href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
February 1, 2010
Borders Bookstore Group
Faces Bleak Future
With dismal holiday sales, sagging shares, loan
deadlines, layoffs and the resignation of its most recent CEO, Ron
Marshall, Borders Group Inc. may face pressure from investors to
consider a pre-packaged bankruptcy or liquidation, the Deal
Pipleine reported on Saturday. The book retailer's market cap is
only about $53 million, slightly more than the $42 million senior
secured term loan Borders is due to repay April 1 to Pershing Square
Capital Management LP, which also holds more than 30 percent of its
shares. Failure to pay will trigger a default on Borders' $1.13 billion
credit agreement. Pershing Square did take shopping mall REIT General
Growth Properties Inc. into a prepack last April, but some experts think
that it is doubtful Borders' creditors will be interested in a
reorganization of the company, especially without a CEO.
href='http://pipeline.thedeal.com/tdd/ViewArticle.dl?id=10005383895'>Read
more. (Subscription required.)
Six Banks Fail, 2010
Tally at 15
Six community banks failed on Friday, bringing the
2010 tally of failed U.S. banking institutions to 15, TheStreet.com
reported on Saturday. Friday's failures are expected to cost the Federal
Deposit Insurance Corp.'s insurance fund a total of $1.9 billion. The
Office of the Comptroller of the Currency shut down First National Bank
of Georgia of Carrollton, Ga., a subsidiary of WGNB. State regulators
took over another Georgia bank, Community Bank and Trust of Cornelia.
The FDIC was appointed receiver and arranged for SCBT NA of Orangeburg,
S.C. to take over the failed bank's $1.1 billion in deposits and $1.2
billion in assets for no premium. The FDIC agreed to share in losses on
$828 million of the acquired assets, and estimated the failure of
Community Bank and Trust would cost the deposit insurance fund $354.5
million.
href='http://www.thestreet.com/story/10670679/1/six-banks-fail-2010-tally-at-15.html?cm_ven=GOOGLEN'>Read
more.
name='3'>Commentary: How the Push for the CFPA Lost Its
Steam
At a time when the country is deeply divided over the
proper role of government, it appears that Capitol Hill's appetite is
waning for a new, independent Consumer Financial Protection Agency with
broad power to police the financial industry and protect consumers from
the risky lending practices, according to a Washington Post
commentary yesterday. After months of tinkering, the House last month
finally endorsed the creation of a CFPA, but the Senate Banking
Committee hasn't found this particular ingredient to its liking. The
disagreements over the proposed agency go beyond mere partisanship,
echoing the enduring national debate over whether government
intervention is more a solution or a problem. The idea for a new agency
with broad powers to police the marketplace for borrowing -- mortgages,
credit cards, payday loans and other forms of consumer credit -- came
from a 2007 article that Harvard Law Prof. Elizabeth
Warren wrote for Democracy, a liberal policy journal
with a circulation of 5,000. In June, the Obama administration adopted
her concept for its package of regulatory reforms. Senate Banking
Committee Chairman Christopher J. Dodd (D-Conn.) was an early supporter.
However, Sen. Richard C. Shelby (R-Ala.), the banking committee's
ranking Republican, said he wouldn't support the creation of an
independent agency, calling it 'a folly and dangerous' and an expression
of the paternalism that he thinks government should avoid. Ultimately,
agreement between Dodd and Shelby is the only obvious route to a
bipartisan deal and they have been discussing alternatives to an
independent agency as part of an overall compromise.
href='http://www.washingtonpost.com/wp-dyn/content/article/2010/01/30/AR2010013000034_pf.html'>Read
more.
S&P Expects U.S.
Default Rate to Slip to 5 Percent By Year's End
Standard & Poor's predicts that the U.S. corporate default rate
will fall to 5 percent by the end of 2010 from 10.9 percent in December
2009, Dow Jones Daily Bankruptcy Review reported today. The
number of corporate defaults has been falling for several months, but
the default rate has only lately begun to drop from its peak of 11.27
percent in November 2009 because the rate is calculated on a trailing
12-month basis. S&P said its baseline prediction shows the default
rate falling by the end of the year to 5 percent, just slightly above
the long-term average of 4.5 percent. S&P further predicted that
without a revival in top-line earnings and growth, many of the surviving
leveraged issuers that originated between 2003 and 2007 could face
renewed default risk beyond the forecast horizon unless they
significantly reduce their debt burdens.
