href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif'>
March 6, 2006
Dana Corp. filed for
chapter 11 protection in U.S. Bankruptcy Court in
w:st='on'>
York City
of $7.9 billion and debts of $6.8 billion, the
face='Times







New




Roman'
size='3'>Toledo Blade reported on Friday. The
company obtained $1.45 billion in debtor-in-possession financing from
Citigroup, Bank of America NA and JP Morgan Chase Bank NA. Bankruptcy
Judge Burton Lifland authorized Dana to use up to $800
million to pay wages, benefits, suppliers, and other expenses while he
weighs an overall financing package, the company said. Dana’s
bankruptcy is the largest one of 2006 and is the third-largest among
automotive suppliers. It joins fellow suppliers Federal-Mogul Corp.,
Delphi Corp., Tower Automotive Inc., Collins & Aikman Corp. and
Meridian Automotive Systems Inc. in bankruptcy. Cost cuts demanded by
Ford Motor
size='3'>Co.
other automakers may help Dana renegotiate pricing for those contracts,
said David Siino, an analyst with Gabelli & Co. Inc. Dana’s
shareholders are unlikely to get any money for their stock unless
unsecured creditors are repaid in full or agree to allow them some
relief, said John
Penn, president of the American Bankruptcy
Institute. Dana has more than 100,000 creditors, but according to its
bankruptcy filing, only Citicorp USA Inc. is secured. Citicorp
represents a syndication of lenders owed $377 million. Wilmington Trust
Co. is the largest unsecured creditoras it is owed more than $1.6
billion in bonds.
href='http://www.toledoblade.com/apps/pbcs.dll/article?Date=20060304&Category…'>Read
more.
name='2'>Commentary: Bankruptcy Law Shows You Get What You Pay
For
When bankruptcy reform
legislation was adopted last year, supporters said that it would crack
down on 'deadbeats' who abuse the bankruptcy laws and avoid paying their
debts; however, Macomb County and counties across the country are
finding that consumers with serious debt problems are getting trampled
in this process, according to an op-ed piece in the
Macomb (Mich.) Daily
yesterday. GreenPath Debt Solutions, a credit counseling
agency with 24
size='3'>Michigan
two in
face='Times New Roman' size='3'>Macomb
size='3'>County
found deadbeats hard to find. GreenPath was among six agencies
nationwide who participated in the NACBA survey, which found that 97
percent of those filing for bankruptcy and reporting for mandatory
credit counseling are unable to pay their debts and that four out of
five are in debt due to dire financial circumstances, such as a job
loss, catastrophic medical expenses or the death of a
spouse.
href='http://www.macombdaily.com/stories/030506/loc_chad%20col001.shtml'>Read
more.
Judge
Denies Allied Shareholders Equity Commitee
Shareholders of
automotive distribution company Allied Holdings will not form an
official equity committee after a
w:st='on'>
size='3'>Georgia
size='3'>bankruptcy court judge denied a motion that would have
authorized it, Portfolio
Media reported on Friday. The company’s
largest shareholder, Guy Rutland Sr., filed the motion in August asking
that the court allow shareholders to form the committee, which would
have given Allied’s investors greater control in the chapter 11
proceedings. The court ruled that although Allied and its executives are
not adequately representing shareholder concerns in the bankruptcy
proceedings, there is no proof that the company is not “hopelessly
insolvent,” which is
size='3'>necessary for the formation of an equity committee.
size='3'>Rutland
descendant of Allied’s founder, controls 30 percent of the
company. Two other large shareholders, Virtus Capital Advisors and Hawk
Opportunity Fund, which together control 9.63 precent of the
company’s stock, also filed motions supporting the
committee.
