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March 29, 2006
w:st='on'>
name='1'>Alabama
face='Times



New
Roman' size='3'> Bankruptcy Cases Hit
Record High in 2005
The number of
bankruptcies filed in
size='3'>Alabama
last year, rising 14 percent from the previous year, the
size='3'>Birmingham
size='3'>(
face='Times New Roman' size='3'>Ala.
size='3'>) News reported today. Bankruptcy
filings in
face='Times New Roman' size='3'>Alabama
jumped 14.1 percent to 47,513 last year, from 41,647 in
2004. Business filings rose 1.8 percent to 331 from 325 in
2004. Most of the filings occurred in the
days leading up to Oct. 17.
face='Times New Roman' size='3'>Alabama
size='3'>joined a national trend, with total bankruptcies in the
size='3'>United States
size='3'>surpassing 2 million for the first time in 2005. There were
nearly 2.07 million filings last year, a 30.1 percent jump from 1.6
million in 2004. Read more.
size='3'>
href='http://www.al.com/business/birminghamnews/index.ssf?/base/business/1143…'>Read
more.
name='2'>Collins & Aikman to Use Insurance for Legal
Costs
Facing at least five
lawsuits by shareholders who accuse current and former executives of
Collins & Aikman of fraud, the struggling automotive parts supplier
company received permission Thursday from a federal bankruptcy judge to
dip into its company insurance policy to pay for defense costs,
Portfolio Media
reported yesterday. Judge Steven W.
Rhodes in
face='Times New Roman' size='3'>Detroit
allowed the company’s request for its insurance
company to foot the defense bill for executives named in the lawsuits.
Shareholders claimed that executives misled investors about the
company’s financial health before Collins & Aikman slid into
bankruptcy last May 17. Shareholders also accuse the defendants and
Collins & Aikman of deceiving investors by sending out false and
misleading statements about the company’s business, operations,
management and value of securities. The lawsuits identify current and
former officers, directors and employees as defendants, including the
company’s former chief executive David Stockman, who also served
under former President Ronald Reagan’s administration as budget
director. In addition to the shareholder lawsuits, the company also
faces investigations by the Justice Department and the U.S. Securities
and Exchange Commission. The bankruptcy case is
face='Times New Roman' size='3'>Collins & Aikman
Corporation, case number 05-55927-swr, in the
U.S. Bankruptcy Court for the Eastern District of
Michigan.
IMA
Investors Ask Judge to Liquidate Fund
A group of investors
caught up in the collapse of hedge fund International Management
Associates has asked a bankruptcy court judge to liquidate the
fund’s remaining assets,
size='3'>Portfolio Media reported yesterday.
The six investors asked the judge to convert IMA’s chapter 11
petition to chapter 7 in order to expedite liquidation and repayment of
debts. The investors had collectively sunk $11 million into the fund,
with the two largest creditors owed $5 million and $2 million. The
investors also asked the court to remove the acting debtor-in-possession
from the case, alleging that William Perkins, who had served as receiver
in the proceedings, still retains interest in IMA’s finances. They
have petitioned for a court-appointed replacement. IMA made headlines
last month when it was discovered that the founder, Kirk Wright, had
disappeared, and that over $100 million was missing from customer
accounts. Seven investors, all former National Football League Players,
sued the fund, as did the Securities and Exchange
Commission.The
bankruptcy case is
size='3'>International Management Associates LLC
size='3'>, chapter 11 petition number 06-62966-pwb in the U.S.
Bankruptcy Court for the Northern District of Georgia.
Autos
GM
Lays Off Hundreds of White-Collar Employees
General Motors laid off
several hundred white-collar workers as part of its restructuring plan
that is cutting deeply into all ranks of the company, the
New York Times
size='3'>reported today. Also on Tuesday, a top United Automobile
Workers official said he expected auto parts supplier
size='3'>Delphi
judge to throw out its labor contracts Friday. Such a move would raise
the likelihood of a strike at
face='Times New Roman' size='3'>Delphi
size='3'>, which could cripple production at GM.
size='3'>The GM layoffs, which affected fewer than 500 people, are just
the beginning of the company's move to reduce the size of its
professional staff this year. GM plans to reduce the number of salaried
and contract workers in the
w:st='on'>
size='3'>United States
size='3'>by 7 percent this year, an acceleration from the usual 5.5
percent reduction over the last 10 years.
href='http://www.nytimes.com/2006/03/29/business/29motors.html?pagewanted=pri…'>Read
more.
