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March 16, 2006
face='Times New Roman' size='3'>Western
Pennsylvania
size='3'> Bankruptcy Cases Jump 21.9 Percent in
2005
Bankruptcy filings in
western
face='Times New Roman'
size='3'>Pennsylvania
size='3'>jumped 21.9 percent last year as debtors rushed to declare
insolvency before the new bankruptcy law took effect in October,
the Associated Press reported yesterday. 'The increase that we saw was
essentially something that occurred immediately prior to Oct. 17,' said
Theodore S. Hopkins, clerk of the U.S. Bankruptcy Court for the Western
District of Pennsylvania.
bankruptcies were overwhelmingly filed by individuals, with 24,704 of
the 25,180 cases categorized as nonbusiness. Only 476 were filed by
businesses during the 12-month period ending in September 2005. Among
the individual cases, a total of 20,400 people filed for chapter 7
protection while 4,273 sought chapter 13 protection.
href='http://www.pennlive.com/newsflash/pa/index.ssf?/base/business-5/1142454…'>Read
more.
J.L.
French’s Creditors Balk at Proposed Changes
Launching fresh protests,
creditors for bankrupt J.L. French Automotive Castings Inc. have
objected to the auto parts maker’s recent request to amend its
contracts with DaimlerChrysler Corp. and Ford Motor Co,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. On Tuesday, creditors filed an objection in
U.S. Bankruptcy Court in
w:st='on'>
size='3'>Delaware
claiming that the proposed changes will enable the company to submit a
reorganization plan that will not pay its unsecured creditors. J.L.
French wants to alter its contract with Ford and DaimlerChrysler on the
grounds that the amendments would generate more revenue for the
struggling auto-parts manufacturer while guaranteeing that Ford and
Daimler Chrysler receive the parts they need. The details of the
proposed changes have not been publicly disclosed since J.L. French is
seeking to file the amendments with the bankruptcy court under seal.
Despite the potential for money-saving and future stability, creditors
argue that the provisions will force the company to quickly emerge from
bankruptcy. If the amendments are approved, J.L. French will be placed
in an 'inescapable box that will result in these cases becoming a fait
accompli; the debtors will be left with no other alternative than to
file a plan under which unsecured creditors will be left with no
recovery,' said the creditors. A hearing on the objection is scheduled
for March 21.
Steel
Maker Reaches Deal on Pension Plan
WCI Steel, the Ohio-based
steel maker, said yesterday that it would give noteholders a majority
stake and pay as much as $25 million to preserve its pension plan under
an agreement that would end its three-year-old bankruptcy case,
Bloomberg News reported yesterday. Judge Marilyn
Shea-Stonum of the U.S. Bankruptcy Court in
size='3'>Akron
w:st='on'>
size='3'>Ohio
to rule March 28 on the plan, which averts a court battle between WCI
and noteholders. If approved, the agreement would also resolve a battle
over WCI's pension fund between the Pension Benefit Guaranty
Corporation, the federal agency that insures pensions, and WCI's
controlling shareholder, the Renco Group. The noteholders' previous
reorganization proposal had called for the pension fund to be abandoned
and left for the federal pension agency. The agency had been preparing
to go after the Renco Group's assets — including the
valuable
face='Times New Roman' size='3'>Hamptons
estate of Renco's owner, Ira L. Rennert — if that
happened.
href='http://www.nytimes.com/2006/03/16/business/16steel.html?pagewanted=print'>Read
more.
Court
Ruling Triggers Thaxton Suits Against Finova
A federal appeals court
in
size='3'>has lifted a stay preventing action on lawsuits regarding
Finova Capital Corp.’s involvement with Thaxton Group Inc. and the
supposed fruadulent sales of $120 million worth of debt to
individuals, Portfolio
Media reported yesterday. The stay on the
lawsuits, in force since last fall, has barred a federal judge in South
Carolina from approving an order permitting partial summary judgment to
noteholders in one action—a suit that resulted from Thaxton
Group’s bankruptcy case in Delaware. The Fourth Circuit Court of
Appeals’ decision could accelerate a financial disbursement to
thousands of people who bought notes from Thaxton Group, a high-risk
lender operating in bankruptcy for the last three years. U.S. District
Judge G. Ross Anderson said last year that he would rule against Finova
and in favor of the noteholders on various claims in the lawsuit.
