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December 29, 2005
name='1'>Former Top Enron Accountant Pleads Guilty
Enron Corp.’s ex-chief accounting officer Richard Causey, a
45-year-old unemployed accountant, ended his legal fight with the
government yesterday and pleaded guilty to securities fraud, the
Associated Press reported today. The plea deal came less than three
weeks before Causey was to stand trial with his former bosses, Enron
founder Kenneth Lay and former CEO Jeffrey Skilling. Now he’s a
key potential prosecution witness against Lay and Skilling, with whom he
has been aligned since their indictments followed his last year. A judge
pushed the Jan. 17 trial back two weeks to Jan. 30 to give lawyers for
Skilling and Lay time to prepare for a possible Causey assault.
Prosecutors said in court they plan to begin debriefing him immediately,
meaning they will assess what ammunition Causey has to help them pursue
convictions of the biggest Enron fish of all more than four years after
the company crashed in scandal.
href='http://www.law.com/jsp/article.jsp?id=1135764312796'>Read
more.
id='2'>McDermott Announces Action on Babcock &
Wilcox’s Chapter 11
McDermott
International Inc. announced yesterday that Hon. Judge Jerry A. Brown of
the U.S. Bankruptcy Court for the Eastern District of Louisiana issued
his findings of fact, conclusions of law and recommendation in favor of
confirmation of the Babcock & Wilcox Co.’s (B&W)
reorganization plan and the associated proposed settlement agreement
contained therein, Business Wire reported today. B&W, a wholly owned
subsidiary of McDermott, filed for chapter 11 bankruptcy in New Orleans
in February 2000 as a result of asbestos-related claims. The plan will
now proceed to the Honorable Judge Sarah S. Vance of the U.S. District
Court for the Eastern District of Louisiana.
href='http://www.chron.com/disp/story.mpl/prn/texas/3553802.html'>Read
more.
id='3'>Banks Warn of Big Hits When 4Q Is Tallied
National City Corp. could face a hit of up to $30 million in this
year’s fourth quarter due to a surge of personal bankruptcy
filings, the Associated Press reported today. The Midwest bank can draw
a bit of solace: It’s not alone. When banks report results for the
fourth quarter early next year, many will have some huge charge-offs, or
accounting for debts that can’t be collected. Those with wide
exposure to consumer loans and credit card debt stand to make National
City’s hit look like pocket change. Banks generally have set aside
reserves to cover higher charge-offs, and they say the fourth-quarter
hits will be offset because there will be fewer charge-offs in the
future thanks to BAPCPA. "Really, what you are seeing is just a
front loading of those filings," said John Penn,
president of the American Bankruptcy Institute. "But it will be
evened out over time."
href='http://www.miami.com/mld/miamiherald/business/industries/banking/134899…'>Read
more.
id='4'>Judge Socks Lucent for $300M
In a case stemming from a partnership struck during the telecom
boom, last week a judge awarded a $244 million judgment for bankrupt
WinStar Communications against Lucent Technologies Inc., CFO.com
reported yesterday. Allowing for interest and other costs, Lucent plans
to take a $300 million charge for the quarter ended December 31. The
decision, say attorneys for WinStar, may establish new case law
concerning vendor-financing relationships, especially regarding what
constitutes an "insider" for purposes of bankruptcy preference
law.
href='http://www.cfo.com/article.cfm/5349962?f=home_featured'>Read
more.
id='5'>Buehler’s Plan to Save Jobs, Stores
Hundreds of jobs will be saved and dozens of stores will remain
open under a bankruptcy reorganization plan filed by Buehler Foods Inc.
late last week, WFIE-TV reported yesterday. The plan calls for the
Jasper, Ind.,-based grocer to pay $43 million to a group of banks that
loaned the family-owned company almost $50 million last year to finance
its expansion into the Louisville, Ky., area with the purchase of 16
Winn-Dixie grocery stores. Under the plan filed by Buehler lawyers in
U.S. Bankruptcy Court in Evansville, those stores and others assets of a
Buehler subsidiary operating in Kentucky have or will be sold off to
raise money to help pay off the debt, while the Buehler-owned Buy-Low
and Sav-A-Lot stores in Indiana, Illinois and North and South Carolina
will remain open and in operation. The Buehler Buy-Low store in
Henderson, Ky., will also remain open. Under the plan, about 2,000 jobs
in five states will be saved.
href='http://www.14wfie.com/Global/story.asp?S=4293780&nav=3w6o'>Read
more.
Airlines
Delta Pilots Will
Accept Temporary Pay Cuts
The pilots at Atlatna-based Delta Air Lines, which filed for chapter
11
protection in September in New York, accepted temporary pay cuts
yesterday,
which will allow the airline to avoid potentially crippling labor
strife
while it tries to negotiate permanent concessions, the New York
Times reported yesterday. The pilots ratified the pay agreement,
which was reached
earlier this month, 58 percent to 42 percent. The concessions include
a 14
percent reduction in hourly pay and other cuts equal to 1 percent, and
will
apply until Delta and the pilots’ union agree to permanent wage
and benefit
terms. The deal with the pilots will save Delta about $143 million a
year;
the airline had initially sought $325 million a year. The vote was the
latest sign of an increasing willingness by airline workers to adapt
to a
lower-cost, more competitive business model exemplified by Southwest
Airlines.
href='http://www.nytimes.com/2005/12/29/business/29air.html'>Read
more.
