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Stalled Asbestos Litigation Bill Faces Test In Public
Hearing
As the Senate Judiciary Committee planned to open controversial asbestos
litigation reform efforts to a public forum today, Sen. Patty Murray
(D-Wash.) said the legislation should include a moratorium on the use of
asbestos in the future, reported CongressDaily. Murray introduced
legislation banning the use of asbestos last month and said on Tuesday
that it should be part of a plan to revamp the system used to compensate
the victims of asbestos-related illnesses. The litigation plan put
forward by Senate Judiciary Chairman Orrin Hatch (R-Utah) would funnel
all asbestos-injury claims through a special court and compensate
victims through a trust fund created by insurers and defendant
companies. Murray insisted that any congressional effort to compensate
victims should be accompanied by a ban to prevent future illnesses and
an unnecessary drain on the fund, the newswire reported. Murray raised
criticism that is expected to be echoed by other Senate Democrats: The
bill only provides compensation to victims who were exposed to asbestos
in work-related circumstances. Murray -- like other Democrats -- is
hoping to incorporate changes to the bill as it moves to hearing this
week and a possible markup session in the following two weeks, according
to CongressDaily. The Judiciary Committee will hold a hearing today to
examine the legislation, which most Democrats have yet to endorse.
Negotiations aimed at making changes to the bill in order to gain
Democratic support stalled over the Memorial Day recess, sources on and
off Capitol Hill said.
Separately, National Journal reported that the House Financial
Institutions and Consumer Credit Subcommittee will hold a hearing today
on 'Fair Credit Reporting Act: How it Functions for Consumers and the
Economy.'
Class Action Reform Supporters Claim Increased Democratic
Support
Class action reform legislation sponsored by Senate Judiciary Chairman
Orrin Hatch (R-Utah) picked up another Democratic vote this week,
bringing the number of senators backing the bill to 57, supporters say,
CongressDaily reported. Sen. Mary Landrieu (D-La.) disclosed her
support for the legislation on Monday, and attorneys advising the U.S.
Chamber of Commerce say the bill will pick up enough Democratic backing
to defeat a filibuster when it comes up for a vote early this summer,
according to the newswire. Other Democrats now supporting the bill
include its cosponsors, Sens. Herb Kohl of Wisconsin, Thomas Carper of
Delaware, and Zell Miller of Georgia. Sen. Dianne Feinstein (D-Calif.)
sponsored a key amendment, and Sen. Blanche Lincoln (D-Ark.) is a
supporter. Sen. James Jeffords (I-Vt.) is undecided. The Hatch bill is
not yet scheduled for a vote, but is likely to come to the floor in
July, with more Democrats likely to come on board days before the vote,
the newswire reported.
CongressDaily also reported that work is under way to square the
Hatch bill and a House bill by Judiciary Chairman James Sensenbrenner
(R-Wis.) and Rep. Bob Goodlatte (R-Va.) with concerns raised by the
Judicial Conference of the United States last month. Conference Chairman
Anthony Sirica notified sponsors in both chambers of Congress that
language in the class action reform bills clashed with rules governing
interlocutory appeal of class action certification and 'plain English'
plaintiff notification requirements, the newswire reported. During last
month's markup, Sensenbrenner stripped the bill of the conflicting
'plain English' requirement, inserting the Judicial Conference's
language instead. The more controversial interlocutory appeal provision,
a holdover from a similar bill in the last Congress, may be dropped,
according to CongressDaily. John Beisner, an attorney with O'Melveny
& Meyers, which is also working with the Chamber, said the
requirement is outdated and should be dropped, the newswire
reported.
Greenspan Sees Signs Economy Is Stabilizing, Ready for
Rebound
Federal Reserve Chairman Alan Greenspan said while he still expects the
economy to accelerate during coming months, there is little evidence of
it yet, the Wall Street Journal reported. Greenspan also said
while deflation is unlikely, the Fed would 'lean over backwards' to make
sure it didn't happen. The issue, he added, will be on the agenda when
Fed policy-makers meet on June 24 and 25. Greenspan has been among the
most optimistic of the Fed's policy-makers, arguing that the economy
will bounce back once war-related nervousness receded. He reiterated
that view on Tuesday, while underlining the continuing lack of evidence
for it.
'The economy did weaken in March and in April, and the data for May to
date suggest that it's stabilized,' Greenspan told the International
Monetary Conference. 'We have not yet seen any major impetus to a
pickup.' He said while he isn't as optimistic as private economists who
expect growth to accelerate to a 4 percent annual rate during the third
quarter, he still expects it to 'quicken,' citing high productivity
growth and the recently enacted tax cuts, reported the
Journal.
