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December 7, 2009
House Taking Up Derivatives
Amendments
The House will vote next week on two amendments that
were left unsettled between House Financial Services Chairman Barney
Frank (D-Mass.) and Agriculture Chairman (D-Minn.) on regulating the
over-the-counter derivatives market, as part of Frank's broader
financial overhaul effort,
face='Times New Roman' size='3'>CongressDaily
size='3'>reported on Friday. The House will start to debate Wednesday,
but these issues have remained unresolved for months. Frank will offer
an amendment that would give the SEC and the Commodity Futures Trading
Commission the authority to require that commercial firms post margin in
trades that do not go through a clearinghouse, which guarantees the
underlying transaction and imposes capital requirements. In addition,
Rep. Stephen Lynch (D-Mass.) will offer an amendment that would limit
ownership in a clearinghouse by a financial firm to 20 percent. As for
other parts of the financial reform package, Frank has agreed with
Energy and Commerce Chairman Henry Waxman (D-Calif.) on the structure of
a proposed Consumer Financial Protection Agency. Frank wanted a director
for the agency, while Waxman argued for a five-member commission. Under
the compromise, an acting director would be in place for the first two
years, after which the agency would convert to a five-member commission
with a chairman.
Glendale Seeks to Convert
Phoenix Coyotes Chapter 11 to Chapter 7
The city of Glendale, Ariz., has filed an emergency
bid to convert the chapter 11 proceedings of the National Hockey
League's Phoenix Coyotes to a chapter 7,
face='Times
New
Roman' size='3'>Bankruptcy Law360 reported on
Friday. There are limited claims and work to be done, but only
approximately $13 million left in the debtors’ estates, which is
cause enough for an emergency to exist, the city said in the U.S.
Bankruptcy Court for the District of Arizona on Thursday. The time and
expense involved in preparing a plan and going through the confirmation
process will serve only to drain the debtors’ estates of their few
remaining assets, the city said. On Nov. 2, Judge
face='Times New Roman'>Redfield
T. Baum signed off on the NHL's acquisition of
substantially all of the bankrupt team’s assets for roughly $140
million. Coyotes Newco LLC and Arena Newco LLC — the holding
companies the NHL has established for the Coyotes' assets —
assumed all of the team's secured debt, committed $2 million for the
payment of administrative fees, paid $11.3 million in cash and agreed to
purchase approximately $11.6 million of the debtors’ prepetition
unsecured claims.
href='http://bankruptcy.law360.com/print_article/137472'>Read
more. (Subscription required.)
NYC Off-Track Betting Files
for Chapter 9
Crippled by mandatory payouts to the wagering board,
New York City Off-Track Betting Corp. filed for chapter 9 protection on
Thursday for a restructuring that ultimately rests on overhauling state
racing law,
size='3'>Bankruptcy Law360 reported on Friday.
NYC OTB’s filing came after seven straight years of operational
deficits and several unsuccessful attempts to have the state Legislature
recast the payments the business distributes to the horse racing
industry, state and city. Hamstrung in particular by payments to the
horse racing industry that are based on percentages of the money handled
rather than the revenue NYC OTB actually receives after costs and
expenses, the business has been unable to repay its mounting debts or
modernize its gambling facilities, the debtor said. The petition cites
more than $100 million in debts and between $10 million and $50 million
in assets. The company said that it expects its cash reserves to be
depleted by the end of the month and seeks $250 million in financing
from investors to carry out the restructuring.
href='http://bankruptcy.law360.com/print_article/137482'>Read
more. (Subscription required.)
U.S. Forecasts Smaller Loss
from Bailout of Banks
The Treasury Department said that it expects to
recover all but $42 billion of the $370 billion that it has lent to
ailing companies since the financial crisis began last year, with the
portion lent to banks actually showing a slight profit, the
face='Times New Roman'>New York
Times reported today. The new assessment of
the $700 billion bailout program is vastly improved from the Obama
administration’s estimates last summer of $341 billion in
potential losses from the Troubled Asset Relief Program. Treasury
officials said that the government could ultimately lose $100 billion
more from the bailout program in new loans to banks, aid to troubled
homeowners and credit to small businesses. Still, the new estimates
would lower the administration’s deficit forecast for this fiscal
year, which began in October, to about $1.3 trillion, from $1.5
trillion.
href='http://www.nytimes.com/2009/12/07/business/07tarp.html?ref=business&pagewanted=print'>Read
more.
