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December 20, 2002
Bush Signs Bill Extending Farmers' Bankruptcy Protection
President Bush yesterday signed legislation giving farmers who file for
bankruptcy an extra six months of special protection so they can keep
their land and assets while reorganizing debts, reported Dow Jones. The
measure extends chapter 12 of the U.S. Bankruptcy Code for an additional
six months beyond its expiration on Jan. 1. Chapter 12, the only
temporary chapter in the U.S. Bankruptcy Code, allows farmers to
reorganize their debts without having to sell their farms and equipment.
It was originally enacted in 1986, but has been extended five times.
Congressional supporters estimated that about 800 to 1,100 farmers apply
for chapter 12 bankruptcy each year.
Corporate Scandals Exposed Market's Vulnerabilities in
2002
An article in the Wall Street Journal reported that corporate
scandal highlighted a year of plunging stock and lost jobs and
retirement savings. 'Hopefully, what will come out of all this will be
some wariness, skepticism and vigilance,' said Nancy Koehn, a financial
historian at Harvard Business School, reported the online newspaper. To
read the article, point your browser to
href='http://www.wsj.com'>www.wsj.com (subscription required).
Focal Communications, 25 Affiliates File for Chapter 11
Protection
Chicago-based Focal Communications Corp. and 25 affiliates filed chapter
11 petitions with the U.S. Bankruptcy Court in Wilmington, Del.,
yesterday morning, reported Dow Jones. The telecommunications carrier
listed in its bankruptcy petition assets of $561 million and liabilities
of $609.3 million as of Sept. 30. In a news release, Focal
Communications said it reached agreement with its senior bank lenders
and senior secured convertible noteholders as part of an overall
reorganization plan designed to reduce the company's outstanding senior
secured debt.
Under terms of the agreements, about $109 million of its senior secured
convertible notes will be exchanged for new common equity and $65
million of redeemable preferred equity. The company also has a deal to
prepay $15 million under its senior secured bank credit facility, the
newswire reported. Focal Communications President and Chief Executive
Kathleen Perone said in the statement that the company was targeting
emergence from chapter 11 in the first half of 2003, Dow Jones
reported.
McDermott Files Plan in Babcock & Wilcox Bankruptcy
Proceedings
McDermott International Inc. has filed a nearly complete plan of
reorganization and a settlement agreement in the bankruptcy
reorganization of subsidiary Babcock & Wilcox Co., which was hit by
a huge number of asbestos-exposure claims, Dow Jones reported. Babcock
once used asbestos, which has been tied to lung disorders, to insulate
boilers. McDermott put the subsidiary under bankruptcy protection in
February 2000 after the potential cost of the asbestos claims
skyrocketed, reported the newswire.
On Thursday, the company announced it had reached a settlement agreement
with two legal committees representing current and future claimants
complaining of asbestos exposure,according to Dow Jones. As part of the
settlement, McDermott agreed to establish a trust for the benefit of
asbestos-related personal injury claimants. McDermott will put 4.75
million shares of its stock into the trust and sell them to provide for
the trust, according to the newswire. The company, or one of its U.S.
subsidiaries, will also add $92 million in unsecured promissory notes to
the trust.
Conseco to Seek Interim OK for Financing at Hearing Today
Conseco Inc. will seek interim bankruptcy court approval this morning to
borrow up to $87 million under its $125 million debtor-in-possession
financing facility, pending a final hearing on the loan, Dow Jones
reported. The financing is being provided by a syndicate of lenders
including an entity called FPS DIP LLC, an affiliate of the
joint-venture which is offering to purchase the company's Conseco
Finance Corp. mobile-home lending unit, reported the newswire. FPS will
also be the loan's administrative agent.
To obtain value for the sale of Conseco Finance, the parent company said
it must 'maintain and preserve its operations,' reported the newswire.
The loan 'provides for the critical requisite financing,' the company
said. Under the loan's terms, Conseco would pay an unused commitment fee
to each lender equal to 0.5 percent per year of the unused amount of
each lender's commitment, reported Dow Jones. Conseco's chapter 11
bankruptcy petition, filed on Tuesday, listed consolidated assets of
roughly $52.29 billion and consolidated debts of about $52.18 billion as
of Sept. 30.
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