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November 17,
2006
Airlines
id='1'>Offer for Delta Raises Questions on Some
Pensions
w:st='on'>
size='3'>US
size='3'>Airways’ bid for Delta Air Lines has cast new uncertainty
over the pensions of roughly 90,000 Delta employees and retirees, just
months after a new law was supposed to have assured their future, the
New York Times reported today. The Pension Protection Act,
signed into law by President Bush in August, contained airline relief
measures, yet the law requires most companies to pump money into their
pension funds quickly. The nation’s airlines received pension
relief, and the most troubled major airlines, Delta and Northwest, won a
provision letting them reduce their contributions for the next 17 years.
However, records at the pension guarantor show that Delta has not
elected to make use of the pension relief, while Northwest Airlines has
already done so.
href='http://www.nytimes.com/2006/11/17/business/17pension.html?ref=business&pagewanted=print'>Read
more .
In related news, Delta
Air Lines began trying to rally support from creditors for its push to
fend off an $8.76 billion hostile takeover bid by US Airways, with
the
size='3'>carrier firmly reiterating its determination to emerge from
bankruptcy as a standalone company, the Wall Street Journal
reported today. Delta Chief Executive Gerald Grinstein and other
executives at the third-largest
w:st='on'>
size='3'>U.S.
size='3'>airline held a series of conference calls yesterday with
creditors to sift through terms of US Airways' cash-and-stock offer,
pressing creditors to back Delta's restructuring plan. The move could
give Delta an early advantage in its fight to remain independent, since
US Airways hasn't had any face-to-face meetings with Delta's
creditors’ committee.
href='http://online.wsj.com/article/SB116373488746126002.html?mod=home_whats_news_us'>Read
more . (Registration required.)
id='2'>Commentary: Regulators Should Proceed with Caution on Airline
Mergers
The question for
regulators in considering airline mergers, such as the possible union
between US Airways and Delta, is whether the result is a leaner, meaner
industry with lower costs or just a case of less competition driving
prices higher, according to a New York
Times editorial today. Without allowing a
free-for-all to break out, there is clearly some room for combining
operations in this changing industry. Even with high fuel prices and
strong demand for tickets, the fierce competition between airlines has
helped hold prices down on many routes, keeping consumers happy.
Low-cost carriers like JetBlue Airways and Southwest Airlines have put
particular pressure on older full-service carriers like Delta.
size='3'>Airways went through bankruptcy twice in the last four years
before merging with the discount carrier America West Airlines.
href='http://www.nytimes.com/2006/11/17/opinion/17fri3.html?pagewanted=print'>Read
more .
id='3'>NWA Bankruptcy Firms Ask for More Than $15 Million in
Fees
Lawyers and consultants
are asking for $15.1 million in fees for helping Northwest Airlines
Corp. reorganize under bankruptcy protection, the Associated Press
reported yesterday. The request for fees covering the four months ending
Sept. 30 brings Northwest's bankruptcy tab so far to $42.58 million in
fees. That's not counting the 20 percent of fees that U.S. Bankruptcy
Judge Allan
Gropper has ordered held back until later in
the bankruptcy process. Attorneys and consultants have also submitted
bills for $2.5 million in expenses, including $669,555 in the latest
round.
href='http://www.twincities.com/mld/twincities/news/16029920.htm'>Read
more .
w:st='on'>
id='4'>Oneida
Payments
After emerging from
bankruptcy two months ago, Oneida Ltd. has found itself locked in a
battle with the Pension Benefit Guaranty Corp. (PBGC) over whether the
flatware maker owes the government insurer a slew of payments for
terminating its pension plans, Bankruptcy
Law360 reported yesterday.
w:st='on'>
size='3'>Oneida
PBGC on Wednesday in the U.S. Bankruptcy Court for the Southern
District, arguing that it should not be held liable for various
termination payments. In September, the PBGC revealed that it had taken
over one of the pension plans for
w:st='on'>
size='3'>Oneida
responsibility for nearly 1,900 workers and retirees.
w:st='on'>
size='3'>Oneida
pension plan is suffering from a $50.4 million shortfall, making the
PBGC’s intervention a necessity. With only 31 percent of the
company’s pension plan funded, the PBGC will now be liable for an
estimated $48.3 million of
w:st='on'>
size='3'>Oneida
leftover legacy costs.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=13689'>Read
more . (Registration required.)
