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February 22, 2006
name='1'>GM Bids for Spot on
face='Times New Roman' size='3'>Delphi
size='3'>Creditors' Panel
In the footsteps of the United
Auto Workers union and the Pension Benefit Guaranty Corp. (PBGC),
General Motors Corp. has made a bid to secure a seat on the
creditors’ committee
size='3'>of scandal-ridden auto parts giant Delphi Corp., arguing that
its appointment would “help to facilitate a consensual
resolution,”
size='3'>Portfolio Media reported yesterday.
In court papers filed last week, GM said that its participation on the
committee, along with the UAW and the PBGC, is “essential and
critical to any resolution” of the automaker’s chapter
11 proceedings. GM says it is the only constituent without a
committee seat. The company also holds the largest claim against
size='3'>Delphi
configuration renders the committee an adversary of GM rather than a
statutory representative of it,” argued GM in court papers.
“The committee is aligned to work for unsecured claimholders, the
PBGC and the unions, all of whom can benefit at the expense of
GM.” GM, Delphi’s former parent, is by far the auto parts
maker’s largest and most important customer, and could be
responsible for as much as $12 billion in contract obligations to
former
size='3'>Delphi
bid came simultaneously with the closure of the first of 12 plants
the company plans to shut down by 2008 as it struggles to meet market
demand in the face of foreign competition. A hearing on GM's bid is
scheduled for March 9. The case is
size='3'>In re Delphi Corp., case no.
05-44481, in the U.S. Bankruptcy Court in the Southern District of New
York.
name='2'>Judge Rejects Owens
w:st='on'>
size='3'>Corning
size='3'>Shareholders’ Plea
A federal bankruptcy
judge has rejected an ad hoc group of Owens Corning shareholders’
request for official representation in the fiberglass
manufacturer’s long-standing bankruptcy case,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. Judge
Judith K. Fitzgerald of the U.S. Bankruptcy Court in
Delaware denied the ad hoc group's motion on Monday, rejecting the
party’s claim that its interests could be overlooked amid Owens
Cornings’ “mad rush to exit chapter 11.” In her
decision, Judge Fitzgerald sided with the U.S. Trustee's office, Credit
Suisse, Cayman Islands Branch and the official committee of asbestos
claimants, as well as Owens Corning and its units, all of whom had
earlier raised serious objections to the request. The shareholder group,
which includes a Harbert Management Corp. hedge fund, Deutsche Bank
Securities Inc., Lehman Brothers and JPMorgan, owns approximately 20
percent of the company's common stock and had argued that the
appointment of an equity committee was vital to protecting its
interests. Owens Corning, which filed for chapter 11 protection in
October 2000 in an
size='3'>attempt to resolve its asbestos liabilities, questioned the
timing of the motion, which came on the eve of the company’s
revised reorganization plan. Under the recently amended plan,
shareholders stand to receive nothing, which has led to a flurry of
activity on their part. The company suggested that the
shareholders’ move was merely a ploy toobstruct the process,
referring to the group’s “improper motivation” as a
primary reason to deny the appointment of an official equity
committee.
name='3'>Calpine Asks Insurers To Cover Employee Defense
Costs
Looking to alleviate defense
costs for several employees mired in class action securities
face='Times New Roman'>litigation, bankrupt power company
Calpine has asked a bankruptcy court judge to allow the company’s
insurers to cover the litigation expenses so employees can focus on
turning around the ailing company,
size='3'>Portfolio Media reported yesterday.
Calpine said that without financial help from the insurers, directors,
officers and employees named in class action lawsuits would have to fund
the litigation themselves, which would divert their attention from
helping Calpine emerge from bankruptcy. If granted by the bankruptcy
court, the funds would be used to cover the defense costs of employees
named in two securities litigation suits filed in 2003, one by the
Hawaii Structural Ironworkers pension trust fund and the other a
consolidated class action case that was dismissed in
December2005.
Calpine said that its employees had incurred “substantial legal
fees and expenses” in both cases and has asked to tap into
policies held with two of its insurers, Associated Electric & Gas
Insurance Services and the Hartford/Twin City Fire Insurance Co. The
company said in court documents that before Calpine filed for chapter 11
bankruptcy, both companies had covered expenses in the suits,
reimbursing both Calpine and individual employees for their legal costs.