However, before the judge could allow the ruling to go through, an
appellate panel issued a stay that has stopped action on suits against
Finova that resulted from the debt sales by Thaxton Group. An attorney
for the noteholders in the Thaxton Group bankruptcy case has said that
the district judge is now able to rule on the matter at any point. The
ruling on the stay also means that a bankruptcy judge in Delaware and
the federal judge in South Carolina can review and potentially authorize
roughly $10 million worth of settlements brokered with Thaxton Group
accountants Cherry Bekaert & Holland LLP and attorneys Moore &
Allen PLLC.
w:st='on'>
name='5'>Spokane
face='Times
&amp;#13;&amp;#10;&amp;#13;&amp;#13;&amp;#10;New
Roman' size='3'> Parishes Fault Plan Offered to Abuse
Victims
The individual parishes of the
Catholic Diocese of Spokane will likely ask a bankruptcy judge to reject
a $45.7 million settlement offer to sex-abuse victims, saying parishes
shouldn't have to shoulder a hefty part of the settlement costs, the
Associated Press reported yesterday. 'This settlement doesn't provide a
mechanism for parishes to protect their churches and schools,' said Bob
Hailey, chairman of an association representing the 82 parishes. The
proposed offer to 75 victims has been controversial from the moment it
was announced Feb. 1 by Spokane Bishop William Skylstad. Skylstad, who
is also president of the U.S. Conference of Catholic bishops, was not
available for comment immediately. Under the proposed agreement, parish
properties — church buildings and schools — are, in effect,
collateral and thus could be liquidated if the diocese were to default
on the settlement. The settlement offer will be filed with U.S.
Bankruptcy Judge Patricia Williams on Friday, Cross
said. It is subject to approval by Judge Williams and the victims. The
Association of Parishes would have 23 days after the filing to file
objections.
href='http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2002…'>Read
more.
w:st='on'>
name='6'>Tennessee
face='Times New Roman' size='3'> Bankruptcy Bench to Get
Experts
George Emerson Jr.
and Paulette Jones
Delk will be two new judges in the U.S.
Bankruptcy Court of the Western District of Tennessee, the
Memphis Commercial
Appeal reported yesterday. Emerson, 51, a
lawyer and bankruptcy trustee, and Delk, 59, associate professor of law
at
face='Times New Roman' size='3'>University
size='3'>of
size='3'>Memphis
await FBI and IRS investigations to be sworn in. The background checks
are expected to take two to three months, said Kay Lockett, assistant
circuit executive of the 6th U.S. Circuit Court of Appeals in
size='3'>Cincinnati
will take a new judgeship, created in last year's bankruptcy reform law.
Emerson has spent most of his career around bankruptcy court as a law
clerk, court clerk and trustee for both chapter 7 and chapter 13 cases.
Delk was one of more than 100 law professors who wrote Congress with
concerns about the bankruptcy reform law. 'I will make every effort to
administer the law as enacted where the language of the law is clear,'
she said. 'Where the language is ambiguous, I will interpret it in light
of the general policies underlying the Bankruptcy Code.'
href='http://www.commercialappeal.com/mca/local/article/0,2845,MCA_25340_4542…'>Read
more.
w:st='on'>
name='7'>Ohio
size='3'> Storage Manufacturer Files for
Bankruptcy
Flood damage, high
material prices and skyrocketing medical costs combined to put the
employee-owned Republic Storage Systems Co. Inc. into bankruptcy, its
president and CEO says,
size='3'>(
face='Times New Roman' size='3'>Ohio
size='3'>) Beacon Journal reported today.
The Canton, Ohio, maker of school
lockers and other steel shelving products filed its chapter 11
bankruptcy petition on Tuesday. Republic has 290 hourly and 90 salaried
workers, President James T. Anderson said.
size='3'>Employee ownership would end if the U.S. Bankruptcy Court
in
size='3'>Canton
Monomoy Capital Partners, a private equity firm based in
size='3'>New York City
buy the company for $20 million. Republic expects to terminate its
pension plan in the bankruptcy, which
w:st='on'>
size='3'>Anderson
underfunded by $8 million. The plan is $30 million short of the total
needed to pay pensions to all eligible employees, he said. Republic
expects the plan to be taken over by the Pension Benefit Guaranty
Corp.,
size='3'>said.
href='http://www.ohio.com/mld/ohio/business/14111574.htm?template=contentModu…'>Read
more.
name='8'>Regional North Carolina Council on Aging Might Be Close to
Bankruptcy
Despite a mounting ledger
of unpaid bills and a pending criminal investigation against its former
executive director, the Haywood County Council on Aging board of
directors asked the
w:st='on'>
size='3'>Haywood
face='Times New Roman'
size='3'>County
size='3'>commissioners this week to back a $125,000 loan to keep the
agency to avert bankruptcy, the Smoky Mountain News (N.C.)
reported yesterday.
