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June 2, 2008
House Hearing to Examine Legislation
to Protect Employees and Retirees in Business Bankruptcies
/>
The House Judiciary Subcommittee on Commercial and Administrative Law
will hold a hearing Thursday on H.R. 3652, the “Protecting
Employees and Retirees in Business Bankruptcies Act of 2007.”
While the final witness list has not been released, Michael
Bernstein of Arnold and Porter is currently scheduled to
testify. The hearing will be held in room 2237 of the Rayburn House
Office Building.
href='http://judiciary.house.gov/hearings.aspx?ID=206'>Click
here for additional details.
Consumers Lean on Rebate Checks for
Bills and Gas
While the federal government is mailing tax rebates to households to
spur spending and invigorate a troubled economy, many Americans are so
consumed with debt and the soaring price of gasoline that they are
opting to save the money or use it to pay bills, the New York
Times reported yesterday. Between late April and the end of
last week, the Treasury handed out more than $50 billion of the $100
billion in tax rebates it plans to distribute to 132 million households.
However, the International Council of Shopping Centers reported that
only once in the last six weeks have chain stores registered an increase
href='http://www.nytimes.com/2008/06/01/business/01checks.html?ei=5087&em=&en=dc35af2b2ffde2ec&ex=1212552000&pagewanted=print'>Read
more.
Number of Foreclosed Homes Continues
to Increase
The number of foreclosed homes owned by lenders continues to rise
despite signs that they are increasingly willing to slash prices to sell
those properties, the Wall Street Journal reported today.
Lenders and investors in mortgages owned about 660,000 foreclosed homes
in April, up from 493,000 in January and 231,000 in January 2007,
according to First American CoreLogic, a research firm based in Santa
Ana, Calif. The April total works out to about one in seven previously
occupied homes available for sale nationwide. A surge in defaults has
increased the inventory of bank-owned homes, known in the trade for real
estate owned (REO) properties. Mark Zandi, chief economist at Moody's
Economy.com, forecasts that the inventory of REO homes won't peak before
href='http://online.wsj.com/article_print/SB121236060176236293.html'>Read
more. (Registration required.)
Minnesota Governor Vetoes Temporary
Freeze on Foreclosures
Minnesota Gov. Tim Pawlenty (R) on Thursday vetoed a bill that would
have put foreclosures on hold for Minnesotans with subprime and exotic
home loans, the St. Paul Pioneer Press reported on Friday. The
temporary foreclosure freeze was a key but particularly controversial
part of a package of bills sent to the governor recently that are aimed
at easing fallout from the foreclosure crisis, 11 of which have been
signed into law. They include laws to protect renters in foreclosure
situations, deal with abandoned properties, increase limits on financial
assistance to homeowners and give homeowners in trouble more information
about foreclosure prevention counseling. In a letter to state Senate
President James Metzen, Pawlenty said that halting foreclosures
would cause lenders to make credit more expensive for other Minnesotans.
He also said the bill raises major legal questions because the U.S.
Constitution forbids states from making laws that impair existing
contracts.
href='http://www.twincities.com/ci_9421317?IADID=Search-www.twincities.com-www.twincities.com'>Read
more.
Judge Approves Additional DIP
Financing for Delphi
Bankruptcy Judge Robert Drain gave Delphi Corp.
permission on Thursday to borrow $254 million more than it originally
planned as part of its bankruptcy financing package, Bankruptcy
Law360 reported on Friday. The refinanced DIP facility consists of
a $1.1 billion first-priority revolving credit facility, a
first-priority term loan of up to $500 million and a second-priority
term loan of about $2.75 billion. It extends through the end of this
year. The bankruptcy case is In re Delphi Corp. et al., case number
05-44481, in the U.S. Bankruptcy Court for the Southern District of
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=57788'>Read
more. (Registration required.)
Student Loans Start to Bypass 2-Year
Colleges
Some of the nation's biggest banks have closed their doors to students
at community colleges, for-profit universities and other less
competitive institutions, even as they continue to extend federally
backed loans to students at the nation's top universities, the New
York Times reported today. Citibank has been among the
most aggressive in paring the list of colleges it serves. JPMorgan
Chase, PNC and SunTrust say they have not dropped whole categories, but
are cutting colleges as well. Some less-selective four-year colleges,
like Eastern Oregon University and William Jessup University in Rocklin,
Calif., say they have been summarily dropped by some lenders.
href='http://www.nytimes.com/2008/06/02/business/02loans.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
Frontier Airlines, First Data Reach
Deal on Processing Dispute
Frontier Airlines has reached an agreement with First Data
Corp. on the handling of proceeds from ticket sales, an issue that had
forced the airline to file for bankruptcy protection, the Associated
Press reported on Friday. Frontier CEO Sean Menke said that the airline
was forced to file for chapter 11 protection last month when First Data
sought to hold up to 100 percent of proceeds from ticket sales until
flights were completed. First Data previously withheld 50 percent. The
Denver-based airline said that the deal will be submitted to a
bankruptcy judge for approval in the next few days.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/05/30/AR2008053001936_pf.html'>Read
more.
