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March 13, 2006
PBGC
Official Calls for Disclosure of Problem Pensions
Companies with underfunded
pension plans should be required to provide information on the condition
of their plans as part of an overhaul of the pension insurance system,
said Bradley D. Belt, executive director of the Pension Benefit Guaranty
Corp. (PBGC), the Associated Press reported on Friday. The federal
agency, which insures the pensions of some 44 million workers, reported
a $22.8 billion deficit for 2005 as big airlines and other companies in
bankruptcy dumped their pension liabilities on the agency. That means
the money available to pay benefits to retirees whose pension plans are
taken over by the agency is eventually going to run out absent new
legislation, Belt said in an interview with the Associated Press.
“People recognize that the current system is broken. Something
needs to be done,” he said. At the same time, he insisted that
changes need to be made to both the House and Senate versions of the
legislation, which he said are even less adequate in some respects than
current law. Transparency of information on underfunded company pension
plans is one such area, Belt said. The House bill would exempt some
companies with underfunded plans from having to file reports on their
plans annually with the PBGC.
href='http://msnbc.msn.com/id/11767893/'>Read more.
name='2'>Oneida Ltd. Expects to File for Bankruptcy
Protection
Oneida Limited says it
expects to file for chapter 11 bankruptcy later this month after
reaching an agreement with its lenders on plans to cut $100 million of
company debt, WCAXTVNews.com reported Saturday. The flatware company
last year closed its factories, including its central
w:st='on'>
York
concentrate on distributing and marketing imported flatware.
size='3'>Oneida
expects to file its 'prenegotiated' petition March 20th. Spokesman
Richard Mahony tells the Syracuse Post-Standard they expect to
be out of chapter 11 in 90 days and that employment won't be
affected.
href='http://www.wcax.com/Global/story.asp?S=4617873&nav=4QcS'>Read
more.
Court
Allows Cornell Trading to Liquidate
The company that operates
the April Cornell chain won bankruptcy court permission Friday to
conduct 'store closing sales' and may auction the leases of its stores,
the
size='3'>Burlington
size='3'>(
face='Times New Roman' size='3'>Vt.
size='3'>) Free Press reported on Saturday.
The U.S. Bankruptcy Court in
w:st='on'>
size='3'>Boston
approved a four-month budget for Cornell Trading Inc., pending final
approval at the end of March, said attorney Christopher
Panos, who is representing the company. Cornell Trading has
been operating under chapter 11 court protection since Jan. 4, and as
recently as late February said it planned to file for chapter 7, which
usually ends in liquidation of a company's assets. The company never
filed chapter 7, instead working out a deal in which KeyBank sold about
$7 million in Cornell Trading debt to a private syndicate. The retail
chain operates 56 April Cornell stores across the country, said
Craig Fox, vice president of Great Neck, N.Y.-based
Keen Realty LLC, which has been selected by Cornell Trading to auction
the leases.
href='http://www.burlingtonfreepress.com/apps/pbcs.dll/article?AID=/20060311/…'>Read
more.
name='4'>Engineered Plastic Products files for Chapter
11
Engineered Plastic
Products Inc. filed for chapter 11 bankruptcy Thursday, but company
officials said it should not affect the employment levels in
size='3'>Lima
w:st='on'>
size='3'>Ohio
size='3'>, the Lima
News reported on Saturday. 'We anticipate to
complete the reorganization before the end of the summer,”said
Laura Carroll, the company’s public relations director. The
size='3'>Michigan
in the hourly workforce, reducing the number in
w:st='on'>
size='3'>Ypsilanti
to 100 employees. Engineered Plastic Products has been in business since
1987. The
face='Times New Roman' size='3'>Lima
size='3'>facility makes internal trim components for GM.
href='http://www.limaohio.com/story.php?IDnum=23486'>Read
more.
name='5'>Veritec Back in Chapter 11 after Deal with
Mitsubishi
Banished to chapter 7
liquidation two months ago, Veritec’s contentious bankruptcy case
has landed once again in the chapter 11 arena, after the bar code
manufacturer reached a new deal with Mitsubishi Corp. and other
creditors this week,
size='3'>Portfolio Media reported on Friday.
