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February 9, 2005
Legislation to End Practice of Forum-Shopping Introduced in the
Senate
In order to reform the system that allowed Enron’s
forum-shopping, Sen. John Cornyn (R–Texas), a member of the Senate
Judiciary and Small Business committees, introduced the Fairness
in Bankruptcy Litigation Act of 2005 yesterday. The Act helps
protect consumers, creditors, small businesses, and others affected by
bankruptcy cases through reforming the rules governing where bankruptcy
cases are heard. The legislation combats forum shopping by corporate
debtors, and would prevent bankruptcy cases from moving thousands of
miles away from the communities and their workers who have the most at
stake.
Separately, the hearing scheduled by the Senate Committee on the
Judiciary on bankruptcy reform for tomorrow will begin at 10:15 a.m.
rather than the previously scheduled time of 9:30 a.m.
Supporters and Opponents of Bankruptcy Bill Debate Early Action
With the Senate likely to act early this year on legislation to
overhaul the nation's bankruptcy laws, lobbyists representing credit
card companies and other lenders contend the need for the bill is as
urgent as it was when Congress first tried to enact “bankruptcy
abuse” legislation eight years ago, CongressDaily
reported. The Coalition for Responsible Bankruptcy Laws, which includes
credit card companies, banks, retailers, mortgage lenders and a number
of financial services trade associations, is urging the Senate to pass
Finance Chairman Charles Grassley’s (R–Iowa) bipartisan
bill. But consumer groups and other opponents argue the bill would harm
middle-income families who suffer unforeseen financial hardships such as
unexpected medical costs. Travis Plunkett, legislative director of the
Consumer Federation of America, said the bill also fails to address
“decades’ worth of reckless and irresponsible lending”
by credit card companies. Grassley has said he expects his bankruptcy
legislation to be one of the first bills considered by the Senate this
year. Early action and a larger Republican majority bode well for the
bill’s prospects for enactment this year, the newswire
reported.
Feinstein Might Support Bingaman Class-action Amendment
As the Senate continued its debate on Tuesday on a bill to overhaul
the rules for class-action lawsuits, a key supporter of the bill said
she might support a contentious amendment by Sen. Jeff Bingaman
(D–N.M.) concerning application of state laws in federal court,
CongressDaily reported. “We’d like to finish work on that
issue,” Sen. Dianne Feinstein (D–Calif.), a co-sponsor of
the bill, said of her discussions with Bingaman.
Minority Leader Harry Reid (D–Nev.), who opposes the bill, said
Feinstein and Bingaman appear likely to reach an agreement. Judiciary
Chairman Arlen Specter (R–Pa.) also has said he plans to vote for
the Bingaman amendment. Specter said Monday the amendment would ensure
that the bill maintains the “substantive rights” of
class-action litigants. But Finance Chairman Charles Grassley
(R–Iowa), the bill’s chief sponsor, urged senators to pass a
“clean” bill. He noted that House leaders have pledged to
expedite the legislation only if the Senate approves it as is, the
newswire reported.
Asbestos Measure Hits More Senate Roadblocks
Asbestos legislation has hit another roadblock as Republican support
started to decrease and senators expressed a desire to prevent victims
from being compensated twice from the proposed $140 billion trust fund,
Reuters reported. Senate Majority Leader Bill Frist (R–Tenn.) said
yesterday the measure would come for a vote “at some point,”
but other bills would advance while work continued on the bill. Sen.
John Cornyn (R–Texas) said the measure had so little GOP support
that it might not pass the Judiciary Committee. Frist said one
outstanding issue was “subrogation”—a term for
offsetting awards from the fund by the amount of compensation paid
elsewhere. Other senators said some Republicans were concerned people
injured by asbestos could collect from the fund and get other awards,
too, the newswire reported.
Senator Urges SEC to Examine Role of Bond Raters
Sen. Paul S. Sarbanes (D–Md.) said yesterday that the
Securities and Exchange Commission (SEC) should address potential
conflicts of interest between Wall Street credit agencies and companies
that sell bonds and pay the agencies to rate the securities, Reuters
reported. At a Senate Banking Committee hearing, Sarbanes said the SEC
might have the authority to regulate the agencies and that he would seek
testimony from the commission on that authority.
