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October
18, 2007
Mortgage
Lending
name='1'>Spectrum Financial Converts to Chapter 7
Less than two months
after filing for chapter 11, Bankruptcy Judge
face='Times New Roman' size='3'>Sarah Sharer Curley
size='3'>approved Spectrum Financial Group Inc.’s request to
convert its proceedings to a chapter 7 liquidation,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. Earlier on Tuesday, the Scottsdale-based
company, which had billed itself
w:st='on'>
size='3'>Arizona
private mortgage broker, filed a motion to convert the case to chapter
7. A notice of the chapter 7 case was sent to potential creditors
yesterday and announced that it had arranged for a creditors' meeting at
the U.S. Trustee's office on Dec. 18. Creditors must submit proofs of
claim by March 18, 2008, except for governmental units, which have until
April 13, according to the notice.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=37717'>Read
more. (Registration required.)
name='2'>Aegis' Employee Compensation Plans
Approved
Bankruptcy Judge
Brendan Shannon
approved two proposals by Aegis Mortgage Corp. to
compensate its workers by erecting a compensation scheme for senior
employees and a plan to draw on its insurance policies to pay workers'
pre-petition compensation claims,
size='3'>Bankruptcy Law360 reported yesterday.
Judge Shannon also granted a motion, filed Oct. 4, in which Aegis had
asked for “the authority, but not the obligation, to continue to
process, defend, administer and pay pre-petition workers' compensation
claims.” The company had said that the money available to pay
workers from its insurance policies far exceeded the amount needed, and
the judge agreed. Aegis' performance-based incentive plan drew fire from
U.S. Trustee Kelly
Beaudin Stapleton, who filed an objection to
it in September. Stapleton specifically objected to the plan as it
pertains to Aegis’ officers.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=37721'>Read
more. (Registration required.)
name='3'>Countrywide Chief Is Said to Face SEC
Inquiry
The Securities and
Exchange Commission has opened an informal investigation into the stock
sales of Countrywide Financial CEO Angelo R. Mozilo, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. Mozilo has come under criticism from
shareholders who have questioned the timing of the sales, which allowed
him to gain more than $132 million in the months before the price
plummeted amid the deepening mortgage crisis. Since 2004, Mr. Mozilo has
sold shares through prearranged selling programs, known as 10b5-1 plans
after an SEC rule. However, the pace of the sales, which have generated
$300 million in gains for him since 2005, began to increase in October
2006 when he put a new program in place. Since October 2006, Mr. Mozilo
has twice raised the number of shares that could be sold under his
plans. In December 2006, when Countrywide shares were trading at $40.50,
he increased the number of shares to be sold each month to 465,000 from
350,000. In February, when shares hit a high of $45.03, he increased the
number of shares sold each month to 580,000.
href='http://www.nytimes.com/2007/10/18/business/18lend.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='4'>Legislation Seeks to Rein in Hedge Funds' Tax
Deferral
Sen. John Kerry (D-Mass.)
announced plans to introduce a bill that would prevent hedge fund
managers from using offshore havens to defer taxes on large amounts of
income, the Wall Street
Journal reported today. The proposal is
written to target managers of offshore hedge funds. It would cap the
amount of compensation the managers can defer each year to the same
amount other taxpayers are permitted to place in 401(k) and individual
retirement accounts. That amount is $19,500 this year. Under current
law, managers of overseas hedge funds can put off for years the income
taxes due on large chunks of their compensation, and they can reinvest
the deferred amount in their funds and let it grow tax-free in the
meantime. Rep. Rahm Emanuel (D-Ill.) plans to introduce a companion bill
href='http://online.wsj.com/article/SB119266431138362721.html?mod=us_business_whats_news'>Read
more. (Registration required.)
U.S.
