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March 27, 2006
name='1'>Personal Bankruptcy Filings Up 30 Percent
Personal bankruptcies
soared 30 percent to a record high last year, surpassing 2 million for
the first time as financially strained people rushed to file before new
restrictions took effect Oct. 17., the Associated Press reported
yesterday. Bankruptcy petitions filed in federal courts totaled
2,039,214 in 2005, up from 1,563,145 in 2004, according to data released
Friday by the Administrative Office of the U.S. Courts. ''It is ironic
that, at least in the short term, a law Congress hoped would reduce
bankruptcies instead caused the largest upward spike in history,''
said Samuel
Gerdano, executive director of the American
Bankruptcy Institute. By contrast, he said, personal bankruptcy filings
have fallen sharply so far this year under the impetus of the more
stringent law. In the final quarter of the year, which included the two
weeks preceding the Oct. 17 deadline, filings under chapter 7 ballooned
to 560,654 from 254,518 in the October-December period of 2004. Chapter
13 filings fell to 93,714 from 109,116.
href='http://biz.yahoo.com/ap/060326/bankruptcy_surge_yourmoney.html?.v=2'>Read
more.
href='/am/Template.cfm?Section=Press_Releases1&ContentID=42631&TEMPLATE=/CM/ContentDisplay.cfm'>Click
here for ABI's press release on the calendar year 2005
bankruptcy statistics.
New
Bankruptcy Law Has Wriggle Room
Even though Congress
enacted a sweeping overhaul of bankruptcy law last year, which included
restrictions on how debtor companies reorganize their businesses,
bankruptcy lawyers say companies have managed to sidestep some of the
law's provisions, the
size='3'>Wall Street Journal reported today.
The law was mainly aimed at individual bankruptcies, but little
attention has been paid to its impact on corporations at a time when
several high-profile companies are working their way through the
process, including power company Calpine Corp. and commodities future
broker Refco Inc. One area of the new law receiving attention is the
ability of a company to offer key employee retention plans (KERPs),
which can be offered only if the company can show that an executive has
a competitive job offer from elsewhere. 'Congress closed one door by
prohibiting retention plans, but left the door wide open for incentive'
bonuses, says Steve Kortanek , who represents
biopharmaceuticals company Nobex's creditors. Congress also
declined to stop companies from filing for bankruptcy far from their
home base with the new law, which is a source of frustration among
debtor companies' creditors, employees and retirees.
href='http://online.wsj.com/article/SB114342447370208718-email.html'>Read
more.
name='3'>Bankruptcy Lawyers Shifting Practice with Law
Change
Consumer bankruptcy
lawyers say the new federal bankruptcy law that took effect last fall
has had a stifling effect on their practices as filings are down and a
number of lawyers are looking for a way out,
size='3'>Philadelphia Business Journal
size='3'>reported on Friday.
size='3'>Edward DiDonato , a name partner in bankruptcy
boutique DiDonato & Winterhalter, found a way out by joining
300-attorney Fox Rothschild and switching his practice from consumer to
business bankruptcy work. 'There has been a tremendous decline in
[consumer bankruptcy] filings,' said DiDonato. His former partner, Paul
Winterhalter, will become a solo practitioner.
href='http://www.bizjournals.com/philadelphia/stories/2006/03/27/story3.html?…'>Read
more.
w:st='on'>
name='4'>Kansas
face='Times








New


Roman'
size='3'> Bankruptcy Filings up 40 Percent
w:st='on'>
size='3'>Kansas
filings jumped almost 40 percent in 2005 over 2004, according to
government figures, the Wichita Eagle
reported on Saturday. In
w:st='on'>
size='3'>Kansas
people filed for bankruptcy in 2005 compared to 16,289 in 2004, a 39.9
percent increase. Most of those filings were for personal bankruptcy,
records show. A total of 410 businesses filed for bankruptcy, while
22,376 individuals filed. Terry Stephens, a local bankruptcy attorney
said the pace has slowed substantially since last October, which saw a
huge surge in numbers as people attempted to beat the Oct. 17 effective
date for the law change. Stephens also said there are other consumers
now filing for bankruptcy because of another law change, one that allows
credit card companies to sharply increase monthly payments. 'In some
cases, payments have doubled and people can't handle the increase,' she
said. Most of the Kansans filing for bankruptcy last year opted for
chapter 7. Of the 22,786 filings, 19,112 people chose that option.
