March 24, 2004
Senate Governmental Affairs Committee to Hold Hearing on Credit
Counseling Abuses
The Permanent Subcommittee on Investigations will hold a hearing
today to address the problems facing the credit counseling industry. The
hearing will review the most serious cases of misconduct among credit
counseling agencies and their for-profit service providers and examine
what solutions may be available to repair the industry. The subcommittee
will hear from victims and ex-employees of the credit counseling
industry, representatives of for-profit service providers and credit
counseling associations, as well as a panel of government
regulators.
'Alarming Abuses' in Credit Counseling
Some of the nation's nonprofit credit-counseling agencies are
engaged in abusive marketing practices that funnel millions of dollars
from cash-strapped debtors to the agencies' executives in violation of
federal tax and fair trade laws, a Senate panel alleges, the
Washington Post reported. Such practices have turned what once
was a social-service-oriented industry into a sometimes profit-driven
business that hurts debtors 'by charging excessive fees, putting
marketing before counseling and providing debtors with inadequate
educational, counseling and debt management services,' the Senate
Permanent Subcommittee on Investigations said in a report to be released
today during hearings on the issue. Read the full article at
href='http://www.washingtonpost.com/wp-dyn/articles/A19019-2004Mar23.html'>http://www.washingtonpost.com/wp-dyn/articles/A19019-2004Mar23.html.
Conferees Agree to Review Multi-employer Pensions
Pension conferees yesterday agreed to examine proposals to provide
limited aid to multi-employer pension plans in the final conference
report, CongressDaily reported. Senators had insisted that the
bill include some help for multi-employer plans that cover employees
under collective bargaining agreements spanning more than one company.
But House negotiators had opposed the inclusion of the Senate-passed
aid. Conferees on Tuesday said they were considering ways to target
waiver authority already written into pension laws in order to give
relief to multi-employer pension plans that have incurred investment
losses because of a downturn in the economy. Conferees will meet again
today, the newswire reported.
Trustees Report Deterioration In Medicare Finances
Medicare will have to begin using its trust fund to keep up with
expenditures and will go broke by 2019 because of rising health costs,
trustees reported on Tuesday, according to the Associated Press. The
deteriorating finances for the health care program for older and
disabled Americans is a result, in part, of the new Medicare
prescription drug law that will raise costs by more than $500 billion
over 10 years, according to the annual report by government trustees.
The 2019 date for the Medicare trust fund, which is devoted primarily to
paying beneficiaries' hospital bills, is seven years sooner than what
the trustees projected last year. The trustees' report is the first
official estimate of the long-term costs of the Medicare law, the
newswire reported. Like last year, the trustees said projected lower tax
receipts devoted to the program and higher expenditures for inpatient
hospital care also contributed to the growing financial problem.
Government officials have been predicting for years that the retirement
insurance and health care funds for the elderly -- both financed through
payroll taxes -- will be pushed toward insolvency as more post-World War
II baby boomers reach 65. Last year, Medicare's insolvency date was
moved up to 2026 from 2030. The projected insolvency date for Social
Security, on the other hand, was extended to 2042, one year later than
what was forecast in 2002.
Republicans pressed for the overhaul of Medicare last year to give
private insurers a much larger role in the program as a way to control
long-term costs. But the government's own projections are that private
managed care plans will cost taxpayers more than traditional Medicare
for the foreseeable future, the Associated Press reported. A big reason
for an earlier insolvency date 'will be a direct result of increased
payments to private health plans,' said Terri Shaw, an analyst with the
Liberal Center for American Progress, the newswire reported.
Judge Approves WorldCom Deal With Oklahoma
A federal bankruptcy judge yesterday gave his approval to a deal between
WorldCom Inc. and the Oklahoma attorney general's office that removes
another legal obstacle for the company and promises to bring jobs to the
state, the Washington Post reported. The agreement, struck
earlier this month, settles criminal charges that had been filed by the
state's attorney general last year in connection with the massive
accounting scandal that led to the company's bankruptcy in 2002. In
return for the attorney general's decision to drop the charges, WorldCom
has promised to create 1,600 jobs in Oklahoma over the next 10
years.
