href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif' />
September 26,
2006
id='1'>Tobacco Makers Lose Key Ruling on Latest Suits
In a legal blow to the
tobacco industry, a federal judge in Brooklyn ruled yesterday that
people who smoked light cigarettes that were often promoted as a safer
alternative to regular cigarettes can press their fraud claim as a
class-action suit, the
size='3'>New York Times reported
today. Judge Jack B. Weinstein of
w:st='on'>
size='3'>Federal District Court
size='3'>in
size='3'>Brooklyn
“substantial evidence” that the manufacturers knew that
light cigarettes were at least as dangerous as regular cigarettes. The
case, first filed in 2004, is against Philip Morris USA, R. J. Reynolds
Tobacco, British American Tobacco, Liggett Group, Brown & Williamson
and Lorillard Tobacco. It differs from many previous tobacco lawsuits in
that it does not claim that smokers suffered personal injury, rather
claiming that the industry defrauded consumers beginning as early as
1971, when Philip Morris began selling Marlboro Lights.
href='http://www.nytimes.com/2006/09/26/business/26tobacco.html?_r=1&oref=slo…'>Read
more.
id='2'>Senior Noteholders Want Adelphia to Pay Bank
Debt
The senior noteholders of
bankrupt Adelphia Communications Corp. filed an “emergency
motion” last week over concerns that interest accruing on the
debtor’s bank debt is eating away at the estate,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. The emergency motion seeks a court order
authorizing and directing the debtors to pay “certain secured
debt,” on which interest is accruing on a daily basis, thus
cutting the amount available to satisfy unsecured claims. The
“burn rate” is about $1.3 million per day, or as much as $40
million per month—minus whatever gains the debtors make on their
investments, the motion said. Bankruptcy
Judge Robert
Gerber has scheduled a conference today to
discuss the senior noteholders’ motion. The senior noteholders
account for about one-third of all claims against Adelphia, with about
$1.75 billion in senior notes, according to their emergency
motion.
In related
news,
size='3'>Adelphia Communications Corp. is seeking approval of a
settlement agreement that would alleviate more than $87 million in
claims that the bankrupt cable provider owes to Verizon Media Ventures
Inc., Portfolio
Media reported yesterday. In court documents
filed late Friday in the U.S. Bankruptcy Court for the Southern District
of New York, Adelphia said the claims relate to three asset-purchase
agreements for the sale of Verizon’s cable television assets
in
size='3'>Ventura County
size='3'>Calif.
w:st='on'>
size='3'>Cerritas
w:st='on'>
size='3'>Calif.
w:st='on'>
size='3'>Pinellas County
size='3'>Fla.
2001. Those transactions were valued at $46 million, $32 million and $58
million respectively, Adelphia said. According to the settlement,
Adelphia said that it will not dispute the
w:st='on'>
size='3'>Ventura
agreeing to pay approximately $48 million plus interest. It also said
the companies have agreed that Adelphia will pay $39 million to cover
the Cerittas and Pinellas claims.
id='3'>Judge Awards Losing
w:st='on'>
size='3'>London
Breakup Fee
After losing the auction
for London Fog Group Inc.’s trademark, the former stalking-horse
bidder for the recognizable name brand has been awarded a $400,000
breakup fee, Portfolio
Media reported yesterday. Bankruptcy
Judge Gregg
Zive endorsed the fee last week for the joint
venture of Gordon Brothers Group LLC, Osgoode Financial Inc. and Hilco
Brothers Inc., which had appeared the likely winner of the beleaguered
rainwear maker’s signature mark. The Gordon-Hilco venture had
originally signed an asset-purchase agreement with bankrupt London Fog
for $15 million. After rival bidder Herman Kay Co. surpassed the offer
by pledging $16 million, the two parties engaged in a war to be named
the lead bidder, according to court papers. In the end, the joint
venture matched Herman Kay’s last offer of $18.1 million and was
appointed stalking horse or lead bidder since it had signed the initial
asset-purchase agreement.
