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December 8, 2006
Autos
name='1'>Court Approves Meridian’s Reorganization
Plan
A bankruptcy court
approved the reorganization plan of auto parts maker Meridian Automotive
Systems Inc., paving the way for the company to completely emerge from
chapter 11 protection by the end of December,
face='Times New Roman' size='3'>Bankruptcy Law360
size='3'>reported yesterday. The plan will take effect as soon as the
company’s $175 million exit funding agreement is formally in
place.
size='3'>Meridian
Judge Mary
Walrath to confirm the plan Monday, saying
that claimants had voted in overwhelming numbers to support the plan,
and touting that support as the product of lengthy negotiations
between
face='Times New Roman' size='3'>Meridian
and its creditors.
w:st='on'>
size='3'>Meridian
bankruptcy court approval at the end of November for an
agreement with Deutsche Bank AG
subsidiaries that will help steer the car parts maker out of chapter 11
with $175 million in financing, after Meridian agreed to keep creditors
informed about what the banks are charging for financing fees.
href='http://bankruptcy.law360.com/secure/ViewArticle.aspx?Id=14665'>Read
more. (Registration required.)
name='2'>Creditor Challenges Fees in Collins & Aikman
Case
A mutual fund that is one
of the largest creditors in the chapter 11 case of Collins & Aikman
Corp. asked the court to withhold all professional fees until a fee
examiner can inspect them,
size='3'>Bankruptcy Law360 reported
yesterday.
face='Times New Roman' size='3'>Third
Avenue
which is owed $250 million, filed a motion Monday with the U.S.
Bankruptcy Court in
w:st='on'>
size='3'>Detroit
that there was no hope of substantial recovery for unsecured creditors
and that professionals should not be allowed to continue feeding
“at the trough after the trough is already empty for so many other
stakeholders in the estate.” Thus far, professional fees have
topped the $100 million mark since Collins & Aikman filed for
chapter 11 in May 2005. In a recent fee application for the period
between May 1 and Aug. 31, 13 professional organizations charged the
company over $20 million.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=14707'>Read
more. (Registration required.)
name='3'>Bondholders of Delta Air May Influence USAir’s
Takeover Bid
Several hedge funds and
two investment banks holding Delta Air Lines bonds have formed an
informal committee, which could play an important role as US Airways
seeks to persuade Delta’s creditors to support its $8.6 billion
offer to acquire Delta out of bankruptcy, the
face='Times New Roman' size='3'>New York Times
size='3'>reported today. The existence of the bondholder committee was
previously reported, but most of its members were not publicly known
until it filed documents with the bankruptcy court yesterday. Among the
panel’s nine members are Avenue Capital Management, a $12 billion
hedge fund that recently sold a minority stake to Morgan Stanley, and
Silver Point Capital, a $6 billion hedge fund focused on investing in
debt.
href='http://www.nytimes.com/2006/12/08/business/08delta.html?_r=1&adxnnl=1&oref=slogin&adxnnlx=1165586413-eaBYyG1kJotJCuHvltHxNQ'>Read
more.
name='4'>Legislation Seeks to Alter DOJ Corporate Fraud
Investigations
In an attempt to pressure
the Justice Department to alter the way it investigates corporate fraud,
a key member of the Senate Judiciary Committee yesterday formally
introduced legislation aimed at preventing prosecutors from forcing
companies to waive the attorney-client privilege in order to avoid
indictment, the Legal
Times reported today. Sen. Arlen Specter
(R-Pa.) the outgoing chairman of the committee, said on the Senate floor
that the DOJ had not moved quickly enough to change policies that
encroached on corporate defendants' constitutional right to
counsel. Specter was joined by former
Attorney General Richard Thornburgh and lobbyists from a number of
business and legal groups, who said that forcing a change in the DOJ's
policy could lead the Securities and Exchange Commission, the Internal
Revenue Service and other government agencies to review their policies
on privilege waivers. Specter's move comes
as Deputy Attorney General Paul McNulty is leading an internal review of
the government's corporate-fraud prosecution policies in the wake of a
concerted lobbying effort by business groups and a court decision
in
York
policies to be unconstitutional.
href='http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1165501515476'>Read
more.
name='5'>Housing Slump Whittles Equity, Stocks Lift Assets According
to Fed Reserve
New Federal Reserve data
shows that the housing slump is slightly eroding a key driver of
consumer spending, but stock-market gains are boosting the average
household's net worth, the
size='3'>Wall Street Journal reported today.
