href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
October 1, 2009
Bernanke Calls for Council
of Financial Regulators
Federal Reserve Chairman Ben Bernanke is prepared to
testify before Congress today that a council of U.S. regulators --
rather than the Federal Reserve alone -- should be charged with
monitoring threats to the U.S. financial system, the
face='Times New Roman'>Wall
Street Journal reported today. 'All federal
financial supervisors and regulators -- not just the Federal Reserve --
should be directed and empowered to take account of risks to the broader
financial system as part of their normal oversight responsibilities,'
Bernanke said in his prepared testimony. Bernanke's view that systemic
risk-monitoring should be a group effort could address some fears that
the Obama administration's sweeping plan to rework the nation's finance
rules would give the Fed too much power. Analysts and former Fed
officials have questioned whether the central bank even has adequate
resources to be a new super-regulator of systemic risks.
href='http://online.wsj.com/article/SB125439712386355943.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more. (Subscription required.)
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/fchr_100109.shtml'>Click
here to read Bernanke’s prepared testimony before the House
Financial Services Committee for its hearing titled “Federal
Reserve Perspectives on Financial Regulatory Reform
Proposals.”
In related news, House Financial
Services Chairman Barney Frank (D-Mass.) yesterday cast skepticism on
calls for a proposed Consumer Financial Protection Agency to pre-empt
state laws, noting that business lobbyists have not made the case that
higher state standards would create confusion in the marketplace,
size='3'>CongressDaily reported yesterday.
Frank noted bank regulators had pre-empted state laws only on a
case-by-case basis until 2004. That year, the Office of the Comptroller
of the Currency issued a rule to pre-empt national banks from a large
array of state laws such as licensing, escrow, credit-score disclosure
and anti-predatory statutes. At yesterday’s hearing on the CFPA,
Frank asked David John of the Heritage Foundation whether there were
serious problems between the conflict of federal and state banking laws
prior to 2004. John said he was not aware of any. Frank plans to mark up
the CFPA legislation next month, but some moderates would like to make
additional changes in the bill. Rep. Melissa Bean (D-Ill.) said she
would like the CFPA to pre-empt state laws, contending that Congress
should not change the rules for national banks.
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr_092309.shtml'>Click
here to read the prepared testimony from yesterday’s
House Financial Services Committee hearing on the
CFPA.
Bankruptcy Judge Rejects
Both Bids to Buy Coyotes
Bankruptcy Judge
face='Times
New
Roman' size='3'>Redfield T. Baum rejected
Canadian billionaire Jim Balsillie’s offer to purchase the Phoenix
Coyotes hockey team and move it to Hamilton, Ontario, as well as the
NHL’s purchase offer, the Associated Press reported today.
However, Judge Baum upheld the league's right to decide who owns its
teams and where they play, and left the door open for the league to go
ahead and purchase the franchise if it amends its bid to treat Coyotes
owner Jerry Moyes and ex-coach Wayne Gretzky more favorably. Balsillie's
bid, which rose to $242 million when $50 million was added in an
unsuccessful effort to persuade Glendale to drop its opposition, was
denied with prejudice. Judge Baum said he found no legal basis for
overturning the NHL's right to determine the ownership of its member
teams and where those teams play.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/10/01/AR2009100101234_pf.html'>Read
more.
Jurisdiction Argument
Bankruptcy Judge
face='Times
New
Roman' size='3'>Mary F. Walrath denied
JPMorgan Chase Bank NA's bid to revoke her jurisdiction over an
adversary case it filed against Washington Mutual Inc. regarding claims
to billions of dollars in assets, Bankruptcy Law360 reported
yesterday. JPMorgan's attempt to remove the bankruptcy court's authority
came in the form of a notice of divestiture of jurisdiction; JPMorgan
had sought to remove the court's jurisdiction while it appealed Judge
Walrath's denial of its motion to dismiss counterclaims that Washington
Mutual filed against it. However, Judge Walrath said that the adversary
proceeding would continue, arguing that her denial of a motion to
dismiss isn't appealable. The adversary case is
face='Times New Roman'>JPMorgan
Chase Bank NA v. Washington Mutual Inc., et al.
