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August 18, 2005
Pension System Fiasco Heats Up
San
Diego’s city manager says he will heed the city attorney’s
call to resign—if the city attorney does the same, San
Diego’s Channel 10 reported today. The exchange between City
Manager Lamont Ewell and City Attorney Michael Aguirre took place
Tuesday as Aguirre released a 15-point plan—immediately assailed
by Deputy Mayor Toni Atkins—to deal with the crisis arising from a
pension-system deficit of at least $1.4 billion. The plan includes
having the city enter into a consent decree with the Securities and
Exchange Commission, which is investigating the city’s finances.
Read the
full story.
JP Morgan Settlement Totals over $1 Billion
The bank will
href='http://news.bbc.co.uk/1/hi/business/4158666.stm'>pay $350 million
in cash and meet claims totalling another $660 million, BBC News
reported yesterday. Enron has previously asserted that 10 banks aided
and abetted in its collapse, but the settlement is the first with a U.S.
bank. Bank CEO William Harrison said that the deal had “put behind
us another significant piece of our Enron exposure.”
href='http://news.bbc.co.uk/1/hi/business/4158666.stm'>Read the full
story.
Watchdog Probes Rover Accountants
The United
Kingdom’s accounting watchdog is to investigate Deloitte over
its role as accountant and auditor to collapsed carmaker MG Rover, BBC
News reported yesterday. Rover filed for bankruptcy in April with debts
of £1.4 billion leading to the loss of more than 5,500 jobs. The
Accountancy Investigation & Discipline Board will examine audits of
the 2003 accounts of Rover and parent Phoenix Venture Holdings. Deloitte
said it was disappointed by the news but would cooperate fully.
href='http://news.bbc.co.uk/1/hi/business/4160746.stm'>Read the full
story.
US Airways, America West Align Policies
href='http://philadelphia.bizjournals.com/philadelphia/stories/2005/08/15/dai…'>US
Airways Group Inc. has aligned three of its policies with those of
America West Group Holdings Corp., the Philadelphia Business
Journal reported yesterday, in preparation of the airlines’
planned merger.
href='http://philadelphia.bizjournals.com/philadelphia/stories/2005/08/15/dai…'>Read
the full story.
Access Pharmaceuticals Initiates Financing Arrangement
href='http://dallas.bizjournals.com/dallas/stories/2005/08/15/daily24.html'>Access
Pharmaceuticals Inc. is in talks with potential buyers to sell business
units that are not part of the company’s long-term strategy,
the Dallas Business Journal reported yesterday. The
Dallas-based pharmaceuticals company said that the sale of these units
could generate enough cash to provide satisfactory debt coverage and
cash flow needs in the near future. In addition, the company is in
discussions with investors and investment firms to renegotiate the
length and terms of its convertible debenture obligations in an attempt
to provide for its intermediate cash flow needs.
href='http://dallas.bizjournals.com/dallas/stories/2005/08/15/daily24.html'>Read
the full story.
Southern Responds to Mirant Suit, Denies Allegations
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=248248+17-…'>Southern
Co. filed its formal response to the more than $2 billion lawsuit
filed by its former subsidiary, energy trader Mirant Corp., denying
allegations that it contributed to Mirant’s bankruptcy, Reuters
reported yesterday. Southern, which supplies power to the southeast
United States, said in its answer to Mirant’s complaint that the
bankrupt energy trader’s financial problems “arose after its
independence from Southern and after Mirant was frustrated in its
attempt to pursue a rapid growth strategy in the wake of an industry
crisis that devastated Mirant’s credit ratings and business
model.”
href='http://today.reuters.com/news/newsArticleSearch.aspx?storyID=248248+17-…'>Read
the full story.
Northwest
NWA Spent Nearly $1 Million in Lobbying
href='http://www.airportbusiness.com/article/article.jsp?id=3129&siteSection=3'>Northwest
Airlines spent $976,000 in lobbying expenses in the first six months
of 2005 as the carrier pushed for pension relief legislation to help it
stay out of bankruptcy, according to Associated Press reports yesterday.
NWA, which faces a strike by its mechanics as early as Saturday, says it
needs both labor concessions and pension relief to avoid bankruptcy.
href='http://www.airportbusiness.com/article/article.jsp?id=3129&siteSection=3'>Read
the full story.
Mechanics’ Offer Falls Short
href='http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=OBR&…'>Northwest
Airlines Corp. said that a new offer by its mechanics’ union fell
short of the concessions the carrier is seeking, signaling that the
sides are far apart as a strike deadline looms, Reuters reported
yesterday. The No. 4 U.S. airline has previously said that it is seeking
$176 million in annual wage and benefit givebacks from the union, which
represents cleaners and custodians as well as mechanics.
href='http://news.moneycentral.msn.com/provider/providerarticle.asp?feed=OBR&…'>Read
the full story.
