March 3, 2004
Reports Show Recovery
The economy is in recovery, reports suggest, with manufacturing activity
and consumer spending on the rise and construction spending solid though
slightly lower, the Washington Post reported. The nation's
manufacturing sector grew for the ninth consecutive month in February,
the Institute for Supply Management reported. Its manufacturing index
was 61.4 in February, below the 62 reading forecast by analysts. An
index reading above 50 indicates expansion. The Commerce Department said
consumers boosted spending in January by 0.4 percent, as disposable
income increased 0.8 percent. Construction spending, however, dipped in
January for the first time since last May, by 0.3 percent, the newspaper
reported.
Thomas Says Pension Bill Conference Could Begin This Week
House Ways and Means Chairman William Thomas (R-Calif.) said on Tuesday
conferees on the pension bill could meet later this week, although House
leadership has yet to appoint negotiators to work out the differences
between the Senate and House versions, CongressDaily reported.
Thomas suggested the bill that emerges from conference might not include
all the provisions included only in the Senate bill, which provided $16
billion in additional pension relief for airlines, steelmakers and
companies with 'multi-employer' pension plans often found in trucking
and construction. 'You only need 60 votes to pass the Senate, not 86,'
Thomas said, referring to the 86-9 Senate vote in January for the
pension bill, the newswire reported. 'I think we can agree to something
less than the entirety of the bill as passed by the Senate.'
Thomas did not say what Senate-passed provisions would be stripped. But
Senate Finance Chairman Charles Grassley (R-Iowa), who favors the
additional relief in his chamber's bill, said the provisions for steel
manufacturers and multi-employers are being targeted. Grassley also
criticized efforts by House members to unofficially 'pre-conference' the
bill, reported the newswire.Backers of the Senate-passed provisions say
companies with under-funded pensions need exemptions from the
accelerated pension payments they are required to make, because those
payments could drive them into bankruptcy, CongressDaily
reported.
Frist Sketches Upcoming Senate Floor Schedule
The Senate will likely take up a series of tort reform bills in late
March, including bills addressing class action and asbestos litigation,
Senate Majority Leader Bill Frist (R-Tenn.) said on Tuesday,
CongressDaily reported. Claiming the bills would help boost the
economy, Frist told reporters the Senate would act on the measures in
the near future. 'The cost of doing business in this country is
something on the floor of the United States Senate we will continue to
address,' said Frist, who later added that these costs, largely due to
lawsuits, have left the United States 'not as competitive as we should
be,' he said, reported the newswire.
National Energy & Gas Gets Court OK For Disclosure
Statement
National Energy & Gas Transmission received court approval of the
disclosure statement outlining its chapter 11 plan to pay creditors.
Judge Paul Mannes of the U.S. Bankruptcy Court in Greenbelt, Md., agreed
to approve the document after some minor changes, National Energy &
Gas spokeswoman Natalie Wymer told DBR Tuesday. An attorney for the
committee of unsecured creditors in the case declined to comment on the
changes to the document, which is to be sent to creditors to solicit
votes in favor of the plan.
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Globalstar Agrees To Settle Claims With Qualcomm
Globalstar Telecommunications Ltd. reached a settlement with Qualcomm
Inc. that would resolve disputes between the companies and ensure that
Qualcomm continues to supply equipment to Globalstar after it emerges
from bankruptcy protection.
Globalstar filed a motion Feb. 27 asking the U.S. Bankruptcy Court in
Wilmington, Del., to approve the deal. According to the motion, Qualcomm
demanded mutual releases from any type of claim Globalstar might make
before it would enter into new equipment and service contracts with
Globalstar. Satellite phone company Globalstar was founded by Qualcomm
and Loral Space & Communications Ltd.
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WORLDCOM
Ex-CEO Charged in $11 Billion WorldCom Accounting Scandal
U.S. Attorney General John Ashcroft announced yesterday criminal charges
against former WorldCom CEO Bernard Ebbers, one of several company
executives accused of presiding over an $11 billion accounting scandal
that sent the telecommunications giant into bankruptcy, the New York
Law Journal reported. The afternoon press conference came hours
after WorldCom's former chief financial officer, Scott Sullivan, pleaded
guilty to securities fraud and filing false documents with the
Securities and Exchange Commission in an effort to hide WorldCom's
enormous expenses and declining profits from investors and the public
over a period of almost two years, ending in 2002.
