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September 5, 2002
House GOP Abortion Divide May Delay Bankruptcy
Vote
A wedge among House Republicans over the
constitutional freedoms of non-violent abortion clinic protesters
deepened this week, raising new questions about prospects for enactment
of a bankruptcy reform conference report this year, CongressDaily
reported. The House had been considering bringing the bankruptcy report
up for a vote this week-a goal that appears bound to slip, sources said
today. The report also needs approval by the Senate, and each day the
House fails to act means the Senate will have that many fewer days to
allocate to the bill and the promised Democratic filibusters that will
accompany it, observers said. Nevertheless, a House leadership aide
yesterday said Republican leaders are weighing a new procedural remedy
suggested by a group of anti-abortion House Republicans.
According to the newswire, at issue is
language brokered in the bankruptcy reform conference committee, chiefly
by Rep. Henry Hyde (R-Ill.) and Sen. Charles Schumer (D-N.Y.), that
would raise the legal and financial liability of clinic protesters whose
actions fall short of the definition of violence. Hyde wanted to be sure
that truly peaceful protesters would not be affected by the language; he
and Schumer negotiated on that point for several months before coming to
an agreement just before the August break. Although Hyde signed off on
the deal, sources at the time said he was less than satisfied with the
agreement. The latest remedy circulated by the anti-abortion Republicans
calls for reintroducing the bankruptcy report fortified with new
language clarifying that peaceful clinic protesters would not be
affected.
Senate Majority Leader Tom Daschle (D-S.D.) said yesterday that he is
very concerned about the prospects for completing work on the bankruptcy
bill, adding that some House Republicans want to make the bankruptcy
bill an abortion bill, reported the newswire.
Hearing on Student Credit Debt Scheduled This Morning
A full committee hearing to examine financial literacy and credit card
debt among college students is scheduled for today at 10 a.m. in the
Senate Banking Committee, CongressDaily reported.
Republican Study Committee Examines Abortion Provision in
Bankruptcy Bill
The proposed Bankruptcy Conference Report seeks to prohibit the
discharge of any debt occurring from the violation of a state or federal
law related to preventing an individual from obtaining or providing any
legal good or service. The executive summary of the Republican Study
Committee analysis of the abortion provision in the bankruptcy bill is
available on the ABI World web site,
href='/AM/Template.cfm?Section=Home'>www.abiworld.org.
Barons of Bankruptcy
A Financial Times investigation has found that the top management of the
25 biggest recent U.S. corporate collapses amassed $3.3 billion from
share sales, payoffs and other rewards, the newspaper reported. This
special Financial Times report examines who made those fortunes, how
they did so even as their companies were heading for bankruptcy, and
what lessons can be learned by regulators and corporate governance
reformers. To read the story, point your browser to
href='http://news.ft.com/servlet/ContentServer?pagename=FT.com/Page/SpecialLe…'>http://news.ft.com/servlet/ContentServer?pagename=FT.com/Page/SpecialLe…
(subscription required).
Marathon Buys Gas-Sale Right from Enron for $31.9 Million
Marathon Oil Corp. acquired Enron Corp.'s right to deliver and sell
liquefied natural gas at terminal facilities in Georgia for $31.9
million, the Wall Street Journal reported. As part of the agreement,
Marathon can supply as much as 58 billion cubic feet of natural gas a
year, for about 17 years, to El Paso Merchant Energy at the Elba Island
LNG regasification terminal. According to the online Journal, Marathon,
a Houston oil company, said the U.S. Bankruptcy Court for the Southern
District of New York approved the transfer of ownership in late August,
when Marathon became the successful bidder for the right.
US AIRWAYS
US Airways Creditors Fight Bid to Shed 67 Planes
US Airways Group Inc.'s bid to end leases for or abandon some of its
aircraft has been met with opposition from some of its creditors, Dow
Jones reported. Pursuant to a recent bankruptcy court order, US Airways
ended leases for or abandoned 57 aircraft and related engines that it
took out of service last year as part of its restructuring efforts. The
aircraft, which are either leased or owned and subject to mortgages,
don't provide any value to the company's bankruptcy estate, US Airways
said.
The order gave lessors and secured financiers 10 days to object,
reported the newswire. Four secured financiers have objected to how US
Airways is providing for the return of the aircraft, which are parked at
a storage facility in the desert in the southwestern United States. In
court papers, US Airways said it has relinquished possession of the
aircraft and that the financiers are free to retrieve their property. US
Airways said 'the law doesn't require it to take any action
post-abandonment.' According to the newswire, a hearing on the matter is
scheduled for Thursday morning before Judge Stephen S. Mitchell of the
U.S. Bankruptcy Court in Alexandria, Va.
Unions Fight Order Letting US Airways Pay Executive
Bonuses
Two unions have asked the bankruptcy court handling US Airways Group
Inc.'s chapter 11 case to vacate an order that authorizes the company to
pay $6 million in bonuses to 500 executives and managers, reported Dow
Jones. The International Association of Machinists and Aerospace Works
(IAM) said in a court filing that the bonuses represent an attempt to
pay non-union employees at the expense of other general unsecured
creditors and union employees who have been asked to take almost $900
million in annual concessions. The Association of Flight Attendants said
in court papers that it supports the IAM's request.
In an objection Tuesday, US Airways countered that the bonuses are
payable under a pre-petition incentive plan and are a basic component of
each employee's total compensation. The company said it would be unfair
not to provide these payments to key managers, who have already agreed
to take salary reductions that in some cases are proportionately greater
than those taken by any other employee group. A hearing on the matter is
scheduled for Thursday before Judge Stephen S. Mitchell of the U.S.
