href='mailto:Headlines@abiworld.org?subject=Subscribe me to the
ABI Headlines Direct'>
src='http://www.abiworld.org/AM/Images/headlines/headline.gif' />
July 11, 2007
name='1'>Congressional Hearings
Focus on Hedge Fund Industry
House and Senate committees
will be holding
hearings today focused on the hedge fund and private equity industries.
T
face='Times New Roman'>he Senate Finance Committee will
hold a hearing on the
issue of “carried interest” by hedge fund managers, interest
that is a
percentage of the fund’s earnings (usually 15 to 25 percent, once
specified benchmarks
are met) and is treated as capital gains under current tax rules. The
hearing will focus on
whether this income should be taxed as regular personal income. The
House Financial Services
Committee will also be holding a hearing titled 'Hedge Funds and
Systemic Risk: Perspectives
of The President's Working Group on Financial Markets.'
href='http://finance.senate.gov/sitepages/hearing071207.htm'>
face='Times New
Roman' size='3'>Click here to view the witness
list for
the Senate Finance Committee hearing on carried interest of hedge
fund
managers.
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr0705074.shtml'>Click
here to view the witnesses and written testimony and to watch the
House Financial
Services Committee’s hearing titled 'Hedge Funds and Systemic
Risk: Perspectives of
The President's Working Group on Financial Markets.'
name='2'>Thrift Regulator May Ban
'Unfair' Lending Practices
The Office of Thrift
Supervision (OTS) is
working on a proposal that could lead to a ban on lending practices the
agency labels
'unfair and deceptive,' the
size='3'>Wall Street
Journal reported today. Some of the practices
under scrutiny could
include prepayment penalties on adjustable-rate mortgages and higher
interest rate charges
on one credit card if a borrower misses payments on a separate credit
card. OTS, a division
of the Treasury Department, has the authority to ban 'unfair and
deceptive' practices for
the roughly 830 federally insured thrifts it regulates. The Federal
Reserve has sole
authority to issue bans on unfair and deceptive practices on the roughly
7,000 federally
insured banks. OTS Director John Reich had discussed using the authority
for months, but
decided to move ahead with the plan after a House Financial Services
Committee hearing last
month that focused on regulatory efforts related to consumer
protection.
href='http://online.wsj.com/article/SB118412229315562986.html?mod=home_whats_news_us'>Read
more. (Registration required.)
Autos
face='Times New Roman'
size='3'>
name='3'>Delphi
size='3'> Bankruptcy Costs Approach $200
Million
Delphi Corp. has racked
up nearly $200
million in legal and accounting bills since it filed for bankruptcy in
October 2005, and the
tab could reach $300 million before it emerges by the end of the year,
the
face='Times New
&a
mp;#13; 

&#
13;


Roman'
size='3'>Detroit
News reported today. With the Troy,
Mich.-based auto supplier
spending $12.5 million per month, Delphi's bankruptcy is on track to
become one of the 10
most expensive in U.S. history, said Lynn
LoPucki, a professor of bankruptcy law at the
University of
California-Los Angeles who tracks chapter 11 costs.
face='Times New
Roman'>United Auto Workers leaders have criticized the
fees paid to teams of
lawyers, accountants, turnaround experts and other firms that specialize
in bankruptcies. In
total, Bankruptcy Judge
size='3'>Robert
Drain has approved $184 million in fees and
$13 million in
href='http://www.detnews.com/apps/pbcs.dll/article?AID=/20070711/AUTO01/707110394'>Read
more.
name='4'>Appaloosa Opposes Dana
Corp's Union Deal
Days after reaching a
settlement with two of
its largest unions, Dana Corp. is now facing opposition from the
company's biggest
stakeholder amid accusations that the bankrupt auto parts supplier has
not provided enough
information regarding the deal,
size='3'>Bankruptcy
Law360 reported yesterday. Appaloosa
Management LP filed an
objection on Monday to Dana's tentative agreements with the United Steel
Workers and the
United Auto Workers, urging the U.S. Bankruptcy Court for the Southern
District of New York
to reject the proposed settlement due to a lack of information. Dana
reached a settlement
last Thursday with the two largest unions that represent its workers.