Consolidated Freightways Pension Taken Over by Federal
Insurer
Pension Benefit Guaranty Corp. (PBGC) said it assumed responsibility for
the pensions of more than 8,000 workers and retirees of Consolidated
Freightways Corp., Bloomberg News reported. Consolidated Freightways,
once the third-largest U.S. trucking company, filed for chapter 11
bankruptcy protection last September and is selling its remaining
assets. The Vancouver, Wash.-based company in April called off a $90
million agreement to sell its Canadian unit to managers after the
parties failed to reach final terms.
Consolidated Freightways' pension plan has about $228 million in assets
to cover $504 million in promised benefits, according to the pension
agency's estimates. The agency said it has filed claims against the
company in bankruptcy court for the estimated $276 million shortfall.
Consolidated Freightways failed to make a $1.8 million required
contribution that was owed to the plan by April 15, the agency said,
reported the newswire.
Former Enron Official Forney Accused in California Power
Probe
John M. Forney, a former manager of Enron Corp.'s energy trading unit,
was arrested and charged with wire fraud and conspiracy for allegedly
manipulating power prices
in California, Bloomberg News reported. Forney was arrested yesterday at
American Electric Power in Columbus, Ohio, according to the U.S.
attorney's office in San Francisco. Forney is the third Enron trading
executive to be charged with scheming to inflate prices during
California's energy crisis to help boost Enron's profits. Enron declared
bankruptcy in 2001.
Martha Stewart Woes Come at a Bad Time for Kmart
For retailer Kmart Holding Corp. the timing of Martha Stewart's latest
legal woes could not be worse, Reuters reported. Less than a month after
the third-largest U.S. discount chain emerged from bankruptcy, news that
a top supplier may soon be indicted can only hurt Kmart's reputation,
although the impact on sales should be minor, analysts said on Tuesday.
'Any negative news for Kmart at this point is probably magnified, so I
don't think this is going to help Kmart,' said Ken Harris, a partner
with consultants Cannondale Associates. Martha Stewart, who is the
target of a probe into insider-trading allegations, could soon be
indicted on criminal charges, her company, Martha Stewart Living
Omnimedia Inc., said on Tuesday. WestPoint Stevens Inc., the textiles
company that makes Martha Stewart sheets and towels for Kmart, declined
to comment. The company filed for bankruptcy this week, reported the
newswire.
Amex Joins Air Canada Aeroplan Loyalty Plan
American Express Co. has come on board as a partner in Air Canada's
Aeroplan loyalty points program, the insolvent airline said on Tuesday,
Reuters reported. New York-based American Express was the mystery bidder
in last month's auction that joined Canadian Imperial Bank of Commerce
in winning the rights to offer a credit card that earns air miles with
the carrier. As part of the tentative agreement, American Express will
provide Montreal-based Air Canada with an unspecified cash advance. It
has until July 31 to negotiate a definitive agreement, which will then
have to be approved by the Ontario judge presiding over the airline's
creditor protection hearings. Air Canada said the cash advance it will
receive from American Express will be repaid as Aeroplan miles are
bought by its retail partners, which give Aeroplan miles as a sales
incentive for their own products and services, reported the
newswire.
Mirant Shares Dive After Exchange Offer
Shares of Mirant Corp., which is struggling to avert a bankruptcy
filing, on Tuesday plunged as much as 17 percent after the power
producer said two lenders were displeased with its offer to restructure
$1.45 billion of debt as part of a wider refinancing plan, Reuters
reported. The Atlanta, Ga.-based company said the two banks were unhappy
with the terms, as they want to assure that they will get paid first if
Mirant cannot pay all of its creditors in full.
Mirant, which is working with its lenders to reach a deal on $5.3
billion of unsecured bank and bond debt, offered to exchange $750
million of 2.5 percent convertible debentures due in 2021 and $200
million of 7.4 percent senior notes due in 2004 for new senior secured
notes due in 2008. The exchange offer is contingent upon Mirant's
ability to work out a refinancing deal with its banks, reported the
newswire.
Hayes Lemmerz Emerges From Chapter 11
Hayes Lemmerz International Inc. has emerged from its voluntary chapter
11 reorganization, the company announced yesterday in a press release
distributed by PR Newswire. The company concluded its reorganization
yesterday, after completing all required actions and satisfying all
remaining conditions to its plan of reorganization. As previously
reported, creditors overwhelmingly accepted the plan, which was
confirmed on May 12, 2003, by the U.S. Bankruptcy Court for the District
of Delaware.
