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April 17, 2007
name='1'>Bankruptcies Plunge 70 Percent in 2006
Bankruptcy filings in the
size='3'>United
States dropped to their
lowest level since 1988 as calendar year 2006 filings plunged following
the implementation of the new bankruptcy law in 2005, according to data
from the Administrative Office of the U.S. Courts (AOUSC). One year
after the Bankruptcy Abuse Prevention and Consumer Protection Act of
2005 (BAPCPA) was implemented on Oct. 17, 2005, total bankruptcy filings
for calendar year 2006 dropped to 617,660, representing the lowest
filing total since 613,465 total filings were recorded for the 12-month
period ending Dec.31, 1988. The total filings for the 12-month period
ending Dec. 31, 2006, represent a 70.28 percent decrease compared with
the record total of 2,078,415 filings for the same period in
2005. Consumer
bankruptcies recorded the sharpest decrease; the 597,965 consumer
filings during calendar year 2006 represented a 70.68 percent drop in
filings from the record 2,039,214 filings made during the 2-month period
ending Dec. 31, 2005. The 12-month filing total for 2006 was the lowest
since the 549,612 filings were recorded for
the 12-month period ending
Dec. 31, 1988. 'The final government statistics merely
confirm what all in the bankruptcy world had already experienced: a
historic drop-off in 2006 activity almost entirely due to the
after-effect of the 2005 law changes,' said ABI Executive Director
Samuel J. Gerdano. 'But as the debt burden on the
household sector remains high, most expect consumer bankruptcies to
bounce back by the end of this year,' he said.
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here to read the ABI's press release.
Subprime
Mortgages
name='2'>Fannie Mae to Unveil Plan to Help Struggling
Homeowners
Fannie Mae, one of the
nation's biggest investors in home mortgages, said it plans to unveil a
campaign today that would allow lenders to refinance certain borrowers'
homes, and federal regulators expect to release a statement urging
mortgage lenders to help financially troubled borrowers hold onto their
homes, the Washington
Post reported today. Fannie Mae is targeting
adjustable-rate mortgages, which typically offer low teaser rates that
increase later. Under a campaign dubbed HomeStay, Fannie Mae would allow
lenders it works with to refinance homes without first having to clear
up borrowers' unpaid bills on their credit reports. Fannie Mae would
expand products now available to 500 selected lenders to about 2,000
nationwide, Fannie Mae's CEO Daniel H. Mudd is expected to tell the
House Financial Services Committee today. Mudd's statement also says
Fannie Mae will stretch the loan term for this refinancing product to a
maximum of 40 years from a current limit of 30 years, which will shave
monthly mortgage payments by about 5 percent.
href='http://www.washingtonpost.com/wp-dyn/content/article/2007/04/16/AR2007041601633_pf.html'>Read
more.
w:st='on'>
name='3'>Fremont
face='Times New Roman' size='3'> in Talks to Sell Subprime
Unit
Fremont General Corp.
said that it agreed to sell about $2.9 billion of subprime mortgages and
entered into exclusive talks to sell its residential lending business to
the same unnamed party, Reuters reported yesterday.
w:st='on'>
size='3'>Fremont
loans represent the bulk of subprime loans marked for sale but not yet
sold. The loans are being sold at a discount, resulting in a pretax loss
of about $100 million. The Santa Monica, Calif.-based financial services
company also said it intends to sell its loan-servicing platform and its
loan origination business, as well as all servicing rights, advances,
residual interests and mortgage-backed securities. The bank will remain
active in commercial real estate lending.
href='http://www.nytimes.com/reuters/business/business-fremontgeneral.html?pagewanted=print'>Read
more.
