July 142009

 

name='1'>Congressional Hearings Focus on Consumer Protection,
Financial Regulatory Reform

Hearings today by committees in both
the House and Senate will be focusing on the Obama
Administration’s proposed Consumer Financial Protection Agency and

SEC Financial Regulatory Reform. The Senate Banking Committee will be
holding a hearing today at 9 a.m. titled “Creating a Consumer
Financial Protection Agency: A Cornerstone of America’s New
Economic Foundation.” 

href='http://banking.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=9a56da23-60cb-4fd0-ac04-f94ead7d1859'>Click

here to view the witness list for the hearing.

Also in the Senate, the Senate Commerce

Consumer Protection, Product Safety and Insurance Subcommittee will be
holding a hearing at 10 a.m. ET titled “The Economy and Fraud:
Protecting Consumers During Downward Economic Times.” 

href='http://commerce.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing_ID=b88504e4-a446-4bd4-8f52-1aff25b38720'>Click

here for more information.

In the House, the Financial Services
Capital Markets Subcommittee will be holding a hearing at 10 a.m. ET
titled “SEC Oversight: Current State and Agenda.” 

href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/cmhr_070709.shtml'>Click

here for more information and to watch the hearing live via Web

cast.

Justice
Department Probes Credit-Derivatives Market

The U.S. Department of Justice
has opened an investigation into credit derivatives, according to Markit

Group Holdings Ltd., for the arcane but booming market that played a
leading role in the credit crisis, the
size='3'>Wall Street Journal reported today.
Markit, a data provider, said today that it has been informed of the
investigation into credit derivatives and related markets by the Justice

Department. In addition to providing pricing data, Markit maintains
benchmark indexes and is owned in part by the big banks most active in
credit derivatives. Markit has helped fuel the spectacular rise of the
credit-derivatives industry in recent years by making prices more
visible to investors and allowing them more ways to hedge risks and make

speculative bets. Previously, investors had little insight into prices
of contracts that are traded between investors rather than on a public
stock exchange. 

href='http://online.wsj.com/article/SB124756743503138067.html#mod=testMod'>Read

more. (Subscription required.)

U.S. in Talks

to Rescue CIT

U.S. government officials are in
advanced talks about providing some sort of aid to CIT Group Inc., one
of the country's primary lenders to small and midsize businesses,
the Wall Street
Journal reported today. CIT has been battered
by heavy losses, but so far, regulators haven't deemed its problems big
enough to pose a threat to the broader financial system. Government
officials are worried, however, about unforeseen consequences that a CIT

collapse could trigger. The Obama administration has struggled to launch

a program to spur lending to smaller companies, a business in which CIT
is a key player, with loans to nearly a million customers. One possible
source of aid would be a Federal Deposit Insurance Corp. program that
guarantees newly issued debt. CIT has been seeking for months to take
advantage of this program, but the FDIC has been reluctant to let it
because of CIT's financial weakness. The Treasury Department and the
Federal Reserve are more supportive of such a move, but it remained
unclear yesterday whether the FDIC would soften its position and let CIT

issue federally guaranteed debt. 

href='http://online.wsj.com/article/SB124749287053432615.html#mod=testMod'>Read

more. (Subscription required.)

Autos

Judge
Approves Plan for GM to Buy Delphi Out of Bankruptcy

Bankruptcy Judge
face='Cambria' size='3'>Robert Gerber approved

a plan that will allow General Motors Co. to team up with a
private-equity firm to buy Delphi Corp. and take the automaker's former
parts unit out of bankruptcy, the
size='3'>Wall Street Journal reported today.
Under the agreement with Delphi, GM would buy Delphi's steering
business, based in Saginaw, Mich., and plants in Kokomo, Ind.;
Rochester, N.Y.; Lockport, N.Y. and Grand Rapids, Mich. A new company
owned by Platinum Equity and GM will buy Delphi's remaining assets in
the U.S. and abroad. Delphi, which has been in bankruptcy for nearly
four years, will receive a membership interest in that company in the
face amount of $145.5 million. GM will pump $2 billion in cash into the
new company and provide a $500 million loan. Platinum will invest $250
million into the company and loan $250 million. GM will also pay or
assume $1.1 billion in Delphi's debt, including a portion of its
bankruptcy loan, and waive a $1.9 billion claim against Delphi in
addition to other considerations. 
href='http://online.wsj.com/article/SB124749398679832673.html'>Read
more. (Subscription required.)