id='4'>Federal Mogul Settles
w:st='on'>
size='3'>Ohio
Liability Claim
Federal Mogul Corp. has
reached a settlement with
w:st='on'>
size='3'>Ohio
resolves nearly $24 million in environmental-damage claims that the
state had been pursuing against the bankrupt auto-parts company, the
Associated Press reported yesterday. In papers filed Friday with the
U.S. Bankruptcy Court in
size='3'>Delaware
Mich.-based company said that
face='Times New Roman' size='3'>Ohio
size='3'>agreed to reduce its claims against the company to $2.3 million
and up to 50 percent of any insurance proceeds Federal Mogul obtains
related to asbestos damage at its former factory in
w:st='on'>
size='3'>McConnelsville
size='3'>Ohio
agreement is subject to approval by U.S. Bankruptcy Judge
Judith
Fitzgerald, who will consider it at a hearing
set for Oct. 30.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20060925/NEWS12/6092504…'>Read
more.
id='5'>GM Said to Be Wary of
w:st='on'>
size='3'>Alliance
General Motors has raised
doubts in its talks with Renault of France and Nissan Motor of
size='3'>Japan
size='3'>that a three-way alliance would yield the benefits that Renault
and Nissan insist would result from such an agreement, the
New York Times
size='3'>reported today. Patrick Pelata, a close associate of Carlos
Ghosn, the chief executive of both Renault and Nissan, said that members
of GM’s negotiating team, including its chief financial officer,
Frederick A. Henderson, have said they are wary of Renault and
Nissan’s claims because of GM’s experiences in its alliances
with global auto companies.
href='http://www.nytimes.com/2006/09/26/business/worldbusiness/26auto.html?re…'>Read
more.
id='6'>Destination Clubs Seek to Reassure Investors
In the wake of the
high-profile bankruptcy filing of Tanner & Haley Resorts in July,
'destination clubs' are scrambling to demonstrate they have sound
financials and a willingness to be brought under government oversight,
the Wall Street
Journal reported today. The largely
unregulated companies, which operate like hybrids between country clubs
and time-shares, allow members to vacation in a variety of luxury homes
around the world in return for refundable deposits that can run as high
as $3 million or more, as well as annual dues. Though the industry has
been growing in recent years, the problems at Tanner & Haley Resorts
have raised questions about the riskiness of this small but growing
alternative to second-home ownership.
href='http://online.wsj.com/article/SB115923607641573894-search.html?KEYWORDS…'>Read
more. (Registration required.)
id='7'>Former American Tissue CEO Sent to Prison for 15
Years
The former chief executive of
one of the nation's largest makers of paper products was sentenced on
Monday to 15 years in prison after being convicted last year of
engineering a $300 million fraud in a fruitless bid to save the company
from bankruptcy, the Associated Press reported yesterday. American
Tissue's Mehdi Gabayzadeh was convicted in April 2005 of all charges in
an eight-count indictment, including bank and securities fraud and
conspiracy, following a nine-week trial. He was accused of inflating
sales and inventory in an effort to defraud a group of banks that loaned
the company $145 million, and bondholders who in 1999 purchased $165
million in American Tissue debt.
href='http://www.usatoday.com/money/companies/management/2006-09-25-american-…'>Read
more.
id='8'>Ex-WorldCom CEO to Start Prison Sentence
Former WorldCom Corp. chief
Bernard Ebbers starts a 25-year federal prison sentence today for his
role in the $11 billion accounting fraud that toppled a company he had
built from a tiny telecommunications firm to an industry giant, the
Associated Press reported today. Ebbers, a former high school basketball
coach, took a small telecommunications firm and transformed it into an
industry giant before the Clinton, Miss.-based WorldCom collapsed in
bankruptcy in 2002. The Second U.S. Circuit Court of Appeals upheld
Ebbers' conviction and sentence last month. His attorney has said they
will continue to appeal, but he has few options, said Ron Rychlak,
associate dean of the University of Mississippi School of Law.
href='http://www.nytimes.com/aponline/business/AP-Ebbers-Prison.html?pagewant…'>Read
more.
International
id='9'>Goldman Sachs to Join
w:st='on'>
size='3'>U.K.
size='3'>Pension Buyout Fray
Investment bank Goldman Sachs
is set to cash in on changes in the British life insurance sector with a
new business to buy corporate pension schemes, Reuters reported
today. The investment
bank had applied to
w:st='on'>
size='3'>Britain
size='3'>'s financial watchdog, the Financial Services Authority, to set
up a life assurance subsidiary, a necessary step before it can begin
acquiring schemes. The company, to be run by senior Goldman banker Addy
Loudiadis, will be used as a vehicle to buy pension schemes that no
longer take on new members.
size='3'>Goldman joins a host of newcomers seeking to cash in on the
pension problem as the bulk annuity business takes off.
href='http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=200…'>Read
more.
href='http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=200…'>