src='/AM/Images/headlines/headline.gif' />
April 6, 2005
Sweeping New Bankruptcy Law to Make Life Harder for Debtors
A Wall Street Journal article discusses the bankruptcy
bill expected to pass Congress next week. Another article focuses on the
counseling requirement in the bill. Read the articles at
href='http://www.wsj.com/'>www.wsj.com (subscription required).
Specter Firm on Trust Fund, Rejects Narrower Asbestos Bill
Republicans and Democrats have made “major concessions”
in negotiations aimed at crafting an asbestos bill, Senate Judiciary
Chairman Arlen Specter (R–Pa.) said yesterday, although he
conceded after a series of meetings that differences remain difficult to
bridge, CongressDaily reported. Faced with concerns from
both sides and criticism from a group of insurers, Specter said he would
not resort to introducing a bill that has the support of only
Republicans, nor would he scrap the current asbestos framework in favor
of a narrower bill. “We are within striking distance,” he
said. Judiciary Committee Republicans still have several concerns,
Specter said, but they are “solvable,” the newswire
reported.
Asbestos Claims Decline, but Questions Rise
The number of claims filed against one of the biggest and oldest
trusts set up to compensate victims of asbestos fell last year to its
lowest level in more than a decade, the New York Times
reported. And recent court proceedings have uncovered highly
questionable practices by some of the doctors whose diagnoses allowed
some asbestos claimants to collect. Read the full article at
href='http://www.nytimes.com/'>www.nytimes.com.
Trump Hotels Bankruptcy-exit Plan Approved
Trump Hotels & Casino Resorts won court approval yesterday to
emerge from bankruptcy, breathing new life into Donald Trump’s
cash-strapped casino empire, the Associated Press reported. Four months
after Trump’s company filed for chapter 11, U.S. Bankruptcy Judge
Judith Wizmur signed off on its reorganization, a
bonds-for-equity swap under which Trump will surrender majority control
but retain the titles of chairman and chief executive in the new
company. It will be called Trump Entertainment Resorts. The company,
which is operated separately from Trump’s real estate business,
including the proposed Trump Tower in Chicago, is to emerge from
bankruptcy in about 30 days. Trump Hotels has agreed to pay $17.5
million to the 20,000 stockholders, who also will share in proceeds from
a land sale, AP reported. Altogether, holders of common stock are to get
between $2 and $3 for each share they held.
Weyerhaeuser to Appeal $460 Million Judgment
Weyerhaeuser Co., a forest products company, said yesterday it would
appeal a decision by a U.S. Bankruptcy Judge awarding $460 million to
the litigation claims representative of Paragon Trade Brands Inc.,
Reuters reported. The Federal Way, Wash.–based company said it
believes the decision will be reversed, and thus has not recorded a
charge against earnings.
HealthSouth Corp. Countersues E&Y, Accuses Scrushy
HealthSouth Corp., struggling to overcome a massive accounting fraud
scandal, filed a lawsuit against its former outside auditor, Ernst &
Young, claiming its inability to discover the fraud was a breach of
contract and amounted to negligence, Reuters reported. The suit, filed
late last week in the circuit court of Jefferson County, Alabama, was a
countersuit to one in which Ernst & Young last month accused
HealthSouth of damaging its reputation and exposing it to lawsuits. The
suit also marked the first time HealthSouth has directly accused its
founder and former Chief Executive Richard Scrushy of directing the $2.7
billion accounting fraud from 1996 to 2002. The suit, which seeks
unspecified damages for lost fees, profits and business opportunities,
as well as for legal fees and the cost of unraveling the fraud and
restating earnings, accuses Ernst and Young of acting “recklessly,
wantonly and with gross negligence in performing its duties,” the
newswire reported. The fraud, when it was revealed in March of 2003,
left the Birmingham, Ala.–based health care company in default on
its bank loans and battling to avoid bankruptcy.
Mortgage Company Abandons Bankruptcy; 820 to Lose Jobs
A mortgage company whose practices are under federal investigation
will abandon efforts to stay afloat through bankruptcy protection,
costing 820 people their jobs, the company said, the Associated Press
reported. American Business Financial Services Inc. (ABFS) filed for
bankruptcy in Wilmington, Del., in January. Debtors include about $585
million owed to mostly elderly investors who sought high returns on
their investments. They are expected to recoup only a fraction of their
investment. Most of the company’s 650 workers in Philadelphia were
told Monday that they would be laid off within a month. Workers in
Texas, Maryland and California were also notified in recent days.
Meanwhile, the company is selling off its assets, including a mortgage
servicing unit that was sold to Ocwen Federal Bank of Fort Lee, N.J.,
for $20 million. Last fall, ABFS had valued the business at $66 million.
Besides Philadelphia, the company has offices in Edgewater, Md.; West
Hills, Calif.; Irvine, Calif.; and Austin, Texas.
Two Indicted for Conspiracy in Connection with Hawaiian Air
Bankruptcy
Two people connected to Hawaiian Investment Partners Group LLC, which
was trying to buy bankrupt Hawaiian Airlines, have been indicted on
conspiracy charges, prosecutors said Tuesday, the Associated Press and
Dow Jones reported. Paul Boghosian, head of HIP, and William Spencer, a
trustee for the E&M Trust, lied about their ability to inject $300
million in new capital to bring the airline out of bankruptcy, the U.S.
Attorney’s office for the Southern District of New York said.
Boghosian was also indicted on two charges of commercial bribery after
allegedly agreeing to pay a $500,000 bribe to an FBI agent posing as a
hedge fund manager in exchange for a $2.5 million loan. He was arrested
in March.
ATA Holdings Gets Approval for Chicago Express Sale
The sale of ATA Holdings Corp.’s commuter airline Chicago
Express to Okun Enterprises Inc. has been approved by a U.S. Bankruptcy
Judge, the Associated Press reported. Okun Enterprises reportedly won
the auction for the airline and also agreed to buy two aircraft from
ATA. The real estate investment and management company is expected to
pay $3 million to $4 million for the airline’s assets and $2.44
million for two Saab 340 turboprop aircraft, the newswire reported. The
sale of the airline is reportedly subject to regulatory approval.
MCI Rejects Qwest’s $8.9 Billion Offer
MCI rejected the latest takeover proposal from Qwest Communications
worth almost $8.93bn yesterday in favor of a lower offer from Verizon
Communications valued at $7.6 billion, the Financial Times
reported. MCI said that it had been influenced by uncertainties about
the value of Qwest’s offer and risks associated with the offer. It
had also been unable to gain improvements in the financial and other
merger terms, or certainty in closing the deal, the newspaper
reported.