Retirement Turns Into a Rest Stop as Benefits Dwindle
As numerous companies across the country withdraw retiree medical and
dental benefits while others switch to less generous retirement plans,
many aging workers who had expected to ease comfortably out of the labor
force in their 50s and early 60s are discovering that they do not have
the financial resources to support themselves in retirement, the
New York Times reported. As a result, a lot more of them
are returning to work. Read the full article at
href='http://www.nytimes.com/'>www.nytimes.com.
Witness Says Ebbers Urged Manipulations at WorldCom
Bernard J. Ebbers, the former chief executive of WorldCom, told his
deputy to meet earnings goals, ignoring warnings that doing so would
entail manipulating company accounts, according to testimony yesterday
by the former chief financial officer, Scott D. Sullivan, the New
York Times reported. Sullivan took the stand for a second day in
the fraud trial of Ebbers. He recounted meetings with Ebbers in October
2000 when it became clear that the finances of WorldCom were
deteriorating and that it would be unable to meet revenue and profit
forecasts.
Valuing MCI in an Industry Filled with Questions
Industry bankers and accountants are trying to answer just that: What
is the value of MCI, a company for which Qwest Communications has
already made a tentative offer of about $6.3 billion, and on which
Verizon Communications has been running the numbers, the New York
Times reported. Conversations between MCI and Qwest have been
suspended since late last week, and Verizon has yet to make a formal
offer, people close to the negotiations say.
Demand for Space Lifts Shopping-mall Results
Shopping malls have been the strongest area in real estate in recent
years and three big mall owners bolstered the view among analysts and
investors that the trend would continue when they reported strong
earnings yesterday, the Wall Street Journal reported. General Growth
Properties Inc., the nation’s second-largest mall owner in terms
of market-cap and number of malls owned, Kimco Realty Corp., a big owner
of strip malls, and Taubman Centers Inc. all said occupancy and rents
were up, the online newspaper reported.
US Airways Says Judge OKs Transactions
US Airways Group Inc. on Wednesday said in a regulatory filing that a
U.S. Bankruptcy Judge had authorized certain transactions between it and
Airbus North America, Reuters reported. Among the transactions that were
authorized, the airline said it and U.S. Bank National Association
agreed to extend the date for the balance of a Dec. 1, 2004, payment for
five Airbus aircraft to Jan. 27, subject to certain conditions.
Elan to Pay $15 Million to Settle SEC Fraud Charges
Irish pharmaceutical company Elan Corp. on Tuesday agreed to pay $15
million to settle charges that it misled investors, the U.S. Securities
and Exchange Commission (SEC) said, Reuters reported. The SEC said
investors in 2000 and 2001 were falsely led to believe through
regulatory filings and press releases that Elan had achieved record
results through improvements in the company’s business, but the
gains were actually due to product divestitures and transactions within
the company.
Moody’s Says Bush Budget Would Likely Bankrupt Amtrak
Moody’s Investors Service on Tuesday said it may cut
Amtrak’s debt ratings because the railroad operator would likely
be forced to file for bankruptcy under President George W. Bush’s
proposed 2006 budget, Reuters reported. The proposed budget would
eliminate all subsidies for Amtrak and give just $360 million for the
National Transportation Safety Board to maintain commuter service in the
Northeast Corridor if the railroad goes bankrupt. Moody’s said it
estimates that Amtrak could likely operate for barely one month without
some external supports such as these subsidies, the newswire
reported.
Airline Liquidations May Not Clear U.S. Skies
Squeezed by high fuel prices and aggressive price cutting by discount
airlines, traditional U.S. carriers are facing another difficult year,
Reuters reported. The industry’s crisis could be good news for its
strongest players, as it could force weaker rivals, easing competitive
pressure. “The industry could do with less capacity and the
elimination of at least one major legacy carrier would probably be a
good thing for the survivors,” said Doug Abbey, a consultant with
Velocity Group, the newswire reported.
Donnkenny Files Chapter 11, May Sell Assets
Donnkenny Inc., a designer and marketer of women’s apparel, on
Tuesday said it filed for chapter 11 bankruptcy protection and has
entered into an agreement that could result in the sale of its assets to
a private equity firm, Reuters reported. The New York–based
company also said it secured a new $60 million debtor-in-possession
credit facility with its current lenders, CIT Group Inc.’s CIT
Group/Commercial Services Inc. and Wells Fargo & Co.’s Wells
Fargo Century Inc., the newswire reported.