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U.S. March Consumer Credit Rises $931 Million
The rise in U.S. consumer debt slowed in March as auto borrowing
declined, Federal Reserve statistics showed, Bloomberg News reported.
Consumers took out $931 million more in credit during the month, a 0.6
percent gain, following a revised increase of $1.3 billion in February,
the Fed said. The rise was the smallest since a decline of $2.9 billion
in November and fell short of the $3.3 billion jump projected in a
Bloomberg News survey of economists. After increasing at an average of
$12 billion a month in 2000, consumer borrowing has been gaining at $4.6
billion a month in the past year. In March, consumer confidence fell to
the lowest in nine years, and the economy lost 124,000 jobs. 'Consumers
had plenty to be concerned about and weren't about to spend
frivolously'' in March, said Richard Yamarone, chief economist at Argus
Research Corp. in New York, reported the newswire.
SEC Chief Criticizes Bankruptcy Adviser Change
A measure before Congress that would let an investment bank advise a
former corporate client during bankruptcy drew criticism from Securities
and Exchange Commission Chairman William Donaldson yesterday, Reuters
reported. 'Personally, at a time like this, where investor confidence is
as fragile as it is, I would want to proceed very cautiously before
lifting any of the conflict-of-interest restrictions that we have,'
Donaldson told the Senate Banking Committee, the newswire reported. The
provision redefining a 'disinterested person' is contained in the
bankruptcy reform bill that cleared the House in March.
Sen. Paul Sarbanes (D-Md.) asked Donaldson about the bankruptcy
measure at a hearing on the $1.4 billion settlement reached last week
with 10 Wall Street firms over biased research, the newswire reported.
Donaldson said he was not speaking for the five-member SEC and could not
rule out that some better definition might emerge in time to let former
investment bankers bring their expertise into the bankruptcy process,
Reuters reported. 'But right now, I think it personally would be a
mistake to change,' said Donaldson, the newswire reported. Sarbanes, who
said the prohibition on former investment bankers acting as bankruptcy
trustees dated back to 1938, thanked Donaldson and said: 'I appreciate
the attitude that is reflected in that response.'
Asbestos Verdict in California Case Worries Insurers (New York
Times)
A jury verdict in California may lead to a wave of new asbestos
litigation that would greatly increase costs for insurance companies,
industry experts and plaintiffs' lawyers said yesterday, the New York
Times reported. On Monday, a jury in a civil trial in Los Angeles
concluded that a group of London insurance companies and two American
insurers must immediately pay nearly $200 million for claims already
filed against the bankrupt Fuller-Austin Insulation Company, as well as
those expected to be filed against a trust created by the company. If
the decision in the California Superior Court were widely adopted,
insurance companies would have to suddenly pay tens of millions of
dollars that they had expected to pay over decades. Small insurers could
be driven out of business, experts said, and others might be forced to
limit their coverage in other areas, reported the Times. To read
the full article, point your browser to
href='http://www.nytimes.com/'>www.nytimes.com.
Kmart Shares Fall After Discount Chain Emerges From
Bankruptcy
Kmart Holding Corp.'s shares fell as much as 10 percent a day after
Kmart, the third- largest U.S. discount retailer, emerged from
bankruptcy, Bloomberg News reported. The stock, trading under the new
ticker KMRT in over-the-counter transactions, dropped $1.50 to $13.50.
The Troy, Mich.-based retailer shed 599, or a third, of its stores and
wiped out $7.8 billion of debt during its reorganization.
Daisytek Units File for Chapter 11 Protection
Daisytek International Corp. filed for chapter 11 bankruptcy-law
protection, just days after the parent company's chief executive and
chief financial officers resigned, the Wall Street Journal
reported. The Allen, Texas-based company said it had exhausted financing
options and had cut costs aggressively to try to ease liquidity problems
that were hurting U.S. operations. The bankruptcy filing, made in the
U.S. Bankruptcy Court for the Northern District of Texas, Dallas
Division, follows layoffs and shutdowns of various U.S. distribution
centers. The filing includes Daisytek Inc. and its subsidiaries --
Arlington Industries Inc., Digital Storage Inc. and Tape Co.
Collectively, these companies had assets and liabilities of $622.9
million and $450.5 million, respectively, as of Feb. 28, reported the
newspaper.
