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May 23, 2007
w:st='on'>
size='3'>Autos
name='1'>UAW Slams Dura's Executive Bonus
Plan
The United Auto Workers union
said yesterday that top executives of Dura Automotive Systems Inc. stand
to collect millions in bankruptcy bonuses even if the reorganizing parts
maker fails to hit financial targets, the Associated Press reported. The
bankrupt Rochester Hills, Mich.-based company has already paid out
millions in bonuses to leaders it refuses to identify. Statements made
in court indicate that about half the cash is going to the company's
five most senior executives. On May 30, Dura goes before a judge for an
additional $4.4 million worth of bonuses under a plan that has been
revised as Dura continues to post losses while operating under chapter
11 protection. Dura's unsecured creditors’ committee and
second-lien debtholders, who are slated to see the business plan May 31,
have already agreed to the new bonus plan. The UAW, however, has not,
and it says Dura's bonus scheme is merely a disguised retention
plan.
href='http://www.chron.com/disp/story.mpl/ap/fn/4826758.html'>Read
more.
name='2'>ASC Seeks Approval of Incentive Plan
ASC Inc. is looking to
continue a pre-bankruptcy incentive plan that would award key executives
and managers at least $1.2 million if they successfully sell the
company's assets, the Associated Press reported yesterday. The
struggling maker of automobile sunroofs said on Friday that the
incentive bonuses will motivate upper management to hunt down the best
possible offer for the assets. ASC, based in
w:st='on'>
size='3'>Southgate
w:st='on'>
size='3'>Mich.
to sell its closed manufacturing plants through a chapter 11 auction.
The company has asked Judge
size='3'>Thomas J. Tucker to approve the
bonuses, which will be based on a percentage of the proceeds from the
sale of four shuttered
size='3'>Michigan properties, in
Gibraltar,
size='3'>Southgate
w:st='on'>
size='3'>Lansing
w:st='on'>
size='3'>Livonia
href='http://biz.yahoo.com/ap/070522/asc_bankruptcy.html?.v=1'>Read
more.
New
Jersey Judge Rules in Favor of Insurers in Congoleum
Settlement
A
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Jersey judge has ruled
that Congoleum’s insurers are not required to fund the global
asbestos settlement at the heart of the flooring manufacturer’s
bankruptcy plan,
size='3'>Bankruptcy Law360 reported yesterday.
“The court concludes that the claimant agreement is an
unreasonable agreement, not made in good faith,” the judge said.
“Therefore, the defendants have no coverage obligations for the
claimant agreement under
w:st='on'>New
Jersey
dispute dates back nearly five years, when Congoleum first started
contemplating entering bankruptcy upon facing thousands of asbestos
claims. <
font size='3'>As part of the deal, Congoleum agreed to enter
bankruptcy with a prepackaged plan, believing that the court would
quickly sign off on the measure. The deal immediately drew the ire of
the insurers, which have been battling in both state court and
bankruptcy court to have the settlement and the reorganization plan on
which it is predicated thrown out. The case is Congoleum Corp., case
number 03-51524, in the U.S. Bankruptcy Court of for the
District of New Jersey in
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href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=25258'>Read
more. (Registration required.)
Approves Northwest's Deal with AFA
Judge
face='Times New Roman' size='3'>Allan Gropper
size='3'>issued an order Monday approving Northwest Airlines
Corp.’s new collective bargaining agreement with the Association
of Flight Attendants, which the carrier says will align its labor costs
with its competitors and is necessary to its viability,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. The restructuring agreement, which is still
subject to union member approval, will save the airline $195 million in
wage costs in the first year and $200 million in the next four. The
reductions represent a 21 percent cut in base pay rates and incremental
pay increases of 1.5 percent this year, 1 percent from 2008 to 2010 and
2 percent in 2011. The union has also agreed to new productivity rules
and a reduction in vacation and sick leave accruals.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=25244'>Read
more. (Registration required.)
name='5'>Portrait Corp.’s Creditors Support Asset
size='3'>
w:st='on'>Sale
Unsecured creditors of
Portrait Corp. of America Inc. (PCA) have thrown their support behind
the bankrupt photography company’s bid to sell off its assets to
Consumer Programs Inc. for $100 million,
size='3'>Bankruptcy Law360 reported yesterday.
PCA’s bankruptcy filing was premised on a prenegotiated term sheet
among the company’s senior noteholder committee, certain
second-lien noteholders and the debtors’ equity sponsor, who
provided for the reinstatement of PCA’s secured debt and the
exchange of the company’s unsecured claims for virtually all of
the equity of the reorganized company. The case is
face='Times New Roman' size='3'>In re Portrait Corp. of America
Inc., case number 06-22541, in the U.S.
Bankruptcy Court for the Southern District of New York.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=25268'>Read
more. (Registration required.)
name='6'>ICG/Holliston Files for Bankruptcy
Book-cover manufacturer
ICG/Holliston has filed for chapter 11 protection in the U.S. Bankruptcy
Court in
face='Times New Roman' size='3'>Wilmington
size='3'>,
size='3'>Del.
Associated Press reported yesterday. The nation's oldest maker of cloth
covers for the book industry said in Monday's filing that it intends to
sell its business to an affiliate of
w:st='on'>
size='3'>Philadelphia
size='3'>buyout firm Chrysalis Capital Partners LP, subject to higher
bids at a court-monitored auction. The privately held company, based
in
size='3'>Churchill,
w:st='on'>
size='3'>Tenn.
assets of $28 million and debts of $27.5 million. Earlier this month,
Chrysalis bought ICG/Holliston's debt previously held by Jackson
National Life Insurance Co., a lender to the company. ICG/Holliston owes
Chrysalis about $21.5 million from the loan, according to court
papers.
href='http://biz.yahoo.com/ap/070522/icg_holliston_bankruptcy.html?.v=1'>Read
more.
