src='/AM/Images/headlines/headline.gif' />
July 27, 2005
House Judiciary Hearings Address New Bankruptcy Law
The House Judiciary Committee’s
href='http://judiciary.house.gov/committeestructure.aspx?committee=5'>Subcommittee
on Commercial and Administrative Law today held hearings yesterday
on the implementation of the new law. Statements from the
witnesses—Clifford J. White III, acting director, Executive Office
for United States Trustees; Honorable A. Thomas Small, United States
Bankruptcy Judge for the Eastern District of North Carolina (on behalf
of Judicial Conference of the United States); Travis B. Plunkett,
Consumer Federation of America, National Consumer Law Center, U.S.
Public Interest Research Group; and George Wallace, Esq., Coalition for
the Implementation of Bankruptcy Reform—should be available later
in the week.
Senate Committee OKs Pension Legislation
unanimously approved Tuesday broad pension legislation to give airlines
new options for funding their pension plans and avoiding bankruptcy, the
Atlanta Business Journal reported yesterday. The plan
includes a provision for airlines that would let them spread their
pension plan payments over 14 years plus a seven-year transition period
instead of the current four years. Sen. Johnny Isakson (R–Ga.),
who introduced bipartisan legislation in April to address the airline
pension crisis, said that the committee’s vote was a good
beginning. The bill has the support of airline employees, their
collective bargaining organizations and their employers. Rep. Tom Price
(R–Ga.) has introduced an identical bill in the House of
Representatives.
U.S. Trustee Program Is Accepting Applications for Budget and Credit
Counseling Agencies, Financial Management Instructional Courses
The United States Trustee Program
is accepting applications for approval as a budget and credit
counseling agency or provider of a financial management instructional
course for bankruptcy filers, under the Bankruptcy Abuse Prevention and
Consumer Protection Act (BAPCPA) of 2005, the program announced in a
news release yesterday. Under BAPCPA, which was enacted on April 20,
2005, all individual debtors who file bankruptcy on or after October 17,
2005, must undergo credit counseling within six months before they file
bankruptcy and must complete a financial management instructional course
after they file bankruptcy. The application forms and related materials
are posted on the program’s
web site. For additional information, applicants may contact the
program at (202) 514-4100.
Beige Book Released Today
Commonly known as the Beige Book, the Summary of Commentary on
Current Economic Conditions by Federal Reserve District is
published eight times per year. Each Federal Reserve Bank gathers
anecdotal information on current economic conditions in its district
through reports from bank and branch directors and interviews with key
business contacts, economists, market experts and other sources,
nationaljournal.com reported. The Beige Book summarizes this information
by district and sector. An overall summary of the 12 district reports is
prepared by a designated Federal Reserve Bank on a rotating basis.
AmeriSave Media Briefing
An in-depth discussion about the new Democratic initiative to improve
savings will be held at HC-9, U.S. Capitol at 1 p.m, nationaljournal.com
reported today. AmeriSave will make it easier to save in existing
investment accounts such as 401(k) and IRAs, nationaljournal.com
reported today. The program also will offer millions of working
Americans a dollar-for-dollar savings match of up to $1,000 contributed
to an IRA, 401(k) or similar plan. AmeriSave will provide nearly 100
million Americans with new opportunities to save and invest in the stock
market. Participants are Rep. Benjamin Cardin (D–Md.) and Rep. Ron
Kind (D–Wis.).
Northwest Losses Heighten Bankruptcy Fears
Fears that Northwest Airlines may file for bankruptcy increased
yesterday after the struggling U.S. legacy carrier reported a widened
quarterly loss and said it would freeze its pension plans in an attempt
to prop up its hemorrhaging balance sheet, financialtimes.com reported.
Northwest, which like other U.S. airlines has been struggling under the
burden of record fuel costs and soaring pensions obligations this year,
said it had lost an average of $4 million a day in the second quarter,
as losses widened to $217 million, from $182 million a year earlier.
