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March 1, 2006
id='1'>Specter Moves to Bring
Asbestos Measure Back to Senate Floor
Senate Judiciary Chairman
Arlen Specter is gathering his GOP colleagues to gauge support for
bringing an asbestos litigation bill back to the Senate floor after a
procedural hurdle derailed the measure last month,
face='Times New Roman' size='3'>CongressDaily
size='3'>reported today. Specter is hoping
to convince enough GOP senators to publicly commit to supporting the
bill after Sen. Bill Frist (R-Tenn.) announced before the President's
Day recess that he would need 'public assurances' from 60 senators
before he would set aside additional floor time.'To fix the asbestos
crisis without additional delay, I have told Chairman Specter and
[Judiciary ranking member Patrick] Leahy (D-Vt.) that 60 members must
signify their commitment to support both the motion to waive the pending
Budget Act point of order and end any filibuster of the bill,' Frist
said. Specter today is likely to pass around a letter to his GOP
colleagues that he and Leahy began circulating last week seeking 58
signatures for a 're-vote' on a budget point of order. The letter does
not mention a vote to invoke cloture or end debate, despite Frist's
announcement that he would need public commitments on ending any
filibuster to bring the bill back to the floor.
id='2'>Congressional
Finger-Pointing Delays Pension Action
A partisan disagreement over
how many Senate negotiators should sit at that table when the House and
Senate attempt to resolve differences between two complex and very
different pieces of legislation is leading to delays in the action on
the pension bills, MarketWatch.com reported yesterday. The dispute casts
a cloud of uncertainty over the timing of any final action on pension
legislation, even as lawmakers warn that an important but unofficial
April 15 deadline for action looms ever closer. Senate Minority Leader
Harry Reid (D-Nev.) on Tuesday accused his Republican counterpart,
Majority Leader Bill Frist (R-Tenn.), of 'arbitrarily' demanding that a
total of 12 senators, seven Republicans and five Democrats, sit on the
conference committee. Reid has called for a total of 14 senators, eight
Republicans and six Democrats. Frist has offered to up the number of
Senate conferees to 15, consisting of nine Republicans and six
Democrats. Frist says that ratio is necessary to preserve equal
representation of the two committees that drafted the Senate bill. Reid,
however, balked at seeing the Republican edge on the committee rise to
three votes.
href='http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B610FD6BD%2D4EB1%2D49D4%2DA829%2DF8BCD96C9F69%7D&siteid=google'>Read
more.
id='3'>Lawyers Take Steps to Dodge
Bankruptcy Disclosure Law
Bankruptcy lawyers are
finding ways to dodge the obligation Congress created last year in
BAPCPA regarding which creditors of bankrupt companies are entitled to
information obtained by the committee charged with representing them,
Dow Jones Newswires reported yesterday. Along with initial bankruptcy
petitions and other first-day filings, lawyers are filing motions that
seek to bar creditors' committees from sharing 'confidential'
information. The result has been more litigation, and more rancor
between bankrupt companies and their creditors. 'Everyone knows the
process now includes getting this order,' said ABI President
John Penn
size='3'>and a partner in the
w:st='on'>Fort
Worth
w:st='on'>
size='3'>Texas
Haynes and Boone LLP. Many bankruptcy attorneys, however, see the
provision as a Pandora's Box. They say it could result in sensitive
information reaching the public -- and competitors. Until bankruptcy
judges begin ruling on the motions in the coming months, creditors are
taking advantage of the provision and gaining access to documents while
they still can, said Henry Efroymson, a partner at Ice Miller LLP
in
size='3'>Indianapolis
Financial information contained in monthly operating reports should be
conveyed to creditors, Penn said, but he doesn't think creditors should
have access to profitability or pricing information, 'which, if that got
out to the public or competitors, could cause substantial harm.'
href='http://online.wsj.com/article/SB114118624052686239-email.html'>Read
more.
