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April 12, 2007
id='1'>
Judge Orders External Audit for
w:st='on'>San
Diego
size='3'>Archdiocese
A federal bankruptcy
judge Wednesday ordered an external audit of the Roman Catholic Diocese
of San Diego amid accusations church leaders are trying to hide assets
to avoid payment to sex abuse victims, the Associated Press reported
today. Judge Louise
DeCarl Adler had earlier threatened the
diocese with contempt for misrepresenting facts and possibly violating
bankruptcy laws. She criticized church attorneys for failing to include
770 parish accounts in bankruptcy documents. The contempt threat Monday
came six weeks after the diocese sought bankruptcy protection amid
lawsuits by more than 140 people who accuse priests of sexual abuse.
Judge Adler had cited a March 29 letter sent by a diocese parish
organization to pastors urging them to get new taxpayer identification
numbers and transfer funds to new accounts.
href='http://www.nytimes.com/aponline/us/AP-Church-Abuse-Bankruptcy.html?pagewanted=print'>Read
more.
Mortgages
id='2'>
Senators Call for
w:st='on'>
size='3'>U.S.
size='3'>Housing Aid
Amid new signs that the housing
slump is worsening, key Senate Democrats said Wednesday that hundreds of
millions of dollars of new federal aid may be needed to assist
homeowners at risk of foreclosure, Reuters reported yesterday. The call
for federal involvement from New York Democrat Charles Schumer, chairman
of the Joint Economic Committee, came on the same day the National
Association of Realtors forecast that the median price for existing
homes will decline for the first time since 1968 as a sales slump
worsens. ''We will be proposing significant amounts of dollars,''
Schumer said. ''We've heard one heartbreaking story after another of
borrowers with limited incomes being sold mortgages they could not
afford,'' Sen. Sherrod Brown (D-Ohio) said. His words were backed up by
the realty group's prediction of a 0.7 percent decline to $220,300 this
year in the median sale price for existing homes, down from $221,900
last year. Tighter lending standards and the continued fallout from the
troubled market for loans given to people with shaky credit are to
blame, the group said.
href='http://www.nytimes.com/aponline/business/AP-Housing-Woes.html?pagewanted=print'>Read
more.
id='3'>
NovaStar May Put Itself Up for
w:st='on'>
size='3'>Sale
NovaStar Financial, the
struggling subprime lender, said yesterday that it was exploring
strategic alternatives, including a possible sale of the company,
Reuters reported today. The company said it had also obtained a $100
million financing commitment arranged by Wachovia Capital Markets.
NovaStar joins many others up for sale, including Fremont
General’s residential lending unit and H&R Block’s
Option One Mortgage Corp. unit. More than 30 subprime lenders have sold
their businesses or quit the industry in the last year. Several,
including the New Century Financial Corp., have sought bankruptcy
protection.
href='http://www.nytimes.com/2007/04/12/business/12novastar.html?pagewanted=print'>Read
more.
Bankruptcy Court Will Not Impede Arrest of Ex-Mortgage Lenders
Exec
Bankruptcy Judge Peter J.
Walsh ruled Tuesday that a bankruptcy court cannot halt a criminal
prosecution in
face='Times New Roman'
size='3'>Connecticut
the former president of subprime lender Mortgage Lenders Network USA
Inc. for failing to pay $2.5 million owed to its employees,
Bankruptcy Law360
reported yesterday. Judge Walsh’s decision opens
the door for the state attorneys office to charge Mitchell Heffernan on
61 counts of failure to pay wages. Connecticut Attorney General Richard
Blumenthal, whose office fought Heffernan’s attempts to avoid
criminal action, praised the decision. 'I am pleased that the bankruptcy
court rejected this spurious and specious attempt to block state
criminal action,” Blumenthal said. “The court reaffirmed
long-standing precedent and practice that bankruptcy courts cannot stop
criminal proceedings.” The Connecticut Department of Labor applied
for an arrest warrant two weeks ago in Middlesex Superior Court
in
size='3'>Middletown
Heffernan for failing to pay commissions and wages that ranged from
$5,000 to up to $300,000 per count.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22449'>Read
more. (Registration required.)
Court Approves Northwest Purchase of Mesaba
A bankruptcy court has
approved bankrupt carrier Mesaba Airlines’ plan to become a
subsidiary of fellow airline Northwest, paving the way for Mesaba to
emerge from chapter 11 bankruptcy protection by the end of the
month, Bankruptcy
Law360 reported yesterday. Under the all-stock
sale, Mesaba said that creditors will be granted a $145 million
unsecured claim in Northwest's ongoing bankruptcy proceeding in exchange
for Northwest receiving 100 percent of Mesaba's new common
stock. The transaction was made possible
after certain agreements were reached with Northwest, Mesaba and
Mesaba’s parent company MAIR Holdings Inc., according to the
airlines. Under one of the pacts, MAIR intends to pay $35 million to buy
Northwest's 28 percent stake in MAIR. Northwest would in turn assign a
$7.3 million claim it has against Mesaba to MAIR.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22453'>Read
more. (Registration required.)
