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August 3, 2006
name='1'>Airlines Put Pressure on Senate over Pension
Bill
Four big airlines with
ailing employee pension plans continue to exert powerful political
pressure on the Senate as it considers legislation to reform the
nation's retirement system,
size='3'>USA Today reported today. The
legislation would give Delta and Northwest, both in chapter 11
bankruptcy, 17 years to fully fund their plans. The bill would give
American and Continental airlines 10 years. Supporters of Northwest and
Delta say the longer period rightly rewards the airlines' decision to
freeze benefits, limiting liability. The two Texas-based carriers,
American and Continental, are pressing senators to alter the bill so
that all airlines are treated the same way. Northwest and Delta have
threatened to use the bankruptcy laws to dump their pension plans on the
federal pension insurance agency unless they get more time to pay for
them. Already, US Airways (LCC) and United Airlines (UAUA) have used
bankruptcy court to cut costs by terminating all their pension plans and
turning them over to the federal Pension Benefit Guaranty Corp.
href='http://www.usatoday.com/money/perfi/retirement/2006-08-03-pensions-usat…'>Read
more.
name='2'>Bankruptcy Court Asked to Block a Northwest
Strike
In a court filing late
Tuesday, Northwest asked the federal bankruptcy judge,
face='Times New Roman' size='3'>Allan L. Gropper
size='3'>, to prevent any strike or job action against it by the
Association of Flight Attendants, Reuters reported yesterday. The union
threatened Monday to strike as early as Aug. 15 after the airline
terminated its contract and imposed new terms. Northwest filed the
request against the union and 16 of its leaders. The flight attendants
gave notice on Monday that they were prepared to act through a variety
of means, including a strike, which Northwest argues would be illegal. A
hearing on the matter is scheduled for next Wednesday. Specialists
disagree on the legality of a strike against the bankrupt
airline.Judge
Gropper said in June that Northwest could void the contract if the two
sides failed to reach a deal the members would ratify. The flight
attendants’ vote on Monday rejecting the tentative deal was the
second defeat of an agreement that union leaders had negotiated.
href='http://www.nytimes.com/2006/08/03/business/03air.html?ei=5040&en=9ed5f9…'>Read
more.
name='3'>Northwest Lender Objects to $1.4 Billion DIP
Loan
JPMorgan Chase Bank
objected Wednesday to a significant portion of the $1.4 billion
debtor-in-possession (DIP) loan that Northwest Airlines Corp. recently
negotiated to help it emerge from bankruptcy,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. According to court documents filed by
JPMorgan, Northwest is trying to get out of a $19.5 million prepayment
fee by arguing that it does not reflect actual damages to the lender.
Northwest also said its loans’ due dates were accelerated after it
declared for bankruptcy, and that it is therefore not subject to a
voluntarily prepayment fee. A previous credit agreement between both
parties stipulated that a 2 percent fee must accompany any voluntary
prepayment. The investment bank added that it had “never sent a
notice of acceleration, moved to lift the automatic stay or taken any
action whatsoever to collect the principal of the loans prior to their
scheduled maturity.” JPMorgan also argued that Northwest would
save $34 million a year in interest by paying back the loans early, and
that a $19.5 million fee was not unreasonable.
Ford
Doubles Reported Loss for Second Quarter
Ford Motor Co. said it
lost more than twice as much in the second quarter as previously
reported due to pension-related losses and disclosed that it now expects
its Premier Automotive Group (PAG) to be unprofitable for the year,
the Wall Street
Journal reported today. Ford blamed the wider
loss on increased estimates for its pension-curtailment losses. Ford
said its full year pension-curtailment expense is now estimated at $1.2
billion, up from its previous estimate of $1 billion. Ford said its
full-year special-items charge will be about $3.8 billion. The larger
pension-curtailment losses reflect early retirements, enhanced benefits
and recognition of accelerated costs with Ford's
w:st='on'>
size='3'>U.S.
size='3'>hourly work force, said Ford spokeswoman Becky Sanch. Ford
recently said it expected about 12,000 hourly workers to leave this year
through attrition, early retirement packages and other buyouts, a larger
number than previously expected.
href='http://online.wsj.com/article/SB115455274467524945.html?mod=home_whats_…'>Read
more. (Registration required.)