In related news, as
General Motors is wading through financially troubles, Rick Wagoner, its
chairman and chief executive, is under pressure again to save the
company as well as his job, the
size='3'>New York Times reported today.
Wagoner was part of the wave of changes that GM’s board made in
1992 when it ousted top management and brought in a fresh slate of
executives, including Wagoner, with orders to burst through the
automaker's turgid culture. The slide that Wagoner helped to reverse 14
years ago has returned and accelerated. For 2005, GM reported its
biggest loss — $10.6 billion — since 1992, and its lowest
market share since the Depression. With the decline not stopping,
analysts are beginning to wonder if GM is headed for Chapter 11
bankruptcy. The bad news has put Wagoner in a harsh spotlight and
awakened GM's board, with its newest member, Jerome B. York, who is
allied with its biggest investor, demanding that Wagoner take
action.
href='http://www.nytimes.com/2006/03/29/business/29auto.html?_r=1&oref=slogin…'>Read
more.
w:st='on'>
name='5'>U.S.
face='Times New Roman' size='3'> Grand Jury Subpoenas GM over
Handling of Supplier Credits
General Motors Corp. said
it received a subpoena from a federal grand jury investigating its
handling of payments or 'credits' from suppliers, and said it had found
'material weaknesses' or 'significant deficiencies' in certain areas of
its accounting controls, the
size='3'>Wall Street Journal reported today.
The company also said it received a subpoena from the Securities and
Exchange Commission in connection with a previously disclosed
investigation of GM's transactions in precious-metal raw materials. Over
the last six months, GM has disclosed the receipt of six subpoenas from
the SEC and two subpoenas from federal grand juries. Two of the SEC
inquiries are related to GM's business dealings with
w:st='on'>
size='3'>Delphi
subsidiary. One federal grand jury matter is part of a broader
investigation of the reinsurance business, including GM's General Motors
Acceptance Corp. finance arm and many of its competitors. The supplier
credits being investigated by the federal grand jury comprise a form of
rebates. Neither GM nor any GM executive has been accused of wrongdoing
in connection with the SEC and grand jury probes. GM declined to
disclose whether any individuals have been named in the federal
subpoenas.
href='http://online.wsj.com/article/SB114355217416310010-email.html'>Read
more (free registration required).
GM
Will Also Restate Results for Its Finance Unit
Two weeks after it
increased its 2005 loss by $2 billion, General Motors said that it would
restate several year’s worth of results for its financing arm, the
General Motors Acceptance Corporation (GMAC), the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. The automaker also said it did not know if it
would be able to sell a controlling interest in GMAC because of the
complexity of arranging a deal. GM put part of the unit up for sale in
October in an effort to raise cash for a wide-ranging corporate
revamping. Negotiations on the sale of a 51 percent stake in GMAC had
been expected to conclude as early as this week. GM said its discussions
with possible buyers would continue. The latest financial restatement
was disclosed as GM filed its annual report Tuesday with the Securities
and Exchange Commission. The filing had been delayed by almost two weeks
after the company discovered a number of accounting errors.
href='http://www.nytimes.com/2006/03/29/business/29restate.html?pagewanted=pr…'>Read
more.
face='Times New Roman' size='3'>
name='7'>Delphi
size='3'> Labor Proposal Rejected by United Auto
Workers
Delphi Corp.'s latest
offer on wages and benefits was rejected by the United Auto Workers
union, which said it expects the bankrupt auto-parts supplier to seek
court permission March 31 to scrap its existing contract, Bloomberg News
reported today.
size='3'>Delphi
'wasn't even close'' to something union leaders could submit to
rank-and-file workers for a ratification vote, said Paul Krell, a UAW
spokesman. Krell said his comments reflect the sentiment of UAW Vice
President Richard Shoemaker, who met with union leaders in
size='3'>Detroit
The union has threatened to strike should
w:st='on'>
size='3'>Delphi
for permission to void its existing labor contract and impose new terms.
A walk-out could also shut down General Motors Corp., which relies on
Troy, Mich.-based Delphi for auto parts, and push GM toward
bankruptcy.
href='http://www.bloomberg.com/apps/news?pid=10000087&sid=aoXDtODx6HXc#'>Read
more.
