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August 29, 2008
Autos
Auto Industry Skid Imperils
Delphi
Bankrupt auto-parts maker Delphi Corp. is sliding deeper into financial
trouble, raising doubts about its ability to survive as a stand-alone
company, the Wall Street Journal reported today. Though the
company is laboring to put together a reorganization plan, odds are
increasing that the nation's largest auto-parts maker instead will be
liquidated, with some U.S. plants being taken over by its former parent
company, General Motors Corp. Several financial hurdles loom in coming
months: Delphi's bankruptcy financing expires at year end, and there are
indications that its current lenders may balk at renewing it. Its
pension plan will need a large cash infusion or GM to take over some of
it. The Pension Benefit Guaranty Corp. has already expressed concern
about the growing possibility of the company's liquidation.
href='http://online.wsj.com/article/SB121997568213582277.html?mod=hpp_us_whats_news'>Read
more. (Subscription required.)
Carmakers Deserve Government Loan Guarantees,
GM Official Says
General Motors vice chairman Robert A. Lutz said yesterday that
automakers were “deserving” of as much as $50 billion in
government-backed loans so that they can build more fuel-efficient cars,
the New York Times reported today. Lutz said that the car
companies need money to retool their plants but probably cannot raise
enough capital on their own because of the tight credit markets. The
automakers, along with the United Automobile Workers union and Michigan
lawmakers, are urging Congress to appropriate $3.75 billion to back the
$25 billion in loans authorized last year. They also want more money -
up to double the original amount, given the sudden jump in consumer
demand for fuel efficiency - and they are urging Congress to act by the
end of September so that the money can be available next year.
href='http://www.nytimes.com/2008/08/29/business/29lutz.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
more.
Bankruptcy Filing Looming for Alabama
County
After months of failed negotiations with creditors and counterparties to
its troubled sewer debt, Jefferson County, Ala., could face bankruptcy
as soon as today, the Wall Street Journal reported. The county
isn't expected to meet a deadline today for an interest
payment, although it received numerous extensions for earlier
deadlines. Since 1934, when the first municipal bankruptcy legislation
was passed, there have been fewer than 600 total chapter 9 filings,
according to law firm Mintz Levin. Jefferson County, which has $3.2
billion in sewer debt, could face a bumpy road in filing for chapter 9,
particularly given the complexity of its sewer financing, which included
copious use of interest-rate swaps.
href='http://online.wsj.com/article/SB121993152522279693.html?mod=hpp_us_whats_news'>Read
more. (Subscription required.)
United States Revises GDP Growth
Higher
The Commerce Department said that the U.S. economy grew much faster than
originally thought from April to June, but the pace is expected to slow
over the rest of the year, the Wall Street Journal reported
today. Gross domestic product grew at a seasonally adjusted 3.3 percent
annual rate during the second quarter, according to the Commerce
Department, which originally put growth at a 1.9 percent pace. The
revision, released yesterday, reflects new data showing that exports
were even stronger than first estimated and that business inventories
weren't depleted as much as thought earlier.
href='http://online.wsj.com/article/SB121992534813979505.html?mod=hpp_us_whats_news'>Read
more. (Subscription required.)
American Home Sells 'Alt-A' Mortgages
for $19 Million
Judge Christopher S. Sontchi on Wednesday granted
approval for American Home Mortgage Inc. (AHM) to sell 233
“Alt-A” mortgages to Vantium Capital Markets LP for nearly
$19.3 million, Bankruptcy Law360 reported yesterday. AHM named
Burbank, Calif.-based Vantium Capital its stalking horse bidder for the
mortgages on Aug. 12, according to court filings. Judge Sontchi approved
the auction process on Aug. 5, according to the docket. The case is
In re American Home Mortgage Holdings Inc., case number
07-11047, in the U.S. Bankruptcy Court for the District of
Delaware.
href='http://bankruptcy.law360.com/articles/67641'>Read
more. (Subscription required.)
Woodside Homes Set to File for
Bankruptcy
Utah-based Woodside Homes said yesterday that it will file for chapter
11 protection before Sept. 16, the Sacramento Bee reported
today. Woodside sells homes at eight projects in Sacramento, Rancho
Cordova, Elk Grove and Marysville, Calif., and has more construction
throughout the San Joaquin Valley and Riverside County. The struggling
firm ranks 15th among Sacramento-area home builders with 77 sales the
first half of 2008, according to researcher Hanley Wood Market
Intelligence.
href='http://www.sacbee.com/103/v-print/story/1194855.html'>Read
more.
Portola Files Prepackaged Chapter 11
Plan
Plastic-bottle-maker Portola Packaging Inc. has filed a prepackaged
chapter 11 plan, citing escalating prices for plastic resins and
previously disclosed accounting irregularities at its Chinese
subsidiaries, Bankruptcy Law360 reported yesterday. The company
listed assets of $164 million and liabilities of $268 million. Portola
said that all of its secured lenders and 90 percent of its senior
noteholders had agreed to the restructuring, and that it hopes to be out
of bankruptcy by mid-October. Under the proposed plan, which will cut
the company's long-term debt obligations by $180 million, holders of the
senior notes will get all of the common stock in the reorganized Portola
in exchange for their claims.
href='http://bankruptcy.law360.com/articles/67558'>Read
more. (Subscription required.)
International
Italy Changes Bankruptcy Law to
Ease Alitalia Sale
Italian Prime Minister Silvio Berlusconi's government revised its main
bankruptcy law to clear the way for the sale of unprofitable state-owned
airline Alitalia SpA to private investors, Bloomberg News reported
yesterday. The move will allow Alitalia's board to ask for protection
from creditors tomorrow when it meets to approve first-half results. The
government plans to sell the company's profitable assets to a group of
investors that may include Air France-KLM Group, and liquidate the rest,
Transport Minister Altero Matteoli said yesterday. Alitalia has lost
more than 3 billion euros ($4.4 billion) in the past seven years and has
been losing more than 1 million euros a day this year. Berlusconi
scuttled the sale of the company to Air France during his election
campaign earlier this year, insisting that the carrier remain
Italian.
href='http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a20AefE3CX8s'>Read
more.
Canada's Zoom Airlines Shuts
Down
Canada's Zoom Airlines said yesterday that it has halted flights and
grounded its planes, leaving hundreds of passengers stranded at
airports, the Toronto Globe and Mail reported today. The
Ottawa-based carrier took down its Web site yesterday afternoon,
preventing consumers from making online bookings. Zoom's British and
Canadian operations have sought creditor protection by filing legal
notices of intention to appoint an administrator in both the United
Kingdom and Canada.
href='http://www.reportonbusiness.com/servlet/story/RTGAM.20080828.wzoom0828/BNStory/Business/home'>Read
more.
Japan Unveils Stimulus
Package
Faced with a sudden emergence of inflation and an economic downturn,
Japan on Friday unveiled an ¥11.7 trillion ($107.49 billion)
economic stimulus package that focuses on helping the nation cope with
soaring energy and food prices, the Wall Street Journal
reported today. The package includes a wide variety of provisions
ranging from a tax cut for lower-income families to subsidies to
suppress price increases for wheat. A large chunk will be used for
additional loan guarantees for small- and medium-size companies, a
segment seeing a sharp rise in bankruptcies this year. The government
said that the Japanese core consumer price index, which excludes fresh
food but covers energy products, rose 2.4 percent from a year earlier in
July, the fastest pace in a decade.
href='http://online.wsj.com/article/SB122000514475882925.html?mod=hpp_us_whats_news'>Read
more. (Subscription required.)