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April 4, 2007
Study: Moderate-Income Home
Buyers Hit by Predatory Lenders
A study being released
today found that one in 30 homeowners in Philadelphia has been hurt by
predatory lenders who target people who live in moderate-income
neighborhoods and whose homes are often their only asset, illustrating a
problem that's captured the attention of federal and local legislators
throughout the country, the
size='3'>Washington Post reported today. The
study by the Reinvestment Fund, a community-development group in
size='3'>Philadelphia
sales and mortgage histories of 15,500
w:st='on'>
size='3'>Philadelphia
size='3'>properties to discern patterns of predatory lending practices,
which generally impose excessive or unnecessary rates and fees, often on
unwitting borrowers, many of them minorities. 'The same kind of lending
practices have taken place in many different parts of the country,' said
Mark Zandi, chief economist at Moody's Economy.com, who has reviewed
the
size='3'>Philadelphia
size='3'>study. The fund found that the likelihood of becoming
victimized by predatory lenders is one in seven for borrowers who have
refinanced their homes multiple times.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/04/03/AR2007040301861_pf.html'>Read
more.
Subprime
Mortgages
Payment Woes Worsen on
Subprime Mortgages
New data from First
American Loan Performance, a research firm in
w:st='on'>San
Francisco
borrowers in the
w:st='on'>United
States
behind on subprime mortgages continues to grow, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The First American data show that in January
payments were at least 60 days late on 14.3 percent of subprime loans
that had been packaged into securities, up from 13.4 percent in December
and 8.4 percent in January 2006. The rapid rise in overdue payments and
defaults has forced dozens of lenders out of business or into bankruptcy
protection in recent months and darkened the outlook for the
size='3'>U.S.
face='Times New Roman' size='3'>housing market.
href='http://online.wsj.com/article/SB117560809027958219-search.html?KEYWORDS=bankruptcy&COLLECTION=wsjie/6month'>Read
more . (Registration required.)
Atlanta-Based Lender
Closes after Fund Sources Dry Up
Mortgage lender SouthStar
Funding said that it has shuttered operations, becoming the latest
casualty in the battered subprime lending market, the Associated Press
reported today. The privately owned SouthStar, based in
size='3'>Atlanta
offered subprime and other mortgage products, closed out all accounts on
Monday after its investment partners cut off financing because of
payment defaults. SouthStar told its customers that it would cancel any
pending closings. “We really felt like we could weather the storm
and that we would outlive some of the competition,” said Tyler
Wood, SouthStar executive vice president and director of governmental
affairs. “Wall Street’s appetite for the Alt-A and subprime
market disappeared.” More than two dozen subprime lenders have
closed in recent months, and others are struggling to remain in
business. Most of those closing have been relatively small lenders, like
href='http://www.nytimes.com/2007/04/04/business/04lend.html?pagewanted=print'>Read
more.
Autos
Judge Urges Dana, Unions
to Continue Negotiations
Bankruptcy Judge
Burton Lifland
size='3'>urged Dana Corp. and its unions to negotiate more amid the
company’s requests to cut labor costs and retirement obligations
it says are needed to emerge from bankruptcy and compete with overseas
suppliers, the Associated Press reported yesterday. The Toledo,
Ohio-based company requested to reject collective bargaining agreements
that cover about 5,200 active employees, including in
w:st='on'>Fort
Wayne
w:st='on'>
size='3'>Marion
represented by the United Auto Workers and United Steelworkers. Dana
also proposes eliminating retiree health benefits for all its union
workers; it has already obtained court permission to do so for nonunion
active and retired workers. “The gate is not closed, we’re
not at impasse and both parties, both sides should ardently avoid
brinkmanship and continue to negotiate,” Judge Lifland
said.
href='http://www.fortwayne.com/mld/newssentinel/business/17025774.htm?source=rss&channel=newssentinel_business'>Read
more.
Delphi Seeks to Ship
Finance Jobs to
w:st='on'>India
Delphi Corp. is seeking
bankruptcy court approval to reduce the number of its North American and
European financial employees by outsourcing their jobs to India's
Genpact International LLC as part of its plan to reorganize operations
and exit chapter 11 protection,
size='3'>Bankruptcy Law360 reported yesterday.