Formica To Face Off Against Former Executives Over
Reorganization
Flooring and countertop company Formica Corp. is seeking more time
to file a reorganization plan, but two former company officers oppose an
extension, saying it has been given more than enough time to turn things
around. A hearing on the matter in U.S. Bankruptcy Court in Manhattan,
originally scheduled for April, is now set for May 13, a Formica
spokesman told DBR Wednesday. As reported, Formica -- which has been in
chapter 11 since March 2002 -- wants its exclusive period to file a
reorganization plan extended to July 31, and its deadline to solicit
votes in favor of its plan pushed to Sept. 30, court papers said.
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Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Allou Healthcare Lender Seeks Trustee To Take Control Of Case
A major lender for Allou Healthcare Inc. has asked a bankruptcy
court to appoint a trustee to take control of the case, in a bid to
distance the troubled personal-care products distributor from its
majority shareholding family. The request, made by Congress Financial
Corp., a unit of Wachovia Corp., came as the latest twist in the battle
for control of the Brentwood, N.Y.-based company, which was forced into
bankruptcy proceedings by its lenders in April. Allou's five-person
board -- which include three members of the Jacobs family holding 61.5
of the company's voting stock, and one just-fired chief financial
officer -- earlier had sought to replace Allou's bankruptcy law firm
with one chosen by the board. (The only independent director on the
board abstained from voting on the issue, according to court
papers.)
Provided by Daily Bankruptcy Review (
href='http://www.djnewsletters.com/dbr2.html'>www.djnewsletters.com/dbr2.html)
Copyright (c) 2003 Dow Jones & Company, Inc. All Rights Reserved
Federal Examiner in Enron Case Is Criticized For Running Up
Fees
A federal bankruptcy examiner appointed to investigate the affairs of
Enron Corp. is beginning to face criticism that he has been running up
excessive fees for himself and his law firm, the Wall Street
Journal reported. Late last week, motions were filed in Houston
federal court that criticized the efforts of the examiner, R. Neal
Batson, to subpoena three former Enron officials. One motion said
that the three had already been extensively interviewed at considerable
cost by Batson's team and that any further questioning would be
'duplicative and harassing.' Last week's Houston court filings,
initially reported by the Houston Chronicle, appear to be the first
public challenge to the examiner's work. A spokeswoman for Batson and
Alston & Bird said that under bankruptcy-court restrictions they
aren't allowed to comment on the Enron case. To read the full article,
point your browser to www.wsj.com
(subscription required).
Federal Judge Unfreezes Assets of Former HealthSouth Chief
A federal judge today lifted a freeze on the assets of Richard M.
Scrushy, the former chief executive of HealthSouth, denying a government
motion to block use of his money and property pending his trial for
fraud, Bloomberg News reported. Scrushy, who was fired in March, has
been accused by the Securities and Exchange Commission of inflating
earnings by $1.4 billion since 1999. He had asked for at least $49
million to be unfrozen, arguing that he had made that amount before he
founded HealthSouth, the largest operator of rehabilitation hospitals,
in 1984. Scrushy has about $150 million in assets, the SEC said in court
papers last week. 'This court found that the SEC had failed to present
sufficient evidence to warrant the issuance of a freeze of defendant
Scrushy's assets,' the ruling by Judge Inge P. Johnson of the Northern
District of Alabama said, reported the newswire.
Acterna Files For Reorganization
Acterna Corp. filed for chapter 11 bankruptcy protection, Phillips
Communication Today reported. The Germantown, Md.-based company says
it has $30 million worth of debtor-in-possession financing from JPMorgan
Chase Bank and General Electric Capital Corp., which will allow Acterna
to conduct business as usual as it reorganizes. The company's initial
plan, filed with the U.S. Bankruptcy Court for the Southern District of
New York, cut its debt by $750 million.
Florida Philharmonic Files For Bankruptcy
Florida philharmonic orchestra filed for bankruptcy on Wednesday, the
Associated Press reported. The cash-strapped philharmonic orchestra has
sent a letter to its musicians and other staffers, informing them their
employment may end this week. It needs the promise of $4 million
immediately, including $500,000 in cash to be raised by Saturday, $1
million over the next month, and $3 million over the next year.
Currently the orchestra is $3.5 million in debt, reported the
newswire.
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