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April 26, 2005

Negotiators Weigh Potential Pension Deal

House and Senate negotiators, hoping to reach an FY06 budget
resolution deal by midweek, appear to be closing in on key agreements on
a five-year deficit reduction package, including a proposed $9 billion
saved through pension premium increases, aimed at helping the troubled
Pension Benefit Guaranty Corp., that has angered industry groups,
CongressDaily reported. “It means a lot more
companies are going to be paying a lot more money, and be subject to a
great deal of uncertainty as to how much money they’re going to be
paying,” said Mark Ugoretz, president of the ERISA Industry
Committee, which represents employers with benefit plans. Critics also
contend the move could stymie plans for a comprehensive pension overhaul
later this year, although lawmakers maintain they can move a
“two-track” legislative process, the newswire reported.

Judiciary Panel Hearing Sets Stage for Markup

The Senate Judiciary Committee today will hear from several sides of
the debate surrounding proposed asbestos legislation at a hearing
featuring witnesses from business, labor unions and the insurance
industry, CongressDaily reported. Insurers and some labor
unions are opposed to the bill, while many companies with asbestos
liabilities support it. The bill would establish a $140 billion trust
fund to compensate victims of asbestos-related illnesses. Instead of
going to court, victims could apply to the fund for compensation and
receive set award amounts based on the severity of illness.

Auto-Parts Maker Meridian Files for Chapter 11

Meridian Automotive Systems Inc. filed for chapter 11
bankruptcy-court protection today, the company said, the Wall
Street Journal reported. Meridian, a closely held company with 23
major plants in three countries, joins a growing list of auto-parts
makers that have sought bankruptcy protection to cope with rising
raw-material prices and declining domestic auto production.

Adelphia Settles Accounting Fraud

The family that founded the Adelphia Communications Corporation will
pay for a $715 million fund to compensate investors who lost money when
the company collapsed, the government said yesterday, the New York
Times reported. The fund was announced as part of an agreement
that Adelphia reached with the Justice Department and the Securities and
Exchange Commission to settle a fraud case stemming from the management
by the company’s founders, the Rigas family.

CEO Interview: Pension Deal Aids UAL Chapter 11 Exit

Chief Executive Glenn Tilton told Reuters yesterday that
Friday’s settlement with the Pension Benefit Guaranty Corporation
removes one key obstacle to a bankruptcy emergence in the fall.
“It is a development that enables the company to now move forward
toward the conclusion of the restructuring and our exit from chapter
11,” he said. “I don’t think it accelerates it, but I
think it affirms the dates that we have mentioned most recently,”
he said, the newswire reported.

Air Canada Orders $6 Billion of Boeing Jets

Air Canada yesterday announced firm orders for 32 Boeing Co.
wide-bodied jets in a deal worth $6 billion, Reuters reported. The order
by Air Canada’s parent, ACE Aviation Holdings Inc., includes 18
Boeing 777 jets and 14 of Boeing’s newest 787 Dreamliner jets, the
newswire reported.

Andersen and WorldCom Investors Settle

Arthur Andersen has reached a settlement with WorldCom investors who
had accused the company’s former outside auditor of violating
securities laws by failing to protect them from WorldCom’s $11
billion accounting fraud, Forbes reported. The deal interrupted a trial
in its fifth week on the accusations contained in a class action lawsuit
brought after WorldCom’s 2002 collapse.

Safety-Kleen Lawsuit Ends With $284 in Judgment, Settlements

The lawsuit investors brought against Safety-Kleen has ended with a
court-ordered $200 million judgment against former officers and $84
million in settlements with Safety-Kleen Corp.’s former auditor
and directors, the Gainesville Sun reported. U.S. District
Court Judge Joe Anderson agreed with lawyers suing the company that
there was enough evidence to rule in their favor against Kenneth Winger,
the company’s former CEO, and Paul Humphries, the former CFO. Just
before then, PricewaterhouseCoopers and Safety-Kleen’s outside
directors agreed to settle. PricewaterhouseCoopers agreed to pay $48
million and the directors agreed to pay $36 million.

Bankruptcy Filings Expected to Explode Before Law Takes Effect

Experts predict the number of people filing for bankruptcy could
increase by 50 percent in the coming months, NBC10.com
reported. The new law is expected to send more people to credit
counseling as well. Read the full article at
href='http://www.nbc10.com/money2/4403251/detail.html'>www.nbc10.com/money2/4403251/detail.html.

Small Businesses Face
Tougher Bankruptcy Rules

The new bankruptcy law not only makes it harder
for individuals to avoid repaying their debts, it also imposes tougher
rules on small businesses wanting to keep creditors at bay,
bizjournals.com reported. The law establishes a streamlined
process for small businesses that file for chapter 11 bankruptcy. Read
the full article at
href='http://triangle.bizjournals.com/extraedge/washingtonbureau/archive/2005…'>http://triangle.bizjournals.com/extraedge/washingtonbureau/archive/2005….

Supreme Court to Hear
Dispute over Student Loan Repayments

The Supreme Court said yesterday it will consider whether the federal
government can seize a person’s Social Security payments to pay
off student loan debts that are at least a decade old, the Associated
Press reported. Justices agreed to hear an appeal by James Lockhart, a
disabled man who says he needs his monthly check to pay for food and
medication. The San Francisco–based 9th U.S. Circuit Court of
Appeals sided with the U.S. Department of Education, which wants to
seize his Social Security checks. Read the full article at
href='http://www.law.com/jsp/article.jsp?id=1114432509952'>www.law.com/jsp/article.jsp?id=1114432509952.

Mirant Shareholders, Creditors Spar

Representatives of NRG Energy Inc. approached a group of creditors
for bankrupt Mirant Corp. last year to explore a merger, but
Mirant’s management said it was never aware of the talks, a
development that now is heightening tensions between creditors and
shareholders in the company’s bankruptcy proceeding, the
Wall Street Journal reported. Disclosure of the talks came
during a Mirant bankruptcy hearing last week, now scheduled to resume
May 2, and angered shareholders who already have complained that the
corporate creditors’ committee hasn’t been playing straight
with them or the company, the newspaper reported.