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Asbestos Reform Negotiations to Continue This Week
Negotiations on the asbestos litigation reform bill will continue this
week, ahead of a planned markup session on Thursday during which Senate
Judiciary Chairman Orrin Hatch (R-Utah) plans to finish work on the
bill, CongressDaily reported. Democrats and Republicans have
managed to compromise on all but one of the major issues surrounding the
bill, which creates a $108 billion trust fund, paid by insurers and
defendant companies, to compensate the victims of asbestos-related
illnesses. During the markup, the committee still must set the awards
that will be granted to those victims. Industry groups have tentatively
backed the progress so far, but most say their support of the final bill
hinges on the award amounts. Insurers and defendant companies are
pushing for more limited awards, while labor groups and others are
hoping for more generous compensation.
'We're encouraged by the progress so far, but we still haven't
resolved all the issues yet,' said an AFL-CIO spokeswoman. Also unclear
is whether an amendment the committee passed providing a 'backstop' if
the fund runs dry will ever take effect. Hatch is hoping for bipartisan
support for the bill, but many expect him to pass the bill out of
committee, even if it means a party-line vote, reported the
newswire.
FCRA Hearings Continue This Week
Lawmakers in both chambers will continue their ongoing review of the
Fair Credit Reporting Act this week, CongressDaily reported. The
House Financial Services Committee will hold a hearing on Wednesday on
bipartisan legislation to update the law, and the Senate Banking,
Housing and Urban Affairs Committee will hear testimony on Thursday on
accuracy issues in credit reports.
Atlas Air Considers Bankruptcy Filing, Agrees on Debt
Atlas Air Worldwide Holdings Inc. said it may file for chapter 11
bankruptcy protection to complete a debt restructuring begun in March.
Its shares fell as much as 17 percent, Bloomberg News reported. The
company also said it reached agreement on delaying repayment of about
half of $50 million owed to holders of bonds backed by some of its
aircraft. A majority of the debt holders agreed not to take actions on
any defaults for 60 days, Purchase, N.Y.-based Atlas said in a
statement.
Atlas on March 28 said it was halting payments on bank debt, senior
notes and leases for 44 planes as it sought to reorganize those
obligations. Friday's agreement involves 12 of those planes, all Boeing
747-400s. The company also said it will resume payments to its main
banks, led by Deutsche Bank, after reaching an agreement in principle to
restructure those borrowings. 'The company is considering various
alternative methods to implement its restructuring program, including
the filing of a pre-negotiated chapter 11 plan of reorganization, with
the goal of emerging from chapter 11 as quickly as possible,'' Atlas
said in the statement, reported the newswire.
AMR to Mortgage Airplanes In Move to Raise More Cash
AMR Corp.'s American Airlines moved to mortgage seven airplanes to raise
$254.9 million, the Wall Street Journal reported. The offering of notes
backed by the Boeing Co. jets is a further sign that the world's largest
carrier believes that its restructuring will allow it to escape a
bankruptcy filing, according to analysts and investment bankers.
Lenders who lined up to provide more than $1 billion in bankruptcy
financing last spring -- when AMR came within hours of having to seek
chapter 11 bankruptcy-court protection from creditors -- would have
sought the aircraft as collateral for new lending. Now, with American
believing bankruptcy is far less likely, the company is borrowing
against some of its last remaining unencumbered assets that could have
been offered to bankruptcy-financing lenders.
In a filing on Wednesday with the Securities and Exchange Commission,
American said it would offer notes backed by three Boeing 737s, one 767
and three 777s. With the offering, the airline has mortgaged 'virtually
all of our … eligible aircraft,' American said in the filing,
reported the newspaper.
Adelphia Creditors Allege Loan Fraud in Bank Lawsuit
Adelphia's creditors filed suit against more than 450 banks that
made billions of dollars in loans to the cable company's controlling
family, the Wall Street Journal reported. The suit, filed by the
company's unsecured creditors on Sunday in the U.S. Bankruptcy Court for
the Southern District of New York, seeks more than $5 billion in damages
and asks for $5.2 billion of company debt to be frozen until the
creditors are paid. The unsecured creditors are mainly bondholders
jostling with the banks for a bigger share of assets in Adelphia's
bankruptcy-court proceeding.
