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Senate to Hold Hearing on FCRA
The Senate Banking Committee will hold the last in a series of six
hearings on the Fair Credit Reporting Act (FCRA) this week,
CongressDaily reported. On Tuesday, the panel will hear testimony
on consumers' understanding of the credit granting process. On Thursday,
members will hold a 'wrap-up' hearing to discuss the various FCRA
legislative proposals and issues that have been raised in hearings over
the past two months. Banking Committee Chairman Richard Shelby (R-Ala.)
plans to work with ranking member Paul Sarbanes (D-Md.) and other
members on FCRA legislation during the August recess. Shelby expects to
begin moving the bill through the legislative process in early
September, reported the newswire.
New Rules Urged to Avert Looming Pension Crisis (New York
Times)
Top government officials have begun a campaign to bring attention to
corporate pension plans, which they say may be headed for collapse, the
New York Times reported. On Wednesday, the comptroller general
placed the Pension Benefit Guaranty Corporation, (PBGC) on a list of
'high risk' government operations. Elaine L. Chao, the secretary of
labor, issued a statement on the same day warning that the decades-old
system in which workers earn government-guaranteed pensions 'is,
unfortunately, at risk.' Treasury Secretary John W. Snow warned recently
that a financial meltdown similar to the savings-and-loan collapse of
1989 might be coming. Steven Kandarian, the executive director of PBGC,
gave a speech earlier this month in which he foresaw a possible 'general
revenue transfer,' reported the Times.
While officials want to underscore the dangers to retirement benefits
that millions of Americans count on, they do not want to frighten
consumers, roil financial markets or anger the companies that already
put billions of dollars into the system.
But some pension analysts, reading between the lines, say they think
that officials are not only looking at calling upon companies to put
more money into their ailing pension plans, but also at the more radical
remedy of encouraging funds to reduce their heavy reliance on the stock
market, according to the Times. To read the full article, point your
browser to www.nytimes.com.
Adelphia Elects Two Additional Board Members
Cable operator Adelphia Communications Corp. on Friday said it has
elected two additional members to its board of director, Reuters
reported. E. Thayer Bigelow Jr., a former HBO president and president
and CEO of Time Warner Cable programming, and Kenneth Wolfe, retired
former chairman of Hershey Foods will join the board of directors of the
bankrupt operator, the company said in a statement. The company is in
the process of remaking its board to be comprised of independent
members, following its bankruptcy late last year. In June, the company
said the last remaining four directors appointed by company founder John
Rigas will step down, reported the newswire.
MIRANT
Pepco May Have $700 Million Claim Against Mirant
Pepco Holdings Inc. would have a $700 million claim against Mirant Corp.
if the power producer that filed for bankruptcy protection last week
cancels its supply contracts, Pepco Chief Executive Dennis Wraase said,
Bloomberg News reported. The company would expect to recover a
'substantial'' amount of the claim through the bankruptcy court in the
event of a default on the contact, Wraase said in an interview.
Washington, D.C.-based Pepco probably would raise customer rates to
recover any money it can't recover from Mirant. Pepco's claim would stem
from a five-year power-supply agreement reached in 2000, when Mirant
bought the utility's electricity plants for $2.65 billion. Under that
agreement, Atlanta-based Mirant is required to provide all of the power
needs of Pepco's customers in Maryland until July 2004 and in
Washington, D.C., until February 2005.
'At this point, we have had no indication from Mirant that they intend
to terminate these contracts,'' Wraase said. 'But it would be imprudent
not to prepare for that eventuality, when everyone knows there is an
opportunity for them to try to terminate or get out of obligations that
are believed to be causing financial harm,'' reported the newswire.
Mirant Creditors' Committee Named With Separate Panel for
Unit
A U.S. Justice Department official named a panel of Mirant Corp.
creditors to represent lenders and investors of the parent company and a
separate committee for creditors of the company's Mirant Americas
Generation unit, Bloomberg News reported. George F. McElreath, the U.S.
Trustee in the Northern District of Texas, had earlier named a single
panel at a meeting of Mirant creditors in Dallas. The committee met
after the meeting and voted 10-3 to support dividing the panel into two,
said Tom Lauria of White & Case, Mirant's bankruptcy lawyer.
McElreath then named a separate creditors' committee, adding two banks
and a bondholder to the Mirant committee and two banks to the Mirant
Americas' panel. 'This is unprecedented,'' said Lauria. 'We can't
provide any explanation for it,'' he said, reported the newswire.
