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September 2, 2005
U.S. Dems Urge Easing Bankruptcy for Katrina
Victims
U.S. Democratic lawmakers said yesterday that they would try to
protect Hurricane Katrina victims who may have lost everything from
being penalized by an overhaul of bankruptcy laws that goes into effect
next month, Reuters reported. The ranking Democrat on the House of
Representatives’ Judiciary Committee, Rep. John Conyers (D-Mich.),
and three other House members pledged to introduce legislation shortly
to provide flexibility for victims of natural disasters in bankruptcy
proceedings. Conyers’ aides said that the hurricane, which had
wiped out thousands of homes and businesses, could produce thousands of
new personal bankruptcy filings. They expect Conyers and the others to
introduce legislation to help them as early as next week.
In the Senate, aides to Sen. Russ Feingold (D-Wisc.), said he was
also exploring possible amendments to the new bankruptcy law, such as
postponing the law’s mid-October implementation date. But
Democrats will have to convince Republicans who are in the majority in
both chambers. Aides to House Republicans said the bankruptcy law did
not need amending, because it only cracked down on those who abused the
system to escape payment. Congress held emergency sessions on Thursday
night and Friday to rush a $10.5 billion bill to President George W.
Bush that would help victims of Hurricane Katrina.
BAPCPA May Aggravate Victims’ Woes
Hurricane Katrina is expected to cause a spurt of bankruptcy
filings—and sweeping changes in U.S. bankruptcy laws may leave
them even more strapped than they otherwise might be, Reuters reported
today.
href='http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20050902…'>The
law wasn’t directed at individuals who file because of natural
disasters such as Katrina, in which people lost homes, businesses
and perhaps months of regular paychecks. It wasn’t immediately
clear if the law could be changed to accommodate Katrina victims.
In July, Spending Outpaced Earning
Even before Hurricane Katrina raised the prospect of higher gasoline
and power bills for American households, consumers showed signs this
summer of stretching their finances to new limits, the Wall Street
Journal reported today. In July, they consumed $59 billion more than
they earned, at an annual rate, sending the personal-saving rate into
negative territory for the first time since the weeks after the Sept.
11, 2001, terrorist attacks, according to a Commerce Department report.
href='http://online.wsj.com/article/0,,SB112557684954929011,00.html?mod=rss_w…'>Read
more.
Landmark Diocese Ruling Could Have Wide
Ramifications
By ruling that parish property should be included in the estate of
the bankrupt Spokane diocese, a judge in Washington state did more than
just give a group of sex abuse victims access to a far richer cache of
assets, TheDeal.com reported today. Judge Patricia Williams of
the U.S. Bankruptcy Court for the Eastern District of Washington in
Spokane also laid down an important marker on just what the legal
structure and financial responsibility of the Catholic Church in America
is. As part of an adversary motion for summary judgment filed by a
committee of tort litigants, Williams ruled Friday, Aug. 26, that the
parish property should be included.
href='http://www.law.com/jsp/article.jsp?id=1125527677580&rss=newswire'>Read
the full story.
Futures Point Flat before Jobs Report
U.S. stocks looked set to open nearly unchanged as investors awaited
the government’s monthly employment report, seen as a key gauge of
the economy’s health and a deciding factor in the Federal
Reserve’s interest-rate policy, Reuters reported today.
Uncertainty over the economic repercussions of hurricane Katrina,
followed by indicators suggesting a weakening economy and high oil
prices, has raised expectations among market players that the Fed may
pause its campaign of rate increases.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/09/02/AR20050…'>Read
the full story.
Keystone Emerges from Chapter 11
Keystone Consolidated Industries Inc. announced that it emerged from
chapter 11 bankruptcy proceedings on Aug. 31, PRNewsire reported
yesterday. Keystone previously received confirmation of its revised
reorganization plan from the U.S. Bankruptcy Court for the Eastern
District of Wisconsin in Milwaukee at a confirmation hearing held on
Aug. 10, 2005.
href='http://biz.yahoo.com/prnews/050901/clth541.html?.v=2'>Read
more.
Airlines
Will Katrina Ground Airlines for Good?
