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February 23, 2006
name='1'>Bankruptcy Attorneys Seek Clarification of Debt-Relief
Agency Provisions
More attorneys are
urgently looking for clarification of the debt-relief agency provisions
of BAPCPA as they feel hindered by civil and criminal penalties for
failure to comply with disclosure and advertising requirements as well
as their needing to know what can and can't be said to clients,
the National Law
Journal reported today. 'For the attorney who
traditionally practices bankruptcy, you used to be able to tell a
client, for example, 'You don't need a bankruptcy if you take out a new
mortgage on your house.' But, as a debt-relief agency, you can't advise
them to take on new debt,' said Chad Wm. Schulze of Milavetz, Gallop
& Milavetz in
size='3'>Edina
w:st='on'>
size='3'>Minn.
'motion to determine attorney status' on
April 4 in Milavetz, Gallop & Milavetz
v.
face='Times New Roman'
size='3'>U.S.
No. 05-CV-2626JMR/FLN. Similar motions and
challenges have been filed in
face='Times New Roman' size='3'>Pennsylvania
size='3'>,
size='3'>Kentucky
w:st='on'>North
Carolina
w:st='on'>
size='3'>Georgia
The National Association of Consumer Bankruptcy Attorneys, in
conjunction with the Connecticut Bar Association, hopes to soon file a
constitutional challenge to the debt-relief agency provisions.
href='http://www.law.com/jsp/article.jsp?id=1140602711488'>Read
more.
name='2'>Attorneys’ Report Finds New Bankruptcy Law
Ineffective
Ninety-seven percent of
consumers seeking to file for bankruptcy so far this year cannot afford
to pay back their debts, according to a survey by the National
Association of Consumer Bankruptcy Attorneys (NACBA), MSN.com reported
yesterday. NACBA surveyed six credit counseling agencies that have been
working with more than 61,000 potential bankruptcy filers and
assessing their ability to pay what they owe under a debt-management
plan. That the NACBA survey found that only 3 percent of potential
filers have the means to pay back some of their debts didn't surprise
ABI Executive Director
w:st='on'>Sam
Gerdano
bankruptcy reform legislation was first proposed, ABI conducted a study
of how many filers could afford to pay something back and found that
only between 3 and 3.5 percent could. The NACBA survey also found that
79 percent of potential filers said their financial troubles were the
result of circumstances beyond their control – e.g., a
medical crisis or job loss.
size='3'>Bankruptcy filings year-to-date are down 74 percent from the
same period last year, according to data from Lundquist Consulting, Inc.
Brad Botes, NACBA's executive director, said the filings may be down
because some consumers falsely believe bankruptcy is not an option for
them because of the more stringent law.
href='http://money.cnn.com/2006/02/22/pf/bankruptcy_survey/'>Read
more.
NBC
Objects to Adelphia's Chapter 11 Plan
Only moments after
Adelphia Communications Corp. announced its agreement with lenders to
amend its $1.3 billion debtor-in-possession loan Wednesday, broadcaster
NBC fired off its objections to the deal, Portfolio Media reported
yesterday. While the changes are still pending approval by the
bankruptcy court, NBC wasted no time in filing an objection to protect
its licensing fees and content distribution. NBC disapproves of the
cable provider’s plan to retransmit NBC programming to Time Warner
Inc. or Comcast Corp. without mentioning Adelphia’s obligation to
pay fees to NBC in the contract.
size='3'>In its current agreement, Adelphia, which filed for chapter 11
in 2002, can distribute CNBC and MSNBC content and retransmit signals of
NBC television stations. But in recent changes to the agreement,
Adelphia can distribute CNBC and MSNBC content until Dec. 31, 2008.
A confirmation hearing on Adelphia’s chapter 11 plan is set for
March 15.
name='4'>Babcock & Wilcox Emerges from Chapter 11
Babcock & Wilcox
in
size='3'>Barberton, Ohio,
size='3'>emerged from chapter 11 bankruptcy protection, the
size='3'>Akron Beacon Journal reported today.
The manufacturer of coal-fired boilers, power plant scrubbers and
related equipment filed for chapter 11 six years ago to protect itself
from about 400,000 asbestos-related lawsuits. The company paid $350
million into a trust Wednesday to pay asbestos claimants. It may need to
pay an additional $605 million into the trust, depending on pending
federal asbestos legislation. B&W's financial results will now be
included in the financial statements of parent McDermott International
Inc.
href='http://www.ohio.com/mld/beaconjournal/business/13940425.htm?template=co…'>Read
more.
