|
More U.S. Bankruptcy Filings Expected in 2003
U.S. bankruptcy experts said they expect an increase in bankruptcy
filings in 2003 as consumer appetite for debt is fueled by widely
available credit, Reuters reported. Projections are that 2003 could be
another record year for bankruptcies, said Sam Gerdano, executive
director of the American Bankruptcy Institute, in a conference call with
reporters. There were 1.5 million bankruptcy cases last year, 97 percent
of which were individual, rather than business, filings, he said.
'Bankruptcy is booming in the United States,' Gerdano said.
Greater availability of credit for a wider range of borrowers and the
U.S. economic contraction are causing more people to seek legal
protections from their creditors, said lawyers, scholars and credit
counselors in a conference call. Bankruptcy experts told reporters they
are noticing more repeat filings and younger and older filers, often
with a level of credit card debt that would have been unthinkable 20
years ago. Another expanding category of debtor declaring bankruptcy is
people who experience a serious family illness but don't have a health
insurance safety net, experts said.
'A major problem debtors incur is catastrophic medical cases,' said
Jason Gold, a bankruptcy attorney in northern Virginia. Experts
on the call said an easy availability of credit plays a big role in
getting consumers in over their heads in debt. Henry Hildebrand,
a Tennessee bankruptcy lawyer, said he has seen flyers advertising
'fresh start' credit cards posted prominently near the exits of
bankruptcy courts. Low U.S. savings rates have made it harder for many
to endure layoffs or less overtime pay because of the slumping economy,
Gerdano said. 'That savings rate is what can help a household survive a
diminution in their income stream,' he said. Efforts by Congress to pass
legislation making it harder for debtors to walk away from their debts
failed last year because of a dispute over an abortion-related
provision.
The full discussion, hosted by ABI, will be available at
href='/AM/Template.cfm?Section=Home'>www.abiworld.org next week.
Asbestos Lawsuits Will Cause Economic Chaos, According to
Study
There will be as much as $2 billion in additional costs nationwide due
to indirect and induced impacts of company closings resulting from
asbestos lawsuits, according to a study released yesterday by the U.S.
Chamber of Commerce, CongressDaily reported. Prepared by NERA Economic
Consulting, the study - 'The Secondary Impacts of Asbestos Liabilities'
- claims asbestos lawsuits not only hurt companies being sued but also
cause secondary harm to other businesses, governments, communities and
individuals. 'Without question, solving the asbestos litigation mess has
to be one of the top priorities for the 108th Congress,' said Chamber
President Thomas Donohue. 'Over 60 companies have filed for bankruptcy
because of asbestos claims, putting 60,000 employees out of work.' He
added: 'If that weren't bad enough, these closings have caused a
devastating trickle-down impact on towns and businesses all across
America, where economic well-being depended on those now-bankrupt
companies. This is one more reason why Congress must act quickly to fix
this problem,' reported the newswire.
Businesses Regroup To Push For Asbestos Litigation Bill
(Wall Street Journal)
Faced with mounting asbestos-exposure litigation, businesses are pushing
to reach a consensus on federal legislation aimed at resolving some
lawsuits, Dow Jones reported. Asbestos suits are no longer aimed solely
at firms that once mined asbestos and manufactured asbestos products;
suits have been filed against firms such as automaker General Motors
Corp. that once used asbestos in vehicle brakes, reported the
newsletter.
Senate Judiciary Chairman Orrin Hatch (R-Utah) is working on a bill to
set a minimum requirement for an asbestos injury before someone could
file a lawsuit. The statute of limitations would be changed to allow
those who might get sick in the future to still be able to file a
lawsuit. That would change the current arrangement where the statute of
limitations in some states runs from the time a person believes he or
she was exposed to asbestos, reported Dow Jones. That prompts some to
file suits before they are ill. In previous years businesses have been
unable to reach a consensus on a bill, hurting legislative efforts. And
unlike past years, some plaintiffs' lawyers believe the current system
is unworkable and that people who are truly sick aren't getting enough
money. To read the full article, point your browser to
href='http://www.wsj.com'>www.wsj.com (subscription required).
AK Steel Makes Rival $1.02 Billion Bid for National Steel
AK Steel Holding Corp. submitted a competing $1.02 billion bid for
National Steel
Corp. two weeks after larger rival U.S. Steel Corp. agreed to buy the
bankrupt company, Bloomberg News reported. The offer is for $825 million
in cash and the assumption of $200 million in liabilities, AK Steel said
in a statement. U.S. Steel agreed on Jan. 9 to buy most of the assets of
National Steel for $950 million, including liabilities.