The company expects
the settlement to allow it to save money as it moves toward exiting
chapter 11 by the end of
the year. Under the agreement, the United Steel Workers and the United
Auto Workers unions
will exchange their current benefit plans, which include health care for
employees and
disability benefits for retirees, for voluntary retirement accounts.
However, Appaloosa has
protested the deal, alarmed by the absence of a discussion regarding the
possible
distribution to the equity holders under the plan.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=29000'>Read
more. (Registration required.)
name='5'>Collins & Aikman
Seeks Plan Approval
After facing numerous
objections to its chapter 11
plan, bankrupt auto parts maker Collins
& Aikman Corp. has asked the court to overrule remaining objections
and approve its
amended plan at a hearing scheduled for Thursday,
face='Times New Roman'
size='3'>Bankruptcy Law360 reported yesterday.
The plan, the
product of two years of negotiation with creditors, is supported by the
pre-petition
lenders’ steering committee, the creditors’ committee and
major customers, the
company said. Bankruptcy Judge
size='3'>Steven
Rhodes approved the company’s disclosure
statement in
January, allowing Collins & Aikman to solicit votes for the plan.
The solicitation
process began in February, and since that time, Collins &
Aikman’s plan received a
number of objections. The company on Monday said that a number of those
had been resolved,
including one lodged by the U.S. Trustee.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=29018'>Read
more.
(Registration required.)
Approves Seal of
National Century Documents
A U.S. magistrate judge
on Tuesday approved a
final protective order allowing attorneys to designate as confidential
any documents
obtained during National Century Financial Enterprises Inc.'s bankruptcy
proceedings,
Bankruptcy Law360
size='3'>reported today. Judge Mark R. Abel of the U.S. District Court
for the Southern
District of Illinois approved the final order yesterday in multidistrict
litigation
involving several NCFE entities for their alleged roles in the company's
collapse. Judge
Abel had granted an interim protective order last month following
motions by JPMorgan Chase
& Co., Bank One NA and former NCFE executives Lance Poulsen and
Donald Ayers, seeking to
keep the financial information obtained during bankruptcy proceedings
from becoming public.
Judge Abel gave counsel until Monday to send a proposed final protective
order to clarify
what can be designated as confidential. He also approved counsel's
request for a 30-day
window to examine bankruptcy documents deemed irrelevant to the MDL
proceedings. The case
is In re National
Century Financial
Enterprises Inc. Financial Investment Litigation
size='3'>, case number
2:03-md-1565, in the U.S. District Court for the Southern District of
Ohio.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=29047'>Read
more.
(Registration required.)
Expectation of Tame Prices Ease Recession Fears
Federal Reserve Chairman
Ben S. Bernanke said
yesterday that the steep rise in oil prices in recent years has not
triggered either high
inflation or a recession, in large part because consumers and businesses
expect price
increases to remain tame, the
size='3'>Washington
Post reported today. That contrasts sharply
with the experience of
the 1970s, when spiking oil prices combined with expectations of high
inflation to fuel
double-digit price increases and slower economic growth, he said. The
Fed chairman made no
mention of the central bank's interest rate policy or its forecast for
inflation or economic
growth in coming months. He is scheduled to testify before Congress
on those subjects
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/07/10/AR2007071000846_pf.htm
l'>Read more.
name='8'>Student Lenders Appeal to
Democrats on Subsidy Cuts
With the House set to
take up legislation
this week that would sharply cut subsidies to student loan companies by
about $19 billion,
lenders are appealing to Democrats to blunt some of the proposed cuts,
the
face='Times New Roman' size='3'>New York Times
size='3'>reported today.
