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October
30, 2007
Hearing to Examine More Solutions to Mortgage Crisis
The House Judiciary
Subcommittee on Commercial and Administrative Law will be holding a
second hearing today to look into potential solutions for the home
mortgage crisis. The hearing, entitled 'Straightening Out the Mortgage
Mess: How Can We Protect Home Ownership and Provide Relief to Consumers
in Financial Distress? Part 2,' comes after H.R. 3609, which would allow
bankruptcy judges to modify chapter 13 debtors’ home mortgages,
was pulled from consideration at a House Judiciary Committee mark-up
hearing last week in order to allow more discussions among stakeholders
on the measure.
href='http://judiciary.house.gov/oversight.aspx?ID=392'>Click
here to view the witness list for today's hearing.
name='2'>BofA Rebukes American Home over
w:st='on'>
size='3'>Sale
size='3'>Disclosures
Bank of America NA was
critical of bankrupt American Home Mortgage Holdings Inc. and its
affiliates for disclosing the purchase price of two loans and allegedly
giving potential buyers leverage in buying other loans,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. The bank, as the mortgage lender's
administrative agent, filed court papers on Friday asking a
size='3'>Delaware
size='3'>bankruptcy court to stop American Home from disclosing further
details of its sale of mortgage loans from Broadhollow Funding LLC and
Melville Funding LLC. Loans from the special-purpose entities, formed by
American Home to acquire the company's mortgage loans with proceeds from
subordinated notes, were auctioned off in September. The entities, along
with American Home unit American Home Mortgage Servicing Inc., filed an
adversary suit against BofA last week for allegedly reneging on swap
agreements in which the American Home affiliates are entitled to more
than $25 million.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=38710'>Read
more. (Registration required.)
name='3'>Judge Approves Cessna's Bid for
w:st='on'>
size='3'>Columbia
Bankruptcy Judge
size='3'>Elizabeth Perris approved Cessna
Aircraft Co.'s $14 million offer as the lead bid for the assets of
Columbia Aircraft Manufacturing Corp., the Associated Press reported
yesterday. Columbia Aircraft has a deal to sell its assets to Cessna, a
unit of Textron Inc., for $14 million in cash. Cessna will also assume
up to $2 million in claims held by supplier Garmin International Inc.,
as well as $5.8 million in other potential claims, according to court
documents. If other interested buyers come forward, an auction will be
held Nov. 27. Judge Perris approved a $500,000 break-up fee to be paid
to Cessna if it is not selected as the buyer. Rival bids must be made by
Nov. 20, but if no one makes a qualified bid, Columbia Aircraft can
cancel the auction and ask the court to approve the sale to
Cessna.
href='http://biz.yahoo.com/ap/071029/columbia_cessna_bankruptcy.html?.v=1'>Read
more.
Dana
Corp. Settles Asbestos Claims
Dana Corp. has agreed to pay
7,500 personal injury claimants a total of $2 million to resolve their
lawsuits stemming from asbestos-laden gaskets produced by the auto-parts
supplier, the Associated Press reported yesterday. Dana has said that
asbestos-related personal-injury claims, which totaled 150,000 as of
June 30, will pass through its bankruptcy unchanged. The company,
however, said that many of the claimants haven't become sick. According
to court papers, about 7 percent of the asbestos claims filed against
Dana allege mesothelioma or cancer. A court hearing on the proposed
settlement is scheduled for Nov. 15.
href='http://www.detnews.com/apps/pbcs.dll/article?AID=/20071029/UPDATE/710290446'>Read
href='http://www.detnews.com/apps/pbcs.dll/article?AID=/20071029/UPDATE/710290446'>
name='5'>Bankrupt Air Freight Company Lays Off 500
Workers
Air freight company Kitty
Hawk Inc. laid off about 500 employees yesterday and said that it would
immediately halt all scheduled network air and ground operations because
of decreased demand, the Associated Press reported yesterday. The
Dallas-based company said its financial condition has deteriorated
'significantly' over the last year, including a 25 percent decrease in
year-over-year demand for its air product and a 5 percent year-over-year
decrease in demand for its ground product.
w:st='on'>Kitty
Hawk
has been unable to secure new sources of financing or a buyer for all or
a portion of its assets.
href='http://biz.yahoo.com/ap/071029/kitty_hawk.html?.v=1'>Read
more.
w:st='on'>
name='6'>U.S.
face='Times New Roman' size='3'> Trustee Balks at M. Fabrikant's
Disclosure Statement
U.S. Trustee
size='3'>Diana G. Adams objected to M.