The deal will provide for the outsourcing of
w:st='on'>
size='3'>Delphi
receivable, accounts payable, fixed assets, travel and expense
reporting, general ledger, and contract administration processes.
size='3'>Delphi
size='3'>said in the filing that it has decided to consolidate many
staff administrative functions into a global business service group in
order to further its goal of lowering its selling, general and
administrative expenses.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=21870'>Read
more . (Registration required.)
w:st='on'>
size='3'>Detroit
face='Times New Roman' size='3'> Auto Makers Post Decline in Sales
for March
General Motors Corp.,
Ford Motor Co. and DaimlerChrysler AG's Chrysler Group reported
yesterday that they posted sales declines for March, while Toyota Motor
Corp.'s sales rose 11.7 percent, making it the Japanese auto maker's
best sales month on record, the
size='3'>Wall Street Journal reported today.
The
size='3'>Detroit
makers have suffered year-over-year sales drops as they work to
restructure and wean themselves off lower-margin sales to daily rental
fleets. Now, auto manufacturers must contend with a run-up in fuel
prices and a weakening housing market. Both could undermine sales and
force cash-sapping production cuts and incentives. GM cut its
second-quarter production forecast by 15,000 vehicles, to 1.16 million,
and several auto makers indicated that incentives like low interest
rates and rebates on many vehicles would remain. Auto makers sold 1.5
million cars and trucks last month, translating into an annual sales
rate of 16.3 million, according to Autodata Corp. Auto makers are hoping
the industry will end the year selling around 16.5 million, roughly flat
href='http://online.wsj.com/article/SB117526026027454552.html?mod=home_whats_news_us'>Read
more. (Registration required.)
DaimlerChrysler
Confirms Talks about Potential
w:st='on'>
size='3'>Sale
Chrysler
DaimlerChrysler confirmed
for the first time that it is in negotiations with a number of parties
about the sale of its money-losing Chrysler division, the
New York Times
size='3'>reported today. Speaking at DaimlerChrysler’s annual
meeting, CEO Dieter Zetsche said, “I can confirm that we are
talking with some of the potential partners who have shown a clear
interest.” Zetsche did not identify the automaker’s suitors,
nor did he guarantee that the talks would end in a sale of Chrysler.
DaimlerChrysler’s confirmation did not come as a surprise as the
auto industry has crackled with rumors about would-be bidders for
Chrysler since mid-February, when Mr. Zetsche disclosed the company was
considering all options for the unit, which lost $1.5 billion last
year.
href='http://www.nytimes.com/2007/04/04/business/04cnd-daimler.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more .
w:st='on'>
size='3'>Malden
Switches to Chapter 7
Malden Mills Industries
Inc.’s chapter 11 case has been officially changed to a chapter 7
liquidation, a conversion requested by both the company and the U.S.
Trustee overseeing the bankruptcy proceedings,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. U.S. District Judge Joel B. Rosenthal
signed off on an order approving the conversion following a hearing on
Malden Mills’ bid to shift from chapter 11 to chapter 7. Malden
Mills will now go by the name OM Industries Inc. An April 9 hearing will
address Malden Mills’ bid to retain CFO Edward P. Schade as
wind-down officer and the unsecured creditors’ committee objection
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=21931'>Read
more. (Registration required.)
Judge Allows Subpoenas to
Stand in Allied Holdings Case
Bankruptcy
size='3'> Judge C. Ray Mullins has refused
to exempt a group of shareholders from subpoenas issued by the Allied
Holdings Inc.’s largest unsecured creditor, Yucaipa Cos.,
Bankruptcy Law360 reported
yesterday. Judge Mullins on Thursday denied the ad hoc shareholders
committee's request to be excused from handing over documents to
size='3'>Yucaipa
company that owns about half of Allied’s unsecured claims. The
committee had pleaded with the court back in March to quash the
subpoenas, which were served to each committee member as well as the
committee's financial adviser.In pleading with the judge, the group argued
that
size='3'>Yucaipa
size='3'>was merely trying to distract it from voicing its concerns over
Allied’s chapter 11 plan, filed early last month.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=21907'>Read
more. (Registration required.)< br>
Nellson Asks Court to
Approve Reduced Employee Bonuses
Nellson Nutraceutical Inc. has
asked the bankruptcy court in charge of its chapter
face='Times New Roman'>11 proceedings for permission to
pay out reduced bonuses to employees, after it was unable to meet
benchmarks that would have triggered full payment,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Nellson filed a motion in the
size='3'>Delaware
size='3'>bankruptcy court on Friday, seeking approval for a modified
version of Nellson’s ordinary-course employee bonus compensation
program, under which 133 employees—about 30 percent of the
debtors’ workforce—would receive bonuses. Nellson
didn’t achieve certain milestones that would have caused bonuses
to be paid out under the plan. However, given the company’s
performance in the face of “unique and extreme challenges,”
Nellson wants to alter its compensation program so that it can hand out
smaller bonuses, the motion said.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=21881'>Read
more. (Registration required.)