name='4'>Musicland Wins Bidding Procedure Approval
A federal bankruptcy judge has
endorsed bankrupt Musicland Holding Corp.’s bidding procedures for
its asset sale, pushing the entertainment retailer one step closer to
climbing into bed
with archrival Trans World Entertainment Corp.,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported on Friday. Judge Stuart Bernstein
approved the order on Wednesday in the U.S. Bankruptcy
size='3'>Court for the Southern District of New York, where the
Minnesota-based company filed for chapter 11 bankruptcy protection in
January. The development comes on the heels of Musicland entering into
an asset-purchase agreement with stalking-horse bidder Trans World for
approximately $104 million in cash, including certain liabilities. While
the upcoming March 21 auction is open to other bidders, TransWorld would
receive a breakup fee of $3.1 million if it fails to emerge as the final
bidder. The fee would apply even if Musicland withdraws from the planned
auction in an effort to reorganize under a stand-alone chapter 11 plan.
The case is
size='3'>Musicland Holdings Corp., case number
06-10064, in the U.S. Bankruptcy Court for the Southern District of New
York.
name='5'>Calpine Rearranges Management, Naming New
Chiefs
The new chief financial
officer of bankrupt power producer Calpine Corp., Scott Davido, will
also serve as the company’s chief restructuring officer, according
to the company,
size='3'>Portfolio Media reported on Friday.
Davido, who joined Calpine in early February and has “both
extensive restructuring experience and broad industry knowledge,”
will lead the company's restructuring process, including the development
of Calpine's new business plan and reorganization plan, according to a
company press release. The company also said Michael Bradley,
Calpine’s Senior Vice President and the president of NewSouth
Energy LLC, has been named to coordinate Calpine’s
asset-disposition program with its bankruptcy stakeholders, said the
press release. The changes represent the company’s renewed focus
on its core power generation business and are aimed at helping Calpine
emerge from its restructuring “as a profitable, competitive power
company,” the company said. The news came on the heels of last
week’s move by the embattled company to have its insurers cover
litigation expenses for several employees mired in class action
securities litigation related to the company.
J.L.
French Creditors Oppose DIP Loan
Frustrated unsecured
creditors of J.L. French Automotive Castings Inc. criticized the
company’s terms for its $50 million debtor-in-possession
(DIP) loan and called for a federal judge to withhold final
approval of the loan,
size='3'>Portfolio Media reported on Friday.
Claiming J.L. French’s terms were “inequitable and
unreasonable” in court documents Wednesday, the creditors said the
current terms of the loan keep J.L. French from finding alternative
financials and are overly generous to lenders. Creditors were concerned
that if it was approved, the loan will undermine the rights and duties
of J.L. French and the committee, and will award DIP lenders too much
control over the chapter 11 cases. “[T]he DIP facility goes far
beyond simply protecting the DIP lenders and further presumes to grant
the DIP lenders control over the outcome of the reorganization process,
and therefore should be denied,” according to the creditors in
court documents. The creditors also argued over the stipulation for the
DIP loan that restricted more than $30,000 to be used by the committee
for an investigation of the liens and claims of the pre-bankruptcy
lenders and agents. They suggested removing the cap altogether or
increasing it to $100,000. The creditors also voiced concern over a
failure to include unsecured noteholders in an agreement between J.L.
French and its second-lien lenders that involved terms of a chapter 11
plan which the company plans to file.
name='7'>Commentary: Tax Bills and Credit Cards Don't
Mix
Consumers teetering on
the edge of solvency and considering a bankruptcy filing should not be
tempted to pay off their taxes with a credit card, according to a
New York
Times op-ed piece on Saturday.
While credit card companies stand at the end of
the line with unsecured debt in any bankruptcy proceeding, it won't work
for consumers looking to have that debt discharged. 'They thought of
that when they wrote the bankruptcy law,' said Victoria S. Wright, a
bankruptcy lawyer who is the executive director of financial education
at Hummingbird Credit Counseling and Education in
w:st='on'>
size='3'>Raleigh
w:st='on'>
size='3'>N.C.
obligation paid by credit card in the previous three years is not
dischargeable through bankruptcy.
href='http://www.nytimes.com/2006/03/04/business/yourmoney/04money.html?_r=1&…'>Read
more.
name='8'>Mediation Planned for Queen Mary
Despite looming deadlines
in chapter 11 bankruptcy proceedings, Queen's Seaport Development Inc.