The Minnesota-based company, which develops and provides high-density
bar coding for the
manufacturing and security industries, announced the news on Thursday,
noting that it must now submit a new reorganization plan to
creditors. The statement marks a significant departure from a year ago
when Van Tran, the Chief Executive Officer of Veritec, blasted creditor
Mitsubishi Corp. after an arbitrator awarded the company $8.17 million
for Veritec's alleged infringement of intellectual property. Unable to
pay, Veritec was forced to file for bankruptcy protection in February
2005 and has spent the past year wrangling over the details of its
restructuring. In light of the recent agreement, Veritec has
consequently dropped its appeal of the arbitration panel’s
decision, according to Tran. The company abandoned the litigation after
Mitsubishi agreed to settle its dispute with Veritec for $300,000, a
mere fraction of the original damages award.
name='6'>Underwriters
w:st='on'>
size='3'>Battle
Bid in Refco Case
The underwriters for Refco Inc.
are fighting creditors’ attempts to investigate the lending
institutions that backed the
company’s public offering just two months before it buckled under
massive financial strain,
size='3'>Portfolio Media reported on Friday.
Back in August 2005, a group of creditors had asked a bankruptcy court
to examine the accounting records of eight banks that financed
Refco’s $583 million initial public offering. The creditors are
also looking for court approval in examining Refco’s leveraged
buyout that took place in June 2004. The eight underwriters filed court
papers in the U.S. Bankruptcy Court in
w:st='on'>
York
bankruptcy judge halt the creditors’ investigation into their
records while a federal district judge mulls over the committee’s
request. Refco’s underwriters, a handful of Wall Street investment
banks, contend that creditors shouldn’t be able to conduct a
“fishing expedition” into their books while underwriters
simultaneously face numerous discovery requests involving Refco-related
securities charges in a federal venue. The creditors want to look into
the bank’s financial records under the imprimatur of Rule 2004 of
the Bankruptcy Code, which permits a
size='3'>bankruptcy court to force a company to divulge records related
to its financial status. Refco’s underwriters argue that the move
on behalf of creditors to invoke the Rule 2004 provision is contrary to
the court’s desire for “coordinating discovery in all
Refco-related matters.”
G+G
Judge Says Creditors Can Limit Information Sharing
As courts struggle to
cope with the vague provision of last October’s new bankruptcy law
on information-sharing, a federal judge overseeing G+G Retail Inc.'s
chapter 11 case has ruled that members of the creditors' committee won't
have to share confidential information with the creditors they
represent. In papers filed this week in a
w:st='on'>
size='3'>Manhattan
U.S. Bankruptcy Judge
size='3'>Robert Drain stated that G+G’s
committee will not be required to provide access to any confidential or
privileged information to any creditor it
face='Times New Roman' size='3'>represents. “There is no
legislative history to 1102(b)(3)(A) to provide guidance on the
application of this new provision,” stated creditors in court
papers filed in January. “The lack of specificity in new
1102(b)(3)(A) creates significant issues for debtors and
creditors’ committees…[it] raises the issue of whether a
creditors’ committee could be required to share a debtor’s
confidential information with any creditor that the committee
represents.” Bids to clarify the hazy terms of the provision have
been surfacing in bankruptcy cases nationwide. “The Code was
amended to impose the duty for creditors to share relevant information
with their constituents that would be relevant, but of course it
didn’t give much guidance at all as to what type of information
needs to be shared and what the limits are, so it’s logical that
attorneys representing committees are now looking to the courts to
clarify the parameters,” said Andrew E. Jillson, a shareholder
with Jenkens & Gilchrist.
