August 272009

 

Judge Rules for Mediation of

Lehman Derivative Disputes

Bankruptcy Judge

face='Times










New

Roman' size='3'>James Peck yesterday ordered
that banks and other firms involved in disputes over the value of
derivatives held with Lehman Brothers must enter into compulsory
mediation in an effort to reduce the number of disagreements brought
before the court, Reuters reported yesterday. Lehman's creditors’
committee is seeking payments on derivatives it believes it is owed
money on, and has sought to begin mediation as an initial means of
resolving any differences between the investment bank and its
counterparties over the value of the contracts. Lehman said that it has
nearly 900,000 derivative transactions with hundreds of firms, and that
many of the contracts that have the potential for recovery in favor of
Lehman are in dispute, or are expected to be. Judge Peck also ruled,
however, that more time should be spent refining the dispute resolution
procedures after nearly 50 of Lehman's trade counterparties lodged
various objections to the resolution proposals. 

href='http://sg.news.yahoo.com/rtrs/20090827/tbs-lehman-derivatives-disputes-7318940.html?printer=1'>Read

more.

Autos

Chrysler Asks Bankruptcy
Court to Halt Auto Dealer Lawsuits

Chrysler is asking the bankruptcy court to bar its
former dealers from suing the automaker for rejecting their contracts,
Dow Jones

size='3'>Daily Bankruptcy Review reported
today. Several dealerships, including a group of eight Wisconsin stores
and separate dealers in Ohio and Arkansas, took legal action against
Chrysler in and outside of bankruptcy court, alleging that the auto
maker’s rejection of their contracts violated state franchise
laws. Chrysler said that the legal action should be blocked and that the

dealerships should be held in contempt because the lawsuits are a
violation of court orders rejecting the contracts and approving the sale

of Chrysler assets to an entity run by Fiat SpA, according to court
papers filed Tuesday. Chrysler is also asking for reimbursement of legal

fees associated with fighting the lawsuits. A hearing on the conflict
between the automaker and dealers is scheduled for
today.

“Clunkers”
Program Generates 690,000 Sales

The Transportation Department said that the federal
government's month-long 'Cash for Clunkers' program, which ended after
having spent almost the entire $3 billion allotted, put 690,114 new,
more fuel-efficient cars on the road, the

face='Times










New

Roman' size='3'>Washington Post reported
today. General Motors announced last week that it will reinstate 1,350
workers and add overtime for about 10,000 at three plants, as the
automaker replenishes inventory sold during the government program.
Honda also said it will increase U.S. production. Eight of the top 10
new cars purchased through the program came from Honda, Hyundai, Nissan
and Toyota, which claimed the top spot with its Corolla. The only
vehicles produced by U.S. automakers in the top 10 were the Ford Escape
and Focus. By contrast, all of the top 10 clunkers turned in were made
by a Detroit company, with the four-wheel-drive Ford Explorer SUV, Ford
F-150 pickup and the four-wheel-drive Jeep Grand Cherokee taking the top

three spots. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2009/08/26/AR2009082603482_pf.html'>Read

more.

Tribune Bondholders Fault
Zell Takeover

Disgruntled Tribune Co. bondholders have asked a U.S.
bankruptcy judge to let them investigate Sam Zell's 2007 buyout of the
newspaper-and-television chain in an effort to derail a plan that would
hand the company over to its banks, the

face='Times










New

Roman' size='3'>Wall Street Journal reported
today. Yesterday’s filing by the bondholders calls the $8.2
billion transaction a 'fraudulent conveyance' that left Tribune
insolvent from the onset of the 2007 deal. It accuses senior lenders led

by JPMorgan Chase & Co. of completing a leveraged buyout they should

have known would push the company into bankruptcy. The
bondholder’s filing seeks to slow or nullify an advancing plan for

Tribune to exit from bankruptcy protection with JPMorgan, Bank of
America Corp.'s Merrill Lynch and other banks owning nearly all of
Tribune in return for the banks forgiving about $8 billion in debt. The
bondholders seeking to investigate Zell's buyout of Tribune represent
more than 18 percent of the company's bond debt, according to the court
filing. The bondholder's requested investigation centers around some
$1.26 billion in notes issued between 1992 and 1997. 
href='http://online.wsj.com/article/SB125134056143662707.html'>Read
more. (Subscription required.)