Auto Critic Takes a Seat in
GM's Turnaround
Stephen J. Girsky, once a high-profile Morgan Stanley
auto analyst who has been a member of the auto maker's board since the
summer, last week was named a special adviser to Chairman and interim
CEO Edward E. Whitacre Jr., the
face='Times
New
Roman' size='3'>Wall Street Journal reported
today. Girsky's role will be to 'clear away' the hurdles standing
between Whitacre's management team and success, and he'll have broad
influence working from an office at company headquarters with
executives, union representatives and Obama administration officials
with whom he has already forged strong relationships. Girsky was named
to the board by the UAW—filling the seat that represents the
union's health-care trust, which owns 17.5 percent of GM—and
quickly made an impact. He was among a group of directors who succeeded
in having GM back out of a long-planned sale of Opel.
href='http://online.wsj.com/article/SB10001424052748704825504574580283961202074.html?mod=WSJ_hps_LEFTWhatsNews'>Read
more. (Subscription required.)
1031 Tax Group Files
Liquidation Trust Deal
The chapter 11 trustee for the 1031 Tax Group has set
up a liquidation trust that will serve as his successor-in-interest to
distribute the assets gathered and prosecute the remaining claims
arising from the scandal-plagued financial firm's bankruptcy,
size='3'>Bankruptcy Law360 reported on Friday.
Under the settlements obtained thus far, the liquidation trust currently
holds about $80 million — before attorney and other professional
fees are deducted — to distribute to creditors, while the class
fund in a related California class action holds about $18 million before
fee deductions, attorneys for the trustee said Friday. Some of the
settlements have split their payments between the class and the trust,
the attorneys said. A hearing on the professional fee requests in the
bankruptcy — which amount to roughly $26 million — is
scheduled for Tuesday, Dec. 8.
href='http://bankruptcy.law360.com/print_article/137500'>Read more.
(Subscription required.)
NTK Receives Approval for
$1.3 Billion Restructuring
Bankruptcy Judge
face='Times
New
Roman' size='3'>Kevin J. Carey on Thursday
approved the pre-packaged reorganization plan for NTK Holdings Inc.
— the parent company of heating, ventilation and consumer
technology manufacturer Nortek Inc. — clearing the way for the
company to emerge from chapter 11 relieved of $1.3 billion in
debt,
face='Times
New
Roman' size='3'>Bankruptcy Law360 reported on
Friday. Under the plan, holders of Nortek's 10 percent senior secured
notes due in 2013 will receive new Nortek 11 percent senior secured
notes and 5 percent of equity in the reorganized company. Meanwhile,
holders of Nortek's 8.5 percent senior subordinated notes due in 2014
and 9.875 percent series A and B senior subordinated notes due in
2011will receive 93 percent of the equity in the reorganized Nortek.
Holders of NTK's 10.75 percent senior discount notes due in 2014 and
indebtedness under NTK's existing credit facility will receive 2 percent
of the reorganized company upon confirmation of the plan, Nortek said.
The case is
face='Times New Roman' size='3'>In re NTK Holdings Inc.
size='3'>, case number 09-13611, in the U.S. Bankruptcy Court for the
District of Delaware.
href='http://bankruptcy.law360.com/print_article/137652'>Read
more. (Subscription required.)
Five high-ranking executives at American International
Group Inc. said last week that they were prepared to quit if their
compensation is cut significantly by the insurer's government overseers,
the
size='3'>Wall Street Journal reported
today.The threat is the latest in the running fracas between AIG and the
government's compensation czar, Kenneth Feinberg, who is charged with
setting pay limits for top executives at companies receiving the most
federal bailout money.The AIG executives who notified the company they
were prepared to resign include its general counsel, Anastasia Kelly,
and the heads of some of its largest insurance businesses. Over the
weekend, two of them changed their minds.The executives are worried that
their 2009 pay will be clipped, and that they will be subject to even
tougher restrictions in 2010, including a prohibition against collecting
so-called golden-parachute severance payments that they are currently
eligible for.
href='http://online.wsj.com/article/SB126015238193279485.html'>Read
more. (Subscription required.)
Supreme Court to Consider
Corruption Law
The Supreme Court this week will consider whether to
apply the brakes to what critics have called a vague and limitless law
that has proved essential to federal prosecutors going after corrupt
politicians and greedy corporate executives, the
face='Times New Roman'>
size='3'>Washington Post reported today. The
court has taken the unusual step of accepting three cases that raise
challenges to a federal anti-fraud provision that has been key to the
prosecutions of former lobbyist Jack Abramoff, former Illinois governor
George Ryan (R) and executives involved in the collapse of Enron. At
issue is the law's language that it is illegal for public or private
employees to 'deprive another of the intangible right of honest
services.' The flexible standard has been part of the law for more than
20 years, but lately it has been subject to a slew of contradictory
lower-court rulings and criticism, not the least of which has come from
Justice Antonin Scalia. Last term, in dissenting from his colleagues'
decision not to review the law, Scalia said the provision 'invites abuse
by headline-grabbing prosecutors in pursuit of local officials, state
legislators and corporate CEOs who engage in any manner of unappealing
or ethically questionable conduct.”
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/12/06/AR2009120602390_pf.html'>Read
more.
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