Sullivan has agreed to cooperate with the government in its
prosecution of Ebbers. As he pleaded guilty before Southern District
Judge Barbara S. Jones, Sullivan said he knew what he was doing was
wrong and apologized for his actions. Read the
href='http://www.law.com/jsp/article.jsp?id=1078196797403'>full
article.
An Attractive Candidate for a Takeover Emerges
WorldCom now faces a competitive climate significantly changed
from when it filed for bankruptcy protection in July 2002, the New
York Times reported. Wall Street and industry analysts said that, in
light of the changes in the telecommunications industry, WorldCom would
be pressed to remain a stand-alone company, and might attract takeover
interest as soon as it emerges from reorganization on April 28, the
newspaper reported.
What has put WorldCom's future independence in doubt, analysts said, is
the trend toward telecommunications megacarriers that sell
long-distance, local and wireless phone service, as well as Internet
access, and television programming through cable and satellite services.
Read the full article at
href='http://www.nytimes.com/'>www.nytimes.com.
Footstar Files for Chapter 11 Bankruptcy
Shoe retailer Footstar Inc. said today it filed for chapter 11
bankruptcy protection following a costly accounting problem and
declining sales to key customer Kmart, Reuters reported. The company,
which is under a U.S. Securities and Exchange Commission investigation,
said it had nearly completed work to restate earnings for fiscal years
1997 through 2002, and was continuing to work with accounting firm KPMG.
The company said it secured $300 million in financing from a group led
by Fleet National Bank and GECC Capital Markets Group, pending
bankruptcy court approval. The West Nyack, N.Y.-based company, which
operates Footaction and Just For Feet stores, as well as shoe sections
in Kmart stores, said it filed for bankruptcy on Tuesday in the U.S.
Bankruptcy Court in White Plains, N.Y. The retailer struggled to recover
sales lost when Kmart closed some 600 stores as part of its chapter 11
reorganization, reported the newswire. Kmart emerged from bankruptcy
last May.
Hawaiian Airlines Attracts Multiple Reorganization Plans
Hawaiian Airlines, which filed for bankruptcy-court protection a
year ago, is attracting competing plans for reorganization that would
rival a plan filed last month by major creditor Boeing Capital Corp. and
a partner, the Wall Street Journal reported.
John Adams, chairman and chief executive of the airline's parent,
Hawaiian Holdings Inc., earlier this week filed a preliminary plan in
which it would invest at least $30 million in new capital in return for
half the equity in the reorganized carrier. Hawaiian Holdings, which
isn't under bankruptcy protection, is 50.9 percent-owned by an
investment vehicle Adams controls. Longtime Hawaiian pilot Robert Konop
last week filed a plan that calls for an infusion of $100 million from a
number of sources, including a 'to-be-identified individual or group,'
reported the online newspaper.
High Court Overturns Pension Ruling
The Supreme Court ruled that small-business owners may participate in
certain pension plans for their workers, a decision that could help
protect owners' assets in bankruptcy proceedings, the Wall Street
Journal reported. The justices, in a unanimous ruling, overturned an
appeals-court decision that said small-business owners are considered
employers, but not employees, for purposes of pension plans operated
under the 1974 federal Employee Retirement Income Security Act, or
ERISA. Writing for the court, Justice Ruth Bader Ginsburg said that if
the pension plan 'covers one or more employees other than the business
owner and his or her spouse, the working owner may participate on equal
terms with other plan participants,' the online newspaper reported.
Deloitte Set to Defend Two Auditors Facing Probe Over
Parmalat
Accounting firm Deloitte Touche Tohmatsu on Tuesday said it planned to
'vigorously defend' two partners in its Italian affiliate who are facing
criminal charges related to their role as auditors of Parmalat SpA, the
Wall Street Journal reported. The firm and the partners denied
allegations by Italian prosecutors that the men improperly influenced
Parmalat's stock price, obstructed the work of the Italian markets
regulator or were associated with false communications between people
connected to the case, the firm said.
NEC's Packard Bell USA Files for Bankruptcy
NEC Corporation announced that its U.S. subsidiary, PB Electronics, Inc.
filed a petition for liquidation under chapter 7 of the Bankruptcy Code,
Computing News reported. Formerly Packard Bell NEC Inc., the
company discontinued its personal computer business operation in the
United States in 2000. This filing represents the final steps
surrounding a closure that began four years ago. The filing has no
effect on NEC Solutions America or other NEC businesses currently
operating in the United States. NEC-branded computers and servers will
continue to be widely available and supported through NEC Solutions
America. NEC will also continue to offer Packard Bell-branded computers
through NEC Computers International, Inc. in the European markets,
reported the magazine.
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