Lawyer Asks for Aid After Third Suicide by Sex-abuse Claimant
href='http://www.oregonlive.com/news/oregonian/index.ssf?/base/news/112427251…'>One
of the 66 clergy sexual-abuse claimants now in mediation with the
Archdiocese of Portland shot himself to death, prompting his lawyer to
ask the U.S. Bankruptcy Court to free up money for emergency counseling
for the others, the Oregonian reported yesterday. Daniel J.
Gatti’s motion asks U.S. Bankruptcy Judge Elizabeth Perris
to allow the archdiocese to pay for counseling for any claimants who are
at risk of harming themselves or others.
href='http://www.oregonlive.com/news/oregonian/index.ssf?/base/news/112427251…'>Read
the full story.
Delta Faces a Lowering of Its Debt Rating
href='http://www.nytimes.com/2005/08/17/business/17delta.html'>Standard
& Poor’s said yesterday that it might lower the debt rating
for Delta Air Lines as shrinking cash holdings and rising fuel costs
push the company closer to bankruptcy, Bloomberg reported. “The
airline’s already slim chances of avoiding bankruptcy are
dwindling rapidly,” Philip Baggaley, an S&P analyst, said in a
statement. S&P has a CC rating on Delta, which is 10 levels below
investment grade. “Unless a big check from some admirer of the
airline gets airlifted in soon, the bottom line of the cash arithmetic
is negative,” said Roger E. King, an analyst at the research firm
CreditSights in New York.
href='http://www.nytimes.com/2005/08/17/business/17delta.html'>Read the
full story.
Cloverleaf Transportation Files for Chapter 11
Cloverleaf Transportation Inc., a privately held regional trucking
company, filed for chapter 11 bankruptcy protection from its creditors
Tuesday, the Associated Press reported yesterday. The Chester,
N.Y.–based company, which serves the Northeast, has assets of
about $1.4 million and debts of about $7.3 million, according to papers
filed in the U.S. Bankruptcy Court in Poughkeepsie, N.Y.
The chapter 11 filing was brought on when its largest customer,
Target Corp., terminated its contract with the company. The filing frees
the company from the threat of creditors’ lawsuits while it
reorganizes its finances. Cloverleaf owes senior lender LHSE Partners
LLC about $3.6 million, the papers said. The company, which is owned by
Exeter Equity Partners LP, owes unsecured creditors about $1.8 million,
the papers said. Atlantic Mutual, with a $400,000 claim, is the
company’s largest unsecured creditor.
Court Approves Huffy Corporation Disclosure Statement
Huffy Corporation announced that the U.S. Bankruptcy Court for the
Southern District of Ohio has
href='http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/…'>approved
the disclosure statement for the company’s joint plan of
reorganization, PR Newswire reported yesterday. The court also
authorized the company to begin soliciting approval from its creditors
for its plan. With this action, the company remains on schedule to
emerge from chapter 11 protection on or about the first week of October
2005.
href='http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/…'>Read
the full story.
CanWest Settles Deal
CanWest Global Communications Corp. has agreed to pay the receiver
handling Ravelston Corp.’s receivership $12.75 million to settle
the cancellation of a management services deal the pair struck in
November, 2000, the National Post reported today. Earlier
this year, Ravelston, Conrad Black’s former holding company, quit
the management services pact when it sought bankruptcy protection, one
day after Lord Black resigned from the private firm that controlled his
Hollinger newspaper empire. The deal—struck after CanWest paid
$3.2 billion to buy 14 urban dailies and a 50 percent interest in the
National Post five years ago—called on the Winnipeg
company to pay Ravelston $22.5 million if Lord Black’s firm wanted
out of the agreement. If CanWest canceled, Ravelston would get $45
million. Lord Black and several associates are being investigated over
$400 million in fees paid to Ravelston by newspaper publisher Hollinger
International Inc. He has denied wrongdoing.
Georgia’s Winn-Dixie Stores May Close Saturday
Saturday could be the last day of work for thousands of Winn-Dixie
employees in Georgia, the Associated Press reported today. Florida-based
Winn-Dixie sought bankruptcy protection in February. A recent filing
with the state Department of Labor shows that 59 stores in Georgia will
close August 20 and that about 29,084 people will be laid off as a
result. Winn-Dixie has been trying to sell 68 stores in Georgia as part
of a strategy to return to solvency. Eighteen of the stores have been
sold at auction. The remaining 50 were put out for bid a second time on
August 9 with the idea that they would close but possibly be purchased.
So far, Winn-Dixie has reported the sale of only one store during the
second time around—one in McRae, which will be purchased by Piggly
Wiggly Alabama Distribution Company for $400 thousand.
Vice Chair: Renco Plan is the Best
href='http://www.vindy.com/content/business_tech/344412863050542.php'>WCI
Steel Inc. announced that a plan of reorganization approved Tuesday
by the company’s independent board of directors has been filed in
the U.S. Bankruptcy Court for the Northern District of Ohio, Eastern
Division, Vindy.com reported today. The reorganization plan, sponsored
by WCI’s parent, The Renco Group Inc., is subject to approval by
the bankruptcy court and a vote of creditors and other stakeholders.
href='http://www.vindy.com/content/business_tech/344412863050542.php'>Read
the full story.