Sallie Mae, the nation’s largest lender, has met with
representatives of historically
black colleges; with Michael L. Lomax, chief executive of the United
Negro College Fund; and
with members of the Congressional Black Caucus, arguing that cuts in
lender subsidies could
make it harder for black students to borrow.
size='3'>
size='3'>The Consumer Bankers Association reached out to organized
labor, directly
contacting union locals around the country. Moving to advance Democratic
plans to overhaul
the student loan system, the House plans to vote this week on
legislation that, in addition
to cutting subsidies by about $19 billion, would increase the size of
Pell grants to poor
students, cut the interest rates paid by student borrowers and cap
students’ monthly
loan payments at 15 percent of their discretionary income.
href='http://www.nytimes.com/2007/07/11/washington/11lobby.html?pagewanted=print'>Read
more.
Loss
Home builder D. R. Horton
said yesterday that
it would post a loss for the just-ended quarter after net orders fell 40
percent and it
wrote down the value of unsold houses, the Associated Press reported
today. The company said
it took orders for 8,559 houses worth $2 billion in the three months
that ended June 30,
down from 14,316 homes worth $3.8 billion in the quarter a year earlier.
The decline was
sharpest in
face='Times New Roman'
size='3'>California and
less severe in the
Southeast. The rate of canceled orders was 38 percent. “Market
conditions for new-home
sales declined in our June quarter as inventory levels of both new and
existing homes
remained high, and we expect the housing environment to remain
challenging,”
said Company Chairman Donald R. Horton.
href='http://www.nytimes.com/2007/07/11/business/11horton.html?pagewanted=print'>Read
more.
Proxy-Access
Proposal Draws Fire from Investors
The Securities and
Exchange Commission (SEC)
is circulating a much-anticipated draft proposal of a plan to give
shareholders an easier
route to nominating candidates to corporate boards, offering an approach
that already has
drawn criticism from investor groups, the
size='3'>Wall Street Journal reported today. A
major sticking
point, according to critics, is that the SEC is contemplating
requiring a high
ownership threshold, equal to at least 5 percent of shares, for those
looking to propose
bylaw changes that would give shareholders a greater hand in nominating
director candidates.
The matter has long been controversial, pitting shareholder advocacy
groups, who want to
bolster the clout of individual shareholders, against corporate
executives who worry that
open ballots will lead to chaos. Critics of the SEC's proposal say a 5
percent ownership
stake is so high that it would make the plan usable only by hedge funds.
Some think the 5
percent level is meant to be a starting point for discussion and could
be lowered to 3
percent, a level that would still be seen as too high by some pension
fund groups and might
be viewed as too low by business groups.
href='http://online.wsj.com/article/SB118410119698962426.html?mod=home_whats_news_us'>Read
more. (Registration required.)
International
name='11'>Hungarian Bankruptcy
Cases Increase 29 Percent in First Half of 2007
The number of bankruptcy
cases in the first
half of 2007 in
w:st='on'>Hungary
increased
by 29 percent to 9,390 compared to the same period of 2006, Interfax
Newswire reported
today. A study conducted by the Hungarian subsidiary of France-based
loan
insurance company
Coface said that the
greatest number of companies involved in bankruptcy procedures in the
first half of 2007 was
in the retail sector, where 2,680 firms were under liquidation in the
first six months of
2007, which was up from 2,127 during the same period in 2006. Some 1,530
companies went
bankrupt in the construction sector, up from 1,240 compared to the same
period in 2006, the
study said.
href='http://www.interfax.com/5/292063/news.aspx'>Read
more.
name='12'>TROUBLED COMPANIES
IN THE NEWS
1000’s of companies lose
money or experience
some form of difficulty each quarter.
The business news articles
below are excerpts taken
from the most recent Weekly Summary of Troubled U.S. Companies and Other
Business News
published by Bastien Financial Publications.
To begin receiving this
news, each morning,
through Bastien Financial Publication’s
size='3'>DAILY e-Summary,
that emails you information on over 70 such companies each morning,
email
steve@creditnews.com your name, company name, address, phone and
fax.
size='3'>We’ll set you up within 24 hours.