size='3'>More than $100,000 in donations intended for 2004 flood victims
entrusted to the agency are unaccounted for, prompting an investigation
into former director Denise Mathis for possible embezzlement, according
to police reports. The agency is also $61,000 behind on a $1.2 million
mortgage for its office building. It is more than $4,000 behind on rent
for its senior day care building, and the power was nearly cut off at
the senior day care last week for unpaid bills. The biggest dispute
involves a Medicaid program that provides care for disabled elderly in
their own homes instead of going into a nursing home. Known as the CAP
program, it brings in $345,000 a year in Medicaid funding. The Council
on Aging only spends $250,000 providing the in-home care —
generating a $95,000 surplus that subsidizes the agency and its other
services. If the CAP program is taken away, it would be the end of the
Council on Aging, said Frank Queen, a Council on Aging board member and
an attorney. “If we don’t have the CAP program, then
I’m going to the bankruptcy court,” Queen said. “It
would be the dissolution of the agency.”
href='http://www.smokymountainnews.com/issues/03_06/03_15_06/fr_bankruptcy.ht…'>Read
more.
w:st='on'>
name='9'>New York
face='Times New Roman' size='3'> Race Track Out of
Bankruptcy
U.S. Bankruptcy Court
Judge Stephen Gerling signed off on a proposal by
w:st='on'>
York City
Jeffrey Gural to bring Vernon Downs race track out of bankruptcy,
according to a spokeswoman for the court, the Utica (N.Y.)
Observer-Dispatch reported yesterday.
face='Times New Roman' size='3'>Vernon Downs has been closed since
summer 2004, when the state Racing and Wagering Board pulled its
license. Gural has said he hopes to have the track open by summer. State
Racing and Wagering Board approval would be needed.
href='http://www.uticaod.com/apps/pbcs.dll/article?AID=/20060315/NEWS/60315002'>Read
more.
name='10'>Louisiana Orthodontics Company Files for Chapter
11
OCA, Inc., a provider of
business services to orthodontic and dental practices, announced that it
and some of its subsidiaries filed for chapter 11 protection in the U.S.
Bankruptcy Court in the Eastern District of Louisiana, according to a
company press release yesterday. OCA has negotiated, and is seeking
approval for, up to $15 million in new debtor-in-possession (DIP)
financing from its existing lender group, led by Bank of America as
agent, and Silver Point Capital.
href='http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=new…'>Read
more.
name='11'>UAW Cites Negotiation Gains in Talks with
size='3'>Delphi
Motors
Delphi Corp., General
Motors Corp. and the United Auto Workers union continue to make
'significant progress' in their labor talks, and the UAW's goal is now
to finalize by the end of March details of early-retirement buyouts and
other incentives for thousands of workers at GM and Delphi, said UAW
members who attended a union briefing, the Wall Street Journal reported
today. The UAW hopes that if it gets early-retirement packages worked
out quickly, then parts supplier
face='Times New Roman' size='3'>Delphi
size='3'>will again delay asking a bankruptcy judge to void its labor
contracts, these members said. The UAW leadership fears that if Delphi
moves to void its labor deals on March 31 as scheduled, that could
hinder negotiations or even prompt strikes by
w:st='on'>
size='3'>Delphi
in turn could shut down GM. In a meeting with UAW-Delphi plant-level
presidents in
President Richard Shoemaker said there had been progress on the main
item of discussion between the three parties: that of incentives such as
buyout packages for older workers at GM and
w:st='on'>
size='3'>Delphi
UAW members and 37,000 to 40,000 of them are eligible to retire now or
in the near future, according to auto experts.
href='http://online.wsj.com/article/SB114247705531899742-email.html'>Read
more.
Airlines
name='12'>Expert Warns Panel of Delta’s Financial
Dilemma
Operating on borrowed
cash after filing for chapter 11, Delta Air Lines Inc. needs to cut
costs or face the looming prospect of liquidation or being sold, a
financial expert warned an arbitration panel on Wednesday,
Portfolio Media
reported yesterday. Timothy Coleman of the Blackstone
Group LP, the carrier’s main financial adviser, testified on the
third day of arbitration hearings that will determine whether Delta is
allowed to throw out its pilots’ agreement and impose pay and
benefits reductions of up to $325 million.
