 the Government Accountability
Office studied a group of pension funds known to be advised by
consultants with conflicts of interest, and found that their average
yearly investment returns were 1.3 percent lower than those of other
pension funds.
href='http://www.nytimes.com/2009/05/07/business/07pension.html?ref=business&pagewanted=print'>Read
more.
International
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