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September 17, 2002
The Bankruptcy Bill
Senate Majority Leader Tom Daschle (D-S.D.) has expressed concern over
the fate of the stalled bankruptcy bill if Republicans continue to try
to load tort reform language onto the bill, CongressDaily
reported. Daschle has expressed similar concern with respect to
bankruptcy reform legislation, which is pending indefinitely before the
House, since being pulled from a tentative schedule last week. House
Majority Leader Dick Armey (R-Texas) indicated on Friday that leaders
were trying to work through the thorny question of how to treat
anti-abortion protesters under bankruptcy laws. Social conservatives in
the House say the bill would unfairly penalize the protesters.
Chief Justice Won't Delay Asbestos Trial
The Supreme Court today refused to block a massive asbestos trial in
West Virginia, the Associated Press reported. Chief Justice William
Rehnquist did not comment in turning down requests from Mobil Corp. and
other large companies that stand to lose millions if found liable in the
trial scheduled for Sept. 23 in a West Virginia court. The trial will
combine the cases of about 8,000 people who claim asbestos exposure
against 250 companies. Over the summer, two companies asked the Supreme
Court to consider whether the trial would be unconstitutional. The court
has not acted on that appeal. The companies returned to the high court
this month to request an emergency delay in the trial, arguing that the
issue cannot wait until early October, when the court's term begins.
Meanwhile, Reuters reported, the U.S. Senate is moving ahead with plans
to reexamine asbestos liability issues. The Senate Judiciary Committee
has tentatively scheduled a hearing on the subject for Sept. 25.
According to the newswire, previous legislative efforts have failed to
gain widespread support amid strong opposition from the Association of
Trial Lawyers of America, whose members have reaped large amounts of
money from asbestos awards. A coalition of corporations and lawyers for
very ill asbestos victims has been urging Congress to pass legislation
to set minimum medical requirements for an asbestos-related injury, so
people who are sick could pursue claims immediately, while others could
bring claims if and when they fall ill, Reuters reported.
Bankruptcy and Protests
Abortion opponents aren't the only ones who have a problem with a
provision affecting protesters as part of a larger bill overhauling
bankruptcy laws, the Washington Post reported. House GOP leaders
have indefinitely postponed voting on the measure because it contains
language that would prevent protesters, such as antiabortion activists,
from ducking legal judgments for obstructing access to legal businesses.
House Minority Whip Nancy Pelosi (D-Calif.) said the language, which was
originally inserted by Sen. Charles E. Schumer (D-N.Y.) but then
broadened by Sen. Orrin G. Hatch (R-Utah), 'would make union leaders on
a picket line personally liable for any damage that might happen.'
According to the Post, Alan Reuther, legislative director for the
United Auto Workers, sent a letter to members of the House last week
urging them to bring down the bankruptcy bill rather than approve
language 'that would jeopardize picketing and protest activities by
labor unions, civil rights, environmental and other organizations.'
Republicans, for their part, say the whole mess is the Democrats' fault
because they're the ones who put in the protest-related language at the
outset. Chief Deputy Whip Roy Blunt (R-Mo.) said that although business
leaders and others were frustrated about the impasse, 'the message to
our friends who worked so hard on this bill is your opponents can come
in and have a real impact on what you're trying to get done, ' the
Post reported.
Hit By Asbestos, Former Armstrong World Unit Files Chapter
11
ACandS Inc., a former subsidiary of Armstrong World Industries Inc., has
filed for chapter 11 bankruptcy protection to deal with asbestos
liabilities, reported Dow Jones. In papers filed Monday with the U.S.
Bankruptcy Court in Wilmington, Del., the insulation contracting company
said the filing was necessary because of the difficulty in defending
asbestos cases in certain courts, the continued increase in new filings
and inflation of verdicts, and one of its insurer's 'refusal to honor
its insurance obligations.'
ACandS said it had been close to completing negotiations for a
prepackaged reorganization plan prior to Monday's filing, but
circumstances led them to believe it would be best for the plan to be
finalized while under chapter 11 protection. The company had book assets
of $18.4 million and book liabilities of $18.4 million as of Dec. 31,
2001. ACandS said more than 50 asbestos defendants have filed for
chapter 11 protection, 18 of which were filed after January 2000.
