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November 24,
2008
name='1'>Federal Regulators Approve Plan to Help Citigroup Cope With
Losses
Federal regulators announced yesterday that they had approved a plan to
stabilize Citigroup in an arrangement in which the government could soak
up billions of dollars in losses at the struggling bank, the New
York Times reported today. The complex plan calls for the
government to back about $306 billion in loans and securities and
directly invest about $20 billion in the company. Citigroup executives
presented a plan to federal officials on Friday evening after a weeklong
plunge in the company's share price threatened to engulf other big
banks. The plan is the government's third effort in three months to
contain the deepening economic crisis and may set the precedent for
other multibillion-dollar financial rescues.
href='http://www.nytimes.com/2008/11/24/business/24citibank.html?_r=1&ref=business&pagewanted=print'>Read
more.
name='2'>Commentary: Return of the Predators
Predatory lenders of every sort have regrouped and returned to
their old ways, this time as loan-modification companies, inserting
themselves between hard-strapped homeowners and banks, offering to work
deals - for cash up front, according to an editorial in today's
New York Times. There's often nothing illegal about
this booming and largely unregulated business. Some shops are true
scams, taking the money and running, while others are profiting on fear
and false hopes with expensive services that nonprofit organizations and
government agencies offer for nothing. Troubled homeowners know all
about the relentlessness of the loan-rescue schemes since foreclosure
filings are public records, and loan modifiers routinely swarm
courthouses to find leads.
href='http://www.nytimes.com/2008/11/24/opinion/24mon1.html?ref=opinion&pagewanted=print'>Read
more.
size='3'>Autos
name='3'>GM Board Says It Hasn't Ruled Out Bankruptcy as an
Option
The board at General Motors Corp. has reviewed the possibility of
bankruptcy, even as the cash-strapped automaker pursues congressional
aid to help it survive the global credit crisis and the worst automotive
sales environment in 25 years, the Detroit Free Press reported
on Saturday. Analysts said that the company's acknowledgment that it has
considered bankruptcy protection concedes that GM is in critical need of
assistance and increases the likelihood that the company could file for
bankruptcy if it doesn't receive federal aid. GM has said repeatedly
that bankruptcy is not an option because consumers are unlikely to
purchase vehicles from an automaker in bankruptcy and because
reorganization financing is not available.
href='http://www.freep.com/article/20081122/BUSINESS01/81122047/1014'>Read
more.
name='4'>Obama Transition Team Said to Explore 'Prepack' Bankruptcy
Option for Automakers
President-Elect Barack Obama's transition team is exploring a swift,
prepackaged bankruptcy for automakers as a possible solution to the
industry's financial crisis, Bloomberg News reported on Friday. A
representative of Obama's team has already contacted at least one
bankruptcy-law firm to say that Daniel Tarullo, a professor at
Georgetown University's law school who heads Obama's economic policy
working group, would call to discuss the workings of a so-called
prepack. U.S. lawmakers on Thursday delayed until December a vote on
whether to give General Motors Corp., Ford Motor Co. and Chrysler LLC a
$25 billion bailout. GM on Friday said that it would idle production at
four plants an extra week and return some corporate jets to conserve
cash.
href='http://news.yahoo.com/s/bloomberg/20081121/pl_bloomberg/aavhrwuqy52o_1/print;_ylt=AiVO4weN9MHz2KfL3l9AdD.pg9IF'>Read
more.
name='5'>Big Three's Troubles May Affect Financial
Sector
The struggling Detroit automakers owe more than $100 billion to their
bankers and bondholders, and Wall Street is starting to wonder how much
of that will be paid back, the New York Times reported today.
With Congress balking at a rescue for the auto industry, and Chrysler
and General Motors warning that they could face bankruptcy without one,
investors are worrying about financial companies' exposure to the Big
Three, as well as to automotive suppliers and dealers. Big banks say
that their exposure to the auto industry is relatively small and that in
any case most of the loans are secured by vehicles or other assets,
which would help minimize any losses. However, the true risks are
difficult to ascertain because banks do not disclose much about their
exposure. Of particular concern is the fate of billions of dollars of
bonds that were used to finance the 2007 acquisition of Chrysler by a
large private investment fund, Cerberus Capital Management.
href='http://www.nytimes.com/2008/11/24/business/24auto.html?ref=business&pagewanted=print'>Read
more.
name='6'>Automotive Suppliers Take Steps to Conserve
Cash
U.S. auto suppliers are scrambling to extend their holiday-season
shutdowns, shedding workers and developing contingency plans to deal
with a potentially devastating failure of some of their biggest
customers in Detroit, the Wall Street Journal reported today.