Airlines
name='8'>Delta Airlines Trustee Questions Fees
Lawyers and financial
consultants working on Delta Air Lines Inc.'s bankruptcy reorganization
charged the carrier $43 million for less than five months' work,
spurring an objection from the
w:st='on'>
size='3'>U.S.
size='3'>trustee in the case, Dow Jones Newswires reported today. The
trustee, Deirdre
Martini, asked a judge Friday for a
'significant holdback' on the requested payments. Some of the fees
appear to be 'excessive' for a company that is fighting in court to cut
its pilots' compensation by $325 million a year, she said. Separately,
Delta said it has received lender approval to amend portions of its $1.9
billion debtor-in-possession credit facility. Delta said the changes
will reduce its interest rate on the three term loans making up the
facility, resulting in annual savings of more than $30 million.
href='http://online.wsj.com/article_print/SB114351603274609773.html'>Read
more.
name='9'>Comair, Flight Attendants Clash ver
Deals
Comair, a unit of Delta
Air Lines Inc., and its flight attendants squared off in a
size='3'>New York
size='3'>bankruptcy court for a second day of hearings devoted to a
request by the regional carrier to do away with contracts made with its
employees, the Associated Press reported yesterday. Erlanger, Ky.-based
Comair, which filed for bankruptcy protection the same day that Delta
filed for chapter 11, has said it needs to reduce wages and benefits of
970 flight attendants as part of a plan to cut $42 million in annual
costs, without which the carrier has said it will have to cease
operations. Comair is asking its 970 flight attendants to agree to cuts
in wages and benefits worth $8.9 million. The carrier has already
reached an agreement with its pilots for $17.3 million in cost cuts and
for $1 million from its mechanics. Talks between the carrier and its
flight attendants union were going on early Tuesday in
w:st='on'>New
York
Thursday and Friday in
w:st='on'>
size='3'>Washington,
face='Times New Roman' size='3'>D.C.
size='3'>, according to the carrier's spokeswoman Kate
Moser.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/03/28/AR20060…'>Read
more.
name='10'>Dispute Unfolding in Colorado Developer’s Bankruptcy
Case
A court-appointed trustee
who filed a lawsuit to stop the $36 million bankruptcy of Robert
Russell, leveling fraud and deception allegations against the
former
size='3'>Denver
now wants to settle the case, the
size='3'>Rocky Mountain News reported today.
But one investor who claims he has been deceived is looking to delay the
settlement. 'This settlement is weak and very premature,' creditor
Lawrence Deutsch wrote in a January letter included in the court file.
Deutsch argued that more money could be retrieved and ultimately
returned to investors if the case continued. A bankruptcy court judge
in
size='3'>Phoenix
expected to decide today whether to approve the settlement agreement.
The pact calls for a judgment of $2.5 million and a payment of $1
million to the bankruptcy estate over a three-year period, according to
the court papers filed earlier this year.
href='http://www.rockymountainnews.com/drmn/other_business/article/0,2777,DRM…'>Read
more.
name='11'>Senator Seeks Elusive Consensus on Predatory Lending
Bill
Rep. Spencer Bachus
(R-Ala.), chairman of the House Financial Services Financial
Institutions Subcommittee, has taken on the arduous task of trying to
write legislation that would curb predatory lending on home
mortgages,
size='3'>CongressDaily reported today. Bachus
will have to craft a measure that can gather a consensus with Democrats,
who have sponsored a rival version. He will also have to balance the
interests of mortgage brokers and sub-prime lenders, who are concerned
about an increasing number of states and cities that are enacting laws
that unfairly hinder their business plans, against consumer groups that
worry that a national standard will be too weak to curb abusive lending
practices that cost Americans more than $9 billion annually. Bachus
suffered a minor setback when a Wednesday markup on a draft proposal was
postponed in an effort to pick up additional Democratic support for his
measure, which is modeled after a 1999 North Carolina law that prevents
pre-payment penalties for loans of $150,000 or less and bans the
practice in which a lender repeatedly finances an existing home loan
with little benefit to the borrower. 'I am hopeful that the end product
will be something akin to, if not identical to, the
w:st='on'>
size='3'>North Carolina
size='3'>statute,' said Bachus, who is seeking to replace Financial
Services Chairman Mike Oxley, who is term-limited as chairman at the end
of the 109th Congress.
