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Report on Enron Highlights Pay Deals, Tax Manipulation
Enron Corp. used schemes of dizzying complexity to shrink its tax
payments, inflate its income and overwhelm the Internal Revenue Service,
even as it paid its executives lavishly and manipulated the tax laws, a
congressional panel found, the Associated Press reported. 'Money, money,
money,' Sen. Charles Grassley (R-Iowa), chairman of the Senate Finance
Committee declared at a hearing on Thursday. 'Money above honesty and
financial accounting.' The hearing coincided with the release of a
massive three-volume report by the House-Senate Joint Committee on
Taxation, which 'reads like a conspiracy novel' that chronicles key
aspects of Enron's stunning collapse, Grassley said, reported the
newswire. Enron received tax advice that pushed legal boundaries from
established companies such as Bankers Trust and from its outside law
firm, Vinson & Elkins, the congressional panel said in a report on
its year-long probe of Enron's tax records. To view the report, visit
href='http://www.house.gov/jct/'>http://www.house.gov/jct/.
Separately, Dow Jones reported that the congressional panel suggested
dozens of changes to tax and pension laws. The Joint Committee
recommended that 401k plans shouldn't be required to have employee
deferrals or after-tax contributions invested in company securities. It
also called for a greater opportunity for workers to diversify their
investments within 401k plans. To deal with tax shelters, the Joint
Committee made nearly two dozen recommendations, such as requiring
taxpayers to assume a much greater economic risk when entering into
tax-motivated transactions, reported the newswire.
Consumer Groups Denounce Ney's Predatory Lending Bill
Consumer activists on Thursday condemned anti-predatory lending
legislation introduced by House Financial Services Housing Subcommittee
Chairman Bob Ney (R-Ohio), calling it 'nothing more than an
industry-backed attempt to legalize predatory lending,'
CongressDaily reported. Ney's bill would clamp down on lenders
who use deceptive practices such as high-cost loans with excessive fees
and balloon payments. However, a coalition including U.S. PIRG, the
NAACP, the United Auto Workers, ACORN, the National Community
Reinvestment Coalition and the National Consumer Law Center denounced
the legislation. The groups said the bill would 'exacerbate some of the
predatory lending problems facing our nation' and 'wipe out the only
anti-predatory lending laws that exist at the present time,' while
pre-empting states from enacting more protective legislation, reported
the newswire.
KMART
Kmart Wants to Eliminate Self-checkout Equipment
Kmart Corp. wants to cancel leases on hundreds of its self-checkout
machines because the systems cost too much to maintain and increase the
risk of theft, the retailer said, Dow Jones reported. Troy, Mich.-based
Kmart said the technology may not have any place in its stores after the
troubled retailer emerges from bankruptcy, according to documents filed
earlier this week in federal bankruptcy court in Chicago. The company
asked Judge Susan Pierson Sonderby to void contracts with General
Electric Co.'s GE Capital unit, which provides the retailer with about
800 self-checkout machines, reported the newswire.
Separately, the Associated Press reported that lawyers on Wednesday
agreed that a former Kmart Corp. executive will appear on Feb. 27 for a
deposition in the company's investigation into its pre-bankruptcy
management. Kmart has said it might have legal claims against some
former executives for being 'grossly derelict' in their duties.
Kmart Asks Court To Extend Co.'s Exclusive Plan
Periods
Kmart Corp. is asking the bankruptcy court overseeing its case to extend
by about four months the time in which other parties will be excluded
from filing reorganization plans for the company, according to a motion
obtained by Dow Jones Newswires. In a motion filed late on Wednesday
with the U.S. Bankruptcy Court in Chicago, Kmart said it is seeking the
exclusivity extension as a precaution, and said it hopes to receive
confirmation of its chapter 11 reorganization plan at a hearing in
April.
Separately, Bloomberg News reported that Fleming Cos. will stop using
two warehouses and cut 42 positions after it ends deliveries to discount
retailer Kmart Corp. next month.
Adelphia Seeks Four More Months to File Plan
Adelphia Communications Corp. has asked the court handling its chapter
11 bankruptcy case to block creditors from filing reorganization plans
for the company for another four months, according to papers filed on
Wednesday with the U.S. Bankruptcy Court in Manhattan, Dow Jones
reported. The Coudersport, Pa.-based cable company said it will need a
significant amount of time to negotiate a reorganization plan for itself
-- a process it says it can't really begin until its new management team
is in place. Adelphia sought chapter 11 bankruptcy protection in June
2002 amid a widening federal criminal investigation into charges of
fraud and self-dealing by senior management. This is Adelphia's second
request for an extension of its exclusive plan filing period. A hearing
on the extension request is scheduled for March 17, reported the
newswire.
Delta to Request Changes To Pilots' Union Contract
Delta Air Lines, seeking to stay competitive as other airlines slash
labor costs, said it is asking its pilots union to begin discussions on
changing its current contract, the Wall Street Journal reported.
The pilots union, however, said it wouldn't meet with management 'at
this time.' Wages would almost certainly be part of any discussions, as
Delta's more than 9,000 pilots, already the highest paid in the
industry, are scheduled to receive a 4.5 percent raise in May, according
to the Journal.
