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January 22, 2008
name='1'>Debtor Audits Suspended by EOUST
The Executive Office of the
U.S. Trustee has suspended auditing debtors filing for bankruptcy as
Congress did not fund the audits in the 2008 appropriation,
BankruptcyLawNetwork.com reported on Saturday. Alternate funding is
being sought and audits will resume when funding is found, according to
the EOUST. The FY 2008 Consolidated Appropriations Act, Public Law
110-161, provided no funding for debtor audits. As a result, the U.S.
Trustees Program (USTP) has suspended its designation of cases
subject to audit and has notified the independent accounting firms
performing the audits. It is pursuing alternative sources of funding to
permit it to resume the designation of cases subject to audit and, if
successful, intends to reinstate the audits. Pursuant to §603(a) of
BAPCPA and 28 U.S.C. §586(a)(6), in the spring, the USTP will make
public information concerning the aggregate results of the debtor audits
performed during fiscal year 2007.
href='http://www.bankruptcylawnetwork.com/2008/01/19/debtor-audits-stopped/'>Read
more.
name='2'>Commentary: Bankruptcy Filings Drop as Reform Makes It
Tougher for Debtors
A little over two years
since the enactment of bankruptcy reform law, debt-strapped consumers
are finding it tougher to wipe out their bills, according to a
commentary in the
size='3'>Dallas
size='3'>Morning News on Sunday. In
congressional testimony in October, the American Bankers Association
said that consumer bankruptcy filings had fallen to roughly half of what
they were before the bankruptcy reform law took effect on Oct. 17, 2005.
'This is evidence that borrowers are, in fact, employing alternatives to
bankruptcy,' the bankers group said. 'It also indicates that debtors are
reaching out to lenders to try and negotiate workable repayment plans.'
Since the enactment of the new bankruptcy law, chapter 7 filings also
have fallen compared with chapter 13 filings, the bankers group said. In
2007, consumer bankruptcy filings jumped nearly 35 percent nationwide
from 2006, but they remain below 2005 levels, according to the American
Bankruptcy Institute.
href='http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-perfi_21bus.ART.State.Edition1.2b6a39c.html?npc'>Read
more.
Fed
Cuts Key Interest Rate as Global Markets Drop for Second
Day
The Federal Reserve cut a
key
face='Times New Roman'
size='3'>U.S.
size='3'>interest rate by three-fourths of a percent this morning,
responding to a broad global sell-off of stocks and a growing sense of
crisis in financial markets with a surprise policy move, the
Washington Post
reported today. The Fed said it had taken the move
because 'incoming information' showed that a downturn in the
size='3'>U.S.
size='3'>housing market was growing worse, unemployment had begun to
rise, and the overall economy was weakening. Stocks across Asia took
precipitous falls Tuesday for the second day in a row and Wall Street
was pointed toward a sharply lower opening as fears grew that a
weakening
w:st='on'>
size='3'>U.S.
size='3'>economy could derail growth worldwide.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/01/22/AR2008012200518_pf.html'>Read
more.
href='http://www.federalreserve.gov/newsevents/press/monetary/20080122b.htm'>Click
here to read the Federal Reserve’s press release.
name='4'>Economic Stimulus Talks Overshadow Congress
The focus of Congress
this week will be on the short-term economic outlook and measures
Congress can take without exacerbating long-term budget problems,
CongressDaily
size='3'>reported today. Bush outlined principles on Friday for a
package estimated to cost roughly $145 billion, about 1 percent of gross
domestic product, the amount most economists say is necessary to pump
into the economy. About two-thirds would be geared toward individuals in
the form of tax rebates, while the remainder would come as business tax
breaks, including small-business incentives. Democrats are envisioning a
package in that ballpark, including business tax breaks, but with a mix
of spending and tax proposals and limits on who can benefit from tax
relief.
name='5'>Business Lending Continues to Tighten
The credit crunch that
was sparked by problems with residential mortgages is spreading to the
broader economy with banks making it harder and more expensive for some
small and midsize businesses to borrow, the
size='3'>Wall Street Journal reported today.
Overall, lending to businesses has actually increased in recent months,
but that's not due to easy credit. Commercial and industrial lending by
commercial banks in the
w:st='on'>
size='3'>U.S.
size='3'>rose to $1.45 trillion as of Jan. 9, on a seasonally adjusted
basis, up 13 percent from July and the start of the credit crunch,
according to data from the Federal Reserve. Much of that increase can be
attributed to banks that were forced to absorb debt that they couldn't
sell in secondary markets, and the impact of companies drawing down
lines of credit when other types of financing started to dry up. A
recent survey by the National Federation of Independent Business found
that 7 percent of the small-business owners surveyed in December said
they were having problems getting financing, up from 4 percent in
November. 'I'm sure that everybody is being a little more careful.
