src='/AM/Images/headlines/headline.gif' />
January 24, 2006
id='1'>Supreme Court Curbs States' Immunity from Suit
In its latest federalism decision, the Supreme Court ruled on
Monday that states are not immune from private lawsuits brought under
federal bankruptcy law, the New York Times reported yesterday.
The 5-to-4 decision made clear that the new Roberts court is just as
divided on issues of federalism as the Rehnquist court was. The opinion
for the majority, by Justice John Paul Stevens, invoked the original
intent of the Constitution's framers in concluding that the individual
states had been committed to a federal solution to bankruptcy problems
that emerged during the early years of the new nation, when states had
widely varying bankruptcy systems. A debtor might be released from one
state's prison only to be thrown into another's, Justice Stevens said.
Justice Stevens noted that the framers had given Congress the power to
establish 'uniform laws on the subject of bankruptcies throughout the
United States,' in the language of the Bankruptcy Clause of Article I.
In so doing, he said, the framers 'plainly intended to give Congress the
power to redress the rampant injustice resulting from states' refusal to
respect' one another's bankruptcy laws. Consequently, he said, 'the
ineluctable conclusion' was that the states intended to yield their
sovereign immunity when it came to bankruptcy.
href='http://www.nytimes.com/2006/01/24/politics/politicsspecial1/24scotus.html?_r=1'>Read
more.
Airlines
id='2'>Northwest, Union Square Off Over Contracts
Northwest Airlines
Corp. may be undervaluing some of the benefit cuts its pilots have
offered to help the struggling airline emerge from bankruptcy, experts
for the pilots union testified on Monday, the Associated Press reported
yesterday. The Air Line Pilots Association (ALPA) offered witnesses
Monday as part of its case against the carrier's motion to abrogate its
union contracts. The pilots and flight attendants have hinted that they
would strike if a contract is imposed. It was the fifth day of hearings
devoted to Northwest's request, which it claims is necessary to emerge
from bankruptcy. The airline is looking for $1.4 billion in annual wage
and benefit concessions from employees and has run into opposition from
pilots and flight attendants who say the company seeking more than it
needs. The hearing is expected to resume next week.
href='http://www.nytimes.com/aponline/business/AP-Northwest-Bankruptcy.html'>Read
more.
id='3'>Delta Approval Sought
Delta Air Lines
filed a motion seeking bankruptcy court approval of a severance plan for
certain critical employees and a retention plan for certain critical
employees who are either senior vice presidents, vice presidents,
directors and principals of Delta Technology, LLC, BankruptcyData.com
reported today. The maximum total
amount of awards to be paid under the retention plan will not exceed
$11,270,000, and the amount of cash payable under the entire severance
plan will not exceed $2,270,000. The court scheduled a Feb. 6, 2006,
hearing to consider the motion.
href='http://www.bankruptcydata.com/BDR.asp?ID=2433'>Read more.
id='4'>Mortgage Lender Settles Lawsuit, Ameriquest to Pay $325M
State prosecutors
and lending regulators in 49 states and the District have reached a
wide-ranging $325 million settlement with Ameriquest Mortgage Co., the
nation's largest lender to home-loan borrowers with poor credit, to
resolve allegations that the company defrauded and misled consumers, the
Washington Post reported today. It is the second-largest consumer
protection settlement in U.S. history, following the $484 million
predatory lending agreement reached in 2002 with Household Finance Corp.
The Orange, Calif.-based company has also agreed to major changes in how
it does business. More than 240,000 U.S. consumers will benefit from the
settlement to make up for losses they suffered after getting loans from
Ameriquest, and they will receive a minimum of $600 each, prosecutors
said. In the agreement, Ameriquest denies all the allegations raised by
the states.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/01/23/AR2006012301523.html'>Read
more.
id='5'>Bankruptcy Court Approves Massachusetts Grocery Store
Plan
The former
operators of the Midland Foods supermarket in Dorchester, Mass., which
had a record of health and sanitary violations, plan to open a grocery
store at the same Fields Corner location after a bankruptcy judge
yesterday gave approval for the plan, according to the building's owner
and court records, the Boston Globe reported today. Capitol Food
Corp. of Fields Corner, which had subleased the store to the now
bankrupt Americas' Food Basket, plans to pay $70,000 to the bankruptcy
court and open its own grocery store at the Geneva Avenue site,
according to court records. Capitol Food operators previously ran
Midland Foods, which closed in 2004 after numerous violations and
community complaints, city officials said. According to court records,
Capitol needs to operate the food store within 30 days after the Dec. 27
closing of Americas' Food Basket to avoid having the sublease returned
to the buildings' owner, Fields Station Realty Trust.
href='http://www.boston.com/business/articles/2006/01/24/bankruptcy_court_approves_grocery_plan/'>Read
more.
