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Chamber of Commerce, FTC, Congress to Hold FCRA Events This
Week
The U.S. Chamber of Commerce will host a Tuesday morning forum to
release what Chamber officials are calling 'the most significant
statistical analysis' of the economic costs should Congress fail to
extend the Fair Credit Reporting Act's (FCRA) pre-emption of state laws,
which expires at the end of the year, CongressDaily reported.
Among those scheduled to speak at the session are House Financial
Services Chairman Michael Oxley (R-Ohio) and Wayne Abernathy, assistant
Treasury secretary for financial institutions.
Rep. Spencer Bachus (R-Ala.), chairman of the Financial Institutions
and Consumer Credit Subcommittee, declined the invitation to appear --
because he is chairing a hearing at the same time on the role of FCRA in
employee background checks, the latest in a series of hearings his
subcommittee has held on FCRA. The FTC will hold an all-day workshop on
Wednesday about the costs and benefits about the data flows of consumer
credit, with top officials from Wells Fargo, credit scoring company Fair
Isaac, and the credit bureau Experian slated to appear. Senate Banking
Chairman Richard Shelby (R-Ala.) on Thursday will hold the first
multiwitness hearing on FCRA -- including government, business and
consumer group representatives, reported the newswire.
Senate to Mark Up Asbestos Reform Legislation
The Senate Judiciary Committee on Thursday plans to mark up legislation
aimed at reforming the litigation system for asbestos exposure and
injury cases, CongressDaily reported. Judiciary Chairman Orrin
Hatch (R-Utah) is said to be considering several amendments to the bill,
including one to include victims of 'second-hand' exposure to asbestos
and possibly another banning on the future use of asbestos. The
legislation sets up a separate court system to hear asbestos injury
cases and establishes a $108 billion trust fund to compensate victims.
At least three proposals to establish a 'backstop' mechanism are
circulating to address the concerns of Democrats, labor groups and
others that the fund may run dry. Sen. Ben Nelson (D-Neb.), a cosponsor
of the Hatch bill, said he is trying to see if any of them 'will gain
traction' and pass Hatch's muster. Nelson predicted that he might be
ready to go public with those proposals by midweek, reported the
newswire.
Kmart May be More Attractive Under Fresh Start Accounting
Kmart Holding Corp., whose shares have climbed 24 percent since it
emerged from bankruptcy last month, may be even more attractive to
investors when the retailer reports results on Monday under so-called
fresh start accounting rules, Bloomberg News reported. Kmart was able to
wipe out $7.8 billion in debt through the reorganization. The Troy,
Mich.-based retailer has projected a profit excluding some costs instead
of a loss in the quarter ended April 30 because the accounting
guidelines allow it to discharge liabilities and make adjustments to the
value of assets. Kmart emerged as a much smaller company, after slashing
about 57,000 jobs and closing 599 stores, or more than a third of the
chain's outlets. The retailer, which filed for chapter 11 in January
2002, expects to be profitable in 2004 and have annual sales of about
$25 billion, reported the newswire.
Fleming To Close Three Wholesale Divisions; May Sell Unit
Fleming Cos. will close three grocery-wholesale divisions by the end of
next month and may sell the entire business, Bloomberg News reported.
The divisions are in Geneva, Ala.; Lafayette, La.; and Superior, Wis.,
Fleming said in statement distributed by PR Newswire. Fleming, which
filed for chapter 11 bankruptcy
protection in April, said potential buyers have expressed interest in
its grocery-wholesale business, reported the newswire.
NationsRent Emerges From Bankruptcy, Secures $80 Million
Loan
NationsRent Inc., which rents construction equipment, exited bankruptcy
court protection and secured $150 million in funding from lenders,
Bloomberg News reported. The Baupost Group LLC invested $80 million in
the Fort Lauderdale, Fla.-based company, said NationsRent spokesman Drew
Pickens. As of Friday, NationsRent is no longer a publicly traded
company and is owned by Baupost and Phoenix Rental Partners LLC, which
controlled a majority of the company's bank debt. NationsRent operates
in more than 250 locations in 26 states. The company sought chapter 11
protection in the U.S. Bankruptcy Court in Delaware in December 2001. It
has named Thomas Hoyer as chief financial officer, replacing Ezra
Shashoua, Pickens said, reported the newswire.
Formica Gets $175 Million Investment Bid From Cerberus,
Oaktree
Formica Corp. said Cerberus Capital Management LP and Oaktree Capital
Management LLC have agreed to invest $175 million to help the company
out of bankruptcy, Bloomberg News reported. The transaction would slash
Formica's bank debt from more than $300 million to about $127 million,
court papers show. Formica's secured lenders support the deal, which is
subject to higher offers and approval from the U.S. Bankruptcy Court in
Manhattan, the company said. Cerberus and Oaktree are the company's two
largest unsecured creditors, Formica said. The equity investment by
Cerberus and Oaktree will be the basis of Formica's chapter 11 recovery
plan. The Warren, N.J.-based company said it expects to come out of
bankruptcy in early 2004, reported the newswire.
Conseco Says Some Creditors End Opposition to Plan
Insurer Conseco Inc., which hopes to exit bankruptcy protection in July,
on Friday said some creditors have agreed in principle to end their
opposition to the company's reorganization plan, Reuters reported. The
company also told a bankruptcy judge it settled its long-running dispute
with real estate mogul Donald Trump over ownership of the General Motors
office building in Manhattan, paving the way for the 50-story
skyscraper's sale.