Certainly the banks that were aggressive are being more careful now,'
said NFIB chief economist William Dunkelberg.
href='http://online.wsj.com/article_print/SB120096351182805111.html'>Read
more (Registration required.)
name='6'>Court Approves Marcal's Proposed Asset
size='3'>
w:st='on'>Sale
Bankruptcy Judge
Morris Stern
size='3'>approved Paper Mills Inc.'s plan to sell substantially all of
its assets after a labor union came to terms on a new collective
bargaining deal with stalking horse bidder Nexbank SSB late Thursday
night, removing the last remaining obstacle to the transaction,
Bankruptcy Law360
reported on Friday. All objections to Marcal's bid for
approval of its planned asset sale were either overruled or resolved,
debtor counsel Michael
Sirota said Friday. Sirota said that the
United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied
Industrial and Service Workers International Union had reached an
agreement regarding collective bargaining. The USW had sought an
injunction blocking approval of Marcal's sale because the proposal
wouldn't require the prospective buyer to assume Marcal's
responsibilities under a 2006 collective bargaining agreement.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=44676'>Read
more. (Registration required.)
MTTC Settle for $108 Million in Claims
FLYi Inc.'s distribution
trust has asked the bankruptcy court overseeing the air carrier's
chapter 11 case to approve a settlement that would grant the
Manufacturers Trading and Trust Co. two allowed $54 million general
unsecured claims,
size='3'>Bankruptcy Law360 reported on Friday.
In its capacity as successor-in-interest to the First Bank of
size='3'>Maryland
had filed several unsecured claims against FLYi, together asserting over
$100 million. The claims relate to leveraged lease transactions into
which Independence Air Inc., the low-cost airline owned by FLYi, had
entered for the purchase of nine aircraft and which the First Bank
of
size='3'>Maryland
as four aircraft whose purchases The First Bank of
w:st='on'>
size='3'>Maryland
size='3'>financed. Under the settlement, the allowed claims will
encompass all damages MTTC has asserted regarding those aircraft, with
all other damages to be waived. The settlement would not, however,
affect administrative expense claims related to the aircraft that MTTC
has also lodged. Objections to the motion are due on Jan. 29, with a
hearing scheduled for Feb. 5.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=44626'>Read
more. (Registration required.)
face='Times New Roman' size='3'>
name='8'>Delphi
size='3'> Creditors Back Reorganization Plan
Delphi Corp. said that it
won creditor endorsement for its reorganization plan and asked a judge
to confirm it, but it still faces hurdles before it can emerge from
bankruptcy court protection, the
size='3'>Wall Street Journal reported
yesterday. The auto-parts maker said it expects to secure a $6.1 billion
exit-financing package early next month, but credit markets have delayed
its plan in the past. It also faces opposition from the United Auto
Workers, which called the plan's executive bonuses 'a massive transfer
to senior management of wealth generated in large part by the sacrifice
of
size='3'>Delphi
workers.'
w:st='on'>
name='9'>Massachusetts
face='Times New Roman' size='3'> Furniture Maker Files for Chapter
11
Domain Inc., the Norwood,
Mass.-based parent company of the Domain Home furniture stores, has
filed for chapter 11 protection after a months-long struggle to find new
investors as sales declined, the
size='3'>Boston Globe reported today. The
company said its 27 stores would remain open, but that it was possible
the 200-employee company will be sold or liquidated. Upscale furniture
retailers such as Domain, facing rivals who sell inexpensive imports
from
face='Times New Roman'
size='3'>China
have been hit hard by declining consumer spending. Several other chains
have also filed for bankruptcy protection, including Bombay Co. and
Levitz Furniture Inc. Domain reported that both its assets and its
liabilities fall in a range of $10 million to $50 million. The filing
listed the largest unsecured creditor as Paladin Industries Inc.,
a
size='3'>North Carolina
size='3'>furniture maker owed about $1.1 million.
href='http://www.boston.com/business/articles/2008/01/21/its_furniture_sales_slipping_domain_files_for_chap_11?mode=PF'>Read
more.
