href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif'>
March 22, 2006
Full
$24.5 Million Recovery for Pliant’s Unsecured
Creditors
Unsecured creditors of
bankrupt food packaging company Pliant Corp. will receive $24.5 million
in a full recovery of claims, according to the company’s chapter
11 reorganization plan filed late last week, a move that is likely to
quell the ire of certain creditors, according to
face='Times New Roman' size='3'>Portfolio Media
size='3'>yesterday. The disclosure statement and plan, filed last week
in the U.S. Bankruptcy Court for the District of Delaware, stated that
while most holders of claims will make full recoveries, certain
stockholders—including holders of Series A and Series B preferred
stock and common shareholders—will only receive partial
reimbursement. According to the statement, $320 million of the
company’s senior subordinated notes will be exchanged for a
combination of 30 percent of new common stock, $260 million of new
Series AA Preferred Stock, certain additional consideration and up to
$35 million of new debt. The statement also said that $278 million of
Pliant’s redeemable preferred stock will be exchanged for a
combination of up to $75.5 million of new Series AA Preferred Stock and
28 percent of new common stock, while holders of outstanding common
stock will receive 42 percent of new common stock.
w:st='on'>
name='2'>London
face='Times 

New Roman'
size='3'> Fog Seeks Second Bankruptcy
Seattle-based London Fog
Group, which makes Pacific Trail outerwear as well as its namesake brand
of raincoats, sought bankruptcy court protection for the second time in
seven years, the Seattle
Times reported today. The company agreed to
sell its Pacific Trail business to Perry Ellis International for $14.5
million as part of a plan to reorganize in bankruptcy, Seattle-based
London Fog said in a statement Tuesday. The company will hold an auction
to try to get a higher price, as is typical in bankruptcy sales. The
filing comes after London Fog's income for the fiscal year ended Feb. 28
fell about 28 percent to $35.4 million, according to papers filed with
the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Reno
w:st='on'>
size='3'>Nevada
company is trying to raise money for creditors owed $92.3 million.
London Fog has $59.8 million in assets.
href='http://seattletimes.nwsource.com/cgi-bin/PrintStory.pl?document_id=2002…'>Read
more .
name='3'>Lucent Wins Auction for Riverstone Assets
Telecommunications gear
maker Lucent Technologies Inc. won the auction for the sale of most of
the assets of bankrupt ethernet infrastructure provider Riverstone
Networks Inc. with a bid of $207 million cash,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. The agreement, subject to approval by
a
face='Times New Roman'
size='3'>U.S.
size='3'>bankruptcy court, calls for the companies to make some
modifications to the purchase agreement signed in February, Riverstone
said Tuesday. Lucent beat out a competing bid from Swedish rival
Ericsson Inc., which had offered $178 million for Riverstone’s
assets. The auction was opposed by one of Riverstone’s largest
shareholders, Charles L. Grimes, who has tried to toss the
company’s chapter 11 filing. Grimes argues that the company is
actually solvent and that it had failed to prove that it was suffering
from financial distress at the time it filed its petition for
bankruptcy. Grimes has asserted that Riverstone’s bankruptcy
filing was an unnecessary ploy to facilitate the company’s asset
sale to Lucent or a higher bidder. He objected to the hurried pace of
the sale process, arguing that potential buyers could be excluded in the
company’s rush to close the deal. A hearing on the objection and
the proposed sale is scheduled for Thursday. Last month, amid
shareholder objections and creditor concerns, U.S. Bankruptcy Judge
Christopher Sontichi decided to allow Riverstone to auction off its
assets. The judge’s endorsement of the proposed auction was a
boost for Riverstone, which had encountered stiff opposition to the plan
from shareholders and creditors alike.
name='4'>Calpine Seeks Control over Chapter 11 Plan Through
2006
Suggesting that its stint
in bankruptcy court could stretch into 2007, power generator Calpine
Corp. is looking to extend its chapter 11 plan through 2006, according
to Portfolio
Media yesterday. The company asked a court
Friday for the exclusive right to file a reorganization plan by Dec. 31,
and to receive creditor support for the plan by March 31, 2007.
Currently, Calpine’s exclusive period runs until April 20, and
itsdeadline
for creditor support of its plan is June 20. Calpine said it is moving
steadily along in its bankruptcy case, but still has a number of issues
to take care of before it can file its plan. It asserted that the
extension would help it to restructure its business and to develop a
feasible reorganization plan. Calpine indicated that an enormous amount
of time has been spent in litigation over its power contracts, and has
slowed down the reorganization planning process. Calpine has proposed to
reject its expensive contracts, but its customers argue that the Federal
Energy Regulatory Commission, rather than the bankruptcy court, has the
right to uphold the contracts. A hearing on the requested extension is
set for April 11 in the U.S. Bankruptcy Court in
w:st='on'>
size='3'>Manhattan
size='3'>.
face='Times New Roman' size='3'>Western
Tennessee
size='3'> Bankruptcy Filings Drop
From March 1, 2005, to
Feb. 28, 2006, almost 15,000 chapter 13 cases were filed in
Tennessee
Memphis Daily News
yesterday. During the same period, a little more than
9,000 chapter 7 cases were filed. From March to September 2005, the
total number of cases filed each month in
w:st='on'>West
Tennessee
2,800. October showed a dramatic increase, with 5,125 cases being filed.