Suppliers, still unsure of what will happen to the nation's carmakers,
are conserving cash by shifting to shorter workweeks, canceling
capital-spending plans and accelerating layoffs. Problems in the supply
network have the potential to spread pain to a wide swath of the U.S.
economy. Auto suppliers employ more than 730,000 workers in the United
States, about three times more than the Big Three.
href='http://online.wsj.com/article/SB122748575992751755.html'>Read
more. (Subscription required.)
name='7'>Builders Make Plea for Federal Aid
Struggling U.S. automakers left Washington empty-handed after weeks of
pleading for a handout, but that hasn't deterred home builders from
stepping up to lobby Congress for help, the Wall Street Journal
reported today. The builders' lobby is ramping up its push for a $250
billion stimulus package called 'Fix Housing First,' arguing that
financial markets won't recover until home prices stop falling. They are
calling for a generous tax credit for home purchases and a federal
subsidy that would lower a homeowner's mortgage rate. Congress resisted
a similar effort to pass a larger tax credit earlier this year, instead
creating a $7,500 credit for new-home purchases that had to be paid back
over 15 years, effectively extending an interest-free loan.
href='http://online.wsj.com/article/SB122748520112251743.html'>Read
more. (Subscription required.)
name='8'>Democrats' Stimulus Plan May Reach $700 Billion
/>
Facing an increasingly ominous economic outlook, President-elect Barack
Obama and other Democrats are rapidly ratcheting up plans for a massive
fiscal stimulus program that could total as much as $700 billion over
the next two years, the Washington Post reported today. Hints
of a hefty new spending program began emerging last week. New Jersey
Governor Jon Corzine (D), an Obama adviser, and Harvard economist
Lawrence H. Summers, whom Obama has chosen to lead his White House
economic team, both raised the possibility of $700 billion in new
spending. Yesterday, Obama adviser and former Clinton Administration
Labor Secretary Robert Reich and Sen. Charles E. Schumer (D-N.Y.) also
called for spending in the range of $500 billion to $700
billion.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/11/23/AR2008112302064_pf.html'>Read
more.
size='3'>Retail
name='9'>Value City Receives Approval for Closeout Sales
A bankruptcy judge has approved bankrupt Value City Holdings
Inc. to conduct going-out-of-business sales to be managed by liquidator
and financial consultant Tiger Capital Group LLC, Bankruptcy
Law360 reported on Friday. The order, issued Thursday in the U.S.
Bankruptcy Court for the Southern District of New York, authorized the
closeout sales to be conducted free and clear of all liens, claims and
encumbrances. Prior to the commencement of chapter 11 proceedings, the
debtors retained Tiger Capital to perform the sales, according to Value
City's motion.
href='http://bankruptcy.law360.com/articles/77819'>Read
more. (Subscription required.)
name='10'>Investors Criticized for Profiting Off of Mervyn's
Distress
While Mervyn's department store is being liquidated under bankruptcy
court protection, the company's private equity owners have profited
since it purchased the retailer in 2004, the Wall Street
Journal reported today. Cerberus Capital Management LP and a group
of private-equity investors bought Mervyn's from Target Corp. in 2004
for $1.25 billion. The investor group, which structured the buyout as
two separate purchases -- one for the retail operations, and one for the
chain's valuable real-estate holdings -- has earned more than $250
million in profits. Though few businesses have been spared by the
current financial crisis, those owned by private-equity firms are in
especially dire straits. Several private-equity executives have fretted
privately that the Mervyn's deal highlights a longstanding criticism of
buyout funds: that they 'strip' companies, loading them with debt and
carting away good assets, with little regard for employees. Forty
private-equity-owned companies have sought bankruptcy-court protection
this year, according to data compiled by Thomson Reuters. Also, of the
86 Standard & Poor's-rated companies that have defaulted on their
debt this year, 53 were involved in private-equity transactions,
according to S&P.
href='http://online.wsj.com/article/SB122748733837451899.html'>Read
more. (Subscription required.)
name='11'>Ex-Circuit City Workers Seek Automatic Stay
Relief
A group of former Circuit City employees has asked a court to lift
the automatic stay protecting their one-time employer after the U.S.
electronics giant filed for bankruptcy before finalizing a settlement
agreement with the workers, Bankruptcy Law360 reported on
Friday. The workers sued Circuit City in April 2007 over its “wage
management initiative,” arguing that the company illegally
replaced many longtime, older employees with younger, inexperienced
workers to cut costs, according to the complaint. In September Circuit
City and the plaintiffs entered into a settlement agreement in Los
Angeles County Superior Court, with the court granting preliminary
approval to the truce and setting a Dec. 12 hearing date for the
settlement to be finalized. That proceeding has been frozen as a result
of Circuit City's chapter 11 filing.
