August 4 , 2006
Pension Bill Clears After Estate-Tax Effort Fails
Landmark pension legislation cleared Congress last night after being freed of an election-year fight in the Senate over proposed cuts in the federal estate tax, the Wall Street Journal reported today. The action came as Republicans fell three votes short of the 60 needed to limit debate and proceed to their "trifecta" bill, combining estate tax cuts with billions in new spending and a $2.10-an-hour increase in the minimum wage. Majority Leader Bill Frist (R.-Tenn.) preserved his ability to renew the fight in the fall, but senators turned immediately to the pension bill under an agreement allowing the House-passed measure to be sent directly to President Bush for his signature without amendments. Years in the making, the pension bill, approved 93-5, represents the most sweeping attempt in decades to shore up defined-benefit retirement plans and map rules for the newer world of 401(k) plans and individual retirement accounts. Its core provisions seek to close the $313 billion funding gap in the nation's employer-sponsored pension plans and make it more difficult for companies to make pension promises they can't keep. The legislation would boost employer contributions to many pension plans and require that all plans have 100 percent of assets to cover their liabilities within seven years. Read more.
U.S. July Payrolls Rise 113,000; Unemployment Rate at 4.8%
Employers in the United States added fewer jobs than expected in July and the unemployment rate rose for the first time since November, indicating that the labor market is losing strength as the economy slows, Bloomberg News reported today. The 113,000 increase follows a revised 124,000 gain in June, the Labor Department said today in Washington, D.C. The unemployment rate rose to 4.8 percent, from 4.6 percent, and the annual increase in hourly earnings slowed. The figures are the final piece of major economic data before Federal Reserve policy makers gather next week to determine whether to raise interest rates for an 18th consecutive time. Today's report helps strengthen the case for the Fed to pause after two years of rate increases, economists said. Read more.
New Trustee Appointed to California’s Central District
Clifford J. White, III, Acting Director of the Executive Office for U.S. Trustees announced that Peter C. Anderson was appointed U.S. Trustee for the Central District of California (Region 16), according to an EOUST release yesterday. Anderson's appointment takes effect on Aug. 6, 2006. Prior to his appointment, Anderson practiced bankruptcy and commercial law in Los Angeles and served for 14 years as a chapter 7 panel trustee for the Central District of California. Anderson received his law degree from Loyola Law School in 1982 and his undergraduate degree cum laude from the University of Southern California in 1979.
Motorola Involved in SEC Probe
Motorola Inc. said yesterday that it is involved in an investigation by U.S. financial regulators regarding bankrupt cable operator Adelphia Communications Corp., Reuters reported today. Motorola was a supplier of television set-top boxes to Adelphia, which was bought on Monday by Time Warner Inc. and Comcast Corp. In its quarterly filing with the Securities and Exchange Commission, Motorola said that as part of its bankruptcy procedure Adelphia on June 23 objected to Motorola's claim for payment, asserting “fraudulent transfers” and “aiding and abetting fraud.” Adelphia is alleging damages in excess of $1 billion, according to Motorola. Motorola reiterated that it had been “unaware of fraudulent activities being conducted by the principals of Adelphia.” Read more.
Airlines
Teamster Flight Attendants Appeal Recent Court Ruling in Comair Proceeding
Teamster flight attendants at Comair filed an appeal of Bankruptcy Judge Adlai Hardin's July 21 decision permitting Comair to reject its flight attendants' contract, according to a Teamster press release yesterday. Judge Hardin had denied the airline's first motion to reject the flight attendant agreement on the basis that it sought excessive concessions from the employees. "We believe the bankruptcy court's decision could very well warrant reversal on appeal," said Connie Slayback, Local 513 President in Florence, Ky. "Our flight attendants should not be asked to do more than their fair share for the company." Flight attendants are scheduled to negotiate with the company later this month and are still pursuing a consensual agreement with the company. Read more.