w:st='on'>
size='3'>Ohio
Station Bankruptcy Petition Dismissed
A federal bankruptcy
judge has granted
size='3'>Cornerstone
w:st='on'>
size='3'>Church
dismiss the bankruptcy case of L&M Video Productions Inc., which
formerly ran
face='Times New Roman' size='3'>Toledo
size='3'>,
size='3'>Ohio
station TV 48, the
size='3'>Toledo Blade reported yesterday. The
ruling by Judge Mary Ann
Whipple cited the low-power TV station's
deteriorating financial condition and L&M's inability to run it
without 'a monthly infusion of funds' from Cornerstone. In her ruling
issued Friday and filed yesterday, Judge Whipple tossed out the chapter
11 petition filed Oct. 30 by LaMaree Miller. He and his wife, Linda, are
majority owners of L&M Video. The Millers began borrowing money
from
face='Times New Roman' size='3'>Cornerstone
size='3'>Church
December 1997 to run the station and have since become embroiled in a
complex battle over ownership of the channel with the Maumee-based
independent church of 6,000.
href='http://toledoblade.com/apps/pbcs.dll/article?AID=/20070403/NEWS10/704030351/-1/NEWS'>Read
more.
SEC Meets to Debate
Accounting Provision
The Securities and
Exchange Commission will meet today to consider easing the most
contentious part of the Sarbanes-Oxley Act, which imposed new duties on
corporate executives and accountants after a series of fraud-ridden
business collapses in 2002, the
size='3'>Washington Post reported today. For
five years, industry groups have complained that the law is too complex
and burdensome, homing in on a provision that requires companies to
assess the strength of their financial controls designed to prevent
fraud and mistakes. In recent months, President Bush, Treasury Secretary
Henry M. Paulson Jr. and members of Congress have called for an overhaul
that would make that provision, known as Section 404, less expensive for
small and mid-size businesses. The SEC's five commissioners are
wrestling with how far to scale back the financial-control rule as
consumer advocates and a few vocal former agency officials are
complaining that regulators are favoring business at the expense of
average investors.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/04/03/AR2007040301774_pf.html'>Read
more .
w:st='on'>
size='3'>U.S.
face='Times New Roman' size='3'> Accuses Part of Tax Chain of
Fraud
The Justice Department
took steps yesterday to shut down a big piece of the Jackson Hewitt
tax-preparation empire, charging that more than 165 of its stores
enabled tens of thousands of middle- and lower-income people to
fraudulently obtain $70 million by falsifying their federal tax returns,
the New York
Times reported today.
size='3'> The agency filed four related
civil lawsuits seeking to halt business at the stores, which are
franchises in
size='3'>Detroit
w:st='on'>
size='3'>Chicago
w:st='on'>
size='3'>Atlanta
area of
face='Times New Roman' size='3'>North
Carolina
lawsuits do not name the corporate headquarters of Jackson Hewitt Tax
Services as a defendant, they raise questions about oversight by the
publicly traded company of one of its largest franchisees. Based
in
size='3'>Parsippany
w:st='on'>
size='3'>N.J.
