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December 15,
2009
Supreme Court
Supreme Court Dismisses
Pension Funds’ Challenge to Chrysler Sale
The U.S. Supreme Court yesterday ordered the dismissal
of an appeal by a group of Indiana pension funds challenging how
Chrysler LLC repaid its debts when the company was sold to Fiat SpA last
summer, Dow Jones
face='Times New Roman' size='3'>Daily Bankruptcy Review
size='3'>reported today. Two pension funds for Indiana public employees
and a construction fund sued in June to stop Chrysler’s sale to
Fiat following the U.S. company’s bankruptcy filing in April. The
U.S. Treasury Department and the Canadian government helped broker the
deal to help the struggling automaker reorganize. However, the Indiana
funds said that the $2 billion sale shortchanged Chrysler’s
secured lenders, most of whom consented to the sale. The U.S. Bankruptcy
Court for the Southern District of New York approved the deal on June 1.
The Indiana funds appealed the decision, first to the U.S. Circuit Court
of Appeals for the Second Circuit and later to the Supreme Court. The
Supreme Court declined to halt the proceedings on June 9 and the
Chrysler sale closed the following day. The Supreme Court yesterday
ordered the Second Circuit to dismiss the Indiana funds’ appeal as
moot.
Supreme Court Allows
Pension Termination Fee Ruling to Stand
The U.S. Supreme Court yesterday declined to weigh
whether companies can discharge fees owed to the Pension Benefit
Guaranty Corp. when terminating a pension plan through chapter
11,
size='3'>Bankruptcy Law360 reported yesterday.
The Supreme Court issued a notice yesterday showing that it had declined
to grant a petition for
face='Times New Roman' size='3'>certiorari
size='3'>filed by formerly bankrupt flatware maker Oneida Ltd., which
was seeking to challenge the finding by the U.S. Court of Appeals for
the Second Circuit that the company could not escape the fees. The
Second Circuit had reversed a ruling by the U.S. Bankruptcy Court for
the Southern District of New York, concluding that the pension plan
termination fees were not pre-petition unsecured debt and therefore
couldn't be dropped through chapter 11.
href='http://bankruptcy.law360.com/print_article/139216'>Read
more. (Subscription required.)
Obama Presses Banks to Lend
More
President Obama reiterated his call yesterday for the
nation's banks to increase lending, saying that he was getting too many
letters from small businesses unable to borrow money, the
face='Times New Roman'>
size='3'>Washington Post reported today.
'America's banks received extraordinary assistance' from the government,
Obama said following a meeting with the heads of the largest banks. 'Now
that they're back on their feet, we expect an extraordinary commitment
from them to help rebuild our economy.' Obama said he also discussed the
need for financial reform with the bank executives, urging them not to
lobby against proposals such as the creation of a new agency to protect
borrowers from lending abuses. The president also said that he once
again urged moderation in executive compensation.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/12/14/AR2009121401464_pf.html'>Read
more.
CIT Group to Waive Fees on
SBA Loans
CIT Group Inc., one of the nation's largest lenders to
small and mid-sized businesses, said yesterday that it is waiving fees
for the next three months on all approved Small Business Administration
Loan applications, the Associated Press reported yesterday. CIT
Group is waiving the $1,000 packaging fee at the same time it is
planning to commit $500 million to support its small-business lending
operations in 2010. The moves come as CIT Group tries to regain business
and reaffirm itself as a top commercial lender after exiting bankruptcy
protection last week. The $500 million will be originated through CIT's
small business lending group to fund government guaranteed loans as part
of two small-business lending programs, the SBA 7(a) and 504 programs.
The $1,000 fee will be waived on all applications for 7(a) loans as of
yesterday and run through March 10.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/12/14/AR2009121400993_pf.html'>Read
more.
Wells Fargo Joins Citigroup
in Repayment of Bailout Funds
Citigroup Inc. and Wells Fargo & Co. won
agreements to begin extracting themselves from the U.S. government's
Troubled Asset Relief Program (TARP) by paying back a total of $45
billion in aid, the
face='Times New Roman' size='3'>Wall Street Journal
size='3'>reported today. With the deals announced yesterday, the banks
will have repaid $161 billion of the $245 billion in capital that was
pumped into about 700 institutions as part of TARP. Citigroup and Wells
are the last major lenders to return their TARP money.
href='http://online.wsj.com/article/SB10001424052748704869304574595600479204352.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more. (Subscription required.)
Tool Maker Axia Inc. Files
for Chapter 11
Axia Inc., a U.S. manufacturer of automatic taping and
finishing tools, filed for chapter 11 protection yesterday, hurt by a
weak construction market that has reduced demand for its products,
Reuters reported today. In a filing with the U.S. Bankruptcy Court for
the District of Delaware, the company listed both assets and liabilities
in the range of $100 million to $500 million. Axia's subsidiaries Ames
Taping Tool Systems Inc. and TapeTech Tool Co. Inc. were also included
in the filing. The company, whose competitors include Stanley Works,
said that it was hoping to sell all its assets through a
size='3'>§363 sale within the first 90 days of bankruptcy. The case
is
size='3'>In re Axia Inc., U.S. Bankruptcy
Court, District of Delaware, No 09-14407.
href='http://www.reuters.com/article/idUSSGE5BE07220091215'>Read
more.