The case is Calpine Corp., bankruptcy petition number 01-30923,
in the U.S. Bankruptcy Court for the Northern District of
California.
Trans
Word Set to Buy Bankrupt Musicland
Guilderland, N.Y.-based
Trans World Entertainment Corp. said it has agreed to buy one of its
struggling competitors, Musicland Holding Corp., which is in the process
of closing 341 stores in the wake of filing for bankruptcy protection,
the Pittsburgh Business
Times reported yesterday. Terms of the deal,
which is subject to a competitive bidding process and approval by the
U.S. Bankruptcy Court for the Southern District of New York, were not
disclosed. Musicland owns retail and online
stores under the names Sam Goody, Suncoast Motion Picture Co. and
MediaPlay.com. Minneapolis-based Musicland filed for chapter 11
bankruptcy Jan. 12. Not counting the 341 stores set for closure,
Musicland has 400 retail outlets. Trans World Entertainment owns nearly
800 retail stores under the names fye, Coconuts Music and Movies,
Strawberries Music, Wherehouse, CD World, Spec's, Second Spin and Planet
Music.
href='http://www.bizjournals.com/pittsburgh/stories/2006/02/20/daily14.html?t…'>Read
more .
w:st='on'>
name='5'>Maryland
face='Times New Roman' size='3'> Ruling Gives New Relief to
Debt-Heavy Consumers
Consumers struggling to
recover from debt have another weapon to protect themselves from
predatory credit-counseling agencies masquerading as nonprofit
organizations, according to an opinion published in Maryland District
Court, the Capital News Service reported yesterday. U.S. District Judge
Peter J. Messitte ruled this month in a class action suit that credit
counseling agencies may be subject to a federal law protecting consumers
from deceptive practices. According to the decision in
face='Times New Roman' size='3'>Polacsek v. Debticated
size='3'>, credit counseling agencies - or CCAs - may fall under the
1996 Credit Repair Organizations Act, which established strict
guidelines for so-called 'credit-repair organizations,' but exempted
nonprofit groups. The act prohibits credit-repair organizations - which
negotiate with clients' creditors to cut debt and lower monthly
payments, interest rates and late fees - from charging fees for service
'before such service is fully performed.'
href='http://www.hometownannapolis.com/cgi-bin/read/2006/02_21-09/BUS'>Read
more .
w:st='on'>
name='6'>Iowa
Cases
The Roman Catholic
Archdiocese of Dubuque has agreed to pay $5 million to settle 20 cases
of alleged sexual abuse by priests over the past five decades, church
officials and attorneys for the victims' said in an Associated Press
report yesterday. The settlement was reached during mediation weeks
before the first of several trials were scheduled to begin in state and
federal courts. The archdiocese also agreed to publish the names of the
nine accused priests, give each victim the chance to meet privately with
archbishop Jerome Hanus and the opportunity to speak about their ordeal
in their home parish. In return for the church's concessions, attorneys
for the victims have agreed to dismiss 15 lawsuits that were filed in
state and federal court. Five other pending claims made against the
archdiocese will also be dismissed. It's the second time in the last 15
months that an
size='3'>Iowa
multimillion dollar settlement to resolve sex abuse claims against
clergy as the Davenport Diocese paid $9 million to settle 37 separate
claims against eastern
w:st='on'>
size='3'>Iowa
November 2004.
href='http://www.crgazette.com/2006/02/21/Home/sexabusecasessettled.htm'>Read
more .
Point
to Point, Inc. Emerges from Bankruptcy
Kansas City, Mo.-based
Point to Point, Inc., (formerly known as Point to Point Business
Development, Inc.) announced that it will emerge from bankruptcy,
according to a company release yesterday. The reorganization plan
includes a line of credit arranged through AGS Capital LLC, a private
equity firm located in
w:st='on'>
size='3'>Indianapolis
size='3'>. Point to Point (P2P) provides e-procurement
services including maintenance repair and operations, storeroom and
inventory management, centralized payment processing and centralized
controls. Under the terms of
its financing, Point to Point will relocate its corporate headquarters
to
size='3'>Indianapolis
allowing it to take advantage of AGS Capital's management
resources.
href='http://www.send2press.com/newswire/print/news_2006-02-0221-004.shtml'>Read
more .