AK Steel's bid is the latest in a shift toward consolidation in the
industry spurred by the formation of closely held International Steel
Group Inc. last year, reported the newswire. International Steel earlier
this month offered $1.5 billion for Bethlehem Steel Corp.'s assets in a
deal that threatened U.S. Steel's 102-year-old position as North
America's biggest maker of raw steel. National Steel sought bankruptcy
protection in March, citing low prices and a weak economy. Japan's NKK
Corp., which bought half of National Steel in 1984, remains the
company's majority owner, reported the newswire.
United Airlines to Lay Off 704 More Flight Attendants
UAL Corp.'s United Airlines will lay off 704 more flight attendants,
about 3 percent of its total, next month because the world's
second-largest carrier reduced flights and amenities such as meal
service, Bloomberg News reported. United, which filed for chapter 11
bankruptcy reorganization last month, will lay off the workers by Feb.
22, the United Association of Flight Attendants told members in a
bulletin. The union asked some of the carrier's 23,000 attendants to
volunteer for the layoffs or split shifts with co-workers, reported the
newswire.
ENRON
Enron Reviews Bids, Will Decide on Asset Sales in Coming
Days
Enron Corp. said it may decide as early as next week which of a dozen
remaining businesses to sell, as the former energy trader that owes
creditors more than
$50 billion raises money to get out of bankruptcy, Bloomberg News
reported. Corporate executives and financial advisers are reviewing bids
for pipeline and power businesses that Enron has valued at $10.8
billion, spokesman Mark Palmer said. The company's board will submit a
plan for creditor and bankruptcy court approval by early next month,
Palmer said, reported Bloomberg.
Enron Seeking Millions In Bonuses To Retain
Employees
Enron Corp. will ask a bankruptcy court judge next month to approve an
additional $29 million in pay for hundreds of key employees needed to
assist in the company's reorganization -and possible liquidation, the
Associated Press reported. Under the proposal, up to 900 critical
employees will be asked to remain with the bankrupt company until
February 2004. The funds being requested would be less than some $40
million from a pool of $140 million set aside last year for so-called
retention bonuses, reported the newswire.
Creditors Zero In On Xcel's Tax Benefits In NRG Talks
Struggling power producer and trader NRG Energy, now teetering on the
brink of bankruptcy, can't generate the billions of dollars it needs to
cover its debts, Dow Jones reported. But parent Xcel Energy Inc. stands
to gain hefty tax benefits from its soured investment, which led to
protracted haggling between Xcel, NRG and NRG's legion of creditors. At
issue in the talks is how much Xcel is willing to pay to unload its
troubled subsidiary, reported Dow Jones. In return for the right to cut
NRG loose and shield itself from potential claims in bankruptcy court,
creditors want Xcel to raise its offer in part to reflect the tax
benefits, which include an estimated $676 million windfall, observers
said, reported the newswire.
America West Sees Revenue Environment Gradually Improving
Amid growing worries that more U.S. airlines may follow UAL Corp.'s
United Airlines and US Airways Group Inc. into bankruptcy , America West
Holdings Corp. said on Thursday the company faces 'no imminent threat of
bankruptcy,' Dow Jones reported
During a conference call with analysts and reporters discussing its
fourth-quarter results, officials at the America West Airlines parent
said the company retained bankruptcy lawyers in September 2001, when it
was preparing to apply for federal loan guarantees to help raise money.
The company has since received the government assistance and isn't
actively working with the bankruptcy attorneys, officials said, reported
the newswire.
Health Care REIT Discloses Info. On Alterra Portfolio
Health Care REIT Inc., which has a master lease with Alterra Healthcare
Corp., said it expects Alterra to remain current on rent payments for
its 45 assisted living facilities, despite a bankruptcy filing, Dow
Jones reported. Alterra, a Milwaukee-based nursing home operator, filed
for chapter 11 bankruptcy protection on Wednesday as the final step in a
restructuring process begun in 2001. In a press release on Thursday,
Health Care, a real estate investment trust that invests in health care
facilities, said the properties covered by the master lease generate
about $6 million a year in cash flow to Alterra and have a depreciated
book value of $106 million, Dow Jones reported.
