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March 17, 2009
Senators Hope for Cramdown Compromise, Vote Delayed until Next Session
Senate Democrats yesterday moved to cut off a key lobbying angle that the financial-services industry had hoped to use to limit the effect of controversial legislation that would empower bankruptcy judges to modify mortgages, The Hill reported yesterday. Industry lobbyists had pushed behind the scenes to minimize the impact of the cramdown provision in a broader housing bill by limiting the language to subprime and nontraditional loans. But that effort hit a roadblock on Monday when Sen. Charles Schumer (D-N.Y.) underlined his opposition to the push. 'Limiting this bill to sub-prime and other exotic mortgages would reduce the bill's effectiveness by up to 50 percent,' Schumer said. 'We want to find a compromise that can gain support, but we will not water down this proposal for the sake of picking up a few additional votes.' Democrats were continuing Monday afternoon to try to find some workable compromise that would allow them to cobble together votes for the housing bill. Staff for Democratic Sens. Schumer, Chris Dodd (Conn.) and Dick Durbin (Ill.) led a meeting with other Senate staff, industry representatives and other advocates yesterday afternoon to try to reach an outline of a possible compromise. The cramdown provision has so far failed to pick up any Republican support and remains a tough sell for some centrist Democrats in the Senate. The Senate 'will not be able to take up this housing bill until the next work period' in April, said Jim Manley, spokesman for Senate Majority Leader Harry Reid (D-Nev.) Read more.
name='2'>Hearings Today on Capitol Hill
The House Committee on the Judiciary will be hearing ''Too Big To Fail?': The Role of Antitrust Law in Government-Funded Consolidation in the Banking Industry,' today at 2:00 p.m. ET, Room 2141 in the Rayburn House Office Building. Click here for the witness list.
The House Financial Services Committee will be hearing 'Perspectives on Regulation of Systemic Risk in the Financial Services Industry,' today at 10:00 a.m. ET in Room 2128 in the Rayburn House Office Building. The hearings, transcripts and archived video of previous hearings can be accessed here. Click here for the witness list.
name='3'>Anderson Homes Files for Bankruptcy
Anderson Homes and several of its subsidiaries are the latest to buckle as tight lending slows home sales, according to a report on NewsObserver.com in Raleigh, N.C., today. The builder, Vanguard Homes and two related land developers, Bridgewater Land Resource and Land Resource Group, are seeking protection from at least 150 creditors, according to bankruptcy court documents filed Monday. The companies, which list $32.8 million in assets, owe banks and contractors $29.2 million. The housing bust has eliminated almost one-fifth of the region's builders. Anderson's case is the latest indicator that even some of the strongest homebuilders are vulnerable to economic ills. Anderson, which offers single-family homes and townhouses for first-time buyers, managed to sell 261 homes last year, down only 4 percent from 2007, according to Market Opportunity Research Enterprises. As the market has declined, lenders have tightened standards for many buyers, and since September sales have slowed considerably. Anderson, which listed assets of $17.2 million, owes contractors and lenders about $13.7 million. Vanguard lists $11.1 million in assets and $9.9 million in debts. Read more.
Autos
name='4'>Chrysler Insists It Will Avoid Bankruptcy
Chrysler insists that the company intends to avoid bankruptcy and said a proposed deal with the Italian carmaker Fiat could be worth as much as $10 billion, according to an AFP report on Yahoo! News yesterday. President Barack Obama's automotive task force questioned the automaker as to whether it was 'viable without a global alliance partner. Our answer is absolutely yes,' said Chrysler CEO Robert Nardelli. Chrysler, which has said it needs another $5 billion in emergency loans on top of the $4 billion awarded in December, also has the resources to survive on its own even if sales hover in the 11.5 million to 12.6 million unit range over the next six years, he said. 'The company is well positioned for long-term viability,' Nardelli said, adding that a 'modest increase in sales back to the 16.8 million-unit level would allow the company to retire its debt to the U.S. Treasury by 2014.' Nardelli, who is also chairman of the ailing automaker, said that a proposed deal with Italy's Fiat provides 'significant benefits to Chrysler.' The alliance, in which Fiat is to receive a 35 percent stake in Chrysler but provides no capital infusion, is seen as providing the troubled U.S. manufacturer with the viability plan it must submit to avert bankruptcy and meet the conditions of the four-billion-dollar US government loan. Read more.
name='5'>GM Bondholders: We're Working to Avoid Bankruptcy
A group representing General Motors Corp. bondholders said it has been willing to cut a deal with the struggling automaker that would help avoid a bankruptcy, comments that come after an advisor to President Barack Obama's autos task force said the committee was being 'quite difficult,' CNNMoney.com reported yesterday. In a statement released last night, the group said that several weeks ago it presented a proposal for a debt swapthatwhich fell in line with terms set by the U.S. government when it loaned GM $13.4 billion to stay afloat. The loan requires a deal with bondholders to convert about two-thirds of GM's $27 billion debt into equity. Without debt-reducing deals with the United Auto Workers union and bondholders, GM will have a much tougher time convincing the government to grant its request for an additional $16.6 billion in loans. GM has been locked in negotiations with both groups and was unable to reach tentative deals with either by a Feb. 17 deadline set by the government. The automaker now has until March 31 to have a final deal under terms of the loans. Read more.