In related news, Comair pilots will vote next month on the
airline’s
proposed revisions on pay, pension and work rules, a union spokesman
said
Wednesday, the Associated Press reported yesterday. Comair, a regional
subsidiary of Delta Air Lines Inc., has said it needs to cut expenses
and is
seeking concessions from its pilots, flight attendants and mechanics.
Comair
and the 1,800-member branch of the Air Line Pilots Association that
represents the company’s pilots have been negotiating the
changes for two
months.
Continental to Cut 69 Planes from
ExpressJet
Continental Airlines
Inc. said yesterday it plans to take back 69 regional
jets that ExpressJet Holdings Inc. had been operating for it after
failing
to win a less expensive contract, Reuters reported yesterday.
Continental’s
move to withdraw a quarter of the 274 planes ExpressJet operates makes
it
the latest regional airline to come under pressure from larger partners
trying to save money as they struggle with heavy losses. ExpressJet
shares
were down $2.36, or 22 percent, at $8.32 in early afternoon
trading—a two
and a half year low—while Continental’s were 64 cents, or
3.0 percent,
lower.
href='http://www.nytimes.com/reuters/business/business-airlines-continental.h…'>Read
more.
id='8'>FLYi to Appeal Claim Reduction Under UAL Bankruptcy
Case
FLYi Inc. said
Tuesday that it will appeal a ruling slashing its claim for
damages against the parent company of United Airlines stemming from UAL
Corp.’s termination of a regional carrier relationship with a FLYi
affiliate, Dow Jones Newswires reported yesterday. FLYi, the parent
company
of low-cost carrier Independence Air, didn’t detail the reasons
for its
appeal in a Tuesday court filing in UAL’s bankruptcy case. Earlier
this
month, Judge Eugene Wedoff of the U.S. Bankruptcy Court
in Chicago reduced
to $500 million FLYi’s $1.3 billion claim for damages against UAL.
A United
Airlines spokesman said the company is "pleased" with the
court’s ruling.
UAL has been in chapter 11 since 2002, but is expected to emerge from
bankruptcy in early 2006.
href='http://online.wsj.com/article/SB113578822135233061-email.html'>Read
more.
id='9'>Fighting Big Tort Awards in Court and Beyond
Steven Hantler isn’t happy with the bill that a state court
judge in Charleston, W.Va., has handed his company, DaimlerChrysler AG,
the American Lawyer reported yesterday. In June the judge
ordered the automaker to pay $152,000 to resolve a customer’s suit
over a faulty Dodge Intrepid. What caught Hantler’s eye was the
bill’s outsize charge for lawyer labor: While the company must pay
$8,750 in damages and interest to the car’s owners, it must pay
$143,027 in fees and costs to their attorneys at Charleston’s
Grubb Law Group. That comes out to lawyers recovering 16 times more than
their clients.
href='http://www.law.com/jsp/ihc/PubArticleIHC.jsp?id=1135677909856'>Read
more.
id='10'>Interstate Bakeries Reports Largest One-month Loss Since
Bankruptcy
Kansas City-based Interstate Bakeries said that it lost $32.5 million
last month, its largest one-month drop since filing for bankruptcy last
year, the Associated Press reported yesterday. The maker of Hostess
Twinkies and Wonder Bread also reduced its retained earnings for the
prior fiscal year by $331 million. For the four weeks ending November
12th, Interstate said it took in $231 million in revenue, down slightly
from the previous month’s record low sales mark. By comparison,
the company reported sales of $260 million during the same period a year
ago and a loss of just under $2 million. Since then the company has
streamlined its operations, closing six bakeries since April and
consolidating delivery routes.
id='11'>Calpine Bankruptcy Raises Questions
Power plant officials say a recent bankruptcy filing should not
impact the town of Beloit, Wis., or its customers, the Beloit Daily
News reported yesterday. Calpine Riverside Energy Center provides a
large sum of money to both the township and the county in lieu of taxes.
Town supervisors discussed the filing and decided to watch and not
directly participate in the chapter 11 proceedings, Town Administrator
Robert Museus said.
href='http://www.beloitdailynews.com/articles/2005/12/28/news/122805news04.txt'>Read
more.
International
Prosecutors Will Seek Second Trial in
Parmalat Case
Italian prosecutors
are expected within days to request that 64 former
Parmalat SpA executives and other officials stand trial for fraud
leading to
the bankruptcy of the Italian dairy firm in late 2003, a person familiar
with the matter said, Dow Jones Newswires reported today. A trial in
Parma,
near Parmalat’s headquarters, would be the second, and more
important, trial
stemming from the company’s collapse, Europe’s biggest-ever
corporate fraud.
Former Parmalat Chairman Calisto Tanzi and other officials are already
standing trial in Milan for market securities violations. Parmalat filed
for
bankruptcy in late 2003 under €14 billion ($16.6 billion) of
previously
undisclosed debt. Prosecutors in Parma believe years of fraud by the
company’s top officials led to the collapse.