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August 7, 2006
name='1'>Pension Provisions Have Special Targets
Defense contractors, airlines
and a food company are among those singled out for different treatment
under a massive pension overhaul bill that Congress could send to the
White House as early as this week, the Associated Press reported
yesterday. Defense contractors that do the bulk of their business with
the government and generate more than $5 billion a year in sales to the
Pentagon are given a three-year grace period before new pension funding
rules will apply. Airlines in bankruptcy proceedings that have frozen
their pension plans get an extra 10 years to meet their funding
obligations, above the seven years given to other pension managers. That
applies specifically to Northwest Airlines Corp. and Delta Air Lines,
although other airlines could get the same break if they freeze their
plans. Smithfield Foods, which says it is the world's largest pork
processor and hog producer, won a reprieve in restoring fiscal integrity
to the failing pension plans of recently acquired companies. One
proposal that didn't make it into the final bill would have given
companies emerging from bankruptcy, specifically the auto parts giant
Delphi Corp., seven years to make up funding deficiencies accumulated
during bankruptcy. The current law requires the delinquent payments to
be made up immediately.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/08/06/AR20060…'>Read
more.
name='2'>Commentary: Blow Is Struck Against Bankruptcy
Law
Consumer attorneys have
scored a significant victory against the new bankruptcy law, according
to a commentary yesterday in the
size='3'>Dallas Morning News.
Susan B. Hersh
size='3'>, a
face='Times New Roman' size='3'>Dallas
bankruptcy attorney, filed suit to challenge a provision
of the law that forbids an attorney from advising a client to take on
additional debt before a bankruptcy filing. U.S. District Judge David C.
Godbey ruled that the provision 'was facially unconstitutional.'
Examples include refinancing a loan to get a lower interest rate and
getting a car loan so a debtor has the means of getting to a job, Judge
Godbey said. Thus, the provision in the law prevents lawyers from
'advising clients to take actions that are lawful' and
'unconstitutionally restricts Hersh's speech,' the judge ruled. Hersh
said in an interview that the provision in the law is such an 'arcane
restriction on the attorney-client relationship that it was just
absurd.' Judge Godbey hasn't issued a final
judgment in the case, so for now the law is technically still in effect,
the lawyers said. And even when there is a final judgment, the federal
government can appeal.
href='http://www.dallasnews.com/sharedcontent/dws/bus/columnists/pyip/stories…'>Read
more.
Airlines
name='3'>Delta Asks Court to End Pilot Pension
Plan
Delta Air Lines late Friday
announced it had asked the court overseeing its bankruptcy to approve
termination of the plan, which covers more than 13,000 active and
retired pilots, TheStreet.com reported on Saturday. Delta also said the
Air Line Pilots Association, which represents some 6,800 active pilots,
does not oppose termination. Delta's request to the court was expected.
The airline already had announced its intention to end the pilots' plan,
saying it was a financial burden that would put it out of business.
Termination of the pilot plan doesn't affect Delta's other pension plan,
which covers about 91,000 active and retired flight attendants and
ground workers.
href='http://www.thestreet.com/newsanalysis/transportation/10301977.html'>Read
more.
name='4'>Northwest's Union Braces for Showdown
Northwest's flight
attendants are preparing to strike as early as Aug. 15 and their union
says it's fighting cuts the company imposed last week, including making
a temporary 21 percent wage cut taken in November apply through 2011,
the Detroit Free
Press reported today. The union also is
fighting cuts to medical benefits and changes to work rules that reduce
total compensation by as much as 40 percent. Flight attendants are
threatening actions such as short walk-offs targeting certain flights or
cities, or a massive walkout -- a scenario that threatens to send delays
and cancellations rippling through Northwest's operations. That could
postpone the company's goal to exit bankruptcy next year or even send it
out of business.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20060807/BUSINESS05/608…'>Read
more.
Owens
Corning Seeks Revision of Letter Against Plan
Taking steps to intervene
in a New York investor’s plan to call on all bondholders to reject
the company’s reorganization plan, Owens Corning has asked a
bankruptcy court to revise what it claims is a materially misleading
letter, Portfolio
Media reported on Friday. Hedge fund Schultze
Asset Management LLC wants bondholders to receive a warning along with
their plan ballots, in hopes of persuading them to reject Owens
Corning’s chapter 11 plan. On Thursday in the U.S. Bankruptcy
Court for the District of Delaware, attorneys for the fiberglass maker
cautioned bondholders that if they vote against the plan and the court
confirms the plan, they would recover less. Attorneys also said that if
bondholders vote against the plan and the court confirms the plan at a
September hearing, a renewed court dispute could end up delaying
payments to bondholders.
LG
Asks Court for Permission to Sue Silicon Graphics
LG Electronics has asked
a judge to give it permission to file a patent infringement lawsuit
against Silicon Graphics Inc., relieving LGE from the stay of lawsuits
against its bankrupt rival,
size='3'>Portfolio Media reported on Friday.