Court Dismisses Durango Apparel's Chapter 11 Case
A bankruptcy court has dismissed Durango Apparel Inc.'s chapter 11
proceedings, as the company had asked, Dow Jones reported. According to
court filings obtained on Wednesday by Dow Jones Newswires, Judge
Cornelius Blackshear of the U.S. Bankruptcy Court in Manhattan ruled
in favor of the company on Feb. 5, following a hearing on the issue on
Jan. 15. As reported, the company said in court filings that it wanted
the case dismissed because its estates are 'hopelessly administratively
insolvent and there is nothing available for distribution to unsecured
creditors with pre-petition claims against the company,' reported the
newswire.
Bayou Steel To File 1st Quarter Report Late; Had Loss Of $8
Million-$9 Million
Bayou Steel Corp. will file its first-quarter report late as a
result of the company's bankruptcy filing on Jan. 22, according to a
filing on Thursday with the Securities and Exchange Commission, Dow
Jones reported. The company said its net loss for the first quarter was
roughly $8 million to $9 million, compared with a loss of $5 million in
the prior year's comparable quarter.
Rand McNally Gets Interim Court OK To Use Cash Collateral
A bankruptcy court has given map maker Rand McNally & Co. temporary
approval to use the cash collateral of its pre-petition lenders, pending
a March 4 final hearing, Dow Jones reported. The company's lenders
before it petitioned for bankruptcy agreed to the order, which was
signed by Judge Eugene R. Wedoff of the U.S. Bankruptcy Court in
Chicago on Tuesday. A final hearing on the matter is set for March 4,
reported the newswire. In another order on Tuesday, Judge Wedoff
conditionally approved the disclosure statement describing Rand
McNally's reorganization plan. The order authorizes the company to get
votes of support for the plan from equity holders, reported the
newswire.
Federal-Mogul Expects To Emerge From Chapter 11 This Summer
Bankrupt auto-parts maker Federal-Mogul Corp. likely will emerge from
chapter 11 late this summer, according to Chip McClure, president and
chief operating officer, Dow Jones reported. In an interview, the
executive said the company and its creditors expect to file a financial
reorganization plan in bankruptcy court on March 6. Early Thursday, the
company reported a fourth-quarter loss, including pension and
restructuring charges, of $113 million, or $1.33 a share, compared with
a loss of $1.37 a share a year ago.
American Airlines Pilots Union Agrees to Enter Contract Talks
Pilot union leaders at American Airlines agreed to negotiate lower labor
costs to help the AMR Corp. carrier stem losses and avoid bankruptcy,
Bloomberg News reported. The Allied Pilots Association, which represents
13,500 pilots at the airline, said in a statement that it directed its
negotiating committee 'to explore changes to the basic working
agreement'' between the pilots union and the company, reported the
newswire. American is asking its unions for $1.8 billion in wage,
benefit and work rule concessions as the company works to cut annual
operating costs by $4 billion.
Bethlehem Steel to Reduce Jobs in Buyout
Bethlehem Steel Corp. said on Thursday that as many as 4,000 people will
lose their jobs as a result of International Steel Group's buyout of the
company, the Associated Press reported. Bethlehem CEO and Chairman
Robert S. Miller told employees on Wednesday that 3,000 to 4,000 jobs
will be cut. The higher figure amounts to 36 percent of Bethlehem's
current workforce of 11,000. Bethlehem Steel's board voted on Saturday
to accept Cleveland-based International Steel Group's $1.5 billion
offer. The Bethlehem, Pa.-based company had filed for chapter 11
bankruptcy protection in October 2001, reported the newswire.
United Wants to Shift Carrier Capacity
United Airlines intends to shift about 30 percent of its U.S. capacity
into the new discount airline it is working to launch as part of its
effort to emerge from bankruptcy, a spokesman said on Thursday, the
Associated Press reported. Plans for a low-cost carrier were first
disclosed in December after United filed for chapter 11 bankruptcy
protection, but remain in the formative stage.
WorldCom Asks Judge to Block Banks' $2.15 Billion Lawsuit Over
Loan
WorldCom Inc. asked a federal bankruptcy judge to delay a $2.15 billion
lawsuit by 22 banks against a senior executive, Bloomberg News reported.
The suit, filed on Aug. 7 in a Maryland state court, claims WorldCom
Treasurer Susan Mayer negligently misrepresented the company's financial
condition when she signed loan agreements more than a year before the
company declared bankruptcy. WorldCom argues that letting the case
proceed now would hinder its chapter 11 reorganization, Bloomberg
reported.
CenturyTel Wins Court Approval of $38 Million Digital Teleport
Buy
CenturyTel Inc., which sells local-telephone service in 22 U.S. states,
won a federal judge's approval to buy bankrupt Digital Teleport Inc.'s
fiber-optic network and other assets for $38 million, Bloomberg News
reported. Digital Teleport asked a U.S. Bankruptcy Court for permission
to auction its fiber-optic business in February 2002, about six weeks
after filing for chapter 11 bankruptcy protection, the newswire
reported. The closely held company is among dozens of fiber-optic
network operators to file for bankruptcy in the past several years in
the face of increased competition and waning demand.
NRG Consolidating With Regional Office Closures, Job Cuts
Struggling electric power generator and trader NRG Energy Inc. plans to
eliminate three U.S. offices, an Australian office and about 30 jobs as
it consolidates its operations, spokeswoman Lesa Bader confirmed on
Thursday, Dow Jones reported. The Minneapolis-based Xcel Energy Inc.
subsidiary, which is currently working to restructure finances through a
prearranged bankruptcy plan with creditors, is shutting down the small
offices due to recent asset sales that have reduced the need for
regional management, Bader said, reported the newswire.
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