Xybernaut Files for Bankruptcy Protection
Xybernaut Corp., the troubled Virginia company that makes wearable
computers, has
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/07/26/AR2005072601753.html'>filed
for bankruptcy protection, the Washington Post reported
today. The company has hired a team of investment bankers and
reorganization specialists, and its executives say that they will
consider selling off Xybernaut’s assets in parts or as a whole.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/07/26/AR2005072601753.html'>Read
the full story.
Many Americans Still Baffled by Credit Reports
One of the three largest credit-reporting agencies has said that
href='http://www.whittierdailynews.com/Stories/0,1413,207%257E12041%257E2978389,00.html'>Americans’
demand to see their credit reports this year has fallen well short
of expectations, the Whittier Daily News reported
yesterday. Meanwhile, a survey by the Consumer Federation of America and
research firm Fair Isaac Corp. showed that nearly half of all Americans
do not understand that credit scores measure their credit risk.
href='http://www.whittierdailynews.com/Stories/0,1413,207%257E12041%257E2978389,00.html'>Read
the full story.
Report: Bankruptcy Filings Climbing
Individuals have started
href='http://money.cnn.com/2005/07/26/news/economy/bankruptcies/'>filing
bankruptcies at a higher pace than a year ago as they seek
protection from creditors under existing law before new bankruptcy
legislation takes effect in October, according to an annual report,
CNN/Money reported yesterday. USA Today reported yesterday
that bankruptcy filings surged 12 percent in April, May and June from
the same period last year, according to exclusive numbers from research
firm LexisNexis. That compares with a 2.6 percent decline during the
first three months of the year, LexisNexis says.
href='http://money.cnn.com/2005/07/26/news/economy/bankruptcies/'>Read
the full story.
Krispy Kreme Loses Fight over Supplies for Franchisees
Krispy Kreme Doughnuts, struggling to avoid a bankruptcy filing and
come up with a plan to revive its business, is
href='http://www.nytimes.com/2005/07/27/business/27kreme.html'>running
into a new problem that threatens to drain more cash from the
company, the New York Times reported today. Struggling
franchises are trying to force the company to continue shipping doughnut
ingredients even though they cannot pay. A state court in Illinois,
responding to a suit filed by the franchise holder for the Chicago and
St. Louis areas, has ordered Krispy Kreme to keep shipping doughnut mix
and other ingredients to the franchisee. The Dow Jones News Service
reported yesterday that Krispy Kreme asked that the case be moved to
federal court in East St. Louis, Ill.
href='http://www.nytimes.com/2005/07/27/business/27kreme.html'>Read the
full story.
General Motors to Sell Consumer Auto Loans to Bank of America
General Motors said Tuesday that it would
href='http://www.nytimes.com/2005/07/27/business/27gmac.html'>sell up to
$55 billion worth of consumer car loans to Bank of America over the
next five years, the New York Times reported today. The
move follows downgrades in May of G.M.’s debt to a rating of below
investment grade, or junk, by Standard & Poor’s and Fitch. The
deal shows how G.M. can steer clear of bankruptcy for at least the next
couple years. But it also shows that one of the nation’s largest
corporate borrowers does not have the broad flexibility to raise cash
that it once did and has been forced to become more resourceful.
href='http://www.nytimes.com/2005/07/27/business/27gmac.html'>Read the
full story.
KMart Corp. to Settle Retirement-savings Suit
Kmart Corp., the retailer owned by Sears Holdings Corp., reportedly
has agreed to pay $11.5 million to settle a lawsuit filed by employees
who lost at least $100 million in retirement savings when the Troy,
Mich.–based company filed for bankruptcy protection in 2002,
Bloomberg reported yesterday. The $11.5 million includes the cost of
administering the settlement and lawyers’ fees, so the 401(k)
holders may recover as little as 5 percent of their losses, according to
the Detroit News, which cited three lawyers familiar with
the settlement who weren’t identified. The payment is covered by
insurance.