href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
September 4,
2009
Judges’ Frustration
Grows with Mortgage Servicers
In addition to the frustration felt by homeowners left
waiting to find out from mortgage servicers if they have qualified for a
loan modification, frustration over mortgage servicer practices is also
rising among federal bankruptcy judges, the
face='Times






New
Roman'
size='3'>New York Times reported today. In
recent months, judges in Ohio and Pennsylvania have chastened mortgage
servicers for failing to process payments properly and for errors in
foreclosure filings, among other concerns. “The judges are seeing
more and more of a pattern of indifference to record-keeping and good
business practices,” said
face='Times New Roman' size='3'>Robert Lawless
size='3'>, a law professor at the University of Illinois. One of the
biggest complaints by homeowners has been poor communication by mortgage
servicers on the status of their applications for loan
modifications.
href='http://www.nytimes.com/2009/09/04/business/economy/04wells.html?_r=1&ref=business&pagewanted=print'>Read
more.
Judge Says Two Ratings
Agencies Must Face Fraud Claims
U.S. District Court Judge Shira A. Scheindlin ruled
Wednesday that ratings firms Moody's Corp. and McGraw Hill Cos., along
with Morgan Stanley, must defend themselves against fraud claims, the
Associated Press reported yesterday. King County in Washington state and
Abu Dhabi Commercial Bank were permitted to continue with their lawsuit
claiming that the pair of ratings agencies and the investment bank hid
the risk of investing in a structured investment fund that purchased
bonds backed by subprime mortgages. The rest of the charges against the
three were dismissed, including claims of breach of contract. Also, all
charges against Bank of New York Mellon Corp., a trust bank, were thrown
href='http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2009801071&zsection_id=2003907475&slug=apusratingsagenciesmover&date=20090903'>Read
more.
Real Estate
Caruso Homes'
Reorganization Plan Receives Court Approval
Homebuilder Caruso Homes Inc. has taken a major step
out of bankruptcy with bankruptcy approval of its reorganization plan,
which calls for the company to share future profits with
creditors,
size='3'>Bankruptcy Law360 reported yesterday.
Under its reorganization plan, the company will share some future
profits with creditors, according to company founder and President
Jeffrey Caruso. The company will immediately begin selling homes in
seven communities in the Maryland suburbs of Washington, D.C., Caruso
said. The homebuilder had filed for bankruptcy in June 2008, a victim of
the flagging house prices and bad mortgages of the subprime credit
crisis.
href='http://bankruptcy.law360.com/print_article/120560'>Read
more. (Subscription required.)
WCI Emerges from Chapter
11 with New Board
WCI Communities Inc. announced yesterday that it had
emerged from chapter 11 with $2 billion less debt and appointed five
people from the financial and real estate industries to its new board of
directors,
size='3'>Bankruptcy Law360 reported yesterday.
Bankruptcy Judge
face='Times






New
Roman'
size='3'>Kevin J. Carey of the U.S. Bankruptcy
Court for the District of Delaware approved WCI's reorganization plan on
Aug. 26. Under the plan, WCI will shave $2 billion in debt and
liabilities from its balance sheet, and its senior secured lenders will
get $450 million of new debt and 95 percent of the equity in the new
company. Unsecured creditors of WCI will get a 5 percent stake in the
new company, as well as a stake in a litigation trust. The 5 percent
stake can increase to up to 35 percent in the new WCI depending on its
performance, according to the plan.
href='http://bankruptcy.law360.com/print_article/120588'>Read
more. (Subscription required.)
Auto Suppliers
U.S. Antitrust
Authorities Approve Delphi Sale to GM
U.S. antitrust authorities have signed off on a deal
in which bankrupt auto parts maker Delphi Corp. would sell the bulk of
its assets to General Motors Corp. and a consortium of lenders led by
Elliott Management Corp. and Silver Point Capital LP,
face='Times New Roman'>
size='3'>Bankruptcy Law360 reported yesterday.
The Federal Trade Commission issued a notice Wednesday showing that the
Delphi deal was allowed to proceed and had been granted early
termination of the merger waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976. Delphi said that the deal is
expected to close by Oct. 1. In August, the European Union also approved
the credit bid acquisition, which is intended to help Delphi exit
bankruptcy court after operating under chapter 11 protection since
2005.
href='http://bankruptcy.law360.com/print_article/120545'>Read
more. (Subscription required.)
Hayes Lemmerz Reaches
Deal on Reorganization Plan
Wheel maker Hayes Lemmerz International Inc. said that
it reached an agreement with its lenders on a reorganization plan, the
Associated Press reported yesterday. The company, which makes aluminum
and steel wheels for cars, trucks, commercial trucks and trailers, filed
for bankruptcy protection in May. The company also supplies automotive
powertrain components. Hayes Lemmerz said this week that it reached a
deal on its reorganization plan among its debtor-in-possession lenders,
pre-petition secured lenders and committee of unsecured creditors. A
bankruptcy court approved the company's disclosure statement, allowing
Hayes Lemmerz to gain acceptance of the overall plan from other
creditors. The hearing on the plan is scheduled for October 15.
href='http://finance.yahoo.com/news/Hayes-Lemmerz-reaches-deal-on-apf-3689722696.html/print?x=0'>Read
more.
Across the country, cash-strapped state governments
are shutting down business for a day at a time to save money, the
size='3'>Wall Street Journal reported today.
