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August 12, 2005
U.S. Economy: July Retail Sales Rise, Led by Autos
Americans spent more in July on discounted automobiles and paid
record gasoline prices to run them, leading to a 1.8 percent increase in
U.S. retail sales, Bloomberg reported yesterday. Last month’s gain
followed a 1.7 percent increase in June, the Commerce Department said
yesterday in Washington. Excluding autos, sales rose 0.3 percent, half
the median forecast in a Bloomberg News economist survey. Job growth has
helped support demand for cars and other goods, and the Labor Department
said yesterday that initial jobless claims unexpectedly fell last week.
The biggest jump in auto purchases in almost four years left consumers
with less to spend at department and furniture stores. Hot weather also
hurt demand for fall clothing at retailers such as Neiman Marcus Group
Inc. and J.C. Penney Co., industry reports showed last week. Rising
incomes will help Americans cope with gasoline prices and keep the
economy growing, economists said.
Diocese Won’t Add Ruling by Vatican to Case
A lawyer defending Spokane’s Roman Catholic diocese from
lawsuits filed by alleged sex-abuse victims said Thursday that a recent
Vatican statement vindicates the diocese’s position that it
doesn’t own Spokane parishes, the Spokesman-Review
reported today. But the attorney representing those victims against
Spokane’s diocese disagreed, saying that the Vatican
statement—telling the Archdiocese of Boston that it has no claim
on its parish assets—has no bearing in a high-stakes legal battle
about to be decided by a Spokane federal bankruptcy judge. Shaun Cross,
the Spokane attorney representing the Spokane diocese, said the Vatican
statement is relevant, but he also said it won’t affect the legal
case. Vatican officials told church leaders in Boston they have no
authority to claim the assets of several parishes being closed there by
Archbishop Sean P. O’Malley, according to a report in the
Boston Globe.
In other news, Archbishop William Levada agreed Wednesday to waive
diplomatic immunity and answer questions about sexual abuse by Catholic
priests after he takes over as the church’s guardian on
doctrine—the Vatican post formerly held by Pope Benedict XVI, the
Associated Press reported yesterday. Attorneys for abuse victims want to
question Levada as part of the bankruptcy case involving the Archdiocese
of Portland. Last year, Portland became the first Catholic diocese in
the nation to declare bankruptcy, citing sexual-abuse lawsuits seeking
more than $155 million in damages. Levada led the archdiocese from 1986
to 1995, when he became the archbishop of San Francisco.
Pension Fund Allocation Case Dismissed
href='http://www.oregonlive.com/newsflash/regional/index.ssf?/base/news-11/11…'>The
Oregon Supreme Court has let stand a lower court ruling that the
state’s public pension system put too much of its 1999 earnings
into members’ accounts instead of saving the money, the Associated
Press reported yesterday. The immediate result of Thursday’s
decision is that $1.6 billion of the pension fund’s $6.9 billion
in 1999 earnings will be shifted from state and local government
employees’ accounts to reserves—a victory for public
employers, including cities, counties, school districts and the state,
but a setback for government retirees. A major upshot of the
court’s action will be shaving pension benefits for about 36,000
retirees who have left their jobs since March 2000.
href='http://www.oregonlive.com/newsflash/regional/index.ssf?/base/news-11/11…'>Read
the full story.
Athlete’s Foot, Creditor Panel File Chapter 11 Liquidation
Plan
href='http://www.marketwatch.com/news/story.asp?guid=%7B6CE925D6-9143-46A2-BF…'>Athlete’s
Foot Stores LLC and its creditors’ committee together filed a
chapter 11 plan to distribute the company’s liquidated assets
to creditors, MarketWatch reported yesterday. Unsecured creditors are
expected to recover between 7 and 10 percent of their $21.49 million in
claims under the plan, which was filed Monday with the U.S. Bankruptcy
Court in Manhattan along with a corresponding disclosure statement. The
plan calls for the creation of a liquidation trust to hold and
distribute assets, resolve disputed claims and pursue certain
recoveries, including a $525,000 fee payment made to secured lender GMAC
Commercial Finance LLC within days of the company’s chapter 11
filing.
href='http://www.marketwatch.com/news/story.asp?guid=%7B6CE925D6-9143-46A2-BF…'>Read
the full story.
WorldCom Fraud Results in Five-year Prison Term for Sullivan
Scott Sullivan, the ex-chief financial officer of WorldCom who was
described by a federal judge as the “architect” of the
largest accounting fraud in U.S. history, was
href='http://www.law.com/jsp/article.jsp?id=1123751119446'>sentenced
yesterday to 5 years in prison, the New York Law
Journal reported today. Southern District of New York Judge
Barbara Jones said that Sullivan, 43, was “extremely
fortunate” to have cooperated with the government. His cooperation
secured the conviction of former WorldCom CEO Bernard Ebbers after a
two-month trial earlier this year. Assistant U.S. Attorney David Anders
acknowledged in court that without Sullivan’s help, prosecutors
would have likely never brought charges against Ebbers.
href='http://www.law.com/jsp/article.jsp?id=1123751119446'>Read the full
story.
Grupo Mexico Selling Asarco
The world’s No. 3 copper maker
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=284208'>Grupo
Mexico is widely expected to try to sell its U.S. mining unit
Asarco, which filed for bankruptcy protection this week, but only if
it can cut Asarco’s costs, Reuters reported today. Analysts said
yesterday that the bankruptcy filing was a step forward in the
restructuring of Grupo Mexico and could help to end a five-week-old
strike at Asarco’s Arizona and Texas operations.
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=284208'>Read
the full story.