(QSDI), which operates the Queen Mary, has yet to announce a
reorganization strategy, the
size='3'>Long Beach Press Telegram reported
yesterday. Underlying disputes have become so contentious that U.S.
Bankruptcy Judge Vincent Zurzolo recently ordered all parties to
mediation to avoid what he termed a 'blood bath.' In a court filing
dated Feb. 6, the Las Vegas-based Bandero LLC, a minority shareholder in
QSDI, laid out a proposal to pay off many of QSDI's creditors, including
the city of
face='Times New









Roman'
size='3'>Long Beach
owns the ship and claims it is owed more than $4.5 million in back rent.
In total, Bandero promised to pay off some $8.6 million in Queen Mary
debt, renovate the ship and develop its adjacent 55-acre site. The next
deadline, April 20, is expected to be the last one. Judge Zurzolo has
ordered parties to show cause why the case should not be dismissed,
converted to chapter 7 or transferred to a chapter 11
trustee.
href='http://www.presstelegram.com/portlet/article/html/fragments/print_artic…'>Read
more.
name='9'>Iowa Engineering Company Up for
w:st='on'>
size='3'>Sale
Proceeding
Wayne Engineering, which
filed for chapter 11 bankruptcy protection in July, voluntarily
converted those proceedings to an 'operating' chapter 7 case in U.S.
Bankruptcy Court in
w:st='on'>Cedar
Rapids
face='Times New Roman' size='3'>Waterloo Courier
size='3'>reported on Friday. In an order issued Tuesday, Chief U.S.
Bankruptcy Judge Paul Kilburg directed the company to remain in
operation in order to facilitate a sale of its assets and subsequent
infusion of new cash into the operation. The company employs about 90
people. A labor agreement between Wayne and its unionized workers,
affiliated with United Auto Workers Local 838, expired Monday but has
remained in place under a verbal extension. Bankruptcy attorney John
Titler, who is representing
w:st='on'>
size='3'>Wayne
bulk of the company's outstanding secured debt, about $4.5 million, was
with US Bank, which in March 2005 sold that debt to MTGLQ, a Texas-based
limited liability company.
href='http://www.wcfcourier.com/articles/2006/03/03/news/breaking_news/doc440…'>Read
more.
New
York Company's Bankruptcy Receives Further Investigation
A spokeswoman for the
Westchester County District Attorney's Office confirmed they are
investigating the sale of investment products by the bankrupt VWE Group
Inc., based in
face='Times New Roman' size='3'>Yonkers
size='3'>,
size='3'>N.Y.
to the Westchester
(N.Y.) Journal News. 'The story that is told
by the facts and materials thus far presented to the committee is one of
a family-owned and controlled company which, in the past 10 years,
raised more debt than it could have ever repaid other than by raising
even more debt, a typical Ponzi scheme based on incomplete and
misleading disclosure about the company's financial status,' the
creditors' committee stated in a filing in U.S. Bankruptcy Court in
White Plains. The company, now headed by Alicia Eimicke, one of Victor
Eimicke's daughters, has reported owing more than $27 million to
investors. The vast majority of the obligations were the unsecured loans
individual investors had made at the Eimickes' behest. More than 130 of
them hold notes that many now regard as worthless.
href='http://www.thejournalnews.com/apps/pbcs.dll/article?AID=/20060305/NEWS0…'>Read
more.