name='12'>Enron Prosecutors Drop Some Charges and Rest
Case
After more than eight
weeks and 22 witnesses, the government rested its case against two
former Enron chief executives, Jeffrey K. Skilling and Kenneth L. Lay,
setting the stage for the defense to begin its bid to keep them out of
prison, the New York
Times reported today. When they present their
first witness on Monday, the defense lawyers' burden will be a bit
lighter because the judge in the case, Simeon T. Lake III of
size='3'>Federal District Court
size='3'>, approved a government request to dismiss some of the criminal
counts against the two men. The government rested its case early Tuesday
after a former Enron employee testified about the apparent contradiction
between Lay's rapid disposal of tens of millions of dollars in Enron
stock and his public pronouncements that Enron shares were 'an
incredible bargain.' The situation alarmed the employee, Joanne Cortez,
enough that she told the Federal Bureau of Investigation about the
trades.
href='http://www.nytimes.com/2006/03/29/business/businessspecial3/29enron.htm…'>Read
more.
San
Diego Pension Board Files Suit to Rescind 1996, 2002
Agreements
The board that
oversees
face='Times New Roman' size='3'>San
Diego
filed a lawsuit seeking to rescind agreements in 1996 and 2002 that
contributed to the city's massive retirement fund deficit, the
San Diego
Union-Tribune reported today. The
cross-complaint in a larger pension-related case before Superior Court
Judge Jeffrey Barton was filed on Friday by an attorney on behalf of
trustees of the San Diego City Employees' Retirement System (SDCERS).
The 1996 and 2002 agreements, known as MP1 and MP2, granted enhanced
retirement benefits in exchange for reduced contributions by the city
into the pension system, which is now saddled with a $1.4 billion
shortfall. SDCERS complaint alleges that by entering into the
agreements, certain former and current City Council members created a
conflict of interest because they would benefit from the enhanced
benefits.City
Attorney Michael Aguirre has filed his own complaint in the case,
challenging the legality of the benefits forged in 1996 and 2002. The
city attorney has estimated that setting aside those retirement benefits
would reduce the pension deficit by as much as $700 million.
href='http://www.signonsandiego.com/news/metro/pension/20060328-1803-pensions…'>Read
more.
International
w:st='on'>
name='14'>British
w:st='on'>
size='3'> Pension
w:st='on'>
size='3'>Experts
face='Times New Roman' size='3'>Back
size='3'>Flat
face='Times New Roman' size='3'>Rate
size='3'>State
face='Times New Roman' size='3'> Pension
Pension experts believe
the British government should move quickly to introduce a flat rate
state pension, drop means testing and find a fairer way of giving tax
incentives for saving, according to the
size='3'>London Guardian. A report by the
Pensions Policy Institute (PPI), which brings together the views of
around 80 experts from more than 40 organizations, shows that all backed
the Pensions Commission call for reforms to the basic state pension. But
it revealed that many would like the government to act more quickly than
the Commission recommended in its report last November, and for it to
aim to reduce the extent of means testing, rather than trying just to
stop the spread of it. 'For most pension experts, a better state pension
means a structure that people can understand, providing full benefits to
a wider range of individuals and a high enough level of benefit so that
means testing for basic income is reduced,' said the PPI's director,
Alison O'Connell. O'Connell said that most experts agreed with the
Pensions Commission's proposals to offer a more generous state pension
to more people and that to fund this employees will have to work
longer.
href='http://business.guardian.co.uk/print/0,,329445599-108725,00.html'>Read
more.
w:st='on'>
name='15'>Moscow
Court
Yukos
A
w:st='on'>Moscow
court ordered bankruptcy supervisors to take
responsibility for oversight of Yukos as the company that was
once
face='Times New Roman'
size='3'>Russia
largest oil producer appeared increasingly likely to be declared
insolvent, the Associated Press reported yesterday. Judge Pavel Markov
of the
face='Times New Roman' size='3'>Moscow Arbitration
Court
oversight and set a June 27 date for the next session to consider
whether to make a formal ruling that the company is bankrupt. A
consortium of Western banks sought to have Yukos declared bankrupt after
it defaulted on nearly half of a $1 billion syndicated loan arranged
three years ago by Societe Generale SA with Deutsche Bank AG, Citigroup
Inc. and HSBC PLC. After the session, Yukos lawyer Drew Holiner said the
company had ample funds to pay some of its debts, but that previous
court-ordered freezes had tied up assets that could have been sold to
raise the cash.
href='http://www.nytimes.com/aponline/business/AP-Russia-Yukos.html?pagewante…'>Read
more.
href='http://www.nytimes.com/aponline/business/AP-Russia-Yukos.html?pagewante…'>