href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
April 1, 2009
Hearings and Mark-ups Focus on Credit Card Protections and Consumer
Fraud Prevention
House committees today will be
considering a number of pieces of legislation looking to establish new
regulations on credit cards and fight consumer fraud.
- The House Financial Services Committee
will hold a mark-up session today on H.R. 627, the “Credit
Cardholder’s Bill of Rights.”href='http://www.house.gov/apps/list/speech/financialsvcs_dem/MRK04012009.shtml'>Click
here for more information.
- The House Judiciary Committee today
will be holding a hearing titled “Proposals to Fight Fraud and
Protect Taxpayers,” to consider such bills as H.R. 1748, the
'Fight Fraud Act 2009' and H.R. 78, the 'Stop Mortgage Fraud
Act.”
href='http://judiciary.house.gov/hearings/hear_090401.html'>Click
here for more information. - Additionally, the House
Judiciary Committee will also be holding a hearing tomorrow titled
“Consumer Debt — Are Credit Cards Bankrupting
Americans?” ABI’s Fall Resident Scholar, Prof.
Adam Levitin
size='3'>of Georgetown University Law, is
href='http://judiciary.house.gov/hearings/hear_090402_1.html'>scheduled
to testify.
Autos
to Ease GM into Bankruptcy
The U.S government may seek to
ease General Motors into what it calls a “controlled”
bankruptcy by persuading at least some creditors to agree to a plan that
would cleave the company into two pieces, the
face='Cambria' size='3'>New York Times
size='3'>reported today. Under a plan being worked out by the
administration, GM would file for prepackaged bankruptcy and then use a
sale authorized under §363 of the Bankruptcy
Code to quickly sell off the desirable assets to a new company financed
by the government. These good pieces might include Cadillac and
Chevrolet, as well as assets the company needs to run the business. Less
desirable assets, brands like Hummer and underperforming factories,
would be left in the old company. The administration appears to be
drawing in part from a playbook used with troubled banks, with the goal
of creating a new, healthier GM, but leaving behind its liabilities and
less valuable assets, perhaps for liquidation.
href='http://www.nytimes.com/2009/04/01/business/01bankruptcy.html?_r=1&ref=business&pagewanted=print'>Read
more.
In related news, the Obama
administration will play a key role in reshaping General Motors' board
of directors over the next six months, potentially giving it even
greater control in the management of the storied American manufacturer,
the Washington Post
reported today. The president's auto task force plans to
consult with the company as it replaces a majority of its board, a White
House official said. The board today largely consists of the current and
former chiefs of major U.S. corporations such as Coca-Cola, Ernst &
Young, Pfizer and Eastman Kodak. It is not known which of the 12 board
members will leave. Kent Kresa, 71, GM's new chairman, said yesterday
that company officials will seek to replace a majority on the board by
August, as the automaker moves to restructure operations.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/03/31/AR2009033101521_pf.html'>Read
more.
Visteon
Warns of Possible Chapter 11 Filing
The same day that Visteon Corp.
put three of its overseas plants into bankruptcy protection, the company
warned that its U.S. operations are at risk for chapter 11
reorganization, the Detroit Free
Press reported today. Van Buren Township,
Mich.-based Visteon Corp. said that it reached a deal with its lenders
yesterday on temporary waivers for defaulting on its credit agreements
-- triggered by a warning from auditors that questioned the company's
ability to continue as a going concern. Visteon, which is in talks with
lenders, said that it 'may seek reorganization under U.S. Bankruptcy
Code' without a long-term agreement. The company also said that it is in
discussions with its customers, including Ford Motor Co. and Nissan
Motor Co. 'regarding support and cooperation to assist the company in
managing through the current environment.'
href='http://www.freep.com/article/20090401/BUSINESS01/904010426'>Read
more.
Delphi
Sells Brake and Suspension Businesses to Chinese
Firms
Two Chinese companies and the
Chinese government signed an agreement Monday to acquire Delphi Corp.'s
brakes and suspension businesses for $100 million, the
face='Cambria' size='3'>Detroit Free Press
size='3'>reported yesterday. The Chinese auto supplier Tempo Group,
which has its U.S. research and development operations in Canton, will
acquire a 24 percent stake in the Delphi businesses. China's Capital
Iron & Steel Co. will purchase a 51 percent stake, and the Beijing
government will own the remaining 25 percent. The Delphi businesses will
be owned by a new Chinese company called Beijing West Industries Co.
Ltd., based in Beijing. The deal is expected to close by Nov. 1 and must
be approved by the court overseeing Delphi's bankruptcy.
href='http://www.freep.com/apps/pbcs.dll/article?AID=2009903310491'>Read
more.
Fannie,
Freddie Are Pressured as Homeowners Fall Behind
The rapid rise in the number of
borrowers skipping their mortgage payments is putting renewed pressure
on the financial reserves of Fannie Mae and Freddie Mac, the
Wall Street Journal
size='3'>reported today. Fannie and Freddie, which own or guarantee
nearly $5 trillion, or half, of the nation's mortgages, have seen their
serious delinquency rates -- mortgage payments 90 days or more past due
-- shoot to records in the past few months. This week, Fannie reported
that 2.77 percent of the single-family loans held in its $785 billion
investment portfolio were delinquent in January. That's a 0.35
percentage point increase from the month before, the largest such
increase since the company started tallying the data in 1998. This is
more than double the 1.06 percent a year earlier. Freddie's level stands
at 2.13 percent. CreditSights estimated last year that Freddie could
face losses as high as $28 billion if the delinquency rate hits 4
percent, as the independent research firm expects over the next few
years.
href='http://online.wsj.com/article/SB123854827507676253.html'>Read
more. (Subscription required.)
