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January 11, 2008
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size='3'>America
Buy Troubled
Loan Giant for $4 Billion
Bank of America announced
today that it has
agreed to pay about $4 billion in stock to acquire Countrywide
Financial, the
New York Times
size='3'>reported
today. Bank of America said that the agreement had been approved by the
boards of directors
of both Bank of America and Countrywide and was subject to approval by
Countrywide’s
shareholders and regulators. As the nation’s largest mortgage
lender, Countrywide
helped fuel the housing boom by offering loans to high-risk borrowers.
But as home prices
began dropping last year and borrower defaults soared,
Countrywide’s lending
practices came under the spotlight of legislators, regulators and
consumer
advocates. With financial pressures
mounting,
Countrywide’s stock price collapsed in 2007, falling 80 percent
and wiping out $20
billion in market value. Earlier this week, Countrywide’s shares
plummeted further as
speculation about a bankruptcy filing roiled the market, a rumor the
company
href='http://www.nytimes.com/2008/01/11/business/11cnd-bank.html?_r=1&hp=&oref=slog
in&pagewanted=print'>Read more.
face='Times New Roman'
size='3'>Delphi
face='Times New


Roman'
size='3'> Reorganization Plan Hit by Numerous
Objections
As
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face='Times New Roman' size='3'>Delphi
size='3'>Corp. tries to
emerge from bankruptcy, new objections to the auto supplier's proposed
reorganization plan
have cropped up, suggesting that the company may be in for a long and
hard confirmation
battle,
size='3'>Bankruptcy Law360 reported yesterday.
Comerica Leasing
Corp. and nearly a dozen others lodged their protests Wednesday to
Delphi’s first
amended chapter 11 plan in the U.S. Bankruptcy Court for the Southern
District of New York
as disputes over equipment purchases, leasing arrangements and other
issues persist. The
wave of objections comes only one day after a group of
w:st='on'>
face='Times New Roman' size='3'>Texas
size='3'>counties
opposed
size='3'>Delphi's proposed chapter 11
plan, accusing the
supplier of trying to wiggle out of its current tax obligations.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=43720'>Read
more.
(Registration required.)
name='3'>BioEnergy Files for
Chapter 11
BioEnergy of America Inc.
filed for chapter
11 protection yesterday amid financial struggles of the biodiesel
production
industry,
size='3'>Bankruptcy Law360 reported. The
company listed assets
between $1 million and $10 million, and liabilities between $10 million
and $50 million.
Its largest unsecured creditor, Paragon Biofuels LLC, has a balance of
$7.6 million. S/K
Edison I Associates, LLC, a creditor, filed a motion to vacate the
automatic stay on
Wednesday, attempting to regain possession of Bioenergy's
89,2000-square-foot industrial
facility in Edison, N.J. The 60-million-gallon
plant in
size='3'>Edison opened in early
2007.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=43665'>Read
more. (Registration required.)
name='4'>Interstate Bakeries
Loses Exclusivity to File Bankruptcy Plan
Interstate Bakeries Corp.,
maker of Twinkies,
Wonder bread and Hostess cupcakes, has lost control over its
three-year-old chapter 11 case
in a move that could complicate the company's effort to end its
bankruptcy, the Associated
Press reported yesterday. The wholesale baker's exclusive right to
determine the course of
its chapter 11 restructuring ended Monday, introducing the possibility
that creditors,
investors or prospective buyers could submit competing proposals to
bring the company out
of bankruptcy protection. Investors interested in buying Interstate
Bakeries or financing
its exit from chapter 11 must beat an offer from Silver Point Finance,
which has agreed to
lend the company $400 million to fund its emergence. California private
equity firm Yucaipa
Cos., controlled by billionaire investor Ron Burkle, has floated plans
to fund the Kansas
City company's reorganization and has teamed up with the Teamsters union
href='http://www.detnews.com/apps/pbcs.dll/article?AID=/20080110/UPDATE/801100499'>Read
more.
over Claims
The Enron Creditors
Recovery Corp. and
Standard Chartered Bank Inc. reached a settlement regarding the bank's
$24 million claim
against three Enron subsidiaries,
size='3'>Bankruptcy Law360 reported yesterday.
Bankruptcy Judge
Arthur Gonzalez approved a stipulation filed jointly by
the Enron
creditors and SCB in which the parties agreed to settle all claims and
issues raised in a
motion to enforce Enron's reorganization plan filed earlier this year by
SCB. The order
approves a settlement under which SCB will be allowed three claims in
the Enron bankruptcy:
a $956,250.00 Class 5 claim, a $210,000.00 Class 6 claim and a
$702,290.77 Class 67 claim,
bringing the total to $1,868,540.77. A previously allowed SBC claim will
be reduced to
$2,491,387.70 and classified as a joint liability claim.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=43690'>Read
more. (Registration required.)
name='6'>Commentary: The Right
'Stimulus'
As politicians are now
talking about a
fiscal 'stimulus,' the challenge is getting them to distinguish between
policies that
actually 'stimulate' and those that will have little effect, according
to a
face='Times New
&
amp;#13; 