Refco
Executives and Clients
Clash over Assets
Former executives of
bankrupt broker Refco Inc. and the company’s clients have once
again locked horns in court, with both sides staking claim to the
remaining assets held by offshore broker dealer Refco Capital
Markets, Portfolio
Media reported yesterday. Customers and
executives have clashed over whether money invested in
Refco Capital
Markets belonged to clients who invested it or to the brokerage. Clients
have taken issue with the fact that Refco used their investments as
collateral, saying that they did not know the firm was engaging in this
practice. Refco fired back, claiming that borrowing against customer
assets is in the canon of broker dealer practices, and that the
investors should have been savvy enough to know that the practice was
occurring. Executives with VR Capital Group, one of Refco’s
biggest clients, told a bankruptcy court that they were under the
impression that their assets remained in their accounts with the
brokerage. But Refco officials refuted the claim, saying that borrowing
against customer assets allowed the brokerage to secure better rates for
clients. Some clients of Refco Capital have taken an even more proactive
approach to winning back their assets, filing a motion in
size='3'>U.S.
size='3'>bankruptcy court to convert Refco’s chapter 11 case to a
chapter 7 case.
id='5'>Ex-Generic Drug Maker Files
Chapter 11 Plan
Able Laboratories Inc.,
the former pharmaceutical developer that sold off its assets to
size='3'>India
Sun Pharmaceutical Industries Ltd. last year, is pursuing a chapter 11
plan designed
to pay back unsecured creditors roughly 27 percent on their
claims, Portfolio
Media reported yesterday. Unsecured creditors
had filed $396 million in claims against Able Laboratories, but the
company said that it will probably object to approximately 111
claims that total nearly $362 million. The former generic drug
producer, which received about $23.2 million resulting from an asset
transaction, will attempt to pay back unsecured creditors in cash with
litigation proceeds, outstanding receivables and sale earnings.
According to court documents filed in the U.S. Bankruptcy Court in
the District of
w:st='on'>New
Jersey
scheduled to repay secured creditors in full, whose claims amount to $7
million. The case number is 3-05-bk-33129.
New
York's
w:st='on'>Saint
Vincent
size='3'> Pleads for Chapter 11 Extension
Still trying to unload
three struggling hospitals, Saint Vincent Catholic Medical Centers has
asked the bankruptcy court to extend its exclusive control over its
chapter 11 case for an additional four months,
face='Times New Roman' size='3'>Portfolio Media
size='3'>reported yesterday. Saint Vincent, which runs six hospitals in
the
York
the bankruptcy court delay until June its sole right to file a
reorganization plan, originally set to expire on March 13. If granted,
the extension would bar other parties from filing competing plans,
allowing
Vincent
chapter 11 case. The medical center is also seeking more time to gather
creditor support for its restructuring plan, asking for the deadline to
be moved from May 1 to August 29. Saint Vincent also said that
additional time was required to handle upwards of $100 million in
medical malpractice claims related to its Brooklyn and
w:st='on'>
size='3'>Queens affiliates. The case
is Saint Vincent’s
Catholic Medical Centers of New York, U.S.
Bankruptcy Court for the Southern District of New York, case number
05-14945-ash.
face='Times New Roman' size='3'>
id='7'>Delphi
face='Times New Roman' size='3'> Losses Now at $1.4 Billion Since
Bankruptcy Filing
Delphi Corp. reported
that it has lost $1.4 billion since the company filed for bankruptcy in
October, according to the
size='3'>Detroit Free Press yesterday. The
nation’s largest auto parts supplier is trying to negotiate a deal
with its chief customer and labor union by March 30 to prevent even
greater losses. If
can’t reach a deal, it may be able to use the
bankruptcy court to nullify its union contracts and impose changes at
will. For the month ended Jan. 31,
face='Times New Roman' size='3'>Delphi
size='3'>lost $121 million and had net sales of $835 million. Since
filing for bankruptcy on Oct. 8,
face='Times New Roman' size='3'>Delphi
size='3'>has lost $1.37 billion from total sales of $3.3
billion.
href='http://www.freep.com/apps/pbcs.dll/article?AID=/20060228/NEWS11/60228009/1013/RSS07&template=printart'>Read
more.
id='8'>Congoleum Bondholders Seek
to Retain Akin Gump
Congoleum Corp.'s
bondholders’ committee has moved to hire Akin Gump Strauss Hauer
& Feld LLP as its counsel in the bankruptcy proceedings of
the
size='3'>Mercerville
products supplier,
size='3'>Portfolio Media reported yesterday.
Last week, the committee filed a motion with the U.S. Bankruptcy Court
in
size='3'>Trenton
w:st='on'>
size='3'>N.J.