Dana
Hopes to Emerge from Bankruptcy within 18 Months
Dana Corp. said it hopes to
emerge from bankruptcy within 18 months, and its chief executive told
creditors that the auto parts company plans to further wean itself off
of three major customers, the Big Three automakers, the Associated Press
reported on Friday. Speaking to a crowded room of creditors and their
attorneys, Dana's chief executive, Michael Burns, assured creditors
there have been no disruptions for customers related to Dana's
bankruptcy. He told creditors diversification of Dana's customer base
has become very important. 'Dana has been historically very much tied to
the Big Three. That's changing now' with customers like Toyota Motor
Corp. and Nissan Motor Co., Burns said. Burns told creditors that a jump
in steel prices, a drop in SUV sales and higher energy costs pushed the
company into bankruptcy. He said that the downturn in the auto parts
industry has made it tougher for the company to borrow money outside of
bankruptcy.
href='http://www.chron.com/disp/story.mpl/ap/business/3715291.html'>Read
more.
In related news recently laid-off salaried employees and retirees
from the company are losing severance packages or have seen savings put
into Dana's stock plummet, according to the Toledo (Ohio) Blade
yesterday. One man expected that his package would have given him a
$38,000 cushion and health insurance for a year while he searched for
another job after 29 years with Dana. In its filing in the U.S.
Bankruptcy Court in
face='Times New Roman' size='3'>New
York
500 firm listed assets of $7.9 billion and debts of $6.8 billion.
Severance payments for claims before the bankruptcy were eliminated, as
required by law, and long-term disability payments for nonunion
employees were discontinued, a company spokesman said.
href='http://toledoblade.com/apps/pbcs.dll/article?Date=20060312&Category=BUS…'>Read
more.
New
Credit Card Minimums May Hurt Banks
Both Citigroup Inc. and
JPMorgan Chase & Co. said in recent filings with the Securities and
Exchange Commission that delinquencies and charge-offs might spike in
the second half of the year, the Associated Press reported yesterday.
That's when the banks believe new federal guidelines that require
significantly increased monthly minimum payments will begin to hurt
customers already struggling to pay bills. The new requirements imposed
by the Office of the Comptroller of the Currency (OCC) are designed to
help customers avoid getting deeper into debt. However, a new spate of
defaults as customers adjust to the new minimums could hurt profit at
the nation's card issuers, especially those that assist borrowers with
weaker credit. Banks have instituted the new minimum balances at a time
when American families continue to reel from credit card debt. The
Federal Reserve said last month in its survey of consumer finances that
46.2 percent of all families now carry a credit card balance, up from
44.4 percent in 2001. 'The new minimums could be very beneficial to
credit card companies because they'll get their money quicker, but it
could become very expensive if it has the effect of driving more
consumers into bankruptcy,' said Bill Hardekopf, chief executive of
credit card Web site Lowcards.com.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/03/12/AR20060…'>Read
more.
name='10'>Delta, Pilots Head to Arbitration
Delta Air Lines Inc. and its
pilots are heading for a showdown over a second round of long-term pay
and benefit cuts that could result in a strike that could put the
nation's third-largest carrier out of business, the Associated Press
reported yesterday. During two weeks of hearings that start Monday,
Delta will ask a three-person arbitration panel to throw out its
collective bargaining agreement with its pilots so it can impose up to
$325 million in long-term pay and benefit cuts. The pilots union has
said it will strike if its contract is voided. Nothing precludes the two
sides from continuing to talk during the hearings, though the company
and union concede they are far apart. Both sides agreed to binding
arbitration, according to court papers, but the pilots union has
asserted that it believes it would still be allowed to strike if its
contract is voided. The company says a strike would be illegal.
href='http://www.forbes.com/home/feeds/ap/2006/03/12/ap2588925.html'>Read
more.
name='11'>Challenge to Wyoming Construction Company
President’s Bankruptcy Filed
Developer Serge d'Elia
has filed an unusual dual challenge to the bankruptcy filing by
construction company president Clint Schuler, his former business
partner, according to court records the
size='3'>Casper (Wy.) Star-Tribune reported
today. Schuler and his wife ShLee also filed for federal chapter 7
bankruptcy on Oct. 14, 2005 in which they declared nearly $1.9 million
in assets and nearly $4.1 million in liabilities, according to their
voluntary petition. Of those liabilities, the Schulers stated they owe
the d'Elias $757,000 without deducting the value of the collateral.
