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April 20, 2006
name='1'>Commentary: Is the PBGC the Next Big
Bailout?
By protecting some
individual pension beneficiaries, the Pension Benefit Guaranty
Corporation (PBGC) has become exposed to huge financial risks and has
put all American taxpayers at risk, according to a commentary in
today’s Washington
Post.
size='3'>As the public is realizing that many pension plans are deeply
underfunded and that companies obligated to remedy the underfunding can
go bankrupt instead, they are also discovering that the PBGC is also
insolvent. PBGC's liabilities exceed its assets by $23 billion, and the
Center on Federal Financial Institutions projects this deficit is likely
to grow to $78 billion. However, a taxpayer bailout should be avoided as
it would mean that the 80 percent of American employees who do not have
defined benefit plan pensions would be forced to pay for the 20 percent
who do.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/04/19/AR20060…'>Read
more.
name='2'>Entergy Wins More Time for Debt Repayment
Plan
A federal bankruptcy
judge has given Entergy New Orleans Inc. (ENOI) a little more breathing
space this week, granting the power company additional time to propose a
reorganization plan despite across-the-board opposition from its
unsecured creditors,
size='3'>Portfolio Media reported yesterday.
ENOI will now have until Aug. 21 to submit a chapter 11 plan of
reorganization and until Oct. 18 to gain the support of its unsecured
creditors, who opposed the extension request and sought the right to
propose their own reorganization plan. In late September 2005,
Entergy’s
face='Times New Roman' size='3'>New
Orleans
to seek chapter 11 bankruptcy protection after Hurricane Katrina ravaged
the city and nearly wiped out the company’s customer base. The
company is still struggling to regain its footing in the destroyed city,
estimating in court filings that restoring the company’s electric
and gas facilities will cost between $325 and $475 million. In asking
the bankruptcy court for additional time to file its reorganization
plan, ENOI said that despite “immense challenges,” including
employee evacuation and a temporarily uninhabitable home office, the
company has made “substantial progress” in its bankruptcy
proceedings.
J.L.
French Creditors Move to Investigate 2004 Reorganization
Plan
Seeking evidence of
possible wrongdoing, creditors of J.L. French Automotive Castings Inc.
are requesting court approval to investigate whether or not the bankrupt
auto parts maker and its lenders properly conducted an out-of-court
reorganization that preceded its insolvency, Portfolio Media reported
yesterday. The Wisconsin-based company, which entered chapter 11
bankruptcy protection on Feb. 10, conducted in August 2004 the
out-of-court restructuring in which lenders offered J.L. French new
terms on its loans in order to boost its struggling finances. Despite
the terms of the 2004 plan, J.L. French defaulted on the loans and in
January forced the company into a forbearance agreement that the company
now says cost the lenders considerably more than the financial
institutions had anticipated. The motion to investigate, which
didn’t include specific allegations of misconduct, was filed in
the U.S. Bankruptcy Court for the District of Delaware, where
Judge Mary F.
Walrath will consider allowing the creditors
to investigate under Rule 2004 of the U.S. Bankruptcy Code. The case
is J.L. French
Automotive Castings Inc., filed Feb. 10, 2006,
petition number 06-10119-MFW, in the U.S. Bankruptcy Court for the
District of Delaware in
w:st='on'>
size='3'>Wilmington
size='3'>.
name='4'>PlusFunds One Step Closer to Selling Its
Assets
A bankruptcy judge has
given FTVentures a approval to purchase PlusFunds Group Inc., but
licensing issues are threatening the proposed deal,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. The sale of Plus Funds’ assets is
unopposed by Diana G.
Adams, the acting
face='Times New Roman'>U.S. Trustee for
w:st='on'>
York
District, who filed a notice of non-objection with the court on Monday.
The transfer of PlusFunds’ licenses with Standard &
Poor’s and OTC Inc. are pivotal to the sale. According to court
papers, PlusFunds held an auction at their attorneys’ office on
Monday. PlusFunds’ license with S&P allows Plus Funds to
replicate S&P’s hedge fund index. Their license with OTC
allows them to use software OTC developed. OTC has accused PlusFunds of
emphasizing parts of a settlement agreement between the two companies
that suits Plus Funds’ goals, while ignoring other aspects.
“Specifically, the debtor is attempting to assume only that
portion of the settlement agreement that conferred upon the debtor a
license to use OTC’s proprietary software, while discarding the
remainder of its contract with OTC,” OTC’s lawyers argued in
court papers filed on March 27. In addition to S&P and OTC,
debt-holders Cumberland Associates LLC and XL Investments Ltd. have
formally objected to the sale.
name='5'>Bankruptcy Court Conditionally Approves Five Rivers'
Reorganization Plan
U.S. Bankruptcy Court
Judge Marcia
Parsons conditionally approved a
reorganization plan for former television manufacturer Five Rivers
Electronic Innovations LLC, the
size='3'>Greeneville (Tenn.) Sun reported
yesterday, In accepting an agreement reached by opposing attorneys,
Judge Parsons said the court’s approval of Five Rivers’
reorganization is conditioned upon acceptance of the plan by creditors
of Creative Molding LLC, a subsidiary of Five Rivers, who will have 30
days to object to the reorganization plan’s approval. Mark S.