Michael S. Stamer as the case principal. Stamer will be
compensated between a range of $435-$895 per hour, according to court
documents. Counsel will receive between $300-$735 per hour, associates
will be compensated between $235-$475 per hour, and paraprofessionals
will receive between $65-$225 per hour, said the documents. Akin Gump
will provide various services, including assisting the bondholders'
committee in analyzing the claims of the company's existing and future
creditors and the company's capital structure, negotiating with holders
of claims and equity interests, and investigating any claims against the
company's non-company affiliates or any other potential causes of
action. The case is
size='3'>Congoleum Corp., case number
03-51524, in the U.S. Bankruptcy Court of New Jersey in
size='3'>Trenton
size='3'>.
id='9'>Winn-Dixie to Close 35
Stores
Winn-Dixie Stores Inc.
announced Tuesday that it will sell or close 35 more stores as the
financially troubled supermarket chain tries to emerge from chapter 11
bankruptcy protection this summer, Florida Today
reported. Company spokesman Dennis Wortham said he did
not know exactly when the stores will close, but said the company wants
to do it in the next several months, in anticipation of emerging from
bankruptcy protection. Winn-Dixie will have a total of 550 stores after
the closings.
href='http://www.floridatoday.com/apps/pbcs.dll/article?AID=/20060301/BUSINESS/603010409/1003&template=printart'>Read
more.
USG
Backstop Agreement
Approved
USG announced that the U.S.
Bankruptcy Court approved its previously announced rights offering
backstop agreement, BankruptcyData.com reported today. USG announced on
Jan. 30 an agreement to resolve the asbestos personal injury claims in
its chapter 11 reorganization case. Under the agreement, USG will
establish and fund a personal injury trust to pay asbestos personal
injury claims. USG's bank lenders, bondholders and trade suppliers will
be paid in full with interest. Stockholders will retain ownership of the
company. Financing for the plan is expected to be provided from USG's
cash on hand, the $1.8 billion rights offering to existing stockholders
backstopped by Berkshire Hathaway Inc., tax refunds and new long-term
debt. The backstop agreement approved by the Court would assure that USG
would receive $1.8 billion in equity proceeds to fund a portion of the
company's asbestos personal injury claim settlement underlying the plan
USG announced on Jan 30. Berkshire Hathaway will receive a $67 million
non-refundable fee for its backstop commitment.
New
Rule Could Boost Credit
Card Charge-Offs
A new rule implemented by
the Office of the Comptroller of the Currency requiring consumers to
make higher minimum payments on their credit cards could boost the
charge-off rate reported by card issuers a JPMorgan Chase &
Co.’s chief executive warned, according to
face='Times New Roman' size='3'>Portfolio Media
size='3'>yesterday. At a presentation to investors, Rich Srednicki said
the rule will bring about higher bank charge-offs, which will amount to
a couple hundred million dollars by late 2006, as well as supplemental
costs in early 2007. Because of the new regulation, JPMorgan foresees a
looming $300 million in
size='3'>costs in its second half of 2006, which will compensate part of
ithe savings it will be able to realize. Under the new minimum-payment
rule, which went into effect for all card-issuing banks on Jan. 1,
cardholders must make monthly payments that reduce their debt by at
least 1 percent. In addition, cardholders who were already required to
pay 1 percent of their outstanding balance will now pay monthly interest
charges, as well as any fees and the original 1 percent. In effect, more
consumers are expected to default on their credit card payments and
delay paying off their balance, which will hinder banks from collecting
interest payments from consumers.
id='12'>Commentary: Poor
Management Put
face='Times New Roman'
size='3'>Pennsylvania
size='3'>Pension Funds in Crisis
As the Commonwealth
Foundation issued a report last week warning of an impending crisis in
Pennsylvania’s retirement plans for state workers and public
school teachers, part of the cause can be found in the breaks that were
given to school districts in the amount they were required to contribute
to the Pennsylvania School Employees Retirement System (PSERS),
according to an editorial in yesterday’s
face='Times New Roman' size='3'>Allentown Morning Call
size='3'>. By 2002, school district contribution rates declined from
almost 20 percent to 1.09 percent. Because the stock market was booming,
the PSERS pension fund grew, therefore easing pressure on lawmakers at
that time to address the underlying weaknesses of how to fund public
education. With contributions from school districts on the rise, the
Commonwealth Foundation estimates this might result in the districts
having to contribute 21.75 percent of their payroll to the pension plan
by 2013-- a bit more than the 20.04 percent they had to pay in back in
1986.
href='http://www.mcall.com/news/opinion/all-edit10228,0,551776.story?coll=all-opiniontop-hed'>Read
more.
