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January 7, 2009
name='1'>Democrats Reintroduce Legislation to Change Bankruptcy
Law
Democratic lawmakers yesterday reintroduced legislation to change
bankruptcy laws to allow homeowners to shrink their mortgage debts on
primary residences, Dow Jones Newswires reported. Sen. Dick Durbin
(D-Ill.), the second-ranking Senate Democrat, first introduced the
legislation in 2007 as a way to combat the foreclosure crisis. The
measure languished amid a heavy campaign from the banking lobby, which
continues to argue that the change would increase mortgage rates for
homeowners across the board. In a widely expected move, Durbin and House
Judiciary Committee Chairman John Conyers (D-Mich.) introduced companion
bills in hope of attaching the legislation to President-elect Barack
Obama's economic-stimulus plan.
href='http://www.nasdaq.com/aspxcontent/NewsStory.aspx?cpath=20090107/ACQDJON200901070750DOWJONESDJONLINE000530.htm&&mypage=newsheadlines&title=US%20Democrats%20Reintroduce%20Legislation%20To%20Change%20Bankruptcy%20Law'>Read
more.
(Text of S. 3 and H.R. 200 forthcoming.)
name='2'>Goody's to Liquidate Months after Chapter 11
Emergence
Less than three months after emerging from chapter 11, clothing retailer
Goody's Family Clothing Inc. has become the first major retail casualty
of 2009 as it plans to liquidate its remaining assets, Bankruptcy
Law360 reported yesterday. CEO Paul White blamed the overwhelming
financial strain and a difficult economic environment for retailers for
a failure to obtain additional financing. The Knoxville, Tenn.-based
retailer, founded in 1953, sells family apparel at more than 280 stores
primarily throughout the Southeast United States. The company has about
9,800 employees. On Oct. 20, Goody's announced that its reorganization
plan had gone into effect, allowing the company to come out of chapter
11 protection.
href='http://bankruptcy.law360.com/articles/81891'>Read
more. (Subscription required.)
name='3'>Frontier Airlines, Pilots Reach Labor Agreement
/>
The pilots union for Frontier Airlines on Monday voted to accept a
long-term labor agreement with the bankrupt carrier, moving the company
closer to emerging from chapter 11, Bankruptcy Law360 reported
yesterday. An estimated 85 percent of the Frontier Airline Pilots
Association opted to approve the deal, which will set forth wage and
benefit concessions through December 2011. The Frontier Airline Pilots
Association union represents most of the 710 pilots at the Denver-based
airline, which filed for bankruptcy in April 2008.
href='http://bankruptcy.law360.com/articles/81890'>Read more.
(Subscription required.)
name='4'>Struggling Retailers Press Struggling Landlords on
Rent
Having just struggled through one of the worst holiday shopping seasons
in recent memory, retailers are now trying to share the pain with their
landlords, the Wall Street Journal reported today. Many stores
are pushing to negotiate lower rents, warning that they might not be
able to make it unless their costs are cut. Those in stronger positions
are finding that the market's turmoil has provided them clout to haggle
for lower lease rates. Office-supply chain Office Depot Inc. confirmed
that last month it hired Gordon Brothers Group's DJM Realty division to
help it close 112 of its 1,275 North American stores and haggle with
landlords for concessions on others. Women's apparel retailer Chico's
FAS Inc. has hired consultants to help it renegotiate, renew or end 340
of its leases coming due through 2011, according to the company. The Gap
apparel chain also wants to cut its 40 million-square-foot portfolio by
10-15 percent, mostly by reducing the size of its stores and,
subsequently, the rent they pay.
href='http://online.wsj.com/article/SB123129342324759689.html'>Read
more. (Subscription required.)
name='5'>General Growth Settles Suit for $48 Million
Cash-strapped mall developer General Growth Properties Inc. said that it
reached a $48 million settlement in a lawsuit against it regarding
alleged unfair business practices, the Wall Street Journal
reported today. The size of the settlement is considerably smaller than
the amount originally awarded in court more than a year ago. General
Growth, the second-largest mall owner in the U.S. by number of
properties, is struggling with a crushing load of debt. The
Chicago-based company is trying to reach a deal with lenders to
restructure or postpone payment on $27 billion in debt as large amounts
are due in the coming months. The company has warned that a bankruptcy
filing is possible if deals can't be reached.
href='http://online.wsj.com/article/SB123125074535257153.html'>Read
more. (Subscription required.)
name='6'>U.S. Service Sector, Factory Orders Decline
The service sector contracted in December for the third consecutive
month, while orders at factories fell the previous month on weakening
consumer demand, according to data released yesterday that highlighted
the persistent weakness in the U.S. economy, the Washington
Post reported today. The Institute for Supply Management said
yesterday that the service sector continued to shrink last month,
although at a slower pace than it had in November. Every industry in the
sector contracted, with the exception of retail. Customers, by and
large, did not flock to after-holiday sales as retailers had hoped.