href='http://bankruptcy.law360.com/articles/77763'>Read
more. (Registration required.)
name='12'>Washington State Bankruptcy Filings Increase 40
Percent
Bankruptcy filings across Washington state are up 40 percent from a year
ago - the highest level since Congress changed the law in 2005 and made
it tougher for people to cancel their debts, the Seattle Times
reported today. The state ranks 12th in the nation - up from 27th last
year - in average monthly growth in bankruptcy filings from 2007 to
2008, reported AACER, a bankruptcy data and management firm. Across the
state, declining home values and tighter credit have added a new twist
to the old story of families bankrupted by medical bills, divorces or
job losses. Experienced attorneys say they've never seen so many filers
with houses.
href='http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2008428045&zsection_id=2003925728&slug=bankrupt24m&date=20081124'>Read
more.
name='13'>Number of Bankrupt Ohioans Is Growing
In the latest symptom of a struggling economy, more Ohioans are
resorting to bankruptcy and they owe almost twice as much as in past
generations and their ranks have expanded to include more senior
citizens, the Cleveland Plain Dealer reported on Saturday. So
far this year, 26,042 people and companies have filed for bankruptcy in
the Northern Ohio District of the U.S. Bankruptcy Court - 11 percent
more than in the same period last year in the state's 40 northernmost
counties. That includes 3,587 last month, a 38 percent jump over October
2007. Included in the year-to-date total are the 19,708 filings for
chapter 7, which has already surpassed last year's total of 19,120.
'Generally speaking, these are people who worked hard, had good jobs and
just don't anymore,' said ABI President-Elect Robert
Keach.
href='http://www.cleveland.com/news/index.ssf?/base/news/1227346286180300.xml&coll=2'>Read
more.
name='14'>Sea Containers Revises Chapter 11 Plan after Trustee
Objections
Sea Containers Ltd. has filed its third amended reorganization
plan to address concerns raised by the U.S. Trustee Roberta
A. DeAngelis that the company's second plan contained sections
that were overly broad, inappropriate and not proposed in good faith,
Bankruptcy Law360 reported on Friday. In an objection filed
Nov. 10, DeAngelis asked the court to deny confirmation of the debtors'
second plan on grounds that its class of proposed debtor releases was
excessively overbroad. She also argued that the plan contained
provisions that attempted to rewrite the Bankruptcy Code and deprived
parties of due process with respect to claims objections.
href='http://bankruptcy.law360.com/articles/77820'>Read
more. (Subscription required.)
name='15'>Superior Offshore, Creditors File Liquidation
Plan
Bankrupt undersea oil services company Superior Offshore International
Inc. and its unsecured creditors' committee on Thursday jointly filed a
chapter 11 liquidation plan, Bankruptcy Law360 reported
yesterday. The plan, filed in the U.S. Bankruptcy Court for the Southern
District of Texas, provides the terms for the distribution of remaining
claims that are outstanding against the company. Houston-based Superior
Offshore filed for bankruptcy protection on April 24 listing more than
$300.5 million in total assets and over $141 million in total debts.
href='http://bankruptcy.law360.com/articles/77797'>Read
more. (Subscription required.)
name='16'>DayJet Ceases 'On-Demand' Flights, Seeks Bankruptcy
Protection
DayJet Corp., saying that it couldn't obtain additional financing,
sought bankruptcy protection from creditors after ceasing operation of
its “on-demand” airline service connecting secondary
markets, Bloomberg News reported on Saturday. The Boca Raton, Fla.-based
company listed debt of $23.1 million and assets of $17.2 million in its
chapter 7 filing on Nov. 14. DayJet said in a Sept. 19 statement that it
had to shut down operations and terminate most of its employees, citing
“a direct consequence of the company's inability to arrange
critical financing in the midst of the current global financial
crisis.”
href='http://www.bloomberg.com/apps/news?pid=20601209&sid=a2OWc2IjZyn8'>Read
more.
name='17'>Giftware Firm Lenox Files for Chapter 11
Lenox Group Inc., the Eden Prairie, Minn., producer of giftware and
collectibles under the Lenox, Dansk, Gorham and Department 56 brands,
said today that it filed for chapter 11 protection, MarketWatch.com
reported. The company said that it filed the petition with the U.S.
Bankruptcy Court for the Southern District of New York. Lenox said it
will need court approval of an $85 million debtor-in-possession
financing from the providers of its current revolving-credit line to
enable it to pay current obligations.
href='http://www.marketwatch.com/news/story/giftware-firm-lenox-files-reorganize/story.aspx?guid=%7B3641EB5B-1388-4EE6-B494-1A687897502E%7D&dist=siteid=rss'>Read
more.
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