After that, the totals dropped sharply, as only 637 cases were filed in
November 2005 and 707 in December. In January and February 2006, the
combined total of filings - 1,773 - was still less than the 1,950 filed
in all of April 2005. There were 14,907 chapter 13 cases filed between
March 2005 and February 2006, a solid drop from the 17,420 filed during
the year that ended in February 2005. In the year that ended in February
2004, 18,549 were filed.
href='http://www.memphisdailynews.com/Editorial/StoryLead.aspx?id=92152'>Read
more .
Lee
Demands Refco Insurance Cover Legal Costs
The financier who
engineered bankrupt Refco Inc.'s initial public offering in 2005 has
accused Refco's creditors of unfairly trying to block him from using the
commodity brokerage giant’s insurance policies to pay his legal
costs, Portfolio
Media reported yesterday. In court papers
filed this week, Thomas H. Lee argued that there was “no basis
whatsoever” to deny his access to insurance intended for
recovering defense costs.
size='3'>Lee, the founder of $12 billion private equity firm Thomas H.
Lee Partners, served as a member of Refco's board of directors, along
with several other firm members, at the time
of the company’s implosion. Refco filed for chapter 11
reorganization last October after a $430 million accounting scandal,
allegedly orchestrated by former chief executive Phillip Bennett, came
to light. Lee and the other members of his firm have all since resigned
from their positions and are currently seeking class-action status in
lawsuits related to Refco’s collapse. But after submitting their
insurance claims to U.S. Specialty Insurance
face='Times New Roman'>
w:st='on'>
size='3'>Co.
stiff opposition to their request from Refco’s creditors’
committee.
name='7'>Firms Rescue British Jewelers from
Bankruptcy
Asprey & Garrard,
suppliers of gems to the rich and famous for more than 200 years, have
been rescued from bankruptcy by
w:st='on'>
size='3'>U.S.
size='3'>firms including billionaire investor Ron Burkle's company, the
Associated Press reported yesterday. Burkle's investment vehicle,
Yucaipa Cos., revealed Tuesday that it has bought Garrard, which was
founded in 1735 and appointed Royal Jeweler by Queen
w:st='on'>
size='3'>Victoria
1843.
size='3'>Yucaipa
Burkle and has former U.S. President Bill Clinton as a director, is
believed to have paid between $20 million and $30 million for Garrard.
The A&G Group went into temporary bankruptcy last month, wiping out
almost $500 million plowed into the business in recent years. Asprey
& Garrard were split last week when Asprey was resurrected as Asprey
International with the backing of
w:st='on'>
size='3'>U.S.
size='3'>investors Sciens Capital Management and Plainfield Asset
Management.
href='http://news.yahoo.com/s/ap/20060321/ap_on_bi_ge/britain_royal_jewelers_…-'>Read
more .
id='8></a>GM,</font>
<st1:place w:st=' name='8'>GM,
ctagnomen='st1:place' unselectable='off' />
size='3'>Delphi May Offer Retirement
Incentives to 70,000 Workers
General Motors Corp. and
Delphi Corp. are close to offering as many as 70,000 workers incentives
to retire as part of a deal to cut costs, according to a labor analyst
monitoring the talks, Bloomberg News reported yesterday. The 70,000
United Auto Union workers include employees at GM and bankrupt Delphi
who are eligible to retire and still work, and workers close to
retirement age, said Sean McAlinden, a labor analyst at the Center for
Automotive Research in
w:st='on'>Ann
Arbor
w:st='on'>
size='3'>Mich.
face='Times New Roman' size='3'>Delphi
size='3'>, an autoparts maker, is a former unit of GM, the world's
largest automaker. An agreement may avoid a strike at
w:st='on'>
size='3'>Delphi
Chief Executive Officer Rick Wagoner's plans to restore profitability at
the automaker, which last week revised its 2005 loss $2 billion higher.
An accord could come as early as today, people familiar with the talks
said.
href='http://www.bloomberg.com/apps/news?pid=10000103&sid=ao4HVtalCXcc&refer=…'>Read
more.
In related news, the
challenge that General Motors,
face='Times New Roman' size='3'>Delphi
size='3'>and the United Automobile Workers have encountered in their
talks on early retirement programs reflects the complexity in devising
the perfect buyout, the
size='3'>New York Times reported
today. To be most effective, the package
must convey to workers the bleak message that the companies they work
for cannot prosper unless they leave. Workers must be convinced that
this buyout deal is the best they can get and must be attractive enough
for auto workers to give up a storied past where their security was
guaranteed. 'They almost see their job as a property right,' said Gary
N. Chaison, professor of labor relations at
w:st='on'>
size='3'>Clark
face='Times New Roman' size='3'>University
size='3'>in
face='Times New Roman' size='3'>Worcester
size='3'>,
size='3'>Mass.
talks have been spurred by a March 31 deadline set by the chief
executive of Delphi, Robert S. Miller Jr., who has said he plans to ask
a bankruptcy judge for permission to set aside labor contracts and
impose less generous terms.
href='http://www.nytimes.com/2006/03/22/automobiles/22auto.html?pagewanted=pr…'>Read
more .
