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October
2, 2007
name='1'>September Consumer
Bankruptcy Filings Increase 23 Percent over Previous Year
w:st='on'>
face='Times New Roman'
size='3'>U.S.
size='3'>consumer bankruptcy filings increased nearly 23 percent
nationwide in September
from the previous year, according to
w:st='on'>ABI
according to data from the
National Bankruptcy Research Center (NBKRC), the overall September
consumer filing total of
68,926 represented a 7.6 percent decrease from the 74,607 filings in
August. Chapter 13
filings constituted 40 percent of all consumer cases in September, a
slight increase over
href='http://www.abiworld.org/AM/Template.cfm?Section=Monthly_Bankruptcy_Statistics&Temp
late=/MembersOnly.cfm&NavMenuID=3716&ContentID=46994&DirectListComboInd=D'>Click
here to view the September consumer filing
charts.
name='2'>Senate Finance Committee
Examining Hedge Funds’ Use of Offshore Tax Shelters
The U.S. Senate Finance
Committee is
reviewing whether to change the nation's tax rules to prevent offshore
hedge funds from
sidestepping withholding taxes on
w:st='on'>
w:st='on'>
size='3'>U.S.
stock dividends by using derivatives, the
face='Times New
Roman' size='3'>Wall Street Journal reported
today. The evaluation
is at an early stage and is part of a multipronged examination of
taxation of hedge funds by
the committee. The U.S. Treasury loses more than $1 billion in potential
tax revenue each
year through this practice, accountants and others in the industry
estimate. 'The Finance
Committee wants to make sure the tax code is appropriately structured
and fair, and entities
are meeting their legal obligation,' says an aide to Senate Finance
Committee Chairman Max
Baucus (D.-Mont.). Federal tax authorities have sought information about
these dividend
tax-related derivative trades from Citigroup Inc. and Lehman Brothers
Holdings Inc. and
other Wall Street securities firms are bracing for questions.
href='http://online.wsj.com/article/SB119119460025744215.html?mod=us_business_whats_news'>Re
ad more. (Registration required.)
name='3'>Overdraft
Legislation
face='Times New Roman'
size='3'>Sparks Last-Minute
Lobbying
Effort
Credit unions and banks
are making a
last-minute push to alter legislation to require them to provide a
warning to ATM customers
when they are about to make an overdraft, though the lead sponsor of the
measure contends
that no major revisions will be made,
size='3'>CongressDaily reported yesterday. The
lobbying groups
argue that the bill sponsored by House Financial Services Financial
Institutions
Subcommittee Chairwoman Carolyn Maloney (D-N.Y) would be costly and
time-consuming to
implement. Besides the ATM warning, the Maloney bill would require
institutions to allow
their customers to opt into overdraft protection programs, rather than
being signed up
without notification, and that they provide customers with a full,
written disclosure of
their overdraft policies. The bill was slated to be marked up last week
but was delayed.
Financial Services Chairman Frank said at the time that he wanted to
bring it up again
within weeks. Banking groups are using the delay to signal their
displeasure with
provisions.
Issued to Protect
Military from Predatory Loans
The Pentagon implemented
rules yesterday to
protect
face='Times New
Roman' size='3'>U.S.
size='3'>service members
and their families from high-cost, short-term loans, saying stress from
such loans can hurt
military readiness,
size='3'>CongressDaily
reported yesterday. The regulation, prompted by a law
passed by Congress last
year, limits the fees and interest that creditors can charge on payday,
vehicle title and
tax refund anticipation loans. Those kinds of loans have high interest
rates and short
payback terms. The Defense Department said that payday and vehicle title
loans often led to
a cycle of ever-increasing debt, and refund anticipation loans came at a
high cost to the
borrower. 'The financial stress service members and their families
suffer in turn causes a
decline in military readiness,' it said in a statement.
size='3'>
name='5'>Creditors Object to
'Insider' Mortgage Lenders Network
w:st='on'>Sale
Mortgage Lenders Network
USA Inc. creditors
are questioning the fairness of a sale of eight foreclosed properties to
an investment group
that includes two former executives of the bankrupt subprime
lender,
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size='3'>Bankruptcy
Law360 reported yesterday. Mortgage
Lenders’ unsecured
creditors’ committee for filed an objection in the U.S. Bankruptcy
Court for the
District of Delaware on Friday to the proposed sale of the REO
properties to Wahoo
Investments LLC for $840,000. Wahoo's members include Mitchell L.
Heffernan and James E.
