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September 13, 2002
Abortion Fight Might Scuttle Bankruptcy Bill; Armey Says Bill is
'Indefinitely Postponed'
Long-awaited legislation to overhaul the nation's bankruptcy laws, which
the credit card industry and other corporations have ardently sought,
teetered toward collapse yesterday when House leaders pulled it rather
than risk angering Republican abortion opponents in an election season,
reported The Washington Post. A compromise crafted in July seemed
to have resolved problems with the bill, and House leaders tentatively
had scheduled it for a vote yesterday. But several dozen GOP members
strongly objected to a provision meant to keep antiabortion activists
from escaping legal judgments by declaring bankruptcy, and the
leadership decided against a confrontation. 'I'm not sure we can pass
it,' House Speaker J. Dennis Hastert (R-Ill.) said in an interview,
reported the Post.
Debate over the bill, whose passage seemed almost certain a few weeks
ago, has been dominated in recent months by provisions aimed at
protesters who block abortion clinics and then are hit with heavy legal
judgments. Sen. Charles E. Schumer (D-N.Y.), an abortion rights
proponent, and Rep. Henry J. Hyde (R-Ill.), an abortion opponent,
brokered a compromise in July, and many expected the bill to sail
through both chambers before the August recess. But a few dozen House
Republicans remained dissatisfied, saying the deal would expose peaceful
antiabortion protesters to enormous legal liability. Rep. Joseph R.
Pitts (R-Pa.) said the language might force 'ladies who sit out on the
sidewalk and pray . . . to write checks to Planned Parenthood for the
rest of their lives,' reported the online newspaper.
According to the Post, a senior Republican, speaking on the condition
of anonymity, said the measure could pass easily if Hastert pushed it,
but 'then we have about 40 or 50 guys on our side who would go nuts.'
House Majority Leader Richard K. Armey (R-Tex.) said yesterday the bill
was 'indefinitely postponed.' House Chief Deputy Whip Roy Blunt (R-Mo.),
however, said leaders might bring it to a vote either before the Nov. 5
election or shortly thereafter if Congress has a lame-duck session in
November or December, reported the online newspaper. Pitts said House
leaders 'do not want to choose between their friends, their business
friends and their pro-life friends,' but they made the right choice
politically. 'A cardinal rule in politics is: Don't go into the election
having deflated your base. The ones who provide volunteers at these
campaigns are pro-family folks,' he said, reported the Post.
However, the decision has angered the party's business allies.
'There's a great deal of frustration among all the parties who have
worked for six years on this bill, when this bill has passed muster with
the Republicans, it's passed muster with the Democrats, it's passed
muster with the White House,' said Steve Pfister, senior vice president
for government relations at the National Retail Federation, reported the
Post. 'I would challenge anybody in this town to show me another piece
of legislation that has passed both houses of Congress with bipartisan,
veto-proof margins, and continues to be held hostage over issues that
are unrelated to the intent of the legislation.' To read the full
article, point your browser to
href='http://www.washingtonpost.com/wp-dyn/articles/A10658-2002Sep12.html'>http://www.washingtonpost.com/wp-dyn/articles/A10658-2002Sep12.html
Greenspan: Economy Solid, Budget Discipline Is Needed
Federal Reserve Chairman Alan Greenspan told Congress yesterday that a
year after the terrorist attacks, the U.S. economy appears to have done
a good job of withstanding a series of severe blows, 'although the
depressing effects still linger,' reported CongressDaily.
Greenspan cautioned the House Budget Committee that such problems as the
terrorist attacks and the huge drop in stock prices were still having a
lingering impact on growth as the country tries to mount a sustained
recovery from last year's recession, the newswire reported. The Fed
chairman said one area of major impact was on the federal budget, which
has seen projections of a decade of surpluses of more than $5 trillion
replaced with the return of huge deficits. The Congressional Budget
Office is now predicting that the deficit for this budget year, which
ends on Sept. 30, will hit $157 billion after four straight years of
surpluses, the longest such stretch that the budget has been in the
black in seven decades. Greenspan said the sharp fall in stock prices,
which have been tumbling since the spring of 2000, was a major reason
that government revenues have declined, CongressDaily reported.