size='3'>, case number 09-50551, in U.S. Bankruptcy Court for the
District of Delaware. The bankruptcy case is
face='Times New Roman'>In re
Washington Mutual Inc., case number 08-12229,
in the U.S. Bankruptcy Court for the District of Delaware.
href='http://bankruptcy.law360.com/print_article/125255'>Read
more. (Subscription required.)
Ninth Circuit Appoints Two
New Bankruptcy Judges
Judges of the Ninth U.S. Circuit Court of Appeals have
appointed two Los Angeles attorneys to serve as judges of the U.S.
Bankruptcy Court for the Central District of California, the
Los Angeles
size='3'>Metropolitan News-Enterprisereported
today. Ninth Circuit Chief Judge Alex Kozinski
said that, contingent upon approval of background clearances, Assistant
U.S. Attorney Catherine Bauer will fill a
vacancy created by the April 2008 retirement of Judge Mitchell Goldberg,
and DLA Piper associate
face='Times
New
Roman' size='3'>Deborah J. Saltzman will fill
a vacancy created by the September 2008 retirement of Judge David
Naugle. Bauer joined the U.S. Attorney’s Office in 2001 and
represents the federal government in all civil, non-tax bankruptcy
matters in consumer and commercial cases in every chapter of bankruptcy
in the Central District.Saltzmanhas practiced bankruptcy law for the
last 10 years in the Los Angeles area, and as an associate with DLA
Piper since last year, she has represented secured and unsecured
creditors, creditors’ committees, debtors and equity-holders in
bankruptcy and out-of-court restructurings.
href='http://www.metnews.com/articles/2009/bank100309.htm'>Read
more.
CIT Draws Up Pre-packaged
Bankruptcy Option
CIT Group Inc. upped the ante with its creditors by
drawing up a pre-packaged bankruptcy plan, the Wall Street
Journal reported today. The move pressures its
bondholders to participate in a proposed debt restructuring, or take
their chances in bankruptcy court. The lender previously warned
investors that a bankruptcy filing as a means of restructuring the
company is one option for CIT. The lender is preparing an exchange offer
to bondholders holding about $31 billion in debt. The exchange would aim
to get bondholders to push out their maturities and exchange existing
debt for new secured debt and equity in a restructured company. This
restructuring would buy the company time as it struggles with an
inability to tap its traditional markets for funding. At the same time,
CIT is soliciting approval from bondholders for a pre-packaged
bankruptcy, a move the company is prepared to make if the exchange offer
fails.
href='http://online.wsj.com/article/SB125435689717554575.html'>Read
more. (Subscription required.)
Frontier Airlines Set to
Emerge from Bankruptcy
Frontier Airlines is set to exit bankruptcy protection
today as part of Republic Airways, the Associated Press reported
yesterday. By buying Frontier, Republic is transforming itself from a
regional jet hauler of travelers for other airlines into a carrier that
competes for its own passengers. Earlier this year it bought
Milwaukee-based Midwest Airlines, too. Republic is looking at moving
Frontier's aircraft maintenance and some ticketing operations out Denver
because of high costs there, CEO Bryan Bedford said yesterday. Frontier
filed for chapter 11 on April 11, 2008, after its main credit-card
processor said it planned to withhold a greater share of proceeds from
ticket sales. Southwest tried but failed to outbid Republic for
Frontier.
href='http://www.google.com/hostednews/ap/article/ALeqM5jdK15NLj3oYLnxb2r4D0NDZwL0LQD9B1TPG00'>Read
more.
