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WorldCom Agrees With Creditors to Exit Bankruptcy
WorldCom Inc. said it reached an accord with creditors allowing it to
emerge from the country's biggest bankruptcy by the end of the year,
Bloomberg News reported. The company, which filed for bankruptcy
protection in July with $30 billion of debt, outlined a reorganization
proposal with the U.S. Bankruptcy Court, spokeswoman Rachel Richards
said. WorldCom will have between $3.5 billion to $4.5 billion in net
debt, according to the new plan. The company filed for chapter 11
protection after initially revealing it hid $3.85 billion in costs,
masking losses, reported the newswire.
Business Groups Lobby To Extend US Credit Reporting Laws
Businesses and trade groups including Fannie Mae, Ford Motor Credit
Co., the U.S. Chamber of Commerce, MBNA, General Electric Co., Household
International and the National Retail Federation have recently launched
the Partnership to Protect Consumer Credit to lobby lawmakers to
permanently extend several provisions of the Fair Credit Reporting Act
(FCRA) that expire on Jan. 1, 2004, Dow Jones reported. The group is
warning of a 'bureaucratic nightmare' if those provisions are allowed to
expire. Renewing the FCRA is one of the financial service industry's
highest priorities this year. 'We would see a fractured credit system
where someone's ability to borrow would depend more upon where they
lived than their actual payment history,' said Joe Rubin, a lobbyist for
the U.S. Chamber of Commerce. 'It would mean credit would be more
expensive, interest rates would have to be higher,' reported the
newswire. To read the full article, point your browser to
href='http://www.wsj.com'>www.wsj.com (subscription required).
KMART
Federal Judge: Bankruptcy Court Erred On Kmart Payments
A U.S. federal judge has overturned a bankruptcy court's decision
allowing Kmart Corp. to make some $300 million in payments to key
creditors it owed before it filed for protection from its creditors, the
Associated Press reported. 'It is clear that however useful and
practical these payments may appear to bankruptcy courts, they simply
are not authorized by the bankruptcy code,' U.S. District Judge John F.
Grady said. Kmart issued a statement saying that Grady's decision would
have no 'material effect' on court approval of the company's
reorganization plan. The retailing giant is hoping for approval of its
plan next week, reported the newswire.
Kmart Asks Court To Force Former Executive To Show
Documents
Kmart Corp. is asking a bankruptcy court to force a former executive to
produce documents relating to an investigation of the events leading up
to the company's chapter 11 bankruptcy filing in January 2002, Dow Jones
reported. The company wants the court to compel David Rots, a former
executive vice president and chief administrative officer, to produce
documents requested under an October 2002 subpoena, including his
testimony before the Securities and Exchange Commission. Rots has
refused to respond to the subpoena, arguing disclosure of the
information would violate his Fifth Amendment right against
self-incrimination, reported the newswire.
Altria's Philip Morris Division To Resume Appeal-Bond Talks
Attorneys for Philip Morris USA are expected to resume talks today with
an Illinois state-court judge about a $12 billion appeal bond the
cigarette maker was asked to post after losing a major class-action
case, Dow Jones reported. After a brief public hearing on Friday,
attorneys for the Altria Group Inc. unit continued arguments before
Madison County Circuit Court Judge Nicholas Byron behind closed doors.
Attorneys for Illinois smokers who earlier were awarded $10.1 billion in
a judgment against Philip Morris argued that the appeal bond is
necessary to protect their interest in collecting the damages from
Philip Morris. Judge Byron said the two sides had 'made progress,'
reported the newswire.
AMR's Union Leaders Favor Pay Cuts at American Airlines
Union leaders urged workers at AMR Corp.'s American Airlines to approve
deep cuts in their own pay and benefits to avoid a company bankruptcy
filing, arguing that a court-supervised restructuring of the world's
largest airline would be far more painful to employees, the Wall
Street Journal reported. American said if tentative agreements to
shed $1.8 billion in annual labor costs aren't ratified by noon on
Tuesday, the airline would seek protection from its creditors in federal
bankruptcy court, and begin the process of canceling existing labor
contracts and imposing new terms on workers, reported the online
newspaper.