Greenspan made no specific mention in his testimony about what the Fed
would do with interest rates, reported the newswire.
Consolidated Freightways Gets Nasdaq Notification
Consolidated Freightways Corp. said it expects its stock to be delisted
from the Nasdaq National Market, after the bankrupt company received
notification that it no longer meets some of the market's requirements,
Dow Jones reported. The troubled trucking company, which last week
announced it couldn't satisfy creditors' claims, now fails to meet
Nasdaq's net tangible assets and shareholder equity requirements.
The expected delisting only compounds existing problems at the company,
which last week announced plans to shutter its operations and
immediately lay off 80 percent of its 15,500 employees. At that time,
the company also said its shareholders will probably get no money for
their shares as a result of it going out of business.
Birmingham Steel Wins Confirmation of Chapter 11 Plan
Birmingham Steel Corp. Thursday won confirmation of a reorganization
plan that contemplates the sale of substantially all of its assets to
Nucor Corp. in a deal valued at $615 million, Dow Jones reported.
Roughly 97 percent of the debtor's creditors, which hold about 99
percent of the claims filed against the estate, voted in favor of
confirmation, attorneys for Birmingham Steel said.
The ruling by Judge Ronald S. Barliant of the U.S. Bankruptcy Court in
Wilmington confirms a plan that was modified in the last 72 hours to
reflect a settlement with the company's secured lenders, major unsecured
creditors and unsecured creditors' committee. As before, proceeds of the
$615 million sale to Nucor will go to a group of secured creditors, who
will give a portion of the proceeds to unsecured creditors and
shareholders. The revised and now-confirmed plan provides for
distributions valued at more than $77 million to general unsecured
creditors and shareholders, though all assets are subject to the secured
creditors' liens.
SLI Inc. Wins Interim Approval of $20 Million DIP Loan
SLI Inc. Thursday won interim approval from the U.S. Bankruptcy Court in
Wilmington, Del., for a $20 million debtor-in-possession loan after the
company's lenders agreed to receive reduced loan fees, Dow Jones
reported. SLI will use the loan to fund working capital and expenses
incurred during its chapter 11 case. On Wednesday the company won
authority to use its pre-petition lenders' cash collateral to cover
payroll. A hearing to consider final approval of a proposed $35 million
DIP loan is scheduled for Oct. 7. Objections must be filed by Sept. 30.
SLI, a lighting maker based in Canton, Mass., filed for chapter 11
bankruptcy protection on Monday, listing $830.7 million in assets and
$721.2 million in liabilities in its chapter 11 petition.
Adelphia Communications Seeks to Restrict Some Shareholder
Trades
Adelphia Communications Corp. has asked the bankruptcy court handling
its chapter 11 case to approve procedures that would restrict trading by
some of its larger equity holders, Dow Jones reported. The cable company
said the move is designed to protect $3.5 billion in net operating
losses that it may be able to use to reduce future federal income tax
liability, according to court papers. In an order made available to the
public Wednesday, Judge Robert Gerber of the U.S. Bankruptcy
Court in Manhattan put the proposed restrictions into effect pending a
hearing scheduled for Sept. 20.
Organogenesis May File for Chapter 11 Bankruptcy
Protection
Organogenesis Inc. Chief Executive Steven Bernitz said a chapter 11
bankruptcy filing for the company is 'certainly possible,' reported the
Wall Street Journal. The biotech company suspended operations
this week. Organogenesis has been unable to renegotiate the terms of its
marketing agreement with Novartis Pharma AG, which distributes its
product, a human-skin substitute. Organogenesis said in July the present
agreement was 'unsustainable.'
Bernitz added that the company could make the bankruptcy filing as part
of a resolved agreement, or if Novartis and Organogenesis fail to agree
on terms. Organogenesis has $10 million in convertible debt owed to
Novartis and $17.5 million in convertible debt owed to other investors,
reported the Journal. The company did not file a report with the
Securities and Exchange Commission for the second quarter; it reported
total assets of $32 million in the first quarter, when it lost $6.7
million on $2.9 million in revenue.