Senator Tells Credit Bureaus to Drop Freeze Fees
Sen. Charles Schumer
(D-N.Y.) threatened legislative action yesterday unless
size='3'>U.S.
size='3'>credit bureaus stop charging fees for freezing a consumer's
credit history report to prevent identity theft, Reuters reported
yesterday. Schumer urged Experian Group Ltd., TransUnion and Equifax
Inc. to drop fees of around $30 that are now required when a worried
consumer wants to freeze a credit history report at all three companies.
The three companies currently do not charge a fee for consumers who can
prove they have already been the victims of identity
theft. 'Freezes need
to be freely available to consumers before they become identity theft
victims, not just after,' Schumer said in a statement. 'This type of
protection should be free of charge and available at the click of a
mouse.' In letters to the chief executives of the three companies,
Schumer said he may offer legislation unless the companies allow
consumers to instantly freeze their reports by mail, Internet or
telephone instead of having to send a request via certified mail.
Schumer also wants the companies to share freeze requests among
themselves so a consumer does not need to contact all three.
href='http://investing.reuters.co.uk/news/articleinvesting.aspx?type=allBreakingNews&storyID=2007-10-17T180910Z_01_N17233829_RTRIDST_0_CREDITBUREAUS-CONGRESS.XML'>Read
more.
Gets Court Approval to Auction Assets
Avado Brands Inc.,
operator of Don Pablo's Mexican Restaurants, won bankruptcy court
approval to auction off its assets on Nov. 14, the Associated Press
reported yesterday. Bankruptcy Judge
size='3'>Mary F. Walrath also signed a final
order approving a $67 million bankruptcy funding package for Avado
Brands. DDJ Capital Management LLC, the Waltham, Mass.-based hedge fund
that engineered the restaurant operator's 2005 exit from bankruptcy, is
leading a group of lenders in providing the debtor-in-possession
loan. Parties
interested in bidding for some or all of Avado's assets must submit
their bids by Nov. 7, along with a cash deposit equal to 5 percent of
the value of the bid or $100,000, whichever is greater.
href='http://biz.yahoo.com/ap/071017/avado_bankruptcy.html?.v=1'>Read
more.
face='Times New Roman' size='3'>
name='7'>Delphi
to Unload Interiors Unit
Delphi Corp. has located
a buyer for its global interiors and closure business, as the bankrupt
supplier continues to cast off noncore businesses while making its way
toward a chapter 11 exit,
size='3'>Bankruptcy Law360 reported yesterday.
The Michigan-based company's board of directors has already approved the
deal, and
size='3'>Delphi
set a bidding procedures hearing for Oct. 25. The sale will encompass
the whole global interiors and closures business line, including book of
business, manufacturing operations, intellectual property, personnel,
supplier contracts and share of joint ventures.
face='Times New Roman'>
size='3'>Delphi hopes to complete the
sale by Jan. 8, 2008, pending bankruptcy court approval.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=37726'>Read
more. (Registration required.)
FASB
Won't Delay Market-Value Rule
The Financial Accounting
Standards Board (FASB) decided against deferring a new rule that lays
out for companies how to apply market values to financial instruments,
as well as some nonfinancial assets, and that mandates disclosures
breaking down differences in easy-to-value vs. hard-to-price
securities, the Wall
Street Journal reported today. However, FASB
left the door open to deferring the rule as it applied to nonfinancial
assets on corporate balance sheets, or perhaps to private companies who
follow generally accepted accounting principles. Groups such as
Financial Executives International, an industry group, had lobbied the
board to defer in its entirety the rule, known as FAS 157, for a year.
FAS 157 takes effect for companies with fiscal years beginning after
Nov. 15, 2007. Many large investment houses and banks, however, chose to
adopt the standard early and its disclosures have been crucial
during the recent unrest in debt markets.
href='http://online.wsj.com/article/SB119264563260362236.html?mod=us_business_whats_news'>Read
more. (Registration required.)
href='http://online.wsj.com/article/SB119264563260362236.html?mod=us_business_whats_news'>