id='5'>Commentary:
w:st='on'>San
Diego
with Pension Troubles
With San Diego finally
settling its case with the Securities and Exchange Commission (SEC),
other states and municipalities are looking at a gap that has been
estimated at $2 trillion, with pension shortfalls of $700 billion and
health-care costs -- also known as “other post-employment
benefits,'' -- of $1.4 trillion, according to a Bloomberg News
commentary today.
face='Times New Roman' size='3'>San Diego
was running into trouble when it sold five bond issues
totaling $260 million in 2002 and 2003. “At the time of these
offerings, city officials knew that the city faced severe difficulty
funding its future pension and health care obligations unless new
revenues were obtained, pension and health care benefits were reduced,
or city services were cut,'' the SEC said in the settlement with the
city. Due to
face='Times New Roman' size='3'>San
Diego
many other cities, states and municipalities are paying closer attention
to their pension and health care obligations.
href='http://www.bloomberg.com/apps/news?pid=20601039&sid=aumexv8vt5rc&refer=home'>Read
more .
id='6'>Bank of
w:st='on'>
size='3'>America
size='3'>Unhappy with Adelphia's Chapter 11 Plan
Bank of America opposed
Adelphia Communications Corp.’s chapter 11 reorganization plan on
Wednesday, arguing that the plan is not legally sustainable or
economically feasible, Bankruptcy
Law360 reported yesterday. The bank said that
Adelphia’s plan ignored legal requirements of the Bankruptcy Code
by giving Adelphia the right to “deem” classes to have voted
for the plan, even if no votes were received. The plan violates the due
process rights of lenders by giving Adelphia the right to take action
with little or no notice to lenders and thus stripping lenders of their
ability to defend themselves, Bank of America added. Bank of America
also argued that the plan would not work economically, claiming that
various stipulations in the plan require large amounts to be escrowed or
paid at higher interest rates than previously discussed.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=13683'>Read
more . (Registration required.)
id='7'>Victory Memorial files for Chapter 11
face='Times New Roman' size='3'>Victory
size='3'>Memorial
face='Times New Roman' size='3'>Hospital
size='3'>and
w:st='on'>
size='3'>Nursing
face='Times New Roman' size='3'>Center
size='3'>, based in
size='3'>N.Y.
has filed for bankruptcy, making it the fourth hospital in
size='3'>New York City
size='3'>currently in chapter 11, Crain’s New York
Business reported yesterday. Victory listed $86.6 million in debts
and $49.5 million in assets, in its bankruptcy filing. The announcement
comes 12 days before the anticipated release of the Commission on
Healthcare Facilities in the 21st Century’s report. The panel is
tasked with naming ailing hospitals that should close or restructure
with a goal of reducing
w:st='on'>New
York
size='3'>’s Medicaid expenditures. Victory spokesman Gerald
McKelvey said that the hospital does not intend to close and has lined
up $10 million in debtor-in-possession financing, he says.
href='http://www.newyorkbusiness.com/apps/pbcs.dll/article?AID=/20061116/FREE/61116003/1049/FREE'>Read
more .
id='8'>Solutia Supports Extension Bid
Seeking to bolster its bid for
a ninth extension of its exclusive rights to file and solicit support
for a chapter 11 plan, bankrupt chemical products maker Solutia Inc.
filed its reply Wednesday to a strongly worded objection lodged last
week by the ad hoc noteholders’committee, Bankruptcy
Law360 reported yesterday. Solutia’s former parent
company Monsanto Corp. has already traded barbs with the noteholders,
who accused Solutia of failing to aggressively prosecute claims for
environmental liabilities against Monsanto, and complained that the
securing liens on the $450 million in Solutia notes they hold were
wrongly stripped. Adversary proceedings over the pursuit of claims
against Monsanto and the noteholders’ liens are still pending, a
fact Solutia points to as support for its request for another
extension.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=13691'>Read
more. (Registration required.)
id='9'>Commentary: Bush’s Renomination of Judicial Candidates
Will Receive Scrutiny in New Congress
While voters sent a clear
message last week that they do not want the far right of the Republican
Party calling the shots in
w:st='on'>
size='3'>Washington
w:st='on'>
size='3'>D.C.
