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October 7, 2005
name='1'>U.S. Pension Bill in Funding Rule Squabble
A bill to strengthen U.S. corporate pension plans was mired in
disputes over funding rules with no resolution in sight, senators said
yesterday. After ending a disagreement over the treatment of airlines,
the legislation's sponsors were battling a new concern by senators over
the bill's stricter treatment of old-line manufacturers that are in poor
financial health, Reuters reported yesterday. Two senators, Mike DeWine
(R-Ohio) and Barbara Mikulski (D-Md.), were holding up action on the
bill to demand deletion of sections requiring tougher pension funding
rules for companies with falling credit ratings. The provision could
hurt companies such as General Motors Corp., which saw its debt rating
cut to "junk" status this year but feels that its pension
plans are adequately funded.
id='2'>House Votes to Extend Unemployment Benefits, 'QI-1' Program
The House yesterday adopted legislation providing unemployment
benefits to Hurricane Katrina evacuees and extending for one year a
program that gives additional help to low-income Medicare beneficiaries,
which is set to run out of money imminently unless Congress acts,
CongressDaily reported today. The Senate already passed
its own version of legislation extending for one year the
"qualifying individual" or QI-1 program that covers some
Medicare co-payments for low-income people. But since the House version
is different, the Senate likely will pass the House version by unanimous
consent. The House bill would give $400 million in unemployment
benefits to Louisiana, $85 million to Mississippi and $15 million to
Alabama, divided according to the expected unemployment benefit needs of
the three states hardest hit by the storm. It also extends the
Transitional Medical Assistance program, which provides Medicaid for
families that have left welfare for work, until the end of the year. The
bill is offset by a ban that prevents Medicare and Medicaid from
providing coverage for erectile dysfunction drugs like Viagra, which the
Ways and Means Committee said would save the programs $600 million over
five years.
id='3'>Florida Court Upholds New Homestead Cap
Rejecting the reasoning of a month-old precedent from Arizona
interpreting the new homestead exemption cap, a Florida bankruptcy court
yesterday upheld the application of new §522(p) to cap homestead
equity at $125,000 in a case where the debtor acquired the property
within 1,215 days of filing. The opinion by Chief Judge Robert
Mark in In re Kaplan relied on legislative history in
rejecting the approach of Judge Randolph Haines in
In re McNabb, 326 B.R. 785. While conceding that the statute is
awkwardly drafted, Judge Mark found the meaning sufficiently ambiguous
to look to Congress' intent, which he found clearly to limit the
homestead in Florida: "It is common knowledge that Florida's
unlimited homestead exemption was at the heart of the legislative
debate," he wrote. Judge Mark called for finality on the issue:
"Determining whether the homestead caps apply in Florida should not
be in dispute and should not distract us further," he said.
Thomas Messana represented the prevailing trustee in
the case.
id='4'>Pension Funds Sue Delphi over Accounting Practices
Two state pension funds and other shareholders are suing auto
supplier Delphi Corp., the Associated Press reported. They claim that
executives lied about the company's finances in order to protect their
jobs and artificially inflate Delphi's stock price. The lawsuit is the
latest blow for the largest U.S. auto supplier, which is threatening to
file for bankruptcy by Oct. 17 if it fails to reach a deal with General
Motors and the United Auto Workers to lower its costs. GM spun off
Delphi in 1999. The plaintiffs claim that Delphi improperly booked
payments for technology services as assets and booked rebates and
credits as income before they were actually earned.
id='5'>Parmalat Sues Standard & Poor’s
Italy 's Parmalat sued ratings agency Standard & Poor's for what
sources familiar with the situation said were damages worth around 4
billion euros ($4.82 billion), Reuters reported yesterday. In a
supplement to its listing prospectus published earlier this week,
Parmalat had detailed a 4.86 billion euro damages claim against an
unknown party, part of its legal battle against financial partners it
said contributed to its collapse. Standard & Poor's had an
investment grade rating on Parmalat until little more than a week before
the dairy group collapsed in December 2003. It then slashed the rating
twice in two days to two levels above default grade.