Barclays Urges
Dismissal of Lehman 'Windfall' Suit
Barclays Plc. urged a judge to throw out a lawsuit by
Lehman Brothers Holdings Inc.'s bankruptcy estate alleging that it
reaped a secret $5 billion profit from its rushed September 2008
purchase of the company's U.S. brokerage, Reuters reported on Friday. In
a filing on Friday with the bankruptcy court, the British bank also
rejected efforts by the Lehman estate to renegotiate the purchase on the
grounds that the terms for Barclays were supposedly 'too good.' Barclays
said that the terms were properly disclosed and were fairly considered
in court.
href='http://www.reuters.com/article/idUSN2918475620100129'>Read
more.
Smurfit
Stone's Proposed Reorganization Plan Headed for Confirmation
Vote
Smurfit Stone Container Corp. received bankruptcy
court approval on Friday to put its reorganization plan to a vote by
creditors, setting up a showdown with shareholders who will be wiped out
in the restructuring, Reuters reported on Friday. Smurfit, a leading
recycler of paper and maker of paper packaging, overcame or resolved 28
objections to its disclosure statement, which it must provide to
creditors along with its proposed plan. Many of the creditors have
indicated they favor the reorganization. The most vigorous objections
came from shareholders and their arguments indicated the company could
face a drawn-out fight to confirm its plan. The case is In re Smurfit
Stone Container Corp., U.S. Bankruptcy Court, District of Delaware,
No. 09-10235.
href='http://www.reuters.com/article/idUSN2915558920100129'>Read
more.
Eddie Bauer's
Disclosure Statement Approved
Bankrupt retailer Eddie Bauer Holdings Inc. received
court approval of a disclosure statement that would pave the way for the
company to exit chapter 11 protection as early as mid-March, in part by
relying on the proceeds of its $286 million asset sale to Golden Gate
Capital, Bankruptcy Law360 reported on Friday. Bankruptcy Judge
Mary F. Walrath on Thursday signed off on the company's
disclosure statement detailing its reorganization on Thursday.
Objections to the plan are due by March 4 and a confirmation hearing has
been scheduled for March 18.
href='http://bankruptcy.law360.com/print_article/146578'>Read
more. (Subscription required.)
name='8'>Regulator Sharpens Tone on
Derivatives
Commodity Futures Trading Commission Chairman Gary
Gensler on Friday signaled that the Obama administration will capitalize
on anti-Wall Street sentiment as it pushes Congress to pass strict
regulation of the derivatives markets, CongressDaily reported on
Friday. Gensler said that statistics released in December by the
International Bank for Settlements strengthened the administration's
argument that derivative transactions involving end-users such as
airlines and electric cooperativess should not be exempt from trading
and clearing requirements. The administration will continue to fight to
bring derivatives into regulated trading facilities and exchanges to
increase transparency, Gensler added. He said that if Congress
determines that commercial end-users should be exempt from a clearing
requirement, the exemptions should apply only to nonfinancial entities
hedging their risks and not include an exemption from
transparency.
Pasadena Playhouse to
Shut Down
The Pasadena Playhouse, the state theater of
California, is scheduled to close its doors on Feb. 7, after the final
performance of “
size='2'>Camelot,”
because of a heavy debt load, the New York Times
reported yesterday. The entire staff of 37 was laid off on
Thursday. “
size='2'>We firmly believe it would be irresponsible to continue to
operate in the same financial patterns of the past,
face='Verdana' size='2'>” Stephen Eich, the
executive director of the playhouse, said in a statement, adding that
the theater will explore bankruptcy as well as financial reorganization.
The playhouse was founded in 1917 and has closed and filed for
bankruptcy before because of financial troubles.
href='http://artsbeat.blogs.nytimes.com/2010/01/31/pasadena-playhouse-to-shut-down/'>Read
more.
name='10'>Recession Forces Nonprofits to
Consolidate
Hit by a drop in donations and government funding in
the wake of a deep recession, nonprofits
lang='EN'>— from arts councils to food
banks — are
undergoing a painful restructuring, including mergers, acquisitions,
collaborations, cutbacks and closings, the Wall Street Journal
reported today. Private donations to charities more than doubled between
1987 and 2007, but private giving fell by 6 percent in 2008, the largest
drop since Giving USA began tracking the data more than 50 years ago. In
addition, state and local government funding
lang='EN'>—which can comprise as much as
two-thirds of some groups' budgets
lang='EN'>—are also falling. States
allocated 5 percent less in 2009 and 4 percent less in 2010 to pay for
education, health care and human services, according to the Center on
Budget and Policy Priorities. State governments owe nonprofits more than
$15 billion in backlogged payments, Independent Sector says.
href='http://online.wsj.com/article/SB10001424052748704586504574654404227641232.html?mod=WSJ_business_LeftSecondHighlights'>Read
more. (Subscription required.)
International
Click here to review
today's global insolvency news from the GLOBAL INSOLvency site.