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July 18, 2007
size='3'>Autos
name='1'>Tower Automotive Settles Pension Fund's
Claims
Bankrupt auto parts company
Tower Automotive has reached a settlement with the pension fund that had
guaranteed retirement benefits for its employees, agreeing to provide
reduced claims and administrative fees to the fund, Bankruptcy Law360 reported yesterday.
The United Furniture Workers Pension Fund A, a fund run by a division of
the AFL-CIO, had stated a number of claims on Tower's estate, but will
now retain only three of them. Those three will all be reduced, becoming
general unsecured claims of around $4.3 million each. According to
Tower's disclosure statement, general unsecured claimants will receive
only .4 percent of their claims. The fund will also receive
administrative fees not to exceed $200,000.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=29654'>Read
more. (Registration required.)
name='2'>Banks May Sweeten Terms of Loans for Chrysler
Deal
Wall Street banks that are
arranging financing for Cerberus Capital Management LP's acquisition of
the Chrysler Group are looking to sweeten the terms on loans as
uncertainty in the debt market lingers, the
size='3'>Wall Street Journal reported today. Bankers
marketed a $10 billion loan for Chrysler's auto business yesterday at
3.75 percentage points above the London Interbank Offered Rate, compared
to the 3.25 percentage points discussed when the road show kicked off
about three weeks ago, Standard & Poor's said.
face='Times New Roman' size='3'>Another $2 billion in financing for the
auto company is also being marketed at seven percentage points above the
London Interbank offered rate, compared to the original six percentage
points. The banks are also offering to sell those loans at less than 100
cents on the dollar in a bid to further entice investors to the deal.
The sweetened terms reflect a recent weakening in the market for risky
corporate loans, which has raised questions about the ability of buyout
firms to continue to tap the credit needed to finance big deals.
href='http://online.wsj.com/article/SB118469944994769178.html?mod=us_business_whats_news'>Read
more. (Registration required.)
Subprime
Mortgages
name='3'>Banking Regulators to Increase Scrutiny of Subprime
Lenders
Federal and state banking
regulators said yesterday that they would step up their scrutiny of
lenders that make subprime mortgage loans, focusing on companies that
operate outside federal banking oversight, the Associated Press reported
yesterday. The pilot program, announced by the Federal Reserve, two
other federal agencies and state banking officials, is scheduled to
start in the fourth quarter and affect about 12 lenders. It will be set
up to examine companies that account for the majority of subprime loans,
a category that has experienced a surge of defaults in recent months.
Regulators in 26 states have pledged to adopt lending standards similar
to those adopted last month by federal banking regulators. The standards
call on lenders to more strictly evaluate a borrower’s ability to
repay a home loan and to include consumer protections.
href='http://www.nytimes.com/2007/07/18/business/18mortgage.html?pagewanted=print'>Read
more.
name='4'>Popular Subprime Mortgage Offering Is Phased
Out
Some lenders are eliminating
what until recently was the most popular type of home-mortgage loan for
subprime borrowers, the Wall
Street Journal reported today. Countrywide Financial
Corp., Option One Mortgage Corp. and Merrill Lynch & Co.'s First
Franklin Financial unit told employees and mortgage brokers this week
that they would no longer offer so-called 2/28 subprime loans, ones that
carry a relatively low fixed rate for the first two years and then jump
to a much higher, floating rate, often more than 10 percent. Lenders
sell most subprime loans to packagers of mortgage-backed securities and
thus typically offer only loans that investors are eager to buy.
Investors have soured on 2/28 loans over the past few months because of
a surge in defaults. At the same time, regulators and rating agencies
are pushing lenders to be more conservative in granting loans.
href='http://online.wsj.com/article/SB118470952306469435.html?mod=us_business_whats_news'>Read
more. (Registration required.)
name='5'>Bear Stearns Says Battered Hedge Funds Are Worth
Little
Bear Stearns told clients in
its two battered hedge funds late yesterday that their investments,
worth an estimated $1.5 billion at the end of 2006, are almost entirely
gone, the New York
Times reported. The more conservative fund, the
High-Grade Structured Credit Strategies Fund, was down 91 percent by the
end of June, investors were told. The High-Grade Structured Credit
Strategies Enhanced Leverage Fund, which used extensive borrowings and
assumed more risk, has no investor capital left, the firm said. Overseen
by Bear Stearns Asset Management, the hedge funds had been stellar
performers until this spring, when the mortgage securities market began
to falter. Since delinquencies on subprime mortgage started climbing in
February, the value of the securities has spiraled downward.
