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February 22,
2008
name='1'>Lenders Fighting Mortgage Modification
Proposals
The nation's largest
lending institutions are lobbying hard to block a proposal in Congress
that would give bankruptcy judges greater latitude to rewrite mortgages
held by financially strapped homeowners, the
size='3'>Washington Post reported today. The
proposal, which could come to a vote in the Senate as early as next
week, is being pushed by Democratic congressional leaders and a large
coalition of groups that includes labor unions, consumer advocates,
civil rights organizations and AARP. The legislation (S. 2636) includes
provisions that would allow bankruptcy judges to alter the terms of
mortgages for primary residences for debtors under chapter 13.
Currently, bankruptcy judges cannot rewrite first mortgages for primary
homes. This restriction was adopted in the 1970s to encourage banks to
provide mortgages to new home buyers.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/02/21/AR2008022102687_pf.html'>Read
more.
href='http://www.abiworld.org/AM/TemplateRedirect.cfm?template=/CM/ContentDisplay.cfm&ContentID=50950'>Click
here to read the press release detailing the results of the
latest ABI Quick Poll focusing on the issue of mortgage modification in
chapter 13 bankruptcies.
name='2'>Countrywide Facing Litigation on Multiple
Fronts
Embattled mortgage lender
Countrywide Financial Corp. is facing lawsuits on all fronts for the
next couple of years, including mortgage customers, disgruntled
investors and shareholders and government regulators, according
to Corporate
Counsel magazine. In January, Bank of America
Corp. made a $4 billion buyout offer for Countrywide, which could be a
much-needed lifeline for the country's largest home lender. The
litigation could be a painful headache for Bank of America as the
Charlotte-based bank will not only assume Countrywide's financial woes
when the deal goes through later this year, but it will also take on the
swelling number of suits against the Calabasas, Calif.-based Countrywide
that began when the subprime mortgage market collapsed last year.
Meanwhile, Bank of America faces its own lawsuits related to the
subprime meltdown, and individual shareholders filed at least three
class action suits against the bank in January challenging the purchase
of Countrywide.
href='http://www.law.com/jsp/ihc/PubArticleFriendlyIHC.jsp?id=1203602189184'>Read
more.
name='3'>Sharper Image Bankruptcy Loans Approved
Specialty retailer Sharper
Image Corp. won interim court approval to tap $35 million worth of
financing to operate its business while it restructures in bankruptcy,
the Associated Press reported yesterday. Bankruptcy Judge Kevin
Gross on Wednesday signed off on a bankruptcy loan from Wells
Fargo Retail Finance, which was already the San Francisco-based
retailer's lead lender, court documents say. Sharper Image owed Wells
Fargo-led banks about $44.5 million when it filed for bankruptcy late
Tuesday. If approved in final form, the chapter 11 financing will total
$60 million, and will be used to pay off the pre-bankruptcy
loans.
href='http://biz.yahoo.com/ap/080221/sharper_image_bankruptcy.html?.v=1'>Read
more.
name='4'>Solutia’s CEO Says Chapter 11 Plan Likely to Crumble
Without Loans
Solutia Inc. CEO Jeffry
Quinn said yesterday that the company’s chapter 11 reorganization
could fall apart if
w:st='on'>three Wall
Street
allowed to renege on a $2 billion deal to finance the company’s
exit from bankruptcy, Dow Jones'
size='3'>Daily Bankruptcy Review reported
today. “The financing is the cornerstone of our entire
plan,” Quinn said at a court hearing. “If the exit is not
funded, the entire plan begins to crumble.” Quinn testified during
the first day of a trial on Solutia’s lawsuit against Citigroup
Inc., Goldman Sachs Group Inc. and Deutsche Bank AG to force them to
honor their $2 billion agreement. The lenders backed out of the
financing deal by invoking a rarely used contract provision known as a
“market MAC” clause, which allows companies to walk away
from contracts upon material adverse changes to the markets.