Move to Ease
Accounting Rule May Subvert Treasury’s Toxic Asset
Plan
A new accounting rule set to be
approved this week will relax mark-to-market rules for banks sitting on
billions of dollars in toxic assets, possibly undermining a larger U.S.
Treasury plan to rid the banks of those same assets, the
face='Cambria' size='3'>Wall Street Journal
size='3'>reported today. The Financial Accounting Standards Board is
proposing significant changes to its mark-to-market rules, allowing
banks to set their own values for certain hard-to-value troubled
mortgages, corporate loans and consumer loans. Once the new accounting
rule takes effect, banks will have new incentive to keep the assets
directly on their books, say bankers. That is because the rule states
that banks can use their own judgment on asset values as long as there
are no willing bidders to set a market price. That seems to run counter
to the Treasury plan, which could spend up to $1 trillion to remove
impaired assets from banks' balance sheets. The new proposal, called FAS
157-e, is scheduled for a vote this Thursday.
href='http://online.wsj.com/article/SB123854595878676211.html#mod=testMod'>Read
more. (Subscription required.)
for Bankruptcy
SeeqPod, the popular 'playable media'
search service that many music sites use as the foundation for their
core offering, filed for chapter 11 protection yesterday, according to
TechCrunch.com. The company, which has raised $7 million in venture
capital to date from undisclosed investors, is reportedly doing this out
of fear about the outcome of the multibillion-dollar lawsuits it was
slapped with by music labels like Warner Music, Capitol Records and EMI.
SeeqPod developed technology that is able to quickly crawl the web for
playable media (MP3s, slideshow presentations, videos, etc.) and enables
users to play it on-site. It doesn't host any files on its servers, but
the downside of the technology from a legal point of view is that the
crawling engine picks up pirated music files from across the Web as
well.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/03/31/AR2009033101493_pf.html'>Read
more.
Silicon
Graphics Files for Chapter 11
Silicon Graphics Inc., which makes
servers and data storage products, filed for chapter 11 protection,
Reuters reported today. The Sunnyvale, Calif.-based company listed
assets of $390.5 million and total debt of $526.5 million in its filing.
The company listed Voltaire Inc., Intel Americas and Qimonda as its
largest creditors.
href='http://www.reuters.com/article/technologyNews/idUSTRE5302OZ20090401'>Read
more.
United
Subcontractors Files for Chapter 11 Protection
Privately held United Subcontractors
Inc. filed for chapter 11 protection yesterday, the Associated Press
reported today. The installer of residential and commercial products
said late yesterday that it reached a deal with lenders related to its
first- and second-lien loans. The agreement lets United Subcontractors
lower its debt by $314 million by converting most of the debt to equity
in its business. The company will have about $22.5 million in debt when
its reorganization is complete.
href='http://www.forbes.com/feeds/ap/2009/04/01/ap6240251.html'>Read
more.
Receives Approval to Tap $85 Million DIP Loan
Bankruptcy Judge
face='Cambria' size='3'>Mary Walrath on Friday
approved a request by Ritz Camera Center Inc., the largest U.S. camera
store chain, to access up to $85 million in debtor-in-possession
financing from its existing secured lenders to help fund operations as
it closes 400 underperforming stores,
size='3'>Bankruptcy Law360 reported yesterday.
The lenders provided prepetition financing to the debtor, according to
court documents. As of the petition date, the aggregate amount of those
prepetition loans was approximately $54 million.
size='3'>The case is In re Ritz
Camera Centers Inc., case number 09-10617, in
the U.S. Bankruptcy Court for the District of Delaware.
href='http://bankruptcy.law360.com/articles/94572'>Read
more. (Registration required.)
Idearc
Files for Chapter 11 Amid Falling Ad Sales
Facing falling advertising
revenue and more than $9 billion in debt, phone book publisher Idearc
Inc. yesterday filed for chapter 11 protection,
face='Cambria' size='3'>Bankruptcy Law360
size='3'>reported today. Idearc said that it had already reached an
“agreement in principle” with its secured lenders on key
aspects of its reorganization plan before filing a voluntary bankruptcy
petition in the U.S. District Court for the Northern District of Texas.
The company said that it hoped to file a reorganization plan in court
within 30 days. Idearc had $1.8 billion in assets and $9.5 billion in
debt at the end of 2008, of which $6.7 billion was secured debt,
according to its bankruptcy petition. The case is
face='Cambria' size='3'>In re Idearc Inc.,
case number 09-31828, in the U.S. Bankruptcy Court for the Northern
District of Texas.
href='http://bankruptcy.law360.com/articles/94697'>Read
more. (Subscription required.)
Four Small
Banks Are the First to Pay Back TARP Funds
Four small banks became the first
to return millions of dollars of emergency aid, and more may soon follow
as the industry tries to escape what it considers the onerous conditions
attached to the government’s money, the
face='Cambria' size='3'>New York Times
size='3'>reported today. Signature Bank of New York said yesterday that
it had repaid $120 million to the Treasury Department. Old National
Bancorp of Indiana returned $100 million, Iberiabank of Louisiana paid
back $90 million, and Bank of Marin Bancorp of Novato, Calif., repaid
$28 million. All of the banks paid 5 percent interest on the money they
had received. The Treasury Department has set aside $250 billion to prop
up the banking system, with about half of that money given to the eight
biggest banks. About 500 small banks have received $73.7
billion.
href='http://www.nytimes.com/2009/04/01/business/01bank.html?ref=business&pagewanted=print'>Read
more.
International
Click here to review
today's global insolvency news from the GLOBAL INSOLvency site.