In other news, Asarco’s decision to file for bankruptcy
protection appears to make things more difficult for its workers who
have been on strike for more than a month, lawyers and economists say,
the Associated Press reported today. About 1,500 miners and other
workers at five Asarco facilities in Arizona and a refinery in Texas
have been on strike since early July. The company, a subsidiary of
Mexico City–based Grupo Mexico SA, filed for chapter 11
reorganization Wednesday. James McBrearty, an associate professor of
economics and industrial relations at the University of Arizona, said
the bankruptcy filing “poses a problem definitely for the unions;
it changes the dynamics of the bargaining somewhat.”
Independence Air Defers Aircraft Deliveries
FLYi Inc. yesterday said that its subsidiary, Independence Air, has
deferred the delivery dates of six Airbus planes, allowing the
cash-strapped airline to conserve liquidity. Independence Air is still
ordering 16 planes from an Airbus affiliate, Reuters reported yesterday.
However, instead of taking deliveries of six of the A319 jets next year,
all of the planes in the order will now be delivered between the second
half of 2007 and 2009. The airline, which recently told analysts it was
looking for ways to conserve its dwindling cash pile, said it expected
to receive a $31.2 million cash refund for pre-delivery payments it had
previously made. Under a series of agreements with the Airbus affiliate,
Independence Air said it would also defer $11.5 million in payments that
it would have otherwise been required to make during the remainder of
this year. It can also extinguish without penalty $16.5 million in notes
previously issued to finance a portion of the pre-delivery payments.
Northwest CEO Makes Case for Labor Concessions
Northwest Airlines Corp., facing a growing strike threat from its
mechanics, has no choice but to
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=269890'>demand
hefty labor concessions if the carrier is to survive, CEO Doug
Steenland said yesterday, according to Reuters. AMFA said that the
proposal stands no chance of ratification by its members.
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=269890'>Read
the full story.
Former City Manager Gets “Last” Check
Though he hasn’t been completely cashed out,
href='http://www.thedesertsun.com/apps/pbcs.dll/article?AID=/20050812/NEWS01/…'>former
Desert Hot Springs City Manager Jerry Hanson received his last paycheck
from the city yesterday, the Desert Sun reported. For
40 hours of work, Hanson earned a gross $5,035.03, but netted $4,104.60,
Finance Director Linda Kelly said. Hanson also received separate checks
of $500 for his July auto allowance, $291 for gas allowance and $578.50
for his life insurance premium, Kelly said. Though he has retired from
the position in which supporters say he added to city revenues by
leading the city through a three-year, $10 million bankruptcy and by
negotiating more than $1 billion in real estate development deals,
Hanson is under investigation for conflict of interest.
href='http://www.thedesertsun.com/apps/pbcs.dll/article?AID=/20050812/NEWS01/…'>Read
the full story.
Museum Files for Bankruptcy
The
href='http://pressherald.mainetoday.com/news/local/050812york.shtml'>Museum
of Glass and Ceramics in South Portland, Maine, has filed for
bankruptcy, complicating a five-year controversy over ownership of
its art collection and how and where it should be displayed, the
Portland Press Herald reported yesterday. The museum, which
was to open in the former armory near the foot of Casco Bay Bridge,
listed liabilities of nearly $804,000 and assets of almost $782,000 in
its chapter 7 filing with the U.S. Bankruptcy Court in Portland.
href='http://pressherald.mainetoday.com/news/local/050812york.shtml'>Read
the full story.
Big Satellite Launch Boosts Loral
href='http://www.siliconvalley.com/mld/siliconvalley/news/12365795.htm'>Loral
Space & Communications got another big boost in its liftoff from
bankruptcy when a massive broadband-communications satellite built
by its Palo Alto, Calif., subsidiary for Asia rocketed into space
Yesterday, the Mercury News reported. The satellite was
purchased by Shin Satellite of Thailand for about $200 million.
Loral, which filed for chapter 11 protection in July 2003, last month
obtained court approval for its plan to reorganize its finances, which
could enable it to emerge from bankruptcy later this year. The company
is counting on its Space Systems subsidiary to help it get back on its
feet.
href='http://www.siliconvalley.com/mld/siliconvalley/news/12365795.htm'>Read
the full story.
Hawaiian Bankruptcy Trustee Seeks $8 Million Fee
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/08/09/AR20050…'>The
trustee who guided Hawaiian Airlines through its two-year bankruptcy
case is seeking an $8 million fee, the Associated Press reported
Tuesday. Joshua Gotbaum said he is entitled to the fee, considering that
the reorganization plan he assembled repaid creditors in full and
allowed existing stockholders to keep their shares. The “success
fee,” requested in a filing with the U.S. Bankruptcy Court late
Monday, would be atop $1.4 million in salary and expenses that Gotbaum
already has received from the airline. He also has authorized a $1.75
million success fee being sought by airline consultant Simat, Helliesen
& Eichner Inc. Gotbaum, who has returned to his Washington, D.C.,
home, is also seeking relocation expenses. The chairman of
Hawaiian’s parent company and the chairman of Hawaiian’s
pilot union both called the request “outrageous.”
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/08/09/AR20050…'>Read
the full story.
Stacker 2 Maker Files for Chapter 11
NVE Pharmaceuticals, the one-time maker of the ephedra-based Stacker
2 pills, filed for bankruptcy protection yesterday under the weight of
more than 100 wrongful-death and injury lawsuits, the New Jersey
Star-Ledger reported yesterday. Sussex County–based NVE,
the nation’s fourth dietary supplement maker to file for
bankruptcy protection, was paying about $400,000 a month in legal fees
to defend against the lawsuits filed in state and federal courts
throughout the country. The government banned ephedra-based weight-loss
pills in April 2004 amid outrage over more than 150 deaths linked to the
substance.