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September 25,
2006
name='1'>Retiree Health Care May Overwhelm State and Local
Governments
Hundreds of billions of dollars
in benefit payments to public employees will be paid over the next three
decades, threatening some local governments with bankruptcy and all but
guaranteeing cuts in services like education and public safety, the
Associated Press reported yesterday. New accounting rules issued by the
Government Accounting Standards Board require public agencies to
disclose the future cost of health care and other benefits alongside
traditional pensions to the nation's estimated 24.5 million active and
retired state and local public employees. Retiree health care costs have
been quietly mounting for decades while public agencies have passed out
generous retirement benefits during labor negotiations -- often in lieu
of salary increases. Many cities and state agencies already are
struggling to fully fund their pension obligations, but experts say
those liabilities pale in comparison to the debt accumulated for other
retirement benefits. Last month, JP Morgan released what it considers
the most comprehensive preliminary estimate. It projects the present
value of unfunded health care and other non-pension benefits at between
$600 billion and $1.3 trillion.
href='http://www.nytimes.com/aponline/us/AP-Retiree-Health-Care.html?_r=1&ore…'>Read
more.
name='2'>Facing Dozens of Lawsuits, Coudert Files for
Bankruptcy
One year after Coudert
Brothers LLP announced its plans to dissolve, the fallen international
law firm has filed for chapter 11 after losing two lawsuits, including a
$2.5 million malpractice suit filed by a former client,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported on Friday.
size='3'>In its bankruptcy petition, Coudert listed assets of between
$10 million and $50 million, and its debts were listed as falling within
the same range. The firm voted to dissolve its partnership and wind down
its practice in August 2005 after a planned merger with
face='Times New Roman'>Baker & McKenzie fell through.
The firm is facing a number of litigations, including malpractice
actions by former clients, actions by trade creditors for unpaid
balances, actions by landlords related to office leases, and claims by
former partners to alleged distribution entitlements, according to court
documents. The case is
size='3'>In re Coudert Brothers LLP, case
number 06-12226-rdd, in the U.S. District Court for the Southern
District of New York.
Autos
name='3'>Court Approves
w:st='on'>
size='3'>Meridian
$75 Million DIP Loan
A bankruptcy judge has
approved Meridian Automotive System Inc.’s amendments to its
bankruptcy financing, which will help steer the company out of chapter
11, Portfolio
Media reported on Friday. Judge
Mary F. Walrath
approved the auto parts supplier’s $75 million
debtor-in-possession (DIP) loan on Wednesday in the U.S. Bankruptcy
Court for the District of Delaware. She also pushed back the maturity
date of the financing from Oct. 31 to Dec. 31. The amendments to the
financing package will also extend the loan to March 31, 2007, and the
fees will amount to $387,000. The company also plans to pay an
additional 0.5 percent interest on any part of the loan that is over
what it could have obtained if the original terms stayed in place. The
case is Meridian
Automotive Systems-Composites Operations Inc.,
size='3'>case no. 05-11168, in the
w:st='on'>
size='3'>U.S.
size='3'>Bankruptcy Court for the District of
Delaware.
name='4'>Additional 1,500
face='Times New Roman' size='3'>Delphi
size='3'>Workers Agree to Accept Buyout Offers
United Auto Workers Vice
President Cal Rapson said Friday that about 1,500 additional Delphi
Corp. workers agreed to accept buyouts under an extended attrition plan
that wrapped up in mid-September, Dow Jones Newswires reported on
Friday. Under an earlier attrition program, 12,500 of 24,000 UAW workers
at
size='3'>Delphi
retirement offers. About 6,300
face='Times New Roman' size='3'>Delphi
size='3'>employees represented by the IUE-CWA union also have accepted
early retirements and buyouts. Additionally, about 5,000 unionized
Delphi workers are flowing back to positions at General Motors
Corp.,
size='3'>Delphi
former parent.
href='http://online.wsj.com/article/SB115895793913571620-search.html?KEYWORDS…'>Read
more. (Registration required.)
name='5'>Auto Supplier BorgWarner to Cut Jobs
w:st='on'>
size='3'>U.S.
size='3'>automakers' production cuts are rippling through the supplier
industry, with BorgWarner Inc. saying Friday that it is eliminating 13
percent of its North American workforce and Lear Corp. earlier this week
cutting its sales forecast by $300 million, the Associated Press
reported on Friday. Suppliers that do a heavy business with General
Motors Corp., Ford Motor Co. and DaimlerChrysler AG's U.S.-based
Chrysler Group are sharing their customers' pain, an analyst says.
BorgWarner has said that it expects to get about 42 percent of its
estimated $4.5 billion in sales this year from
w:st='on'>North
America
the U.S. Big Three. About 40 percent will come from Europe and 18
percent from
size='3'>Asia
BorgWarner's 850 North American job cuts will be spread across its 19
facilities in the United States,
size='3'>Canada
size='3'>Mexico
size='3'>and should be mostly completed by the end of October, the
company said. The company reduced its 2006 earnings forecast
by 40 cents a share but said it should rebound in 2007.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/09/22/AR20060…'>Read
more.