Newspaper Publisher Seeks
Debt Exchange, Could File for Bankruptcy
Newspaper publisher Morris Publishing Group yesterday
that it had launched an exchange offer for almost $300 million of debt
and could restructure under a pre-packaged bankruptcy if necessary,
Reuters reported yesterday. Morris, which publishes 13 daily newspapers,
said that it would offer to exchange $100 million of second lien secured
debt due in 2014 for all of the nearly $300 million existing senior
subordinated notes due in 2013. The company, whose titles include
the
size='3'>Augusta (Ga.) Chronicle,
the
size='3'>Florida Times-Union and
the
size='3'>Juneau (Alaska) Empire, said that it
had the support of about 75 percent of noteholders for the debt
exchange. Morris said that it was soliciting holders of existing debt
for approval of a pre-packaged bankruptcy reorganization plan in case it
cannot get the required amount for the exchange offer. The exchange
offer expires on Jan. 12.
href='http://www.reuters.com/article/idUSN1419077320091214'>Read
more.
Enron Appeals Securities
Settlement Decision
Enron Creditors Recovery Corp. is appealing a decision
that had been hailed as a victory for investors who collect securities
settlements from soon-to-be bankrupt companies,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. In a notice of appeal filed Thursday, Enron
said that it would ask the U.S. Court of Appeals for the Second Circuit
to review a decision finding that two ING funds did not have to return
early payments received from the former energy giant prior to
bankruptcy. The U.S. District Court for the Southern District of New
York had previously reversed a bankruptcy court order and instructed
that summary judgment be entered in favor of ING regarding payments
received for Enron notes. Shortly before it filed for bankruptcy at the
end of 2001, Enron paid out more than $1.1 billion to retire some of its
unsecured and uncertified paper prior to its maturity date. Some of that
paper was held by the ING funds ING VP Balanced Portfolio Inc. and ING
VP Bond Portfolio Inc. JPMorgan Chase & Co., Goldman Sachs Group
Inc. and Lehman Bros. all participated in the redemption process. After
Enron went bankrupt, the company brought nearly 200 adversary
proceedings against former noteholders, seeking to recover payments made
prior to maturity dates.
href='http://bankruptcy.law360.com/print_article/139104'>Read
more. (Subscription required.)
High Tech Road Out of Bankruptcy
Bankrupt U.S. yellow-pages publishers Idearc Inc. and
R.H. Donnelley Corp. are preparing to emerge from court protection with
high-tech plans to transform their businesses, Reuters reported
yesterday. When the U.S. recession hit, the yellow-pages were crushed by
a prolonged decline in advertising spending and a simultaneous drop in
the use of print directories, generally. Both companies had trouble
meeting payments on their debt and filed for bankruptcy earlier this
year. Each plans to shed some $6 billion in debt from their balance
sheets, and continue restructuring their businesses to fit a blended
model of Internet and print advertising. Idearc said that in 2008,
consumers conducted more than 23 billion searches on its SuperPages.com
network. It also distributes its clients advertisements to 250 Internet
Web sites, and even posts customer restaurant reviews from Facebook on
its Web site for local advertisers. R.H. Donnelley says it lists 11.5
million businesses online through its dexknows.com website and also
supplies content for YellowPages.com. The companies have deals with
search engines like Google and Yahoo and link their ads with services
like Google Maps or Microsoft's Map Point.
href='http://news.yahoo.com/s/nm/20091214/bs_nm/us_yellowpages_bankruptcies_1'>Read
more.
Lehman’s
Professional Fees Surpass $500 Million Since September
2008
Lehman Brothers Holdings Inc. reported yesterday that
it has paid its bankruptcy advisers $533.5 million since September 2008,
Bloomberg News reported yesterday. The restructuring firm Alvarez &
Marsal LLC, which provided Lehman with its current CEO, Bryan Marsal,
led the payments with $202.4 million in fees for “interim
management” through Nov. 30, according to a court filing. Weil
Gotshal & Manges LLP of New York was paid $127.1 million for acting
as the investment bank’s lead bankruptcy law firm, Lehman said in
the monthly report. Lehman and its affiliates currently hold $16.3
billion in cash, up from $15.8 billion at the start of the month,
according to the filing. Lehman filed the biggest U.S. bankruptcy
case in September 2008 with assets of $639 billion. The case
is
size='3'>In re Lehman Brothers Holdings Inc.,
08-13555, U.S. Bankruptcy Court, Southern District of New York
(Manhattan).
href='http://www.bloomberg.com/apps/news?pid=20601127&sid=aqRl4rRwz1N8'>Read
more.
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