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June 12, 2006
Autos
id='1'>Delphi Reaches Buyout Deal with UAW
Auto parts supplier Delphi Corp. reached an agreement on Friday with the
United Automobile Workers union and General Motors that offered buyouts
to all of its 24,000 workers and reduced the possibility of a crippling
strike, the New York Times reported on Saturday. The plan, which
GM will finance, expands a plan announced in March that covered 13,000
Delphi workers, and comes on the eve of the union's leadership
convention, which begins Monday in Las Vegas. Agreement on the buyouts
allows the two companies and the union to focus negotiations on other
crucial issues like the level of wage and benefit cuts at Delphi, the
amount GM is willing to pay for buyouts and to subsidize workers' wages,
and the number of workers who will be left at Delphi once the cuts are
made. After announcing that deal, Delphi asked a federal bankruptcy
judge for permission to set aside its labor contracts and impose sharply
lower wage rates and less-generous benefits. Delphi also said it would
close or sell 21 of its 29 plants in the United States, and cut 20,000
hourly jobs, many held by UAW members.
href='http://www.nytimes.com/2006/06/10/business/10delphi.html?pagewanted=pri…'>Read
more.
id='2'>UAW Facing Tough Choices, Leader Warns
Ron Gettelfinger, president of the United Automobile Workers union, told
his members in a report released Sunday that they cannot ride out the
automobile industry crisis and should be prepared to make
tradition-breaking decisions to help rescue the industry, the New
York Times reported today. In the report, to be given to members
today at the union's convention, Gettelfinger, pointed to many causes of
the industry's grave malaise, including 'bad management' and declining
auto sales. However, Gettelfinger acknowledged that the union's health
care benefits helped create a ballooning health cost crisis that had
become 'unsustainable' in the face of the auto companies' declining
sales. This, he said, was a reason why the UAW agreed to substantial
health care concessions last year.
href='http://www.nytimes.com/2006/06/12/automobiles/12UAW.html?_r=1&oref=slog…'>Read
more.
id='3'>Dana Corp. Reaches Settlement with Supplier
Despite the objections of creditors, auto parts maker Dana Corp. has
reached a settlement with supplier Toledo Press Co. in a dispute over
equipment and shipping charges, Portfolio Media reported Friday.
A U.S. bankruptcy court has ruled that Dana can pay Toldeo Press Co.
$200,000 in shipping charges, and in exchange, the company will install
equipment that had been purchased by Dana. Creditors argued that Toledo
Press does not actually have a claim to the funds. The two companies
have been sparring over the payment for years, after Dana purchased four
presses from Toledo Press between October 2004 and February 2005. After
Dana filed for chapter 11 bankruptcy protection in March, Toledo Press
said it would not deliver and install the equipment until Dana paid for
the presses and the shipping charges.
id='4'>Riverstone Seeks Overhaul of Shareholder Deal
Bankrupt ethernet provider Riverstone Networks Inc. has asked for court
approval to change an old shareholder lawsuit settlement that would
enable it to recoup nearly $1
million in fees originally paid to shareholders' lawyers, Portfolio
Media reported on Friday. On Thursday, the company asked for
permission to make proposed changes to its November 2004 shareholder
settlement that will allow it to reclaim an estimated $950,000 of the
$1.75 million previously paid in legal fees. The settlement resolved a
number of shareholder suits against the company, its officers and
directors stemming from allegations of misrepresentations or omissions
in the company's financial statements. The deal, approved by the
California District Court last June, required the company to improve
corporate governance and pay $1.75 million of the shareholders' legal
fees. But Charles Grimes, a shareholder who was not party to the
settlement, appealed the order, blasting the legal fees as 'excessive.'
If the proposed amendments are approved, the altered settlement will
resolve Grimes' pending appeal, allowing Riverstone 'to avoid
significant uncertainty and economic exposure,' the filing stated.
id='5'>USG Wins Approval of Exit Financing Package
Drywall maker USG
Corp., bankrupted by asbestos-related personal injury claims, has won
court approval for a $2.75 billion exit financing package, Portfolio
Media reported on Friday. The reorganization plan, filed with the court
May 16, is funded by J.P. Morgan Chase Bank and Goldman Sachs Credit
Partners LP. It includes a $650 million revolving credit, a $1 billion
term loan and a $1.1 billion tax-bridge loan. The Chicago-based company
and its attorneys are busy gearing up for a confirmation hearing on the
reorganization plan. Bankruptcy Judge Judith K. Fitzgerald (W.D.