Fabrikant & Sons Inc. and Fabrikant-Leer International Ltd. companies'
proposed disclosure statement on Thursday, saying that the liquidation
plan and disclosure statement lacked adequate information for a creditor
vote, Bankruptcy
Law360 reported yesterday. The joint plan
calls for two classes of general unsecured claims against the debtors
– claims against M. Fabrikant & Sons and those against
Fabrikant-Leer International, which will be paid primarily from causes
of action owned by the estates. However,
w:st='on'>
size='3'>Adams
neither the disclosure statement nor the joint plan gives any
information about possible returns. In a separate motion, also filed
Thursday, attorneys for the trustee took issue with the interim fee
applications filed by seven firms seeking fees and expenses totaling
more than $2.7 million for work done between the beginning of April and
the end of July 2007.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=38632'>Read
more. (Registration required.)
name='7'>Lionel Reaches Tentative Deal with Model-Train
Rival
Model-train manufacturer
Lionel LLC has entered into a contingent agreement with competitor
Mike's Train House that could resolve their seven-year trade secrets
dispute and put Lionel on course to emerge from chapter 11 by the first
quarter of 2008,
size='3'>Bankruptcy Law360 reported yesterday.
Three years after Chesterfield, Mich.-based Lionel was driven into
bankruptcy by a major defeat in a trade secrets suit against MTH for
$38.6 million, Lionel filed its amended reorganization plan on Tuesday
in the U.S. Bankruptcy Court for the Southern District of Manhattan. The
plan outlined a deal that would settle all of MTH claims against
Lionel.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=38653'>Read
more. (Registration required.)
name='8'>Investors in Bankrupt Bear Funds to Vote on Control
Change
Investors in two Bear
Stearns Cos. hedge funds that went bankrupt this past summer are looking
into whether to install a forensic accounting and restructuring firm in
place of Bear as controlling party, the
size='3'>Wall Street Journal reported today.
The investors, who lost about $650 million in the two funds, will vote
on the matter at the Wall Street firm's headquarters in
size='3'>New York
in
Nov. 14. More than 10 percent of investors in the two funds have
petitioned for the change, setting up the vote, the person said. If more
than 50 percent of investors approve, Bear will be replaced as
controlling party by FTI Capital Advisors LLC, a broker-dealer
subsidiary of FTI Consulting Inc. of
w:st='on'>
size='3'>Baltimore
at Reed Smith LLP and some other firms representing institutional and
retail investors in the funds have complained that Bear isn't
cooperating in providing information on the names of all investors or on
the activities that led to the funds' demise. FTI would be charged with
conducting an investigation to see if there is cause to sue.
href='http://online.wsj.com/article/SB119371627353176014.html?mod=us_business_whats_news'>Re
ad more. (Registration required.)
Home
Builder’s Bankruptcy Delay Baffles Creditors and
Experts
Beleaguered Chicago-area
builder Neumann Homes remained on the verge of filing its chapter 11
petition, but still had not submitted the filing nearly a week after
announcing that the company would enter into bankruptcy, the
Chicago Tribune
reported today.
size='3'>Company CEO Kenneth P. Neumann said yesterday that he still
wasn't sure when the bankruptcy petition would be filed because
discussions with the Warrenville, Ill.-based firm's eight lenders were
ongoing. Neumann Homes said on Oct. 22 that it was unable to secure
funding to operate, owing to 'the significant downturn' in the
size='3'>Detroit
w:st='on'>
size='3'>Chicago
w:st='on'>
size='3'>Denver
where it does business, and that it had closed all its sales, production
and customer-service offices. “Bankruptcy is usually very
carefully orchestrated,” said
size='3'>Anthony Sabino, a bankruptcy attorney
and professor of law at
w:st='on'>St.