Autos
name='4'>Talks to Buy Delphi Hit Snag with
size='3'>
w:st='on'>Union
An investor group's
effort to acquire Delphi Corp. for as much as $3.4 billion has hit a
potential roadblock, with the United Auto Workers refusing demands by
group leader Cerberus Capital Management to cut future wages and
benefits for new hires, the
size='3'>Wall Street Journal reported today. A
Cerberus-UAW standstill could hurt Cerberus's effort to acquire
DaimlerChrysler AG's Chrysler Group. The burden of keeping Delphi talks
going has fallen on General Motors Corp., the former parent of parts
maker Delphi, and could force GM to further subsidize wages and benefits
for new and future UAW-Delphi employees, said the people familiar with
the matter.Cerberus, Appaloosa Management and Harbinger Capital Partners
have agreed to take control of Delphi, which is under chapter 11
protection, but Cerberus has recently expressed concerns to the UAW, GM
and Delphi about Delphi's profitability a few years from now, when new
hires' wages and benefits escalate.
href='http://online.wsj.com/article/SB117678081542272317.html?mod=home_whats_news_us'>Read
more. (Registration required.)
In related news, Delphi
filed an objection in bankruptcy court on Friday in an effort to stop
Wachovia Bank NA from pursuing a breach of contract and interference
suit against a
size='3'>Delphi
Bankruptcy Law360
reported yesterday. Wachovia named Delphi employee Larry
Graves as a defendant in litigation in Mississippi State Court in 2003,
before
size='3'>Delphi
In its objection, filed in the U.S. Bankruptcy Court for the Southern
District of New York, Delphi insisted that
w:st='on'>
size='3'>Graves
from litigation by the automatic stay granted in its chapter 11 case.
SouthTrust Bank, which is now Wachovia, provided real estate loans to
Lextron in 2002, but later declared the company in default. However,
SouthTrust asked
size='3'>Delphi for a letter promising
to keep Lextron as a supplier. Despite
promises allegedly by Graves that
face='Times New Roman' size='3'>Delphi
size='3'>would help Lextron stay afloat, the company cut ties with
Lextron in February 2003 after it discovered that its supplier could not
survive as a going concern, according to court documents.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22696'>Read
more. (Registration required.)
name='5'>Supreme Court Drops Bankrupt Daewoo
size='3'>America
size='3'>'s Case
The Supreme Court struck
down bankrupt Daewoo Motor America’s plea to continue its case
against General Motors Corp. and Suzuki Motor Corp.’s acquisition
of Korean auto maker Daewoo on Monday,
size='3'>Bankruptcy Law360 reported yesterday.
The case stretches back to the financial crisis that hit
size='3'>Asia
Daewoo
size='3'>America was then a
wholly owned subsidiary of Daewoo Motor Co. and the exclusive
distributor of Daewoo cars in the
w:st='on'>
size='3'>United States
size='3'>as well as the exclusive provider of warranty services and
replacement parts. After a severe liquidity crisis in August 1999, the
parent company was put under a Korean workout proceeding. The company
entered into an agreement with its financial institution creditors. The
deal called for the spin-off of the company’s trading and
construction divisions, and addressed management of the remaining
assets. In 2002, Daewoo negotiated a bid with GM and Suzuki, and created
a new company to acquire assets and assume liabilities of Daewoo
size='3'>Korea.
Daewoo
size='3'>America, mired in
bankruptcy filed an action against GM, Suzuki and the new GM Daewoo in
2003 in a
face='Times New Roman'
size='3'>California
size='3'>bankruptcy court, alleging fraud, tortuous interference with
contract, tortuous interference with prospective economic advantage and
other claims.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22768'>Read
more. (Registration required.)
Airlines
name='6'>Judge Approves Northwest Flight Attendants Wage
Cut
A federal bankruptcy
judge on Friday refused to reverse the wage cuts imposed by Northwest
Airline Corp. on its 8,000 flight attendants, Bankruptcy Law360
reported yesterday. In his order Friday, Judge
face='Times New





















Roman'
size='3'>Allan Gropper of the U.S. Bankruptcy
Court for the Southern District of New York also refused a claim of more
than $2 billion that the Association of Flight Attendants (AFA) had
requested. Northwest made cuts last year to save an estimated $195
million a year after it couldn’t reach a contract deal with the
flight attendants. Judge Gropper said that if he granted relief, the
other unions that had entered into new collective bargaining contracts
would file similar motions. AFA was seeking a “minimum”
claim of $182 million and a claim of $75,000 for each pre-petition
grievance filed by a flight attendant.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22728'>Read
more. (Registration required.)