name='5'>Car
Dealers Look to House Appropriations Bill for
Help

Dealerships of General Motors
Corp. and Chrysler LLC products that are targeted for closure could
receive a boost this week when the House takes up the FY10 Financial
Services appropriations bill that includes a provision to restore the
franchise agreements canceled in bankruptcy proceedings or terminated by

the automakers,
size='3'>CongressDaily reported yesterday. The

National Automobile Dealers Association is lobbying for the provision by

arguing that the dealerships are independent and do not cost the
carmakers money, and therefore closing them would not save money. The
two car companies are looking to close roughly 3,000 dealerships in an
effort, supported by President Obama, to reorganize into more
competitive businesses. The dealers' language was approved by voice vote

during the bill's full committee markup of the $24.1 billion spending
bill last week. House Appropriations Chairman David Obey (D-Wis.) pushed

for approval of the amendment, sponsored by Rep. Steven LaTourette
(R-Ohio) and said that he would protect the proposal when the bill goes
before the Rules Committee, according to LaTourette's
office.

Ford, GM,
Creditors Blast $80 Million Visteon Bonuses

Visteon Corp.'s unsecured
creditors and its proposed debtor-in-possession lenders, including
former parent Ford Motor Co., have objected to the bankrupt auto parts
maker's plan to pay up to about $80.1 million in bonuses,
Bankruptcy Law360
size='3'>reported yesterday. The unsecured creditors’ committee
said that some employees would likely qualify for more than one of
several incentive programs proposed by Visteon. It asked the court to
allow more time, and order Visteon to provide more information, so that
it could evaluate the extent of overlap between different incentive
programs. Ford and General Motors Corp., which are currently negotiating

a DIP loan to Visteon along with Chrysler Group LLC and Nissan North
America Inc., launched a broader attack on the bonus plan in objections
filed Friday, with Ford calling the plan “too rich” given
the present economic climate. 
href='http://bankruptcy.law360.com/print_article/110917'>Read
more. (Subscription required.)

name='7'>Administration’s Auto Industry Point Man
Resigns

The Treasury Department announced

yesterday that Steven Rattner, the Wall Street financier who led the
Obama administration's efforts to save General Motors and Chrysler, is
resigning as the head of the auto task force to return to New York,
the Washington Post
reported today. The departure surprised some of his
colleagues and came a week after the task force finished leading the two

automakers into and out of rapid bankruptcy restructurings, along the
way investing billions in government funds into the companies and their
suppliers. 'With the emergence of both General Motors and Chrysler from
bankruptcy, we enter a new phase of the government's unprecedented and
temporary involvement in the automotive industry,' Treasury Secretary
Timothy F. Geithner said in a statement. Ron Bloom, a senior member of
the autos task force and former adviser to the United Steelworkers, will

assume leadership of the group. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2009/07/13/AR2009071302411.html'>Read

more.

name='8'>Pharmaceutical Firm Files Chapter 11

Oscient Pharmaceuticals Corp. and
subsidiary Guardian II Acquisition Corp. filed for chapter 11 in the
U.S. Bankruptcy Court for the District of Massachusetts and sold its
chronic bronchitis drug Factive, the Associated Press reported
yesterday. Oscient agreed to sell Factive to Cornerstone Therapeutics
Inc. for $5 million, plus royalties and the value of the drug's
inventory. The company said that it will consider strategic
alternatives, including seeking a buyer for its only other approved
drug, the cholesterol drug Antara, and other assets. Oscient has cut 280

of its 305 jobs this year as part of an effort to preserve cash and
reduce debt. In February, it eliminated 100 jobs, and in June, it cut
its 150-person sales force and 30 other positions. 

href='http://www.google.com/hostednews/ap/article/ALeqM5iD0rPxs6e1xsoS0BVSTDnylp9jPwD99DQOA80'>Read

more.