Subprime
Mortgages
name='7'>Head of Mortgage Bankers Optimistic on Loan
Legislation
John Robbins, chairman of
the Mortgage Bankers Association, said yesterday that he was 'guardedly
optimistic' on legislation House Financial Services Chairman Barney
Frank (D-Mass.) will produce to crack down on predatory lending,
CongressDaily
size='3'>reported today. Robbins thinks that Frank will introduce
legislation that would place national standards to curb abusive mortgage
practices modeled after state laws, such as those in
w:st='on'>
size='3'>North Carolina
Robbins was adamant that most of the abuses in the subprime lending
market have already been corrected as underwriting standards have
tightened and 40 lenders have gone out of business for offering faulty
loans. Robbins said Senate Banking Chairman Chris Dodd (D-Conn.) is
waiting on banking regulators to take action before moving any bill, so
it would be harder to predict what might emerge from the
Senate.
size='3'>Troubled Lender Sells Division and
Brings in New Leadership
The Fremont General
Corporation, a financial services company caught up in the subprime
mortgage lending downturn, said yesterday that it had agreed to sell its
commercial real estate unit for $1.9 billion and bring in new managers,
Bloomberg News reported yesterday. IStar Financial, a real estate
lending and leasing company, will buy the commercial loan
business,
face='Times New Roman' size='3'>Fremont
said. The new management team
will be led by Gerald J. Ford, who once ran Golden State Bancorp.
size='3'>Fremont
receive $80 million for selling a minority stake in the remaining
business to a group of investors led by Ford. The cash infusion will
allow
size='3'>Fremont
fallen more than two-thirds in the last year, to stay in business as a
retail bank with 22 branches in
w:st='on'>
size='3'>California
size='3'>.
href='http://www.nytimes.com/2007/05/23/business/23fremont.html?pagewanted=print'>Read
more.
name='9'>HSBC Says It Has Curbed Subprime Mortgage
Woes
HSBC Holdings PLC Chief
Executive Michael Geoghegan said measures taken to deal with the bank's
subprime-mortgage problems in the United States
size='3'>are working, the
size='3'>Wall Street Journal reported today.
'Deterioration has been contained,” Geoghegan said. “In the
first four months of the year, the rate of increase in delinquency has
slowed.' However, Geoghegan said the situation may worsen. 'In the
second half of the year more loans in this portfolio will reset and will
undoubtedly have some problems for some customers,' he said. To further
alleviate the situation, the lender said it will restructure up to $4
billion of subprime mortgages on more manageable terms this year and is
seeking to securitize some of these subprime assets.
href='http://online.wsj.com/article/SB117986298027411182.html?mod=us_business_whats_news'>Re
ad more. (Registration required.)
name='10'>House Votes to Tighten Oversight of Fannie Mae and Freddie
Mac
The House of Representatives
passed legislation to tighten federal oversight of the two biggest
buyers of home mortgages, Fannie Mae and Freddie Mac, the Associated
Press reported yesterday. The House voted 313 to 104 in favor of the
measure to provide stricter federal supervision of the two
government-sponsored companies, which together finance or guarantee more
than three-quarters of the home mortgages in the country. The
legislation would also create a housing aid fund — worth as much
as $3 billion — to be financed by Fannie Mae and Freddie Mac.
However, the bill could lose the support of the Bush administration
because of a provision trimming the authority of federal regulators.
Multibillion-dollar accounting scandals at Fannie Mae and Freddie Mac
brought demands for tighter government supervision and cuts in the
companies’ huge mortgage holdings, now worth a combined $1.5
trillion.
href='http://www.nytimes.com/2007/05/23/business/23fannie.html?_r=1&oref=slogin&pagewanted=print'>Read
more.
name='11'>Sallie Mae CEO Agrees to Resign
SLM Corp. CEO Thomas J.
Fitzpatrick quit under pressure from a firm taking the nation's largest
student lender private for $25 billion, the
size='3'>Wall Street Journal reported today.
Chief Financial Officer C.E. Andrews will replace Fitzpatrick, said the
company, commonly known as Sallie Mae. Fitzpatrick's departure after two
years at Sallie Mae's helm was an abrupt turnaround. The private-equity
firm acquiring Sallie Mae, J.C. Flowers & Co., said just last month
that it intended to retain management, including Fitzpatrick. The deal
is considered the largest privatization in the financial-services
industry. However, the firm concluded that Fitzpatrick's resignation
would help reduce congressional opposition to the deal. Some members of
Congress, which sets the subsidies that Sallie Mae and other student
lenders receive, have criticized the student-loan industry for cozy ties
to college officials. Fitzpatrick's departure came a day after Flowers
said it would replace Sallie Mae's board and appointed an independent
committee to review its marketing practices.
href='http://online.wsj.com/article/SB117986419085311190.html?mod=home_whats_news_us'>Read
more. (Registration required.)
name='12'>AmEx Plans Mortgage Rewards
American Express Co.
plans to announce today what is believed to be the first program
designed to allow consumers to put their monthly mortgage payments on
plastic -- and to earn credit card rewards for doing so, the
Wall Street Journal
reported today. Mortgage bills have been off limits to
cardholders to collect points, largely because home lenders find it
costly to pay card companies for processing the transactions. American
Home Mortgage Investment Corp. and IndyMac Bancorp Inc., both among the
nation's top 10 residential-mortgage originators, are the first two
lenders to sign up for the program, with the idea of appealing to
American Express's affluent clientele.
href='http://online.wsj.com/article/SB117988693282411700.html?mod=us_business_whats_news'>Read
more. (Registration required.)
href='http://online.wsj.com/article/SB117988693282411700.html?mod=us_business_whats_news'>