Sharper Image Stores to be Closed and
Liquidated
All remaining stores of bankrupt gadget retailer Sharper Image Corp.
will be closed and liquidated, its new owners said yesterday, Reuters
reported. A joint venture led by units of Hilco and Gordon Brothers
purchased the company's assets at a bankruptcy auction last week for $49
million, and plan to continue its wholesale, direct-to-retail,
e-commerce and catalog businesses under a new licensing strategy. The
joint venture said that more than $50 million of inventory is being sold
at 86 Sharper Image store-closing sales throughout the United States.
Hilco and Gordon Brothers have already led liquidations at 96 of the
company's stores since its bankruptcy filing.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/06/01/AR2008060101307.html'>Read
more.
India's Sterlite to Buy Asarco
Assets
U.S. copper mining company Asarco LLC will sell virtually all its
operating assets to Sterlite Industries (India) Limited for $2.6 billion
in cash, the Associated Press reported yesterday. Sterlite is a
subsidiary of Vedanta Resources, a London-based FTSE 100 metal and
mining group. The assets being acquired include three open-pit copper
mines and a copper smelter in Arizona, as well as a copper refinery, rod
and cake plant and precious metals facility in Texas. The two companies
have signed an agreement on the deal, which is still subject to approval
by the U.S. Bankruptcy Court for the Southern District of Texas.
Sterlite said that it will assume operating liabilities, but not
Asarco's liabilities for asbestos and other environmental claims for
closed operations.
href='http://www.washingtonpost.com/wp-dyn/content/article/2008/05/31/AR2008053101002_pf.html'>Read
more.
Michigan Casino Files for
Bankruptcy
Greektown Casino has filed for bankruptcy reorganization, a move that
effectively blocks the Michigan Gaming Control Board from forcing a sale
of the gambling hall, the Detroit News reported on Saturday.
The filing was prompted when the casino failed to meet financial
requirements; the gaming board was poised next month to exercise its
power to make the Sault Ste. Marie Tribe of Chippewa Indians,
Greektown's majority owner, sell the casino. The bankruptcy won't
affect the millions of dollars the state of Michigan and city of Detroit
receive in wagering taxes each year. Greektown, already with $314.5
million in outstanding loans, is working to secure another $150 million
in financing to help continue operations and complete the casino-hotel
project.
href='http://www.detnews.com/apps/pbcs.dll/article?AID=/20080531/BIZ/805310373'>Read
more.
Wachovia CEO Ousted by
Board
Wachovia Corp. said that its board ousted CEO Ken Thompson, replacing
him on an interim basis with Chairman Lanty Smith, the Wall Street
Journal reported today. The move comes nearly a month after
Wachovia shifted Thompson out of the chairman role, thrusting Smith into
the spot as part of a step the company had said would strengthen its
'independent leadership.' Thompson was served a major setback in April
when Wachovia plunged into the red, battered by sinking credit quality
and the ill-timed acquisition of a California mortgage lender, while
announcing plans to raise $7 billion in capital and cut its dividend by
41 percent.
href='http://online.wsj.com/article_print/SB121240774837437279.html'>Read
more. (Registration required.)
Law Firm Close to a Settlement over
Alleged Kickbacks
Class-action law firm Milberg LLP is close to a settlement that could
end a federal prosecution of the firm for alleged kickbacks, the
Wall Street Journal reported today. The government alleged that
the firm paid more than $11 million in kickbacks to clients in exchange
for their serving as lead plaintiffs in securities class actions. These
payouts allowed the firm to quickly file suits and become lead counsel,
prosecutors allege, entitling Milberg to a large share of the fees: some
$250 million over more than two decades. The firm, which is scheduled to
stand trial in August, has denied wrongdoing. Last summer, prosecutors
had sought about $50 million in fines and penalties, but the demand
mushroomed this year to about $100 million. Recently, Milberg and
prosecutors have zeroed in on a payout in the neighborhood of $75
million.
href='http://online.wsj.com/article_print/SB121236562043736537.html'>Read
more. (Registration required.)