August 182009

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August 18, 2009

Banks Continue to Shore Up
Lending Standards

The Federal Reserve's periodic survey of banks
released yesterday showed that banks continued to tighten lending
standards to businesses and households, but there are hints that the
credit crisis is beginning to ease, the

face='Times










New

Roman' size='3'>Wall Street Journal reported
today. Nearly a third of banks surveyed said that they tightened lending

to businesses in the three months ended in July, down from roughly 40
percent in April's survey. The percentage of banks that tightened
standards on commercial real estate loans dropped 20 percentage points,
to 45 percent. For residential real estate, the percentage fell to 20
percent from a peak of about 75 percent a year ago. 'Most banks reported

that they expected their lending standards across all loan categories
would remain tighter than their average levels over the past decade
until at least the second half of 2010,' the Fed report said. 
href='http://online.wsj.com/article/SB125051411593936739.html'>Read
more. (Subscription required.)

New Credit Card Regulations
Go into Effect Thursday

The first phase of the landmark credit card
legislation signed by President Obama in May will take effect this week,

forcing card issuers to give consumers more time to pay their bills and
to consider interest rate increases, the

face='Times










New

Roman' size='3'>Washington Post reported
today. Starting Thursday, issuers must give customers 45 days' notice
before raising their interest rates, instead of 15 days as previously
required. Customers can then choose to pay what they owe at the original

rate over time but will not be able to use the card for future
purchases. The issuer reserves the right to increase the minimum
payment, as a percentage of the total balance, to no more than double
the percentage it had been. Card issuers will also have to mail bills 21

days -- instead of 14 days -- before the due date. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2009/08/17/AR2009081702636_pf.html'>Read

more.

Reader’s
Digest to File Chapter 11 to Reduce
Debt

Reader’s Digest Association Inc., the publisher
of the pocket-sized magazine, will likely file for chapter 11 protection

under an agreement with a majority of its secured lenders to reduce debt

by 75 percent, Bloomberg News reported yesterday. Senior secured lenders

will exchange a “substantial portion” of $1.6 billion in
debt for equity, the publisher said today in a statement. Some of them
will be providing $150 million in debtor-in-possession financing. The
publisher was bought in March 2007 by an investor group, led by
Ripplewood Holdings LLC, that saddled it with debt just before the
advertising market slumped. Ad sales at the magazine, which claims the
world’s largest readership, slipped 7.2 percent to $121.2 million
in the first half from a year earlier, according to Publishers
Information Bureau data. 

href='http://www.bloomberg.com/apps/news?pid=20601087&sid=ayUQqBX7fsB4#'>Read

more.

SEC Delays Action on
Restricting Short Sales; Puts Forward New Proposal

The Securities and Exchange Commission yesterday
delayed a decision on whether to put in place new measures to limit
short-selling stocks and put forward a new proposal for dealing with the

practice, the Washington Post reported
today. The SEC moved swiftly in April to propose new curbs after
executives, investors and lawmakers complained that short-selling helped

crater the stocks of banks and other firms at the height of the
financial crisis, but the SEC has not settled on an approach. The agency

suggested a new approach yesterday to limiting short-selling and gave 30

days for the public to comment on it. The new SEC proposal would only
allow traders to bet against a company's shares at a higher price than
what other traders are willing to pay to buy the shares. Previously, the

agency had considered stopping short sales altogether when shares were
declining rapidly. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2009/08/17/AR2009081702993_pf.html'>Read

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Autos

Ace, Delphi Strike Deal
on Insurance Contracts

Ace American Insurance Co. and Delphi Corp. have
reached a deal over a limited objection stemming from provisions to
transfer insurance contracts to General Motors Corp. and a group of
lenders under Delphi's recently approved asset sale plan,
face='Times New Roman'>
size='3'>Bankruptcy Law360 reported yesterday.

Bankruptcy Judge
face='Times New Roman' size='3'>Robert D. Drain
size='3'>signed off on the deal, which will see Delphi's buyers pay for
the insurance contracts under the normal course of business on transfer
of the policies by the court. Ace filed its limited objection to the
Delphi sale on July 14, claiming that the debtor did not account for the

payment of administrative claims, including insurance claims, in its
June revised sale plan. 
href='http://bankruptcy.law360.com/articles/116950'>Read more.
(Subscription required.)

Lear’s
Reorganization Plan Aims to Convert $1.6 Billion in Secured
Claims

Bankrupt automotive seat maker Lear Corp. has filed
its chapter 11 reorganization plan and disclosure statement, seeking to
convert $1.6 billion in secured claims into new loans and preferred
common equity in the restructured company,

face='Times










New

Roman' size='3'>Bankruptcy Law360 reported
yesterday. Lear filed its plan and statement Friday in the U.S.
Bankruptcy Court for the Southern District of New York, saying that
confirmation of the plan is necessary to prevent delays, additional
costs and litigation. The $1.6 billion in secured claims that will be
converted into new loans and equity will also include interest and swap
claims, according to Lear. Additionally, the plan would partly convert
general unsecured claims — including a prepetition credit
agreement deficiency claim of $737 million and unsecured notes claims
totaling $1.3 billion — into common equity in the reorganized
debtors and into warrants to acquire common equity. 
href='http://bankruptcy.law360.com/articles/116892'>Read more.
(Subscription required.)