Sales at stores open at least a year fell 0.8 percent in the seven days
through Saturday compared with the corresponding week in 2007, according
to the International Council of Shopping Centers and Goldman Sachs
Group.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/01/06/AR2009010601074_pf.html'>Read
more.
name='7'>Lyondell's U.S. Unit Files for Chapter 11
Dutch chemical maker LyondellBasell Industries sought chapter 11
protection yesterday for its U.S. operations and one of its European
holding companies amid a heavy debt load and plunging sales, the
Wall Street Journal reported today. LyondellBasell is owned by
New York-based industrial group Access Industries, but the filing in the
Southern District of New York in Manhattan applies to Lyondell Chemical
Co., its U.S. arm. The court filing lists assets of $27.1 billion and
liabilities of $19.3 billion. Basell Germany Holdings GmbH is the
European concern included in the U.S. filing.
href='http://online.wsj.com/article/SB123127968554958711.html'>Read
more. (Subscription required.)
name='8'>Rock Theme Park Liquidating Just Nine Months after
Opening
Hard Rock Park, a 140-acre theme park in Myrtle Beach, S.C., opened with
great fanfare last April, but a Delaware bankruptcy judge approved the
company's request to begin liquidating what was billed as the world's
first rock 'n' roll theme park and the single-largest tourism investment
in South Carolina history, the Wall Street Journal reported
today. Hard Rock Park's hard-knock life serves as one of the most
colorful examples of lax corporate lending standards during the decade's
lending boom. Private-equity investors of Hard Rock Park put up about
$75 million and raised another roughly $320 million in debt to fund the
park's development and construction. Since its opening in April 2008,
the park has generated only $20 million in ticket sales, hardly enough
to meet its roughly $24 million in annual interest payments, much less
other operating expenses. The park closed in September.
href='http://online.wsj.com/article/SB123128760224559189.html'>Read
more. (Subscription required.)
name='9'>Obama Warns of Potential Trillion-Dollar Deficits
President-elect Barack Obama yesterday braced Americans for the
unparalleled prospect of “trillion-dollar deficits for years to
come,” a stark assessment of the budgetary outlook that he said
would force his administration to impose tighter fiscal discipline on
the government, the New York Times reported today. Obama sought
to distinguish between the need to run what is likely to be
record-setting deficits for several years and the necessity to begin
bringing them down markedly in subsequent years. Even as he prepares a
stimulus plan that is expected to total nearly $800 billion in new
spending and tax cuts over the next two years, he said that he would
make sure the money was wisely spent, and he pledged to work with
Congress to enact spending controls and efficiency measures throughout
the federal budget.
href='http://www.nytimes.com/2009/01/07/us/politics/07obama.html?_r=1&ref=business&pagewanted=print'>Read
more.
name='10'>Madoff Tried to Stave Off Firm's Crash Before
Arrest
Ten days before his arrest, Bernard Madoff received $250 million from a
man who helped give him his start on Wall Street, a move that shows how
the investment manager tried to raise cash to stave off his firm's
collapse, the Wall Street Journal reported today. Madoff
received $250 million around Dec. 1 from Carl Shapiro, a philanthropist
and entrepreneur. It isn't clear whether the sum was a loan or an
investment, but none of the money was repaid. Shapiro has personally
lost an estimated $400 million from the Madoff fraud, including the $250
million. His charitable foundation has lost an estimated $100 million or
more.
href='http://online.wsj.com/article/SB123129835145559987.html'>Read
more. (Subscription required.)
Skilling's Conviction Upheld,
Resentencing Ordered
A U.S. appeals court upheld ex-Enron Corp. CEO Jeffrey Skilling's fraud
conviction while ordering him resentenced due to a procedural mistake, a
decision experts said is unlikely to significantly change his 24-year
prison sentence, Bloomberg News reported yesterday. A three-judge panel
of the U.S. Court of Appeals in New Orleans yesterday rejected all of
Skilling's arguments to throw out his conspiracy and fraud convictions.
The court granted Skilling a new sentencing hearing, holding that the
trial judge misinterpreted federal guidelines. A Houston jury found
Skilling and former Enron Chairman Kenneth Lay guilty in 2006 of
deceiving investors, analysts and employees about Enron's deteriorating
financial condition through the use of fraudulent accounting and
off-books partnerships that concealed billions of dollars in debt and
losses. Skilling's lawyers said he will appeal.
href='http://www.bloomberg.com/apps/news?pid=20601087&sid=atTC_Llwu6Eg'>Read
more.
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