Jones
Day Bids to Recoup $9 Million in Fees from Dana
Seeking four
months’ compensation from Dana Corp., primary debtor counsel Jones
Day has asked a
face='Times New Roman' size='3'>New York
bankruptcy court to approve just over $9 million in fees
for the work the firm has done thus far on behalf of the beleaguered
auto supplier, Portfolio
Media reported yesterday. The firm asked the
court to sign off on its interim application for professional
compensation in a filing earlier this week. The firm is seeking
$9,039,271 for the services it has provided andsaid it is hoping to
be reimbursed $390,244.79 for other related expenses, the filing
revealed. Jones Day contends that it has yet to be fully compensated for
the professional services rendered on behalf of Dana, which filed for
chapter 11 protection on March 3. The case is
face='Times New Roman' size='3'>Dana Corp.,
bankruptcy petition number 06-10354-brl, in the U.S. Bankruptcy Court
for the Southern District of New York.
name='6'>Interstate Bakeries Files for Extensions of
Debtor-in-Possession Financing, Exclusive Plan Filing
Date
Interstate Bakeries Corp. (IBC)
filed a motion seeking approval of a proposed extension of its $200
million debtor-in-possession (DIP) financing facility to June 2, 2007,
according to a company press release yesterday. JPMorgan Chase Bank (JPM
Chase), the agent for the initial DIP facility, which expires Sept 22,
will continue to act as agent and syndicate the extended financing
facility. The company also filed a request to extend the exclusive
periods within which it may file and seek acceptances of its
reorganization plan until Jan. 31 and April 2, 2007, respectively. Under
the previous schedule, IBC had until Sept. 22 to file its reorganization
plan and until Nov. 21 to solicit acceptance of that plan.
href='http://biz.yahoo.com/prnews/060802/law115.html?.v=37&printer=1'>Read
more.
name='7'>California Bay Area Foreclosures Spike
The number of San
Francisco Bay Area homeowners in danger of losing their homes to
foreclosure spiked this spring, as more people found themselves unable
to pay their home mortgages or sell for enough money to cover their
loans, the San Jose
Mercury News reported today. A total of 2,910
homeowners in the nine-county Bay Area got “notices of default''
from their mortgage lenders in the April-through-June period, a 37
percent increase from the same time in 2005, according to a report
Wednesday from DataQuick Information Systems. A smaller proportion of
homeowners face foreclosure in
w:st='on'>
size='3'>California
in most other states, largely because home values have risen quickly
enough here that they can sell at a profit. But experts said the spike
in defaults suggests that as home prices flatten or drop and higher
interest rates squeeze household budgets, even more Californians will
slide toward foreclosure in the coming months. Statewide, the number of
homeowners in default grew 67 percent compared to the second quarter of
2005, when default rates hovered near historic lows and 20,752 property
owners got warnings from their lenders. It was the steepest increase in
at least 14 years, DataQuick said.
href='http://www.mercurynews.com/mld/mercurynews/news/15183278.htm?template=c…'>Read
more.
International
w:st='on'>
name='8'>Paris
Court
Request
A French court accepted
Eurotunnel's bid for bankruptcy protection on Wednesday, a petition the
cross-Channel tunnel operator filed last month after last-ditch talks on
the restructuring of its 9.1 billion euro ($11.6 billion) debt
failed to produce a deal, the Associated Press reported yesterday. The
decision by the
w:st='on'>Paris Commercial
Court
Anglo-French company a six-month stay from creditors, allowing it to
return to the negotiating table with bondholders. Eurotunnel and its
main creditors had agreed on a restructuring plan in May, but the deal
was rejected by Eurotunnel bondholders, who said it didn't give them
enough back on their investments. The company said the bankruptcy
protection will not disrupt rail traffic through the tunnel, which is
used by Eurostar passenger services, freight locomotives and shuttle
trains carrying cars and trucks.
href='http://biz.yahoo.com/ap/060802/france_eurotunnel.html?.v=3&printer=1'>Read
more.