Pa.; Pittsburgh) has scheduled the hearing for June 15. According to the
filing, USG has $1.5 billion on hand and expects to garner another $1.8
billion from a rights offering, which will be extended to existing
shareholders.
id='6'>Link Between Gambling, Bankruptcy in Indiana Elusive, but
Some Say Connection Exists
A long-term check
of the U.S. Bankruptcy Court statistics showed the bankruptcy rate more
than doubled in Indiana since 1996, the year the first gambling boats
started operating in the state, over the more modest increases of the
previous decade, the Northwest Indiana Post-Tribune reported yesterday.
'I don't think there is any question that casino gambling contributes to
bankruptcy or increases in crime,' said Calvin Hawkins, a trustee
in U.S. Bankruptcy Court for the Northern District of Indiana. Since the
boats arrived, Hawkins said he has combed through the receipts and he
has seen the credit card debt of problem gamblers. Researchers tend to
pin most of the increase in filings on a loosening of the bankruptcy
laws in the 1970s, coupled with the rise of the credit card, said Thomas
Garrett, a researcher with the Federal Reserve office of St. Louis, who
co-authored a 2005 paper 'Do Casinos Export Bankruptcy?' for the Federal
Reserve. Garrett is convinced there is a connection between bankruptcies
and casino gambling but, as most research suggests so far, he believes
it is a small contributor in an overall rising tide of personal
financial failures.
href='http://www.post-trib.com/cgi-bin/pto-story/news/z1/06-11-06_z1_news_04…'>Read
more.
id='7'>Lawyers Expect Delaware Bankruptcy Filings to Rise
With energy prices
moving higher and interest rates on the rise, more U.S. corporations
likely will be filing for bankruptcy, which is good news for Delaware's
economy, the Delaware News Journal reported on Saturday. Previous
estimates have put the economic benefit of corporate bankruptcy filings
in Delaware at between $30 million and $50 million annually. The
Delaware bankruptcy court, which had only two permanent judges, was seen
as overloaded, prompting lawyers to file in other jurisdictions.
However, the days of being backlogged should be over following the
appointment of four additional bankruptcy judges for the Delaware court,
local bankruptcy lawyers said. All four of the new judges made their
first public appearance as a group as they participated in panel
discussions at a conference Friday sponsored by the American Bankruptcy
Institute and the Delaware Bar Association, 'Delaware Views from the
Bankruptcy Bar and Bench.'
href='http://www.delawareonline.com/apps/pbcs.dll/article?AID=/20060609/BUSIN…'>Read
more.
id='8'>Counseling Falls Short of Staving Off Bankruptcies
When filers come in
for a counseling session, '99.5 percent don't qualify for a repayment
plan,' said Gale Crenshaw, director of the East Toledo (Ohio) Community
Credit Counseling Specialists Inc., the Toledo Blade reported
yesterday. 'They've tapped out their 401(k)s, have no equity in their
home, and usually don't have anyone who can loan them money.' Consumer
Credit Counseling Service of the Midwest Inc., which is approved to
provide pre-filing counseling in eight states, conducted 130 such
individual sessions in January and 537 last month. Maureen Morris, a
counselor at Community Credit Counseling Specialists Inc., admits it
didn't take long to determine that Sarah Rapparlie and her husband,
John, were headed for bankruptcy. 'Her income was $1,300 a month, her
living expenses were $1,101 a month, and there was one credit card that
required a $350-a-month payment,' said Morris.
href='http://toledoblade.com/apps/pbcs.dll/article?AID=/20060611/BUSINESS04/6…'>Read
more.
id='9'>Commentary: The American Way of Debt
Consumer
indebtedness is soaring, the savings rate is down to zero and people are
filing for bankruptcy at record rates, seen by many observers to be
symptoms of cultural decline, according to a commentary in yesterday's
New York Times. But as the history of debt in America shows,
condemnations of extravagance can obscure more than they illuminate. The
equation of debt and decline assumes that once upon a time Americans
lived within their means and saved for what they bought. This is
fantasy: there never was a golden age of thrift. Debt has always played
an important role in Americans' lives — not merely as a means of instant
gratification but also as a strategy for survival and a tool for
economic advance.
href='http://www.nytimes.com/2006/06/11/magazine/11wwln_lede.html?pagewanted=…'>Read
more.