Homeowners had $10.9 trillion in equity stored up in their properties at
the end of the third quarter, an amount that was essentially flat
compared with the previous quarter and down from a nearly 3 percent rate
of growth during the same period last year, the Fed said. Home equity
fell to 53.6 percent of the value of household real estate, down from 54
percent in the second quarter and 54.6 percent a year ago. While the
impact on consumer spending has been modest, many economists worry that
further weakness in the housing market, particularly if it leads to an
outright drop in house prices, could shrink home equity and lead
consumers to pull back in the months ahead.
href='http://online.wsj.com/article/SB116549855837843453.html?mod=home_whats_news_us'>Read
more. (Registration required.)
name='6'>Economy Adds 132,000 Jobs
The
w:st='on'>
w:st='on'>U.S.
stronger-than-forecast 132,000 jobs in November, the government reported
on Friday, though the unemployment rate edged up slightly from October,
Reuters reported today. The Labor Department said that the unemployment
rate was up to 4.5 percent from the 5-1/2-year low of 4.4 percent it
reached in October. The new-jobs total last month topped Wall Street
economists' forecasts that 110,000 jobs would be created.
href='http://www.washingtonpost.com/wp-dyn/content/article/2006/12/08/AR2006120800402.html'>Read
more.
International
name='7'>ARCO Backs Eurotunnel's Plan on Creditors'
Heels
ARCO, the organization of
Eurotunnnel bondholders which represents about £1.9 billion of
junior debt, revealed that a majority of its members now favor the
beleaguered channel operator’s plan to restructure its nearly
£6.2 billion ($11.5 billion) debt after opposing the measure a few
months prior,
face='Times



New
Roman' size='3'>Bankruptcy Law360 reported
yesterday. Approximately 28 out of 35 creditors represented
approved Eurotunnel’s proposal to refinance its debt with the help
of a 40-year bank loan, according to the company. In order for the plan
to pass, it needs two-thirds approval from the financial establishment
committee, which it has already seemed to capture. Under the current
plan, the debt will be slashed by 54 percent, with either Goldman Sachs
with Deutsche Bank or Citigroup expected to finance the loan.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=14712'>Read
more. (Registration required.)
name='8'>Court Upholds Italian Law Allowing Parmalat Proceedings
against GE Capital Finance, UBS
w:st='on'>
size='3'>Italy
size='3'>'s
face='Times New Roman' size='3'>Constitutional
Court
enabling Parmalat SPA to continue two legal proceedings against GE
Capital Finance and UBS AG, the Associated Press reported today. The
ruling marks a victory for Parmalat's chief executive, Enrico Bondi, who
has been using “clawback” actions to recover part of the
money that left the company's bank account before its collapse in late
2003 under 14 billion euros of previously undisclosed debt. Bondi, who
was named chief executive after Parmalat's shares re-listed in October
2005, is seeking to recover 13.2 billion euros ($17.55 billion) in
separate claims against banks, auditors and advisers, claiming they were
complicit in the accounting fraud that led to
w:st='on'>
size='3'>Europe
bankruptcy.
href='http://biz.yahoo.com/ap/061208/italy_parmalat.html?.v=2'>Read
more.
name='9'>Capitalia's Geronzi and Other Execs Found Guilty in
Bankruptcy Case
An Italian court sentenced the
top executives of three large companies, Piaggo, Banca Popolare Italiana
and Capitalia, to prison yesterday on charges of practicing
'preferential bankruptcy' in the case of failed real estate and hotel
group Italcase-Bagaglino, Reuters reported today. Prosecutors argued the
banks, looking to gain the properties as collateral, extended loans even
though the group's financial difficulties were obvious as
Italcase-Bagaglino slid towards collapse in the late 1990s. Capitalia
Chairman Cesare Geronzi was setenced to one year and four months in
prison while Italian bank Banca Popolare Italiana's CEO Divo Gronchi was
sentenced to one year and 8 months.