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=218821+06-Oct-2005+RTRS&srch=bankruptcy'>Read
the full story.
id='6'>MCI Shareholders OK Verizon Merger
Shareholders of MCI Inc. approved the $8.6 billion purchase of the
company by Verizon Communications Inc. yesterday, officially ending
months of stockholder wrangling over the fate of the former WorldCom,
Reuters reported yesterday. MCI said that 209.6 million shares (about 64
percent) of its outstanding shares were voted in favor of the Verizon
bid, while some 27.8 million shares were voted against the merger. A
majority of outstanding shares was needed for the merger to win
approval. Verizon, which is still seeking approval of its bid from
federal and state regulators, has said that it could close the deal by
the end of this year but might have to wait until early next year.
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=212301+06-…'>Read
the full story.
id='7'>Amtrak Gets Asbestos Tab
As the second round of cleanup is set to begin at the former W.R.
Grace & Co. Zonolite plant, financially strapped site owner Amtrak
will have to foot the bill, New Jersey’s Times newspapers
reported today. The Environmental Protection Agency ordered Amtrak and
American Premier Underwriters, the successor to the Penn Central
Railroad, to pay for the cleanup under the Superfund law. Amtrak
officials estimate the cost of the second and final round at roughly $1
million. Amtrak officials said that they plan to file a claim seeking to
recover the costs of the cleanups from W.R. Grace during that company's
bankruptcy proceedings. The federal Justice Department is supporting
Amtrak's claim, said Roy Deitchman, vice president of Amtrak's
environmental group. Congressional officials yesterday criticized
shifting the cost of the cleanup from the private company that caused
the pollution to the publicly funded transit system.
id='8'>World Wide Financial Services Inc. Files for Chapter 11
World Wide Financial Services Inc., which does business as
LoanGiant.com, filed for chapter 11 late Tuesday in the U.S. Bankruptcy
Court in Detroit, Crains reported yesterday. The Southfield, Ill.-based
company plans to reorganize through the filing, said Lynn
Brimer, a partner at Raymond & Prokop PC, the firm
representing LoanGiant in the proceedings. “What truly led to the
bankruptcy filing was an inability of World Wide Financial to reach a
resolution with GMAC/Residential Funding Corp., coupled with the costs
associated with defending the actions that have been taken by the
state’s Office of Financial and Insurance Services,” Brimer
said.
href='http://www.crainsdetroit.com/cgi-bin/news.pl?newsId=7012'>Read
more.
id='9'>New Bidder Emerges in Glass Factory Sale
Indian glassmaker Gujarat Glass Ltd. suddenly expressed strong
interest in the Park Hills, Mo., Flat River Glass factory, asking the
Wilmington, Del., Bankruptcy Court to delay yesterday’s hearing to
approve the factory’s sale to Austrian glassmaker
Stólzle-Oberglas, the St. Louis Post-Dispatch reported
yesterday. Bankrupt glassmaker Glass Group Inc. of Millville, N.J.,
already signed an agreement to sell the facility and two New Jersey
glass-coating plants to the Austrian company for $12 million.
Stólzle also would assume approximately $2 in assumed
liabilities, such as unpaid health benefit claims. However, Gujarat
Glass now says it is willing to pay $16 million in cash as well as
assume the $2 million in liabilities for those same assets, according to
a court filing. The Indian company now is asking the court to adjourn
the hearing until Oct. 11, giving the glassmaker time to complete its
due diligence. If everything goes well, Gujarat would then formally
submit a bid on Monday. Judge Peter Walsh was expected
to decide whether to approve the sale during a hearing.
href='http://www.stltoday.com/stltoday/business/stories.nsf/0/A5733D6CAD3592E…'>
Read the full story.
Airlines
id='10'>United Lands $3 Billion Financing Commitment
United Airlines said yesterday that JP Morgan and Citigroup will be
joint lead arrangers for a $3 billion all-debt exit financing package in
what it called a significant step toward exiting bankruptcy, Reuters
reported yesterday. The airline said that it signed a commitment letter
for $3 billion of debt financing with a term of six years. United, which
has been in chapter 11 since December 2002, will use the exit financing
to repay its debtor-in-possession loans, make other payments required
upon exit from bankruptcy and ensure strong cash balances to conduct
post-reorganization operations.
id='11'>Judge Approves Delta Loan Package
A U.S. Bankruptcy Judge approved a $1.9 billion package of loans for
bankrupt Delta Air Lines as it seeks to reorganize under federal
bankruptcy protection yesterday, according to Reuters reports. Positive
reception for the loan among a group of lenders led by GE Capital and
Morgan Stanley allowed the company to obtain an additional $200 million
on top of the $1.7 billion initially sought and borrow it at a rate of
11.198 percent, about 30 basis points below the original rate. $50
million of the total would be used to pay down a higher-interest, $350
million loan the beleaguered airline received from American Express Co.
at the time of the bankruptcy last month. Judge Prudence
Beatty approved the loans. In other news, Delta is prepared to
use the bankruptcy court to achieve $325 million in cost concessions
from its pilots if the company and union can't reach a deal on their
own, CEO Gerald Grinstein said yesterday, the Associated Press reported.