FDIC Eases Rules on Private
Investors Looking to Buy Banks

The Federal Deposit Insurance Corp. approved rules
yesterday aimed at making it easier for private investors to buy failed
banks, the Associated Press reported today. The FDIC's board voted 4-1
to reduce the cash that private-equity funds must maintain in banks they

acquire. Under the new rules, a buyer would need to maintain the bank's
capital reserves equal to 10 percent of the failed bank's assets, down
from 15 percent under an earlier proposal. That compares with a 5
percent minimum requirement for banks that buy other banks. The new
policy also limits the circumstances under which private investors must
maintain assets that could be provided if needed to bolster banks they
own. The agency's deposit insurance fund, which insures customers'
deposits, has shrunk under the weight of collapsing banks. The FDIC is
scheduled to reveal today how much was left in its reserves at the end
of June. 
href='http://www.fdic.gov/news/board/Aug26no2.pdf'>Click here to
read the FDIC’s new rules for private-equity acquisition of failed

banks.

TARP Collections Reach $7.3
Billion

The U.S. Treasury reported that it has collected a
combined $7.3 billion in dividend payments from many of the hundreds of
banks to which it has loaned government capital, the
face='Times New Roman'>Wall
Street Journal reported today. Government
collections of bailout dividends in July were aided by Citigroup Inc.,
which added $648 million to the tally as part of a deal that gave the
U.S. government a 34 percent stake in the banking giant. The Treasury's
report shows that the government collected a total of $649.2 million in
dividends in July from Citigroup and two community banks paying off
accrued dividends in conjunction with their repayment of borrowed funds.

Of the 662 institutions in which Treasury had invested the Troubled
Asset Relief Program (TARP) capital as of the end of July, about 82 pay
noncumulative dividends, meaning they are never liable for dividends
they don't declare or pay for a particular quarter. 
href='http://online.wsj.com/article/SB125131342944261351.html'>Read
more. (Subscription required.)

Boat Builder Files for
Chapter 11

Fountain Powerboats Industries Inc., a builder of fast

and high-end motorboats, filed for chapter 11 protection on Monday, the
Associated Press reported yesterday. The Washington, N.C.-based company
reported owing its main creditor, Birmingham, Ala.-based Regions Bank,
nearly $20 million and its main subsidiary reported assets of $18.4
million and liabilities of $50.2 million. The parent company said that
it lost $8.1 million from operations in the fiscal year ended June 30
after losing $2.2 million last year. 

href='http://finance.yahoo.com/news/NC-boat-builder-seeks-apf-2607350063.html?x=0&.v=1'>Read

more.

MagnaChip Creditors Hatch
Rival Chapter 11 Plan

MagnaChip Semiconductor LLC’s unsecured
creditors’ committee has filed a rival chapter 11 plan that it
argues will net a higher price and give unsecured creditors a much
fairer deal, Bankruptcy Law360 reported
yesterday. The committee lodged its own plan and disclosure statement
Tuesday in the U.S. Bankruptcy Court for the District of Delaware to
rival the plan proposed by MagnaChip and its affiliated debtors, which
the creditors claim is too flawed to be confirmed. The debtors' plan,
approved in July, envisions the sale of the debtors' assets, as well as
nondebtor foreign subsidiaries, to satisfy first-lien lender secured
claims valued at $95 million, but the committee said that it leaves
creditors saddled with more than $750 million in unpaid claims. 
href='http://bankruptcy.law360.com/articles/118527'>Read
more. (Subscription required.)

