src='/AM/Images/headlines/headline.gif' />
March 29, 2005
Judges Say Overhaul Would Weaken Bankruptcy System
For nearly a decade, proponents of overhauling the nation’s
bankruptcy laws have described their aim as ensuring that Americans who
enter bankruptcy court do not escape bills that they can truly afford to
pay, the LA Times reported. But only weeks before Congress
is likely to approve the long-sought overhaul, bankruptcy judges across
the country warn that the measure would undermine the very section of
the law under which debtors are now repaying more than $3 billion
annually to their creditors, the newspaper reported.
href='http://www.latimes.com/news/nationworld/nation/la-na-bankrupt29mar29,0,…'>Read
the full article.
Jury Chosen for WorldCom Suit Against Arthur Andersen
A jury was chosen yesterday to decide a lawsuit that accuses the
accounting firm Arthur Andersen of violating securities laws by failing
to protect investors from WorldCom’s $11 billion accounting fraud,
the Associated Press reported. The jury of 11 people is scheduled to
hear opening statements today in the trial, which stems from a
class-action lawsuit brought after WorldCom’s 2002 collapse.
Chamber Files Brief on Enron Losses
The U.S. Chamber of Commerce has submitted a friend-of-the-court
brief essentially arguing for lighter sentences for top Merrill Lynch
& Co. officials convicted last year of fraud for their role in
helping Enron Corp. improperly meet profit goals, the Washington
Post reported. The chamber filed a 24-page brief with a federal
judge in Texas late last week, contending that prosecutors had
incorrectly calculated shareholder losses stemming from an improper
energy deal. The calculation could have a profound impact on how much
time the former Merrill executives spend behind bars.
Trump Hotels to Pay $17.5 Million to Stockholders
Trump Hotels & Casino Resorts has agreed to pay $17.5 million to
stockholders who complained they were affected by the casino
company’s bankruptcy reorganization plan, the company announced
yesterday, the Associated Press reported. In addition to the cash
payment, the Official Committee of Equity Security Holders—which
represents about 20,000 holders of Trump Hotels shares—also would
share in the proceeds from the sale of land that had been earmarked for
Chairman Donald Trump under the company’s original chapter 11
reorganization plan. The settlement, which has the support of
bondholders, eliminates a key obstacle to Trump Hotels’ bankruptcy
reorganization, the newswire reported.
Krispy Kreme Nears Lending Agreement
Krispy Kreme Doughnuts Inc. is close to an agreement to secure $225
million in new financing from a group that includes Silver Point Capital
LLP and Credit Suisse First Boston, the Wall Street Journal
reported. Krispy Kreme on Friday said its existing lenders had agreed to
extend to April 11 a deadline for filing overdue financial
statements.
Delta
Delta Air Adds New Measures to Cash-conservation Effort
Delta Air Lines filed plans to possibly raise as much as $500 million
through securities offerings, one of several moves the airline is making
to avert a cash crunch later this year, the Wall Street
Journal reported. In a separate bid to shore up its finances amid
high fuel costs and intense fare competition, the company detailed plans
to outsource more aircraft maintenance in order to save $240 million
over five years.
S&P Lowers Outlook on Delta’s Debt
Standard & Poor’s lowered its outlook for Delta Air Lines,
citing higher fuel costs that could drain an extra $1 billion from the
carrier’s cash reserves this year, the Atlanta Journal and
Constitution reported. The credit-rating firm switched Delta from
a ‘positive’ outlook to ‘developing,’ signaling
a higher risk that Delta could eventually default on its debt.
Texas Can Provide Model for Healthy Asbestos Laws
Because of asbestos litigation, 72 American companies have been
driven into bankruptcy and 60,000 Americans have lost their jobs, the
Houston Chronicle reported. The eventual job loss could
reach as high as 423,000 jobs. Now, Texas legislators are poised to end
this.
href='http://www.chron.com/cs/CDA/ssistory.mpl/editorial/outlook/3104695'>Read
the full article.