id='6'>Allied Defends Deal to Finance Acquisition of
Rigs
Allied Holdings Inc. has
fired back at two shareholders that filed an emergency motion opposing a
$15 million financing deal that gave the bankrupt auto hauler approval
to acquire 117 rigs, arguing that the emergency motion is moot,
Bankruptcy Law360
reported yesterday. Allied Holdings and three
incarnations of private-equity firm
w:st='on'>
size='3'>Yucaipa
Transport LLC, which actually purchased the rigs at auction--filed a
joint objection Tuesday in response to the emergency motion Allied
shareholders Sopris Capital Advisors LLC and Aspen Advisors LLC filed on
Friday. Sopris and
size='3'>Aspen
an interim order authorizing Allied to obtain new, secured post-petition
financing from
size='3'>Yucaipa
related equipment pending an appeal.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22452'>Read
more. (Registration required.)
Dana
Ordered to Make $5.2 Million Pension Payment
Dana Corp. has been
ordered to fork over $5.2 million to the company's nonunion workers'
pension plan by April 13,
size='3'>BankruptcyLaw360 reported yesterday.
Bankruptcy Judge Burton
Lifland signed off on an agreement on Tuesday
between Dana and its unions requiring Dana to make the payment to the
defined benefit program covering certain employees. The order also
stipulates that Dana make a separate pension payment of $487,000
stemming from the February sale of its engine parts business to
size='3'>Germany
size='3'>'s Mahle GmbH for $157 million. The news comes only a week
after Judge Lifland ordered Dana back to the negotiating table after the
company asked the court for permission to reject collective bargaining
agreements covering more than 5,000 employees.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=22431'>Read
more. (Registration required.)
id='8'>Bankruptcy Judge Teaches Credit Skills
Bankruptcy
Judge John C. Ninfo II
founded Credit Abuse Resistance Education (CARE) to help young people
around the country about developing good money skills and avoiding debt
traps, the Associated Press reported yesterday. CARE is among the 180
organizations that make up the JumpStart Coalition for Personal
Financial Literacy. Each April, the Washington, D.C.-based JumpStart
marks financial literacy for youth month with conferences aimed at
sharing program ideas and visits to congressional offices to urge
support for school programs. Judge Ninfo uses real stories from his
bankruptcy courtroom in
w:st='on'>
size='3'>Rochester
w:st='on'>
size='3'>N.Y.
students about the potential dangers of misusing credit cards. Judge
Ninfo believes stories like these prove his point that the lack of
financial literacy has moved beyond the problem stage to the crisis
stage.
href='http://www.nytimes.com/aponline/business/AP-On-the-Money.html?pagewanted=print'>Read
more.
w:st='on'>
id='9'>Utah
size='3'>Bankruptcy Filings Rise for Third Straight
Month
w:st='on'>
size='3'>Utah
increased to593 filings in March, up from 368 in January and 400 in
February, the Salt Lake
Desert News reported today. The March totals
this year also represent an increase of 123 filings from the 471
reported in March 2006. So far this year, there have been 1,361
bankruptcy filings in
w:st='on'>
size='3'>Utah
percent when compared to the first three months of 2006. Of that total,
776 are for chapter 7, 584 are for chapter 13 and one is for chapter
11.
Chief Backs Current Hedge Fund Rules
Federal Reserve chairman Ben S.
Bernanke said yesterday that light regulation of hedge funds has worked
well so far and seems appropriate given the benefits the funds provide
to the financial system, Reuters reported today. “Market
discipline does not prevent hedge funds from taking risks, suffering
losses or even failing — nor should it,” Bernanke said.
“If hedge funds did not take risks, their social benefits —
the provision of market liquidity, improved risk-sharing and support for
financial and economic innovation, among others — would largely
disappear.” He said that the regulatory oversight applied to hedge
funds was “relatively light” and acknowledged that their
growing market share had raised concerns about possible systemic
risks.
href='http://www.nytimes.com/2007/04/12/business/12hedge.html?ref=business&pagewanted=print'>Read
more.
id='11'>Sallie Mae to Close Student Call Centers
Loan giant Sallie Mae
will shut down its student call-center services at 19 colleges and stop
paying for trips taken by university officials, it said in a settlement
of a
York
allegedly deceptive financial-aid practices, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The company, officially named SLM Corp., agreed
to these terms with New York Attorney General Andrew Cuomo, while
denying wrongdoing in a broad investigation that has also resulted in
settlements with eight colleges and Citigroup Inc. Cuomo said that the
call-center services, operated on behalf of colleges, were deceptive
because students seeking advice on aid believed they were speaking to
colleges directly, rather than a company interested in selling them
loans. Sallie Mae, the nation's largest student lender, acknowledged
that its workers generally didn't identify themselves as its employees,
but said the schools had requested the arrangement under various
contracts.
href='http://online.wsj.com/article/SB117631137607666531.html?mod=us_business_whats_news'>Read
more. (Registration required.)