John's
size='3'>. “You don't issue a press release until you've filed
chapter 11, either five minutes after it's official, or you issue a
press release that morning while somebody is going downtown to make the
filing.'
href='http://www.chicagotribune.com/business/chi-tue_neumann_1030oct30,0,249840,print.story'>Read
more.
name='10'>More Cuts at Bear Stearns as UBS Issues
Warning
Bear Stearns cut 300 jobs
yesterday to reduce costs as the investment bank continued to deal with
the summer’s credit turmoil that swept through Wall Street, the
Associated Press reported yesterday. Bear Stearns already cut about 600
positions from its mortgage-origination unit as defaults from subprime
borrowers began to grow. The layoffs came the same day that the Swiss
bank UBS, which is already writing down the value of some assets by $3.4
billion, warned investors that its fourth-quarter results might be hit
by a further downturn in the
w:st='on'>
size='3'>United States
size='3'>housing and mortgage markets. UBS
said that although the fourth quarter had started well, exposure to
the U.S. credit market “could lead to
further write-downs.”
href='http://www.nytimes.com/2007/10/30/business/30bear.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
name='11'>Lerach Enters Guilty Plea in Class-Action
Conspiracy
William S. Lerach,
the
size='3'>plaintiff's attorney who helped turn class-action lawsuits into
a lucrative trend, pleaded guilty yesterday to a conspiracy charge
stemming from his role in a wide-ranging kickback scheme, the
Washington Post reported today. Lerach acknowledged in a
Angeles
and his former partners at the Milberg Weiss firm hid payments to people
who served as repeat plaintiffs in their class-action suits. According
to federal prosecutors, the lawyers found people who held shares --
often only a few -- in companies that were accused of fraud. By getting
those people to sign up as early plaintiffs in civil lawsuits against
the companies, Lerach and his firm were able to exert greater control
over the cases and reap additional fees. In all, the scheme infected
more than 150 cases over the past two decades, bringing Lerach and his
partners well over $200 million, according to court papers.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/10/29/AR2007102901796_pf.html'>Read
more.
International
name='12'>Pope & Talbot Files for Bankruptcy in
size='3'>
w:st='on'>Canada
Wood-products producer
Pope & Talbot filed for bankruptcy protection in
w:st='on'>
size='3'>Canada
size='3'>as the company cited a record low demand for lumber and the
appreciation of the Canadian dollar, the
size='3'>Seattle Times reported
today. The 150-year-old
w:st='on'>
size='3'>Portland
protection from creditors for
w:st='on'>
size='3'>U.S.
Canadian subsidiaries under the Companies' Creditors Arrangement Act of
Canada. The cost of servicing debt and
slowing demand for sawdust were cited as reasons its principal operating
subsidiary, based in
w:st='on'>
size='3'>Canada
sought bankruptcy. The company, with about 2,500 employees, said most of
its operating assets are in
w:st='on'>British
Columbia
mills in
size='3'>Oregon
w:st='on'>
size='3'>South Dakota
size='3'>.
name='13'>Report: Thousands of Scottish Homes Likely to be
Repossessed in Housing Downturn
The Council of Mortgage
Lenders forecast that up to 170,000 people are expected to struggle with
their mortgage payments next year and 45,000 homes are expected to be
repossessed as increases in interest rates hit those whose fixed-rate
mortgage agreements are coming to an end, the
face='Times New
Roman'
size='3'>Daily Scotsman reported
today. At the same time, house prices will
edge forward by just 1 percent in 2008 and property sales will fall by
15 percent as first-time buyers find it more difficult to purchase
property. The latest figures show mortgage approvals have already fallen
to their lowest level since 2005, adding to speculation that the crisis
at Northern Rock and the credit crunch is hitting the overheated
size='3'>property market. Although
house prices in
w:st='on'>
size='3'>Scotland
size='3'>are expected to continue to increase at a rate of three to five
percent next year, this represents a considerable slow-down in a
market that has been growing at a rate of 10-15 percent in recent
years. Read
more.