name='10'>Centrix Disclosure Statement Approved
Bankruptcy Judge
Elizabeth E. Brown
approved Centrix Financial LLC's disclosure statement on
Thursday, giving the company the green light to send the plan to
creditors for a vote, the Associated Press reported on Friday. Court
documents show that Centrix proposes to repay creditors with proceeds
from any successful litigation as well as the remaining proceeds from
the sale of its assets to Kendrick CF Acquisition Inc., now known as
Peak 5, which closed on Feb. 23 for about $30 million. The unsecured
creditors' recovery will likely depend on whether Centrix is allowed to
go after claims against its chief executive, Robert E. Sutton, who also
helped form Kendrick. Centrix said that it and the creditors’
committee have identified potential claims of more than $100 million
against Sutton for fraud and breach of duty to the company and its
creditors.
href='http://www.chron.com/disp/story.mpl/ap/fn/5467721.html'>Read
more.
name='11'>Propex Files for Chapter 11
Propex Inc., the world's
biggest maker of carpet backing, filed for bankruptcy Friday, becoming
the latest casualty of the slump in the
w:st='on'>
size='3'>U.S.
size='3'>housing market and the global credit crunch, the Associated
Press reported. The Chattanooga, Tenn.-based manufacturer filed for
chapter 11 protection after being weighed down by its debt load and the
slowdown in the housing market. In court papers the company said it
defaulted on bank loans totaling $230 million. Propex also owes its
bondholders an additional $150 million. The company, which makes the
synthetic material used for holding carpet together, listed total assets
of $585.7 million and debt of $527.4 million in its bankruptcy
petition.
href='http://www.chron.com/disp/story.mpl/ap/fn/5467883.html'>Read
more.
name='12'>Buffets Holdings Files for Bankruptcy
Buffets Holdings Inc.,
the Eagan, Minn.,-based chain of 626 restaurants, said that
it filed for bankruptcy protection yesterday, Bloomberg
News reported. The filing was made in the U.S. Bankruptcy Court
in
size='3'>Wilmington,
Del., the company said today. Buffets has
lined up $385 million of financing with its banks, adding that all
of the company's restaurants in 39
w:st='on'>
size='3'>U.S.
size='3'>states continue to operate and staff will be paid as usual. The
chain blamed the bankruptcy on higher labor costs and a decline in
spending driven by higher gasoline costs and rising debt
payments.
International
name='13'>Quebecor World Seeks Protection After Rescue
Fails
Quebecor World Inc.,
North America's second-largest publicly traded printer, is filing for
protection from creditors in the United States
size='3'>and
w:st='on'>
size='3'>Canada
size='3'>after talks over a rescue deal failed, Bloomberg News reported
yesterday. The company wasn't able to secure a C$400 million ($387.5
million) financing package from parent Quebecor Inc. and Tricap
Partners, a private-equity fund run by Brookfield Asset Management Inc.
, although Credit Suisse Group and Morgan Stanley agreed to lend $1
billion. In November, Quebecor World
withdrew a plan to sell C$250 million in stock and $500 million in
bonds, citing ``adverse'' market conditions. The sale of its European
printing business to
w:st='on'>RSDB
size='3'>NV
Wes Lucas quit as CEO the following month.
size='3'>Bankers, which hold Quebecor World's $750 million line of
credit, demanded that it find $125 million in new financing by Jan. 15
and get commitments to repay the outstanding balance on the credit
facility by June 30, according to a Dec. 31 statement. Quebecor World
missed the Jan. 15 deadline and also failed to make a $19.5 million
interest payment on its outstanding $400 million in senior
notes.
href='http://www.bloomberg.com/apps/news?pid=20601082&sid=a6ZT.qKJltVM'>Read
more.
name='14'>China
face='Times New Roman' size='3'> Real Estate Brokers Face
Slowdown
After booming in recent
years,
face='Times New Roman'
size='3'>China
real estate market is finally beginning to feel the pinch from sagging
demand and tighter controls, the Associated Press reported on Sunday.
One of China's biggest real estate agencies, Chuanghui Real Estate, has
shuttered dozens of outlets in Shanghai and other cities, leaving behind
angry customers and employees, following an ill-timed expansion just as
the market was peaking. Several other agencies around the country also
have closed down or scaled back. So far, the retrenchment appears to be
mainly limited to property brokers, but the moves could herald the
beginning of a broader slowdown in one of
w:st='on'>
size='3'>Asia
markets.
href='http://www.nytimes.com/aponline/business/AP-China-Property-Pullback.html?sq=bankruptcy&scp=6&pagewanted=print'>Read
more.
href='http://www.nytimes.com/aponline/business/AP-China-Property-Pullback.html?sq=bankruptcy&scp=6&pagewanted=print'>