Airlines
name='11'>Northwest Pilots Reach Pay-Cut Deal
Pilots reached a tentative
pay-cut deal with Northwest Airlines Corp., a major step toward ending a
showdown that put the bankrupt airline's future in doubt, the Associated
Press reported Friday. The nation's fourth-largest airline said it got
the $358 million in savings it sought, but other details weren't
released. This deal, as well as pacts reached earlier with flight
attendants and ground workers, needs ratification to be final. 'The
tentative agreement is a painful but necessary part of a successful
restructuring of Northwest Airlines,' said Mark McClain, head of the
Northwest branch of the Air Line Pilots Association. Northwest ended up
getting the $1.4 billion in concessions it wanted from union workers as
well as two rounds of pay cuts for salaried and management employees.
Friday's deal leaves only Delta Air Lines Inc. pilots holding out in
this round of concessions.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/03/03/AR20060…'>Read
more.
name='12'>San Diego Mayor Urges Mediation in Pension
size='3'>Battle
Mayor Jerry Sanders asked
the lawyers for four
w:st='on'>San
Diego
consider mediation yesterday as the cheapest and quickest way to resolve
a benefits dispute that could drag through the courts for years,
the San Diego
Union-Tribune reported on Saturday.
Representatives from three of the four unions remained guarded about the
proposal last night, but the president of the city's largest union
sounded positive about the possibility
size='3'>and about the mediator Sanders proposed. Under Sanders' plan,
retired federal judge Lawrence Irving would meet with the attorneys
March 22 in the first of a series of settlement conferences to determine
the legality of pension benefits awarded to city employees in 1996 and
2002. Sanders' proposal, however, requires buy-in from the four labor
groups, which represent police officers, firefighters and blue- and
white-collar workers.
href='http://www.signonsandiego.com/news/metro/pension/20060304-9999-7m4union…'>Read
more.
w:st='on'>
name='13'>Oklahoma
face='Times









New




Roman'
size='3'>'s Public Pension Funds Criticized
Faced with underfunding,
some of
face='Times New Roman'
size='3'>Oklahoma
pension systems are moving into 'hyper-aggressive, high-risk'
investments in an effort to increase returns and stave off insolvency,
according to a draft report prepared by the Oklahoma Pension Oversight
Commission, the Daily
Oklahoman reported yesterday. The report
strongly questioned the wisdom of the Oklahoma Police Pension and
Retirement System investing $92 million of its $1.5 billion portfolio in
high-risk private equity investments. The report contends the high-risk
private equity investments are of greatest concern. 'The norm in this
category of investments is for only one in five investments to make
money,' the report said. 'The hope is that the one that does make money
will make more than enough to cover the losses of the other four that
lose money.'The fund has tried to reduce its risk by pooling its private
equity investments with other investors, which allows it to spread its
money over a greater number of business ventures, but the investments
remain risky, the report contends. 'We don't think that level of
exposure is appropriate for public funds,' State Treasurer Scott Meacham
said. Read
more. (Free registration required).
w:st='on'>
name='14'>Kentucky
face='Times









New




Roman'
size='3'> Diocese Sells Property to Help Pay Abuse
Settlement
The Roman Catholic Diocese of
Covington, Ky., has sold all but 40 acres of its 266-acre campus to help
fund a settlement with victims of priest sexual abuse, WKYT.com reported
on Saturday. The property was sold to Vinings Trace, a subsidiary of
Cincinnati-based Western and Southern Financial Group, for for $25
million. The property's sale was needed to help fund the diocese's part
of an $85 million lawsuit settlement filed by sexual abuse victims by
priests and other diocesan employees. The church is responsible for $40
million of the fund, with insurance companies contributing the remaining
$45 million.
href='http://www.wkyt.com/Global/story.asp?S=4585094&nav=4CAL'>Read
more.
name='15'>Landmark
w:st='on'>
size='3'>Michigan
Promises to Stay Open Through Bankruptcy
Frank's Tavern will
remain open despite bankruptcy proceedings, said the co-manager of
the
size='3'>Lake
face='Times New Roman' size='3'>Ponemah
size='3'>landmark that's been around since the 1920s, the
size='3'>Flint
w:st='on'>
size='3'>Mich.