The
face='Times New Roman' size='3'>ABI
size='3'>member discount
rate is only $250 for an annual subscription.
size='3'>Indicate
“
size='3'>ABI CODE 27” in
your
email.
size='3'>Children's Place
Retail Stores Inc.’s stock price fell
nearly 12% after the
Secaucus, N.J. apparel retailer reported that its second quarter loss
will be worse than
analysts had expected amid sagging sales.
size='3'>Dell
Inc., Round Rock, Tx., is revving up a
television, print and
online ad campaign to push its new notebook computers. Both the
ads and the computers
are brightly colored, as Dell attempts to redefine its brand.
Formerly, Dell had been
successful with its direct-distribution sales model, but it fell behind
rivals as the market
changed. It had stressed corporate sales and missed out when the shift
occurred by some
companies to focus on consumers. And while Dell earlier focused on
technical specifications
and processing speed, it is now looking to make itself more identifiable
as a
product.
size='3'>D.R. Horton
Inc., the Texas homebuilder which is one of
the nation’s
largest, now expects to report a third quarter loss--this after
reporting its second quarter
earnings fell 85%. With orders declining nearly 40% during the
current period, the
company expects net sales orders to be around $2 billion, compared with
close to $3.8
billion in orders for the same period one year
earlier.
size='3'>Emmis
Communications Corp. of
w:st='on'>
w:st='on'>
size='3'>Indianapolis, In.
reported its first
quarter net declined 96%–to $311,000, on a slight revenue
decline–to $87.2
million. The company also reported a loss from continuing
operations for the period of
$509,000.
size='3'>Gemstar-TV Guide
International Inc.’s stock price surged
15% after the TV
guide and cable company put itself up for sale. Gemstar, which is
41%-owned by Rupert
Murdoch’s News Corp., is capitalized at about $2.2 billion. A sale
of Gemstar could
lead to a breakup of the firm into its component businesses in order to
maximize shareholder
value. Gemstar has been a disaster for News Corp., which five
years ago wrote off $6
billion of its Gemstar investment.
size='3'>Haverty Furniture
Cos., an
w:st='on'>
face='Times New Roman' size='3'>Atlanta
size='3'>,
w:st='on'>
size='3'>Ga.
size='3'>furniture retailer, said that its sales in June fell
3.2%–to $69.4 million.
Same-store sales in the month slipped 5.1%. For the first six
months, Haverty’s
sales are down 10%.
size='3'>Jennifer
Convertibles Inc., the Woodbury, N.Y. retailer
of sofa beds and
love seats, reported its third quarter net declined 28%–to $1.6
million, on a 6%
revenue decline–to $33.2 million. Income from continuing
operations also
declined 29%–to $1.6 million.
size='3'>Outsource Partners
International Inc., a provider of finance,
accounting and related
professional services, is laying off seventy-seven employees at its
offices in Houston, Tx.
by the early part of September.
size='3'>Viragen, a
w:st='on'>
w:st='on'>
size='3'>Plantation, Fl.
biopharmaceuticals
firm, said that a panel with the American Stock Exchange has voted to
delist its shares from
trading. Viragen’s stock will be moved to the Over-the-Counter
Bulletin
Board.
size='3'>Wild West World
LLC, the Park City theme park operator which
opened its doors only
two month ago after seeing the city approve $30 million in industrial
revenue bonds to help
finance the facility (only one of five issues had actually been sold),
has filed for Chapter
11 protection. Hurt by both poor weather and cash flow, the
company, which has $24
million in debt, is looking for a buyer for the park.
size='3'>World Air Holdings
Inc., the Peachtree City, Ga. parent company
of World Airways
Inc., filed delayed financial reports for the third and fourth quarters
and the full year,
after a probe into stock options found no intentional backdating of
options. The
investigation did note that there were certain gaps in the years 1995
through 2000. Last
year, World Air, which also operates the North American Airlines Inc.
and WorldRisk
Solutions Ltd. businesses, lost $2.3 million on revenue of more than
$825
million.
WorldGate Communications Inc., a Trevose,
w:st='on'>
videophones, announced
that its stock will continue being listed for trading until a Nasdaq
panel issues a final
determination on whether the stock should be delisted. A hearing on the
matter is slated for
8/9. In the meantime, WorldGate will work toward regaining compliance
with listing
requirements by increasing shareholders’ equity, listed securities
and net income.