name='6'>Dana Reports $691 Million Loss Since Emerging from Bankruptcy
Auto supplier Dana Holding Corp. reported a loss of $256 million, or $2.64 a share, in the fourth quarter of 2008, compared to a loss of $257 million, or $1.52 a share, for the same period a year ago, according to Monday's Toledo (Ohio) Blade. For the year, the Toledo, Ohio-based company, which hasn't reported a profit since emerging from bankruptcy protection Jan. 31, 2008, said it had a profit of $18 million after booking a $709 million gain when it emerged from bankruptcy. For the 11 months it operated without chapter 11 protection, the company disclosed a loss of $691 million, or $7.16 a share. Dana's announcement had been delayed by almost three weeks, which it attributed to the rapidly changing economic conditions. The company also announced that it plans to reduce its global workforce by an additional 5,800. The cuts are in addition to 5,000 jobs that were eliminated in the fourth quarter of 2008. Dana did not immediately identify where those cuts would take place. Read more.
name='7'>Empire Resorts Reports Loss of $12.2M, Might Face Bankruptcy
Empire Resorts reported steep losses in 2008 at its struggling Monticello racino, and company officials now say that bankruptcy could be looming, Times Herald-Record (Middletown, N.Y.) reported today. The owner of the Monticello Gaming & Raceway reported a net loss applicable to common shares of $12.2 million for 2008, compared with a loss of $26.2 million in 2007. Empire executives say the company's immediate future is in the hands of its creditors. The company is required to pay an outstanding balance of about $7.15 million to the Bank of Scotland by May 29. The company's total net revenues decreased about $8.4 million or 11 percent from 2007. Racino revenue decreased $6.2 million, or 10 percent, while racing revenue decreased by $1.8 million, or 22 percent. Empire is blaming competition from a racino in Yonkers, N.Y., and casinos in Pennsylvania for a nearly 20 percent drop in attendance last year. Empire's stock plunged to new lows yesterday, closing at 40 cents per share, down from 88 cents. Read more.
name='8'>Asarco Settles Environmental Claims
Touting it as the largest settlement of its kind, bankrupt Asarco LLC has cut a $1.11 billion deal with federal and state authorities to rid itself of environmental claims as it prepares to file an amended reorganization plan with a new offer for the copper smelter and mining company, according a TheDeal.com report yesterday. That amended plan could be filed as early as midnight tonight, and will include a $1.7 billion bid from Sterlite Inc. for Asarco. Judge Richard Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi will consider the approval of the environmental settlement for Asarco at a hearing scheduled to begin May 18 and end the next day, court documents said. Through the settlement, Asarco will allow $835.7 million in general unsecured claims and $14 million in administrative claims to federal and state governments. It will also pay $261.3 million in cash to those entities. When Tucson, Ariz.-based Asarco filed for chapter 11 on Aug. 9, 2005, its Mexico City parent, Grupo M?xico SAB de CV, received only one-third control of the company. Asarco has since been operating with an independent board and has been trying to cut its ties with Grupo M?xico, since it blames its former parent for forcing it to sell its majority stake in Southern Peru Copper Co. to another Grupo M?xico unit in 2003. Asarco, the third-largest U.S. copper producer, has argued that the sale was designed to force it into bankruptcy and free Grupo M?xico of environmental liabilities, estimated at roughly $100 million. Read more.
North Carolina Theme Park Files for Bankruptcy
Ghost Town in the Sky, the amusement park in Maggie Valley, N.C., has filed for bankruptcy, according to WorldLeisureJobs.com today. The Old West-themed park, which is located on top of a mountain and can only be accessed by chairlift, said it was filing for chapter 11 bankruptcy as a result of the current economic climate. The park's president and chief executive, Steve Shiver, said that 'the economic uncertainty, coupled with the banking and credit crisis that has engulfed the nation, has made obtaining a lender very difficult.' Ghost Town in the Sky reopened in May 2007 after a five-year closure and has struggled to pay off outstanding debts. However, Ghost Town currently still plans to reopen on 15 May. Read more.
name='10'>Forum Health Hospitals File for Bankruptcy
Forum Health, an Ohio-based hospital group, filed for chapter 11 bankruptcy protection on Monday, according to a Reuters report yesterday. In court documents, it listed assets in the range of $100 million to $500 million and liabilities in the same range. Forum said a heavy debt load, population decline in its area, the current economic downturn and restrictive labor agreements hurt liquidity. Read more.
name='11'>Sports Museum of America Files for Bankruptcy
The buzzer has sounded on the parent of the Sports Museum of America after it filed for bankruptcy and announced a liquidation, TheDeal.com reported yesterday. National Sports Attraction LLC filed for chapter 7 liquidation on March 13 in the U.S. Bankruptcy Court for the Southern District of New York in Manhattan, listing assets of $55.55 million and about $177.1 million in liabilities. It has about $125.8 million in unsecured debt. The museum, which hosts the annual Heisman Trophy award dinner, blamed its lack of cash on its $6 million construction overrun, which made it difficult to market and advertise. The for-profit Sports Museum of America, also known as the National Sports Museum, opened its doors in May 2008. The New York company called its main asset 'the first major museum that celebrates the history of all sports under one roof.' Basketball hall of famer Bob Cousy is owed an unsecured amount of $487,500. Read more.
International
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