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June 13, 2005
Committee to Hold Hearing on Pension Laws
The House Education and the Workforce Committee on Wednesday will
hold a hearing on comprehensive legislation aimed at overhauling the
nation’s pension laws, CongressDaily reported. The
bill, introduced by Education and the Workforce Chairman John Boehner
(R–Ohio), includes a proposal similar to a White House plan to
raise pension premiums and establish a new rate that companies must use
to calculate their pension contributions. Under the bill, companies
would have less time to make up shortfalls in their pension funds. It
would also require companies to disclose more information to employees
about the financial status of their pensions. Boehner said he hopes to
mark up the bill next week in subcommittee and complete a full-committee
markup the week before the Independence Day recess, the newspaper
reported.
Bankruptcy Filings Increase in First Quarter of 2005
The total number of bankruptcies filed during the first three months
of 2005 rose 7.9 percent, according to data released on Friday by the
Administrative Office of the U.S. Courts. Non-business filings for the
period totaled 393,086, up 8.0 percent from the quarterly non-business
filings of 363,890 in the three-month period ending December 31, 2004.
Business filings for the period totaled 8,063, up 3.7 percent from the
7,778 bankruptcy cases filed in the three-month period ending December
31, 2004. More information is available at
href='/AM/Template.cfm?Section=Home'>ABI World.
Diocese Asked to Halt Attorney Fees
Catholic parishes in Eastern Washington have asked that payments to
bankruptcy lawyers be suspended or at least held down until the clergy
sex abuse case is settled, the Spokesman-Review.com reported. With legal
fees running in excess of $325,000 a month, parish members worry that
the Roman Catholic Diocese of Spokane could run out of money before the
case is resolved. There are 82 parishes within the diocese. Through
donations to the Catholic Appeal, parishioners support the operations of
the diocese. This year, however, the annual appeal is collecting about
20 percent less. The drop in collections, added with the high fees, is
causing a liquidity crisis, parish attorneys John Munding and
Ford Elsaesser wrote in their motion. Elsaesser has advised
attorneys in the case that the parishes were contemplating such action
unless a deal could be worked out, the newspaper reported.
Citigroup to Pay $2 Billion to Settle Enron Lawsuit
Citigroup Inc. said on Friday it will pay $2 billion to Enron Corp.
investors who accused it of helping the energy trader in a massive
accounting fraud, a move that cleans up one of the bank’s top
legal problems and could pressure others to settle the case, Reuters
reported. The class-action settlement with stock and bond holders is the
biggest in the long-running Enron debacle and one of the largest in
corporate history, though less than the $2.58 billion Citigroup agreed
to pay WorldCom Inc. investors in 2004. Analysts said the agreement with
Citigroup, the world’s largest financial services company, could
prompt settlements from other banks facing claims for their roles in
Enron’s December 2001 collapse. Read the full story at
href='http://go.reuters.com/newsArticle.jhtml;jsessionid=1SUC4DRDDRDKKCRBAEKS…'>go.reuters.com/newsArticle.jhtml;jsessionid=1SUC4DRDDRDKKCRBAEKSFFA?type=topNews&storyID=8768774.
Northwest May Be Heading for Chapter 11
Now that US Airways and United Airlines have improved their chances
of emerging from bankruptcy-court protection, another
carrier—Northwest Airlines—may be steering perilously close
to chapter 11, the Wall Street Journal reported. Facing
unsustainably high labor costs and pension-plan obligations, the Eagan,
Minn.–based company is girding for possible labor strikes, and a
bankruptcy-court filing could be an option if Northwest can’t
persuade Congress to change pension law. Northwest, the nation’s
fourth-largest airline by passenger traffic, is being hurt by problems
affecting mature U.S. carriers: weak pricing, high fuel prices and the
rapid growth of discount airlines. But the company, with a market value
of about $552 million, also is facing challenges because rivals have
extracted concessions in chapter 11 or under the threat of it, leaving
Northwest with the U.S. industry’s highest labor costs. Read the
full story at www.wsj.com
(subscription required).
American Airlines Protects Pensions
When American Airlines teetered on the brink of bankruptcy in 2003,
employees agreed to $1.8 billion worth of concessions, with one
comforting condition: their pensions would be protected, the Associated
Press reported. That deal, which saved the nation’s largest
carrier from a chapter 11 filing, is a key factor that distinguishes
American from its rivals at a time when the retirement benefits of
workers throughout the industry are increasingly at risk. UAL’s
United Airlines and US Airways Group have dumped their pension plans
through bankruptcy restructuring, and other carriers are threatening to
do the same. “We are trying very hard to strike another
path,” said Tommie L. Hutto-Blake, president of the Association of
Professional Flight Attendants, which represents flight attendants at
American Airlines, a unit of AMR. Read the full story at
href='http://www.usatoday.com/travel/news/2005-06-13-aa-pensions_x.htm?csp=34'>www.usatoday.com/travel/news/2005-06-13-aa-pensions_x.htm?csp=34.