FormTech Files for
Bankruptcy, Seeks to Sell Assets

FormTech Industries LLC, a supplier of forged metal
automotive components, filed for chapter 11 protection yesterday and
sought approval to sell all its assets through a court-supervised
auction, Reuters reported today. In its chapter 11 filing, the Royal
Oak, Mich.-based company listed assets in the range of $100 million to
$500 million and debt in the range of $50 million to $100 million. The
case is

size='3'>In re FormTech Industries LLC, U.S.
Bankruptcy Court, District of Delaware (Delaware), No: 09-12964. 

href='http://www.reuters.com/article/bankruptcyNews/idUSBNG5359620090827'>Read

more.

Sports

Creditors Back Michael
Vick's Bankruptcy Plan

Creditors who are owed a total of more than $20
million have endorsed Michael Vick's plan to pay them back and emerge
from bankruptcy, the Associated Press reported today. Secured and
unsecured creditors overwhelmingly approved a reorganization plan by
Vick, who is due in Newport News today to seek a judge's approval of the

plan before returning to Philadelphia to make his debut with the Eagles
in an NFL preseason game. Creditors ranging from banks holding mortgages

on Vick houses to his former team, the Atlanta Falcons, endorsed Vick's
plan to repay them based on future earnings and the sales of assets,
including houses, cars and investments. A payment plan outlined before
Vick's signing with the Eagles would give creditors 10 percent of the
first $750,000 a year Vick earns. He would be allowed to keep one house
in Virginia, a luxury SUV and other possessions under the plan. 

href='http://www.google.com/hostednews/ap/article/ALeqM5hDsEKkbHNcP7laksDZz0oHhhHOwAD9AB5CEO0'>Read

more.

NHL Offers $140 Million

for Phoenix Coyotes

The NHL is offering about $140 million to purchase the

bankrupt Phoenix Coyotes franchise and would avoid a sticky issue still
facing the case by accepting the existing lease to play in Glendale,
Ariz., the Associated Press reported yesterday. The other bidder that
would keep the team in Arizona, Ice Edge Holdings, did not include a
figure in its bid, but its CEO Anthony LeBlanc said the partnership will

offer up to $150 million. However, the Ice Edge bid is contingent on
reaching a new lease agreement with Glendale, something LeBlanc said
must happen by the end of next week to keep the offer viable. The two
bids plus the $212.5 million offer of Canadian billionaire James
Balsillie, which is contingent on immediately moving the franchise to
Hamilton, Ontario, were filed yesterday after being submitted by a
court-imposed deadline on Tuesday for review by the
debtors-in-possession, a group headed by Moyes. The Coyotes are
scheduled to be sold at auction on Sept. 10. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2009/08/26/AR2009082603603_pf.html'>Read

more.

New Jersey Approves New
Tropicana Ownership Led by Icahn

New Jersey regulators approved a plan yesterday for
the former corporate parent of Atlantic City's bankrupt Tropicana Casino

and Resort to operate the business again as a reorganized company owned
by a group of investors led by billionaire Carl Icahn, the Associated
Press reported yesterday. The state Casino Control Commission found that

the company had been sufficiently transformed through the bankruptcy
process. The Icahn-led investment group acquired the casino earlier this

year by buying its $200 million in debt. The sale is still pending
bankruptcy court approval. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2009/08/26/AR2009082603024_pf.html'>Read

more.

Report: Big Gain in July
for New Home Sales

The Commerce Department reported yesterday that sales
of new homes surged nearly 10 percent in July from a month earlier,
the
size='3'>New York Times reported today. The
report showed that new-home sales rose 9.6 percent to a seasonally
adjusted rate of 433,000 last month. Sales, however, were still down
13.4 percent from a year ago, and the housing market is still in
critical condition. Economists attributed some of the month’s
increase to a government tax credit of up to $8,000 for first-time
homebuyers, and they pointed out that sales could struggle as more
people lose their jobs and more loans go bad. 

href='http://www.nytimes.com/2009/08/27/business/economy/27econ.html?ref=business&pagewanted=print'>Read

more.

International

Click here to review

today's global insolvency news from the GLOBAL INSOLvency site.