March 24
Congressional Attention Turns Again to Bankruptcy
Reform as Senate Panel Examines Credit Card Fees and
Bankruptcy
While Congress is currently focused on efforts to stem
home foreclosures by altering the Bankruptcy Code so that bankruptcy
court judges will be allowed to modify certain mortgages, greater
attention will once again turn to altering the 2005 bankruptcy reforms,
USA Today reported yesterday. 'There is continuing concern
about the bankruptcy-reform bill and what its effects have been,' said
Sen. Sheldon Whitehouse (D-R.I.) who chairs the Senate Judiciary
Subcommittee on Administrative Oversight and the Courts. The panel will
hold a hearing today that will discuss legislation Whitehouse has
introduced that would allow families burdened by credit card rates and
fees to more simply discharge their debt under bankruptcy. Despite
Congressional intent to lower the number of bankruptcy filings with the
passage of BAPCPA in 2005, filings are expected to grow to nearly 1.4
million, although if layoffs continue and consumer credit continues to
be hard to come by, they may reach 1.6 million, according to
size='3'>Robert Lawless, professor of law at
the University of Illinois. Click here to read the full
story.
href='http://judiciary.senate.gov/hearings/hearing.cfm?id=3739'>Click
here to view the details and a live Webcast of the Senate Judiciary
Subcommittee on Administrative Oversight and the Courts hearing titled
“Abusive Credit Card Practices and Bankruptcy.” The hearing
will take place at 10 a.m. ET in room 226 of the Dirksen Senate Office
Building.
Geithner, Bernanke Set to Testify on Stronger
Oversight of Financial Firms
U.S. Treasury Secretary Timothy Geithner, in a joint
appearance with Federal Reserve Chairman Ben Bernanke, plans to tell
lawmakers today that all systemically important firms and markets need
to be brought under strong oversight, including limits on risk-taking,
the
size='3'>Wall Street Journal reported today.
Geithner and Bernanke will testify at a House Financial Services
Committee hearing today that will focus on the federal bailout of giant,
embattled insurer American International Group Inc. However, Geithner
plans to use the appearance to call for new regulations that might have
prevented the government's need to funnel taxpayer funds into
AIG.
href='http://online.wsj.com/article/SB123789587004924441.html'>Read
more. (Subscription required.)
href='http://www.house.gov/apps/list/hearing/financialsvcs_dem/hr03240923.shtml'>Click
here for further details on the House Financial Services Committee
hearing set for 10 a.m. ET today and to view a live Webcast.
IRS Focuses on AIG's Tax Deals
Some of the same banks that got government-funded
payouts to settle contracts with American International Group Inc. also
turned to the insurer for help cutting their income taxes in the U.S.
and Europe, the Wall Street Journal
size='3'>reported today. The Internal Revenue Service (IRS) is
challenging some of the tax deals structured by AIG Financial Products
Corp., the same unit of the New York company that has caused political
ire over $165 million in employee bonuses. The company paid $61 million
last year in disputed taxes stemming from the deals but sued the U.S.
government last month in federal court in New York, seeking a refund,
according to filings in the case. In general, AIG's tax deals permitted
U.S. companies and foreign banks to effectively claim credit in their
home country for a single tax payment, partly through the use of an
offshore AIG subsidiary. In its lawsuit against the government, the
insurer said it was told by the IRS that AIG hadn't shown that the
transactions 'had sufficient economic substance and business purpose' to
href='http://online.wsj.com/article/SB123785925883921027.html#mod=testMod'>Read
more. (Subscription required.)
Lawmakers Back Off From Quick Action On Bonus
Tax
The Obama administration and Democratic leaders appear
to be taking a step back from slapping tax penalties on bonuses doled
out by American International Group and other companies benefiting from
government aid, CongressDaily reported
yesterday. Senate Majority Leader Harry Reid (D-Nev.) appears content to
let Republicans object again to taking up a tax bill by unanimous
consent, as they did last week after the House passed a 90 percent bonus
tax on firms that received $5 billion or more in federal
aid. In related news, New York State
Attorney General Andrew M. Cuomo yesterday said that he had persuaded
nine of the top 10 bonus recipients at the American International Group
to give the money back, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. Cuomo said that he was working his way down a
list of A.I.G. employees, ranked by the size of their bonuses, and had
already won commitments to pay back $50 million out of the total $165
million awarded this month.
href='http://www.nytimes.com/2009/03/24/business/24bonus.html?_r=1&ref=business&pagewanted=print'>Read
more.