Expect more chapter 11 bankruptcies followed by mergers among the
industry’s top players. Topping the list are two familiar names:
Delta Air Lines and Northwest Airlines, the Wall Street Journal
said yesterday.
href='http://www.forbes.com/business/2005/09/01/katrina-airlines-fuel-cz_mt_p…'>Read
more.
Northwest Chapter 11 Clock Ticking
Northwest Airlines Corp. warned that it was running out of time to
avoid a bankruptcy filing because of rising fuel prices, and that it
would lose as much as $400 million this quarter. Company pilots said
that they would negotiate a new round of pay cuts, the Associated Press
reported today. The carrier said in a filing with the SEC that its cash
had fallen to $1.7 billion as of Wednesday, down from $2.1 billion on
June 30. Some of the decrease was due to holdbacks required by the
company that processes its credit card transactions. Northwest said its
third-quarter loss would be $350 million to $400 million, but possibly
worse depending on the financial effect of Hurricane Katrina.
In related news, alarmed by Northwest Airlines’ worsening
financial situation, leaders of the pilots’ union— which
already joined managers last year in agreeing to $300 million in
givebacks—voted yesterday to reopen contract negotiations soon
with the airline, the Wall Street Journal reported today. The Air
Line Pilots Association said it aimed to reach a new agreement that
would include “significant” cost reductions, and Northwest
said it was pleased with the offer.
href='http://online.wsj.com/article/0,,SB112563412803030073,00.html?mod=rss_w…'>Read
more.
Delta Bankruptcy Predicted
Airline stocks continued to slide Thursday amid jet fuel prices that
have risen nearly 20 percent in the last week in the wake of Hurricane
Katrina’s devastation, which prompted at least two major carriers
to raise fares, the Miami Herald reported yesterday. A Standard
& Poor’s analyst, meanwhile, said the added financial pressure
on Delta Air Lines Inc., “may hasten an already likely bankruptcy
filing, which will probably occur within weeks.”
href='http://www.miami.com/mld/miamiherald/business/national/12536214.htm'>Read
more.
In other news, a growing number of early pilot retirements is
threatening to further increase Delta Air Lines’ financial woes,
the Kentucky Post reported. The union representing pilots
at Cincinnati’s dominant airline said that 639 pilots have retired
during the first eight months of 2005, compared with 918 during all last
year. More importantly, early retirements so far this year number 588
compared with 696 all last year.
Government Agrees Not to Prosecute MCI in WorldCom
Fraud
U.S. federal prosecutors said yesterday that they will not prosecute
MCI, the post-bankruptcy version of WorldCom, for the $11 billion fraud
carried out at the telecommunications firm, the Associated Press
reported yesterday. Manhattan U.S. Attorney David Kelley said that MCI
has fired virtually every employee who “played even a tangential
role” in the fraud, which came to light three years ago.
“The public interest has been sufficiently vindicated by the
successful criminal prosecution of the principal criminal
wrongdoers—Bernard Ebbers and Scott Sullivan,”
Kelley’s office said in a statement.
Seafood Co. Files for Chapter 7
Massive product recalls, a two-month shutdown and a lawsuit from the
U.S. government proved to be more than SeaSpecialties could handle, the
Miami Herald reported today. The smoked fish company, which was
founded in Miami in 1954, was forced into chapter 7 bankruptcy
protection by three of its creditors. The three SeaSpecialties fish
suppliers filed a petition on Aug. 23 with the U.S. Bankruptcy Court in
Miami claiming that they are owed a total of $257,937.36. The debts are
for a combination of merchandise sold and bad checks issued by
SeaSpecialties. On Thursday, SeaSpecialties filed a petition in Fort
Lauderdale to convert the case to a chapter 11, which would allow for
the possibility of a reorganization rather than simply a liquidation.
But the company, which had been one of the country’s largest
manufacturers and distributors of smoked fish and seafood, said
yesterday that it is in the process of liquidating its assets.
SeaSpecialties announced that it has reached an agreement to sell its
Barnacle Seafood division in Fort Lauderdale for $3.5 million to
Meriturn Partners, a private equity firm that will purchase the company
along with existing management. The sale of the fresh/frozen seafood
processor and distributor is subject to court approval and consideration
of higher offers.