IES
Looks for Speedy Bankruptcy Exit
A judge has granted
several requests made by newly bankrupt Integrated Electrical Services,
clearing the way for the company to seek permission to solicit creditor
support for its reorganization plan as early as next month,
Portfolio Media
reported yesterday. Dallas bankruptcy court Judge
Barbara Houser approved several of the company’s
preliminary motions, including routine first-day orders to continue
paying employees and vendors over the duration of the bankruptcy. The
judge also approved a request for a March 10 hearing on IES’
statement disclosing its reorganization plan. Objections to the
disclosure statement must be filed with the court by March 8. If the
judge approves the statement, IES will be permitted to send the
reorganization plan to its creditors for approval. Electrical contractor
IES filed for chapter 11 protection earlier this month, having drafted a
reorganization plan even before it formally filed for bankruptcy. Court
documents listed a total debt of $385.54 million and total assets of
$400.83 million.
size='3'>Seeking to expedite the bankruptcy process, the company has
already arranged for $80 million debtor-in-possession financing from
Bank of America, $48 million bonding facility with its primary lender,
Federal Insurance Co., and an additional $10 million bonding facility
with SureTec Insurance Co. The case is Integrated Electrical
Services, bankruptcy petition number
06-30602-bjh11, in the U.S. Bankruptcy Court for the Northern District
of Texas.
name='6'>Mesaba Seeks Confidentiality in Bankruptcy
Proceedings
Mesaba Airlines wants its
bankruptcy judge to clear the courtroom when its executives testify
about the finances of the regional feeder carrier for Northwest
Airlines, the Associated Press reported yesterday. The
face='Times New Roman' size='3'>Star Tribune
size='3'>newspaper said it will fight the secrecy request. Federal
Bankruptcy Judge Gregory Kishel is scheduled to rule on
the issue Friday, when a hearing opens on Mesaba's request to void
its labor contracts with its pilots, flight attendants and mechanics.
Mesaba, a subsidiary of MAIR Holdings Inc., wants specific information
about a revised agreement with Northwest to be off-limits to the public,
including the specifics of proposals it submits to Northwest,
Continental or other carriers for future flying. Mesaba is also seeking
to have some of its court filings declared confidential, according to
the motion it filed on Monday.
href='http://www.grandforks.com/mld/grandforks/news/state/13933564.htm'>Read
more.
name='7'>Commentary: Congressional Pension Reforms Have Serious
Weaknesses
While Congress is right
to be considering pension reforms that would prevent defaults, or at
least mitigate them, while shoring up federal pension insurance, the
bills that have emerged from the reform effort have serious weaknesses
that would undercut those worthy goals, and in some cases could make
things worse, according to an editorial in today’s
face='Times New Roman' size='3'>New York Times
size='3'>. One of the worst provisions, currently in the Senate version
of the reform bill, would exempt ailing airlines from tougher new
pension-funding rules that would apply to all other companies. Delta and
Northwest have lobbied hard for the exemption, saying that defaults
would be much more likely if airlines had to compute their obligations
the same way everyone else did. Another flawed reform proposal could
make it easier for companies to hide their pension troubles. Currently,
a company must tell the federal insurer when its pension deficit reaches
$50 million, so the government can track its risk. A House measure would
adopt a new formula to determine when a deficit must be
disclosed.
href='http://www.nytimes.com/2006/02/23/opinion/23thu1.html?_r=1&oref=slogin'>Read
more.
name='8'>Students Suffocating Under Loans
The average debt for a
college graduate has soared 50 percent in the past decade, after
inflation, according to the Project on Student Debt, a non-profit
advocacy group, USA
Today reported today. Just as record-low
mortgage rates have eased the impact of soaring home prices, low
student-loan rates have let borrowers cut their payments, softening the
impact of rising debt. The cost of that student debt is about to rise as
the rate on new federally guaranteed student loans will hit a fixed 6.8
percent in July, the highest rate since 2001. It comes as the average
graduate owes $19,000, with many undergrads having debt exceeding
$40,000. Erasing the loans by filing for bankruptcy is seldom an option.