Solutia’s lawsuit is the first by a company in bankruptcy to
challenge the use of the clause. (Subscription
required.)
face='Times New Roman' size='3'>
name='5'>Delphi
size='3'> Receives Approval to Pay Professional
Fees
size='3'>Delphi received approval
yesterday from Bankruptcy Judge Robert Drain to pay
almost $50 million in fees to lawyers and financial advisers for four
months of work as the auto parts supplier struggles to emerge from court
protection, the Associated Press. Judge Drain also approved the sale
of
size='3'>Delphi's steering business to
the Platinum Equity LLC private equity firm. Separately, Delphi said it
will sell its wheel bearings business to Kyklos Inc., a
size='3'>Novi
supplier.
size='3'>Delphi
chapter 11 court protection by the end of March, but that looks
increasingly unlikely as it struggles to secure $6.1 billion in loans in
href='http://www.iii.co.uk/news/?type=afxnews&articleid=6561600&subject=companies&action=article'>Read
more.
name='6'>Pilots Leave Airline Deal Circling
Pilot disagreement over a
fair way to combine seniority systems dashed the plans of directors of
Delta Air Lines Inc. and Northwest Airlines Corp. to meet separately
Wednesday and approve a merger agreement, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. The two carriers have been in talks for weeks
about a merger and in recent days completed most details of the
transaction, including a common labor contract for their 11,000 pilots
and agreement to give them equity in the merged company and a voting
board seat. However, the two branches of aviators represented by the Air
Line Pilots Association, as of yesterday hadn't been able to settle on a
way to integrate their respective seniority lists and their talks broke
off, at least temporarily.
href='http://online.wsj.com/article/SB120364316904284771.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
International
name='7'>British Government Takes Control of Northern Rock after Law
Enacted
U.K. Chancellor of the
Exchequer Alistair Darling nationalized Northern Rock Plc today after
emergency legislation to take control of the lender received royal
approval, Bloomberg News reported today. Ron Sandler, who rescued
Lloyd's of London from the edge of bankruptcy in the 1990s, will run
the
size='3'>Newcastle,
England-based lender, the first U.K. bank to suffer a run on
deposits in more than a century. Northern Rock has required £55
billion ($108 billion) of public loans and guarantees to stay afloat
since its credit lines dried up. Queen Elizabeth II signed the emergency
legislation shortly after it was passed yesterday, and House of Commons
Speaker Michael Martin announced in Parliament it was law shortly after
11 p.m. last night.
href='http://www.bloomberg.com/apps/news?pid=20601102&sid=apniLBQQvAhM'>Read
more.
name='8'>Italian Creditor to Settle Dispute with
Parmalat
In the wake of Parmalat
lawsuits against creditor banks in the wake of the Italian dairy
producer’s 2003 bankruptcy filing, Banca Monte Dei Paschi Di Siena
said that it would pay Parmalat 79.5 million euros ($117.9 million) to
put an end to its legal dispute, Forbes.com reported today. Parmalat has
ongoing civil proceedings against Credit Suisse First Boston, a
subsidiary of Credit Suisse, as well as Citigroup, UBS and Bank of
America. The bankruptcy of the $19 billion dairy company is one of
Europe's most notorious corporate scandals, having been widely described
in the media as '
size='3'>Europe's Enron.' Since 2003,
numerous civil and criminal proceedings involving Parmalat, its
creditors and advisors, have taken place. Parmalat's founder, Calisto
Tanzi, and 15 other executives are on trial in
w:st='on'>
size='3'>Milan
providing false information to
w:st='on'>
size='3'>Italy
regulator, while nearly 60 former executives, financial advisers and
bankers face allegations of fraudulent bankruptcy in the company's
hometown of
face='Times New Roman' size='3'>Parma
href='http://www.forbes.com/2008/02/22/parmalat-italy-settlement-markets-equity-cx_vr_0222markets08_print.html'>Read
more.
name='9'>French Bank’s Troubles Now Include Record
Loss
Société
Générale said yesterday that the rogue trading uncovered last
month, combined with significant write-offs of
w:st='on'>
size='3'>U.S.
size='3'>subprime mortgage investments, had pushed it to a record loss
in the quarter, the New
York Times reported today. The French bank
reported a net loss of 3.35 billion euros, or $4.95 billion, for the
fourth quarter, in contrast to a gain of 1.18 billion euros in the
period a year earlier. Société Générale —
which has said that most of its troubles are a result of
“exceptional fraud” by a 31-year-old trader,
Jérôme Kerviel — reported an 82 percent drop in net
profit for the year, to 947 million euros. The bank also had write-downs
and provisions worth 2.6 billion euros linked to its holdings of
collateralized debt obligations and mortgage-backed securities.
href='http://www.nytimes.com/2008/02/22/business/worldbusiness/22bank.html?ref=business&pagewanted=print'>Read
more.
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