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Judge Allows Conseco Unit to Continue Supreme Court Appeal
Conseco Inc.'s Conseco Finance unit on Tuesday received bankruptcy court
permission to continue with its U.S. Supreme Court appeal of $26.8
million in arbitration awards made in 2000, Dow Jones reported. Judge
Carol A. Doyle said she would lift the automatic stay pertaining to the
matter, which involves two South Carolina residents who obtained
real-estate-secured credit from divisions of Green Tree Financial Corp.,
now known as Conseco Finance, in the early- to mid-1990s. Lynn W. Bazzle
and Daniel B. Lackey didn't receive a South Carolina-specific disclosure
form relating to the selection of attorneys and insurance agents in
connection with the credit transactions, reported the newswire.
FAO Inc. Gets Nasdaq Delisting Notice
FAO Inc. said on Tuesday it received a Nasdaq delisting notice on Jan.
14 for failing to comply with requirements due to its bankruptcy filing,
the Associated Press reported. The parent company of the FAO Schwarz toy
store said it requested a hearing before a Nasdaq Listing Qualifications
Panel. FAO filed for chapter 11 bankruptcy protection earlier this
month, amid liquidity issues following consecutive quarterly losses and
store closings. Last week, FAO hired investment banker Morgan Joseph
& Co. to help the company raise equity capital. The retailer
anticipates emerging from chapter 11 in the second quarter, reported the
newswire.
WorldCom's Ex-CFO Loses Bid to Move Trial
Scott Sullivan, WorldCom Inc.'s former chief financial officer, will be
tried in New York, a judge decided, after rejecting his request to
transfer his securities fraud trial closer to his home in Mississippi,
Bloomberg News reported. A federal judge told Sullivan that he must
stand trial in Manhattan on charges of orchestrating a
multibillion-dollar accounting fraud that drove the nation's
second-largest long distance company into the biggest U.S. bankruptcy.
Sullivan wanted the case transferred to Washington, D.C., home of
WorldCom's MCI Communications Corp. unit. Clinton, Miss.-based WorldCom
is hoping to exit bankruptcy by summer, reported the newswire
Wherehouse Entertainment Files for Bankruptcy Protection
Again
Wherehouse Entertainment Inc., a music and movie retailer that emerged
from
bankruptcy in 1997, sought chapter 11 protection again as increased
competition from discounters has hurt sales, Bloomberg News reported.
The Torrance, Calif.-based company listed assets of $228 million and
debt of $222.5 million in its chapter 11 petition filed in U.S.
Bankruptcy Court in Wilmington, Del. In its most recent U.S. Securities
and Exchange Commission filing, Wherehouse said its revenue has declined
in part due to 'continuing competition from mass merchandisers and
specialty electronics chains selling new music and DVD releases at or
below cost,'' reported the newswire.
Peregrine Files Plan to Repay Creditors and Exit
Bankruptcy
Peregrine Systems Inc., a bankrupt business-management software maker,
filed
a reorganization plan that would give 90 percent of the stock in the
reorganized company to current shareholders, Bloomberg News reported.
Under the plan, which has to be approved by the bankruptcy court before
creditors can vote on it, as much as 10 percent of the stock would be
used to settle shareholder lawsuits, the company said, Bloomberg
reported. Peregrine filed for chapter 11 protection in September to
overcome accounting problems and reorganize $607 million of debt.
Creditors in the company's bankruptcy case had asked the court to end
Peregrine's so-called exclusive period to file a reorganization plan.
The company plans to ask the bankruptcy court at a Feb. 25 hearing for
permission to seek creditors' approval of the plan.
American Airlines Pushes for Speedy Negotiations with Labor
Unions
American Airlines Chief Executive Donald Carty says his airline faces a
cash crunch that needs immediate attention, the Dallas News
reported. The management-labor dialogue began on Monday afternoon when
American officials met with union leaders for its pilots and ground
employees, the first of a series of weekly meetings to restructure the
airline.
'Given the severity of our situation, it's clear that management and
labor need to work more closely than ever before in our history and
intensify our efforts to find both short- and long-term solutions to
save and restructure our airline,' Carty said last Thursday. Having cut
$2 billion a year in structural costs, the airline needs to extract
another $2 billion in labor-related savings to reach its $4 billion
annual goal. The usual give-and-take nature of negotiations, however,
probably won't work here, consultants say, because American has very
little to offer pilots in exchange for concessions, reported the
newspaper.
3 Airlines to Defy U.S. Agency on Marketing Alliance
Three of the nation's largest airlines said yesterday that they intend
to go ahead with a proposed marketing partnership that has drawn
criticism from the Transportation Department, the New York Times
reported. The agency has said that it would approve the partnership only
if the airlines followed strict conditions intended to prevent
anticompetitive behavior, and that it would start enforcement action if
the airlines did not adhere to those guidelines. The carriers -- Delta
Airlines, Northwest Airlines and Continental Airlines -- objected to
most of those conditions, but they said they would agree to a much
smaller set of limitations. Executives at the airlines said this was the
first time in recent memory that the companies were defying the
Transportation Department to a degree that would likely result in a
legal hearing. To read the full article, point your browser to
href='http://www.nytimes.com/2003/01/21/business/22CND-AIR.html'>http://www.nytimes.com/2003/01/21/business/22CND-AIR.html.