State offices are shuttered Friday in California, Maine, Maryland and
Michigan. Rhode Island had planned to join them until a judge on
Thursday blocked its closure plan. Some state agencies are closed in
Georgia and Wisconsin, and most Colorado state offices will be shuttered
on Tuesday. Other states, such as Arizona, have been trying to keep
their operations open while furloughing thousands of workers. The
furloughs, which basically act as salary cuts for state workers, are the
latest response to plunges in tax revenue because of the recession.
State legislatures have struggled to cover shortfalls that have
ballooned to $168 billion, or 24 percent of their general-fund budgets,
for the current fiscal year, which for most began July 1, according to a
report released Thursday by the left-leaning Center on Budget Policy
Priorities.
href='http://online.wsj.com/article/SB125202235182685075.html'>Read
more. (Subscription required.)
Unemployment Hits 9.7
Percent, but Job Loss Slows in August
Employers eliminated 216,000 jobs in August even as
the larger economy showed signs of turning around, the
face='Times New Roman'>New York
Times reported today. The unemployment rate,
which dipped in July as Americans left the work force and stopped
looking for jobs, resumed its climb last month, rising to 9.7 percent
from 9.4 percent, the Labor Department reported today in its monthly
snapshot of the job market. As factories slowly begin to ramp up
production and businesses start to restock their shelves, economists
anticipate that job losses will dwindle and that employers could begin
creating jobs by late this year or early 2010. However, most economists
— and White House officials — still expect the unemployment
rate to reach 10 percent or higher.
href='http://www.nytimes.com/2009/09/05/business/economy/05jobs.html?ref=business&pagewanted=print'>Read
more.
Manufacturing, Housing Data
Signal a Return to Growth
New data is showing that two sectors of the economy
that have suffered the longest, deepest decline in the recession --
manufacturing and housing -- are now expanding, the
face='Times New Roman'>
size='3'>Washington Post reported today.The
Institute for Supply Management reported Tuesday that manufacturing
expanded in August for the first time since January 2008. The
institute's index of business activity rose to 52.9, from 48.9. Any
number below 50 signals a contraction.Separate reports showed that
construction spending on residential real estate rose 4.5 percent and
that pending home sales increased for the sixth consecutive month,
supporting other recent indications that the decline in the housing
market is leveling off.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/09/01/AR2009090101347_pf.html'>Read
more.
Rescue Philadelphia's Papers Faces Deadline
Brian Tierney on Sept. 15 will face off against
creditors that are owed $300 million and want to seize ownership of the
bankrupt
size='3'>Philadelphia Inquirer
size='3'>and
face='Times New Roman' size='3'>Philadelphia Daily News,
the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. In 2006, Tierney led a $515 million buyout of
the
size='3'>Inquirer and
face='Times New Roman'>Daily
News, betting his advertising experience and
local connections could revive them. Tierney sliced almost $100 million
from annual operating costs that stood at $461 million in 2006. He cut
nearly 400 of the company's 2,600 full-time-equivalent jobs and
persuaded unions to ease work rules. He also replaced most of the
papers' ad-sales staff, ended cut-rate subscriptions and started a
glossy magazine to attract luxury-goods ads that the company says brings
in $1.5 million in annual revenue. However, the Philadelphia papers'
combined ad revenue fell to $279 million in 2008, down 22 percent from
2006. Ad revenue for the overall newspaper industry declined 23 percent
in the same period, according to the Newspaper Association of
America.
href='http://online.wsj.com/article/SB125201205082484509.html'>Read
more. (Subscription required.)
Orders Mediation Talks, Sets Dates
The judge in Heller Ehrman's bankruptcy has ordered
mediation between the firm's creditors and its former shareholders, the
first sign that shareholders might come to the table to iron out an
ending to the nine-month-old bankruptcy, The Recorder reported today.
The talks are scheduled to take place on Oct. 30 and Nov. 16. Also,
Judge Dennis Montali ordered each side to file
settlement conference statements confidentially with the moderator,
Judge Randall Newsome, by later this
month. It's not clear how many shareholders
the creditors intend to target by arguing the firm was insolvent as
early as 2007, bringing into question payments made to partners since
then. A majority appear to be participating in settlement talks: Six
attorneys are representing 183 of the former shareholders, some of whom
left or retired before the firm dissolved, according to the order's
proof of service.
href='http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1202433587028'>Read
more.
Former Baseball Player
Dykstra Accused of Stripping Property from Estate After
Bankruptcy
Lenny Dykstra, who helped the New York Mets win the
World Series in 1986, was accused of taking goods from his home
including a $40,000 French stove two weeks before a bankruptcy judge
appointed a trustee to oversee his finances, Bloomberg News reported
yesterday. Fixtures and furniture were “removed and presumably
sold” by the Major League Baseball All-Star, who filed for
bankruptcy in July, the mortgage lender Index Investors LLC, a creditor
in the case, said in court papers. Bankruptcy Judge Geraldine Mund in
Los Angeles said this week that she will appoint a trustee who will
assess the prospects for a reorganization, said Bruce Speiser, a lawyer
for Index Investors, which asked the court to let creditors liquidate
Dykstra’s assets.
href='http://www.bloomberg.com/apps/news?pid=20601127&sid=aTHeAOobL7i4'>Read
more.
International
href='http://global.abiworld.org/?q=news'>Click here to review
today's global insolvency news from the GLOBAL INSOLvency
site.