In a motion filed Thursday, LGE asked for relief from SGI’s stay
and for confirmation that the stay doesn’t apply to proceedings
related to continuing, post-petition patent infringement. LGE said it
wants to file a suit for damages “from SGI’s historic,
pre-petition infringements” of its patents. The action would be
joined with LGE’s claims for post-petition infringement and would
also seek injunctive relief prohibiting further infringement. If LGE
gets relief from the automatic stay, all the patent infringement
claims—pre- or post-petition—would be heard together by the
court. A hearing on the matter is scheduled for Aug. 31. The case
is In re
Silicon Graphics Inc. et
al., case number 06-10977, in the U.S.
Bankruptcy Court for the Southern District of New
York.
name='7'>Unsecured Creditors Contest World Health Bid
World Health Alternatives
Inc.’s unsecured creditors are contesting the conversion of the
company’s bankruptcy from a chapter 11 to a chapter 7 case,
Portfolio Media
reported on Friday. The motion came two weeks after U.S.
Trustee Kelly Beaudin
Stapleton appealed an approved deal between
World Health and fellow medical staffer Jackson Healthcare
Staffing.
face='Times New Roman' size='3'>Jackson
acquired World Health’s assets for $43 million in
cash and $10 million in assumed debt in an agreement brokered by
creditor Capital Source Finance LLC, which also had a hand in
determining how the proceeds from the sale would be distributed. In
order to push the sale through, CapSource agreed to cap its claims in
the case at $42 million and to distribute $1.63 million amongst the
unsecured creditors. Stapleton, however, claims that the settlement
unfairly compensates World Health’s unsecured creditors. Because
of the pending appeal, the creditors argue in their July 28
motion, the conversion will not preserve estate assets or
benefit creditors.
Refco
Trustee Objects to Costs, Creates Committee
The ballooning costs of
Refco’s bankruptcy have triggered an objection from the U.S.
Trustee overseeing the commodities broker’s chapter 11 case, who
also appointed a new creditors' committee on the heels of complaints
from claimants,
size='3'>Portfolio Media reported on Friday.
U.S. Trustee Diana G.
Adams’ objection, filed Thursday,
tallies up the bills submitted by professionals retained by the estate
thus far, and puts the total expense to the debtors’ estate at
more than $60 million. During the first phase—spanning Oct. 18,
2005 to Jan. 31—professionals submitted invoices for more than $33
million, the objection says. The U.S. Trustee’s objection seeks a
20 percent holdback of the funds requested for the second interim
period, and reserves her right to pursue objections in the future. Also
on Thursday, the U.S. Trustee filed papers saying that she had created
an additional unsecured creditors’ committee to represent the
interests of parties with claims against Refco Capital Markets Ltd., and
appointed four members to the original unsecured creditors’
committee.
Autos
name='9'>Dana Settles Patent, Antitrust Suits
Bankrupt auto parts
supplier Dana Corp. has agreed to a $1.625 million settlement with
American Axle & Manufacturing Inc. that, if approved, would end
eight years of patent litigation,
size='3'>Portfolio Media reported on Friday.
In return for the money, Dana will give American Axle a nonexclusive,
worldwide, royalty-free license to its patents for driveline assemblies.
Dana added that more litigation would be expensive and time-consuming,
and that it would still face the costs and delays of appeal even if it
was successful at trial. A loss in court, meanwhile, could destroy the
value of the patents, the company said. A hearing on the matter is
scheduled for Aug. 16, with objections due Aug. 11.
name='10'>Ford Records $489 Million in Pension Costs Because of Job
Cuts
Ford Motor Co., the
second-largest
size='3'>U.S.
recorded $489 million in pension costs in the second quarter related to
cutting jobs in
size='3'>North America
reported on Friday. Ford said such costs were $315 million when it
reported second-quarter earnings on July 20. Two days ago, the company
revised its loss in that quarter to $254 million, more than double what
it originally reported, because of the higher pension
expense. Ford is cutting 30,000 jobs
in
size='3'>North America
of a restructuring plan for the region. The automaker said in July that
it's accelerating the revamping, and earlier this week hired a former
Goldman Sachs Group Inc. executive as a strategic adviser to Chief
Executive Officer William Clay Ford Jr.
href='http://www.bloomberg.com/apps/news?pid=20601103&sid=a3ImNLSvQWFk&refer=…'>Read
more.
name='11'>Tanner & Haley's Bankruptcy Filing Shakes Upscale
Vacation Industry
On July 23, 62 corporate
affiliates operating under the Tanner & Haley Resorts name sought
chapter 11 protection, the
size='3'>Wall Street Journal reported on
Saturday. The chapter 11 filing disclosed operating losses of $64
million in 2005.
