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Farm Bankruptcy Measure Likely to Come Before House Today
The House is likely to consider the farmers bankruptcy measure (H.R.
4718) today that would extend the time some farmers have to get their
finances in order by three months, the CQ Daily Monitor reported.
The bill would extend the extension of a part of federal tax code from
July 1 to Oct. 1 that is aimed at making it easier for farmers to file
for financial reorganization instead of liquidation. The measure will be
considered through a time-saving proceduresuspension of the
rulesthat allows no amendments and limits debates over the measure
to 20 minutes per side. Rep. Nick Smith (R-Mich.) sponsored the bill.
House Banking Committee to Consider Internet Gambling Bill
On Wednesday, the House Banking Committee is set to consider a bill that
would make Internet gambling activities using credit cards, checks or
electronic fund transfers illegal, the CQ Daily Monitor reported.
The measure, H.R. 4419, would prohibit the use of bank instruments to
pay entry fees, place bets, collect winnings from bets or other gambling
activities. Banking Committee Chairman Jim Leach (R-Iowa) said that
Internet gambling can be 'particularly destructive to families' and 'an
easy way for young people to lose extraordinary amounts of money,' and
said that the National Gambling Impact Study Commission has asked
Congress to enact legislation to restrict electronic payment access for
online gambling. The committee said that hundreds of Internet gambling
sites have sprung up during the last few years, many operating out of
such faraway places as the Caribbean and Australia, and they tend to
advertise the ease of opening betting accounts through the use of credit
cards. The bill proposes a $20,000 fine and four years in prison for
gambling businesses that use the Internet to place, receive or make a
bet.
First Union Bank Plans to Close Money Store
First Union Corp. announced it would close down operation of Money Store
Inc., a consumer finance company it acquired for $2.1 billion, saying it
made a mistake when it purchased the company two years ago, according to
The Wall Street Journal. Closing the Money Store, which made
loans to people with poor credit histories, could bring about a
second-quarter charge of more than $1 billion, according to analysts
familiar with the situation. First Union also announced it would be
selling its mortgage-servicing and credit card units. The Charlotte,
N.C.-based bank has recorded sluggish earnings in recent weeks, and its
stock has fallen 22 percent during that time. Money Store had been
recording bigger credit losses and lower revenue because the customers
were paying off their loans sooner than expected, said analyst Susan
Roth.
Drkoop.com Receives $1.5 Million Bridge Loan
Drkoop.com, an Internet health-care company chaired and co founded by
former U.S. Surgeon General C. Everett Koop, said Friday it obtained a
$1.5 million bridge loan to stay in business while it tries to solve its
financial problems, according to the Industry Standard. A bailout
could reportedly cost Drkoop founders control of the company. The
company did not disclose the name of the bank that loaned the money, but
said that the bank has the right to appoint a director to the Drkoop
board and will receive warrants to purchase up to 4 million shares of
the company's stock at 75 cents per share. The company's stock jumped 73
percent, to $2.81, after the announcement.
The Autin, Texas-based company has laid off about 40 percent of its
staff since March 31, and analysts have said that the company's dire
condition leaves few options other than a sale or bankruptcy. If Drkoop
is able to obtain permanent financing, it may be able to continue as an
independent company, albeit not necessarily under the control of the
current management, and the company said that such funding may be
arranged in the coming weeks. 'The company's capital resources are
extremely limited, and its operations continue to operate at a loss
requiring that additional capital be available,' the company stated.
Johns Manville Agrees to $2.4 Billion Buyout
Johns Manville Corp., a Denver-based building-product manufacturer, has
agreed to a $2.4 billion buyout offer from an investment group,
according to the Associated Press. The 142-year-old Denver company
sought chapter 11 protection in 1982 when it was faced with suits from
people sickened by exposure to asbestos. It emerged from bankruptcy in
1988. Under the deal announced Friday, the investment group led by
affiliates of Hicks, Muse, Tate & Furst Inc. and Bear Stearns
Merchant Banking would pay $15.625 in cash and securities for each of
Manville's 155 million shares. The buyers are also assuming liabilities
and expenses that would boost the total value of the deal to about $3
billion. The deal is expected to close before the end of the year
pending regulatory, financing and shareholder approval.
The Manville Personal Injury Settlement Trust, created to finance
settlement of litigation over the company's asbestos products, would
retain a stake in the new company, as would management including
chairman and chief executive Jerry Henry. The settlement trust, which
holds about 76 percent of Johns Manville's common stock, has agreed to
support the merger subject to certain conditions. Following the merger,
the trust would hold about 8.5 percent of the company's common stock.
Johns Manville has also agreed to pay the trust $90 million to settle
the company's obligation for future income taxes of the trust.
Maurice Corp., Owner of Maurice 'The Pants Man,' Files for
Bankruptcy
The Maurice Corp., owner of Maurice 'The Pants Man,' filed for chapter
11 on Friday, according to a newswire report. The New Hampshire-based
retailer of casual men and womens clothing was formed in 1994 when
a management team and a group of private equity investors acquired the
Maurice 'The Pants Man' chain. The retailer had 50 stores at the time of
filing. Subject to court approval, the remaining merchandise will be
sold through a liquidator at all store locations. Due to the interest of
several parties purchasing certain locations, some stores may reopen
under the Maurice name. Richard E. Mikels of Mintz, Levin, Cohn,
Ferris, Glovsky and Popeo P.C. is the lead attorney representing the
company.
Mexico's Banking System Has Recovered from Debt Crisis
Mexico's banking system has recovered from the debt default crisis
sparked by the devaluation of the peso six years ago forcing a $100
billion bailout, Trade Minister Herminio Blanco said on Friday,
according to Reuters. 'We have a banking system that's out of the
critical ward,' said Blanco. Spanish financial groups have recently
acquired Mexican banks, which have injected almost $3 billion of foreign
capital into the sector. These deals showed that the administration's
overhaul of the sectornew rules for supervision and regulation of
the banking system as well as new bankruptcy and collateral
ruleswas bearing fruit, Blanco said.
EOUST Director Appoints Acting Deputy Director, General
Counsel
Kevyn D. Orr, director of the Executive Office for U.S. Trustees
(EOUST), announced Thursday that he has appointed Martha L. Davis
as EOUST acting deputy director and Joseph A. Guzinski as EOUST
acting general counsel. Davis has served as EOUST general counsel since
1990, and Guzinski has served as assistant director for Research and
Planning since 1997, a position he will retain while serving as acting
general counsel. As EOUST general counsel, Davis played a key role in
shaping the organization's policies and has represented the its views
regarding the bankruptcy reform litigation pending before Congress.
Prior to joining the EOUST in 1984, Davis practiced law regarding real
estate, bankruptcy and collections. Guzinski currently oversees the
EOUST's strategic planning, statistical research, public information and
consumer affairs. Prior to joining the EOUST, he worked in the
bankruptcy sections of the Federal Deposit Insurance Corp. and the
Resolution Trust Corp., and was a Baltimore bankruptcy attorney.
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