id='10'>Companies Seek Dismissal of Thousands of Asbestos Cases
An unprecedented
move that could alter the nature of asbestos litigation, a coalition of
47 companies last week asked a federal judge to dismiss tens of
thousands of pending cases, alleging that the vast majority of them are
premised on flawed or fraudulent medical diagnoses, the Legal
Intelligencer reported today. In the motion, defense lawyers say they
are targeting claims that stem from 'mass medical screening enterprises'
that, they say, have clogged the courts with thousands of bogus asbestos
claims. The motion was filed before U.S. District Judge James T. Giles,
who is presiding over a case known as MDL 875, the name for the
multidistrict litigation in which all pending federal asbestos claims
were consolidated. First, they want the judge to exclude all expert
testimony from six doctors who the companies say either have taken the
Fifth Amendment against self-incrimination when asked to testify about
their methods or have disavowed diagnoses attributed to them. The second
request is that Giles 'dismiss without prejudice all nonmalignant cases'
in MDL 875 'subject to reinstatement upon production by plaintiffs ...
of diagnosing documents by a doctor other than the six doctors.'
href='http://www.law.com/jsp/article.jsp?id=1149843922549'>Read
more.
id='11'>Panel Finds Funding of California Public Pensions, Retiree
Benefits a Growing Challenge
A panel of
investment experts drew a grim picture of California's public employee
pension plans Saturday, saying that a mix of new debt, higher taxes or
cuts in government service may be needed to shore up accounts that in
some cases are underfunded by billions of dollars, the Associated Press
reported yesterday. At the same time, a new federal accounting rule will
require local and state governments for the first time to show the
actual costs of other benefits promised to retirees, primarily for
health care. Complying with that rule, which takes effect in December,
is expected to show that the pay-as-you-go method traditionally used by
governments has left many of them with huge unfunded liabilities. In
California, those liabilities are in the tens of billions of dollars.
href='http://www.mercurynews.com/mld/mercurynews/news/breaking_news/14790056…'>Read
more.
id='12'>Phone Calls from Bankrupt Diocese Upset Some Alleged
Victims
Attorneys for the
Spokane (Wash.) Catholic Diocese have been calling people who claim they
were victims of clergy sex abuse, and it's upset some victims and
attorneys, who argue that some of the diocese's questions are
inappropriate and intimidating, the Associated Press reported on
Saturday. Critics also worry that the diocese is pushing lowball
settlement offers at a time when Bishop William Skylstad has offered
other victims an average of more than a half-million dollars each. The
calls are being made to a group of claimants who were not included in a
$45.7 million settlement offer the diocese reached with 75 victims. U.S.
Bankruptcy Court Judge Patricia Williams rejected that offer three weeks
ago, saying that all claimants must be treated equitably.
href='http://seattlepi.nwsource.com/local/6420AP_WA_Diocese_Phone_Calls.html'>Read
more.
International
id='13'>Varig Gets One Bid at Bankruptcy Auction
Brazil's flagship
airline Varig received a single bid at a bankruptcy auction Thursday in
the form of a below-minimum offer from its own workers, the Associated
Press reported on Friday. The consortium formed by Varig employees bid
1.01 billion reals ($449 million) for the right to take over the
domestic and international operations of the 79-year-old carrier.The bid
was well below the minimum set at $860 million. Bankruptcy Judge Luiz
Roberto Ayoub said he would take 24 hours to decide whether to approve
the sale.
href='http://www.chron.com/disp/story.mpl/ap/fn/3951303.html'>Read
more.
id='14'>Deal Looks to Aid Troubled Canadian Biopharmaceutical
Company
A Canadian court
has approved the plan sponsorship agreement between a troubled
biopharmaceutical company - Hemosol Corp. - its receiver and a potential
buyer, Portfolio Media reported on Friday. The company's receiver,
PriceWaterhouseCoopers, announced the development, but did not say who
might purchase the company. However, a Toronto-based newspaper reports
thatthe possible purchaser is a company linked to Biovail Corp. chairman
and owner of the National Hockey League team the Ottawa Senators, Eugene
Melnyk. Hemosol has been operating under court-appointed receivership
since December.
id='15'>British Industry Unites to Warn on Spiraling Cost of
Company Pensions
Christine Farnish,
chief executive of Britian's National Association of Pension Funds,
warned of severe economic disruption if employers were forced to make
good on all of their pension promises, and said it was not in the
national interest that they should be enforced, the Financial Times
reported yesterday. In particular, she pointed to a government
requirement that employers increase the pensions they pay with
inflation, up to 2.5 percent, and to rules barring solvent employers
from rolling back benefits that have already accrued to pension scheme
members. Geoff Mellor, pensions director at Whitbread Group, summed up
much of the industry's attitude toward pension promises, saying that
with a change to pensions law, benefits became a firm promise, not
simply the general intention that companies had previously believed.
href='http://news.ft.com/cms/s/12f29bbc-f819-11da-9481-0000779e2340.html'>Read
more.