Journal reported on Saturday. Owner Steve
Fessler has new ownership lined up to buy the business' assets and
continue running the restaurant, said Jessica Begley, one of the
restaurant's managers. Frank's Tavern filed for chapter 7
bankruptcy Dec. 13, according to records in U.S. Bankruptcy Court
Eastern District of Michigan in
w:st='on'>
size='3'>Flint
has appointed a trustee to operate Frank's while case is pending before
Judge Walter Shapero.
href='http://www.mlive.com/news/fljournal/index.ssf?/base/news-35/11414784171…'>Read
more.
International
name='16'>PixeLINK emerges from bankruptcy
PixeLINK, an Ottawa-based
manufacturer of digital cameras for industrial and scientific
applications, will emerge from bankruptcy protection in April,
the Ottawa Business
Journal reported on Friday. PixeLINK says its
creditors have voted unanimously in favor of a restructuring proposal.
'Looking ahead, we will be able to reassert our position in the
industrial and scientific camera market,' says new president Michael
McKay. PixeLINK entered bankruptcy protection last October when it was
unable to fulfill a covenant with the bank due to operational problems
that had affected its cash flow.
href='http://www.ottawabusinessjournal.com/295035044555075.php#'>Read
more.
name='17'>British Treasury's Estimate of Unfunded Pension
Liabilities Rises by £70 Billion
The British Treasury
raised its estimate by £70 billion for the liabilities of unfunded
pensions for doctors, nurses, teachers and police, according
to London's
size='3'>Financial Times on Friday. Figures
from the Government Actuary's Department showed that £530 billion
would have to be found to fund the public service pension schemes fully,
compared with the previous £460 billion estimate. One factor
accounting for the raised estimate was a lowering of the discount rate
used to assess police and fire service pensions. Although the figures
show the liabilities greatly exceeding the £443 billion net
national debt, they are low compared with many independent estimates.
Watson Wyatt, the actuarial company, last year calculated pension
liabilities of £690 billion using a lower discount rate to the
Treasury, while the
w:st='on'>
size='3'>Institute
Affairs
might be as high as £817 billion. The Treasury said the key issue
was not the liability, which was sensitive to the choice of discount
rate, but the burden for future taxpayers. 'The annual cash payment from
the unfunded schemes would rise gradually from 1.5 percent of gross
domestic product now to 2.1 percent by the middle of the century,' it
said.
href='http://news.ft.com/cms/s/6d3c7122-aa5a-11da-96ea-0000779e2340.html'>Read
more.
w:st='on'>
name='18'>Ireland
face='Times New Roman' size='3'> May Become Home for British
Companies' Pensions
Ireland could become a
home for the pension funds of major British companies hoping to take
advantage of its more favorable regulatory regime, the Pensions Board
said last week, according to the Ireland's
size='3'>Sunday Business Post. Jerry Moriarty, head of
compliance at the Pensions Board, which oversees pension funds in
size='3'>Ireland
British companies could relocate their pension funds here to avoid a
levy that is applied to funds in
w:st='on'>
size='3'>Britain
British employers must contribute to a special Pensions Protection Fund
(PPF), which is used to safeguard pensioners if their schemes collapse,
but no such fund exists in
w:st='on'>
size='3'>Ireland
New EU rules will allow pension funds to operate on a cross-border
basis. Industry experts have said this would be likely to benefit
size='3'>Ireland
size='3'>Luxembourg
size='3'>. Irish pension legislation is considered more advanced than
laws in many other EU countries, while
w:st='on'>
size='3'>Ireland
as a favorable location because it has a well-developed financial
services industry in the IFSC in
w:st='on'>
size='3'>Dublin
href='http://www.sbpost.ie/post/pages/p/story.aspx-qqqid=12392-qqqx=1.asp'>Read
more.