Deal with Ex-Parent, DSW
The liquidating estate for bankrupt Filene’s
Basement Inc. has struck a deal with its former parent Retail Ventures
Inc. and shoe retailer DSW Inc. to wipe out $70 million in claims
related to loans, bills and other obligations, Bankruptcy
Law360 reported yesterday. The most
substantial portion of the settlement involves Retail Ventures’
agreement to forgive $52.6 million in outstanding loans to
Filene’s Basement, and seek to have them expunged with prejudice
from the claims register, the motion says. In addition, Retail Ventures
agreed to assume obligations associated with Filene’s
Basement’s pension plan, including indemnification of
Filene’s Basement against any claim asserted by any person or
entity arising out of or related to the plan, minus any claims arising
between April 21, 2009, and the approval of the agreement, the motion
says. The unsecured creditors’ committee is also in support of the
deal, according to the motion.
href='http://bankruptcy.law360.com/articles/125386'>Read
more. (Subscription required.)
Bankrupt Meat Processor
Settles $20 Million Insurance Spat
Bankrupt meat processor GFI America Inc. has settled
an insurance dispute over a fire that destroyed a South Dakota
meatpacking plant, ending a five-year-old case where it initially
alleged it was entitled to more than $20 million,
face='Times New Roman'>
size='3'>Bankruptcy Law360 reported yesterday.
U.S. District Judge Karen E. Schreier dismissed the case on Tuesday
after GFI, Federal Beef Processors Inc., a wholly owned subsidiary, and
GAB Robins North America Inc., the insurance adjusters for the fire,
agreed to settle the case for $250,000.GAB, which GFI accused of fraud
and tortious interference, was the final defendant to settle the
case.Details of the settlement were filed in June with the U.S.
Bankruptcy Court for the District of Minnesota, where GFI filed for
chapter 7 bankruptcy in 2005. The bankruptcy court, which shortly
converted the case to chapter 11, approved the settlement in
July.
href='http://bankruptcy.law360.com/print_article/125435'>Read more.
(Subscription required.)
GM to Close Saturn after
Deal Fails
General Motors said yesterday that it would shut down
its Saturn division by next year after Roger Penske abruptly cut off
talks to acquire the brand, the
face='Times
New
Roman' size='3'>New York Times reported today.
The Penske Automotive Group said that it could not proceed with the deal
because another auto manufacturer, which it did not identify, said that
it would not build vehicles to be distributed under the Saturn brand
name. “Without that agreement, the company has determined that the
risks and uncertainties related to the availability of future products
prohibit the company from moving forward with this transaction,”
Penske Automotive said. Saturn’s 350 dealerships across the United
States will now close because of the development.
href='http://www.nytimes.com/2009/10/01/business/01auto.html?_r=1&ref=business&pagewanted=print'>Read
href='http://www.nytimes.com/2009/10/01/business/01auto.html?_r=1&ref=business&pagewanted=print'>
Bank of America Chief
Resigns Under Fire
After fighting to keep his grip on the bank he helped
build into one of the nation's largest in assets, Bank of America Corp.
CEO Kenneth D. Lewis said that he will resign by year end, the
size='3'>Wall Street Journal reported
yesterday. BofA’s board had previously asked Lewis how long he
planned to stay on as CEO. He previously indicated that he would stay
through 2010, but allegedly changed his mind during a vacation to Aspen,
Colo., in late August. Lewis was initially hailed as a hero for swooping
in to buy Merrill on the same weekend last September when Lehman
Brothers Holdings Inc. collapsed. He soon may face civil securities
charges from New York Attorney General Andrew Cuomo over disclosures of
Merrill's bonus payments and ballooning losses shortly before the
takeover was completed in January. Bank of America said its board plans
to name a successor for Lewis by the time he leaves, but no one has been
chosen yet.
href='http://online.wsj.com/article/SB125434715693053835.html'>Read
more. (Subscription required.)
International
Click here to review
today's global insolvency news from the GLOBAL INSOLvency site.