Federal Mogul Settles Asbestos Suit
Federal Mogul Corporation says it will pay 29 million dollars to
resolve more than 183 million dollars in asbestos injury claims, WLNS
reported. The auto parts company wants a federal bankruptcy judge to
approve a settlement of litigation between it and the Center for Claims
Resolution. Federal Mogul was facing hundreds of millions of dollars in
asbestos claims when it sought chapter 11 bankruptcy protection in
2001.
Auto Leasing Company Faces Bankruptcy Petition
Three area banks attempting to collect a total of nearly $6 million
from Centerville, Ohio-based Motorwerks Inc. are trying to force the
auto leasing company into bankruptcy, the Dayton Business
Journal reported. The banks filed an involuntary chapter 7
bankruptcy petition in the name of Motorwerks in the U.S. Bankruptcy
Court for the Southern District of Ohio in the Western Division on March
11.
Winn-Dixie to Pay $500K a Month for Financial Consultant
The bankruptcy court for New York’s Southern District approved
Winn-Dixie Stores Inc.’s Friday motion to retain Bain &
Company Inc. as a financial support consultant, according to the court
record, bizjournals.com reported.
Ormet Says Bankruptcy Court Clears Ormet Reorganization
According to an Ormet press release, the bankruptcy court’s
orders, issued on Friday, concluded the company should exit bankruptcy
according to its plan of reorganization. It said the court rejected the
United Steelworkers of America’s request to force a due diligence
and sale of company. A source close to the privately held company told
Reuters that Ormet may be able to emerge from chapter 11 bankruptcy as
soon as this week, if conditions laid out in the plan are met.
Mirant Authorized to Sue Southern
Bankrupt energy trader Mirant Corp. said in a bankruptcy filing that
its board authorized it to sue former parent company Southern Co. in
order to recover about $1.945 billion in payments it made to Southern,
Reuters reported. Mirant’s claims stem from its initial public
offering and spin-off from Southern in 2001. It said in an amended
disclosure statement filed in U.S. Bankruptcy Court on Friday that it is
seeking to recover about $910 million from dividend payments and
distributions Mirant made to Southern in 1999 and 2000 and about $1.035
billion from repayment of inter-company loans.
Study: Counties with Casinos Have Higher Bankruptcy Rates
A new gambling study points to a link between casino gambling and
bankruptcies in Iowa, the Register reported. A preliminary
report on the University of Northern Iowa study, shared with lawmakers
today, shows there are more bankruptcies in counties with casinos than
in a comparable-sized group of counties that don’t have gambling
facilities.
Morgan Lewis Fires Back Against Ex-Brobeck Staff
Morgan, Lewis & Bockius denies that it conspired to bring about
Brobeck, Phleger & Harrison’s dissolution, the
Recorder reported. But in a court document on Friday,
Morgan Lewis said that even if the allegations by former Brobeck
employees were true, it is still not liable to pay their severance since
it did not purchase all or part of Brobeck.
href='http://www.law.com/jsp/article.jsp?id=1112016916690'>Read the full
article.
Cablevision May Join Adelphia Bid
Cablevision Systems is in advanced talks to join two big private
equity firms that are bidding forAdelphia Communications, the New
York Times reported. If Cablevision jumps into the battle for
Adelphia, it would face its longtime rival, Time Warner, which is allied
with Comcast in the auction. The Time Warner–Comcast alliance has
long been favored to win, and in recent weeks has appeared close to
reaching a final agreement for control of the company by paying more
than $18 billion in stock, according to the executives.
Qwest Gives MCI an Ultimatum
Qwest Communications International Inc. threatened to withdraw its
$8.45 billion offer to acquire MCI Inc. if the company doesn’t
respond to its takeover bid by midnight April 5, the Wall Street
Journal reported. MCI has already agreed to be acquired by
Verizon Communications Inc. for $6.75 billion. But MCI resumed talks
with Qwest after that company came back with a higher offer.