TROUBLED COMPANIES IN THE
NEWS
1000’s of companies lose money or
experience some form of difficulty each quarter.
The business news articles below are
taken from the Daily Summary of Troubled & Fast Growing U.S.
Companies and Other Business News published by Bastien Financial
Publications.
To begin receiving the COMPLETE Daily
e-Summary, that emails you information on over 70 such companies each
morning, email
face='Times New Roman'
color='#0000ff'>steve@creditnews.comyour name, company
name, address, phone and fax. We’ll set you up within 24
hours.
Tax Time Special! Now through April 15,
you can receive an annual subscription to the U.S. Business
Journal¹s weekly summary of troubled
w:st='on'>
w:st='on'>U.S.
Indicate “ABI CODE 27” in your email.
size='3'>Amgen Inc., a Thousand Oaks, Ca.
biotech firm, saw its chief financial officer resign, as the firm
continues battling with setbacks in its drug-development programs and
pressure to hold down costs of its pricey drugs. Amgen is also under
investigation by the Securities and Exchange Commission, which is
looking into a recent study on one of its drugs, whose failure was not
announced until February although Amgen called off the drug trials in
December.
size='3'>Citigroup Inc., the
w:st='on'>
size='3'>Manhattan
w:st='on'>
size='3'>N.Y.
size='3'>financial-services giant, unveiled a restructuring plan that
will result in nearly 17,000 job cuts (5% of its workforce). The
firm could also dump another 10,000 jobs in the
w:st='on'>
size='3'>U.S.
shipping some work overseas and by closing 40 of its Smith Barney
retail-brokerage offices. The downsizing will likely results in extra
charges of more than $1 billion, and, once completed, could save
Citigroup more than $2.5 billion. Citigroup is also attempting to
purchase the 95%, that it doesn’t already own, of the Japanese
brokerage firm, Nikko Cordial Corp., in a $14 billion tender
offer.
size='3'>Delta and Pine Land Co., a Scott, Ms.
seed company, reported a second quarter net loss of nearly $1.7 million,
compared to net income of $23.5 million in the year-earlier
period. Revenue dropped 61%–to $45
million.
size='3'>Discovery Communications,
size='3'>Silver Spring
size='3'>Md.
that it will reduce its payroll by workers 200 (3% of its workforce),
while also warning that further layoffs will follow. The company
didn’t specify how much it would save in the downsizing, but it
said that it intends to invest more money in programming and
expanding its worldwide brand.
size='3'>Loblaw Cos. seems to have lost its
way and is now struggling to survive as
w:st='on'>
size='3'>Canada
size='3'>’s largest grocery chain now that U.S.-based Wal-Mart
StoreApril 11, 2007s Inc. is muscling its way into the Canadian grocery
market. The
face='Times New Roman' size='3'>Toronto
size='3'>,
size='3'>Ontario
size='3'>supermarket operator had tried to adjust, in part, with a new
distribution system last year, but that attempt ran into a wall when
inventories piled up in warehouses, leaving store shelves empty.
Inventory writedowns and another $780 million in writedowns related to
its acquisition of a regional chain in
w:st='on'>
size='3'>Quebec
in a $190 million loss last year, its first year in the red in nearly
two decades. Once considered among the most innovative of retailers
in
size='3'>North America
concedes that it has to rethink nearly every part of its business.
Having failed in its attempts to go toe-to-toe with Wal-Mart by filling
some of its shelves with televisions, furniture and other nonfood goods
because it couldn’t match Wal-mart on prices, Loblaw now wants to
refocus on food and find a successful niche in the market. Loblaw is
controlled by
w:st='on'>
size='3'>Canada
size='3'>’s Weston family.
size='3'>Rockaway Bedding Inc. filed for
bankruptcy protection in the U.S. Bankruptcy Court for the Eastern
District of New Jersey. The firm listed assets and liabilities of
between $1 million and $10 million each. The case number is
07-14890. Also filing for bankruptcy protection in
w:st='on'>New
Jersey
Pennsylvania Inc., Rockaway Bedding of Maryland Inc., Rockaway Bedding
of Delaware Inc., Rockaway Bedding of Connecticut Inc., Rockaway Bedding
of
size='3'>48
size='3'>th
size='3'>Street
and
face='Times New Roman' size='3'>Rockaway
size='3'>Bedding
face='Times New Roman'
size='3'>Centers
New York Inc. All told, the Chapter 11 filings cover more than 190
stores, including 131 locations that are operated by
subsidiaries.
size='3'>Trinsic Inc., a
w:st='on'>
size='3'>Tampa
telecom firm, is ending life as a public company in the wake of a $25.5
million bankruptcy sale of the company to Tide Acquisition Corp. At
least $17 million of the purchase price will go toward a secured claim
held by a primary lender and to pay back utility bills. Under new
ownership, Trinsic will attempt to gain profitability, which it never
achieved during its seven-year run as a public firm. Trinsic filed
Chapter 11 in February, listing debts of as much as $50 million. Tide
Acquisition is a unit of Platinum Equity LLC of Beverly Hills,
Ca.