Delta
Says Bookings Are Down Due to Threat of Strike by Pilots
Delta Air Lines Chief
Executive Gerald Grinstein said the threat of a possible strike by
pilots is starting to hurt bookings at the
w:st='on'>
size='3'>Atlanta
according to the Wall
Street Journal today. Grinstein said bookings
for flights for the next two months hadn't met normal levels for that
period of time 'as people become concerned about April and
May.'Delta,
which sought bankruptcy court protection last September, previously had
insisted that its chapter 11 restructuring wasn't having any effect on
ticket sales, partly because many travelers have continued flying
troubled carriers despite a string of bankruptcy filings in the past
several years. Now it looks like the war of words between Delta
management and its unionized pilots is rattling at least some travelers.
Delta, the third-largest
w:st='on'>
size='3'>U.S.
size='3'>airline as measured in passenger traffic, continues to seek
$305 million a year in wage and benefit concessions from pilots,
claiming those cuts are essential to its turnaround efforts. The Air
Line Pilots Association has offered about $140 million a year in
givebacks while threatening to strike if an arbitration panel grants a
request by Delta to dump the current pilot contract. A ruling is
expected by April 15.
href='http://online.wsj.com/article/SB114288671035403245-email.html'>Read
more .
In related news, the pilots
union sought to show that Delta is in better competitive shape than its
executives portray and has performed so well recently that it doesn't
need any of the $325 million or so in cuts it is seeking from its
pilots, according to the Associated Press yesterday. The dispute between
the nation's third-largest airline, which is operating under bankruptcy
protection, and its pilots escalated as they began a new round of
picketing at airports. The 6,000-member pilots union at Delta has vowed
to strike if the company is allowed by an arbitration panel to impose
the long-term pay and benefit reductions a labor action that the
airline's chief executive has said would bring about its demise. At
Tuesday's hearing before the arbitration panel, a pilots union economic
expert asserted in lengthy testimony that in a cutthroat industry
replete with nimble low-cost airlines, Delta faces less competitive
pressure than other big carriers. In addition, a strategic five-year
business plan put into effect in 2004 has resulted in 'significant' cost
reductions compared with the rest of the industry, said Ana
McAhron-Schulz, the union's director of economic and financial
analysis.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/03/21/AR20060…'>Read
more.
name='10'>Ex-Treasurer Testifies Skilling Left Enron in Weak
Shape
Ben F. Glisan Jr., the
government's last big witness in the Enron trial, testified on Tuesday
that Enron was 'weak' when Jeffrey K. Skilling resigned as chief
executive in August of 2001, even as Skilling was claiming it was in
'great shape,' the New York Times reported today. Glisan, a
former Enron treasurer who reported to the former chief financial
officer, Andrew S. Fastow, took the stand late on Tuesday in his
much-anticipated testimony in the trial of Skilling and Enron's founder,
Kenneth L. Lay, who are accused of conspiring to defraud Enron
investors. Glisan recalled the day Skilling resigned, Aug. 14, 2001,
when Skilling told analysts on a conference call that he had left Enron
for personal reasons, saying the company was 'in great shape' and that
it was 'the world's greatest company.' Glisan is expected to testify on
today about high-level meetings with Skilling and Lay in which the Enron
executives discussed Enron's mounting financial problems and the use of
off-the-books financing structures to manage earnings and to hide debt
from the public.
href='http://www.nytimes.com/2006/03/22/business/businessspecial3/22enron.htm…'>Read
more .
International
name='11'>Scholar Says that German Pension Age May Have to Rise to
70
Future German governments
may have to lift the country's pension age to 70 years from 65 years as
people live longer, Meinhard Miegel, head of the Bonn-based Institute
for Economy and Society, said in an interview, Bloomberg News reported
yesterday.
w:st='on'>
size='3'>Germany
size='3'>'s population will shrink to 75 million over the next two
decades from around 82 million, Miegel said. Half the population will be
above 60 and as many as 9 million people will be above 80. Labor
Minister Franz Muentefering's decision to raise the pension age
gradually to 67 years by 2029 may have to be revised, Miegel said.
'A pension age
of 70 can't be ruled out if life expectancy over the next 40 years
develops as it did over the past 40 years,'' said Miegel, the author of
at least three books on German demographics, in a televised
interview.
w:st='on'>
size='3'>Germany
size='3'>'s pension system, which accumulated a 4 billion euro ($4.8
billion) shortfall last year, is buckling under increasing life spans
and a dwindling birth rate. Pension, health insurance and nursing care
premiums will jump to 80 percent of gross pay unless future governments
agree on policy changes, Miegel said.
size='3'>
href='http://www.bloomberg.com/apps/news?pid=10000100&sid=aiAK9LkX4omQ&refer=…'>Read
more .
href='http://www.bloomberg.com/apps/news?pid=10000100&sid=aiAK9LkX4omQ&refer=…'>