Grinstein said that the union so far has been unwilling to negotiate the
cuts with the company. He added that from the company's standpoint, time
is essential to get the cuts.
href='http://www.washingtonpost.com/wp-dyn/content/article/2005/10/06/AR20051…'>Read
more.
Meanwhile, the Associated Press reported yesterday that the airline
plans to offer daily nonstop flights between Atlanta and Tel Aviv,
Israel, starting March 27. The route has long been discussed but never
scheduled. It is part of the Atlanta-based carrier's effort to expand
internationally.
id='12'>US Airways Group Repurchase Announced
US Airways yesterday announced that it has agreed to repurchase
all of the replacement warrants recently issued to the Air
Transportation Stabilization Board (ATSB) in connection with the
recently completed merger with America West Holdings Corp.,
BankruptcyData.com reported yesterday. US Airways Group will repurchase
approximately 7.7 million warrants to purchase shares of common stock
that have an exercise price of $7.27 per share. The total purchase price
for the warrants will be approximately $115.8 million. US Airways Group
Chairman, President and CEO Doug Parker said that the merger has been
supported by more than $800 million in new equity investments and that
the company expects to have approximately $2.5 billion in total cash
when certain transactions close this week. A portion of the cash
balances will be used to purchase the outstanding warrants held by the
ATSB. The warrants were created in conjunction with America West's $439
million ATSB loan in 2002, which continues to be repaid on schedule,
with interest. In addition, ATSB is receiving an additional $116 million
for the warrants.
id='13'>Funds Sue Delphi
Two U.S. state pension funds and other large investors have sued
Delphi Corp., contending that executives at the troubled auto parts
supplier made bogus deals with third-party vendors aimed at hiding the
company's financial problems, Reuters reported on Wednesday. The
lawsuit, whose lead plaintiffs include the Teachers' Retirement System
of Oklahoma and the Public Employees' Retirement System of Mississippi,
was filed in federal court in New York last Friday and seeks
class-action status. The suit names the company, current and former
directors including former CEO J.T. Battenberg III, former CFO Alan
Dawes, outside auditor Deloitte & Touche LLP and others as
defendants. According to the suit, senior Delphi executives instructed
subordinates to violate accounting rules overseeing how revenue and
expenses should be recognized.
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=191105+05-…'>Read
the full story.
id='14'>Ex-champ Rahman Declares Bankruptcy Before Big Fight
Former world heavyweight champion Hasim Rahman, claiming debts of more
than $5 million, reportedly filed for chapter 11 protection in U.S.
Bankruptcy Court at Las Vegas, Agence France Presse reported yesterday.
The Baltimore Sun, Rahman's hometown newspaper, revealed that
the fighter hopes to reorganize his debt and find a way to pay off his
creditors and continue his career with his filing on Tuesday. Rahman is
set to fight Ukraine's Vitali Klitschko, the World Boxing Council
heavyweight champion, in Las Vegas on Nov. 12. Paperwork filed with the
court shows that Rahman, who will be paid $4.2 million for facing
Klitschko, owes 20 creditors. The Internal Revenue Service and promoter
Don King, each owed approximately $2 million, top the list of
Rahman’s creditors. King filed a $2.1 million lawsuit against
Rahman last week, claiming that his contract with Rahman calls for the
payment if he failed to win the purse bid for the Klitschko-Rahman bout.
Rival promoter Bob Arum won rights to stage the fight with a bid of $12
million to King's $11.1 million bid. "Because of the litigation
from Don King, we sought legal advice and we are going to follow the
counsel's advice throughout on this issue," Rahman manager Steve
Nelson told the newspaper.
href='http://news.yahoo.com/s/afp/20051006/ts_alt_afp/boxusaheavyrahman_05100…'>Read
more.