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August 25, 2006
Airlines
name='1'>Northwest and Its Flight Attendants Await a Strike
Ruling
Northwest Airlines and
its flight attendants’ union are awaiting a ruling today by
Federal District Court Judge Victor Marrero over whether the flight
attendants have a legal right to strike, the
size='3'>New York Times reported today.
Management knows it and is therefore doing its best not to further anger
its workers. Bankruptcy Judge Allan L.
Gropper ruled last week that he did not have
the jurisdiction to stop a labor action. Judge Marrero will hear
Northwest’s appeal of that decision. A long strike could
potentially lead to a liquidation at Northwest, the country’s
fifth-largest airline, as well as to financial hardships for the
airline’s flight attendants. Northwest said it had contingency
plans for such work stoppages, but declined to discuss details.
href='http://www.nytimes.com/2006/08/25/business/25air.html?pagewanted=print'>Read
more.
In related news,
Northwest Airlines Corp. Chief Executive Doug Steenland says the
potential flight attendants' strike is merely the latest challenge to
his restructuring effort, which he insists is progressing according to
plan, the Wall Street
Journal reported today. Since last summer,
Steenland has dealt with a mechanics strike, a bankruptcy court filing,
contentious contract negotiations with numerous unions, dogged lobbying
for the pension bill and soaring fuel prices. 'I remain optimistic no
matter how the events of the next days, week or two weeks unfold,' he
said.
href='http://online.wsj.com/article/SB115646855095645154.html?mod=us_business…'>Read
more. (Registration required.)
name='2'>Delta's Bankruptcy Costs Hit $70 Million
U.S. Bankruptcy
Judge Adlai S.
Hardin, Jr. entered an order
approving a slew of payment applications in Delta Airlines’
bankruptcy, bringing the total cost of the airline’s chapter 11
proceedings to more than $70 million, Portfolio Media reported
yesterday. The order granting the applications for compensation covers
the period from Feb. 1 through May 31, and is the second such order
signed in the case thus far by Judge Hardin.
face='Times New Roman'>The
first order, signed in June, approved $41.4 million in fees and expenses
for consultants, advisors and attorneys hired to steward Delta through
chapter 11, and the most recent order Judge Hardin approved was for
almost $33 million in charges. The case is In re Delta Air Lines Inc. et al
size='3'>., case number 05-19723, in the U.S. Bankruptcy Court for the
Southern District of New York.
name='3'>Airline Cuts Hurting Small Airports
Regional airports are
also feeling the effects of the airline industry’s distress as
airlines have cut flights and replaced large planes with smaller ones on
routes serving small and midsize cities, the Associated Press reported
today. The development has led to higher fares, fewer flight options and
a decrease in passengers flying out of the regional airports, which were
seeing a surge in passengers until this year.
w:st='on'>
size='3'>U.S.
are putting most of their new seats in routes to Europe, Latin America
and
size='3'>Asia
domestic routes, hoping it will allow them to raise fares to cover
soaring fuel costs. Delta cut its July domestic capacity by 13 percent,
while Northwest reported a 12 percent drop.
href='http://www.nytimes.com/aponline/business/AP-Regional-Airport-Blues.html…'>Read
more.
w:st='on'>
name='4'>Spokane
face='Times New
Roman' size='3'>Diocese Mediation to Continue
A three-day mediation
between the Catholic Diocese of Spokane, Wash., and lawyers for abuse
victims ended late Wednesday with no resolution, but the talks will
continue in
face='Times New Roman' size='3'>Nevada
at a later date, the Spokane Spokesman
Review reported yesterday. In July, the two
sides held a one-day mediation in
face='Times New Roman' size='3'>Nevada
size='3'>, led by Bankruptcy Judge Gregory Zive of
w:st='on'>
did not say when the new round of mediation talks will begin. If a deal
can be mediated, it would settle the church’s sex abuse crisis and
bankruptcy proceeding. An attorney representing people who were sexually
abused by Catholic priests said earlier this month that the church could
settle for $60 million.
href='http://www.spokesmanreview.com/breaking/story.asp?ID=7249'>Read
more.
name='5'>Gateway Capital Offers to Fund SeraCare's Chapter 11
Exit
Gateway Capital
Management LLC plans to submit a 'superior' financing proposal to propel
SeraCare Life Sciences Inc. out of chapter 11 protection,
Portfolio Media
reported yesterday. Gateway didn't specify any terms or
details, but said it would disclose information prior to a hearing
scheduled for Aug. 31. SeraCare plans to ask the court for approval of a
competing offer to provide $15 million in debtor-in-possession financing
to support its proposed plan at the hearing. A syndicate of investors
proposed the original loan, which could be increased to as much as $25
million and which would be substituted with a convertible loan when
SeraCare emerges from chapter 11. The case is
face='Times New Roman' size='3'>In re SeraCare Life Sciences
Inc., case number 06-00510, in the U.S.