US Airways, Delta Drop WorldCom as Frequent-flier Partner
US Airways Group Inc., Delta Airlines Inc. and other U.S. airlines have
scrapped
frequent-flier alliances with WorldCom Inc. in favor of the phone
company's rivals, AT&T Corp. and Sprint Corp, Bloomberg News
reported. The business, in which long-distance phone companies reward
customer spending with frequent-flier miles, is one that WorldCom
pioneered in 1988 and dominated until it filed for bankruptcy protection
in July. UAL Corp.'s United Airlines said it dropped WorldCom and
partnered with Sprint after the phone company failed to make payments
under their agreement, reported the newswire.
Arizona Treasurer May Limit Risk After National Century Loss
Arizona's new treasurer may seek tighter limits on how much money a
government pool can put in some investments to lower risk after the
state lost money last year on bonds sold by a bankrupt health-care
finance company, Bloomberg News reported. Arizona's local treasurers
last month urged a review because they stand to lose money on $131
million in debt the pool bought from Dublin, Ohio-based National Century
Financial Enterprises Inc., which provided cash to health-care providers
by buying medical bills and then packaging them into asset-backed bonds,
reported the newswire.
Adelphia Shareholders Criticize Pay Plan for 2 Top Executives
A deal that could pay at least $41 million to the two top executives at
scandal-plagued Adelphia Communications Corp. has come under fire from a
committee representing the company's stockholders, the Associated Press
reported. The contracts must be approved by the U.S. Bankruptcy Court
that has been overseeing Adelphia's restructuring. The Coudersport,
Pa.-based cable company filed for chapter 11 bankruptcy-court protection
in June following revelations that it had guaranteed billions of dollars
in debt taken on by companies controlled by the family of its founder,
John Rigas, reported the newswire. In letters to the company's
directors, Adelphia's equity committee said it intends to fight the
proposed compensation deals for William Schleyer and Ron Cooper, who
were picked as Adelphia's new chief executive and chief operating
officers last week. In all, the deal, detailed in bankruptcy-court
filings on Tuesday, guarantees the pair $23.9 million, and is likely to
pay them at least $41 million over three years, according to the equity
committee, the Associated Press reported.
Systech Retail Arranges for C$2.66 Million Financing
Systech Retail Systems Inc. and its Canadian affiliates were granted
creditor protection under Section 11 of the Companies' Creditors
Arrangement Act, Dow Jones reported. In a news release, Systech said the
order recognizes the voluntary petitions filed by Systech Retail Systems
Inc. and its U.S. and Canadian affiliates as 'foreign proceedings,'
which has accorded Systech protection under chapter 11 of the U.S.
Bankruptcy Code in the Eastern District of North Carolina, effective
Jan. 13, according to Dow Jones.
Systech has arranged for a C$2.66 million (about US$1.73 million)
debtor-in-possession financing commitment from its existing, principal
secured lenders, Integrated Partners L.P. One and Park Avenue Equity
Partners L.P., that will enable it, subject to court approval, to
continue business operations, including having funds available to meet
future working capital needs and fulfill the obligations associated with
its business, including the prompt payment of new vendor invoices,
reported the newswire.
Alcoa Unit to Buy Owens Corning Facility
Alcoa Inc.'s home exteriors unit reached an agreement to acquire Owens
Corning's vinyl production facility in Atlanta, Dow Jones reported. In a
press release on Tuesday, Alcoa Home Exteriors President Gary Acinapura
said, 'The addition of this facility along with the increased capacity
it will bring to our overall production system will help support our
future organic growth initiatives.' The deal is expected to be completed
by April 2003. Since Owens Corning filed for chapter 11 bankruptcy
protection, the deal is subject to approval by the presiding bankruptcy
court, the company said, reported the newswire.
Former Budget Group Can Proceed With Foreign-Units Sale
Former Budget Group Inc. on Tuesday won approval of bid procedures in
connection with the proposed sale of its remaining businesses in Europe,
the Middle East and Africa to Avis Europe PLC, Dow Jones reported. Avis
Europe has offered to pay $20 million in cash and to provide a $1.9
million debtor-in-possession loan to the chapter 11 estate of the entity
now called BRAC Group Inc. The debtor-in-possession loan was approved on
an interim basis on Tuesday, reported the newswire. Avis Europe also
offered to provide a $6 million cash infusion to Budget France as part
of the deal, said Larry J. Nyhan, an attorney with Sidley Austin Brown
& Wood, the firm representing BRAC Group Inc., Dow Jones
reported.
Bankruptcy's Big Bonuses: Greed or Need?
A company files for bankruptcy, thousands of workers lose their jobs and
the stock price becomes nearly worthless. So what do its executives and
managers do? They ask for bonuses, sometimes worth millions of dollars,
the Associated Press reported. And creditors often say the bonuses are
good money spent because they help stem the exodus of workers who know
the business. The creditors' goal is to get a company back to health so
they can recoup money loaned before business faltered. To read the full
article, point your browser to
href='http://hoovnews.hoovers.com/'>http://hoovnews.hoovers.com.
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