size='3'>Tanner & Haley's time-share concept involved buying homes
in desirable locations around the world, then charging membership fees
for access to them. Members own no property, but have the right use
an array of homes for a set amount of time each year. Interviews with
Tanner & Haley members and with former employees, along with
bankruptcy-court filings and lawsuits, suggest that the privately-held
company, based in
face='Times New Roman' size='3'>Westport
size='3'>,
size='3'>Conn.
struggled for months to pull in enough new members to stay
afloat.
href='http://online.wsj.com/article/SB115473976489827687-search.html?KEYWORDS…'>Read
more. (Registration required.)
w:st='on'>
name='12'>Pennsylvania
face='Times New Roman' size='3'> Brewery Seeks Labor
Concessions
Pittsburgh Brewing Co. has
asked a bankruptcy judge to reject its labor agreement, saying
concessions are necessary to keep the brewery afloat, the Associated
Press reported on Saturday. The brewery, which makes Iron City Beer,
said in court documents Friday that it cannot arrive at a feasible plan
to emerge from chapter 11 bankruptcy protection as long as its five-year
labor contract remains intact. Pittsburgh Brewing, which filed for
chapter 11 bankruptcy protection late last year, warned that without a
new deal, it probably will close and its brands will be made by an
out-of-state brewer. According to court documents, the brewery wants its
employees to take a 10 percent wage cut that would remain in place for
two years after the company emerges from bankruptcy.
href='http://news.yahoo.com/s/ap/20060806/ap_on_bi_ge/bankrupt_brewery_1'>Read
more.
size='3'>Winn-Dixie Ready to Seek Approval to
Exit
size='3'>Bankruptcy
Winn-Dixie Stores Inc.
said a federal bankruptcy judge approved its disclosure statement,
clearing the way for the supermarket chain to seek creditors' approval
for its reorganization plan, Reuters reported on Friday. The
Jacksonville, Fla.-based company said it expects to emerge from chapter
11 protection in late October or early November. It said U.S. Bankruptcy
Judge Jerry
Funk approved the disclosure statement and has
scheduled an Oct. 13 hearing to confirm the reorganization plan, which
has the backing of the company's unsecured creditors' committee.
Winn-Dixie said the court on July 27 approved a commitment by a Wachovia
Corp. unit to provide up to $725 million of financing to help it emerge
from bankruptcy.
href='http://asia.news.yahoo.com/060804/3/2o24m.html'>Read
more.
name='14'>Smaller Unions Pursue Mergers to Gain Clout with
Employers
Facing tough
concessionary demands from employers, some independent unions are
merging with bigger unions to gain access to more-experienced labor
lawyers and negotiators, as well as larger strike funds and broader
support in case of strikes or walkouts, the Wall Street
Journal reported today. Late last month,
members of Armco Employees Independent Federation Inc. at AK Steel
Holding Corp.'s
face='Times New Roman' size='3'>Middleton
size='3'>,
size='3'>Ohio
voted to become a local of the International Association of Machinists
and Aerospace Workers, which represents 500,000 workers. In February,
AEIF's 2,700 production and maintenance workers were locked out by the
company, following failed contract negotiations on a range of issues,
from health care cost-sharing to changing workers' pension plans. One
test of the benefit of linking with a larger union could come within the
next two weeks, as flight attendants at Northwest Airlines struggle to
reach satisfactory contract terms with the airline, now being overseen
by a bankruptcy court, or potentially go on strike. Last month, the
flight attendants voted out a small independent union, in favor of
joining the Association of Flight Attendants-CWA, which is affiliated
with the AFL-CIO.
href='http://online.wsj.com/article/SB115490735102228276.html?mod=home_whats_…'>Read
more. (Registration required.)
International
w:st='on'>
name='15'>U.K.
face='Times New Roman' size='3'>Personal Insolvencies on Track to Pass
100,000 in 2006
The number of people who
have become bankrupt or entered into an Individual Voluntary Agreement
(IVA) in
size='3'>England
w:st='on'>Wales
of 2006 is 26,020, according to data by the DTI Insolvency Service and
analyzed by PricewaterhouseCoopers LLP, the RetailBulletin.com reported
today. This represents the highest ever number of personal insolvencies
in
size='3'>England
w:st='on'>Wales
and is a 66.3 percent increase on the same quarter in 2005. If this rate
of growth continues, PricewaterhouseCoopers said it expects personal
insolvencies to pass the 100,000 mark in 2006. The record growth in IVAs
continues, with a 153.2 percent increase compared to the same quarter
last year, showing the ongoing popularity of the IVA process with
debtors as a way to resolve their financial problems. In total, 11,105
people entered into an IVA arrangement in the second quarter of
2006.
href='http://www.theretailbulletin.com/index.php?cat=news&page=5&id=8752#'>Read
more.
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