OWENS CORNING
Owens Corning Creditors Seek to Recover Asbestos
Payments
Owens Corning's unsecured creditors' committee is seeking to bring
lawsuits designed to recover hundreds of millions of dollars the company
paid under an asbestos claims settlement program, Dow Jones reported.
The committee would seek to void transfers the company made to claimants
and their law firms, as well as to its own officers and directors,
during the period preceding its chapter 11 filing almost two years ago,
according to papers filed with the U.S. Bankruptcy Court in Wilmington,
Del.
The committee would seek to recover $700 million in cash transferred
into the accounts of some of the law firms; funds transferred under
agreements reached after Jan. 1, 2000, and those reached earlier but
converted or accelerated because of the company's financial crisis;
$115.2 million in transfers made to asbestos claimants and their law
firms in the 90 days preceding the bankruptcy filing; and $290 million
in transfers made to some of the law firms and their clients between
March 2000 and the bankruptcy filing date.
Owens Corning Creditors Seek Suit to Void '97
Acquisition
Some members of Owens Corning's unsecured creditors' committee are
seeking court authority to file a lawsuit aimed at setting aside the
company's 1997 acquisition of Fibreboard Corp. as a fraudulent transfer,
reported Dow Jones. Bondholder and trade members of the committee also
want to file a separate suit to set aside guaranty and stock pledge
claims held by one of the company's lending groups, and to void and
recover $61 million in dividends paid to shareholders between 1996 and
2000, according to emergency court papers filed with U.S. Bankruptcy
Court in Wilmington, Del., the newswire reported. The court is handling
the company's almost two-year-old asbestos-related chapter 11 case.
According to the committee members, Fibreboard or certain affiliates,
or both, were either insolvent or made insolvent by the 1997
acquisition, Dow Jones reported. Because of this, they couldn't have
received reasonably equivalent value under the deal and the deal is a
voidable fraudulent transfer, the committee members said. The suit would
seek to recover the transferred property or the value of the property
for the chapter 11 bankruptcy estate and for creditors, reported the
newswire. The committee members said it also might be appropriate to
seek the realignment of asbestos liabilities between Fibreboard and its
preacquisition affiliates and the rest of the Owens Corning debtors, the
newswire reported. The deadline for filing the suits is Oct. 4. A
hearing on the committee members' request to bring the suits is
scheduled for Sept. 24.
Reorganization Plan Values Lodgian at $630 Million
Lodgian Inc. and the official committee of its unsecured creditors have
proposed a chapter 11 plan that estimates the company's reorganization
value at $630 million, assuming the reorganization becomes effective
Dec. 31, Dow Jones reported. The reorganization value was prepared by
Chilmark Partners LLC, the hotel operator's adviser, and revealed in the
disclosure statement filed by the company and committee in conjunction
with the plan on Aug. 30.
The U.S. Bankruptcy Court in Manhattan has scheduled a hearing on the
disclosure statement for Sept. 24, with objections due Tuesday. The plan
confirmation hearing is currently set for Oct. 29. Judge Burton R.
Lifland on Aug. 8 approved a commitment letter between the company
and Merrill Lynch Capital Inc., providing for a $286.2 million exit
financing facility, secured by some of Lodgian's hotels. The company is
currently negotiating with Merrill Lynch to raise the facility by $5.3
million, according to the disclosure statement.
Conseco Preferred Securities Holders Hire Attorney
In a move that could complicate Conseco Inc.'s efforts to restructure
the company, a group of preferred securities holders has formed a
committee to represent their interests in negotiations with Conseco, Dow
Jones reported. John Devaney, president of United Capital Markets Inc.
of Key Biscayne, Fla., said the group has retained the law firm of Saul
Ewing LLP to represent the group. Devaney said his firm holds about $100
million of Conseco preferred securities while Conseco has $1.9 billion
of preferred securities outstanding.
Pension Agency to Cover Plans of 11,000 Polaroid Workers
The Pension Benefit Guaranty Corp. said Thursday that it has taken
responsibility for the underfunded pension plan of 11,000 former
employees of Polaroid Corp., which is under chapter 11 bankruptcy
protection, Dow Jones reported. The agency said in a statement that
Polaroid's plan is underfunded by about $324 million, based on its
estimates that the company has plan assets of $657 million and benefit
liabilities of $981 million. The plan was terminated on July 31, the
same day Polaroid closed its asset sale to OEP Imaging, a unit of Bank
One Corp.