name='7'>Delta Says Reorganization Plan Receiving Creditor
Approval
Delta Air Lines Inc. said
that an overwhelming number of creditors voted in favor of its
reorganization plan, paving the way for the nation's third-largest
carrier to emerge from bankruptcy protection on April 30, the Associated
Press reported yesterday. The Atlanta-based airline said in a statement
that unofficial results show that more than 95 percent of ballots cast
were in favor of the plan. Delta said that creditors also voted in favor
of a reorganization plan for Comair, Delta's wholly owned regional
airline subsidiary. The final voting results for both plans will be
filed later this week with the U.S. Bankruptcy Court in
size='3'>New York
confirmation hearing is scheduled for April 25.
href='http://www.nytimes.com/aponline/business/AP-Delta-Bankruptcy.html?pagewanted=print'>Read
more.
name='8'>Le-Nature's Creditors Seek Chapter 11 Plan Hearing
Delay
Creditors and lenders of
Le-Nature's Inc. are seeking to delay a court hearing on the bankrupt
drink maker’s disclosure statement amid objections from lead
lender Wachovia Bank and the trustee overseeing the case,
Bankruptcy Law360
reported yesterday.
size='3'>The creditor committee and ad hoc lender's committee requested
that a hearing on the disclosure statement slated for April 17 be
adjourned until May 1 to give them time to address objections. The group
of senior lenders has been at odds with Wachovia–the lead lender
on Le-Nature's pre-petition loan–since creditors forced the drink
maker into involuntary bankruptcy last November after allegations
surfaced of a massive fraud at the company.
href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=22739'>Read
more. (Registration required.)
name='9'>Commentary: Sallie Mae Deal Could Shake Up Lending
Industry
As the largest buyout of
a financial services company, the potential deal for student
lender Sallie Mae could shake up the entire lending
industry, according to a commentary in today’s
face='Times New Roman' size='3'>New York Times
size='3'>. The buyout will put the company in the hands of two private
equity investors, J. C. Flowers and Friedman Fleischer & Lowe, and
two banking giants, Bank of America and JPMorgan Chase. Although the
buyers are investing a total of $8.8 billion of their own money, the
remaining $16.2 billion will be financed with debt. Together, the two
buyout firms will control 50.2 percent of the company, while the banks
will provide Sallie Mae with up to $200 million in backup financing and
own the remaining stake. The deal comes as debate is renewed on Capitol
Hill over how heavily the government should subsidize and guarantee
student loans made by Sallie Mae and smaller rivals. Sallie Mae could
also become a bigger player in the origination of private loans, a
lucrative market ranging from $17 billion to $25 billion, where it
already has as much as a 40 percent share.
href='http://www.nytimes.com/2007/04/17/business/17sallie.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read
href='http://www.nytimes.com/2007/04/17/business/17sallie.html?_r=1&oref=slogin&ref=business&pagewanted=print'>
w:st='on'>
name='10'>New Jersey
w:st='on'>
size='3'> Medical
w:st='on'>
size='3'>Center
face='Times New Roman' size='3'> Files
Bankruptcy
The Bayonne (N.J.)
size='3'>Medical
face='Times New Roman'
size='3'>Center
filed for bankruptcy protection but will operate while it reorganizes
its finances, the Associated Press reported yesterday. The hospital has
obtained a mortgage-backed line of credit giving it $30 million in
working capital.
size='3'>Last summer, two
size='3'>New Jersey hospitals filed
for bankruptcy protection:
face='Times New Roman' size='3'>William
size='3'>B.
face='Times New Roman' size='3'>Kessler
size='3'>Memorial
face='Times New Roman' size='3'>Hospital
size='3'>in Hammonton and
face='Times New Roman' size='3'>PBI
size='3'>Regional
face='Times New Roman' size='3'>Medical
size='3'>Center
size='3'>Passaic
was bought by St. Mary's Hospital Passaic, and the two hospitals were
consolidated.