The suit claims that Bank of America Corp., Wachovia Corp., Bank of
Montreal, Citigroup Inc. and others made fraudulent loans to the Rigas
family, which controlled Adelphia. Moreover, the suit claims the loans
to the family were made in order to win lucrative investment-banking
business from Adelphia, reported the Journal.
Air Canada Secures Loan, Financing From GE Unit
Air Canada has secured $1.3 billion (1.74 billion Canadian dollars) in
new loan and aircraft financing in a major step toward restructuring the
insolvent airline, the Associated Press reported. The carrier announced
the deal with General Electric Capital Aviation Services (GECAS) late on
Thursday. GECAS will provide $429 million in new debt for the company
'to improve the company's cash position' once it emerges from
court-ordered bankruptcy protection, the airline said. The deal also
provides $959 million to finance up to 43 regional aircraft as part of
Air Canada's plan to attract new capital to the airline and buy new
smaller, fuel-efficient planes to become more competitive. While the
agreement doesn't solve Air Canada's current debt problems with other
creditors, analysts said funds from the new loan make up a significant
portion of exit financing required by the company to successfully
restructure, reported the newswire.
United Airlines Parent UAL Terminates ESOP plan
Bankrupt United Airlines said on Thursday it is formally terminating the
employee stock ownership plan after nine years and returning assets to
workers in a way that preserves tax loss benefits needed for
restructuring, Reuters reported. UAL has said the common stock has
little or no value and likely will be canceled under any court approved
reorganization. The Internal Revenue Service issued a ruling allowing
share distribution to plan participants without jeopardizing tax
benefits UAL expects from net operating losses, UAL said in a filing
with the U.S. Securities and Exchange Commission, reported the
newswire.
A judge enjoined sale of UAL shares by major groups after the
bankruptcy, including the trustee for the employee stock ownership plan,
to preserve the tax benefits, reported the newswire. Senior executives
have agreed not to sell any stock they have acquired through the
employee stock ownership plan, UAL said. The termination of the plan is
not expected to have any impact on the company, UAL said, AP
reported.
Record Debt Levels Are Good News For EPIQ Systems
Market watchers expect the economy to improve in the second half of
this year, but debt levels are forecast to remain high and that's good
news for EPIQ Systems Inc. The Kansas City, Kan.-based company makes
bankruptcy management software for use in chapters 7, 11 and 13. The
company has had software used by chapters 7 and 13 trustees for several
years, and it entered the chapter 11 market earlier this year when it
purchased Bankruptcy Services LLC on Jan. 31. EPIQ Systems has a 30
percent market share in the bankruptcy management business.
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ABB Upbeat as Asbestos Deal Seen This Week
Engineering group ABB said on Monday it was encouraged by a district
judge's likely calling of a status conference on its proposed $1.3
billion asbestos settlement, indicating preliminary approval would come
soon, Reuters reported. ABB trust appointee David Austern told Reuters
an initial court ruling could approve the deal on Tuesday. The judge
there has already cleared the proposal, capping potentially ruinous
claims and easing a key ABB disposal, pending further information from
ABB. U.S. District Judge Alfred Wolin, who will give the final sign-off
on the deal if all goes according to plan, is expected to announce a
status conference on the settlement later this week, lawyers said,
reported the newswire.
Le Meridien Hotels Delays Rent, Gains Loan to Avoid
Bankruptcy
Le Meridien Hotels, the operator of London's Grosvenor House and the
Hotel Eden in Rome, said it delayed a rent payment and raised a loan to
avoid bankruptcy, Bloomberg News reported. Le Meridien is struggling to
pay its bills after demand for rooms slumped as stumbling economies, the
U.S.-led war in Iraq and the outbreak of severe acute respiratory
syndrome prompted travelers to stay home. London- based Le Meridien has
more than 130 hotels.
Royal Bank of Scotland Group PLC, owner of Grosvenor House and 10 other
Le Meridien hotels, agreed to receive a payment of 4 million pounds
($6.65 million) to allow the hotel chain to delay 20 million pounds of
rent, a Le Meridien spokesman said. Banks also agreed to lend an
unspecified amount of working capital. The Sunday Times reported
yesterday that Saudi Prince Alwaleed bin Talal may invest in Le Meridien
to help prevent the company's bankruptcy, reported the newswire.
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