Dessauer, a
face='Times New Roman' size='3'>Kingsport
attorney representing Five Rivers, expressed confidence
that there will be no objections from Creative Molding’s
creditors.
href='http://www.greene.xtn.net/index.php?table=news&template=news.view.subsc…'>Read
more.
name='6'>Bankruptcy Still an Option for
w:st='on'>
size='3'>Ohio
Conglomerate
Dr. James Sudimack,
medical director of Emergency Medicine at Trumbull Memorial Hospital and
member of the Ohio-based Forum Health’s board, said that board
members have looked at every available option, including bankruptcy, in
their discussion about bringing the health care system from its
projected losses of more than $60 million by the end of the year,
the Warren (Ohio)
Tribune Chronicle reported today. Lisa
Medovich, vice president of finance and corporate controller at Forum
Health, said the system is facing growing financial problems for a
myriad of reasons, including changes in the reimbursements provided
through Medicaid and Medicare systems, lowering the amount of money
hospitals are reimbursed, unexpected changes in workers’
compensation, and the amount of charity care it is required to
do.
href='http://www.tribunechronicle.com/news/articles.asp?articleID=2818'>Read
more.
name='7'>Sylvest Farms Files for Chapter 11
Bankruptcy
Montgomery, Ala.-based
Sylvest Farms Inc., filed for bankruptcy Tuesday, owing creditors across
the state and the nation millions of dollars as the company announced
that it is seeking to sell off its business, the
size='3'>Montgomery (
w:st='on'>
size='3'>Ala.
Advertiser reported today. According to the
bankruptcy court in
w:st='on'>
size='3'>Birmingham
Sylvest Farm’s chapter 11 filing was transferred, the poultry
company has debts and assets between $50 million and $100 million.
“The unforeseen and prolonged impacts of overseas bird flu fears
and reduced export demand have caused dramatic downward pressure on
commodity chicken prices domestically,” according to a statement
issued by the company. “Continued softness in commodity prices has
resulted in severe losses in segments of the chicken industry and for
Sylvest.” The company has filed a motion to sell most of its
assets to an affiliate of Koch Foods, Inc.
href='http://www.montgomeryadvertiser.com/apps/pbcs.dll/article?AID=/20060419…'>Read
more.
name='8'>Reduced Bailout Could Force Arizona City District into
Bankruptcy
The
w:st='on'>
size='3'>Arizona
size='3'>state-appointed receiver for the school district says the
latest version of a state legislative bailout bill could put the
district at risk of having to file for bankruptcy, the Associated Press
reported today. A Senate committee on Tuesday reduced a House-approved
bill's proposed loan to the 400-student
w:st='on'>
size='3'>Colorado
face='Times New Roman' size='3'>City
size='3'>Unified
face='Times New Roman' size='3'>School
District
from $1.3 million. The reduced amount would be enough to cover two
payments on bonds previously sold by the district to investors, but far
short of the approximately $1 million needed to repay a school insurance
trust that bought the district's warrants when it was short of cash and
couldn't pay its teachers. A lawyer for Receiver Peter Davis said the
inability to pay the insurance trust could leave the
size='3'>Colorado
face='Times New Roman' size='3'>City
size='3'>district, located in northwestern
w:st='on'>
size='3'>Arizona
vulnerable because any repayment demand by the trust would have first
right to the district's cash, meaning there wouldn't be any left over to
pay operating costs such as teachers' salaries and utilities. If that
happens, that would put the district in a position of having to either
shut down or file for bankruptcy protection, attorney Fred Rosenfeld
told the Judiciary Committee.
href='http://www.mohavedailynews.com/articles/2006/04/19/news/local/local5.txt'>Read
more.
GM
Reports $323 Million Net Loss
General Motors Corp.
reported that its net loss narrowed in the first quarter on improvements
in its automotive units amid a charge related to a health-care
settlement, the Wall
Street Journal reported today. Compared with a
loss of $1.25 billion one year ago, GM reported a net loss of $323
million for the first quarter of 2006, hit by a charge of $681 million
for a health-care settlement for its retired workers. GM's North
American division reported a loss of $946 million, compared with a loss
of $1.5 billion a year ago. GM Chief Financial Officer Fritz Henderson
said cost savings from the health-care agreement and from employee
buyouts will largely be seen after July 1, but the automaker is
optimistic about its results.
href='http://online.wsj.com/article_print/SB114546593894230109.html'>Read
more. (Registration required)
w:st='on'>
name='10'>New York
face='Times New Roman' size='3'> Pension Fund Alleges Qwest
Fraud
The New York State Common
Retirement Fund filed a lawsuit accusing Qwest Communications
International Inc. and its former chief executive, Joseph Nacchio, of
misleading investors about the financial health of the company,
Bloomberg News reported today. The suit accuses Nacchio and other senior
Qwest executives of orchestrating 'this fraud' in an effort 'to create a
false perception that Qwest was a dynamic, growing business.' The
York
in the
face='Times New Roman' size='3'>United
States
more than 8 million Qwest shares between 1999 and 2002 and lost more
than $240 million as a result, the suit says. Qwest, the
fourth-largest
w:st='on'>
size='3'>U.S.
size='3'>telephone company, agreed in November to pay $400 million to
settle some of the shareholder suits it faced. It also agreed to pay
$250 million to settle fraud allegations by the Securities and Exchange
Commission. Nacchio, 56, was indicted in December on insider trading
charges. He was accused of selling $101 million in Qwest stock in 2001,
with the knowledge that company revenue targets were inflated.
href='http://www.newsday.com/business/ny-bzslug4708920apr20,0,4282958,print.s…'>Read
more.
href='http://www.newsday.com/business/ny-bzslug4708920apr20,0,4282958,print.s…'>