Court Extends RSL Com USA's Chapter 11 Plan Filing Exclusivity
A bankruptcy court has granted RSL Com USA Inc. an extension of its
exclusive periods to file its chapter 11 reorganization plan and to
solicit acceptances for the plan. According to a court order obtained by
Dow Jones Newswires on Wednesday, Judge Allan J. Gropper of the U.S.
Bankruptcy Court in Manhattan extended until Feb. 24 the time it has to
file its plan and to May 5 the period to solicit plan votes.
As reported, RSL Com USA said in court papers it needs the exclusivity
extensions because of the delay in closing the sale of its enterprise
business to WorldxChange Corp. The enterprise business provides data and
long-distance voice services to small and medium-size businesses, and
long-distance and other voice services to small businesses and
residences. The company closed the sale on Dec. 10 and is now focused on
finalizing a joint liquidating chapter 11 plan with its committee of
unsecured creditors, Dow jones reported.
Bayou Steel Corp. Files Voluntary Chapter 11 Petition
Bayou Steel Corp. filed for chapter 11 bankruptcy protection as part of
its strategy to preserve assets and improve its liquidity, Dow Jones
reported. In a press release on Thursday, the metals and mining company
said the bankruptcy filing will give the Laplace, La.-based concern the
necessary time to stabilize its finances and implement a plan that will
ensure a return to profitability. Recently, the company experienced an
increase in shipments and announced a $15-per-ton price increase that
will be fully implemented by April. The company, which employs about 510
workers, said it will continue to operate as usual, and fulfill existing
and future obligations to its customers, Dow Jones reported.
US Air Gets Court OK To Limit Operations At Florida Airport
The bankruptcy court handling US Airways Group Inc.'s chapter 11 case
has authorized the airline to take steps to reduce its operations and
flight schedule at Orlando International Airport, according to a court
order obtained on Thursday, Dow Jones reported. Judge Stephen S.
Mitchell of the U.S. Bankruptcy Court in Alexandria, Va., authorized US
Airways to end its leases at the airport and sign a new agreement for
only the premises it will need, according to the order, which was signed
on Tuesday.
The move-which the airline said will save it about $18 million over the
remaining terms of the leases, or $3 million a year-is part of the
airline's restructuring efforts, reported the newswire. US Airways has
been reorganizing under chapter 11 since August. The airline has
terminated or is in the process of ending operations at various
locations. It is also seeking cost savings from employees and aircraft
leases, Dow Jones reported.
Kentucky Electric Steel To File For Bankruptcy
Kentucky Electric Steel Inc. expects to file for bankruptcy protection
by the end of this month and announced further job cuts as it implements
its plan to shut down its production facilities, Dow Jones reported. In
a press release on Thursday, the steel company said it filed an
additional WARN Act notice relating to the layoff of 59 employees,
reported the newswire. This follows the layoff of 267 employees at the
end of December, when Kentucky Steel announced plans for the shutdown.
At that time, the company also filed a non-timely 10K with the
Securities and Exchange Commission because it was negotiating a
restructuring of debt under its revolving credit line and senior notes,
reported Dow Jones.
Kentucky Electric said Thursday that it defaulted on its 7.66 percent
senior notes due on Nov. 1, 2005, of which $16.7 million is currently
outstanding, and under its $18 million revolving line of credit, which
has about $13.3 million outstanding, the newswire reported. The company
said it is continuing discussions with its lenders regarding potential
arrangements involving use of cash collateral, debtor-in-possession
financing and other financial aspects of the anticipated bankruptcy
filing, Dow Jones reported.
Magellan Health May File for Bankruptcy Protection
Magellan Health Services Inc. is considering refinancing about $1
billion in debt
and possibly filing for chapter 11 bankruptcy protection, Bloomberg News
reported. Magellan, which coordinates counseling and mental-health
services for employers and health-care organizations, had about $1
billion in debt as of Sept. 30, the company said in a Securities and
Exchange Commission filing. Magellan's filing said the company was in
default under the loan agreement and the loan has been accelerated. The
company said the debt restructuring and a reorganization plan also might
be accomplished under chapter 11 protection, according to the SEC
filing, Bloomberg reported.