Mirant Says Some Holders to Give Notice of Trades
Mirant Corp. on Friday said a U.S. Bankruptcy Court has approved an
interim measure requiring large shareholders and creditors to notify the
bankrupt power producer and trader 10 days in advance of selling or
trading the company's shares or claims, Reuters reported. Atlanta-based
Mirant said the procedure applies to claims of more than $250 million
and shareholders who own or seek to own at least 4.75 percent of
Mirant's stock. Violations of the order could include monetary damages
and the voiding of some transactions, the company said in a statement. A
hearing to consider a final order will be held on Aug. 8, reported the
newswire.
Seitel Gets Approval to Tap Into $20 Million Bankruptcy
Loan
A bankruptcy judge granted Seitel Inc., a seismic data seller that plans
to become part of Warren Buffett's Berkshire Hathaway Inc., permission
to tap into a $20 million loan to finance operations while it
reorganizes, Bloomberg News reported. U.S. Bankruptcy Judge Peter
Walsh in Wilmington, Del., authorized Seitel to use as much as $10
million of the loan. He scheduled a hearing to consider approval of the
full amount on Aug. 18. Wells Fargo Foothill Inc. is providing the
loan.
Burlington Says Ross's $608 Million Offer to Be Opening Auction
Bid
Burlington Industries Inc. said financier Wilbur Ross's $608 million
offer will be the opening bid for the company at a July 28 auction,
Bloomberg News reported. Warren Buffett's Berkshire Hathaway Inc.
dropped a $579 million bid for Burlington in February after a judge
rejected sales procedures that favored the billionaire's investment
company, reported the newswire.
MCI/WORLDCOM
MCI, Hoping to Exit Bankruptcy, Faces New Investigation of
Fraud
Just weeks before a critical court hearing to determine whether telecom
giant MCI can emerge from bankruptcy-court protection, rivals have
brought a new set of fraud allegations to the attention of federal
prosecutors, who have opened an investigation, the Wall Street
Journal reported. Verizon Communications Inc., AT&T Corp. and
SBC Communications Inc. have actively lobbied to put MCI out of business
since the long-distance telephone-services provider disclosed a year ago
an accounting fraud. These rivals now say MCI, in a different scheme,
has been defrauding them and other telephone companies since 1994. The
companies say MCI collaborated with small local phone companies to
reroute phone traffic, making long-distance calls appear to be local
phone calls, to avoid having to pay access fees, reported the
Journal. To read the full article, point your browser to
href='http://www.wsj.com/'>www.wsj.com (subscription required).
U.S. Agency Objects to WorldCom Pension Plan
WorldCom Inc.'s plan to reorganize has inadequate safeguards for its
pension funds, which are underfunded by $281.3 million, a U.S. agency
said on Friday in an objection filed with a bankruptcy court, Reuters
reported. The Pension Benefit Guarantee Corp. (PBGC) objected to the
telecommunications company's plan because it does not explicitly say the
reorganized company will maintain the pension funds and attempts to
exclude some beneficiaries. The Ashburn, Va.-based company believes its
intention to assume the plan is clear but wants to drop obligations to
employees connected to the scandal that led to its bankruptcy. PBGC said
its lawyers were negotiating with WorldCom to resolve the issues, but
filed the objection with the bankruptcy court in case those talks do not
lead to a resolution, reported the newswire.
WHX says PBGC Won't Terminate Pension Plan
WHX Corp. said the Pension Benefit Guaranty Corp. (PBGC) has agreed not
to terminate the company's pension plan now that WHX's
Wheeling-Pittsburgh Corp. unit is set to emerge from bankruptcy, Reuters
reported. WHX, parent of steelmaker Wheeling-Pittsburgh Corp., said the
PBGC agreed to withdraw a complaint in the civil action it brought
against WHX in the U.S. District Court for the Southern District of New
York.
Shares of WHX were up 20 cents, or 7.8 percent, at $2.75 in midday trade
on the New York Stock Exchange. A PBGC spokesman said the need to
terminate the pension plan has been 'obviated' since Wheeling-Pittsburgh
has received a $250 million loan guaranty and is poised to emerge from
bankruptcy, reported the newswire. Wheeling-Pittsburgh and its
subsidiaries filed for chapter 11 bankruptcy protection in November
2000. The Emergency Steel Loan Guarantee Board has set Aug. 15 as the
last day for the company to exit bankruptcy, according to a company
spokeswoman, Reuters reported.