&
;amp;#13;


Roman'
size='3'>Wall Street Journal editorial today.
The Bush
Administration and lawmakers are beginning to understand that the
Federal Reserve can't
flip its easy-money switch and immediately end the credit crunch and
forestall home
foreclosures. Former Treasury Secretary Larry Summers is leading the
charge for the
Democrats, pushing what he calls a 'timely, targeted and temporary' tax
rebate of $250 per
tax filer, and $500 per couple. The White House is floating its own
rebate of $500 or so
for families with taxable income of less than $100,000 a year.
href='http://online.wsj.com/article_print/SB120001233120482535.html'>Read
more.
(Registration required.)
Airlines
name='7'>Delta's Merger Buzz
May Stir the Industry
Delta Air Lines Inc. is
seriously
considering a merger with either Northwest Airlines Corp. or United
Airlines parent UAL
Corp., a move that could spur a new round of industry matchmaking as
rising fuel costs hurt
airline stocks, the Wall
Street
Journal reported today. Delta's board is
expected today to act on
a proposal to give CEO Richard Anderson a green light to pursue formal
merger discussions
with both Northwest and United. That would follow exploratory talks
Delta held in December
with United, Northwest and Continental Airlines Inc.
href='http://online.wsj.com/article_print/SB119998733704081313.html'>Read
more. (Registration required.)
name='8'>American's Pilots Ask
for Mediation
The pilots' union at American
Airlines pushed
yesterday for a federal mediator to help in contract negotiations, which
after more than a
year have produced few signs of progress, the Associated Press reported
yesterday.
American, the nation's largest carrier, rejected a union proposal for
pay raises of about
50 percent but hasn't made a counter offer, union officials say. The
Allied Pilots
Association asked American yesterday to join its request for help from a
federal mediator,
though the company indicated it was unlikely to go along. Union leaders
said they would
give management until late Monday to respond before contacting the
National Mediation
Board, which could take over negotiations or tell the parties to keep
talking
href='http://biz.yahoo.com/ap/080110/american_airlines_pilots.html?.v=2'>Read
more.
name='9'>American Express to Take
Big Charge as Loans Sour
American Express Co. said
that cardholder
spending is slowing down and delinquencies are rising as the card
company said yesterday
that it would take a $440 million pretax charge against fourth-quarter
earnings as it sets
aside more money to cover soured loans, the
size='3'>Wall Street Journal reported today.
The company's stock
fell 6.9 percent in after-hours trading last night after the
announcement. In a
statement, AmEx Chairman and CEO Kenneth Chenault said business worsened
in December,
particularly in
size='3'>California,
w:st='on'>
size='3'>Florida and other
regions most
affected by the housing downturn. Fourth-quarter loans that were at
least 30 days past due
amounted to 3.2 percent of its
w:st='on'>
w:st='on'>
size='3'>U.S.
size='3'>loan portfolio
outstanding, up from 2.9 percent in the third quarter. Its
fourth-quarter rate of loan
write-offs rose to 4.3 percent of loans outstanding, compared with 3.7
percent in the third
href='http://online.wsj.com/article/SB120000076375181927.html?mod=hpp_us_whats_news'>Read
more. (Registration required.)
name='10'>Retailers Report Weak
December Sales
Retailers reported deep
declines in their December
sales yesterday, reflecting a 2007 holiday shopping season that is
turning out to be one of
the weakest in years, CNNMoney.com reported. Retail Metrics, which
tracks same-store sales
at 43 retail chains, said that combined November-December sales rose 1.7
percent, their
weakest gain since 2002. In the overall retail sector, Thomson
Financial, which also
compares monthly results at 43 of the nation's largest retail chains
based on analysts'
estimates, said that total December same-store sales rose just 0.5
percent compared to its
revised estimate for a 0.7 percent gain, much weaker than the 3.3
percent gain for the same
href='http://money.cnn.com/2008/01/10/news/economy/retail_sales/index.htm?section=money_top
stories'>Read more.
href='http://money.cnn.com/2008/01/10/news/economy/retail_sales/index.htm?section=money_top
stories'>