face='Times New Roman' size='3'>Coleman underscored that Delta needs to
wean itself off of outside capital, and said the carrier’s
liquidity is actually borrowed liquidity, which could pose a serious
problem for Delta. Coleman showed a list of 11 airlines that filed for
bankruptcy since 1982, but were forced to liquidate or to sell off the
business. To steer away from either fate, Coleman said Delta, which
filed for chapter 11 protection in September, must be able to work with
a cost structure that allows the carrier to compete with its rivals by
keeping its airline ticket prices low. Coleman also mentioned that
Blackstone is costing Delta $200,000 a month, in addition to a $10.5
million services fee. The panel is set to rule on Delta’s pilot
contract by April 15.
name='13'>Northwest to Cooperate with Pension
Probe
Northwest Airlines Corp. said
on Wednesday that it will cooperate with Labor Department investigators
investigating its underfunded pension plan, the Associated Press
reported today. The agency is investigating ''whether any person has
violated or is about to violate'' pension law, according to a letter
sent with the subpoena issued in January. Northwest fought the broad
subpoena, saying it requested documents such as its business plan that
would harm it if the department disclosed them to competitors. Northwest
demanded that Labor sign a confidentiality agreement, which the
department signed on Monday, Northwest said. Northwest said it paid its
pension obligations in full and on time until it filed for chapter 11
bankruptcy protection. However, by filing for protection on Sept. 14, it
did avoid a $65 million payment to its pension plan that would have been
due the next day. The subpoena also seeks any documents related to
Northwest's decision to seek bankruptcy protection, and asks for ''all
documents and communications'' related to stock sales by officers or
directors.
href='http://www.nytimes.com/aponline/business/AP-Northwest-Pensions.html?pag…'>Read
more.
name='14'>Whistle-Blower Shifts Focus of Enron Trial
Former Enron Corp.
accountant Sherron Watkins told jurors on Wednesday that she warned
former chairman Kenneth L. Lay about 'an elaborate accounting hoax' that
could bring down the company but that Lay instead chose a path toward
concealment and 'disaster,' the
size='3'>Washington Post reported today. Until
now, most witnesses in the seven-week-old government case have
concentrated on the actions of former chief executive Jeffrey K.
Skilling. But her testimony marked a shift, as prosecutors focused
increasingly this week on the actions of Lay in the company's final
months. Watkins met with Lay in August 2001, sounding alarms about
partnerships that she said could lead the energy trader to 'implode in a
wave of accounting scandals.' Lay listened and 'winced' as he read a
line in her memo that called Enron 'crooked' and said it deserved to get
caught. But, she testified, Lay ultimately disappointed her by presiding
over a whitewashed internal investigation into 'fraudulent' partnerships
that put the company on a course for bankruptcy.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/03/15/AR20060…'>Read
more.
International
name='15'>Yukos Reveals Its Debt Was Sold to State Oil
Firm
Russian oil producer OAO
Yukos said a consortium of banks led by Société
Générale SA sold Yukos's $482 million debt to Russian
state-owned oil producer OAO Rosneft, as early as Dec. 13 last year,
the Wall Street
Journal reported today. The announcement came
only days after the consortium filed in the Moscow Court of Arbitration
to have Yukos declared bankrupt. In its filing, the 14-bank consortium
-- which includes France's BNP Paribas SA, Citigroup Inc. of the U.S.,
ING Groep NV of the Netherlands and Deutsche Bank AG and Commerzbank AG
of Germany -- claimed Yukos still owed it the $482 million, the
remainder of a $1 billion syndicated loan made to the company in
2003. The news
brought a fresh round of accusations that the banks may be acting in
league with Russian authorities reluctant to take direct responsibility
for starting bankruptcy proceedings after President Vladimir Putin said
publicly that it wasn't in the state's interest for Yukos to go
bankrupt. The announcement also sparked speculation that Rosneft, which
plans to hold an initial public offering this year, might be poised to
snap up Yukos's remaining assets.
href='http://online.wsj.com/article/SB114245096185899164-email.html'>Read
more.
name='16'>Maple Leaf Distillers Bankruptcy Hearing
Set
Bankruptcy proceedings
have been launched against financially embattled Maple Leaf Distillers,
the Winnipeg
Sun reported today. Maple Leaf Distillers and
parent company Protos International were placed in receivership last
January after allegedly defaulting on $7.5 million in loans to the Astra
Credit Union. In court documents filed earlier this week, Astra claims
Maple Leaf has 'with the six months preceding committed an act of
bankruptcy by ceasing to meet its liabilities generally as they became
due.' Maple Leaf is alleged to owe $17.5 million to 225 creditors,
including the provincial government. A bankruptcy hearing is scheduled
for April 5 in Court of Queen's Bench.
href='http://winnipegsun.com/Business/2006/03/16/1490627-sun.html'>Read
more.
href='http://winnipegsun.com/Business/2006/03/16/1490627-sun.html'>