Hewitt is the nation’s second-largest income tax preparer, after
H&R Block, and promotes itself as a low-cost tax return
service.
href='http://www.nytimes.com/2007/04/04/business/04tax.html?ref=business&pagewanted=print'>Read
more.
w:st='on'>New
Jersey
size='3'> Diverting Billions from Pension
Fund
There are a number of
indications that
face='Times New Roman' size='3'>New
Jersey
billions of dollars from its pension fund for state and local workers
into other government purposes over the last 15 years, using a variety
of unorthodox transactions authorized by the Legislature and by
governors from both political parties, the New
York Times reported today. The state has long
acknowledged that it has been putting less money into the pension fund
than it should. The discrepancies raise questions about how much money
is really in the
face='Times New Roman' size='3'>New
Jersey
industry statistics show to be the ninth largest in the nation’s
public sector, with reported assets of $79 billion. State officials say
the fund is in dire shape, with a serious deficit. It has enough to pay
retirees for several years, but without big contributions, paid for by
cuts elsewhere in the state’s programs, higher taxes or another
source, the fund could soon be caught in a downward spiral that could
devastate the state’s fiscal health. Under its
Constitution,
face='Times New Roman' size='3'>New
Jersey
earned pension benefits.
href='http://www.nytimes.com/2007/04/04/nyregion/04pension.html?pagewanted=print'>Read
href='http://www.nytimes.com/2007/04/04/nyregion/04pension.html?pagewanted=print'>
TROUBLED COMPANIES IN THE
NEWS
1000’s of companies
lose money or experience some form of difficulty each
quarter.
The business news
articles below are taken from the
size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and
Other Business News published by Bastien
Financial Publications.
To begin receiving the COMPLETE
Daily e-Summary, that emails you information on over 70 such companies
each morning, email
face='Times New Roman' color='#0000ff'
size='3'>steve@creditnews.comyour
name, company name, address, phone and fax. We’ll set you up
within 24 hours.
Tax Time Special! Now
through April 15, you can receive an annual subscription to the U.S.
Business Journal¹s weekly summary of troubled
w:st='on'>
size='3'>U.S.
size='3'>companies for only $99! Indicate “ABI CODE 27” in
your email.
size='3'>Accredited Home Lenders Holding Co.
size='3'>has seen Grant Thornton resign as its auditor after it advised
Accredited to “significantly expand” the range of an audit
into its 2006 results.
size='3'>AdStar Inc., a Marine del Rey, Ca.
advertising technology firm, reported a fiscal net loss of $1.4 million,
compared to a $1.1 million loss in the year-earlier period.
Revenue slipped 2%–to $5.1 million.
size='3'>AMS Health Sciences Inc., an
size='3'>Oklahoma City
company that markets weight-management products and personal-care items,
reported a narrowed fiscal net loss of $2.1 million, including an
operating loss of $1.4 million. That’s down from a nearly $3.8
million net loss in the year-earlier period. Sales fell
23%–to $9.7 million.
size='3'>Fremont General Corp.’s
auditor, Grant Thornton, resigned, complaining that Fremont General
failed to provide certain promised information about its finances. Grant
Thornton has also disagreed with certain of
w:st='on'>
size='3'>Fremont
past financial statements. The departure of Grant Thornton leaves in
doubt when Fremont General will be able to file its already late
financial report for 2006. The company, based in
w:st='on'>
size='3'>Santa Monica
has been trying to find a buyer for its subprime mortgage
operations.
size='3'>GTSI Corp., a Chantilly,
size='3'>Va.
computers, software and networking products for government agencies,
reported a fiscal net loss of $3 million, compared to a $13.7 million
loss a year ago. Sales fell nearly 4%–to $850
million.
size='3'>HEI Inc., a Victoria, Mn. maker of
ultrasmall microelectronic components, reported a second quarter net
loss of $1.6 million, a slightly improvement over its loss in the
year-earlier period. Sales fell 10%–to more than $10.5
million.
size='3'>Modtech Holdings Inc., a Perris, Ca.
maker of modular classrooms, reported a fiscal net loss of $54.7
million, more than twice its loss in the year earlier. The recent
results included a debt-extinguishment loss of $3.4 million and an
impairment loss of $33.6 million. Revenue declined 32%–to $156
million.
size='3'>Smith & Wollensky Restaurant Group Inc.
size='3'>, a
face='Times New Roman' size='3'>Manhattan
size='3'>,
size='3'>N.Y.
upscale restaurants, reported a fiscal net loss of $4.2 million. The
loss, which included a $6.6 million asset impairment, compares with a
$3.1 million loss a year ago. Sales fell slightly–to $125
million.