Airlines
id='13'>Northwest Abandons Key
Flight Attendant Request
Bankrupt Northwest
Airlines Corp. has reportedly retreated from an earlier demand to staff
overseas flights with mainly non-U.S flight attendants, according to the
airline’s Professional Flight Attendants Association
(PFFA), Portfolio
Media reported yesterday. The embattled
carrier, which filed for bankruptcy in September 2005, is currently
seeking to reject its union contracts with pilots and flight attendants,
but the two sides are still trying to negotiate new collective
bargaining agreements. U.S. Bankruptcy Judge Allan Gropper
indicated that he would rule by Wednesday on whether
Northwest can reject the union contracts, but urged the groups to try to
work out their differences before then. 'This is the
closest I've seen us,” said PFAA spokeswoman Karen Schultz said.
“It’s just a matter of getting a deal done by
[Wednesday].” The case is
size='3'>Northwest Airlines Corporation and Northwest Airlines
Corporation et al., case no. 05-17930, in the
U.S. Bankruptcy Court in the Southern District of New
York.
In related news, Northwest said
its quarterly loss nearly tripled as a result of reorganization
expenses, soaring fuel costs and low-fare competition, Reuters reported
yesterday. The No. 4 U.S. carrier, which filed for bankruptcy in
September, said its fourth-quarter net loss was $1.3 billion compared
with a loss of $434 million a year earlier. Excluding reorganization and
other unusual items, Northwest reported a fourth-quarter 2005 loss of
$387 million, compared with a year-ago quarterly loss of $373 million.
Northwest hopes to cut total costs by $2.5 billion. The airline says it
needs $1.4 billion in cost savings from its labor groups to survive in
an industry plagued by high fuel costs and stiff competition.
href='http://asia.news.yahoo.com/060228/3/2gm2q.html'>Read
more.
id='14'>Delta, Pilots Are Still
Far Apart in Negotiations
Delta Air Lines and its
pilots union remain far apart in negotiations to get concessions from
pilots that the carrier says are needed as part of its bankruptcy
restructuring, the Wall
Street Journal reported today. A deal isn't
expected to come before a deadline set for today, but both sides plan to
continue talks. They face arbitration-panel hearings later this month
that will consider Delta's request to dump its pilot contract. The two
sides agreed to the self-imposed deadline, and after today, the matter
goes automatically to arbitration. Pay and benefits for more than 6,000
pilots at the
face='Times New Roman' size='3'>Atlanta
airline remain a major sticking point for Delta as it
tries to use bankruptcy to shed costs that contributed to more than $12
billion in losses since the start of 2001 and finally drove Delta into
chapter 11 proceedings last September. The Air Line Pilots Association
representing Delta pilots has threatened a possible strike if the
company breaks its contract and tries to impose concessions -- valued at
$315 million a year. The union has offered givebacks it calculates to be
worth about $115 million a year.
href='http://online.wsj.com/article/SB114115515569985619-email.html'>Read
more.
International
id='15'>Scottish Parliament
Compromises on Bankruptcy Law
Members of the Scottish
Parliament (MSP) drew back from a clash with an executive minister over
the reform of the country’s bankruptcy law, the Scotsman.com
reported yesterday. Parliamentary business minister Margaret Curran had
told the MSPs they were planning to take too long to study the
Bankruptcy and Diligence (
w:st='on'>
size='3'>Scotland
size='3'>) Bill. The MSPs on Holyrood's Enterprise Committee agreed on a
compromise deadline - the middle of May - after a short debate in which
some MSPs complained of not having enough time to do justice to their
job of parliamentary scrutiny. Provisions of the proposed bankruptcy law
include reducing the discharge period for bankruptcy from three years to
one year, and updated enforcement procedures in areas like the
arrestment of earnings.
href='http://news.scotsman.com/latest.cfm?id=308832006'>Read
more.
href='http://news.scotsman.com/latest.cfm?id=308832006'>