w:st='on'>
name='8'>Oregon
face='Times New Roman' size='3'> Arena Bankruptcy Trustee May File
Lawsuit
The trustee overseeing
the Oregon Arena Corp. bankruptcy told the court Tuesday that she may
file a lawsuit over unresolved claims from the 2004 bankruptcy by the
former Rose Garden operator, the
size='3'>Oregonian reported today. In a status
report to the Oregon Bankruptcy Court, attorney Susan Freeman did not
identify whom she might sue, but said she has circulated a draft
complaint to potential defendants and is continuing her review. The
bankruptcy court assigned Freeman the responsibility to investigate
several claims, including transfers of more than $9 million to
billionaire Paul Allen, formerly Oregon Arena's owner. Although Freeman
initially faced a February deadline to file a lawsuit over any claims,
she and the other parties agreed to an extension until August. In the
meantime, the trustee will try to reach a settlement with the potential
defendants, the filing said. Oregon Arena, which had been owned by
Allen, filed for chapter 11 bankruptcy protection in February 2004,
blaming debt payments to the group of lenders that financed the Rose
Garden's construction.
href='http://www.oregonlive.com/business/oregonian/index.ssf?/base/business/1…'>Read
more .
name='9'>Witness Testifies that Enron Executives Modified Financial
Data
The former chief
executive of Enron, Kenneth L. Lay, took an active role in preparing
misleading and often conflicting statements about financial conditions
at the company, according the testimony of a former Enron
investor-relations manager and board secretary, the
face='Times 

New Roman'
size='3'>New York Times reported today. Paula
H. Rieker, the former board secretary, provided testimony that Lay,
Enron's founder, misled employees and investors about Enron finances.
Rieker, testifying in the fourth week of the trial in
w:st='on'>
size='3'>district court
size='3'>, said that another former chief executive, Jeffrey K.
Skilling, ordered last-minute changes to at least two quarterly earnings
reports so that Enron could meet or beat analysts' expectations. She
also said that Skilling directed her to misrepresent in a news release
the source of most of the revenue at the struggling broadband
unit.
href='http://www.nytimes.com/2006/02/22/business/businessspecial3/22enron.htm…'>Read
more.
In related news, three
British bankers may be extradited to the
w:st='on'>
size='3'>United States
size='3'>to face Enron-related fraud charges, the British High Court
announced in a ruling that was the first test case of laws
introduced to speed the transfer of suspected terrorists, the Associated
Press reported today. The bankers — David Bermingham, Gary Mulgrew
and Giles Darby, former executives at Greenwich NatWest, a unit of the
Royal Bank of Scotland Group — had argued that because the
majority of the reported offenses took place in Britain, any trial
should be held here and that their deportation to the United States
would contravene European human rights laws. The High Court ruled,
however, that it would be 'unduly simplistic to treat the case as a
domestic English affair' and dismissed their application for a full
hearing. The three had already appealed to a lower court, seeking to
overturn a government decision to grant the request from the
States
for their extradition in May.
href='http://www.nytimes.com/2006/02/22/business/22natwest.html?pagewanted=pr…'>Read
more.
Airlines
name='10'>Delta Fights For Executive Severance
Plan
Delta Airlines returned to
bankruptcy court this week to defend its proposed severance package for
company officers and directors, Portfolio Media reported
yesterday. The plan has come under fire from the Delta pilot’s
union, which asked the court to reject the $14.2 million proposal.
Delta, claiming that during the bankruptcy “management attended to
the rest of the company’s employees first and itself last,”
has proposed a severance plan that would grant pay of six to 12
months to employees who are fired due to business restructuring. The
plan would be offered to 144 eligible employees. The airline estimated
that if all recipients were terminated, Delta would be forced to pay out
$14.2 million in severance packages. The carrier argued that the $14.2
million cost is unlikely, estimating that 20 percent of officers and
directors are likely to be terminated at a costof $3 million. The
severance plans of Delta’s CEO and chief operating officer would
not be included in the proposal. Delta’s pilots have vigorously
opposed the severance plan, saying it is unfair to pilots who are being
asked to absorb heavy pay and benefit cuts.
name='11'>Despite 4th Quarter Loss, US Airways Looks to be
Profitable by Year’s End
Recently out of
bankruptcy, US Airways reported a loss of $537 million for 2005 on
Tuesday, but said it anticipates a turnaround this year, said Chairman
and Chief Executive Doug Parker, the
size='3'>Chicago Tribune reported today.
