August 17, 2004
US Air to Seek 5-Year Extension for Pension Fund
Payments
US Airways, facing a cash
shortage as it tries to avoid another bankruptcy filing, said yesterday
that it would seek government permission to stretch out $67.5 million in
contributions it owes to the pensions of its mechanics and flight
attendants, the New York Times reported. The airline plans
to ask the Internal Revenue Service for waivers that will allow it to
spread the contributions, due for 2004, for up to five years.
US
Airways said the move would not affect benefits to members of the
International Association of Machinists and the Association of Flight
Attendants. The request came five days after its pilots' union released
a report from its financial adviser saying the airline was in danger of
a second bankruptcy filing by mid-September and could cease operating
within six months unless it could significantly cut its operating costs,
the newspaper reported.
Leap Wireless Emerges from
Chapter 11 Bankruptcy
Leap Wireless International
Inc., a wireless telephone company, on Tuesday said it has emerged from
bankruptcy protection after reducing long-term debt by more than $2
billion, Reuters reported. The San Diego-based company last October said
the U.S. Bankruptcy Court for the Southern District of California
confirmed a reorganization plan that would leave it with more than $100
million of cash, and allow it to reduce long-term debt by more than 80
percent to roughly $426 million.
Bankruptcy Court Approves
Haynes Reorganization
Haynes International Inc. said
on Monday that a bankruptcy court had approved its plan to reorganize
and that it expects to emerge from chapter 11 by the end of August,
Reuters reported. The maker of specialized alloys used in the aerospace
and chemical processing industries also said that it will receive $100
million in exit financing from Congress Financial Corp., which will be
available when it emerges from chapter 11 protection, the newswire
reported.
Kaiser Posts Q2 Profit, Sees
2005 Chapter 11 Emergence
Kaiser Aluminum reported a net
profit for the second quarter on Monday after a loss last year but said
it does not expect to emerge from chapter 11 bankruptcy protection until
the first half of 2005, Reuters reported. Houston-based Kaiser said the
sale of assets and a 10 percent increase in sales due to higher alumina
prices helped improve results. The company reported net income of $24.2
million, or 30 cents per share, compared with a net loss of $61.4
million, or 76 cents per share, in the same quarter last year. But much
of the income in this year's quarter came from a pre-tax gain of $23.4
million for the sale of a smelter in Mead, Wash. Excluding the smelter
sale and other items, Kaiser had a second-quarter loss this year of 25
cents per share, the newswire reported.
Chicago Remains
Largely Unfazed So Far by United's Bankruptcy Filing
How United's 20-month-old
bankruptcy has played in Chicago's suburbs and O'Hare International
Airport offers insight for Atlanta should its own hometown carrier,
Delta Air Lines, file for chapter 11 as its financial ills worsen, the
Knight Ridder reported. If
Chicago's experience is any
predictor, people outside the company can expect minor turbulence rather
than shock waves from a Delta filing, at least in the short run. Experts
say the real impact will come less from United's decision to go into
bankruptcy court and more from how it emerges, if it does. Even after
nearly two years, that is still unclear. Read the article at
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Penthouse Considering Appeal
of Reorganization
Penthouse International on
Monday said it was considering an appeal of a court-approved
reorganization plan for the publisher of its racy adult magazine,
Reuters reported. A
U.S.
court confirmed on Aug. 12 a plan to allow General Media to emerge from
chapter 11 bankruptcy protection later this month. General Media has
been a unit of Penthouse International, which did not file for
bankruptcy protection and will not receive anything for its 99.5 percent
equity interest in the magazine. PET Capital Partners, an affiliate of
Marc Bell Capital
Partners, holds 89 percent of General Media's senior notes and was
behind the reorganization that would swap the debt for all of the new
common shares of the reorganized company. Penthouse
International said it had filed a complaint in New York State Supreme
Court against Marc Bell and others on charges of fraud and breach of an
earlier reorganization plan, the newswire reported.
CI's Advisers Seeking $613
Million
Consultants, lawyers and other
advisers who helped rehabilitate MCI Inc. are seeking to be paid $613
million, the most ever in a bankruptcy case, Bloomberg News reported.
KPMG LLP is asking the U.S. Bankruptcy Court in
New York to approve
almost $173 million in fees and expenses for auditing the company's 2002
and 2003 financial results, according to court documents. New York-based
Deloitte & Touche LLP is seeking $142 million and Deloitte
Consulting LLP is asking the court to approve $32 million in fees and
expenses. U.S. Bankruptcy Judge Arthur Gonzalez will consider the fee
and expense requests from about 45 firms retained by MCI and its
creditors at a hearing in New
York in October. The fees and expenses
sought are almost four-times the $174 million sought in the Global
Crossing Ltd. case, at the time the most ever, the newswire
reported.
Conseco Gives CEO Rich
Severance
Last week, Conseco said that
its third CEO in the past four years, William J. Shea, was leaving --
and taking with him a severance package worth $13.5 million in cash and
stock, the Wall Street Journal reported. That is a lot for
a
company like Conseco, which just last year emerged from bankruptcy-court
protection. The cost of his severance package amounts to about 6 percent
of what the company had expected to earn this year, and the sheer
magnitude of the payout forced Conseco last week to lower its earnings
forecast for all of 2004. This is another example of how executive pay
has continued to rise despite a season of scandal and iffy stock-market
performance. Read the full article at
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MCI Aides Seek $600
Million in Fees
Lawyers, advisers and
accountants who worked for MCI as it went through the biggest
chapter 11 bankruptcy case in U.S. history are seeking approval to
collect about $600 million in fees, according to filings with the U.S.
Bankruptcy Court for the Southern District of New York, the Wall
Street Journal reported. The Ashburn, Va.-based company filed
for bankruptcy-court protection in 2002 after an accounting fraud that
ultimately totaled $11 billion. MCI emerged from chapter 11 in April and
the fees cover the entire period of the bankruptcy.
Federal Judge Rules Scrushy
Trial to Commence in January 2005
Richard M. Scrushy, the former
HealthSouth Corp. CEO and chairman indicted for his alleged role in
accounting fraud at the company, will go to trial Jan. 5, 2005, a
federal judge ruled, the Wall Street Journal reported.
Scrushy,
who was indicted by a federal grand jury last fall, had faced a trial as
early as this month. The trial will take place in
Birmingham,
Ala. , where HealthSouth is based,
U.S. District Court Judge Karon Bowdre said in her order. The trial will
take place nearly two years after federal agents raided HealthSouth in
March 2003. Following the raid, more than a dozen former HealthSouth
employees agreed to plead guilty to fraud, and several alleged
that Scrushy knew or directed the fraud, the newspaper
reported.
Air Canada Creditors Set To Vote On Plan,
Report Says
As Air Canada's creditors prepare to meet in Montreal
this week to vote on the airline's restructuring plan, analysts suggest
it will take more than a revamping of its finances to make the airline a
success and avoid a return journey to financial distress, according to a
Canadian Press report. While it will be a leaner and more efficient
airline when Air Canada finally ends 18 months under court protection
from creditors, doubts remain that its new business plan can succeed and
provide creditors a solid return for their co-operation. 'I think they
are making some progress, but I don't think they're anywhere near out of
the woods at this point,' said Ron Kuhlmann, an Oakland, Calif.-based
transportation consultant for Unisys R2A.
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