Allegheny Receives Key Approval From SEC
The Securities and Exchange Commission (SEC) has given permission to
Allegheny Energy Inc. to sell $325 million in convertible securities as
the utility struggles to avoid bankruptcy, the Associated Press
reported. The energy company's subsidiary, Allegheny Energy Supply Co.,
will also be allowed to borrow up to its $2.2 billion limit, the SEC
said on Thursday. Allegheny has warned that if it were unable to secure
new financing, its Allegheny Energy Supply subsidiary would be unable to
conduct business, possibly forcing the company to seek bankruptcy
protection, reported the newswire.
Regional Carrier Plans Bargain Airline
Atlantic Coast Airlines plans to sever its 14-year bond with United
Airlines and become a low-fare airline that could increase competition
for price-conscious travelers in the Washington, D.C. region, the
Washington Post reported. The plan would mean refashioning a
regional carrier dependent on United for most of its passengers and
revenue into an independent airline during one of the travel industry's
worst slumps. Atlantic officials concede that the plan is risky and
costly, but that it provides the best hope for the company's long-term
growth.
Under the plan, Atlantic would no longer operate regional United Express
flights. It would develop its own brand and market itself as a
competitor to such airlines as Southwest Airlines Co., AirTran Airways
and JetBlue Airways. The plan is contingent upon United rejecting its
current contract with Atlantic. As recently as Thursday, United chief
executive Glenn F. Tilton said negotiations on a new contract were
continuing. With the venture to be announced today, Atlantic would
effectively end those negotiations. United and Atlantic have been trying
to renegotiate the contract since United filed for chapter 11 bankruptcy
protection in December, reported the Post.
Some XO Investors To Get a Second Chance
XO Communications Inc. plans to offer shareholders who held stock before
the telecom company's emergence from chapter 11 bankruptcy a chance to
buy stock in the reorganized firm, a move that will give former
investors a stake in the Reston, Va.-based company and raise up to
$216.6 million, TechNews.com reported. In filings on Tuesday with
the Securities and Exchange Commission, XO said that as part of its
chapter 11 bankruptcy reorganization, it is required to offer
bondholders and any common shareholders who owned XO stock as of Nov.
15, 2002, the right to buy up to 43.3 million shares in the new company,
an amount that could represent 30 percent of its shares. Each share can
be repurchased at $5 a share. XO filed for chapter 11 in June 2002 and
emerged in January.
Burlington Accepts Bid from W.L. Ross
Burlington Industries Inc. on Friday said it accepted a $608 million
offer from distressed asset fund W.L. Ross & Co. as the opening bid
in an auction to be held today for the bankrupt textile maker, Reuters
reported. Greensboro, N.C.-based Burlington, which filed for bankruptcy
in November, 2001, said others will now have the option to top the W.L.
Ross offer in an open auction in New York. The company said on July 21
that it had received 'several proposals in connection with the sales
process,' but didn't name the bidders.
W.L. Ross hopes to buy Burlington and spin off its Lees Carpet unit to
Mohawk Industries Inc., both companies said. Under the agreement, Mohawk
will pay $350 million for Lees, a leading commercial carpet maker,
according to a person close to Burlington, reported the newswire.
US Airways Settles Claims, Seeks to Keep Hub
US Airways said on Friday it has settled all bankruptcy-related claims
filed by Allegheny County, Pennsylvania and the Allegheny County Airport
Authority with regard to Pittsburgh International Airport, one of its
hubs, Reuters reported. The carrier said the county and airport
authority will be granted a $211 million general unsecured claim in its
bankruptcy case. It said they will rank with other unsecured creditors
in the distribution of equity under US Airways' bankruptcy
reorganization plan. US Airways Group Inc. exited chapter 11 in March,
reported the newswire.
Bonus Stores Files for Chapter 11 Bankruptcy Protection
Bonus Stores Inc., which operates about 335 stores under names including
Bill's Dollar Stores and Bonus Dollar Stores, on Friday filed for
chapter 11 bankruptcy protection, court filings show, Reuters reported.
The Columbia, Miss.-based retailer said it had about $78 million of
assets and $61.6 million of debts as of July 5. It filed for protection
from creditors with the U.S. Bankruptcy Court in Delaware, reported the
newswire.
In an affidavit, Chief Financial Officer Alan Williams said Bonus
suffered from 'lagging sales' in a softening retail environment,
especially in lower-income markets where it does business. He also said
asset-based lenders, which have helped fund Bonus's day-to-day
operations, have tightened their lending standards, Reuters
reported.
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