Bankruptcy Court in Alexandria, Va.
Qwest Credit Facility Extended
Qwest Communications International Inc. has gained some breathing room
for its turnaround efforts after reaching an agreement with banks to
amend and extend the struggling telecom company's $3.4 billion credit
facility, the Dow Jones reported. The agreement comes about two weeks
after the company inked the sale of its phone directory business for $7
billion. Banc One Capital Markets, led by Bank of America, agreed to
extend the facility by two years until May 2005 and to relax a debt
covenant that threatened to send Qwest into bankruptcy, according to a
person familiar with the situation.
Ohio to Pursue Enron, WorldCom in State Court
Ohio is dropping out of federal class-action lawsuits against both Enron
Corp. and WorldCom Inc. in order to pursue bigger awards against the
energy and communications companies in state court, said Attorney
General Betty Montgomery's office Wednesday, the Associated Press
reported. The new state lawsuits in Ohio are expected to be filed by the
end of the day in Franklin County Common Pleas Court. Two of Ohio's
public employee-pension funds suffered a combined loss of more than $500
million with Enron's fall and WorldCom's bankruptcy. Pension systems in
California, Illinois, West Virginia and Alabama also have dropped out of
the federal lawsuits to pursue their own cases in state courts, the
attorney general said. Ohio had been one of several states pursuing a
federal class action, the wire reported.
NATIONAL AIRLINES
National Airlines Reaches Pact For $112 Million Financing
Package
National Airlines struck a deal for a $112 million financing package,
days after slashing employee compensation by up to 20 percent and about
three weeks after the federal government rejected its request for a
$50.5 million loan guarantee, reported Dow Jones. A spokesman for the
bankrupt carrier declined to comment on who is involved in the financing
package, saying only that the agreement is with 'a number of different
entities,' mostly in the aerospace industry, reported the newswire. In a
press release Wednesday, the airline said it now expects to successfully
emerge from bankruptcy protection in early October, pending final
documentation, modification of its previously confirmed reorganization
plan and court approval, reported the newswire. National has been
operating under bankruptcy protection since December 2000.
National Airlines Temporarily Halts Some Flights
National Airlines, operating under chapter 11 bankruptcy protection,
said it will temporarily halt service between Chicago's Midway Airport
and Las Vegas starting Oct. 1 because of postponed aircraft deliveries,
according to the Wall Street Journal. The move follows the rejection
last month of National's application for a $50.5 million government loan
guarantee. The Air Transportation Stabilization Board-the federal panel
formed to help airlines cope with the financial impact of the Sept. 11
terrorist attacks-rejected the application because National couldn't
prove it would be able to repay the government.
New UAL CEO Says Bankruptcy Not Forgone Conclusion Glenn Tilton, the
new chief executive of United Airlines parent UAL Corp, on Wednesday met
with union leaders as soon as he arrived for his new job, and said
bankruptcy was 'not a foregone conclusion,' Reuters reported. United had
planned to refile an application with the federal government for $1.8
billion in loan guarantees by Sept. 16. But Tilton said, 'I think we do
want to talk to the ATSB' (Air Transportation Stabilization Board) about
possibly extending that time period.
WORLDCOM
WorldCom Extends Billing Pacts with Verizon through 2003
WorldCom Inc. on Wednesday extended its billing agreement with Verizon
Communications until the end of next year, a move that could help the
bankrupt telecommunications provider ensure services and preserve
revenue, Dow Jones reported. As part of the extension agreement,
WorldCom will pay $34.5 million it owed to Verizon before its bankruptcy
filing on July 22. With the agreement, WorldCom can 'save lots of
revenue and avoid trying to renegotiate for another billing system or
create its own,' said Daniel Golden, lead attorney for the official
creditors' committee in WorldCom's bankruptcy case. Golden voiced the
creditors' support for the agreement at a court hearing Wednesday.
Subsequently, Judge Arthur Gonzalez granted his approval for the
agreement.
WorldCom Seeks to Reject Severance Pact with 19 Ex-Execs
WorldCom Inc. is seeking bankruptcy court approval to pay remaining
severance benefits to employees it laid off before the company filed for
bankruptcy and whose employment ended on or before the July 21
bankruptcy filing, reported Dow Jones. The U.S. Bankruptcy Court in
Manhattan on July 22 granted a WorldCom request to pay nearly all
pre-petition wages and to continue pre-petition employee compensation
and benefits programs, reported the newswire. 'Given the limited notice
of the first-day motions,' the company had sought authority to pay
severance obligations only up to $4,650 per dismissed employee,
according to a motion filed late Tuesday. Dow Jones reported that the
July 22 order authorized the company to pay a total of about $22
million.
In the four months before the bankruptcy filing, the company laid off
or gave notice of termination to roughly 12,800 employees. In addition
to those workers, WorldCom terminated 19 executives under severance
agreements with different terms from the company's typical severance
programs. Under the severance agreements with the executives, WorldCom
would have paid them about $900,000 in enhanced severance. Before the
chapter 11 filing, the company paid them about $500,000 of that amount.
WorldCom is seeking to reject the enhanced severance agreements and to
permit the laid-off executives to otherwise participate in the company's
severance programs, the motion said. The company would provide the
12,800 terminated employees with an amount equal to the severance
payments due to the executives minus the amount they received under the
enhanced agreements. The balance due to the executives is about $1.1
million, Tuesday's filing said.
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