Hana Bank Petitions Court To Block New Foreign Bids
Hana bank, one of SK Global Co.'s biggest creditors, said on Friday that
it has petitioned a U.S. bankruptcy court to prevent more foreign
creditors from trying to seize the assets of SK Global, a South Korean
trading company hit by a 1.55-trillion-won ($1.26 billion) accounting
scandal, Dow Jones reported. The move is viewed as a defensive step to
shield SK Global from foreign creditors, who apparently are less willing
than their South Korean counterparts to wait for the company to come up
with a restructuring plan. Hana Bank said the petition, in U.S.
Bankruptcy Court for the Southern District of New York, asked that the
court 'take into consideration that domestic creditors are currently
conducting due diligence on SK Global and will come up with a
restructuring plan,' reported the newswire.
United Nears Goal to Cut Costs in New Labor Pacts
United Airlines' parent UAL Corp. moved closer to its goal of cutting
labor costs by about a third as its pilots ratified a contract and the
union representing the carrier's mechanics reached a tentative agreement
on a concessionary pact, the Wall Street Journal reported. UAL
has been pressing its unions for savings totaling $2.56 billion a year,
or 36 percent of overall labor expenses. The company had asked the court
for permission to void existing labor contracts if voluntary concessions
weren't achieved. The mechanics, represented by the International
Association of Machinists union, were the last unionized group to
tentatively agree to new terms, which will be voted on by union members
on April 29, reported the Journal.
Vanguard Sues Citigroup Over Enron-Bond Deals
Mutual-fund company Vanguard Group filed a lawsuit in Pennsylvania state
court against Citigroup Inc., claiming the bank sold it $70 million in
Enron Corp. bonds even though Citigroup should have known of the Houston
energy trader's financial troubles, the Wall Street Journal
reported. The suit centers on a series of transactions in which
Citigroup raised money from investors like Vanguard but arranged that
financing in a way that kept it from appearing on Enron's books as debt.
Dan Noonan, a spokesman for Citigroup, said the bank believes the
Vanguard suit 'is without merit,' signaling the bank's intention to
fight in court. The Vanguard suit is the latest in a number of civil
cases that target Wall Street firms for their role in financing Enron
and other high-profile corporate scandals that surfaced over the past
year, reported the Journal.
U.S. Bankruptcy Court OKs EBSCO's Purchase Of RoweCom USA
Ebsco Industries Inc. confirmed that U.S. Bankruptcy Court on Monday
approved its purchase of Divine Inc.'s RoweCom Inc., Dow Jones reported.
In a press release on Friday, Ebsco said the deal is dependent on the
successful closing of its purchase of RoweCom's European operations and
verification of publisher support representing at least 50 percent of
the aggregate monetary amount prepaid to RoweCom by customers, which was
not subsequently forwarded to publishers. The information management and
services company said it expects both items to be finalized in the next
few weeks, reported the newswire.
Firms Oppose WorldCom Extension To File Asset Schedules
A subsidiary of BellSouth Corp. objected on Friday to WorldCom Inc.'s
request for an extension on filing its schedules of assets, according to
court papers obtained by Dow Jones Newswires. BellSouth
Telecommunications Inc. said in its objection that because WorldCom said
it intends to file a reorganization plan on Tuesday, it would be
impossible for creditors to adequately review the plan, evaluate their
options and participate in meaningful discussions of the plan's terms.
Verizon Communications Inc. and Qwest Corp. also objected on Friday to
WorldCom's request for an extension through May 31, and they
incorporated BellSouth's argument, reported the newswire.
Dress Barn Gets Unfavorable Jury Ruling
A Connecticut jury ruled that Dress Barn Inc. should pay $30 million in
compensatory damages to plaintiffs that sued the company over a failed
asset purchase transaction, Dow Jones reported. In a filing on Friday
with the Securities and Exchange
Commission, the women's apparel retailer said it intends to vigorously
pursue an appeal of the jury's decision, which was issued on Thursday.
The judge will determine punitive damages, if any, Dress Barn said in
the filing. In a lawsuit filed in May 2000, Beford Fair Industries Ltd.
and Alan Glazer accused Dress Barn of unfair trade practices and breach
of contract. Before Bedford filed for chapter 11 bankruptcy protection,
Dress Barn had been in negotiations regarding a possible acquisition of
Bedford's business, but the transaction never occurred, reported the
newswire.
