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March 26, 2010
U.S. Labor Continues Push for Bankruptcy
Reform, Executive Pay Curbs
Labor unions are pushing for greater worker protection and added
scrutiny of executive pay at companies in bankruptcy, but restructuring
professionals fear the changes might force more companies to liquidate
rather than reorganize, Reuters reported yesterday. Congress is
considering a bill backed by unions that proposes to raise the limit on
wage claims in bankruptcy, make it harder to change collective
bargaining agreements, and limit the ability of companies to shed
retiree benefits. The proposals are not new, and the bill, the
'Protecting Employees and Retirees in Business Bankruptcies
Act,' is still pending in committees in both the House and Senate.
However, unions are hoping to give the bill fresh life following the
recession, the outcry against Wall Street pay and the financial hit
suffered by thousands of workers and retirees whose benefits have been
shed in bankruptcy court.
href='http://www.reuters.com/article/idUSN2415131020100325'>Read
more.
Philadelphia Newspapers Lenders Plan Cash
Offer
Secured lenders of Philadelphia Newspapers LLC plan to submit a cash
bid at an upcoming auction for the publisher following an appeals court
ruling that they cannot use pre-bankruptcy claims as tender, a lawyer
for the group said on Wednesday, the Deal Pipeline reported
yesterday. The lenders will also ask the U.S. Court of Appeals for the
Third Circuit to reconsider its March 22 decision that the secured
creditors cannot use nearly $320 million in claims as a bid. The auction
rules have been the subject of protracted litigation. The U.S.
Bankruptcy Court for the Eastern District of Pennsylvania ruled in
October that the banks could submit a credit bid for the publisher of
the Philadelphia Inquirer and Philadelphia Daily News.
The U.S. District Court overturned the decision in November on appeal.
The Third Circuit upheld the District Court. Philadelphia Newspapers has
requested an April 27 auction.
U.S. Plans Big Expansion in Effort to Aid
Homeowners
The Obama administration today will announce broad new initiatives to
help troubled homeowners, potentially refinancing several million of
them into fresh government-backed mortgages with lower payments, the
New York Times reported today. Another element of the new program
is meant to temporarily reduce the payments of borrowers who are
unemployed and seeking a job. Additionally, the government will
encourage lenders to write down the value of loans held by borrowers in
modification programs. The administration?s earlier efforts to stem
foreclosures have largely been directed at borrowers who were
experiencing financial hardship. However, the biggest new initiative,
which is also likely to be the most controversial, will involve the
government, through the Federal Housing Administration, refinancing
loans for borrowers who simply owe more than their houses are worth.
id='n6nb' title='Read more.'
href='http://www.nytimes.com/2010/03/26/business/26housing.html?hp=&pagewante…'>Read
more.
Senator Outlines Objections to Dodd Bill's
$50 Billion Fund for At-risk Firms
Senate Banking Committee Ranking Member Richard Shelby (R-Ala.)
yesterday called for elimination of a proposed $50 billion fund that
would be used by the federal government to help take over at-risk firms,
saying that it is a slush fund that would keep in place a bailout
mentality, CongressDaily reported today. The legislation calls
for a system whereby federal regulators could take over an at-risk firm
with the FDIC acting as a receiver for the company in liquidation,
wiping out shareholders and forcing top management to be replaced. The
fund was pushed for by FDIC Chairwoman Sheila Bair to ensure that the
agency would have enough resources as it ascertains the value of a
firm's assets. Shelby also protested a provision that would give the
Federal Reserve oversight over the top 35 firms with assets of $50
billion or more, complaining that would officially sanction companies as
'too big to fail.'
GM to Make $1 Billion Government Loan
Payment on Wednesday
General Motors Corp. expects to make a $1 billion loan repayment to
the U.S. Treasury on Wednesday as part of its promise to begin giving
back government money ahead of schedule, Dow Jones Daily Bankruptcy
Review reported today. GM promised to pay back at least $1 billion
of its $6.7 billion cash loan each quarter, with the final payment
coming by the end of June. GM's first quarter ends next week. The
company had two years to repay the loan, but Chairman and Chief
Executive Edward E. Whitacre Jr. has made repaying the money a priority
as GM tries to shed the stigma of the federal bailout it received last
year from the U.S. Treasury. Under the deal, the U.S. loaned GM $50
billion. The company is to repay $6.7 billion directly; the rest is
covered in the form of a 60 percent equity stake that the Treasury plans
to start selling off after GM launches an initial public offering.
Lehman, Metavante Ask Court to Approve Swap
Payment Deal
Lehman Brothers Holdings Inc. is seeking bankruptcy-court approval of
a settlement with Metavante Corp. resolving a closely followed dispute
between the investment bank and the financial-technology company over
payments due under an interest-rate swap, Dow Jones Daily Bankruptcy
Review reported today. In papers filed on Wednesday, Lehman said
that Metavante has agreed to drop its appeal of a bankruptcy judge's
decision requiring it to continue making payments to Lehman under the
swap agreement. Under the settlement, the two sides have agreed to defer
payments to each other and instead will net out payments when the swap
matures in less than two years. Metavante is also withdrawing its $5.4
million claim filed against Lehman's bankruptcy estate and another $9
million claim for what it said was the cost to rehedge its interest rate
risk. In return, Metavante has the right to terminate the swap agreement
early, but it will have to pay Lehman an 'early maturity' payment.
Station Casinos to Sell Assets, Restructure
Around Four Casinos
Station Casinos Inc. said yesterday that it has finalized its plan to
exit bankruptcy protection, a deal that will split ownership of a group
of the company's casinos between senior lenders and the founding
Fertitta family, Dow Jones Daily Bankruptcy Review reported
today. The restructuring plan, which requires court approval before it
takes effect, calls for Station Casinos to reorganize around four Las
Vegas casinos while selling its other properties. Senior lenders owed
$2.5 billion would own half of the casino properties with most the
remaining equity to be owned by the Fertittas, according to court
papers. The Fertittas will also manage the casinos. The restructuring
plan comes nearly eight months after Station filed for chapter 11
protection, weighed down by a heavy debt load and a steep downturn in
the casino gaming industry.
Personal Income Drops Across the
Country
The Commerce Department reported yesterday that personal income in 42
states fell in 2009, the Wall Street Journal reported today.
Nevada's 4.8 percent plunge was the steepest, as construction and
tourism industries took a beating. Also hit hard was Wyoming, where
incomes fell 3.9 percent. Nationally, personal income from wages,
dividends, rent, retirement plans and government benefits declined 1.7
percent last year, unadjusted for inflation. One bright spot in the
statistics is that personal income was up in all 50 states in the fourth
quarter compared with the third as the economy rebounded.
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Analysis: General Growth Plan Filing a
Trigger for Rival Bids
A reorganization proposal expected to be filed by bankrupt General
Growth Properties Inc. this week could be the starting gun for rival
suitors to jump into the fray, Reuters reported yesterday. Simon
Property Group Inc., which had initially made a $10 billion takeover
offer for General Growth, is weighing a higher bid. A new offer could
see Simon partnering with Blackstone Group and sovereign wealth funds. A
group of investors including Elliott Management and Paulson & Co is
interested in coming in with an offer to help fund General Growth's exit
from bankruptcy.
href='http://www.reuters.com/article/idUSN2415845020100325'>Read
more.
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