D'Elia claimed that he should receive his $757,000 because Schuler
defrauded him in real estate transactions and for improper use of credit
cards, as well as for converting money to buy unauthorized
building materials instead of using it for the 303 restaurant
renovation. D'Elia also claimed that Schuler has property in
size='3'>Arizona
accounted for funds he received during the 303 restaurant remodel, and
may have hidden funds in other corporations.
href='http://www.casperstartribune.net/articles/2006/03/11/news/casper/280f4e…'>Read
more.
w:st='on'>
name='12'>Spokane
face='Times


New
Roman' size='3'> Diocese May Face
Further Abuse Claims
The Catholic Diocese of Spokane
will know soon how much money it could be asked to pay by victims of
clergy sex abuse, the Associated Press reported on Saturday. The
deadline for victims to file claims in U.S. Bankruptcy Court here was
midnight Friday, and lawyers for the diocese expected to know as soon as
Monday how many people allege they were abused, and how much the diocese
might be asked to pay. Bishop William Skylstad offered $45.75 million
last month to settle claims by 75 people, who are expected to accept or
reject the settlement within two months. But diocesan attorneys have
said there could be a like number of people not covered under that
settlement who demand compensation. All of those who claim to have been
abused, including the original 75, had until Friday to file claims with
U.S. Bankruptcy Court, to protect their right to seek compensation. If
dozens of additional claims are upheld, the diocese could be liable for
as much as $80 million, the association has estimated.
href='http://seattlepi.nwsource.com/printer2/index.asp?ploc=t&refer=http://se…'>Read
more.
name='13'>Commentary: To Save a Crippled City
The Bush Administration
is going to have to push hard on the storm victims' behalf so that
legislators do not shortchange distressed homeowners, according to
a New York
Times editorial today. Only one thing matters
to the funding debate now: helping the hundreds of thousands of evacuees
return and rebuild or, at minimum, freeing them from mortgages on ruined
properties before they must declare bankruptcy. According to federal
figures, more than 200,000 houses and apartments suffered major or
severe damage in
size='3'>Louisiana
around
Orleans
percent of all housing units in the entire state.
href='http://www.nytimes.com/2006/03/13/opinion/13mon1.html?_r=1&oref=slogin&…'>Read
more.
name='14'>Online Sales Company in
w:st='on'>
size='3'>Nebraska
Bankruptcy
size='3'>Lincoln
w:st='on'>
size='3'>Neb.
sold consigned items on the Internet, filed for bankruptcy on March 4,
the Lincoln Journal
Star reported today. The U.S. Bankruptcy
chapter 7 filing did not estimate assets and liabilities of the company.
Those are due March 17. Former Sell2All
controller Marvin Frank, who left the company in November, said he was
not in a position to say whether company employees were paid before the
bankruptcy filing. Sell2All sold excess inventory for companies through
online auctions on the Internet, according to earlier news reports. It
got a percentage from the seller or earned profit by selling items for
more than liquidation prices. Sell2All sold items including toys, shoes,
electronics, tools and Tupperware.
href='http://journalstar.com/articles/2006/03/13/local/doc4414c34adee2c015524…'>Read
more.
name='15'>Bankrupt Ex-Lawmaker Owes More than $1 Million to
USDA
The U.S. Department of
Agriculture lent former U. S. Rep. Tommy Robinson, who is now bankrupt,
$ 1.2 million in October 2000, even though Robinson had defaulted a year
earlier on a promissory note of more than $500,000, records in U.S.
District Court for the Eastern District of Arkansas show, according to
Saturday's Arkansas
Democrat-Gazette. As part of a chapter 11
bankruptcy reorganization plan, Robinson is asking that the government
give him nearly 20 years to repay just a portion of the more than $1.5
million he owes. In September 2004, when Robinson's Brinkley Truck and
Tractor filed for bankruptcy protection, it owed the USDA $ 1,538,645
— $ 1,205,477 in principal, plus $333,168 in interest —
according to the proof of claim that the government filed in U.S.
Bankruptcy Court for the Eastern District of Arkansas. The USDA noted in
that filing that no payments had been made since August 2002.