Loews Cineplex To Make Debt Offering Along With IPO
New York-based Loews Cineplex Entertainment Corp. on Monday said it
would offer an unspecified amount of senior subordinated notes when it
makes its initial public offering, Dow Jones reported. Loews amended its
IPO registration with the Securities and Exchange Commission to discuss
the sale of the notes and said that it and subsidiary Grupo Cinemex
planned to enter into senior secured credit facilities, the newswire
reported. The terms being sought for the credit facilities weren't
disclosed. The company filed for chapter 11 bankruptcy protection on
Feb. 15, 2001, and emerged from bankruptcy March 21.
Rigases Seek Defense Cost Payments Under Adelphia
Insurance
John Rigas and his three sons have asked a court to rule that the
chapter 11 filings by Adelphia Communications Corp. and its former
telecommunications unit, Adelphia Business Solutions Inc., shouldn't
prevent them from receiving payments under the companies' director and
officer liability insurance policies, Dow Jones reported. In papers
filed with the U.S. Bankruptcy Court in Manhattan, the Rigases said the
companies' primary director and officer liability insurance provider has
refused to pay their defense costs unless the court lifts the Bankruptcy
Code's automatic stay provision. The provision generally puts a debtor's
property out of reach from others while the debtor attempts to
reorganize.
The request is scheduled to be considered on Oct. 8 by Judge Robert
E. Gerber, who is presiding over the two companies' chapter 11
cases. The Rigases said Judge Arthur J. Gonzalez recently granted
similar relief in a matter brought by the same insurer in Enron Corp.'s
chapter 11 case.
Airlines Extend Losses on Weaker Outlook; AMR Hits Year Low
Shares of major airline companies continued to fall Monday on weaker
earnings outlooks, Dow Jones reported. AMR Corp. was among leading
losers in the group, hitting a new 52-week low after closing down more
than 17 percent on Friday. American on Friday said September bookings
have been weaker than expected. Airline analyst John V. Pincavage said
that the industry's rough patch appears likely to continue. Uncertainty
regarding Iraq and oil prices will continue to constrain its outlook,
and Pincavage also cited the potential for weaker airlines to emerge
from chapter 11 bankruptcy with competitive advantages that may spell
trouble for currently stronger rivals.
Judge OKs Global Crossing's Motion to Extend Exclusivity
Judge Robert Gerber on Friday approved Global Crossing Ltd.'s
request to extend the exclusivity period in which it is the only party
allowed to file a reorganization plan with the court, Dow Jones
reported. The request represents a defensive move by the company as the
extension of the exclusivity rights will protect the debtors if the
current plan fails to get court approval. The fiber-optic network
builder has scheduled to file its reorganization plan on Monday with the
Manhattan court. The core of the plan is expected to be a $250 million
cash infusion from two Asian companies. A court hearing on a disclosure
statement, which provides details of the plan, is set for Oct. 21.
Global Crossing expects a majority of creditors to accept the plan and
the court to approve it. Global Crossing's exclusive rights were set to
expire today. Should the current plan fail, Global Crossing would get an
additional 60 days to draft a new plan with the court. Global Crossing's
initial petition in January listed assets of $22.4 billion and debt of
$12.4 billion.
SpectraScience Inc. Files for Bankruptcy Protection
SpectraScience Inc. filed for chapter 7 bankruptcy and is selling its
assets in connection with the bankruptcy proceedings in order to pay its
creditors and shareholders, Dow Jones reported. In a press release
Monday, the company said it has been unsuccessful in completing a
financing transaction that would help it execute its business plan.
SpectraScience develops patented Laser Induced Fluorescence
spectrophotometry systems capable of determining whether tissue is
normal, pre-cancerous or cancerous without removing tissue from the
body.
Sierra Pacific: Court to Hear Further Arguments on Enron
Sierra Pacific Resources said a bankruptcy court will hear additional
arguments on Oct. 3 regarding a lawsuit filed against the company by an
Enron Corp.unit, Dow Jones reported. In June, Enron Power Marketing sued
Sierra Pacific's two utilities, Nevada Power Co. and Sierra Pacific
Power Co., for $307 million in damages from a power-supply contract that
Enron Corp. terminated in May. On Friday, the U.S. Bankruptcy Court for
the Southern District of New York denied Sierra Pacific's request for a
stay until a ruling is made by the Federal Energy Regulatory Commission
on the issue. That ruling is expected in May 2003. Sierra Pacific has
asserted that prices in the power markets weren't just and reasonable
under federal law when the contracts were signed.