Enron Gets Court OK to Revamp Portland General Utility
Enron Corp. can vote its shares in Portland General Utility, one of its
non-bankrupt units, to support the subsidiary's issuance of new stock, a
federal bankruptcy judge ruled Thursday, reported Dow Jones. The ruling
is expected to help improve the Oregon utility's credit rating and
increase its appeal to potential buyers. Enron put Portland General,
along with 11 other top assets, up for sale about two weeks ago. A
change of Portland General's ownership structure will make it 'more
bankruptcy remote,' Martin Bienenstock, Enron's lead bankruptcy lawyer,
told Judge Arthur Gonzalez, reported the newswire. He pointed out that
the company's credit rating has suffered because of its proximity to
Enron.
Grand Court Lifestyles Reorganization Plan Gets Court Nod
Fort Lee, N.J.-based Grand Court Lifestyles Inc. received court approval
for its second amended joint plan of reorganization, which will provide
payment to its creditors, Dow Jones reported. The plan calls for the
liquidation of all Grand Court Lifestyles assets, according to a Form
8-K filed Wednesday with the Securities and Exchange Commission. Under
the plan, proceeds from the sale of assets will be distributed to
creditors who hold allowed claims. The newswire reported that
claimholders with equity interests won't receive any payments, except
under some circumstances, the filing said. In addition, all equity
interests in Grand Court Lifestyles will be canceled upon the company's
dissolution. Grand Court Lifestyles filed for chapter 11 bankruptcy
protection on March 20, 2000, listing assets of $323.9 million and
liabilities of $286.6 million.
U.S. House Panel Subpoenas Global Crossing Chairman to
Testify
A House panel issued a subpoena Thursday for testimony by Global
Crossing Chairman Gary Winnick and expanded its investigation to include
Western phone company Qwest Communications and other companies, Dow
Jones reported. The House Energy and Commerce Committee served the
subpoena on Winnick to appear at a hearing on Sept. 24, committee
spokesman Ken Johnson said. They have refused to be interviewed by
committee investigators, he said. Also subpoenaed were Jim Gorton,
former general counsel of Global Crossing, and Greg Casey, a former
executive vice president of Qwest, according to Johnson. The Justice
Department and the Securities and Exchange Commission are investigating
Global Crossing's accounting. Quest also has acknowledged major
accounting errors and is under investigation by the SEC.
Among other things, the committee has been investigating whether
Winnick, who founded Global Crossing, acted to inflate the fiber optic
giant's balance sheet before selling large chunks of its stock, reported
Dow Jones. Winnick sold $734 million in stock before the company filed
for bankruptcy protection in January. Two Asian companies bought Global
Crossing out of bankruptcy earlier this month for $250 million, a
fraction of the $22 billion in assets the company listed in its
bankruptcy court filing.
Pittsburgh Symphony Considers Bankruptcy
Bankruptcy may be on the horizon for the Pittsburgh Symphony Orchestra,
reported the Associated Press. In the last two years, the 106-year-old
orchestra has seen its endowment drop by almost $40 million and its
reserves dwindle, the newswire reported, and contributions have been
below expectations. Now, with many orchestras facing financial problems
because of a faltering stock market, the PSO's managing director, Gideon
Toeplitz, says if donations from corporations, foundations, government
agencies and individuals don't pick up, the group could be forced to
make cutbacks or file for chapter 11 bankruptcy protection, reported the
Associated Press. The orchestra expects a deficit of no less than
$750,000 for the season that ended this year.
Forstmann Faces XO Deadline
Time is running short for Forstmann Little & Co., which must
complete an $800 million bailout package for bankrupt XO Communications
Inc. within the next 70 days unless it invokes a material adverse change
clause, the Daily Deal reported. The New York buyout firm first
expressed its reluctance to go through with the deal in a June 6 letter
to XO's lawyers. Now its only way out appears to be a MAC clause.
Sources said the Forstmann camp is confident it can invoke a MAC in the
bailout plan agreed to Jan. 15 because of a change in the broadband
provider's projections.
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