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Lott Remains Optimistic Despite Clinton Veto Threat
Unmoved by veto fears from the White House, Senate Majority Leader Trent
Lott (Miss.) said Monday he remains optimistic Congress will clear
legislation to overhaul consumer bankruptcy laws, according to the CQ
Daily Monitor. Lott said he would not be 'consumed' with the
possibility of a veto, and added he is working to accumulate a
broad coalition of lawmakers. 'I suspect the White House just wants to
veto this bill anyway because they don't really want people to have to
live up to their debts,' Lott said. In a June 9 letter to Lott and
Speaker J. Dennis Hastert III, President Clinton raised concerns that
Democratic objections would not be adequately addressed in the final
version of the bill. 'I sincerely hope that balanced, bipartisan
bankruptcy reform will be completed this year, but I will not hesitate
to veto unfair legislation that fails the test of balance,' Clinton
said. Clinton also opposed 'an anti-consumer provision eliminating
existing law protections against inappropriate collection practices when
collecting from people who bounce a check.' Addressing the homestead
exemption, the president wrote that the bill 'may not adequately address
the problem of wealthy debtors who use overly broad homestead exemptions
to shield assets from their creditors.' On May 24, lawmakers agreed on
a compromise cap at $100,000 the amount of home equity that debtors
could protect from creditors. The cap would apply only to homes bought
within the previous two years.
'Step Back From Bankruptcy'
Financial expert Adrian G. Berg, along with ABCNews.com, explores the
profile of a 37-year-old man who needs to fix his abysmal credit before
it dooms his future. Bankruptcy appears to be the easiest path, but
before he takes the first step he'd like to know his options. Read the
full text
HREF='http://www.abcnews.go.com/sections/business/PersonalFinance/makeover.ht
ml' TARGET='window_2'>here.
Assistant U.S. Trustee Receives Service Award
Assistant U.S. Trustee John R. Byrnes received the Milwaukee
Bar Association's Distinguished Service Award at the association's
annual meeting last Thursday in Washington. U.S. Trustee Ira
Bodenstein said Byrnes was chosen to receive the award because of
his leadership in coordinating pro bono legal representation for clients
of a Milwaukee-area bankruptcy attorney who closed his office without
providing services for which he was retained. During the summer of 1999,
Byrnes received multiple complaints that debtors' counsel John Asher,
doing business as Christian Legal Services and Christian Law Center of
Wisconsin S.C., had failed to appear at required bankruptcy hearings
and failed to timely file bankruptcy petitions for clients who had
retained his services. After meeting with Asher and further
investigating the situation, Byrnes determined that Asher had closed
Christian Law Center without providing legal services to clients who had
paid him. Approximately 25 lawyers, primarily from southeastern
Wisconsin, participated in the pro bono program established by
Byrnes and the Bankruptcy Section. Their assistance not only allowed
the debtors to obtain bankruptcy relief, but to also significantly
reduce the amount of claims that would otherwise have been made upon the
State Bar Client Scrutiny Fund, which reimburses clients for amounts
lost as a result of misconduct by their attorneys. 'In accepting this
award, I wish to recognize all the lawyers who gave their time and
talents to help people in desperate need of legal assistance,' Byrnes
stated. 'The prompt action by members of the bar helped to resolve an
emergency situation for over 100 families. I am grateful to have had
the opportunity to participate in this joint effort.' Bodenstein added,
'John Byrnes is a creative, 'no nonsense' public servant who always
takes the extra step to safeguard the integrity of the bankruptcy
system.'
Philippine Airlines Reports Profit
Philippine Airlines, near bankruptcy just a year ago, reported yesterday
its first annual profit in seven years, according to an Associated Press
report. The airline reported unaudited net income of more 44.2 million
pesos (US$1.04 million) in the fiscal year, which ended March 31. It was
the first year under a rehabilitation plan, which allowed it to generate
more revenues. However, Philippine Airlines Chairman and
majority owner Lucio Tan said the amount 'is really nothing to crow
about.' Tan also attributed the gains to the airlines' creditors,
suppliers and its more than 5 million passengers last year. Philippine
Airlines was unable to repay $2.2 billion in debts.
Innovative Clinical Plans Debt for Equity Exchange
Innovative Clinical Solutions Ltd. announced yesterday it has begun
soliciting consent from holders of its $100 million, 6.75 percent
convertible debentures, according to a newswire report. The Providence,
R.I., company said it will exchange the notes for common equity through
a voluntary pre-packaged plan of reorganization under chapter 11. The
plan will enable it to convert all $100 million of notes so long as the
plan is approved by shareholders of at least two-thirds of the principle
amount of the debentures. Holders of more than 50 percent of the
principal amount of the debentures have agreed in writing to vote in
favor of the prepackaged plan. Court approval is pending.
Spain Plans Aerolineas Bail-Out
Aeolineas Argentina needs a $650 million capital injection and
sweeping cost cuts to save it from bankruptcy, according to Reuters.
According to a rescue plan published yesterday the plan now
needs to be agreed to by Argentina's government and airline employees,
who face pay cuts of up to 20 percent. Aerolineas' biggest shareholder
is now covering a bulk of its losses, which Spanish sources put at $300
million this year. Spanish flag-carrier Iberia, due to be fully
privatized later this year, owns 8.5 percent of Aerolineas and has
served as a model for the Aerolineas plan. Iberia was technically
bankrupt itself in the mid 1990s, but has cut costs, returned to profit
and attracted British Airways as a foreign partner.
Harvard Industries Enters Agreement to Acquire Breed
Technologies
Harvard Industries Inc. and Breed Technologies Inc. announced that the
two companies have entered into an agreement to combine their
businesses as part of a plan for Breed to emerge from chapter 11,
according to a newswire report. If consummated, the transaction will
create a premier global supplier of automotive occupant safety systems
and engineered products with combined annual revenues
of approximately $1.7 billion. The transaction is subject to Breed
obtaining bankruptcy court approval and confirmation of a reorganization
plan, which is expected to occur in the third or fourth calendar quarter
of this year. Breed Technologies has been currently under chapter
11 since September. Harvard Industries designs, develops and
manufactures a broad range of components in the automotive market and
emerged from chapter 11 itself in November 1998.
AmeriServe Gets
Exclusivity Extension; Shorter Than Asked
A bankruptcy court has extended AmeriServe Food Distribution Inc.'s
(AMSV) exclusive periods for filing and soliciting votes to its chapter
11 plan for a period that is 4 months shorter than what the company had
requested. In an order obtained Friday by DBR, Chief Judge Peter F.
Walsh of the U.S. Bankruptcy Court in Wilmington, Del., extended the
exclusive filing period for the food service distributor through Aug. 10
and the exclusive solicitation period through Oct. 10. The order is
without prejudice to the company's right to seek additional extensions.
Safety Components Seeks Executive Severance Program Nod
Safety Components International Inc. (ABAGE) is requesting approval for
its executive severance program, according to a May 24 motion filed in
the U.S. Bankruptcy Court in Wilmington. The maximum cost of the
severance benefits is approximately $1.24 million, the motion states. A
hearing on the motion will be held June 21. Objections are due
Wednesday. Safety Components notes that the program should 'minimize
executive management turnover and retain four key executives in a tight
labor market.'
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