A 1998 law designed to reduce student loan defaults requires borrowers
to prove they'll fail to maintain a minimal standard of living unless
their student loans are wiped out. The bankruptcy reform law enacted
last year toughened the rules by extending the hardship standards to the
private student loans that borrowers often turn to once they've maxed
out on government loans, according to Nora Raum, a
lawyer and author of Surviving Personal Bankruptcy.
href='http://news.yahoo.com/s/usatoday/20060223/bs_usatoday/studentssuffocate…'>Read
more.
ABB
Nears Pact on Settlement of Asbestos Suits
ABB Ltd. is likely to
settle its
w:st='on'>
size='3'>U.S.
size='3'>asbestos litigation in early spring, concluding 10 years of
restructuring and stanching a $1 billion stream of losses, the
Wall Street Journal
reported today. The Swiss electrical-engineering company
said yesterday that plaintiff lawyers filed no objections to its $1.43
billion plan to settle more than 100,000 lawsuits against Combustion
Engineering, its U.S.-based unit that produced asbestos-insulated
boilers until the 1970s. A closing of the case in late March would end
the crippling legal fights that cost
face='Times New Roman' size='3'>Europe
size='3'>'s largest engineering firm around $1 billion in legal fees --
even before the settlement -- and put it on the brink of bankruptcy in
2002, when spiraling asbestos claims coupled with a weak global economy
strained its finances.
href='http://online.wsj.com/article/SB114062730418280249-email.html'>Read
more.
name='10'>Judge Close to Approving $5.8 Billion Enron
Deal
A federal judge in
size='3'>Houston
to approving a $5.8 billion settlement from three investment banks
accused of helping Enron hide massive financial losses,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. The latest defendants to settle the charges
are the Canadian Imperial Bank of Commerce, JP Morgan Chase & Co.
and Citigroup Inc. Their offer pushes the total figure gleaned from
Enron’s underwriters and auditors to $7.2
face='Times New Roman' size='3'>billion, but counsel warned that the
figure could be even higher with interest. Judge Melinda Harmon of the
U.S. District Court for the Southern District of Texas gave initial
approval of the settlement Wednesday and is expected to finalize the
deal later, according to plaintiff attorney William Lerach. The Enron
settlements, which were reached last year, were part of an overall $17
billion in 2005 settlements by underwriters. The list wastopped by the
CIBC’s $2.4 billion Enron hit. Citigroup and J.P. Morgan Chase
& Co. tied for third and fourth with $2 billion each for their Enron
settlements.
name='11'>Enron Board Didn't Object to Reorganization that Masked
Losses
No Enron Corp. officer or
director at a 2001 meeting objected to a reorganization that allowed the
energy trader to mask sales losses with trading gains, according to
Paula Rieker, Enron's former board secretary, in the fraud trial of
Kenneth Lay and Jeffrey Skilling, Bloomberg News reported yesterday. The
overhaul of Enron's wholesale and retail divisions in the first quarter
of 2001 let the company disguise $665 million in retail energy losses
with more than $2 billion in trading earnings reaped during the
size='3'>California
crisis of 2000, prosecutors say. Rieker testified that none of the
senior officers and directors objected to the reorganization discussed
at the October 2001 board meeting.
size='3'>The case is
size='3'>U.S. v. Skilling, No. 04-cr-25, U.S.
District Court, Southern District of Texas (Houston).
href='http://www.bloomberg.com/apps/news?pid=10000087&sid=afkP75pim2kQ'>Read
more.
Diocese
w:st='on'>
name='12'>New York
face='Times New Roman' size='3'> Diocese Escapes Abuse
Lawsuit
New York’s highest
court rejected a $300 million lawsuit filed by 42 alleged victims of
pedophile priests in Brooklyn and Queens, ruling the alleged victims
waited too long to seek justice, the
size='3'>New York Daily News reported today.