Wachovia Sues WL Homes, Insurer over $10.5 Million
Loan
Wachovia Bank NA has sued WL Homes LLC, accusing the
bankrupt luxury homebuilder and an insurer of breach of contract, acting
in bad faith and failing to repay $10.5 million secured by a loan
agreement, Bankruptcy Law360 reported
yesterday. The suit, filed Friday in the U.S. District Court for the
District of Delaware, claims the bank is entitled to cash collateral in
an account that secured the loan and alleges the builder acted in bad
faith when it claimed JLH Insurance — not WL Homes —
controlled a deposit account where the collateral was held. Under the
loan agreement, Wachovia loaned funds to WL Homes to finance the
builder's acquisition of residential real property, the complaint
says. Read
more. (Registration required.)
Linens 'N Things Sues Vendors to Recoup
Payments
Bankrupt housewares retailer Linens ‘N Things
has filed nearly two dozen lawsuits against a slew of home appliance
manufacturers and distributors, including Salton Inc., the distributor
of Black & Decker, George Foreman and Farberware home appliances, to
recover amounts it claims it overpaid to the vendors when it was
insolvent, Bankruptcy Law360 reported
yesterday. In nearly two dozen separate but similar complaints filed
Friday in the U.S. Bankruptcy Court for the District of Delaware, Linens
'N Things and 12 related debtors sued Salton and 21 other companies to
avoid and recover certain payments the debtors made to the companies
before filing for chapter 11 protection in May 2008. According to the
complaint against the Miramar, Fla.-based Salton, which was acquired by
Applica Inc. in late 2007, Linens is entitled to credit in the form of
cash or as credit against invoices from the home appliance distributor
for the overpayment for goods, damages allowances and freight
allowances.
href='http://bankruptcy.law360.com/articles/93005'>Read more.
(Subscription required.)
BearingPoint to Sell Off Key
Businesses
McLean, Va.-based consulting firm BearingPoint, which
filed for bankruptcy protection last month, said yesterday that it had
reached an agreement with several parties -- including
PricewaterhouseCoopers and Deloitte -- to sell 'substantially all of its
businesses,' the
face='Times New Roman' size='3'>Washington Post
size='3'>reported today. Deloitte is buying a 'significant portion' of
BearingPoint's public services business, its largest and most successful
unit, for $350 million. Pricewaterhouse will buy a 'substantial portion'
of the firm's North American commercial services unit, including a
segment focused on financial services, for $25 million. It was not clear
what would happen with the remaining portions.
href='http://www.washingtonpost.com/wp-dyn/content/article/2009/03/23/AR2009032303461_pf.html'>Read
more.
Sportsman's Warehouse Files for Chapter
11
Midvale, Utah-based national outdoor retailer
Sportsman's Warehouse filed for chapter 11 protection on Saturday, the
Associated Press reported yesterday. Already 23 locations are shutting
down, putting 1,700 employees out of work. It was announced in November
that Calgary, Canada-based UFA Co-operative Ltd. was seeking to purchase
a controlling interest in Sportsman's Warehouse. However, Sportsman's
Warehouse Chairman and CEO Stuart Utgaard said Sunday that the deal fell
through, with UFA choosing to buy 15 stores and not taking a majority
position in the privately held company.
href='http://www.forbes.com/feeds/ap/2009/03/23/ap6202624.html'>Read
more.
World’s Airlines Face Almost $5 Billion
Shortfall
The International Air Transport Association (IATA)
predicted that losses for the world’s airline industry, grappling
with its deepest crisis in 60 years, will total nearly $5 billion this
year as the economic slowdown continues to shrink passenger and freight
traffic, the New York Times reported
today. IATA said today that it had nearly doubled its loss forecast to
$4.7 billion from $2.5 billion in December. High-end passenger traffic
plunged 16.7 percent in January and cargo dropped 23.2 percent.
href='http://www.nytimes.com/2009/03/25/business/worldbusiness/25iata.html?ref=business&pagewanted=print'>Read
more.
Four Michigan Markets Will Lose Daily Newspapers
amid Industry Downturn
Daily newspapers will become a thing of the past for
readers in four Michigan markets, with issues being printed only three
days a week in Flint, Saginaw and Bay City, and twice weekly in Ann
Arbor, the New York Times reported today.
Advance Publications said it would close the 174-year-old
size='3'>Ann Arbor News in late July, and
replace it with two new corporate entities: a primarily Web-based news
operation, AnnArbor.com; and a printing company that will publish two
days a week. AnnArbor.com will have some original reporting, and an
emphasis on reader input and community forums. The changes at
theFlint Journal,
size='3'>Saginaw News and
face='Times New Roman'>Bay City
Times will be less sweeping, reducing daily
publication to Thursdays, Fridays and Sundays only.
href='http://www.nytimes.com/2009/03/24/business/media/24paper.html?ref=business&pagewanted=print'>Read
more.
href='http://www.nytimes.com/2009/03/24/business/media/24paper.html?ref=business&pagewanted=print'>