GM and Swedish Automaker
Ink Deal for Saab

Koenigsegg and General Motors said today that they had

signed a deal for the Swedish sports car maker to buy Saab Automobile
from GM, Reuters reported today. The agreement comes after weeks of
uncertainty concerning the level of support for the bid from
Koenigsegg's backers, after a preliminary deal for the sale was struck
in June. Questions regarding the financing of the deal remain, however,
and a statement from GM Europe was vague about the agreed terms beyond
calling the deal a 'stock purchase agreement.' The Swedish government is

negotiating with Koenigsegg on a possible guarantee for a loan to Saab
from the European Investment Fund, a pre-condition for the deal. 

href='http://www.nytimes.com/reuters/2009/08/18/business/business-us-saab-koenigsegg.html?ref=business&pagewanted=print'>Read

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Grupo Mexico Increases
Asarco Bid to $2.2 Billion

Mexican miner Grupo Mexico SAB de CV said yesterday
that it was offering $2.2 billion in cash to regain control of bankrupt
U.S. copper miner Asarco LLC, Reuters reported yesterday. Grupo Mexico
said in court documents filed yesterday that its offer would include
full repayment of administrative, priority, secured and asbestos
personal injury claims, as well as payment in full on general unsecured
claims. Asarco, which sought bankruptcy protection in 2005 amid a worker

strike and more than $1 billion of environmental damage and asbestos
claims, began the second week of confirmation hearings for its
reorganization plan yesterday. The hearings are the final stage in a
year-long tussle between Grupo Mexico and India's Sterlite Industries
Ltd. for the right to sponsor Asarco's bankruptcy exit plan and take
control of Asarco. 

href='http://www.reuters.com/article/mergersNews/idUSWNA154920090817'>Read

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Judge Denies Tessera's Bid
to Gather Patent Information from Spansion

Bankruptcy Judge

face='Times










New

Roman' size='3'>Kevin J. Carey on Friday
denied Tessera Inc.'s bid to compel bankrupt flash memory company
Spansion Inc. to turn over information relating to its alleged
infringement of Tessera patents, Bankruptcy Law360 reported
yesterday. Spansion objected on Aug. 5 to the motion, saying that
Tessera was after information pertaining to nonbankruptcy litigation,
that it was seeking information to gain an unfair advantage in
settlement talks with Spansion, and that Tessera’s requested
discovery was unduly broad and burdensome. According to Tessera's
motion, the company invented certain fundamental small-format
semiconductor packaging technology and holds hundreds of related
patents, and most of the semiconductor industry—including Intel,
Samsung and Motorola—have licensed Tessera's technology. However,
Tessera said that Spansion chose to 'unlawfully use' Tessera's
technology, which led to Tessera filing a complaint asserting five
patents against various defendants, including certain Spansion debtors
in California in 2005. 
href='http://bankruptcy.law360.com/print_article/116912'>Read more.
(Subscription required.)

Pacific Energy Seeks Asset

Exchange Approval

Pacific Energy Resources Ltd. has asked a bankruptcy
court to allow one of its subsidiaries to enter an asset-exchange
agreement with Union Oil Co. of California and Marathon Oil Co. related
to offshore oil and gas production in Alaska, Bankruptcy
Law360 reported yesterday. Marathon currently
produces fuel at an oil- and gas-producing platform in Trading Bay Unit,

offshore in Cook Inlet, Alaska. Pacific
Energy’s subsidiary, Pacific Energy Alaska Operating LLC
(PEAO),and Union own working interests in the oil produced from the
Trading Bay Unit, and Union and Marathon own working interests in the
gas produced from the gas wells in the Trading Bay unit. Under the asset

exchange agreement, PEAO and Union will transfer rights in a drilling
location to Union and Marathon, in exchange for options to obtain two
unused drilling locations. 
href='http://bankruptcy.law360.com/print_article/116920'>Read more.
(Subscription required.)

River Road Hotel Partners
Files for Chapter 11

River Road Hotel Partners LLC, owner of the
InterContinental Chicago O'Hare hotel, and five affiliates filed for
chapter 11 protection yesterday, Reuters reported today. The company
listed estimated assets of up to $100 million and estimated liabilities
of up to $500 million. The case is

face='Times










New

Roman' size='3'>In re River Road Hotel Partners
size='3'>, U.S. Bankruptcy Court for the Northern District of Illinois,
No 09-30029. 

href='http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSBNG2353820090818'>Read

more.

Investors Say Regulators
Were Informed of Stanford Fraud

Investors who lost their savings in certificates of
deposit issued by the Antiguan bank of R. Allen Stanford told a Senate
Banking Committee field hearing yesterday that federal regulators had
ignored warnings as early as 2003 that the bank’s finances were
questionable, Reuters reported yesterday. Stanford is in a Texas jail
awaiting trial after the government charged him with 21 criminal counts
related to what it calls a $7 billion Ponzi scheme involving
certificates of deposit issued by the Stanford International Bank in
Antigua. Federal agencies, including the Justice Department, the
Securities and Exchange Commission and the Federal Bureau of
Investigation, are investigating the case, which has attracted the
attention of politicians. 

href='http://www.nytimes.com/2009/08/18/business/global/18stanford.html?ref=business&pagewanted=print'>Read

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International