Owens
Corning Prepares for Bankruptcy Exit
Owens Corning officials
are working hard to meet a goal of exiting chapter 11 by Oct. 31 and put
an end to nearly six years of bankruptcy proceedings, the
Toledo Blade
size='3'>reported yesterday. Bankruptcy Judge Judith
Fitzgerald must first confirm the company's reorganization
plan, though she strongly signaled she would at a hearing in
size='3'>Pittsburgh
week. Once approves the plan, U.S. District Judge John Fullam of
size='3'>Philadelphia
size='3'> will need to approve it as well. All previous
creditor objections have been either overruled or
withdrawn.
href='http://www.toledoblade.com/apps/pbcs.dll/article?AID=/20060924/BUSINESS…'>Read
more.
name='7'>EG Liquidating
face='Times New Roman'
size='3'>Co.
Approved
Gardening giant EG
Liquidating Company Ltd. has moved closer to liquidation after a federal
bankruptcy judge approved the company's disclosure statement and
extended its exclusive right to seek approval for its liquidation
plan, Portfolio
Media reported on Friday. The deadline for
objections to EG Liquidating’s first amended liquidation plan is
Nov. 8, with a confirmation hearing on the plan scheduled for Nov. 14
before Bankruptcy Judge
size='3'>Kevin Gross. The company’s
exclusivity period has been extended through Nov. 29. On June 2, the
bankruptcy court signed off on an order approving the sale of virtually
all of Easy Gardener Product’s assets to Green Thumb Acquisition
Corp., and the sale was finalized later that month. The sale included
the trade name Easy Gardener Products Ltd., and the debtors asked the
court to replace the Easy Gardener name with EG Liquidating Co. Ltd. to
avoid confusion. The case is
size='3'>In re EG Liquidating Company Ltd.,
case number 06-10396 in the U.S. District Court for the District of
Delaware.
name='8'>Centrix Approved to Pay Employees
The federal judge
overseeing Centrix Financial LLC’s bankruptcy proceedings has
approved an order granting the debtors permission to pay off
pre-petition debts to employees and continue providing employee
benefits, Portfolio
Media reported on Friday. U.S. Bankruptcy
Judge Gregory Zive held on Thursday that granting
the debtor’s motion served the interests of both the debtors and
their creditors, and directed banks to honor checks written to satisfy
pre-petition employee obligations. The order comes as the court mulls a
motion by the debtors asking the court to approve proposed rules for an
auction at which the debtors would sell off most of their assets,
including Centrix’ auto-loan servicing business. The case
is
size='3'>In re CMGN LLC et al., case number
06-50631 in the U.S. Bankruptcy Court for the District of
Nevada.
Judge
Says Mesaba has $10 Million in Available Cash
Mesaba Airlines has only
$10 million left in 'available cash,' according to the bankruptcy judge
presiding over the carrier's restructuring, the Associated Press
reported on Saturday. Bankruptcy Judge
size='3'>Gregory Kishel disclosed that figure
Friday when he formally withdrew his permission for Mesaba to void its
contracts with three labor unions. Kishel's decision granting that right
was overturned the previous week by U.S. District Judge Michael Davis.
Mesaba management notified the unions that it intends to return to
Kishel's courtroom seeking authority to toss out the contracts if the
unions don't reach concessionary agreements by Thursday. Eagan,
Minn.-based Mesaba told its unions it wants permission to impose a 19
percent pay cut, spokeswoman Elizabeth Costello said Friday.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20060923/NEWS12/6092304…'>Read
more.
w:st='on'>
name='10'>U.S.
face='Times New Roman' size='3'> Foreign Debt Growing Faster than
Investments
As interest rates
rise,
size='3'>America
payments are starting to climb, and for the first time in at least 90
years the United States is paying
noticeably more to its foreign creditors than it receives from its
investments abroad, the
size='3'>Wall Street Journal reported today.
The gap reached $2.5 billion in the second quarter of 2006. In effect,
the United States made a quarterly debt payment of
about $22 for each American household, a turnaround from the $31 in net
investment income per household it received a year earlier. The gap is
still small within the context of the $13 trillion American economy, and
the trend could reverse if
w:st='on'>
size='3'>U.S.
size='3'>interest rates decline. However, economists say
size='3'>America
size='3'>'s emergence as a net payer illustrates that a growing share of
the prosperity that the nation achieves in the coming years will
probably be sent abroad in the form of debt-service payments, which
means that Americans will have to work harder to maintain the same
living standards -- or cut back sharply to pay down the debt.
href='http://online.wsj.com/article/SB115915177853972817.html?mod=home_whats_…'>Read
more. (Registration required.)
International
w:st='on'>
name='11'>China
face='Times New Roman' size='3'> Exempts More than 2,000
State Companies from Bankruptcy Law
w:st='on'>
size='3'>China
size='3'>has exempted more than 2,000 state companies from complying
with the new bankruptcy law until the end of 2008, according to
the Financial
Times yesterday, AFX News reported today. The
new bankruptcy law, which comes into effect in June 2007, will not apply
to 2,116 state-owned enterprises; the government is concerned
about the social impact if the companies go bankrupt. Citing Li
Shuguang, one of the authors of the new law, said that employees' health
and wage claims would still take precedence over creditors' claims, an
arrangement that had so far slowed restructuring in some
sectors.