id='6'>Commentary: Why Big Retailers Are Shuttering Stores
It's only three
weeks into the New Year, but retailers have already gotten their hands
dirty with an early bout of in-house spring cleaning, CNNMoney.com
reported today. Instead of talking about their growth plans for 2006,
many big-name retailers instead are announcing store closings. Among
those retailers closing locations are jeweler Zale Corp., which is set
to turn off the lights at more than 30 of its high-end Bailey Banks &
Biddle stores. Office supplies seller OfficeMax announced it
will close 110 of its 950 U.S. outlets this year as part of its ongoing
restructuring efforts. Department store chain Mervyn's plans to close a
third of its stores in 2006. Toy seller Toys R Us is closing 75 of its
namesake stores, most of them by springtime, and converting 12 others to
Babies R Us locations. Why the rash of closings and cutbacks? Retail
Analyst Howard Davidowitz, chairman of Davidowitz & Associates, argued
that the U.S. retail market was 'too overstored' and therefore a victim
of its own overcapacity. He also blamed online retail sales, which he
said are growing about 20 percent a year.
href='http://money.cnn.com/2006/01/24/news/companies/retail_retrenchment/index.htm'>Read
more.
id='7'>Adelphia Dates Changed
An order of
adjournment of the hearing on confirmation of the Fourth Amended Joint
Plan of Reorganization and related voting and objection deadlines was
filed in the U. S. Bankruptcy Court in the Adelphia Communications case,
BankruptcyData.om reported today.
The previously-scheduled confirmation hearing was to commence on Feb.
22, 2006, but is now scheduled to commence on March 15, 2006. Also, the
voting deadline and the date to file objections to the plan has been
extended to Feb. 21, 2006.
href='http://www.bankruptcydata.com/BDR.asp?ID=1828'>Read more.
id='8'>Atlantic Gulf Sales Approved
A bankruptcy court
issued separate orders approving Atlantic Gulf Communities' chapter 7
trustee's motions to sell the following real property free and clear of
liens and encumbrances: Lots - Syndicated Capital Group, 1 GDH Tract -
Syndicated Capital Group and the Tampa tract, BankruptcyData.com
reported today. The court also granted the
chapter 7 trustee's motion to clear title to Lot 20 and transfer legal
title to Lot 34, both real property parcels are located in Port Malabar
Unit 25. Read
more.
id='9'>Graze Faces Uncertainty under Musicland's Bankruptcy
Nearly 18 months
before filing for chapter 11 bankruptcy protection, Musicland Holdings
Corp. began planning a new store concept that would reinvent its
troubled chains for the Internet era, the Minneapolis-St. Paul
Business Journal reported today. The idea was to emulate the lounge
feel of coffee shops and tap into the Internet's growing role in
distributing music and movies. Customers could burn their own CDs from
an electronic catalog, play with interactive games and, hopefully, buy
more products at Musicland's Sam Goody stores. But in the midst of
turmoil in the executive suite and efforts to turn around its other
chains, the company opened only a handful of the heavily-hyped concepts
last fall under the name Graze. With Musicland now in bankruptcy
restructuring and facing a lawsuit from one of the vendors that built
the first Graze prototypes, the idea's future is in question.
href='http://twincities.bizjournals.com/twincities/stories/2006/01/23/story2.html'>Read
more.
International
id='10'>Alitalia Worker Protests Continue, Certain Flights Are
Canceled
Italy's Alitalia
canceled at least 173 flights yesterday as workers continued wildcat
protests, while the labor minister warned in an interview the government
won't bail out the troubled airline, the Associated Press reported
today. A union official said if a meeting tomorrow with the government
wasn't positive, a nationwide strike truce scheduled to last from Jan.
31 to March 23 to cover the Turin Winter Olympics could be at risk.
Strike action during the truce 'is a possibility we are considering,'
said Oder Procacciante, an official for the Filt-Cgil transport union.
Though unions called off a 24-hour strike for yesterday, Alitalia
workers picketed at Rome's Leonardo da Vinci airport, a fifth straight
day of protests. Alitalia, which is nearly 50 percent owned by the
Italian state, said protests Sunday had forced it to scrap 121 flights.
Workers are protesting restructuring plans, including cutting jobs and
spinning off the airline's flight unit from the ground-services
business.
href='http://online.wsj.com/article/SB113806651148354241-email.html'>Read
more.
id='11'>European Gaming Unit Files for Bankruptcy
Highlighting the
difficulties of entering the portable game market, the European unit of
Tiger Telematics, the company behind the Gizmondo game device, has filed
for bankruptcy protection, according a filing Monday with the U.S.
Securities and Exchange Commission (SEC), the Red Herring
reported
yesterday. The SEC filing said the company's U.K.-based subsidiary,
Gizmondo Europe, is seeking 'a moratorium in order to affect a financial
restructuring of the business.' Tiger Telematics has struggled to turn
around its U.K. arm. Last week, it cut staff costs by 50 percent to save
money, said the filing. The company also recently received a bridge loan
of $5 million. Tiger said the funds would 'reinvest in the business in
the United Kingdom and to restructure the overall debt of the European
business.'
href='http://www.redherring.com/Article.aspx?a=15419&hed=Gizmondo+Unit+Files+Bankruptcy§or=Industries&subsector=Computing'>Read
more.