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Bankruptcy Cases Continue to Break Records
The total number of bankruptcies and the total number of
non-business (personal) bankruptcy cases filed in the 12-month period
ending June 30, 2003, once again broke records, according to data
released today by the Administrative Office of the U.S. Courts. Filings
increased 9.6 percent from 1,505,306 bankruptcy cases filed in the
12-month period ending June 30, 2002, to 1,650,279 filed in the same
period ending on June 30, 2003, the largest number of cases ever filed
in any 12-month period.
Non-business (personal) bankruptcy filings also reached an all-time
high for any 12-month period. Non-business filings totaled 1,613,097 for
the 12-month period ending June 30, 2003, up 10 percent from the
1,466,105 cases filed in the 12-month period ending June 30, 2002. In
the same period, business filings fell by 5.2 percent to 37,182 from
39,201 in 2002. The 440,257 total filings during the second quarter are
the most ever in a 3-month period, surpassing the 412, 968 cases filed
during the first quarter of this year.
Filings increased under the following bankruptcy chapters in the
12-month period ending June 30, 2003. Chapter 7 increased by 10.7
percent from 1,053,230 chapter 7 filings in the 12-month period ending
June 30, 2002, to 1,165,993 chapter 7 filings for the same period ending
June 30, 2003. The next largest group of filings were chapter 13 filings
at 472,811, a 7.4 percent increase over the 440,231 filings in the
12-month period ending June 30, 2002. Chapter 12 filings rose 111.2
percent, from 367 in the 12-month period ending June 30, 2002, to 775 in
the same 12-month period in 2003. Only chapter 11 filings fell 7
percent, decreasing from 11,401 in 2002 to 10,602 in 2003.
Ex-National Century Executive Pleads Guilty in $1 Billion
Fraud
Former National Century Financial Enterprises Inc. executive Sherry
Gibson pleaded guilty on Monday to her role, including providing false
information to investors, in a $1 billion securities fraud, Reuters
reported. Gibson acknowledged taking part in a scheme that took money
from now bankrupt National Century, the U.S. Attorney's Office for the
Southern District of Ohio said in a statement. A former executive
vice-president with the Dublin, Ohio-based company, Gibson faces up to
five years in prison without parole, a $250,000 fine and three years of
supervision following release. A sentencing date in the U.S. District
Court for the Southern District of Ohio has yet to be set.
Privately-held National Century built a multibillion-dollar business out
of buying patients' bills from health care providers and selling them to
investors as asset-backed securities. National Century, which filed for
bankruptcy last November, has already faced a flood of lawsuits from
investors who have also sued the company's accountants and investment
banks, reported the newswire.
Xcel Sets More NRG Charges
Power and gas utility Xcel Energy Inc. on Friday said it recorded
additional second-quarter charges for its bankrupt NRG Energy unit and
warned it may need a waiver from U.S. regulators to pay its
third-quarter dividend, Reuters reported. The Minneapolis-based company,
which initially set a $236.2 million NRG-related charge, said it decided
it would take an additional charge of $115 million, or 29 cents a share.
Xcel's updated second-quarter loss is $284 million, or 71 cents a share,
compared with the preliminary net loss of $169 million, or 42 cents,
reported the newswire. In the year-ago period, Xcel had earnings of $86
million, or 23 cents. The company said the higher charge is attributable
to circumstances and conditions surrounding NRG prior to May 14, when
NRG filed for chapter 11 bankruptcy protection, Reuters reported.
NRG seeks to restructure $9.2 billion in debts it accumulated during
more than a decade of expansion into unregulated power generation and
trading. NRG's financial condition deteriorated in late 2001 as falling
power prices lowered revenue and the collapse of Enron Corp. led to a
breakdown in energy markets, Reuters reported.
Chapter 11 Transfer Tax Loophole Narrows In Third Circuit
A federal appeals court has narrowed a popular tax loophole for real
estate sold during chapter 11 cases in a move that means more money for
local governments and less for companies restructuring in bankruptcy.
The July 18 ruling by the Third Circuit Court of Appeals involved the
liquidating trust that is wrapping up the loose ends for the defunct
hardware chain, Hechinger Co., which filed for chapter 11 protection in
June 1999.
The decision already is reverberating in the Wilmington bankruptcy
courts, where the case started. Judges last week struck language
referring to the tax loophole from sale documents that transferred real
estate in the chapter 11 cases of Uniroyal Technology Corp. and Fleming
Cos.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
WORLDCOM/MCI
WorldCom Reaches Deal With Qwest Units, Would Pay $17
Million
WorldCom Inc. reached a proposed settlement with two units of Qwest
Communications International Corp. to resolve disputes over amounts the
companies owe each other. According to a motion filed on Monday,
WorldCom is seeking bankruptcy court approval of the settlement, under
which it would pay Qwest Corp. and Qwest Communications Corp. $17
million in cash. Also, the filing said, WorldCom would credit Qwest
Communications $4 million toward minimum purchase commitments under an
existing digital services agreement. The Qwest subsidiaries claim that
WorldCom owed them a total of roughly $151.6 million when it filed for
bankruptcy under several interconnection agreements and a billing and
collection pact. WorldCom says that the Qwest subsidiaries owed more
than $125 million as of the WorldCom chapter 11 filing in July 2002.
Provided by Daily Bankruptcy Review (
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
MCI May Make More Restatements
MCI said on Tuesday its auditor found weaknesses in the company's
internal controls that could lead to additional restatements of
financial results as the company tries to emerge from bankruptcy,
Reuters reported. In a filing with the U.S. Securities & Exchange
Commission, MCI also said it was withdrawing all of its previous
financial forecasts.
'KPMG has identified a substantial number of material weaknesses in the
company's internal controls,' MCI said in the filing. 'Although the
company has begun work to address these deficiencies, a significant
amount of work remains to be done,' reported the newswire.
Last week, the company said its net income could fall between $36
million and $250 million over three years, depending on the length of
its ban from winning new U.S. government contracts. The company was
suspended last month from receiving new government contracts, pending a
review of whether the company should be barred for up to three years,
Reuters reported.
Northwest Airlines Can Use Stock Of Unit to Fund Retirement
Plans (Wall Street Journal)
Northwest Airlines received permission from the Labor Department to
contribute stock from a subsidiary, instead of cash, to its pension
plans, the Wall Street Journal reported. The exemption allows
Northwest to contribute the difficult-to-value stock of Pinnacle
Airlines Corp., a majority-owned regional Northwest affiliate, to three
of its underfunded pension plans. Since the stock isn't publicly traded,
it isn't a 'qualifying security' under pension law, so such a
transaction wouldn't normally be legal, reported the online newspaper.
To read the full article, point your browser to
href='http://www.wsj.com/'>www.wsj.com (subscription required).
Judge Freezes Sale of Clayton, Ruling Holder Suit Can Proceed
The planned sale of Clayton Homes Inc. took another unusual turn
when a Tennessee judge froze the $1.7 billion acquisition by Berkshire
Hathaway Inc., saying that a shareholder lawsuit against the deal could
proceed, the Wall Street Journal reported. The ruling by Blount
County Circuit Court Judge W. Dale Young came even as Clayton contends
the transaction already has been completed because it has filed formal
merger documents in Delaware, where it is incorporated, reported the
Journal. The decision also means Clayton's stockholders, who are
supposed to receive $12.50 for each share held, may not be paid until
the dispute is resolved. Clayton's stock stopped trading earlier this
month when the Maryville, Tenn.-based concern declared the deal
completed. Judge Young didn't determine the actual status of the
transaction, pending a trial or further orders from the court, reported
the newspaper.
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