Steel Tube
Maker RathGibson Files Prepackaged Chapter 11

RathGibson Inc., which makes steel
tubes and pipes for a variety of industries, filed for chapter 11
protection yesterday with a plan in place to reduce its debt and repay
unsecured creditors in full, Dow Jones Newswires reported yesterday. The

Lincolnshire, Ill.-based company said that its management, prepetition
secured lender and some key noteholders were on board with the
reorganization efforts, which involve swapping $200 million in senior
notes for equity in the new business. RathGibson listed assets of $305
million and debts of $219.2 million in its petition. RathGibson CFO Jon
M. Smith described how a looming $11.25 million payment to senior
noteholders, due Aug. 15, and consistent downgrades by ratings firms
like Moody's Investors Service and Standard & Poor's had driven the
company into bankruptcy protection. 

href='http://money.cnn.com/news/newsfeeds/articles/djf500/200907131514DOWJONESDJONLINE000551_FORTUNE5.htm'>Read

more.

Frontier
Air Receives Approval to Be Sold to Republic Airways

Bankruptcy Judge
face='Cambria' size='3'>Robert Drain approved
a deal yesterday under which bankrupt Frontier Airlines Holdings Inc.
will sell itself to Republic Airways Holdings Inc. if no other better
bids emerge, paving the way for the airline's exit from bankruptcy
within months, Reuters reported. Under terms of the deal, Republic
Airways will pay $108.8 million for a 100 percent stake in Denver-based
Frontier, which would become a wholly owned subsidiary of Republic,
Frontier said in a statement. However, the deal could be scuttled if
potential rivals make higher offers; Frontier has a bankruptcy auction
scheduled to be held on Aug. 11. Frontier said it expects to emerge from

chapter 11 protection later this year. The case is
face='Cambria' size='3'>In re Frontier Airlines Holdings
Inc., U.S. Bankruptcy Court, Southern District

of New York, No. 08-11298. 

href='http://www.reuters.com/article/marketsNews/idUSN1351820090713'>Read

more.

Bankruptcy
Filing Possible for Chicago Cubs

The possibility of the Chicago
Cubs baseball team being placed into bankruptcy raises a number of legal

questions, as bankrupt Tribune Co. moves closer to selling the team,
Wrigley Field and related assets to the Ricketts family, the
Chicago Tribune
size='3'>reported today. Sources say that Tribune Co. remains in
negotiations with a rival bidding team led by New York investor Marc
Utay. Some of the banks that have agreed to lend the Ricketts family
money to finance their $900 million offer have begun talking to other
financial institutions about taking on some of the loans, sources said,
an indication that the Rickettses' deal is progressing. Tribune Co.'s
deliberation about whether to place the team in bankruptcy is also
picking up steam after the company left the team out of its December
filing. A separate Cubs bankruptcy filing would be made as a legal
tactic designed to expedite the sale of the team and not because of any
financial pressures on the franchise. 

href='http://www.chicagotribune.com/business/chi-tue-cubs-0714-jul14,0,779712,print.story'>Read

more.

Sinclair
Broadcast Warns of Possible Chapter 11 Filing

Television station owner Sinclair
Broadcast Group Inc. has warned that it may be forced to file for
chapter 11 protection as it struggles with continued declines in
advertising spending and a hefty debt load, the Associated Press
reported yesterday. The Baltimore-based company, which owns 58 TV
stations in 35 markets, said in a regulatory filing Friday that the
recession continues to hurt its advertisers, including those in the
automotive industry, which have historically made up a quarter of the
company's total ad sales. As of March 31, the company had $1.33 billion
of total debt outstanding, and holders of its 3 percent convertible
senior notes and 4.875 percent senior subordinated notes may require
Sinclair to buy back nearly $500 million worth of that debt within the
next 18 months. In its Securities and Exchange Commission filing,
Sinclair said that it doesn't have the cash to buy back that debt and
could be forced to file for chapter 11. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2009/07/13/AR2009071303386_pf.html'>Read

more.