The state Court of Appeals dismissed the suit brought against the
Diocese of Brooklyn in 2002, as well as a similar case upstate, because
the 10-year statute of limitations on their complaints
expired. The victims' lawyer, Michael Dowd, argued the diocese
should have been barred from raising a statute of limitations defense
because it deliberately hid Catholic priests, paid off victims and used
other delay tactics. 'Conduct like this might be morally questionable in
any defendant, let alone a religious institution, but it is not
fraudulent concealment as a matter of law,' Judge Carmen Beauchamp
Ciparick wrote for the court.
href='http://www.nydailynews.com/front/story/393686p-333707c.html'>Read
more.
w:st='on'>A
name='13'>laska
w:st='on'>
size='3'> Church
face='Times New Roman' size='3'> Abuse Suit
Dismissed
Superior Court judge
dismissed a civil suit against the Fairbanks Catholic Diocese and the
Society of Jesus on Tuesday in a decision that could affect more than
100 sexual abuse of a minor claims in
w:st='on'>Alaska
face='Times New Roman' size='3'>Fairbanks Daily News-Miner
reported today. Judge Ben Esch dismissed Jane
Doe 2's suit against the Rev. James Poole in December, saying the
statute of limitations had passed. After hearing arguments last week,
Esch came to the same decision for the diocese and the Jesuits in a
ruling issued Tuesday. Trial was due to start Feb. 27.
href='http://www.news-miner.com/Stories/0,1413,113~7244~3247157,00.html'>Read
more.
name='14'>Three Companies Found Liable in Lead Paint
Case
A
w:st='on'>
size='3'>Rhode Island
ruled on Wednesday that three former lead paint makers were liable for
creating a public nuisance and poisoning children, and must clean up
lead paint in the state, Reuters reported yesterday. The verdict, which
means that the companies that once manufactured lead paint could be held
liable for millions of dollars in cleanup costs and mitigation, battered
stock prices of two of the three companies named in the landmark
lawsuit. The companies are Sherwin-Williams Co., NL Industries Inc. and
Millennium Holdings LLC. A fourth defendant, Atlantic Richfield, was not
found liable, according to a spokeswoman for the law firm, Motley Rice
LLC.
href='http://go.reuters.com/newsArticle.jhtml?type=businessNews&storyID=11304…'>Read
more.
Airlines
name='15'>Court Rules Delta Can Establish Severance Plan for
Executives
Delta Air Lines Inc. can
implement a severance plan for certain officers and upper-level managers
that could result in the airline paying out $14 million, a federal court
ruled over the objection of the union representing the airline's pilots,
the Wall Street
Journal reported today. Judge Adlai
Hardin noted the company's executives have taken pay cuts, are
the lowest-paid in the airline industry and are currently working
without severance benefits. The Air Line Pilots Association (ALPA) union
said Delta shouldn't go ahead with the severance plan because it will
further provoke its 6,000 already angry pilots. What Delta should be
focusing on now 'is not a severance plan, but a consensual agreement
with the pilots,' said Michael Winston an attorney for ALPA. ALPA, the
airline's only major union, has threatened to strike if it is forced to
accept concessions to which it hasn't agreed. Judge Hardin said Delta's
talks with ALPA shouldn't be impacted by the ruling, but conceded they
might be.
href='http://online.wsj.com/article/SB114064166783080457-email.html'>Read
more.
International
name='16'>Final Vote on Canadian Pension Bill Could Lead to
Municipal Worker Strike
w:st='on'>
size='3'>Ontario
face a province-wide strike today by the municipal workers who clean
schools and hospitals, staff day care centers, plow roads and pick up
trash, the Canadian Press reported yesterday. The walkout - a protest
against the Liberal government's decision to forge ahead with
controversial pension legislation - was scheduled to begin at 12:01 a.m.
Thursday, said Sid Ryan,
w:st='on'>
size='3'>Ontario
of the Canadian Union of Public Employees (CUPE). The legislation at the
centre of the dispute is designed to devolve responsibility for the $40
billion Ontario Municipal Employees Retirement System (OMERS) to the
municipalities and the workers they employ. Final reading debate on the
bill began Tuesday. If passed, the bill would give emergency workers
such as police and firefighters the power to negotiate supplemental
pension benefits during contract talks, giving them what some CUPE
members consider an unfair advantage. The
proposed changes would also make it impossible for municipal workers to
negotiate better pension benefits, said Ryan. Nearly 100,000 Ontario
CUPE members could strike today, although it's unclear which locals will
participate and which will maintain emergency services.
href='http://www.canada.com/topics/news/national/story.html?id=7583a9b1-64da-…'>Read
more.
href='http://www.canada.com/topics/news/national/story.html?id=7583a9b1-64da-…'>