Credit Card Delinquencies at New High
The number of past-due U.S. credit card accounts jumped to a record high
in the fourth quarter of 2003 as Americans struggled to pay their bills,
Reuters reported. Credit card delinquencies rose to a seasonally
adjusted 4.43 percent of all accounts in the three-month period from
4.09 percent in the third quarter, which had also been a record, the
American Bankers Association (ABA) said on Tuesday. Weak job creation
and rising energy costs put Americans without work under greater
financial stress, ABA Chief Economist James Chessen said. 'The improving
economy has not yet touched all individuals, particularly those who
continue to look for work and may be relying on credit cards to meet
their daily living expenses,' he said in a statement. Meanwhile,
delinquencies of other types of consumer loans fell. A composite of
installment loans, including home equity and auto loans, fell to its
lowest level since 1995, the newswire reported.
Bankruptcy Protection Period Extended, Ivaco Says
Ivaco Inc. said on Tuesday that its court protection under the
Companies' Creditors Arrangement Act has been extended until May 21,
Reuters reported. Montreal-based Ivaco, which entered bankruptcy
protection in September because of difficult market conditions for the
North American steel industry, said it will consider stand-alone
restructuring alternatives and the potential sale of major portions of
its assets. The steelmaker also said the Ontario Superior Court of
Justice had approved a process under which asset sales will be
conducted, the newswire reported.
Kaiser Says Minimum Bid for Alpart Auction Set
Bankrupt aluminum producer Kaiser Aluminum Corp. on Tuesday said the
minimum bid for the auction of its 65 percent interest in a Jamaican
alumina refinery joint venture has been set at $215 million, Reuters
reported. The U.S. Bankruptcy Court in Delaware on Monday ordered the
auction. Houston-based Kaiser, which filed for chapter 11 bankruptcy
protection in February 2002, has been exploring the sale of some of its
businesses -- including Alpart, the joint venture in Jamaica -- in order
to speed up its financial turnaround. Kaiser said it expects the court
to rule on the winning bid for Alpart at a regularly scheduled monthly
hearing on April 26, the newswire reported.
Judge Raises Spectre of Air Canada Liquidation
A judge overseeing the restructuring of insolvent Air Canada has urged
unions and a key investor to end a pensions stand-off that risks
delaying the airline's rescue, Reuters reported. Ontario Superior Court
Justice James Farley, in March 19 comments posted on the web site of Air
Canada's Toronto-based lawyers on Monday, said he was concerned at the
slow progress in the airline's emergence from bankruptcy protection.
The Montreal-based airline went into bankruptcy protection last April,
due to deep losses and C$13 billion ($9.75 billion) of debt and aircraft
lease commitments, Reuters reported. Its restructuring target date has
already been delayed by four months to the end of April, and an impasse
between unions and Trinity Time Investments risks delaying it further.
Unions for 85 percent of Air Canada's 35,000 staff, from pilots to
mechanics, refuse to discuss Trinity's plan to switch their pensions to
a defined contribution scheme from a defined benefit scheme, the
newswire reported.
Creditor Challenges Rules for Sale of Weirton Steel
A creditor who says its steam generation plant has been wrongly lumped
in with the assets of Weirton Steel Corp. is challenging the bidding
procedures set for the sale of the ailing steelmaker, according to an
Associated Press article. In documents filed with the U.S. Bankruptcy
Court in Wheeling, W.Va., attorneys for MABCO Steam Co. said the rules
approved by Judge L. Edward Friend II deprive MABCO of its rights and
should be reviewed by a U.S. District Court judge. As of Tuesday, Judge
Friend had not ruled on MABCO's request for permission to appeal.
Provided by Daily Bankruptcy Review (
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
AMR's Ex-chief Joins Plan to Save Hawaiian Airlines
Donald Carty, who resigned a year ago as chairman and CEO of American
Airlines parent AMRCorp., announced yesterday he is teaming up with
Hawaiian Airlines' majority owner on a plan to lift the airline out of
bankruptcy-court protection, the Wall Street Journal reported.
John Adams, chairman of Hawaiian's parent company, Hawaiian Holdings
Inc., enlisted Carty to invest in Hawaiian when it emerges from chapter
11 this summer and become its nonexecutive chairman. Adams already has
proposed a reorganization plan for the carrier, one of three rival plans
filed so far with the U.S. Bankruptcy Court in Honolulu, the online
newspaper reported.
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