Chapter 13 was chosen by 3,412 individuals.
href='http://www.kansas.com/mld/eagle/business/consumer/14181899.htm'>Read
more.
name='5'>New Bankruptcy Law Not Working as Intended for
size='3'>Ohio
size='3'>Residents
The new federal law that
led hundreds of
size='3'>Northeast Ohio
file for bankruptcy last fall isn't working as intended, according to
local bankruptcy trustees and credit counselors, the
face='Times New Roman' size='3'>Akron Beacon Journal
size='3'>reported on Sunday. Most of the people who have contacted her
program in Kent, Ohio, “are usually in debt far enough that
there's not a whole lot that we can do to help them,'' said Judy Booth,
program director Consumer Credit Counseling Service of Portage County.
“Realistically, I am not seeing a great impact of that (the means
test),'' local chapter 7 trustee Harold Corzin said. “In every
case I've had except one, people were below the state median
income.''
face='Times New Roman' size='3'>Ohio
size='3'>'s median income is $36,109 for a single individual and $44,734
for a couple. The same holds true for chapter 13 filings, said
Keith Rucinski, staff counsel for
w:st='on'>
size='3'>Akron
trustee, Jerome Holub. “I don't think really people are deciding
whether to do a chapter 7 or 13 based on the means test,'' Rucinski
said. In the five months since the new law went into effect, the
means test had a clear impact on only one local case, he added.
href='http://www.ohio.com/mld/beaconjournal/14184651.htm?template=contentModu…'>Read
more.
name='6'>Lawyers Win in Every Airline Bankruptcy Case
As Delta and Northwest
press employees to take deep pay and benefit cuts, their lawyers and
consultants are asking bankruptcy court judges to approve $59 million in
fees and expenses for 3 1/2 to 4 1/2 months of work, the Associated
Press reported Friday. Complicated bankruptcy cases commonly generate
large fees for lawyers, so it might not be surprising that by the time
the two airlines exit chapter 11, the tab could be $276 million or more.
'It's hard for us to fathom,' said Terry Trippler, an industry expert
who runs travel Web site cheapseats.com. 'It's difficult for the airline
employees. It's difficult for the average Joe consumer.' Delta's lead
bankruptcy lawyer, Marshall Huebner, said it's understandable that some
people are perplexed by the size of the professional fees. But, he said,
'restructuring is expensive, especially a restructuring of this size.
But the work we are doing is critical to return Delta to financial
viability.' It should be noted that even if the bills continue at the
rate so far through their exit from chapter 11, the projected total for
the two airlines combined could be $276 million. That would still be
lower than the $335 million UAL Corp.'s United Airlines spent on its
bankruptcy case during the 38 months it was in chapter 11.
href='http://www.kare11.com/money/business_article.aspx?storyid=121500#'>Read
more.
Refco
Creditors Committee to Probe IPO Underwriters
Despite earlier protests
from its underwriters, a judge decided that Refco’s
creditors’ committee can review records from banks that underwrote
the company’s initial public offering just two months before Refco
fell into bankruptcy,
size='3'>Portfolio Media reported on Friday.
Judge Robert
Drain in the U.S. Bankruptcy Court in
size='3'>Manhattan
that the committee was acting responsibly by conducting a thorough
investigation of the events that happened in the Refco case before
bringing any claim against the underwriters. The creditors’
committee had asked the bankruptcy court permission to examine the
accounting records of eight banks that financed Refco’s $583
million initial public offering in August 2005. Drain said the committee
and the court-appointed examiner will collaborate to decide what
documents will need to be reviewed.
Hedge
Fund Losses Laid at Adelphia's Feet
Aggressively seeking
restitution, hedge fund Appaloosa Investment Partnership has claimed
that it lost hundreds of millions of dollars in the massive fraud
scandal that rocked bankrupt cable provider Adelphia Communications
Corp, Portfolio
Media reported on Friday. Appaloosa argued
last week that its losses were triggered by a dramatic drop in the value
of notes issued by Adelphia and its Arahova Communications Inc. unit,
according to court papers filed in U.S. Bankruptcy Court in
size='3'>Manhattan
Adelphia has been parked in chapter 11 since 2002, after allegations of
wrongdoing by members of the founding Rigas Family surfaced. Appaloosa,
which purchases securities trading below par, said that it relied on the
accuracy of Adelphia's financial reports to the U.S. Securities and
Exchange Commission, which later turned out to be false and misleading.
The case is Adelphia
Communications Corporation, case no. 02-41729,
in the U.S. Bankruptcy Court Southern District of New
York.
name='9'>Commentary: Congress Needs to Expedite Confirmation
of
size='3'>Appeals Court
size='3'>Judges
With two months passing
since Samuel Alito was confirmed to the Supreme Court, it's time Senate
Republicans got back to work confirming appeals-court judges, according
to an op-ed in today’s
size='3'>Wall Street Journal. Judges are a key
issue for the GOP's base, who could stay home on Election Day rather
than turn out for Republicans who waiver about confirming President
Bush's nominees. There are 17 vacancies on the appeals bench, including
nine pending nominations. They deserve to be filled as soon as possible
before the summer recess.
href='http://online.wsj.com/article/SB114341264229508542-email.html'>Read
more.