Robinson’s latest request for help comes after he and his wife,
Carolyn, were declared personally bankrupt in September in two
involuntary chapter 7 cases. Since four of Robinson’s companies
filed for chapter 11 bankruptcy protection, two of them — both
farming businesses — have been liquidated. Brinkley Truck &
Tractor, the larger of his two remaining companies, has asked the USDA
to grant it 19 1/ 2 years to repay the secured portion of its government
debt, according to a reorganization plan filed Dec. 7 and updated March
1.“In the case of USDA, there’s no way that we can service a
$ 1. 2 million debt,” Robinson said. The federal
government’s loan is secured by a mortgage on real estate that
belongs to Brinkley Truck & Tractor, and by the equipment, inventory
and accounts receivable of both companies, which are owned jointly by
the Robinsons.
href='http://www.nwanews.com/adg/Business/148489/'>Read
more.
International
name='16'>Expert Blasts Proposal for British Pension
Reform
British pension
businesses may be seriously damaged if proposals in a recent
quasi-official report were to become law, a senior retirement industry
figure will warn in a speech on Monday, Reuters reported today. The
proposed National Pensions Savings Scheme would use tax systems to
channel workers' and company contributions into a few large pots of
money to reduce management fees. Such a system could undermine the
pension industry by damaging existing plans and reducing the diversity
of fund providers, according to the text of a planned speech by Alan
Pickering, a partner at consultants Watson Wyatt.
size='3'>The scheme is the brainchild of the Pension Commission, a body
set up by the government to propose reforms of
w:st='on'>
size='3'>Britain
size='3'>'s pension system, which is straining to cope with the impact
of an aging population. The scheme would use bulk-buying power to
negotiate low-fee contracts with investment funds in different asset
classes. One option, like the Swedish savings system, would channel
money to hundreds of portfolios.
href='http://today.reuters.co.uk/news/newsArticle.aspx?type=topNews&storyID=2…'>Read
more.
name='17'>Palestinian Government Faces
Bankruptcy
Despite funding from
foreign sources, the Palestinian Authority will have only 95
percent of the money needed to pay February's overdue salaries,
according to the Palestinian economic minister, the
face='Times New






Roman'
size='3'>Times of India reported yesterday. In
the last two weeks, the Palestinian Authority has been given about $70
million more than $40 million released by the World Bank, nearly $21
million from the EU and $10 million from
w:st='on'>
size='3'>Norway
How it will cover salaries for March, said the minister, Mazen Sinokrot,
'remains a mystery.' And once Hamas, the militant Islamic party that
swept January's legislative elections, names a new government,
significant amounts of international aid will dry up. 'We're bankrupt,'
Sinokrot said in an interview on Thursday in his Ramallah
office.
href='http://timesofindia.indiatimes.com/articleshow/1446592.cms'>Read
more.
w:st='on'>
name='18'>China
face='Times New Roman' size='3'> Pension Reform May Need to
Accelerate
Pension reforms are
urgent in
w:st='on'>
size='3'>China
growth in the working age population will slow around 2010 and its ranks
of over-65s will have quadrupled by 2050, according to Reuters on
Saturday. By that time, every 10 adults will be supporting seven
children or pensioners, up from four today, according to Goldman
Sachs. In 1997,
w:st='on'>
size='3'>China
size='3'>embarked on reforms of its public pension system, which the
Organization for Economic Cooperation and Development (OECD) says covers
just 14 percent of the active population. To complement the basic
flat-rate pension,
w:st='on'>
size='3'>China
size='3'>introduced a second pillar that provides a pension varying
according to contributions paid into individual accounts. 'There is a
small window of opportunity of one to two decades -- the demographic
dividend period -- in which you can start accumulating funds,' said Yu
Xiaoqing, a pension specialist with the World Bank in
w:st='on'>
size='3'>Beijing
would only widen the funding gap between contributions and payouts. 'If
they don't use this window, the system is going to be even harder to
sustain,' Yu said.
href='http://wireservice.wired.com/wired/forms/printstory.asp?section=Breakin…'>Read
more.