Pliant
Appeals Denial of Exclusivity-Period Extension

Bankrupt plastic film and
packaging manufacturer Pliant Corp. has asked a court to stay its orders

eliminating exclusivity and allowing private equity fund Apollo
Management to put forth a competing restructuring plan,
face='Cambria' size='3'>Bankruptcy Law360
size='3'>reported yesterday. In a motion filed Friday in the U.S.
Bankruptcy Court for the District of Delaware, Pliant asked the court to

stay the orders pending the company's appeal with the U.S. District
Court for the District of Delaware. Pliant asked the bankruptcy court to

hold a hearing on the stay on July 20. Earlier this month, Judge
Mary Walrath
size='3'>gave Pliant's largest single creditor, Apollo, the go-ahead to
file a competing restructuring plan. The fund filed its plan and
disclosure statement Thursday. 
href='http://bankruptcy.law360.com/articles/110927'>Read
more. (Subscription required.)

Economy,
Labor Troubles Push Arizona Grocer into Chapter 11

Arizona-based grocer Bashas' Inc.

filed for chapter 11 protection, saying that tight credit markets, a
tough state economy and an ongoing war with unions have pushed the
company to the financial brink,
size='3'>Bankruptcy Law360 reported yesterday.

Bashas' filed a voluntary chapter 11 petition with the U.S. Bankruptcy
Court for the District of Arizona on Sunday, listing both the company's
estimated assets and liabilities between $100 million and $500 million.
The company, founded in 1932, employs about 10,000 workers and bills
itself as the largest family-owned grocer in Arizona and among the top
20 privately held grocers in the U.S. The bankruptcy case is
In re Bashas' Inc.
size='3'>, case number 09-bk-16050, in the U.S. Bankruptcy Court for the

District of Arizona. 
href='http://bankruptcy.law360.com/print_article/111022'>Read
more. (Subscription required.)

Toys R Us
Looks to Protect IP in KB Toys Case

Toys R Us-Delaware Inc. has told
the court overseeing KB Toys Inc.'s chapter 11 proceedings that it wants

to make sure there's no overlap between certain intellectual property
the debtors are looking to sell, and customer data and related IP that
Toys R Us previously bought from a company that once ran KB's online
stores, Bankruptcy
Law360 reported yesterday. Toys R Us filed its

objection Friday in the U.S. Bankruptcy Court for the District of
Delaware in response to a June 29 motion from KB Toys that sought
permission to sell off certain IP, including trademarks, URL addresses
and e-mail addresses. EToys, which went bankrupt on Dec. 28, 2008, sold
certain assets to Toys R Us, including 'intellectual and intangible
property,' to Eagle LLC pursuant to a Feb. 12 final sale order. Eagle
was then a Toys R Us subsidiary, but merged with Toys R Us in April,
according to Toys R Us. The case is
size='3'>In re KB Toys Inc., case number
08-13269, in the U.S. Bankruptcy Court for the District of
Delaware. 
href='http://bankruptcy.law360.com/articles/110864'>Read more.
(Subscription required.)

Dreier
Sentenced to 20 Years for $700 Million Fraud Scheme

Marc S. Dreier, who orchestrated
an elaborate fraud scheme that bilked hedge funds and other investors of

$700 million, was sentenced yesterday to 20 years in prison by a judge
who rejected the government’s request for a much longer sentence,
the New York Times
reported today. In carrying out his scheme, Dreier sold
fake promissory notes to the hedge funds and other investors. He created

phony financial statements and accounting documents, and paid people to
impersonate others to trick prospective investors into believing the
notes were genuine. Dreier’s case exploded into public view in
December, when he was arrested in Toronto after trying to impersonate an

employee of the Ontario Teachers’ Pension Plan in an attempt to
sell a fake note for millions of dollars. Prosecutors have also said
that Dreier stole more than $46 million from his clients. Dreier pleaded

guilty in May to all eight charges in the indictment against him, which
included conspiracy, securities and wire fraud and money
laundering. 

href='http://www.nytimes.com/2009/07/14/nyregion/14dreier.html?ref=business&pagewanted=print'>Read

more.

International

Click here to review

today's global insolvency news from the GLOBAL INSOLvency site.