href='http://www.nytimes.com/2007/07/18/business/18bond.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='6'>Refco Bankruptcy Consultants Earn $171
Million
The legion of lawyers and
financial advisers in the Refco Inc. bankruptcy case have collected $171
million in fees and expenses from the commodities broker that imploded
almost two years ago, the Associated Press reported yesterday. The
trading firm paid $11.1 million in the second quarter to 38 legal and
business advisers, bringing the total payout so far in the case to $171
million, according to court documents filed Monday. Refco's creditors,
meanwhile, collected $2.72 billion in the second quarter, nearly double
the $1.39 billion they pocketed in the first quarter, court documents
show. When Refco collapsed two year ago, creditors were owed $16.8
billion. Refco filed for bankruptcy in October 2005, right after it
announced that its former chief executive, Phillip Bennett, had hidden
$430 million in bad debt going back to 1998. Bennett is facing trial on
fraud charges and has pleaded not guilty.
href='http://biz.yahoo.com/ap/070717/refco_bankruptcy.html?.v=1'>Read
more.
name='7'>Kara's Disclosure Statement Faces
Objections
Kara Homes Inc. is facing
objections to its amended disclosure statement as the bankrupt
homebuilder heads toward an approval hearing tomorrow,
face='Times New Roman' size='3'>Bankruptcy
Law360 reported yesterday. At least seven objections
have been filed in the U.S. Bankruptcy Court for the District of New
Jersey since Friday, challenging the developer’s amended
disclosure statement and chapter 11 plan, filed on June 27. The
objectors are all Kara creditors who claim that the proposed disclosure
statement and plan do not provide adequate information and
therefore are unconfirmable. Each party claims that Kara owes it certain
payments, and asserts that the proposed plan does not explain how and
when it will be repaid. The objecting parties include a Kara employee, a
size='3'>New Jersey
utility.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=29657'>Read
more. (Registration required.)
name='8'>Northwest Reaches Rapprochement over Leases
Two months after emerging
from bankruptcy, Northwest Airlines Corp. has finally settled one of the
claims still lingering in its chapter 11 case, putting to rest a dispute
with Wells Fargo over aircraft leases,
size='3'>Bankruptcy Law360 reported yesterday.
U.S. District Judge Stuart Bernstein signed off on the proposed
stipulation agreement on Monday between the reorganized carrier and
Wells Fargo Bank Northwest, NA over a slew of aircraft leases that date
back to before Northwest ducked into bankruptcy. The heart of the
dispute began in 2000, when Northwest first entered a lease agreement
for various planes including the British Aerospace Avro 146-RJ85A model,
court documents stated. After Northwest entered chapter 11 in 2005, the
airline and the U.S. Bank NA entered into an agreement that allowed
Northwest to return the aircraft and to reject the relevant leases,
which the court endorsed. In March, however, Wells Fargo filed a general
unsecured claim against Northwest in the amount of $9,350,499.72,
seeking to recoup damages regarding the aircraft and the agreements.
Under the new deal, Northwest will now pay at least $1,682,319 for the
three class 1-D claims and at least $1,165,045 for each of the
guaranteed claims, according to court documents.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=29651'>Read
more. (Registration required.)
name='9'>Buyout Firm Said to Seek a Private Market
Offering
Apollo Management, the
giant buyout firm led by Leon Black, plans to become the latest private
equity firm to hit the public market, the New York Times reported today.
While several rivals, including the Blackstone Group and Kohlberg Kravis
Roberts, have either made initial public offerings or have filed to do
so, Apollo is trying a different tack, one that will allow it to sell
shares of itself quickly while avoiding for several months the
disclosure involved in a public offering. That would allow Apollo
Management to stay away from much of the scrutiny that Blackstone faced
this year when it went public. Amid reports that Blackstone’s
founders made billions of dollars from the offering, Congress began to
review the taxes that the private equity industry was paying.
href='http://www.nytimes.com/2007/07/18/business/18place.html?ref=business&pagewanted=print'>Read
more.
name='10'>Internet Phone Company Goes Out of Business
SunRocket, an Internet
phone provider, abruptly ceased operations Monday and is looking to sell
its assets after two rounds of layoffs and the departures of top
executives, the
size='3'>Washington Post reported today. Some
customers reported being left without service, while others said they
planned to transfer to other providers. Customers already in the middle
of the company's two-year contracts may forfeit some of their money. The
closing caps a tough run for independent Internet phone companies. The
Vienna, Va.-based start-up, with about 206,000 customers, was the
second-largest provider, behind Vonage. However, growth at both
companies has slowed in recent months as they battle giant cable
companies selling phone service in bundled packages.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/07/17/AR2007071701799_pf.html'>Read
more.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/07/17/AR2007071701799_pf.html'>
href='http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2007/07/17/ninsolvent117.xml'>