Proxim to Sell Assets to Moseley for $21 Million
Proxim Corp., a maker of wireless networking equipment, said Moseley
Associates Inc., a privately held rival, will acquire and assume most of
Proxim’s domestic and foreign operations for $21 million, Reuters
reported. The deal is subject to certain adjustments and deductions and
no proceeds of the sale are expected to be distributed to Proxim
stockholders, Proxim said in a statement released on Saturday. The sale
will be implemented through Proxim’s filing of a chapter 11
bankruptcy case in the United States Bankruptcy Court for the District
of Delaware and subject to court confirmation and overbidding
procedures. Moseley also has agreed to provide Proxim with bridge
financing in the principal amount of up to $6.2 million, which will be
offset against the purchase price, Proxim said.
Judge Orders Board to Renew License For Emerald
A judge on Thursday ordered the Illinois Gaming Board to renew the
bankrupt Emerald Casino’s gambling license and allow it to
relocate to suburban Rosemont, but attorneys for the board contend a
hearing aimed at revoking the casino’s license can continue, the
Las Vegas Sun reported. Emerald says the ruling should end
the revocation hearing, while it was unclear whether board members will
vote to renew the license. Cook County Judge Sophia Hall issued an order
saying the Illinois Appellate Court’s 2003 decision that found
gambling regulators were required to renew Emerald’s license and
let it move its casino should be followed, the newspaper reported.
United Airlines
Court Denies Flight Attendants’ Motion to Preserve Pension
Plan
United Airlines’ flight attendants have lost a bid in court for
an injunction to keep the carrier from going forward with an agreement
that would end their pension plans, the Chicago Tribune
reported. U.S. District Judge Ellen Huvelle denied the union’s
motion in Washington last week, saying the group did not meet standards
for granting the relief. The Association of Flight Attendants, which
represents 20,000 workers at Elk Grove Township–based United, said
on Thursday that it will appeal the ruling, the newspaper reported.
UAL Cost Cuts May Tempt Rivals to Try Chapter 11
After 2½ years in bankruptcy, United Airlines is poised to
emerge in the fall with an enviable cost structure that could tempt
rival carriers to strive for similar cost cuts through court protection,
Reuters reported. United, a unit of UAL Corp., has made the most of
chapter 11, reducing yearly costs by $7 billion. Much to the chagrin of
its workers, the No. 2 U.S. carrier last month even managed to jettison
its burdensome defined pension plans, generating annual savings of $645
million. US Airways Group, also bankrupt, has won more than $1 billion
in annual labor savings this year, an amount that might have been
impossible outside of bankruptcy. The savings of those two carriers has
put increased pressure on non-bankrupt rivals, battered by soaring fuel
prices and low-fare competition, to slash costs as well. Read the full
story at
href='http://go.reuters.com/newsArticle.jhtml;jsessionid=1SUC4DRDDRDKKCRBAEKS…'>go.reuters.com/newsArticle.jhtml;jsessionid=1SUC4DRDDRDKKCRBAEKSFFA?type=topNews&storyID=8768755.
ABB to Submit New Asbestos Plan Soon After June 13
ABB has yet to finalize a reworked asbestos settlement plan but
expects to present it to a U.S. Bankruptcy Court soon after June 13, the
Swiss-based engineering group said on Friday, Reuters reported. In May
ABB had said it would submit the new plan this month but added that a
June 13 deadline given by the U.S. court was not set in stone. The maker
of robots and electric motors moved to resolve its asbestos problems in
March by offering to pay an additional $232 million to claimants, eager
to resolve one of the final hurdles on the group’s path to
recovery. That money was on top of the $1.2 billion that ABB had already
agreed to contribute to a settlement under an earlier plan, which was
thrown out by a U.S. court last year. The settlement would cap
potentially ruinous claims from former workers who made products
containing asbestos, which can cause cancer. ABB had come to the brink
of financial collapse in 2002 after an acquisition spree left it
debt-laden, but it has since narrowed its focus to concentrate on
automation and power technology, shedding non-core businesses and
thousands of jobs along the way.
Rio Vista Energy Cautions of Bankruptcy
Shares of Rio Vista Energy Partners LP, a distributor of liquefied
petroleum gas, plunged Friday on news that the company’s primary
buyer sharply cut orders—a blow the company said could push it to
bankruptcy, Forbes.com reported. In a statement filed with the
Securities and Exchange Commission, Rio said it expects a cash shortfall
of between $75,000 and $175,000 a month from June through September,
based on lower prices and volumes from its agreement with customer
P.M.I. Trading Ltd. Rio operates storage facilities in Brownsville,
Texas, and Matamoros, Mexico, and transports petroleum, supplied by Penn
Octane, to markets in Mexico through two U.S. and Mexico pipelines. The
company also supplies Mexico’s state-owned oil company, Petroleos
Mexicanos.
Read the full story at
href='http://www.forbes.com/smallbusiness/feeds/ap/2005/06/10/ap2087744.html'>www.forbes.com/smallbusiness/feeds/ap/2005/06/10/ap2087744.html.