Pedrick, who were principals of Mortgage Lenders and
w:st='on'>
size='3'>Virgin
face='Times New Roman'
size='3'>Island's
affiliate Emax Financial
Group LLC, the mortgage banker that conducted the bidding for the
properties. The committee,
which includes Merrill Lynch Mortgage Lending Inc., Lehman Bros. Bank
FSB and Wachovia Bank
NA, said that it would attempt to resolve the objection
“consensually” but
wanted to reserve its rights to prosecute its objection and seek
appropriate relief.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=36270'>Read
more.
(Registration required.)
Appeal of Adelphia Deals
The U.S. Supreme Court
said yesterday that it
will not review an order handed down during the bankruptcy of Adelphia
Communications Corp.,
which several of the company's creditors, including the unsecured
creditors’
committee, had appealed,
size='3'>Bankruptcy
Law360 reported yesterday. The creditors had
appealed the
bankruptcy court's decision in 2005 to approve four related settlements
between the bankrupt
company, creditors and government regulatory agencies, saying that it
had acted outside of
its discretion, first to a New York District Court and then to the
Second Circuit. The U.S.
Court of Appeals for the Second Circuit ruled last December that the
creditors had waited
too long to appeal the decision, since they had not asked for a stay and
the parties to the
settlements had already begun executing them. The high court announced
its decision not to
grant writ of
certiorari
size='3'>to the appeal in the first order of its new term.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=36376'>Read
more. (Registration required.)
Autos
name='7'>Federal-Mogul
Settlement Unravels
A settlement aimed at wrapping
up the six-year
bankruptcy reorganization of Federal-Mogul Corp. has fallen apart,
dealing a blow to the
company's effort to exit chapter 11 protection by year's end, the
Associated Press reported
yesterday. The company's pact with PepsiAmericas Inc. unraveled late
last week after The
Hartford Financial Services Group, one of six insurance companies
involved in the
settlement, said that it wouldn't go along. The settlement would have
ended the objections
by Minneapolis-based PepsiAmericas -- the world's largest bottler of
Pepsi drinks -- to
Federal-Mogul's chapter 11 plan. It argued that the parts maker's
reorganization jeopardized
PepsiAmericas' insurance coverage, and so insisted that its insurance
companies agree to the
settlement. Unless Federal-Mogul wins final court approval for its
chapter 11 plan by Dec.
31, it will have to renegotiate terms of its $3.5 billion exit-financing
deal, in a market
in which tight credit has pushed up the price of corporate
borrowing.
href='http://biz.yahoo.com/ap/071001/federal_mogul_bankruptcy.html?.v=1'>Read
more.
name='8'>UAW Faces Resistance
to Deals at Ford, Chrysler
Union negotiators
representing workers at
Chrysler have signaled reluctance to tacitly approve an agreement that
mirrors the tentative
deal forged with General Motors Corp. last week, the
face='Times New Roman'
size='3'>Wall Street Journal reported today.
At the same time,
management officials at Ford and Chrysler have their own issues with
such an agreement. The
problems don't necessarily imperil the prospects of reaching similar
deals to the one
reached last week with GM, which agreed to a wage and benefits
restructuring as well as a
commitment to invest in the
w:st='on'>
face='Times New Roman'
size='3'>U.S.
size='3'>However, sticking to the union's long-held tradition of having
a deal with one set
the pattern for the other two -- a system known as pattern bargaining --
could be a
difficult balancing act for UAW president Ron Gettelfinger given the
various states of
restructuring among Detroit's auto makers.
href='http://online.wsj.com/article/SB119127641947345582.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
name='9'>Dura Amends
Reorganization Plan
Dura Automotive Systems
Inc. has filed an
amended disclosure statement and an amended reorganization plan in its
chapter 11 bankruptcy
proceedings in order to account for its creditors' committee's newfound
support,
Bankruptcy Law360
size='3'>reported yesterday. Under the terms of Dura's proposed plan,
creditors will be
entitled to a full cash payout of debtor-in-possession claims,
administrative expenses,
priority claims and second-lien secured claims. The proposed plan will
also provide for the
conversion of senior notes and general unsecured claims of more than
$75,000 into between
57.4 to 60.7 percent of common stock in the reorganized company, and
cash payment in lieu of
an equity distribution of all trade claims and general unsecured claims
of $75,000 or less.
There will be no recoveries for subordinated notes’ and
convertible preferred
securities’ claims, nor will the company’s common stock
holders receive any
recoveries under the proposed plan.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=36328'>Read
more.