Autos
face='Times New Roman' size='3'>
name='10'>Delphi
size='3'> Gives UAW a New Proposal for Wage
Cuts
Delphi Corp., which set a
Thursday deadline to reduce labor costs, gave the UAW another proposal
for cuts in wages and benefits, the
size='3'>Detroit Free Press reported
today. Delphi CEO
Steve Miller has said he wants a deal reached on reducing labor costs by
Friday or he will file a motion to eliminate union contracts. The UAW
has said it would strike if that happens, which could put the supplier
out of business and force its biggest customer, General Motors Corp., to
seek bankruptcy protection. The UAW also has summoned its local leaders
to a Tuesday meeting in Detroit to discuss Delphi's proposal, according
to an online update from UAW Local 1097 President John Huber in
Rochester, N.Y. Delphi could be offering the UAW wages of $17 an hour,
down 37 precent from a current average wage of $27 an hour,
according to David Cole, director of the Center for Automotive Research
in Ann Arbor.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20060327/BUSINESS01/603…'>Read
more.
name='11'>GM Races to Correct Errors for Report to
SEC
General Motors Corp. is
working to rectify last-minute accounting mistakes and could file its
annual report with the Securities and Exchange Commission within days,
according to people familiar with the process, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. But the auto maker still must deal with SEC
probes related to several other accounting matters. Separately, GM is
continuing talks with potential suitors over the possible sale of a
controlling stake in General Motors Acceptance Corp., the company's
auto-financing, mortgage and insurance unit, which could generate as
much as $13 billion in proceeds for GM. A decision on GMAC could come
within days. GM's board was expected to meet early this week to review
the situation.
href='http://online.wsj.com/article/SB114341932643308634-email.html'>Read
more.
name='12'>Commentary: Next Pension Agency Head Faces Tough
Decisions
Bradley Belt, who
resigned last week, said he was ready to pursue other opportunities,
and that any candidate looking to succeed him is going to be
facing quite a challenge, according to a Seattle Post-Intelligencer
size='3'>editorial today. 'This past two years has been a particularly
tumultuous period for the PBGC, which has had to confront unprecedented
operational, financial and policy challenges,' Belt said. Candidates to
take on the position must be willing to convince American business to
fully fund pension obligations (underfunded last year by $450 billion)
as well as convince Congress and businesses to pay higher insurance
premiums to protect against defaults.
href='http://seattlepi.nwsource.com/printer2/index.asp?ploc=b&refer=http://se…'>Read
more.
name='13'>Pensions Are Thing of the Past for Many Massachusetts
Employers
Retailer TJX Cos.' recent
decision to close its pension plan to new employees adds another large
Massachusetts employer to a growing list of local and national companies
that have concluded that the old-style pension system is too expensive
and uncertain to maintain, the
size='3'>Boston Globe reported on Saturday.
Major hospital chains Baystate Health in
w:st='on'>
size='3'>Springfield
Christi Health Care, the network owned by the Catholic Archdiocese of
Boston, also have closed their plans to new employees since 2004. The
changes at TJX, which has 12,000 employees in
w:st='on'>
size='3'>Massachusetts
worldwide, and Baystate, with 9,500 people in
w:st='on'>Western
Massachusetts
employees, only new ones. Caritas said it stopped contributing to the
pension plans of its 10,000 employees in 2004 and quit offering the
plans to new workers. 'TJX spokeswoman Sherry Lang said the company
closed its pension plan to new employees partly in reaction to rising
premiums being charged by a federal program, the Pension Benefit
Guaranty Corp., that insures the plans of all companies.
href='http://www.boston.com/business/articles/2006/03/26/at_many_mass_employe…'>Read
more.
w:st='on'>
name='14'>South Carolina
face='Times New





Roman'
size='3'> Workers Face Uncertainty as Pensions Freeze,
Fail
Nearly 16 South
Carolina-based companies' pensions have failed and 33 pensions have been
frozen, the Associated Press reported yesterday. The trend, highlighted
by the decisions of high profile firms like automaker GM and airline US
Airways to phase out their pensions, began years ago in the
size='3'>Palmetto
face='Times New Roman'
size='3'>State
size='3'>Spartanburg
size='3'>textile giant Milliken was the most recent firm in the state to
freeze the pensions of its 9,300 employees. The high-profile firms'
decisions have inspired other companies to scrutinize their pension
costs. The federal Pension Benefit Guaranty Corp. took over the pensions
of nearly 32,000 WestPoint Stevens retirees and laid-off workers. At
that point, the company's pension financing was $170 million short, said
Harvey Lebson, a consultant for the federal pension guarantor.