In conjunction with its emergence from chapter 11, Hayes Lemmerz closed
on its exit financing facilities yesterday. The company's current total
financing package is valued at $800 million and includes: a $100 million
senior secured revolving credit facility maturing in 5 years; a $450
million senior secured term loan facility maturing in 6 years; and $250
million of senior unsecured notes, maturing in 7 years, according to the
company's press release.
MCSi Files for Reorganization under Bankruptcy Code
MCSi Inc., along with its domestic subsidiaries, voluntarily filed for
reorganization under chapter 11 of the Bankruptcy Code, the company
announced yesterday in a press release distributed by Business Wire. The
company is actively engaged in negotiating a comprehensive restructuring
plan with the lenders under its secured credit facility and expects to
file a plan of reorganization early this summer.
In connection with the filing, the company reached an interim agreement
with the lenders to use cash collateral which, upon court approval, will
enable MCSi to fund post-petition trade and employee obligations, as
well as its ongoing operating needs. To supplement these funds, the
company has also finalized a term sheet with certain of its existing
lenders for a $10 million 'debtor-in-possession' financing facility to
provide additional liquidity during the restructuring process. MCSi
expects to finalize its cash collateral arrangements as part of the
completion of the documentation of the DIP facility, according to the
company's press release.
WorldCom Selects Nortel for Long-distance Network Upgrade
WorldCom Inc. selected Nortel Networks Corp. to provide equipment for
the first part of a network upgrade intended to reduce costs and enable
new services to be sold, Bloomberg News reported. WorldCom will boost
the portion of calls transmitted through packet switching to 25 percent
by January and 100 percent by the end of 2005, Rick Price, a company
vice president, said in a telephone interview from the Supercomm
conference in Atlanta. Shares of Nortel fell 5 cents to $3.15 at 4 p.m.
in New York Stock Exchange composite trading, reported the newswire.
Brennan, Already Serving 9 Years, Gets 3 Years in Contempt Case
Former penny stock promoter Robert Brennan, already serving a nine-year
prison term for fraud and money laundering, was sentenced to three more
years for violating a judge's order freezing his assets, Bloomberg News
reported. Brennan pleaded guilty last year to criminal contempt,
admitting he violated an April 2000 order by U.S. District Judge Richard
Owen in Manhattan when he paid $500,000 to his defense lawyer, Michael
Critchley. The plea followed Brennan's 2001 conviction for hiding $4.5
million from bankruptcy creditors.
Philip Services Files for Bankruptcy Again Amid Slump in Metals
Philip Services Corp., a scrap metals and industrial services
company whose largest shareholder is billionaire financier Carl Icahn,
declared bankruptcy for the second time in four years blaming a slump in
prices, Bloomberg News reported. Philip Services listed $613.4 million
in assets and $686 million in debts in chapter 11 papers filed yesterday
in the U.S. Bankruptcy Court in Houston. The company had previously come
out of chapter 11 in April 2000 after giving Icahn more than 45 percent
of the company's shares in exchange for company bonds he held, reported
the newswire.
General Electric Units Object To Terms Of Fleming's Asset Sale
Fleming Cos. plans to seek bankruptcy court approval Wednesday to
sell 31 Rainbow Foods grocery stores, but the proposed sales are facing
several objections, including one from two units of General Electric Co.
The units, GE Consumer Products and the GE Distribution Finance Division
of General Electric Capital Corp., which are creditors of Fleming, said
that proceeds of the sale should be subject to their liens. According to
an objection filed last Wednesday, the units said they have a
first-priority security interest in proceeds from the asset sale. As the
transaction has been proposed, however, the assets would be sold 'free
and clear' of the units' liens and interests in deferred receivables,
the filing said.
Provided by Daily Bankruptcy Review (
href='http://www.djnewsletters.com/dbr2.html'>www.djnewsletters.com/dbr2.html)
Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Adelphia Communications Asks To Keep Sole Right To File Plan
Adelphia Communications Corp. is asking the bankruptcy court
overseeing its case for more time to file a chapter 11 reorganization
plan without the threat of other parties filing plans for the company,
according to a motion. The motion, filed with the court on Monday, said
that Adelphia Communications can turn its attention to forming a plan
now that it has new senior management in place. While new management is
in place and making progress, the filing said, talks with creditors and
equity holders on a chapter 11 plan remain premature. The cable company
is seeking an extension of its exclusive period to file a plan through
Oct. 20. If the bankruptcy court grants the request and the company
files a plan by that date, other parties would be further excluded from
filing plans through Dec. 22, while the company solicits votes for its
plan.