Global Crossing Has November Loss of $32 Million; Sales of $239
Million
Global Crossing Ltd., the bankrupt fiber-optic network operator that's
being bought by Hutchison Whampoa Ltd. and another company, said it had
a November net loss of $32 million on sales of $239 million, Bloomberg
News reported. Global Crossing sought protection from creditors a year
ago after it couldn't repay $12.4 billion in debt amassed to build a
27-nation network for carrying phone calls and information at high
speeds. The Hamilton, Bermuda-based company has agreed to sell a
majority stake to Hutchison and Singapore Technologies Telemedia and
expects to emerge from chapter 11 this year, Bloomberg reported.
Adelphia Court Asked to Stop Depositions
A U.S. Attorney has asked the court handling Adelphia Communications
Corp.'s lawsuit against the founding Rigas family to stop the Rigases
from taking the depositions of potential government witnesses, including
some company directors and employees, Dow Jones reported. James Comey,
the U.S. Attorney for the Southern District of New York, said the
Rigases have sought to depose individuals in the Adelphia suit who may
be important witnesses at a related criminal trial, according to a court
filing obtained on Thursday, the newswire reported. Comey said the court
should prevent the Rigases from taking these depositions until after the
criminal case is resolved, saying this is necessary to 'prevent severe
prejudice to the criminal prosecution,' Dow Jones reported
WORLDCOM
WorldCom Looks to Sell Ebbers's Shipyard
WorldCom Inc. has asked a bankruptcy court's permission to sell a
Georgia yacht manufacturing shipyard it took over last year from its
former chief executive, Bernard Ebbers, the Associated Press reported.
In court filings on Wednesday, WorldCom officials said they could
realize about $7 million by selling Intermarine Savannah to Palmer
Johnson Savannah, a Ga.-based yacht builder, the newswire reported.
Ebbers paid $14.4 million for the shipyard in 1999. Mr. Ebbers turned
Intermarine over to WorldCom in November to help repay $408 million in
loans from the company. In its filing, WorldCom said it needs to sell
the yacht company quickly because that business is losing more than
$100,000 per week, the Associated Press reported. The actual sale price
of the company, if approved by the court, will be $9.8 million, but some
of those proceeds will go to pay off Intermarine's debt and to make
repairs at the shipyard, reported the newswire.
New Jersey Files $402 Million E-ZPass Claim Against
WorldCom
Attempting to recoup its E-ZPass losses, New Jersey this week filed a
claim for $402 million against WorldCom Inc., the Star-Ledger
reported. Despite the firm's financial troubles, state officials said
they were confident they would collect some of the money through a $100
million bond posted by an insurance company representing WorldCom.
On Wednesday, state highway agencies filed their claim for $402 million
in WorldCom's bankruptcy case in court in New York. The state's claim
sought $284 million for lost tolls and fines, $30 million to cover the
cost of completing the system's installation and $28.8 million to repair
WorldCom work that wasn't right, the Star-Ledger reported.
National Century to Close; Further Woes Are Uncovered National
Century Financial Enterprises Inc. will cease operations in the next
few months after the restructuring experts brought in to revive the
scandal-ridden health-care financier decided that its problems were even
more widespread than originally thought, the Wall Street Journal
reported. David Coles, a corporate-restructuring specialist with Alvarez
& Marsal Inc. of New York who took over as National Century's chief
executive in November, painted a picture of widespread deception at the
company. 'I've been involved in badly run businesses, some of which
we've been able to recuperate, others which we've had to liquidate but
I've not had experience with a falsification of information component
that compares to this,' said Coles. The closing of closely held National
Century not only runs counter to earlier expectations that the company
could be revived, but it could cost bondholders more than $2 billion,
depending on what can be recovered through litigation. To read the full
article, point your browser to www.wsj.com
(subscription required).
Focal Communications: Utilities Decision Seen on Friday
Judge Kevin J. Carey has said he was wary of approving the cash
collateral use before ruling on Focal Communications' motion to prohibit
its utilities from discontinuing, altering or refusing service, Dow
Jones reported. Judge Carey will consider that motion at Friday's
hearing. In issuing his preliminary ruling Thursday, Judge Carey said
his decision wouldn't bind him from ruling in the utilities' favor
today.
Also on Thursday, Judge Carey questioned Focal Communications's choice
to remain under chapter 11 bankruptcy. The question arose because Focal
Communications's proposed reorganization plan contemplates no
distribution to unsecured creditors while secured creditors will be
fully repaid. In response, Laura Davis Jones, the company's
attorney, said there is no provision in the Bankruptcy Code that
prohibits a chapte
|