(Registration required.)
face='Times New Roman'
size='3'>
name='10'>Delphi
size='3'> Quietly Filing Law
Suits
Delphi Corp. has filed
hundreds of lawsuits
against suppliers and other business contacts, but is keeping the
lawsuits secret 'to avoid
unnecessarily alarming' those being sued, the Associated Press reported
yesterday. Starting
Friday afternoon and through the weekend, the restructuring auto-parts
supplier filed more
than 700 lawsuits against unnamed parties in the U.S. Bankruptcy Court
in
w:st='on'>
size='3'>Manhattan. The
suits target up to $5.5
billion in potentially questionable payments that went out of the Troy,
Mich.-based company
in the six years before it filed for chapter 11 protection in October
2005.
size='3'>Delphi
size='3'>says it has 'no intention' of pushing forward with the lawsuits
as long as it gets
out of bankruptcy, as planned, by way of reorganization. If something
goes wrong with the
reorganization, however, the secret lawsuits will be served on the
unsuspecting defendants
and the litigation will begin, the company says.
href='http://biz.yahoo.com/ap/071001/delphi_bankruptcy.html?.v=1'>Read
more.
name='11'>Judge Reverses $457
Million Ruling against Forestry Giant
A federal judge in
w:st='on'>
size='3'>Atlanta has
reversed a $457 million judgment against one of the world's largest
forest product
companies, saying that the
w:st='on'>
face='Times New Roman'
size='3'>Georgia
size='3'>bankruptcy judge who ruled against the Weyerhaeuser Co. liable
was wrong,
the Fulton County Daily
Report
reported today. In an order released Sept. 26, U.S.
District Judge Julie E.
Carnes said that Bankruptcy Judge Margaret H. Murphy had erred in
embracing a
characterization of Weyerhaeuser as a 'bad actor' in the case, which
sprang from the 1998
bankruptcy of Norcross, Ga.-based Paragon Trade Brands Inc. Paragon,
which manufactured
generic brand disposable diapers, was established as a division of
Weyerhaeuser. In 1993,
Weyerhaeuser took Paragon public, making more than $200 million from the
initial public
offering of Paragon stock. But five years later, after losing two patent
infringement suits
associated with its line of baby diapers, Paragon filed for bankruptcy.
It then sued
Weyerhaeuser, claiming that Weyerhaeuser executives had saddled Paragon
with diaper patents
that infringed patents registered by Kimberly-Clark Corp. (which makes
Huggies) and Procter
& Gamble (which makes Pampers.) Murphy had granted Paragon summary
judgment and ordered
Weyerhaeuser to pay $457 million in damages, plus $3 million in legal
fees.
href='http://biz.yahoo.com/law/071002/86ad1cb047993202fbdff5ba66fa045c.html?.v=1'>Read
more.
name='12'>Oasys Mobile Wins
Approval for Bankruptcy Plan
Bankruptcy Judge
w:st='on'>
size='3'>Chris
face='Times New
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Roman' size='3'>topher S.
Sontchi
size='3'>approved the reorganization plan of Oasys Mobile Inc., paving
the way for the
developer of games and ringtones for cell phones to exit chapter 11 in
the hands of its
senior lenders, the Associated Press reported yesterday.
Under the plan, Oasys senior lenders RHP Master Fund
Ltd. and LAP Summus
Holdings LLC will still take over the reorganized company in exchange
for their claims of
over $8.84 million. The company's unsecured creditors and its preferred
shareholders,
however, will divvy up a maximum of $2 million. The exact amount depends
on whether Oasys
reaches specified financial targets. The lenders, who have been
financing Oasys' chapter 11
case, have agreed to supply a $5 million loan to fund the company's
emergence from
href='http://biz.yahoo.com/ap/071001/oasys_mobile_bankruptcy.html?.v=1'>Read
more.
name='13'>Perella to Buy the
Hedge Fund Xerion
Perella Weinberg
Partners, the boutique
investment bank, announced yesterday that it had acquired Xerion Capital
Partners, a hedge
fund focusing on investments in distressed credit and other special
situations, for an
undisclosed amount, the
size='3'>New York
Times reported today. The move comes as Wall
Street banks prepare
for the aftermath of the credit market turmoil, one that is expected to
bring a rise in
defaults and bankruptcies. The
Xerion acquisition is a fifth tent pole in Perella Weinberg’s
asset-management
strategy. Xerion was founded in late 2002 by Daniel J. Arbess, a former
partner at the law
firm White & Case, and began with investments in the bonds of
companies that had entered
or were about to enter bankruptcy. It has invested in companies
like
w:st='on'>
size='3'>Oneida, the
flatware maker.