Provided by Daily Bankruptcy Review (
href='http://www.djnewsletters.com/dbr2.html'>www.djnewsletters.com/dbr2.html)
Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
IDT Asks Judge to Block ST Telemedia's Global Crossing
Purchase
IDT Corp. asked a judge to block Singapore Technologies Telemedia Pte's
$250 million plan to acquire bankrupt network operator Global Crossing
Ltd., Bloomberg News reported. U.S. Bankruptcy Judge Robert
Gerber in New York should reject the plan because it might meet with
opposition from U.S. officials concerned about national security, IDT
said in a court filing. The judge should ensure that Global Crossing,
which filed for chapter 11 in January 2002, entertain other proposals,
including IDT's $255 million offer, the filing said. Newark, N. J.-based
IDT failed to bid last year when Global Crossing and its creditors
initially considered offers. Hong Kong-based Hutchison Whampoa Ltd.
dropped out of an earlier plan to join ST Telemedia in the purchase
after U.S. officials widened a national security probe into the
acquisition, reported the newswire. A bankruptcy court hearing is
scheduled for June 9.
Northwest Flight Attendants Sue Over Wage Concessions
Flight attendants at Northwest Airlines sued the company yesterday,
accusing it of breaking a promise to compensate them this summer for
millions of dollars in wage and benefits concessions negotiated a decade
ago, the New York Times reported.
The dispute began late last month, when Northwest notified its flight
attendants that it might not be able to make good on a promise to buy
back a block of preferred stock it issued to them in 1993. The stock was
intended to compensate the 11,000 flight attendants for wages and
benefits they gave up from 1993 to 1996. The stock grant included a put
option that gave the flight attendants the right to sell back their
shares at a predetermined price starting this past Monday, reported the
Times.
Bankruptcy Is Changing Air Canada
An article in the New York Times discusses how North America's
seventh-biggest airline is trying to implement changes, like new snack
offerings, to help it build a new public image. To read the article,
point your browser to
href='http://www.nytimes.com/2003/06/04/business/worldbusiness/04CANA.html'>http://www.nytimes.com/2003/06/04/business/worldbusiness/04CANA.html.
Orange County Approves Renewing Merrill Lynch Ties
Orange County officials voted yesterday to resume business with Merrill
Lynch & Co., the investment firm that played a major role in the
Southern California county's 1994 bankruptcy, Reuters reported. The
county's Board of Supervisors voted 3-2 to use Merrill Lynch as a broker
for the money-market investments in its $5 billion portfolio. Orange
County Treasurer John Moorlach had argued for the shift in policy,
saying that access to the brokerage's huge inventory of commercial paper
offerings would save the county millions of dollars. Orange County
declared bankruptcy after disclosing investment losses estimated at more
than $1.6 billion from its investment portfolio, which had relied
heavily on interest-rate derivatives, reported the newswire.
Daisytek Files for Chapter 11 Bankruptcy
Daisytek International Corp. filed for chapter 11 reorganization on
Tuesday, nearly a month after its U.S. subsidiaries filed for the same
bankruptcy protection from creditors, Reuters reported. 'The company
continues to conduct negotiations with creditors of its U.S.
subsidiaries and to pursue the reorganization process in the court,'
Daisytek said in a statement. Allen, Texas-based Daisytek had said on
May 7 that chapter 11 was the 'most practical way for the company to
address liquidity challenges that are hindering the U.S. subsidiaries'
ability to conduct business.' The company's chief executive resigned
earlier in May. Its restructuring is being conducted by Dale Booth,
interim president and chief executive, and John 'Jack' Kearney,
executive vice president and chief restructuring officer, reported the
newswire.
Paper Warehouse Files for Bankruptcy
Minneapolis-based Paper Warehouse Inc. has filed for bankruptcy
protection and closed 24 company-owned stores, including stores in
Shawnee and Mission, according to the Kansas City Star. However, the
party goods retailer said the chapter 11 reorganization would not affect
its 51 franchised locations, 62 corporate-owned stores or Internet
business. Paper Warehouse, which has struggled for years in an intensely
competitive field, said consumer spending on party goods dropped because
of the Sept. 11, 2001, terrorist attacks, a weak economy and the war in
Iraq, the online newspaper reported. The company also closed
underperforming stores in Colorado, Iowa, Nebraska and Oklahoma.
According to the bankruptcy filing, Paper Warehouse had total
liabilities of $26.5 million and assets of $20.8 million as of last
month, reported the Star. The company said it had between 200 and 999
creditors, the online newspaper reported.
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