href='http://today.reuters.com/news/articleinvesting.aspx?view=CN&storyID=2006-12-08T010307Z_01_L08595348_RTRIDST_0_CAPITALIA-GERONZI-UPDATE-1.XML&rpc=66&type=qcna'>Read
more.
name='9'>Credit Managers Daily Business News
Report
1000’s of companies lose
money or experience some form of difficulty each
quarter.
Below are just a few of these
companies, taken from the latest Daily e-Summary of
Financially-Challenged U.S. Companies.
To begin receiving the COMPLETE
Daily e-Summary, that emails you information on over 70 such companies
each morning, email
face='Times New Roman' color='#0000ff'
size='3'>steve@creditnews.com
size='3'>your name, company name, address, phone and fax.
We’ll set you up within 24 hours.
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your email.
size='3'>Blyth Inc., a
w:st='on'>
size='3'>Greenwich
w:st='on'>
size='3'>Conn.
candles, accessories and giftware, reported a third quarter net loss of
$220,000, including operating income of $1.9 million. Revenue declined
9%--to $280 million.
size='3'>Ford Motor Co.'s stock price dipped
4% amid investor worries about its finances.
size='3'>While the
face='Times New Roman'
size='3'>Dearborn, Mi.
carmaker has added as much as $5 billion more to its $18 billion
financing arrangements, giving it more restructuring flexibility, the
financing also greatly increases its debtload. And while Ford currently
carries a junk credit rating, investors are apparently eager to provide
the company with money. Ford needs the
liquidity to maintain its operations as it continues restructuring its
North American operations. The company
recently said that between 2007 and 2009 it will generate $17 billion of
negative cash flow in
America
size='3'>Innovative Solutions and Support Inc
size='3'>., an Exton,
w:st='on'>
size='3'>Pa.
of flight computers and displays, reported a fourth quarter net loss of
$950,000. Revenue declined 44%--to $4.6
million. For the year, it lost $2.9 million on a 74% drop in revenue--to
$16.7 million.
size='3'>Novell Inc.'s stock price slipped
more than 5% after the networking software and services firm reported
its fourth quarter sales fell 15%--to $245 million, below estimates and
the fourth-straight quarterly revenue decline.
size='3'>The company also predicted that 2007 revenue will come in short
of analysts' expectations. Results so far are preliminary, as Novell is
still looking into its stock-option grants.
size='3'>Synovis Life Technologies Inc.,
a
size='3'>St. Paul,
w:st='on'>
size='3'>Minn.
surgircal products, reported its fourth quarter net income tumbled
67%--to $90,000. Revenue declined 13%--to $14.6 million. For the year,
it lost $1.5 million on a 7% revenue decline--to $55.8
million.
size='3'>Tweeter Home Entertainment Group Inc
size='3'>., a
face='Times New Roman' size='3'>Canton
size='3'>,
size='3'>Mass.
high-end audio and video products, reported a net loss in its most
recent quarter of $16.8 million, including an operating loss of $16.4
million. Sales fell 14%--to $162 million. The results included
restructuring charges of $712,000.
size='3'>United Airlines's unionized pilots
will establish a 'strike preparation committee', indicating some labor
troubles may be a-brewing for the
w:st='on'>
size='3'>Chicago
w:st='on'>Il
While the current pilots' contract extends till the end of 2009, many
are complaining that there's a growing disparity between employee and
management pay. United's pilots and other workers are currently in
contracts that force them to accept steep pay cuts stemming from efforts
to slash costs during the company's Chapter 11
reorganization. United says that it's under
no obligation to resume talks at this time, and the pilots themselves
have no legal right to engage in a strike until new contract talks come
up in 2009.