The agreements are the latest steps in Carmel, Ind.-based Conseco's push
to leave chapter 11 as an insurance-only company, and cut its debt and
preferred securities obligations by more than $5 billion to about $1.3
billion. Hearings to confirm its reorganization plan began on Friday in
the U.S. Bankruptcy Court in Chicago. Conseco sought protection from
creditors last December after years of aggressive expansion. Its 1998
takeover of mobile home lender Green Tree Financial Corp. saddled it
with many bad loans and too much debt. With $52.3 billion of assets and
$51.2 billion of liabilities, its bankruptcy remains the third largest
in the United States. The company on Friday said it plans to file a
third amended reorganization plan with the court as a result of talks
with creditors, reported the newswire.
Air Canada Sales Agents Ratify Cost-cutting Deal
Air Canada's 7,000 sales clerks ratified a cost-cutting deal that will
result in 800 layoffs to help the insolvent airline emerge from
bankruptcy protection, the union said on Friday, Reuters reported. The
ratification is another step in Air Canada's complex restructuring and
follows a similar vote by its dispatchers and regional affiliate pilots.
The airline is seeking to save up to C$1.1 billion a year through deals
negotiated with its unions. Those unions have until the end of the month
to complete a ratification vote, according to Reuters.
The carrier is trying to restructure about C$13 billion in debt and
lease obligations in the wake of a serious downturn in the travel
industry. The sales clerks, represented by the Canadian Auto Workers
union, voted 71 percent in favor of the new six-year labor contract, the
union said, adding that about 60 percent of the union members cast a
vote, reported the newswire.
Bankrupt NRG Halts Further Power Sales to CL&P
Xcel Energy Inc. unit NRG said it stopped delivering power to Northeast
Utilities Connecticut Light & Power (CL&P) unit, following a
U.S. District Court order on Friday, Reuters reported. NRG said it has
lost about $15 million from the contract since it filed for bankruptcy
protection on May 14, and can no longer afford to continue delivering
power. The dispute began when NRG filed for chapter 11 bankruptcy
protection in New York and said it wanted to breach the CL&P supply
contract, which was losing NRG about $500,000 a day. But the Federal
Energy Regulatory Commission (FERC), following a request by CL&P and
Connecticut officials, ordered NRG to continue delivering power under
the utility until the commission had a chance to consider the issues,
reported the newswire. Early last week, however, Bankruptcy Judge
Prudence Carter Beatty ruled NRG could breach the contract, pending
a decision by FERC, because the deal was hurting the company's efforts
to restructure by threatening its access to a $250 million loan.
Philip Services Lenders Oppose Bid Procedures For Sale Of
Assets
Some of the lenders who funded Philip Services Corp. before it filed for
bankruptcy protection objected on Thursday to proposed bidding
procedures for the sale of the company's assets, according to court
papers. In an objection filed in bankruptcy court, the group of lenders,
led by agent Canadian Imperial Bank of Commerce, said Philip Services is
proposing to move the sale process forward on an 'extremely expedited
schedule' that appears 'unlikely to maximize recoveries' for creditors.
The company proposed an auction for Aug. 18, and objections to the sale
would be due Aug. 11. A proposed sale hearing would take place on Aug.
25 before the bankruptcy court.
Provided by Daily Bankruptcy Review (
href='http://www.djnewsletters.com/dbr2.html'>www.djnewsletters.com/dbr2.html)
Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
AMR Won't Give Carty A Severance Package
AMR Corp., the parent company of American Airlines, has decided not to
give its former Chairman and Chief Executive Donald J. Carty a severance
package, although he will receive an $8.2 million lump-sum after-tax
payment from a supplemental pension plan for senior executives, the
Wall Street Journal reported. Carty resigned in April after
failing to disclose the company had funded this supplemental pension
program even as he negotiated concessions from labor unions expected to
save the airline $1.8 billion annually. While the concessions helped the
nation's largest airline avoid bankruptcy, union dissatisfaction with
the special perks for executives prompted Carty's departure. Carty did
not seek severance and none will be given to him, according to AMR
spokesman Al Becker, reported the online newspaper.
Law Firm Can Be Sued for Fraud on Client's Creditors
A New Jersey law firm's aggressive efforts in hindering a client's
judgment creditors can be the basis of liability for fraud, the Third
U.S. Circuit Court of Appeals has ruled, the New Jersey Law
Journal reported. The judges on May 30 reinstated a suit against
Norris, McLaughlin & Marcus over its representation of carmaker John
DeLorean in the 1990s. The suit claims that the Bridgewater firm
actively, knowingly and intentionally participated in DeLorean's
unlawful efforts to avoid execution on his property based on an
out-of-state federal court judgment. The New Jersey federal district
court threw out the suit for failure to state all the elements of common
law fraud -- misrepresentation, detrimental reliance and damages -- but
the appeals court said creditor fraud requires no such showing. To read
the full article, point your browser to
href='http://www.law.com/jsp/pubarticleNJ.jsp?id=1052440855677'>http://www.law.com/jsp/pubarticleNJ.jsp?id=1052440855677
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Reports Reveal Splintered Legal Department at WorldCom
The legal department's role at the bankrupt telecommunications company
has been laid bare in two investigative reports, released last week,
detailing striking governance lapses, Legal Times reported. The
two reports -- one from Wilmer, Cutler & Pickering, the other from
Kirkpatrick & Lockhart -- paint a picture of a splintered legal
department that failed as a safeguard against apparent misconduct by
board members and senior managers, most notably ousted chief executive
Bernard Ebbers.
General Counsel Michael Salsbury resigned on June 10, after the
reports were made public. He said in a statement issued by MCI that he
didn't want the Kirkpatrick report's 'characterization of certain
incidents unrelated to the accounting fraud to become an obstacle to the
company's emergence' from bankruptcy. To read the full article, point
your browser to
href='http://www.law.com/jsp/article.jsp?id=1055463648583'>http://www.law.com/jsp/article.jsp?id=1055463648583
.
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