ScanSoft to Complete Lernout & Hauspie Share Buyback
ScanSoft Inc. expects to repurchase 1.46 million common shares from
Lernout & Hauspie Speech Products NV's L&H Holdings USA Inc.
unit at $4.79 a share, or a total of $7 million, Dow Jones reported. The
deal is part of a definitive agreement that provides for disposition of
the approximately 7.4 million common shares that L&H received when
ScanSoft acquired the L&H Speech & Language Technologies
business last December. L&H will include the roughly six million
remaining shares in an underwritten public offering to be completed no
later than Feb. 15, 2003.
According to the newswire, ScanSoft said last month that the U.S.
Bankruptcy Court for the District of Delaware approved its agreement to
buy back $7 million of its shares from bankrupt Lernout & Hauspie.
ScanSoft was the winning bidder for most of Lernout & Hauspie's
speech and language technologies business in a Nov. 26 auction, offering
$10 million in cash, a $3.5-million note and 7.4 million in shares.
Williams Cos./AIG Highstar: Sale to Help Balance Sheet
Williams Cos. agreed to sell its central natural gas pipeline to
Southern Star Central Corp. for $380 million in cash and the assumption
of $175 million in debt, helping the energy concern strengthen its
balance sheet, Dow Jones reported. In a press release Monday, the
natural-gas pipeline company said it expects this latest sale to reduce
its capital spending requirements by about $50 million over the next 16
months. The company also plans to record a related, pretax loss of about
$90 million to $95 million in the third-quarter.
Williams Cos., which was contemplating a bankruptcy filing in July, has
been selling off its assets to bolster its balance sheet. The Tulsa,
Okla., company already sold one of its chief pipeline systems and was
forced to put up other core assets as collateral for new loans.
Sterling Files Plan
Sterling Chemicals Holdings Inc. filed a second amended plan of
reorganization and related disclosure statement with the U.S. Bankruptcy
Court, Bankruptcydata.com reported. The plan contemplates a
reorganization of Sterling around its core petrochemicals business.
Sterling's pulp chemicals business would be sold at the time Sterling
emerges from bankruptcy, with the proceeds being used to provide $80
million of Sterling's exit financing requirements. The proposed plan
calls for the infusion of $60 million in new equity capital at the time
Sterling emerges from chapter 11, all of which will be provided by
Resurgence Asset Management L.L.C., subject to the right of Sterling's
unsecured creditors to participate in the investment in an amount up to
$30 million in the aggregate.
Soo Plastics Inc. Files for Chapter 11 Bankruptcy
Less than a month after laying off more than 15 percent of its
workforce, Soo Plastics has announced it is filing for chapter 11
bankruptcy protection, reported the Sault Ste. Marie Evening
News. The Sault Ste. Marie, Mich.-based company will continue to
operate as it has been, according to the online newspaper. Employees
were told that not only will the company continue to produce for its
customers, but it will also be able to make payroll while continuing to
provide benefits. All current bills will continue to be paid with a hold
apparently placed on the outstanding debts under the chapter 11 plans,
reported the Evening News. Soo Plastics was founded in 1979. The
company reportedly will continue to be involved in product research and
development, custom injection molding, hot stamping and sonic welding as
the financial mess is sorted out through the federal bankruptcy
courts.
PG&E Is Seeking Purchaser for All or Part of NEG Unit
PG&E Corp., the San Francisco electricity and natural-gas company
whose regulated utility is already operating under bankruptcy-law
protection, is looking for a buyer for all or part of its once-prized
unregulated energy and natural-gas unit to resolve a looming debt
crisis, the Wall Street Journal reported. The National Energy
Group unit, which has been struggling to restructure part of its $4.4
billion in bank and bond debt, has a book value of $2.3 billion. Because
the value of power plants and pipelines has declined sharply in recent
months, people familiar with the PG&E unit say it is unclear whether
it will be able to attract high enough bids even to cover its existing
debt. If the bids are too low, then bank lenders and bondholders would
face a difficult decision: accept a fraction of what they are owed or
risk more protracted restructuring that might end in a bankruptcy
filing.
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