'Looking forward, we continue to believe that, excluding one-time,
merger-related transition costs, the new US Airways will be profitable
in 2006, even at today's projected fuel prices,' Parker said. Of the six
legacy carriers--mainline airlines that offer domestic and international
routes--Northwest Airlines and Delta Air Lines are operating in
bankruptcy. Two others, American Airlines and Continental Airlines, have
said that turning a profit remains a challenge. The financial results US
Airways reported Tuesday reflected the first full quarter of the
airline's combined operations with America West Holdings Group Inc. The
merger with America West in September was part of US Airways' bankruptcy
reorganization plan.
href='http://www.chicagotribune.com/business/chi-0602220057feb22,1,4331940.st…'>Read
more .
For
Minorities, Signs of Trouble in Foreclosures
Despite the housing boom
of the last decade helping to push minority home ownership rates above
50 percent for the first time in 2004, a disturbing trend has also
emerged over the past few years as neighborhoods with large poor and
minority populations in places like Cleveland, Chicago, Philadelphia and
Atlanta have experienced a sharp rise in foreclosures, in some cases
more than a doubling, the
size='3'>New York Times reported
today.The
increase in foreclosures could be the first of a wave of financial
distress for many minority homeowners, experts say, because they are
twice as likely as whites to have taken out expensive subprime
mortgages, most of which will jump to higher interest rates in the next
two years, according to an analysis of data that lenders disclose under
the federal Home Mortgage Disclosure Act.
size='3'>Some housing experts worry that the minority foreclosure rate
could worsen if the economy or the housing market, nationally or
regionally, hits a rough patch as it has in industrial Midwestern states
like
size='3'>.
href='http://www.nytimes.com/2006/02/22/business/22home.html?pagewanted=print'>Read
more .
International
w:st='on'>
name='13'>Germany
face='Times New Roman' size='3'> Seeks to Avoid Cash Shortage after
Heros Insolvency
w:st='on'>
size='3'>Germany
size='3'>'s central bank, retail companies and lenders are taking
measures to avoid cash shortages at stores and bank machines after the
country's biggest money transport company filed for bankruptcy,
according to Bloomberg News yesterday. The Bundesbank will keep branch
offices open for as long as needed to provide companies with notes and
coins, it said in a statement today. Retail banks including Commerzbank
AG and some 60 savings banks said they are also looking for new ways to
move cash. Heros, a money transporter based in
w:st='on'>
size='3'>Hanover
yesterday said it and 23 subsidiaries are insolvent after prosecutors in
Moenchen-Gladbach accused some employees at a unit of embezzling as much
as 300 million euros ($358 million). A collapse of the company may
affect banks, supermarkets and department stores.
href='http://www.bloomberg.com/apps/news?pid=10000100&sid=a5V.2ejt1ibY&refer=…'>Read
more .
face='Times New Roman' size='3'>New
Zealand
w:st='on'>
size='3'> Insolvency
w:st='on'>
size='3'>Law
face='Times New Roman' size='3'>Reform
size='3'>Bill
face='Times New Roman' size='3'>Passes
size='3'>First
w:st='on'>Reading
The New Zealand
Insolvency Law Reform Bill, the first major review of insolvency
legislation since the 1960s, passed its first reading in Parliament and
has been sent to the commerce select committee for public submissions,
according to Suff.com. The legislation will
modernize the country's insolvency and personal bankruptcy laws,
streamline the bankruptcy administration process and introduce a
voluntary procedure for companies with potential for rehabilitation.
Commerce Minister Lianne Dalziel said when the bill was introduced in
December that the 40-year-old insolvency laws did not reflect shifts in
trade practices, and the new bill would bring
w:st='on'>
size='3'>New Zealand
size='3'>into line with other OECD countries. It does not contain any
measures to regulate the insolvency profession. Dalziel has asked
officials to report to her on that by late this year.
href='http://www.stuff.co.nz/stuff/0,2106,3580124a13,00.html'>Read
more .
href='http://www.stuff.co.nz/stuff/0,2106,3580124a13,00.html'>