href='http://www.nytimes.com/2007/10/02/business/02deal.html?ref=business&pagewanted=pri
nt'>Read more.
name='14'>Write-Downs by Big
Banks Spark Stock Rally
Investors took the
disclosures of Wall
Street’s banking giants yesterday as a sign that the worst may be
over for the banks
and that any losses related to the credit crisis may be contained,
the
face='Times New
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Roman' size='3'>New York
Times
size='3'>reported today. The country’s biggest bank, Citigroup,
will write off $5.9
billion in the third quarter, causing its profit to drop 60 percent from
a year
earlier.
size='3'>Europe’s biggest bank,
UBS, said it had
written down $3.4 billion in the value of mortgage-backed securities and
would suffer a loss
in the quarter. Other banks, including Merrill Lynch and Bank of
America, have issued
similar warnings. Analysts cautioned, however, that serious problems
remained in the housing
market and questioned whether consumer spending could continue to carry
the broader
href='http://www.nytimes.com/2007/10/02/business/02citi.html?_r=1&oref=slogin&ref=bu
siness&pagewanted=print'>Read more.
name='15'>TROUBLED COMPANIES IN
THE NEWS
The business news
articles below are taken
from the U.S. Business Journal’s Daily Summary of Troubled &
Fast Growing U.S.
Companies which is published by Bastien Financial Publications.
size='3'>ABI
size='3'> Members receive a 50% discount off of our regular
subscription rate of $500
when subscribing to the complete Daily Summary.
To subscribe email steve@creditnews.com
title='mailto:steve@creditnews.com'
href='mailto:steve@creditnews.com'>
color='#0000ff'
size='3'><mailto:steve@creditnews.com>or call
800-407-9044—use
size='3'>ABI
Code 37
size='3'>Advanced Photonix
Inc., an
face='Times New Roman'
size='3'>Ann Arbor, Mi. manufacturer of
optoelectronic
semiconductor parts, will shutter an assembly facility in
w:st='on'>
size='3'>Dodgeville,
w:st='on'>
face='Times New Roman' size='3'>Wi
size='3'>. and lay
off more than thirty employees by 12/31. The Dodgeville production
will be moved to
another location in
w:st='on'>Camarillo
face='Times
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3;&amp;amp;#10;&amp;amp;#13;&amp;amp;#10;&amp;amp;#13;&a
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#13;&amp;#10;Roman'>, Ca. to improve efficiency.
Advanced will take a
one-time charge of $520,000 in the second quarter related to the
closure.
Concord Camera
Corp.
size='3'>, a
face='Times New Roman'
size='3'>Hollywood, Fl. camera manufacturer,
reported a fourth
quarter net loss of $3.2 million, on a 33% revenue decline–to $22
million. For
the year, the firm reported a net loss of $11.7 million on a 37% revenue
decline–to
$86.7 million.
Electronics for Imaging
Inc.
anticipates taking a noncash charge of $150 million
related to misdated stock
options. The
face='Times New
Roman' size='3'>Foster City
face='Times New
Roman'>, Ca. firm is working on a restatement to update
its filings with the
Securities and Exchange Commission.
Ferrellgas Partners
LP
size='3'>, an
face='Times New Roman'
size='3'>Overland Park
face='Times New
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propane seller, reported
a fourth quarter net loss of $38.2 million, on a slight revenue
decline–to $329.1
million. For the year, the firm reported its net increased
39%–to $34.5 million,
on a 5% revenue increase–to more than $1.9 billion. The
results included charges
of $2.9 million and $11.2 million related to the disposal of assets for
the quarter and the
year respectively.
Idenix Pharmaceutical
Inc.
size='3'>,
face='Times New Roman'
size='3'>Cambridge, Ma., announced that it will
reduce its payroll
by about 100 workers (a third of workforce) in a realignment. The
restructuring, following
setbacks for one of its clinical treatments, will hopefully save the
company at least $40
million a year and cut its cash-burn rate in half. Idenix’s
remaining employees will
focus on treatments for hepatitis C and HIV.
Intervoice
Inc.
size='3'>reported its second quarter net income declined to $1.4
million, down from $1.6
million for the same period one year earlier. Revenue declined to $48.7
million, compared to
$50.5 million a year ago. The Dallas, Tx. manufacturer of
call-automation systems added that
it purchased 400,000 shares of common stock for $3.2 million during the
quarter.