src='/AM/Images/headlines/headline.gif' />
July 14, 2005
Groups: High Fuel Costs Could Cause Airline Bankruptcies
Citing the high cost of crude oil, representatives of the airline
industry predicted yesterday more airline bankruptcies,
CongressDaily reported. The forecasts came from the airline
and financial industry and union officials during a Senate Commerce
Aviation Subcommittee hearing. Jamie Baker, a VP of JP Morgan
Securities, said Delta and Northwest Airlines could be forced to file
bankruptcy next year unless there is “a rapid decline in fuel
prices” or a reform allowing for long-term amortization of
deficits.
Specter: Nomination Hearings Will Not Affect Asbestos Bill
Senate Judiciary Chairman Arlen Specter (R–Pa.) said yesterday
that the committee’s work on filling vacancies on the Supreme
Court would not slow the progress of asbestos legislation he is
co-sponsoring, CongressDaily reported. Specter said Senate
Majority Leader Bill Frist(R–Tenn.) is considering when the bill
will come to a vote, and that work on confirming a Supreme Court nominee
would not affect the bill. “All we need is floor time,”
Specter said. A Frist spokesman said the leader is still considering the
legislation and has not come to a decision about when the asbestos bill
would come before the chamber, the newswire reported.
S&P Says U.S. Credit Card Issuance Drops Sharply
U.S.credit card public-term ABS issuance appears to be headed toward
a six-year low with total volume of $50 billion in 2005, down from
Standard & Poor’s Ratings Services’ earlier forecasts of
$69 billion, Reuters reported. “The growth rate for the card
industry has been fairly flat. The explosive growth in home equity lines
of credit, and the continuation of cash-out mortgage refinancing has
provided additional liquidity for homeowners to pay down their credit
card debt, and the industry is consolidating,” Credit analyst
Joseph Sheridan, a managing director in Standard & Poor’s
Structured Finance Ratings group, said. Credit card ABS issuance for the
first half of 2005 is 16 percent lower than the same period in 2004.
US Airlines’ Union Woes Reflect Era of Labor Pains
Top airlines and other big corporations complain that health and
retirement costs are weakening their bottom lines, underscoring a need
to extract concessions from workers, Reuters reported. “It is
difficult for unions today at the bargaining table because they are
confronted with having to face the reality that the gold-plated benefit
programs that had been negotiated for many years can no longer be
sustained,” said Andrew Kramer, a partner with Jones Day’s
labor and employment law practice. Kramer, who represents management in
union negotiations, recalled how several steel companies dumped their
burdensome pension plans on government insurers in 2001 and 2002.
Airlines now are in the same boat, and manufacturers soon may follow, he
said, the newswire reported.
Ebbers Gets 25 Years
Ex-WorldCom CEO Bernard Ebbers was sentenced yesterday to 25 years in
prison for his role in orchestrating the biggest corporate fraud in the
nation’s history, Reuters reported. Legal experts said the
sentence, effectively a life term for the 63-year-old, is the largest
ever against a high-profile CEO found guilty of committing corporate
crimes. Ebbers was convicted in March for his part in the $11 billion
accounting fraud at WorldCom, which was the biggest in a wave of
corporate scandals at Enron, Adelphia and other companies.
Doctor’s Conviction for Lying on Bankruptcy Forms Upheld
The Ninth U.S. Circuit Court of Appeals yesterday affirmed the tax
and bankruptcy-related convictions of a prominent Beverly Hills
physician whose husband and co-defendant leaped or fell to his death the
day before the jury returned its verdict, metnews.com reported. The
panel denied Letantia Bussell’s contention that she should have
received a new trial because jurors improperly speculated that John
Bussell had made a deal to plead guilty.
href='http://www.metnews.com/articles/2005/buss071305.htm'>Read the full
story.
Boundless Corporation Receives Court Approval of Its Disclosure
Statement
Boundless Corporation announced yesterday that the U.S. Bankruptcy
Court for the Eastern District of New York has approved the Boundless
Corporation’s fourth amended disclosure statement with respect to
its proposed plan of reorganization, the company announced in a press
release. At the hearing held on June 21, 2005, Hon. Dorothy Eisenberg
ruled that the Boundless Corporation disclosure contained adequate
information for the purpose of soliciting creditor approval of the plan
of reorganization. Creditors are scheduled to vote on the plan by Aug.
26, 2005. A hearing for the court to consider confirmation of the plan
has been scheduled for Sept. 6, 2005.
Enron Directors Boost Their Pay
Enron Corp. directors have voted themselves raises that will increase
their pay as much as sixfold, citing the demands of overseeing the
affairs of the one-time energy giant that collapsed in late 2001 amid a
giant financial and accounting scandal, the Wall Street
Journal reported. Enron emerged from New York federal bankruptcy
court proceedings in November with a new five-member board, largely
chosen by the company’s creditors. Under the bankruptcy
reorganization plan, they were paid $150,000 a year except for the
chairman, who received $200,000.
Bankrupt AaiPharma to Sell Drug Rights for $209.2 Million
AaiPharma Inc., which filed for bankruptcy protection in May,
yesterday said it agreed to sell its pharmaceuticals division to
Xanodyne Pharmaceuticals Inc. for $209.25 million, the Associated Press
reported. AaiPharma said Xanodyne was the winning bidder in an auction
approved by the bankruptcy court. The winning bid is about $40 million
higher than Xanodyne’s original offer of $170 million, which also
opened the bidding.
Varig Airlines Starts Restructuring Plan
The 60-day period that Varig, Brazil’s airline, has to present
a restructuring plan aimed at recovering its financial health began on
Tuesday, the Associated Press reported. Varig will have an additional
four months to negotiate the plan with its creditors, the Agencia Estado
news agency said. To be implemented, the plan must be approved by 51
percent of the airline’s creditors. If approval is refused, the
company will be declared bankrupt, Agencia Estado said. Varig’s
single largest creditor is the Brazilian state, the AP reported.
Aloha Tower Marketplace Bought Out of Bankruptcy
Aloha Tower Marketplace has been purchased out of bankruptcy for $25
million by AHI Aloha Associates, a newly formed Delaware corporation
backed by New York-based Apollo Real Estate Advisors LP, the
Honolulu Star Bulletin reported. The sale by Aloha Tower LP
ends the partnership’s more than three-year bankruptcy and
provides for payment of 53 cents on the dollar to unsecured creditors.
The payments were made to 62 creditors holding about $380,000 in
claims.
Diocese to Pay $10 Million Upfront as Plan Approved
By mid-September, about 50 checks ranging from $15,000 to $600,000
will be in the mail to victims of sexual abuse by clergy members in the
Roman Catholic Diocese of Tucson, the Tucson Citizen
reported. More than $22 million has been set aside to cover claims. A
federal bankruptcy judge yesterday approved the diocese’s chapter
11 bankruptcy reorganization plan after a nearly day-long hearing.
Initially, about $10 million will be paid to 45 victims and to five of
their relatives.
Experts: Tucson Diocese Settlement a Bankruptcy Model
The successful completion this week of the Tucson Roman Catholic
diocese’s bankruptcy case could serve as a potential model, but
it’s unlikely to have much impact on two more acrimonious diocesan
bankruptcies in the West, according to bankruptcy experts and other
specialists who have followed the sex abuse scandals in the Catholic
church nationwide, the Associated Press reported.
href='http://www.oregonlive.com/newsflash/regional/index.ssf?/base/news-11/11…'>Read
the full story .