href='http://www.myrtlebeachonline.com/mld/myrtlebeachonline/14193145.htm'>Read
more.
name='15'>Judge Likely to Downsize Aguirre Pension
Suit
A judge said he will
likely drop five of eight former
face='Times New Roman' size='3'>San Diego
size='3'>pension board members from a
w:st='on'>
size='3'>lawsuit
face='Times New Roman' size='3'>City
Attorney Mike Aguirre filed in an effort to roll back
pension benefits he contends the board illegally approved, the
San Diego Union
Tribune reported on Saturday. Superior Court
Judge Steven R. Denton issued a tentative ruling removing the five
former board members from a lawsuit Aguirre filed in July. The lawsuit
accuses the plaintiffs of violations of the state's Political Reform Act
and contends they had conflicts of interest that should invalidate their
votes that led to pension benefit increases in 1996 and 2002. In a court
hearing Friday,
face='Times New Roman' size='3'>Denton
informed both sides of his decision and gave them 10
days to submit further arguments before he makes a permanent
ruling.
face='Times New Roman' size='3'>Denton
left the complaint in place against three former pension
officials: administrator Lawrence Grissom, firefighters' union president
Ronald L. Saathoff and former acting auditor Terri A. Webster. The five
removed from the suit were general counsel Loraine Chapin, retired
deputy city manager Bruce Herring, former human resources director Cathy
Lexin, fingerprint analyst John A. Torres and analyst Sharon K.
Wilkinson.
href='http://www.signonsandiego.com/news/metro/pension/20060324-1355-bn24pens…'>Read
more.
International
name='16'>Canadian Regulator Says that Private Pension Plans Are
Struggling
The financial health of
struggling private pension plans 'declined markedly' last year and the
outlook for 2006 looks even worse, senior federal regulators have warned
Finance Minister Jim Flaherty, the Canadian Press reported yesterday.
Historically low interest rates, stricter standards and rising pension
costs are worsening an already difficult situation for pension plans,
the federal pension regulator warns in documents obtained under the
Access to Information Act. Some pension plans may even be given
permission to reduce benefits that were previously promised to retirees,
say the documents prepared by the Office of the Superintendent of
Financial Institutions (OSFI). 'Interest rate declines through 2005 and
the introduction of a new actuarial standard will result in
significantly higher funding requirements for most defined benefit
pension plans in 2006,' warn the briefing notes dated Feb.
6.
href='http://cnews.canoe.ca/CNEWS/Canada/2006/03/26/pf-1506544.html'>Read
more.
w:st='on'>
name='17'>Japan
face='Times New Roman' size='3'> Backs Down over Valuation of
Pension Fund
The Japanese government
has backed down on its controversial plans to change the way it measures
the value of its pension fund in the face of criticism from experts, the
Financial Times reported today. The Ministry of Health, Labor
and Welfare’s original plan ran into trouble when a senior
investment expert working for the pension fund accused it of
perpetrating accounting fraud. The ministry’s change in direction
underlines the continuing tension within the government over a range of
issues between traditionalists and reformists. The reformists want more
transparency in
w:st='on'>
size='3'>Japan
size='3'>’s notoriously opaque public sector accounts, arguing
that this will boost economic growth by encouraging a more rational
allocation of capital in the economy. The u-turn means thousands of
billions of yen of passive bond investments managed by the Government
Pension Investment Fund will continue to be measured by their present
market value. The Ministry had previously planned a change to a book
value system from next month, going against standard international
practice for pension funds.
href='http://news.ft.com/cms/s/78f08c94-bd27-11da-bdf6-0000779e2340.html'>Read
more.
name='18'>Cable & Wireless Faces £300 Million Rise in
Pension Gap
Cable & Wireless
(C&W) is facing an increase of up to £300m ($537 million) in
its pensions deficit, potentially creating a large poison pill for any
prospective purchaser of the troubled telecoms operator, the
BusinessOnline.com (
w:st='on'>
size='3'>London
on Sunday. C&W confirmed an actuarial review of the
company’
size='3'>s pension fund is under way but refused to comment on its
likely conclusions. It will be published on 25 May. But according to
senior industry sources, new pension rulings based on mortality tables
showing people are living longer, mean C&W
size='3'>’s pension
deficit could grow by as much as £200m-£300m when calculated
to 31 March 2006. The deficit stood at £197m on 30 September
2005.
href='http://www.thebusinessonline.com/Stories.aspx?C&W%20faces%20£300m%20ris…'>Read
more.