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October 8, 2004
Chapter 12 Extension Passed the House on Friday
H.R. 5167, to restore chapter 12 bankruptcy protections for farmers,
introduced by Reps. Tammy Baldwin (D-Wis.) and Nick Smith (R-Mich.),
passed the House today. S. 2864, a companion bill in the Senate,
introduced by Senators Chuck Grassley (R-Iowa) and Patrick Leahy
(D-Vt.), passed the Senate on Wednesday. This legislation extends
chapter 12 until June 30, 2005, retroactive to Jan. 1, 2004. The
retroactive provision would allow some farmers who filed under a
different chapter to convert to a chapter 12 filing if their bankruptcy
is not yet final. The bill now can be sent to the President.
Frank Pushes Bill to Pre-empt OCC Rules
House Financial Services ranking member Barney Frank (D-Mass.)
yesterday introduced legislation to shield certain state consumer
protections from the Office of the Comptroller of the Currency’s
contentious pre-emption rules, which took effect in February,
CongressDaily reported. Frank said the bill would clarify
the relationship between state consumer protection authority and the
operation of national banks. The OCC rules exempt national banks from
state laws pertaining to lending and deposit-taking. The rules also
include new federal anti-predatory lending standards and restrict state
agencies’ authority to take action against those banks.
U.S. Congress Must Stop Pension “Train Wreck,” McCain
Says
Congress must act to control a looming crisis with airline and U.S.
corporate pensions, Senator John McCain (R-Ariz.) said, as the agency
that insures employee retirement plans said its 2004 deficit rose
“significantly,” Bloomberg News reported.
“There’s a looming train wreck here that could cost the
American taxpayer untold billions of dollars,” said McCain at a
Senate hearing on the pensions of airlines. The Pension Benefit
Guarantee Corp., which backstops pensions for 44 million workers and
retirees, had a “significantly increased” deficit in the
year ended Sept. 30, Executive Director Bradley D. Belt said. The
agency, which had a record deficit of $11.2 billion in the 2003 fiscal
year, will report the 2004 figure in about 45 days, he said.
Analyst sees Delta Bankruptcy Soon
Smith Barney analyst Daniel McKenzie yesterday said he saw a high
probability that Delta Air Lines Inc., struggling to cut costs to avoid
bankruptcy, could file for chapter 11 by the end of the month, Reuters
reported. McKenzie reiterated a sell rating on Delta shares,
recommending that clients sell into recent stock strength, and said in a
research note that Wall Street is overly optimistic about Delta’s
prospects.
“We note that $1 billion in savings from pilots is no guarantee
that Delta escapes chapter 11, and the key point is that the market
doesn’t fully appreciate the pension issue,” McKenzie wrote.
“We think there remains a high probability of the carrier filing
for chapter 11 by the end of the month,” the newswire
reported.
Liquidation Looms in Great Plains’ Bankruptcy
The U.S. trustee in Great Plains Airlines’ bankruptcy
reorganization has suggested she may ask the court to liquidate the
carrier, according to new court documents, the Associated Press
reported. The trustee, Mary May, has been concerned since April that the
case was heading for dismissal or liquidation because the airline was
making little progress reorganizing, according to her status report. May
said she has held off asking the bankruptcy judge to order a liquidation
to give the airline an opportunity to resume flights and sell assets,
the trustee’s status report filed on Monday said.
Parmalat Sues Bank of America for $10 Billion
Parmalat’s bankruptcy administrators sued Bank of America on
Thursday for $10 billion, saying the number three U.S. bank played a
“central role” in one of Europe’s biggest financial
scandals, Reuters reported. The group’s rescue managers filed for
damages in Bank of America’s home state of North Carolina,
accusing it of fraud by helping to disguise Parmalat’s finances,
selling bonds to “unsuspecting investors” and blocking
internal investigations.
KPMG Settles Lernout & Hauspie Lawsuit
KPMG agreed to settle a shareholder lawsuit over the collapse of
Belgium’s Lernout & Hauspie Speech Products N.V., by agreeing
to pay $115 million, one of the law firms representing investors said on
Thursday, Reuters reported. KPMG audited the books of the software
company, which filed for bankruptcy in 2000, after revelations of
improper revenue recognition tore into its share price, dropping it from
$70 to less than a dollar in just eight months. The company’s
founders have been charged with forgery and stock price manipulation in
Belgium, the newswire reported.
Enron Would’ve Covered Merrill Barge Loss-Witness
An imprisoned former Enron executive told a jury in the first Enron
criminal trial on Thursday that the energy company would have paid back
Merrill Lynch for three barges the bank supposedly bought even if they
had sunk, Reuters reported. The government contends Enron and Merrill
had a secret oral agreement that the energy company would repurchase the
barges within six months and pay Merrill a guaranteed return of 22
percent, making the deal a loan rather than a true sale, the newswire
reported.