Delta Sees Declining Traffic in July
Delta Air Lines Inc. said that its July traffic fell less than 1 percent, as capacity declined 2.1 percent, the Associated Press reported yesterday. The airline, which is restructuring under chapter 11 bankruptcy protection, said traffic fell 0.6 percent to 11.76 billion revenue passenger miles, an industry unit measuring one paying passenger flown one mile. Capacity fell to 13.77 billion available seat miles. Delta said traffic in the year to date is down 4.8 percent on a 6.8 percent decline in capacity. Occupancy is up 1.7 percentage points to 79.2 percent. Read more.
Phoenix-Area Bankruptcy Filings Fall
The U.S. Bankruptcy Court for the District of Arizona reported 352 filings for the month of July in the Phoenix area, down a few percentage points over the numbers posted in March through June, the Business Journal of Phoenix reported yesterday. The number represents a drop of more than 80 percent, however, from July 2005. Most of the July filings in the Phoenix area, 280, came from individuals under chapter 7 liquidation proceedings. There were only eight chapter 11 filings, reorganizations that generally involve businesses. Year-to-date data shows 1,810 chapter 7 filings this year compared with 11,820 a year ago in the Phoenix area. Chapter 11 numbers show less of a drop with 73 petitions filed from January through July of this year compared with 82 a year ago. Year-to-date chapter 13 reorganizations for individuals and smaller businesses fell to 472 from 1,915. Read more.
U.S. Trustee Guts Refco Creditor Committee
Claimants of bankrupt commodities broker Refco Inc. are crying foul after the U.S. Trustee overseeing the chapter 11 case cut the official committee of unsecured creditors down from nine members to three, a move that critics say may undermine approval of the company’s reorganization plan, Portfolio Media reported yesterday. In an emergency motion filed Wednesday, five of the six parties removed from the committee asked U.S. Bankruptcy Judge Robert D. Drain to issue an order staying the U.S. Trustee’s decision for 45 days pending a review, to reverse the Trustee’s decision or, alternatively, reconstitute the committee. The emergency motion—filed on behalf of VR Global Partners LP, Cargill Incorporated, Premier Bank International N.V., Fimex International Ltd. and Markwood Investments Ltd.—called the paring down of the committee “unlawful,” and asserted that nonbondholder claims make up about 90 percent of the unsecured noninsider claims at issue in Refco’s bankruptcy. Read more.
Immersive VR technology pioneer IPIX has filed for chapter 7 liquidation, and has ceased all business activity and operations, a press release from the Adorama News Desk said today. According to a filing with the Securities and Exchange Commission, the company "determined that it does not have sufficient resources to continue its operations." The Oak Ridge, Tenn.-based company had pioneered technology for 360-degree "virtual tours" that viewers could navigate. However, it also caused much controversy by intimidating its competitors through legal action. There are some in the VR community who claim the evolution of VR technology was actually slowed due to IPIX patent infringement lawsuits against its competitors. The bankruptcy announcement came after several members of the IPIX board of directors had resigned last month.
Calpine Bids To Sell $80 Million Stake In Plant
In a bid to maintain Pacific Gas & Electric Co.’s involvement in a power plant project that could be worth up to $841 million, Calpine Corp. asked a bankruptcy judge on Tuesday to allow it to sell a 35 percent stake in the plant that is expected to bring in $80 million at an auction, Portfolio Media reported yesterday. In court documents filed in the U.S. Bankruptcy Court for the Southern District of New York this week, the bankrupt energy giant sought permission to sell its stake in the Russell City Project, a 600-megawatt power plant it has been building in Hayward, Calif., at an auction on Sept. 19. Calpine said that it expects to garner at least $80 million when it sells the stake and that the project would be worth up to $841 million with PG&E's involvement. But if PG&E backs out of the agreement, Calpine "could be left with no other alternative than to halt all development efforts and dispose of the Russell City Project for scrap value," according to court documents. Read more.
International
Germany Says Corporate Bankruptcies Fell
The number of German businesses filing for bankruptcy decreased by more than 8 percent in May, according to government figures released Friday, underscoring optimism about Europe's biggest economy, the Associated Press reported today. A total of 2,840 firms went bankrupt in May, down 8.4 percent from a year earlier, the Federal Statistics Office said. Over the first five months of the year, 49,582 companies filed for bankruptcy—an 11.8 percent decline. Read more.