Bush resubmitted a group of conservative judicial nominees that Senate
Democrats have already said are unacceptable, according to
size='3'>a New York Times editorial
today. With the Democrats about to take control of the Senate, it is
highly unlikely that these men will be confirmed. Senator Charles
Schumer (D-N.Y.) has said that “the days of hard-right
judges” are over, and when Democrats take over in the Senate, he
will be in a position to see that they are.
face='Times New Roman' size='3'>
href='http://www.nytimes.com/2006/11/17/opinion/17fri1.html?pagewanted=print'>Read
more .
id='10'>Credit Managers Daily Business News
Report
The following articles
are taken from the Daily Summary of Troubled & Fast Growing U.S.
Companies published by Bastien Financial Publications.
size='3'> For more of the latest business
news visit http://dailybusiness.creditmanagers.biz.
size='3'>
ABI Members receive a 50
percent discount when subscribing to the complete Daily Summary. Enter
“ABI Member” in the comments section when you fill out the
subscriber form.
size='3'>Cerro Wire and Cable Co., an
Alabama-based maker of products for homebuilders, is laying off
twenty-one workers at its facility in Crothersville, In., citing the
downturn in the homebuilding market.
size='3'>Dell Inc., the Round Rock,
size='3'>Texas
maker, revealed that the Securities and Exchange Commission upped an
informal probe into its accounting methods to an official investigation,
which now gives the SEC legal power to subpoena documents and company
officials. The company added that it will delay filing its third quarter
earnings report because of the complex issues involved in the SEC
inquiry.
size='3'>General Motors Corp.,
size='3'>Detroit
w:st='on'>
size='3'>Mich.
closer to selling its majority interest in its General Motors Acceptance
Corp. finance unit to a group led by private-equity firm Cerberus
Capital Management LP by the end of the year.
size='3'> The Federal Deposit Insurance
Corp. has now voted in favor of permitting GM to transfer GMAC's banking
charter to Cerberus, a decision that clears a major condition for the
potential $14 billion deal. GM would benefit from the sale by raising
cash needed for its ongoing efforts to turn itself
around.
size='3'>Hallwood Group Inc., a
size='3'>Dallas
w:st='on'>
size='3'>Texas
firm, reported a third quarter net loss of $850,000. Revenue declined
17%--to $25.1 million.
size='3'>Hyperspace Communications Inc., a
Greenwood Village, Colo. provider of software and services, reported a
third quarter net loss of $40.5 million. The results included a charge
of $11 million related to impairment, a vendor settlement, debt
extinguishment and stock compensation. Revenue declined 24%--to $76.6
million.
size='3'>Pep Boys-Manny, Moe & Jack, the
Philadelphia, Pa.-based retailer of auto parts, reported a third quarter
net loss of $7.9 million.
size='3'>Its operating loss of $7.7 million included an extra gain
$213,000 from the sale of assets. Sales increased almost 1%--to $551
million.
size='3'>Pomeroy IT Solutions Inc., a
size='3'>Hebron
w:st='on'>
size='3'>Ky.
computers, reported a third quarter net loss of $1 million. The results
included goodwill-writedown charges of $3.5 million. Revenue declined
16%--to $155 million.
size='3'>Sun-Times Media Group, the publisher
of the Chicago Sun-Times and community newspapers, retained Cyrus
Freidheim, a turnaround expert and outside director, to serve as its
president and CEO. In
the first nine months of this year, the
w:st='on'>
size='3'>Chicago
w:st='on'>Il
lost almost $26 million on a 9% drop in revenue--to $341
million.
size='3'>Tarrant Apparel Group, a
size='3'>Los Angeles
w:st='on'>
size='3'>Calif. apparel
company, reported a third quarter net loss of $25.4 million. Sales fell
21%--to $54.6 million.
size='3'>TRM Corp., a
w:st='on'>
size='3'>Portland
w:st='on'>
size='3'>Ore.
ATMs and copy machines inside stores, reported a third quarter net loss
of $101 million. Its operating loss of $101 million included $96.8
million in charges related mostly to impairment. Revenue declined
12%--to $51.1 million.
size='3'>Wilsons The Leather Experts Inc., a
Brooklyn Park, Minn. retailer of men's and women's leather outerwear and
accessories, reported a third quarter net loss of $14.1 million. Sales
sank 16%--to $64.5 million.