Union Authorizes National Steel Strike If AK Steel Bid Okayed
National Steel Corp.'s union workers threatened to strike if AK Steel
Holding Corp.'s plan to buy the bankrupt company and terminate labor
agreements is approved, Dow Jones reported. In a press release on
Friday, the United Steelworkers of America said there will be 'severe
consequences' for National Steel's lenders and creditors if the
company's management approves AK Steel's plan. AK Steel, with its offer
of $1.13 billion, was approved by National Steel's bankruptcy court as
the lead bidder for the company. On Friday, however, competing bidder
U.S. Steel Corp. raised its offer for National Steel to $975 million,
reported the newswire.
Carmike Cinemas CEO To Get $15 Million In Stock Over 3 Years
Carmike Cinemas Inc. has agreed to grant 780,000 of its common shares,
valued at $15.3 million at Dec. 31, 2002, to Chairman, President and
Chief Executive Michael W. Patrick over a three-year period beginning in
2005, Dow Jones reported. The stock award is part of Patrick's
employment contract signed after the company's reorganization and
emergence from chapter 11 bankruptcy protection last year, according to
a proxy statement filed on Friday with the Securities and Exchange
Commission, reported the newswire.
Encompass Services Disclosure Statement Gets Court OK
The bankruptcy court overseeing the Encompass Services Corp. case
approved the disclosure statement to the company's first amended chapter
11 reorganization plan, an attorney representing the company's unsecured
creditors committee said on Friday, Dow Jones reported. Hugh M. Ray told
Dow Jones Newswires that Judge William R. Greendyke of the U.S.
Bankruptcy Court in Houston approved the disclosure statement at a
hearing on Wednesday. A hearing to consider confirmation is to be
scheduled when Greendyke signs the order, reported the newswire.
US House Lawmakers Introduce Pension Fix, 401(k) Boost
A bipartisan group of House lawmakers introduced a bill on Friday that
would boost the amount of money people can put annually into retirement
accounts such as 401(k)s and IRAs, Dow Jones reported. The measure would
also provide a new formula to determine the interest rate companies must
use when calculating pension benefits. The bill, sponsored by Reps. Rob
Portman (R-Ohio) and Ben Cardin (D-Md.) essentially accelerates planned
retirement contribution limit increases enacted as part of a 2001 tax
bill and makes the changes permanent. They are currently set to expire
in 2010, reported the newswire. Among other things, the legislation also
aims to address corporate abuses by imposing an excise tax on excessive
contributions made to senior executives in the period prior to
bankruptcy.
Conseco, Trump Arbitration On Skyscraper Begins Next Week
A second round of arbitration proceedings between Conseco Inc. and
Donald Trump regarding the ownership of the GM Building in New York will
begin next week, attorneys involved with the proceedings said on Friday,
Dow Jones reported. The two sides on Friday were ironing out who will
make up the three-person panel overseeing the arbitration, which will
likely take place in New York. Conseco and Trump late last week were
ordered to restart arbitration proceedings by Judge Carol A. Doyle of
the U.S Bankruptcy Court for the Northern District of Illinois. The
first round of arbitration collapsed with both sides dishing out blame.
Judge Doyle has set up weekly status checks with attorneys for Conseco
and Trump to be sure that the 45-day second round is progressing,
reported the newswire.
Aquila Receives $630 Million in Loans Through CSFB
Aquila Inc.said it received two loans totaling $630 million after
agreeing to pledge power plants as collateral, Bloomberg News reported.
Aquila obtained a three-year, $430 million loan, with an interest rate
of 8.75 percent and backed by regulated and unregulated power plants,
the company said in a statement. A one-year, $200 million loan, at 7
percent, was extended to the company's UtiliCorp Australia Inc. unit,
the statement said. Aquila said it pledged its interest in Australian
utilities, including United Energy Ltd., and its portfolio of
unregulated U.S. power plants as collateral for the one-year loan,
reported the newswire.
Senate Judiciary Panel Approves Class Action Reform Bill
The Senate Judiciary Committee approved an amended version of a
controversial class action bill on Friday, rejecting Democratic attempts
to carve out exceptions for lawsuits filed against tobacco companies,
gun manufacturers and many other types of litigation,
CongressDaily reported. The bipartisan bill, approved on a 12-7
vote, would enable defendants to move many class action suits filed in
state court into federal court.
making national law, and this amendment is meant to address that issue,'
Feinstein said, reported the newswire.
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