Bankruptcy Court for the Southern District of
California.
name='6'>Refco's $2 Billion Settlement Delayed Once
Again
The fate of a proposed $2
billion settlement to wrap up Refco Inc.’s bankruptcy proceedings
is still up in the air after a federal bankruptcy judge Thursday once
again postponed a decision on the deal, Portfolio Media
reported. According to U.S. Bankruptcy Judge
Robert Drain, the new delay, which puts off the hearing
to Friday morning, will give battling parties additional time to iron
out their differences through negotiators. Judge Drain hopes the
combatants, Refco’s customers and creditors, will fix potential
problems that could threaten the deal down the road. He indicated that
the hearing could be postponed until next week if additional
opportunities emerge for improving the pact.
name='7'>Trustee Objects to Best's Investment Bank
Choice
The U.S. Trustee
overseeing Best Manufacturing Group LLC’s bankruptcy case has
objected to the company’s choice of an investment bank, balking at
fees that could total millions of dollars, Portfolio
Media reported yesterday. In court papers
filed last Wednesday, Trustee
size='3'>Kelly Beaudin Stapleton requested
that the application to hire Houlihan, Lokey, Howard & Zukin Capital
Inc. to lead Best through its chapter 11 case and possible sale be
denied. Stapleton argued that Best provided “no evidential support
as to the reasonableness of the amount of monetary compensation,”
fees that would amount to $50,000 per month plus a base fee of at least
$850,000 for the first sale transaction, plus $250,000 for each
subsequent transaction. Houlihan was also seeking approval of additional
incentive and transaction fees that could substantially increase its
income even more.
Court
Approves Silicon Graphics’ Bid for Backstop Deals
Paving the way for
Silicon Graphics Inc.’s emergence from chapter 11 protection, a
bankruptcy judge on Wednesday gave the company approval to enter into
backstop commitments for a rights offering to be conducted through its
reorganization plan,
size='3'>Portfolio Media reported yesterday.
In court documents filed this week in the U.S. Bankruptcy Court for the
Southern District of
York
Burton R. Lifland
approved the high-performance computer maker’s bid
to sign backstop commitments with several investment firms. Under the
terms of that plan, noteholders have been given the option to buy up to
700,000 shares in the reorganized company at $6.67 per share. Lampe
Conway & Co., the holder of a majority of SGI’s subordinated
debentures, will have the first opportunity to purchase leftover shares
that noteholders don’t buy, according to court documents. Backstop
purchasers Encore Fund L.P. and affiliates of Quadrangle Master Funding
Ltd. and Watershed Technology Holdings LLC will then have the option to
buy remaining shares.
w:st='on'>
name='9'>U.S.
face='Times New Roman' size='3'> Seeks to Delay Grace Asbestos
Trial
Federal prosecutors plan
to appeal a series of rulings that they say will undermine their
upcoming conspiracy case against
w:st='on'>
size='3'>Columbia
maker W.R. Grace & Co, according to court papers, the
Washington Post
reported today. William W. Mercer, the U.S. attorney in
Montana, is seeking a delay in the Sept. 11 trial, citing a government
appeal of three rulings by U.S. District Judge Donald W. Molloy that
significantly hamper the prosecutors' criminal case. Grace is accused of
violating the Clean Air Act and knowingly poisoning former workers and
other residents of a
w:st='on'>
size='3'>Montana
town with deadly asbestos fibers. Grace purchased the Libby,
size='3'>Mont.
the 1960s and closed it three decades later. Grace, which filed for
bankruptcy protection five years ago in part because of asbestos
liabilities unrelated to the Libby mine, continues to grapple with
'significant unpredictable costs to resolve litigation and legacy
issues,' chief executive Fred E. Festa told investors in a news release
last month.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/08/24/AR20060…'>Read
more.
w:st='on'>
name='10'>New Orleans
face='Times New Roman' size='3'> Shops Struggle to
Survive
Shoppers, store owners,
economists and government officials across New Orleans fear that the
small businesses that made up much of the city’s economy are
having trouble reviving a year after Hurricane Katrina, the New York
Times reported today. “We expect to
lose hundreds of them,” said Michael J. Olivier, the state
secretary of economic development, referring to the city’s small
businesses. The city estimates that 95 percent of the 22,000 businesses
before Hurricane Katrina employed fewer than 100 workers (fewer than 25,
in most cases).
face='Times New Roman' size='3'>Louisiana
is getting more than $10 billion in federal aid, but at
the federal government’s insistence, almost all the money must go
for housing, Olivier said. Less than 4
percent will be used for economic development, and only $38 million has
been set aside for possible grants to small companies.
href='http://www.nytimes.com/2006/08/25/us/nationalspecial/25katrina.html?ei=…'>Read
more.
name='11'>Bankrupt Kitchen Appliance Chain to Be
Acquired
A unit of Nacco
Industries said yesterday that it had agreed to buy Le Gourmet Chef, a
kitchen appliance chain that sought bankruptcy protection this month,
according to Bloomberg News yesterday. Terms of the deal were not
disclosed. Kitchen Collection, Nacco’s housewares unit, will add
Le Gourmet Chef’s 77 mall stores to its chain of 200
kitchen-gadget outlets. Le Gourmet Chef, based in
w:st='on'>
size='3'>Paramus
w:st='on'>
size='3'>N.J.
bankruptcy protection Aug. 8, saying slumping sales left it unable to
pay suppliers and cover debt payments. The closely held company listed
assets of about $33 million and debts of $32 million in its filing in
the U.S. Bankruptcy Court for the District of New Jersey.
href='http://www.nytimes.com/2006/08/25/business/25gourmet.html?pagewanted=pr…'>Read
more.
No
Bankruptcy or Tax Hikes, San Diego Mayor Says
San Diego Mayor Jerry
Sanders said that the city would not file for bankruptcy or raise taxes
to address the city’s financial problems, including public pension
shortfalls, the San
Diego Union Tribune reported today. The three
specific changes the mayor highlighted at a town hall meeting yesterday
to create checks and balances throughout the city's financial system
were creating an audit committee, hiring an oversight monitor and making
the auditor independent.
href='http://www.signonsandiego.com/uniontrib/20060825/news_1n25townhall.html'>Read
more.
href='http://www.signonsandiego.com/uniontrib/20060825/news_1n25townhall.html'>