href='http://wcbs880.com/pages/358042.php?contentType=4&contentId=414929'>Read
more.
name='11'>AARP Says It Will Become Major Medicare Insurer While
Remaining a Consumer Lobby
The American Association
of Retired Persons (AARP) the lobby for older Americans, announced
Monday that it would become a major participant in the nation’s
health insurance market, offering a health maintenance organization to
Medicare recipients and several other products to people 50 to 64 years
old, the
size='3'>New York Times reported today. As
medical expenses continue to climb for older Americans, the products for
people under 65 include a managed care plan and a high-deductible
insurance policy that could be used with a health savings account. When
the new coverage becomes available next year, AARP will be the largest
provider of private insurance to Medicare recipients. In addition to the
new H.M.O., AARP will continue providing prescription drug coverage and
policies to supplement Medicare, known as Medigap coverage. The group
also said it would use its leverage to reshape the health insurance
market. The organization has 38 million members, and Mr. Novelli said it
hoped to have 50 million by 2011.
href='http://www.nytimes.com/2007/04/17/health/17insure.html?ref=business'>Read
more.
size='3'>
name='12'>TROUBLED COMPANIES IN THE
NEWS
1000’s of companies lose
money or experience some form of difficulty each
quarter.
The business news
articles below are taken from the
size='3'>Daily Summary of Troubled & Fast Growing U.S. Companies and
Other Business News published by Bastien
Financial Publications.
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.
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your email.
size='3'>Koala Corp., a bankrupt Denver, Co.
maker of infant products, said that it wants to sell its remaining
KoalaPlay Group Inc. and SCS Interactive Inc. assets. However, a Koala
lawyer warned that proceeds might not be enough to pay off a $5 million
loan that Koala owes to Republic Financial Corp. Koala is also
looking for an extension of its debtor-in-possession financing
arrangement. Koala, which filed Chapter 11 in March, anticipates
an asset auction in August.
size='3'>Bush Industries Inc., a worldwide
manufacturer of ready-to-assemble home and office furniture, will
shutter its 100,000-square-foot facility in Little Valley, N.Y. as part
of a consolidation at its facility in
w:st='on'>
size='3'>Jamestown
w:st='on'>
size='3'>N.Y.
move will affect 100 workers, but Bush earlier said that about three
dozen Little Valley workers will likely accept a transfer to the
size='3'>Jamestown
size='3'>plant.
size='3'>Bruce Plastics Inc., a
Robinson,
size='3'>Pa.
closing its
size='3'>Pennsylvania
cutting its local workforce by the end of June as it moves its
operations to
face='Times New Roman' size='3'>South
Carolina
hopes that the move to
w:st='on'>South
Carolina
better compete with overseas suppliers, partly because Bruce has some
big customers in the South. The firm also says it wants to take
advantage of a newer manufacturing facility that it purchased. Also,
Bruce Plastics, which last year acquired injection molder HITECH Hold
& Tool LLC in
face='Times New Roman' size='3'>South
Carolina, expects to
increase its payroll this year.
size='3'>Fila USA , a Baltimore County,
Md. sportswear apparel firm, is in an agreement to be acquired by Fila
Korea, its licensee in
w:st='on'>South
Korea
million. Fila
w:st='on'>
size='3'>USA
revenue last year of $100 million but has been losing
money.
size='3'>InSite Vision Inc.’s auditors
issued a warning in the company’s recent annual report with regard
to InSite’s ongoing losses and said there is “substantial
doubt” about InSite’s ability to continue as a going
concern. InSite, an
w:st='on'>
size='3'>Atlanta
w:st='on'>
size='3'>Ga.
treatment firm, said that it still has enough money to fund operations
through June. Over the winter, the firm received a license fee of $13
million, using part of the money to reduce its debt.
size='3'>Irwin Financial Corp., Columbus, In.,
said that it will incur losses in its first quarter of between $5
million and $10 million due to the weak mortgage market and a bad-loan
chargeoff.